The Early Modern Atlantic Economy

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The Early Modern Atlantic
Economy
Edited by
John J. McCusker
and
Kenneth Morgan
publi shed by the press syndicate of the uni versi ty of cambri dge
The Pitt Building, Trumpington Street, Cambridge, United Kingdom
cambridge uni versi ty press
The Edinburgh Building, Cambridge CB2 2RU, UK www.cup.cam.ac.uk
40 West 20th Street, New York, NY 10011– 4211, USA www.cup.org
10 Stamford Road, Oakleigh, Melbourne 3166, Australia
Ruiz de Alarco´ n 13, 28014 Madrid, Spain
© Cambridge University Press 2000
This book is in copyright. Subject to statutory exception
and to the provisions of relevant collective licensing agreements,
no reproduction of any part may take place without
the written permission of Cambridge University Press.
First published 2000
Printed in the United Kingdom at the University Press, Cambridge
Typeset in Plantin 10/12pt [vn]
A catalogue record for this book is available from the British Library
Library of Congress Cataloguing in Publication data
The early modern Atlantic economy/edited by John J. McCusker
and Kenneth Morgan.
p. cm.
ISBN 0 521 78249 X
1. Great Britain – colonies – commerce – history – 18th century.
2. Great Britain – commerce – America – history – 18th century.
3. America – commerce – Great Britain – history – 18th century.
4. France – colonies – commerce – history – 17th century.
5. France – commerce – America – history – 17th century.
6. America – commerce – France – history – 17th century. I. McCusker,
John J. II. Morgan, Kenneth.
HF3093.E2 2000
382'.09182'1–dc21 00–028924
ISBN 0521 78249X hardback
Contents
List of Wgures page vii
List of tables viii
List of abbreviations x
List of contributors xiii
Introduction 1
j ohn j . mccusker and kenneth morgan
Part I The role of merchants and their connections
1 Risk, credit and kinship in early modern enterprise 15
peter mathi as
2 Business networks in the British export trade to North
America, 1750–1800 36
kenneth morgan
Part II The development of trades
3 Property versus commerce in the mid-eighteenth-century
port of London 65
henry roseveare
4 Irish businessman and French courtier: the career of Thomas
Sutton, comte de Clonard, c. 1722–1782 86
loui s m. cullen
5 ‘A revolution in the trade’: wine distribution and the
development of the infrastructure of the Atlantic market
economy, 1703–1807 105
davi d hancock
6 Law, credit, the supply of labour, and the organization of sugar
production in the colonial Greater Caribbean: a comparison of
Brazil and Barbados in the seventeenth century 154
russell r. menard
v
7 The revolutionary impact of European demand for tropical
goods 163
carole shammas
8 The business of distilling in the Old World and the New World
during the seventeenth and eighteenth centuries: the rise of a
new enterprise and its connection with colonial America 186
j ohn j . mccusker
Part III Imperial economies
9 France, Britain and the economic growth of colonial North
America 227
stanley l. engerman
10 Merchants and bankers as patriots or speculators?
Foreign commerce and monetary policy in wartime,
1793–1815 250
patri ck k. o’ bri en
11 America and the crisis of the British imperial economy,
1803–1807 278
franc¸ oi s crouzet
Part IV Colonial working societies
12 Emigration and the standard of living: the eighteenth-century
Chesapeake 319
loi s green carr
13 After tobacco: the slave labour pattern on a large Chesapeake
grain-and-livestock plantation in the early nineteenth century 344
ri chard s. dunn
Index 364
vi Contents
Figures
6.1 Richard Lignon’s map of Barbados, about 1650, when the
dispersed method of organizing sugar production was still
common on the island. (Courtesy of the James Ford Bell
Library, University of Minnesota, Minneapolis.) page 160
8.1 A small English distillery of the eighteenth century, as
pictured in the frontispiece of George Smith, A
Compleat Body of Distilling, Explaining the Mysteries of
That Science, in a Most Easy and Familiar Manner. 192
vii
Tables
3.1 From ‘An Account of all Tobacco Bonds standing out
in the Port of London, Oct. 24th, 1747’ page 79
5.1 Departures from the island of Madeira, 1727–1807 110
5.2 Wine exports from Madeira, 1779–1807 (pipes of
110 gallons) 114
5.3 Top exporters of wine in Madeira 125
6.1 Estimated population of Barbados, 1640–1700
(in thousands) 155
6.2 Acreage and workforce on various Barbados plantations,
1641–4 157
7.1 Western European empires: approximate square mile
distribution by geographical area c. 1775 (in percentage
of square miles) 167
7.2 Western European empires: approximate population
distribution by geographical area c. 1775 (in percentage
of subjects) 168
8.1 Estimates of annual per capita consumption of spirits,
1600–1800 202
9.1A Estimated populations, major British and French
Caribbean island colonies, 1680–1780 (in thousands) 236
9.1B Estimated populations, British and French Caribbean
colonies, 1780 and 1790 (in thousands) 236
9.2 Caribbean populations, 1750 238
9.3 Estimated plantation output of the British and French
Caribbean, 1770 (values in thousands of pounds sterling,
fob Caribbean) 246
11.1 Re-exports from Great Britain 279
11.2 Imports of sugar in Britain (yearly average in million cwt) 280
11.3 Re-exports from Britain of raw sugar (including the
equivalent of reWned sugar exports) (million cwt) 280
11.4 Re-exports from the United States (US$ million) 284
11.5 British imports and re-exports of sugar (million cwt) 286
viii
11.6 Index of the average quarterly and yearly prices of
‘Jamaica brown’ sugar on the London market (customs
duties excluded). Average yearly price of 1806=100 287
11.7 Exports from the United States to the British West Indies 294
11.8 Britain’s East India trade: indices of oYcial values
(volume), 1806=100 299
11.9 Tonnage of merchant ships registered in Great Britain,
Ireland, Isle of Man, the Channel Islands (000 tons) 302
11.10 Tonnage of merchant ships built in Great Britain
(000 tons) 302
11.11 The American merchant Xeet 305
11.12 Total number of entries and clearances in British ports
of ships coming from or going to the United States 306
12.1 Chairs and tables in Chesapeake and English inventories,
householders only, seventeenth and eighteenth centuries 330
ix Tables
1 Risk, credit and kinship in early modern
enterprise
Peter Mathias
This contribution to a volume honouring Jacob Price and celebrating his
work takes as its themes risk, credit and kinship in the early modern
period, exploring the ways in which they interacted to condition business
strategies and the day-to-day conduct of business. It seeks to survey and
assess generally rather than to add to research.
