Staying Afloat: Risk and Uncertainty in Spanish Atlantic World Trade, 1760–1820 by Jeremy Baskes (review)

Straddling the tightly regulated era of Spanish colonial shipping before 1778 and the free-trade era thereafter, Staying Afloat offers a nuanced analysis of commercial risks during war and peace years and of mercantile strategies for coping with uncertainties. Baskes has researched the records of the Cadiz consulados (at the Archivo General de Indias, Seville) to underpin the broad themes discussed in his book: the risks of shipping in Atlantic trade, the potential for business problems in the principal–agent relationship, the significance of trust in the mercantile system, credit and debt problems, the use of the convoy system to minimize risk, and the performance of the marine insurance market in Cadiz. Baskes combines empirical research and the contextualization of findings from the consulados, which include detailed accounts from bankruptcy records, with insights from economic theory and the new institutional economics to explore the main issues covered. He has familiarity with econometric methods, but they do not feature prominently in the text. He includes a useful multiple-regression analysis, however, to determine the risk factors that influenced marine insurance premium rates (245–248).

Spanish colonial shipping operated differently from the oceanic trade of other Western European trading powers, such as Britain, France, and the Netherlands, in that fleets protected by convoys were prominent. This strategy was made possible by the concentration of much Spanish trade at Cadiz and at a limited number of Spanish American ports. Such convoys have usually been viewed as a way of protecting the monopoly profits of the flotas and galleons. Baskes argues convincingly against this interpretation by marshalling evidence to show that monopoly practices were not especially prevalent in the fleet system: “There were simply too many merchants engaged in the fleet trade to collude, and none of them had sufficient market share alone to drive up prices” (53). Another section of the book offers a significant revision of the existing historiography in a critique of the methodologies independently deployed by Fisher and García-Baquero González for calculating increased exports in Spanish colonial trade after 1778.¹ Baskes shows that the export base year used by both historians inflates the post-1778 growth in exports.

Chapter 5 has an interesting discussion of the rising demand for credit in Mexico and other parts of Spanish America and the escalation of risk after 1778. Merchants became uneasy about further extension of credit as debts piled up; this story is familiar to anyone who has studied the British or French Caribbean during the same period. Chapters 8 and 9 provide a thorough study of the Cadiz marine-insurance market. Some of the themes addressed are the lack of correlation between insurance rates and distance covered and the use of discounts by insurers for those merchants who shipped their goods in convoys. The problems of sustaining a profitable marine insurance industry at Cadiz in wartime during the 1790s are attributed to relatively few individuals assuming risks that were too big.

Future historians will extend the material offered in Staying Afloat by linking the risks associated with extending credit in Spanish colonial trade to institutional mechanisms for securing payment and recovering debts between principals and agents. Consideration of those matters would deepen the findings reported in Staying Afloat, which is a notable study of risk management in oceanic trade. Baskes’ book deserves careful reading not just by scholars of Spain’s colonial empire but by specialists in the business and economic history of European transatlantic trade during the eighteenth and early nineteenth centuries.