The Barbary Pirates1. Abhishek

2. Anshuman

3. Rajul

4. Sharad

5. Srinivas

6. Suket

1

2

End of 18th Century

USA has no Navy Fleet

No Protection from British

Economy Improving

Debt Still There

3

Year: 1786, The NegotiatorsJohn Adams Thomas Jefferson

USA Ambassador to

FranceAgainst Peace with

PiratesTo Negotiate with Barbary

StatesLeading USA Diplomat to

UKWants to set up Naval

FleetTo Negotiate with Barbary

StatesFor Peace with PiratesAgainst setting up the

fleet

4

Adams Says War Is Costlier than Peace

Potential Trade Revenue LossMore than (500,000 ) £ per year

Option 1: PeaceCost 200,000 to 500,000

As 10,000 to 30,000 annual interest considered @ 6%

Option 2: Prepare & Go for WarAt least 500,000 even when no fight

200,000 to 500,000 additional if fight

Assumed as one time cost!

This is recurring cost.

Assumed as recurring cost!

This is one time cost.

Not Apple to Apple Comparison

5

Jefferson ArguesBuilding Fleet is Must & not that Costly

Splits costs of war

Fixed vs. Variable

Fleet Set Up cost – 450,000

MUST be done anyway

Additional Cost – 22,500 per year

As half the fleet kept in service

Only variable costs should be compared

Assumed as one time cost.

Not used for comparison.

Cost to Fight not considered.

Only maintenance taken.

Cost of War NOT Considered.

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Our Calculation

Cost of Peace

200,000 to 500,000 annual (recurring)

350,000 Average annual (recurring)

Cost of War

450,000 one time fleet set up (FC)

22,500 to 45,000 maintenance every year (recurring)

350,000 whenever fight (recurring with probability of war)

One win may decimate pirates for many years

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Our Take

Set up Fleet

One time cost of 450,000

Maintenance cost of up to 45,000

Go for war once

350,000 average

Reduce bargaining power of Pirates

Settle for peace

200,000 per year or less maybe

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This was 1786.What Happened

Thereafter? War?

Peace?

A d a m s ? J e f f e r s o n ?

9

Jefferson Stuck to His Argument

Paying ransom

NOT a sustainable solution

Barbarian states

MUST feel the threat

10

Navy Gets Formed

With some delay

In 1794

With 6 battle carriers

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John Adams?

Becomes PRESIDENT of USA

In 1797

Remains till 1801

And Keeps on paying

The Ransom every year

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J e f f e r s o nUSA President

1801-09

13

Jefferson Stops Ransom Payment

Refuses Tripoli’s demand of an immediate payment

of $225,000

and

an annual payment

of $25,000

14

Initiates War with Pirates

Orders NAVY to move & initiates WAR

Alliance of Barbary states breaks

1st War ends in 1805 Ransom of 60,000 per sailor continues

2nd War held in 1815

N o r a n s o m t h e r e a f t e r !

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Thank You !!!