1
Considerations about
kinship, credit, risk and the avoidance of risk have suVused all of Jacob
Price’s investigations into transatlantic trade and Wnance in the seven-
teenth and eighteenth centuries, either explicitly or as a structural feature
of the context. Indeed, because uncertainty and risk were almost univer-
sally present to so much greater an extent in ‘normal’ trading activities in
that period than in conducting equivalent transactions in the twentieth
century they conditioned the operation of the business system in an
elemental way. Nor can risk be easily distinguished from uncertainty in
the commonly assumed modern conceptual sense – where risk can sup-
posedly be quantiWed (a precondition for commercial insurance) and
uncertainty not. Many categories of risk had uncertainties also built into
them and were in large measure open ended. Focusing attention on
avoiding or minimizing risk may imply taking too negative or too defens-
ive a viewabout the conduct of business in this period. It takes for granted
other aspects of business which are emphasized in the literature of entre-
preneurship in historical settings – the motivations of businessmen for
expanding the scale of their operations, increasing their proWts, pioneer-
ing innovations, making their personal fortunes, enhancing their social
status with the accumulation of wealth. But one set of determinants does
1
This chapter draws on, and adds to, my paper ‘Strategies for reducing risk by entrepre-
neurs in the early modern period’, in C. Lesger and L. Noordegraaf, eds., Entrepreneurs
and Entrepreneurship in Early Modern Times: Merchants and Industrialists within the Orbit of
the Dutch Staplemarket, Hollandse Historische Reeks, 24 (The Hague, 1995). For the
general debate see O. E. Williamson, Markets and Hierarchies (NewYork, 1975); J. March
and H. Simon, Organisations (Oxford, 1958); W. Reddy, The Rise of Market Culture
(Cambridge, 1989); A. Godley and O. Westall, eds., Business History and Business Culture
(Manchester, 1996).
15
not exclude the other. Entrepreneurship had to be exercised within the
parameters of high risk, which made demands of their own, while diVer-
ent phases in the evolution of a business, diVerent stages in a person’s
business career and diVerent circumstances at a particular point of time
would determine varied responses. This was particularly the case in
circumstances of intense, occasional short-termXuctuations in trade and
Wnancial liquidity.
The central theme argued in the following pages is that the context of
risk emphasizedthe importance of face-to-face personal relationships and
kinship in business, in particular concerning access to credit.
2
Within the
general parameter the family matrix was so often central to the operations
of business, whether in structural relationships (patterns of ownership,
succession, the identiWcation of ownership with management authority
and the like) or in everyday dealings.
3
Amajor dimension of such a matrix
was demographic – and the demographic dynamic added risks and uncer-
tainties of its own, as well as opportunities, which could not be antici-
pated. These demographic indeterminacies – as with economic and W-
nancial indeterminacies – are often subsumed and articulated (in the
terms in which they were perceived) as ‘luck’. The greater the degree of
indeterminacy in a situation, the greater the role often put down to ‘luck’
– which is acknowledging the same reality through diVerent perceptions
and articulations. Demographic dynamics for the family Wrm were then
very diVerent from what they were in the later nineteenth and twentieth
centuries. The hazards of survivability were much greater (compounded
when in a tropical setting). This produced early – and unexpected –
succession to ownership, unexpected windfalls fromlegacies, lower prob-
abilities for direct succession through male heirs (or daughters) in a
family Wrm. Higher demographic risks also enhance the importance of
wider kinship relations in partnership successions, the role of widows and
the propensity for re-marriage. The rights of patrimony and the normal
legal provision for nominating kin to succession in a partnership con-
2
J. Scott, Social Network Analysis (London, 1991); M. Casson and M. B. Rose, eds.,
Institutions and the Evolution of Modern Business (special issue, Business History, London,
1993). The introduction to the latter volume states that ‘one of the consequences of
making the institutional environment endogenous would be that networks and their social
underpinnings would move from the periphery to the core of institutional theory’ (p. 6).
