An alternative institutional approach to long-distance trade finance, 1668-1828
27/04/2021 17.00 UK (NB – Time rescheduled, previously 16.00 UK)
Presenter: Juan José Rivas Moreno (London School of Economics and Political Science)
Discussant: Fernando Arteaga González (University of Pennsylvania)
Chair: Manuel A. Bautista-González (Columbia University in the City of New York)
This paper seeks to explain the financial model of the Pacific silver trade that linked Spanish America and Asia through Manila during the Early Modern period, focusing specially on the era between 1668 and 1828.This research therefore seeks to understand the business and financial model of the Manila trade, its resilience in time as well as its successful monopolisation of the Pacific route (the most direct route for the exchange of silver pesos for Asian manufactures) in the context of corporate, business, and institutional history. It does so by reconstructing and analysing for the first time the universe of the financial markets in Manila, which rested on a combination of financial and risk-mitigating instruments such as sea loans, investment vehicles like legacy funds grouped under the administration of confraternities and tertiary orders, and a legal framework that combined differing jurisdictions including Canon, Civil, and consuetudinary law. It explores the interaction of all this elements in the context of a trade defined by lack of substitutes, high risks, and oligopsonic structures in order to explain the rationale behind the instruments and organisations used.It crucially uses for the first time a database of over 525 sea loans from the notarial protocols of Manila (NAP) as well as the only surviving year-on-year account books of 23 legacy funds that invested in the Manila trade (APSR). The result is an alternative business model that relied on horizontal specialisation rather than vertical integration, in which Manila played a specialised role as a risk manager and financier of the trade, which allowed it to remain competitive and to fend-off encroachment attempts from interlopers and the East India companies without adopting a corporate form.