- Staying Afloat: Risk and Uncertainty in Spanish Atlantic World Trade, 1760–1820 by Jeremy Baskes
Jeremy Baskes has produced an intriguing and important book about eighteenth-century transatlantic trade. Ostensibly concentrating on commerce between Spain and America, much of the work centers on the mercantile connections between Mexico and Cuba and the Spanish port of Cádiz. Occasionally, there are comparisons with trade to Peru or the Río de la Plata. Baskes starts by pointing out that good commercial information [End Page 355] was hard to come by during the period, a problem that bedeviled all merchants operating within this world. Given the large distances, long voyages, changing circumstances and slow communication, few voyages were risk free. Even relying on one’s brother or nephew could be fraught with problems. Indeed making commercial decisions based on information that was often more than a year old meant that problems arising during even relatively small shipments could result in loss of any expected profits.
Interestingly, Baskes sees the much maligned convoy system as being effective in limiting market risk. The traditional historiography sees this system as having produced great wealth for a select group of merchants who monopolized the trade and set high prices for their goods, thus making these articles overly expensive for the colonial consumer. To the contrary, Baskes argues that it was common for several Spanish merchants to embark their goods in one ship, thereby insuring competition once the ship arrived in the New World.
Moreover, Baskes argues that the much-applauded comercio libre policy enacted by Charles III in 1778 had the paradoxical effect of producing a new kind of commercial risk. Although most historians have seen the new policy that allowed multiple Spanish American ports to trade directly with a growing number of Spanish ports as encouraging to trade, Baskes points out that trade liberalization ended any control on the amount of merchandise arriving in America. As a result markets were glutted and merchants frequently found it impossible to sell at a profit. Moreover, although the resulting decline in the prices of imported goods should have produced an increased demand for these goods, it did not do so in Spanish America—a large percentage of its population were too poor to be consumers.
Although historically specie-poor from 1778 on, Spanish America also experienced a rising demand for credit. Baskes finds that wealthy merchants, storekeepers, and consumers at all levels depended on credit to lubricate the economic system. Credit involved high interest rates, but the ability to obtain credit was closely tied to one’s personal reputation, not always to one’s solvency. A merchant had always to be careful about whom he dealt with in both giving and receiving credit. Baskes also finds that bad debt became more prevalent after the liberalization of trade.
Transatlantic trade was vastly more complicated from 1793 on because of on-going European conflicts. At least initially, war increased the riskiness of trade and interrupted commerce while also driving up the cost of insurance premiums and transportation costs. The net result was an increase in the value of imported goods and a decrease in that of American exports. The concluding chapters of the book examine the Spanish response to growing trade risks and war. As many Spanish merchants trading with America moved out of transatlantic commerce, they frequently became involved in the growing Cádiz market for maritime insurance. War, seizure of ships by corsairs, shipwrecks, overexposed shareholders, and an insurance market concentrated in the hands of a relatively few investors led to a complete devastation of the Cádiz financial community by 1800. [End Page 356]
The width and depth of Baskes’ research is admirable. He draws on a wealth of sources including books and articles by economists, economic historians, and historians of trade, empires, and commercial networks, as well as the correspondence of several merchants, consular records, insurance policies, and company statutes. Although the book would have benefited from a bit less...