See especially in the same volume Casson, ‘Institutional economics and business history:
a way forward’, where he notes that ‘Transaction costs reXect a lack of trust between the
people concerned’ (pp. 151–2).
3
S. R. H. Jones, ‘Transaction costs and the theory of the Wrm’, in Casson and Rose, eds.,
Institutions and the Evolution of Modern Business, pp. 9–25; P. Dasgupta, ‘Trust as a
commodity’, in D. Gambetta, ed., Trust: Making and Breaking Cooperative Relations (New
York, 1988), pp. 49–72; A. Etzioni, The Moral Dimension: towards a New Economics (New
York, 1988); F. Fukuyama, Trust (London, 1995).
16 Peter Mathias
solidated the matrix, where demographic success permitted. The provi-
sion of capital and credit (more long-term capital than normal trade
credit, except in emergencies) was another vital nexus linking kinship,
and trusted personal connections, with the operation of business.
Such interpersonal and interkinship relationships are integrally linked
with the context of high risk within which business had perforce to be
conducted. One dimension of high risk derived from natural hazards of
various kinds – the improving but still greatly limited control over nature:
slow communications and the uncertainties imposed by storm, calm,
Xood, drought or frost. Technological weaknesses reinforced such natu-
ral hazards and, for the most part, had to be accommodated to the
dictates of nature rather than being able to overcome them. The oper-
ation of the business system also created endogenous risks, apart from
those consequent upon a hostile nature and a limited technology. Legal,
institutional and political processes imposed great uncertainties, long
delays and high costs. The most elemental ‘law and order’ precondition
for the successful conduct of most legitimate business – the physical
security of property and assets, a peaceful, well-ordered environment
where commercial transactions could take place in a context of deWned
legal rules – was often lacking in many European as well as non-European
settings, on occasion if not more permanently. More frequently, war
created risks in international shipping and commerce. These various
categories of risk can be elaborated at length but the general conclusion –
even, perhaps, constituting a general law – would be that the weaker the
institutional context, from a wide variety of sources of risk and uncer-
tainty, then the higher the premium to be placed on individual dealings
with known individuals, personal trust and the kinship nexus. As the
common phrase puts it: ‘blood is thicker than water’.
Wealth in the parents of a businessman and in his kinship group more
widely, together with wealth brought by his wife and her family, could
cover a multitude of risks. Very fewgreat fortunes were created in a single
generation by the eVorts of a single man of business. Modest capital at
least, and modest personal connections, were usually preconditions for
success and overcoming the initial risks of establishing a business. The
hazards of setting up in business were minimizedby following one’s father
in trade or being introduced into a partnership by patrimony. Following
inthe shoes of one’s father, or other relative, directly oVered knowledge of
the trade, connections with established clients, customers and suppliers,
with the conWdence and trust that continuity of dealing over earlier years
had built up. In general, access to a prosperous business or professional
career depended greatly upon family wealth and connections, despite
well-publicized individual instances to the contrary. The fame of such
17 Risk, credit and kinship
exceptions correlated with their infrequency, compounded by much
mythologizing on the poor-boy-made-good theme, which also has to be
discounted. Where direct succession to the family Wrm did not happen,
entry into an allied trade, or another partnership with personal links,
could bring many of the same advantages. Young men were often taught
the trade, following their schooling, by being placed with the Wrm of a
family friend, living under his roof for a year or so. Membership of an elite
trading or city company, preeminently the East India Company, could
usually be contrived by powerful established members for a kinsman, if
not secured by outright nomination as with an ordinary commercial or
professional partnership.
Potentially lucrative business positions commanded high apprentice-
ship or acceptance fees which imposed high barriers to entry, as with the
main trading companies with monopoly privileges, major brewers and
distillers and more generally wherever large capital and potentially high
returns were in question. Such fees could run up to £500–1,000 in the
mid- and late eighteenth century, but provided a privileged entre´e to a
lucrative commercial world.
4
Even with high fees a personal introduction
would be a prerequisite for acceptance. In all these ways parental wealth
and inXuence could secure a privileged position for sons beginning a new
career. At issue was not just the means of learning the trade in question,
with the relevant technical skills, but of gaining access to the insider’s
world of personal contacts, conWdential relationships, personal trust and
status in the trade. This was not the only ladder to potential success but it
was much the easiest and the fastest. In a context of high risk privileged
access was at a premium. Given prevailing demographic patterns (pro-
vided that he took care to survive) the son could stand to inherit at an
early age or be invited into the Wrm of an uncle or a cousin without male
heirs. The demographic lottery could also yield unexpected legacies with
extensive failures in the direct line of succession. Maintaining close links
with kin on the side of both parents was thus elementary prudence.
The demographic odds also oVered opportunity to the able apprentice
who had demonstrated his talents as a salaried clerk or manager.
