Staying Afloat: Risk and Uncertainty in Spanish Atlantic World Trade, 1760-1820

Staying Afloat: Risk and Uncertainty in Spanish Atlantic World Trade, 1760-1820

Staying Afloat: Risk and Uncertainty in Spanish Atlantic World Trade, 1760-1820

Staying Afloat: Risk and Uncertainty in Spanish Atlantic World Trade, 1760-1820

Synopsis

Early modern, long-distance trade was fraught with risk and uncertainty, driving merchants to seek means (that is, institutions) to reduce them. In the traditional historiography on Spanish colonial trade, the role of risk is largely ignored. Instead, the guild merchants are depicted as anti-competitive monopolists who manipulated markets and exploited colonial consumers. Jeremy Baskes argues that much of the commercial behavior interpreted by modern historians as predatory was instead designed to reduce the uncertainty and risk of Atlantic world trade.

This book discusses topics from the development and use of maritime insurance in eighteenth- century Spain to the commercial strategies of Spanish merchants; the traditionally misunderstood effects of the 1778 promulgation of comercio libre, and the financial chaos and bankruptcies that ensued; the economic rationale for the Spanish flotillas; and the impact of war and privateering on commerce and business decisions. By elevating risk to the center of focus, this multifaceted study makes a number of revisionist contributions to the late colonial economic history of the Spanish empire.

Excerpt

Risk was pervasive in early modern, oceanic commerce. At virtually every juncture of a long-distance venture, merchants encountered risks that threatened to sink their investments and generate painful losses. This ever-present danger was even reflected in the basic language of trade: to engage in a commercial transaction was expressed in Spanish as correr un riesgo, “to take a risk.” Given the prevalence of risk, it is not surprising that early modern traders were deeply aware and profoundly concerned about the many dangers that their business dealings might face and dedicated considerable energies to reduce or accommodate them. Despite the centrality of risk in governing commercial behavior, however, historians of the Spanish empire have virtually ignored its role. This book seeks to rectify this omission by elevating risk and uncertainty to the center of analysis. Not only does this approach require the exploration of new issues, but analyzing familiar topics through the lens of risk management produces wholly different perspectives about the activities and behaviors of Spain’s Atlantic traders.

Merchants engage in business with the goal of making profits. Risk represents an obstacle to the success of mercantile ventures, an event or danger that has a potentially negative consequence on the outcome of business deals. If not for risk and uncertainty, merchants could develop commercial strategies confident that all scenarios were known and that no surprises would arise. In classical economic theory entailing perfect . . .

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