5
Apart
from the possibility of working his way into the partnership (usually by
way of a loan from an existing partner, at interest, but paid oV by
instalments saved fromhis salary), the salaried clerk who found himself in
a strategic position running the business might even aspire to the possibil-
4
R. Campbell, The London Tradesman (1749); see, for example, in brewing Peter Mathias,
The Brewing Industry in England, 1700–1830 (Cambridge, 1959).
5
This sequence was played out in the relations between the Thrale family, with no male
heirs, and the salaried manager of the large brewery in London, John Perkins. See
Mathias, The Brewing Industry.
18 Peter Mathias
ity of marrying his master’s daughter, or (it had been known) his master’s
widow. High talent in non-kin could also be rewarded where male heirs
did not wish to take on the trade or were considered unsuitable. Where a
business was important to a family’s fortunes and extensive capital was
engaged, practical considerations sometimes challenged the dictates of
kinship. High risk and the safeguarding of capital, together with the
income Xows, produced important incentives to consolidate the oper-
ation of business with kinship links – and not only over the question of
succession. Clearly, this has been the case in many walks of life, not least
in the expansion and consolidation of landed estates, where dynastic
alliances have traditionally constituted an essential strategy. Kings and
princes, nobles and commoners have followed this motivation, jointly
pursuing wealth, power and dynastic advantage.
Everything that has been said about discounting risk when setting up in
business by choosing one’s parents wisely relates in equal measure – and
with greater choice – to the businessman’s own marriage and this, of
course, when he was young was far frombeing independent of his family’s
status. Marriage often cemented alliances between families with close
business interests, while being arranged informally and remaining de-
pendent on the personal consent of the two parties, despite family press-
ures. Such a marriage contract usually reXected a carefully estimated
reciprocity, not cast only in terms of capital sums in down payment for a
dowry and a wife’s portion but including presumptions about the pros-
pective earning power and inheritance of the bridegroom. Unless on
marriage the wife’s capital (or the widow’s assets) was legally separated
and administered on her behalf through a trust, as with an unmarried
heiress, then her assets became her husband’s. In the normal lottery of
marriage, before the days of Married Women’s Property Acts giving
statutory protection, the husband won the jackpot. Past, present and
future thus converged in the making of such alliances.
Where capital values and earning power derived from a business these
considerations of personal ownership and control operated with much
greater eVect than when the assets were in land and property or in
government stock (the ‘Funds’ in English parlance). To yield a continu-
ing streamof income and to maintaintheir capital value all assets required
skills in management, but the required degree of active management and
the skills involved varied widely between diVerent categories of assets.
Minimal expertise and supervision, but honesty in administration by
trustees or those with powers of attorney, was demanded by assets in the
Funds. Freehold property required maintenance and eVective supervi-
sion of tenants, but arrangements could be made to organize this, usually
throughlocal solicitors or land agents. Such services were widely available
19 Risk, credit and kinship
for both town and country. In the case of business assets, however, the
case was more complicated. EVective management skills, technical ex-
pertise in the case of productive enterprise, application and honesty were
paramount if the income stream from proWts was to be preserved and the
capital value of the assets which produced the income maintained, let
alone enhanced. In the words of Samuel Johnson’s famous comment on
the sale of the Thrale brewery to Messrs. Barclay and Perkins: ‘What can
misses do with a brew-house? Lands are Wtter for daughters than trade.’
6
Daily attendance and supervision were required, just to maintain rou-
tine business and accounting, but the supervision of a salaried clerk on the
spot could not supply the initiatives or the decisions which were the
reality of doing business, as distinct from fulWlling its routine functions.
This was not just a question of honesty, in a context where the opportuni-
ties for deception were manifold, but raised wider issues of decision-
making, risk-taking, investment decisions and incentives. If a salaried
clerk or manager with the necessary abilities found himself with such
responsibilities he would want a share of the proWts, which meant partici-
pating in the equity capital of the business as a partner – in short, moving
from salaried manager to part owner. Where assets were in trade the
elderly partner could hope to pull out by transferring his assets into land
and property or the Funds without signiWcant loss, if trading conditions
were favourable. Most trading assets (stock, good commerical debts
owing, perhaps some shares of ships) could be realized in a short time, if
they were not taken over by existing or incoming partners. This is doubt-
less one reason for the relative absence of family dynasties in trade.
In the case of manufacturing realizing assets was not so easy. More
capital was embodied in Wxed assets, such as buildings, plant and equip-
ment, which had to be utilized with speciWc skills and experience if the
potential stream of income which they could yield was to be achieved.
Without a certain level of technical knowledge, for example, being
cheated was always a danger. A manufacturing enterprise also required
associatedtrading skills andWnancial skills, inthe absence of whichsimilar
risks applied. It was therefore that much more risky for an outsider to buy
the business outright and take it over as a going concern. The greater the
scale of operations andthe larger the sumrequiredthenthe greater the risk
and the higher the odds against a successful outright sale. Such assets
(whether tangible or in business connections) quickly deteriorate when
unused. Hence the double incentive for selling to existing partners or
negotiating partnership rights with an existing manager who had the
necessary skills but lacked capital. The ageing owner without suitable
6
Peter Mathias, The Transformation of England: Essays in the Economic and Social History of
England in the Eighteenth Century (London, 1979).
20 Peter Mathias
male kin in the next generation had the conWdence of preserving income
andcapital values while the ambitions of the lucky manager were satisWed,
as his commitment to the Wrm combined with his own advancement and
that of his family. The existence of a daughter created an opportunity for
consolidating dynastic and business continuity in the next generation by a
new alliance between kin and Wrm, with similar double advantages.
An equivalent route for advancement beckoned the impecunious clerk
in a trading concern. If honest, capable and possessing book-keeping
skills he might become a supercargo, acting as agent for the principals in
trade. Considerable responsibilities would fall to him overseas when
quick decisions had to be taken in the light of the actual market condi-
tions prevailing when a ship arrived in port. Original instructions might
not be able to be carried out proWtably, while waiting for newinstructions
might well prove the worst option possible. Where principals were weeks
or months away fromtaking decisions, the man on the spot was in the best
position for taking advantage of any turn in the market. Opportunities
would often present themselves for a supercargo to trade a little on his
own account (and he might be able to command a modest space on a ship
for this), fromwhich small beginnings greater gains might follow. An oVer
of advancement might well followthe demonstration of such honesty and
ability.
Credit
The role of credit in the operation of business and its relationship with
risk is so fundamental that it merits a speciWc discussion. Many sorts of
risk impinged upon a business by way of making extra demands for credit,
in diVerent forms. Risks, as we have seen, were inherent in the context of
nature, climate and technology. Storm and shipwreck were endemic at
sea, as were delays in the fulWlment of transactions. Ships could wait for
weeks at the quayside for full loading (inland transport and production
could also be held up by many kinds of natural hazard). The inherent
logistics of inland transport by barge and wagon curtailed eYciency,
compoundedby delays (which meant higher costs) beyond these intrinsic
parameters. Ships could wait for days or more for a favourable wind to
clear the Thames estuary or the Downs or the Bristol Channel. Customs
clearance could be time consuming; quayside spaces or warehousing
capacity could be stretched when delays in making port led to a bunching
of arrivals.
When shipping was controlled in a convoy system, as sometimes hap-
pened in wartime, such delays were compounded as the convoy assem-
bled, followed by further delays from slow sailing and changes of route.
21 Risk, credit and kinship
Even after an eVective insurance market developed for ships and cargoes
in the early eighteenth century the recoverable costs did not compensate
for all the forms of loss, such as the consequences of delayed transactions
and the payment of claims. Seasonal interruptions to agricultural, indus-
trial, mining, construction, shipping and trading activities were endemic.
Export markets (and also the home market) were subject to cyclical
variations – aVecting returns by way of price movements as well as
changes in volume. Where industrial production was scattered over dif-
ferent sites, with diVerent processes utilizing artisan technology taking
place in diVerent localities, delays in fulWlling orders could be inordinate.
In a sense speculative trading was inevitable given the decoupling be-
tween taking commercial decisions and the information on which they
had been based, even if consignments were only dispatched according to
Wrmorders. Market conditions could change between the time of placing
an order and the arrival of the ship carrying the goods. The same was true
on a lesser scale for the commercial time gap between London and the
provinces. Aweek might be required for commercial intelligence between
Britain and the North Sea littoral. Returns from a trading venture to the
eastern Baltic from Britain would take half a year, a full year possibly for
the transatlantic trades and two years to India, south-east Asia and the far
east. Inland bills were normally payable at twenty-eight days, with equiv-
alent extensions for maturity according to the distance of trading areas.
Even discounting the risks of non-payment, destruction or damage, the
uncertainties resulting from delays and enforced changes in prices meant
that capital and credit requirements were much higher in relation to turn-
over than in more recent times of faster, more assured communications.
Margins could also be Wner as such eYciencies increased. Extra credit
needs arose where such delays proved longer than anticipated. Because so
much capital was locked up in stocks of raw materials, goods being made
and goods in the course of distribution – in all of which mercantile credit
was paramount – the eYcient control of stocks was central to business
eYciency and the minimizing of risk from over-extended credit. Pro-
cedures for recovering debt, beyond the ‘protesting’ of bills of exchange,
could be uncertain and protracted, with the certainty of high legal costs.
Debt recovery in a foreign country compounded all these diYculties. The
Crown of Virginia Act of 1663, for example, made it ‘almost impossible’
for a British creditor to use the local courts to collect from a debtor who
had moved to the colony.
7
7
Jacob M. Price, Perry of London: a Family and a Firm on the Seaborne Frontier, 1615–1753
(Cambridge, Mass., 1992), pp. 81–2. The Colonial Debts Act subsequently reversed the
situation when ‘land, houses, chattels and slaves of planter debtors became liable for the
satisfaction of debts’. The process could still prove protracted and expensive.
22 Peter Mathias
The centrality of credit is amply documented. The Perrys usually
bought at eighteen months’ credit and, in turn, for goods exported in
adventures to America at least twelve months’ credit had to be oVered,
with a retail mark up of 100 per cent or more.
8
Large planters in Virginia
had the leverage to command extended credit fromimporting merchants,
but middling planter consignees could be held on a short credit leash.
9
The credit chain stretched fromthe merchant supplying rawmaterials on
credit to ‘putters-out’ and manufacturers in England right through to
upcountry store owners in the Chesapeake and other colonies: ‘the real
cost involved in the long credit oVered by the export merchant rested in
turn upon the long credits available from the wholesaler’.
10
Twelve
months’ credit was usual in the domestic trades in England. Those who
agreed to six months’ credit ‘keep constantly giving orders and send up
bills when it suits them, or are not drawn upon for the full balance
perhaps for 2 or 3 years, the accompt remaining open, it may be said that
almost every country shopkeeper has credit for a year, if not more’.
11
Credit facilities have long been acknowledged as the key to developments
in the trade and the development of the West Indian slave economy. As a
Liverpool slave trader put it, the right sort of credit ‘made the wheel
turn’.
12
‘First place must be givento credit’ in the development of Virginia
and Maryland repeats the assertion.
13
Good credit, access to credit and access to cash to meet the unex-
pected, unanticipatable emergency were keys to survival in this commer-
cial world beset with risk and uncertainty. In normal trading conditions
discounting bills of exchange with a banker would enable a businessman
to get returns in cash without holdings bills to maturity. He might also
take advantage of short-term ledger credits from suppliers – in ordinary
8
Ibid., p. 49.
9
Ibid., pp. 66–7.
10
Jacob M. Price, Capital and Credit in British Overseas Trade: the View from the Chesapeake,
1700–1776 (Cambridge, Mass., 1980), pp. 124, 143, 192. Chapter 7 is entitled ‘The
signiWcance of credit’.
11
The Tradesman’s Directory (London, 1756), pp. 54–5.
12
Jacob M. Price, ‘Credit in the slave trade and plantation economies’, in The Atlantic
Frontier, ch. 5.
13
Jacob M. Price, ‘Glasgowin the Chesapeake tobacco trade’, in ibid., ch. 1. See also Jacob
M. Price, France and the Chesapeake: a History of the French Tobacco Monopoly, 1674–1791,
and of its Relationship to the British and American Tobacco Trades, 2 vols. (Ann Arbor,
1973), p. 733; Richard Pares, ‘A London West-India merchant house, 1740–1769’, in
Richard Pares and A. J. P. Taylor, eds., Essays Presented to Sir Lewis Namier (London,
1956), pp. 45–50; Richard B. Sheridan, ‘The commercial and Wnancial organisation of
the British slave trade, 1750–1807’, EcHR, 11 (1958), 249–63; Rosemary E. Ommer,
ed., Merchant Credit and Labour Shortage in Historical Perspective (Fredericton, 1990);
Jacob M. Price, ed., Joshua Johnson’s Letterbook, 1771–1774: Letters from a Merchant in
London to his Partners in Maryland, London Record Society, 15 (1979); Jacob M. Price,
‘Transaction costs: a note on merchant credit and the origin of private trade’, in James D.
Tracy, ed., The Political Economy of Merchant Empires (Cambridge, 1991), pp. 276–97.
23 Risk, credit and kinship
circumstances mercantile credit could oVer great Xexibility. In certain
circumstances a ‘Xoat’ of short-term credit could also be rolled over, or
renewed, rather than liquidated at term to form – in eVect by overdraft
and doubtless at 5 per cent per annum– longer-termcredit requirements.
The need for such extensions of credit, however, could prove to be
hazardous when credit was tight and where commercial and Wnancial
conWdence had lapsed, propelling a rush for liquidity. Then merchants,
bankers and lenders in general would demand to get back into cash to
protect their own positions and the demands for liquidity being made on
them by their own creditors. Short-term loans would be called in, bills
presented for payment at their legal limits, further discounts refused or
accepted only at a high cost because of the rise in the discount rate (to the
legal limit) which such contractions in multiple but interlinked credit
markets would bring. Such contractions operated in common trading
areas – with particular sensitivity between Amsterdam and London –
apart from the linkages in internal markets. The integration of regional
and local credit centres with London progressed rapidly with the develop-
ment after the mid-eighteenth century of a network of country banks, all
having correspondent banks in the capital.
A business could require extra short-term credit urgently in such a
situation, just when its normal sources were adding to the pressure with
demands for repayment. Mercantile assets (whether stocks or commer-
cial credits awaiting maturity) would probably not be negotiable in such a
commercial or Wnancial crisis, or marketable only at an unacceptable
discount. The enforced realization of such assets in a short-termliquidity
crisis would invite disaster. On the other hand, holding a large reserve in
cash against such an eventuality imposed high costs: apart from the
necessary marginal cash ‘Xoat’ to cover ordinary dealings such Wnancial
resources would be earning a return if left in the business or invested in
the Funds.
Where, in such circumstances, could the owner or partner in a business
turn for accommodation? The context, universally, was of personal,
unlimited liability, which meant that no line could be drawn between the
debts of the business and the private and personal assets of the owners.
Family savings and assets would normally be the main recourse, together
with help from trusted close conWdants – such as the long-known family
attorney or those long associated in trade. Those oVering assistance
would need to know that the need for accommodation arose from crisis
market conditions facing the Wrm rather than from speculative overtrad-
ing or fraudulent dealings. A personal relationship developing personal
trust was required to produce such conWdence.
14
This has been well put
for the Dutch context:
24 Peter Mathias
Merchants were pre-occupied with risk and reputation because they were preoc-
cupied with continuity . . . It was a question of faith, of conscience, of trust and
reputation. Those were essential values in trade. A merchant was dependent on
others and it was often diYcult to know whether a person was trustworthy. One
had to go by reputation . . . people made a clear distinction between ‘us’ and
‘them’ between ‘friends’ and ‘strangers’. Everyone who did not belong to the
circle of . . . friends was a stranger of whom one could not be completely sure.
15
The most extreme formof risk in lending would be an unsecured ‘note
of hand’ – meaning that such a debt might well not be recoverable in law
– so that personal trust was absolute and the only assurance for repay-
ment was the honouring of the borrower’s word. Security would nor-
mally be taken to cover a loan and the commonest form of security –
many times more extensive than holdings in government stock – was
freehold land and property. When unencumbered by existing mortgages
this was the cheapest and the most reliable way of raising cash. The
mortgage market was well organized, easily tappable through attorneys,
and oVered interest rates only about a percentage point over the return
on government stock. Hence freehold property owned by the business-
man needing more liquidity, or by members of his family or his wife’s
family, could be pledged. Kinship, by creating a bond of personal conW-
dence, provided a crucial base for lending of last resort for a relative
over-extended in business. Wider kinship linkages, with extensive
cousinhoods, where close association and mutual trust prevailed, also
provided a genealogical nexus for such assistance.
16
This has been exten-
sively documented for Jewish, Quaker, Scottish and other minority
groups in business (not least by Jacob Price), but there is every reason to
suppose that this was a universal characteristic of the linkage between
kinship and enterprise.
17
The wider the operative kinship network –
where relationships remained active – the more extensive this safety net
could be: many cousins could ensure survival through a temporary busi-
ness depression or money panic.
14
N. Nohria and R. G. Eccles, eds., Networks and Organisations: Structure, Form and Action
(Boston, 1992); Grahame Thompson, Jennifer Frances, Rosalind Lecacic and Jeremy
Mitchell, eds., Markets, Hierarchies and Networks: the Coordination of Social Life (London,
1993).
15
L. Kooijmans, ‘Risk and reputation in the mentality of merchants in the early modern
period’, in Lesger and Noordegraaf, eds., Entrepreneurs and Entrepreneurship in Early
Modern Times, pp. 27, 32.
16
A. W. Sleeswijk, ‘Social ties andcommercial transactions of aneighteenthcentury French
merchant’, in ibid., pp. 203–12. This documents the kinship networks in the Dutch–
Bordeaux wine trade, reinforced by membership of the Walloon church in Bordeaux.
17
Price, France and the Chesapeake, pp. 596–8 (for cousinhoods in the Whitehaven tobacco
trade); Price, ‘Joshua Johnson in London, 1771–5’ and ‘Buchanan and Simson, 1759–
1763’, in his Tobacco in Atlantic Trade, ch. 8, pp. 155–6 (the Hanbury cousinhood), ch. 6,
pp. 15–16.
25 Risk, credit and kinship
Apart from unencumbered land and property the next most market-
able category of asset which could be realized was a holding in the Funds
(total holdings of British government stock were over £50 million in
1730, £80 million by 1750 and £600 million in 1810). Such holdings
were realizable: the elemental condition and supreme asset of a perma-
nent funded debt was that its holdings were always negotiable, com-
manding a market, even if at a discount from the purchase price. The
exceptional circumstances of Charles II’s ‘stop of the Exchequer’ in
1672, which immediately froze public credit, were never repeated; and
nor could they have been if the state was to be Wnancially viable in the
British context (where levels of taxation were determined in Parliament
and where the Bank of England rather than the government controlled
the money supply). Military, political and commercial crises could de-
press the price of government stock, particularly when large new loans
were being marketed in wartime, and this would make the sale of such
assets for cash more expensive; but holdings in the Funds were a major
recourse for a businessman whose kin had savings in this form.
The operation of the usury laws, which put a ceiling on rates of
interest (in the eighteenth century 6 per cent per annum before 1714
and 5 per cent thereafter), aVected such capital and credit transactions.
The ‘real’ rate of interest on government stock was not aVected because
the legal basis was deemed to be that on the stock ‘at par’ – the par price
being 100 and the formal return being usually 3
1
2
per cent or 3 per cent.
The actual return to the lender depended on the current price of gov-
ernment stock on the market: if this was 50 then the capital would be
yielding 7 per cent or 6 per cent. Normal interpersonal loans would be
at 5 per cent per annum – borrowed in pounds, repaid in guineas – at
the maximum allowed under the usury laws. For the lender taking se-
curity for a loan, due care was needed to ensure a safety margin between
the cash handed over and the realizable value of the asset (in case the
security had to be realized in less favourable market conditions should
the borrower default on the loan). Creditors asked to liquidate their
holdings in the Funds might require that repayment of their capital at
the end of the loan take the form of replacing the same ‘par value’ of
stock as had been realized to provide the loan originally. If the price of
the Funds had fallen in the interim the capital cost of replacement
would be higher so that the borrower would, in eVect, be paying at a
higher rate than the usury law maximum (i.e. 5 per cent per annum plus
any loss on the capital transaction). This, however, was within the legal
rules.
The mode of operation of the usury law itself increased the intensity of
disruption in credit markets and hence the risk facing borrowers on those
26 Peter Mathias
occasions when the market rate of interest was drivenabove 5 per cent per
annum. With commercial interest rates for discounting bills, as well as
personal loans, being legally pegged at that point some lenders moved out
of the discount market looking for better returns in government stock or
even in Amsterdam. Discounts therefore had to be rationed by quantity
rather than by price. This increased the rate of interest in the discount
market, which itself generalized the panic among those seeking accom-
modation and fearful of being denied. Such occasions were relatively rare
and short lived – at times, usually in war, of acute commercial and
Wnancial pressures – but they made the search for credit more diYcult just
when such accommodation was most needed.
Apart from the occasional need for short-term credit in an emergency,
longer-term borrowing might also be needed – for example, when a
business was being established or when a major investment had to be
undertaken, making capital demands beyond the limit which could be
met from annual proWts. Here, again, the same logic applied, with kin
being a usual recourse, often associated where the context allowed by
extending a partnership to bring in equity capital. Long-term personal
lending, at the standard Wxed interest rate, was also widespread outside
the kinship group, where a bond of personal trust could be sustained.
Despite such various exigencies it might well prove that, in times of
temporary commercial constraint, customers could not repay outstand-
ing commercial debts when the normal credit period had transpired. This
could happen on both sides – with the failure of debtors to honour their
credit limits preventing repayments in turn to commercial creditors when
bills of exchange on the Wrm matured. Where this happened, providing
that the business was essentially sound – and, in some circumstances,
even if it was not – little use would be served by protesting the bills or
taking legal action to foreclose on loans. If recoverable at all, an enforced
sale of the commercial assets of a trading business at such impropitious
times might realize only a few pence in the pound and with long delays.
Industrial assets might well be even less saleable. Only the lawyers would
proWt from such a decision to invoke the law. Better to hold on – letting
short-term credit continue into long-term at 5 per cent per annum, and
with security if possible. As well as obliging in this way, establishing such
a ‘moral’ credit balance might be put to good use in later circumstances.
The sense of reciprocal obligations extending over time could be Wnely
tuned. While a customer was under such a loan or credit tie, of course, he
would Wnd it diYcult to seek keener prices from alternative suppliers.
Credit, and access to credit, was thus the key to successful trading, and
had been so for centuries. The pervasiveness of credit in the medieval
economy has been amply documented: doubtless credit is coeval with
27 Risk, credit and kinship
commerce itself.
18
A Wnancial structure of growing complexity and soph-
istication articulated ever greater and more complex credit needs and
credit Xows in the seventeenth and eighteenth centuries. The universality
of credit, as an integral constituent of commercial dealings rather than an
applied lubricant, was such that to identify the growth of commercial and
industrial capitalism as the triumph of the ‘cash nexus’ in a ‘money
economy’ is a perverse interpretation. Monetization was a complex pro-
cess as it spread into many relationships, but this trend marched hand in
hand with the elaboration of credit, not as a substitute for credit. Indeed,
one rule for success might be ‘let him owe’, provided the lender was sure
of the standing of the debtor and that payment eventually would be
secure. Prudence and consideration ran together, and the moral obliga-
tion thus created could be useful in the future.
Creditworthiness
Access to credit, as a precondition for business operations, had as its
Janus-face creditworthiness. Again, the context of high risk and a limited
institutional structure conditioned the mode of operation. Very little
knowledge was available: no credit ratings, no published accounts and
no professional auditing, while bank dealings were a highly personal
aVair. Beyond the charmed circle of partners and their private ledgers (to
which the ordinary clerks in the counting house would not have access) all
was rumour and hearsay. Law provided an outer envelope within which
the business systemoperated, but personal trust and conWdence, personal
standing and personal introductions were of the essence. A prominent
Glasgowtobacco merchant wrote that at the local level in Virginia in 1766
‘it is in dependence on the labour, industry and honesty of many [small
planters], not of their real property that they get goods on credit from
diVerent storekeepers’, although larger loans were normally secured on
bonds at 5–6 per cent per annum interest.
19
A man’s personal reputation
in business was all. Published homilies abounded about trustworthiness
and personal character bringing their due reward, accompanied by down-
side scare stories that a rake’s progress of personal extravagance, the
pursuit of pleasure, vice and irresponsible behaviour would surely lead to
nemesis for the person and his business conjoined. Contemporary litera-
ture – Wction, drama and pedagogic – abounds with such moral tales. At
18
See J. Day, The Medieval Market Economy (Oxford, 1987); R. H. Britnell and B. M. S.
Campbell, A Commercialising Economy: England, 1086–1300 (Manchester, 1995);
J. Kermode, ‘Money and credit in the Wfteenth century’, Business History Review, 65
(1991), 475–501; P. Nightingale, ‘Monetary circulation and mercantile credit in later
medieval England’, EcHR, 43 (1990), 560–75.
19
Price, Capital and Credit in British Overseas Trade, p. 125, and The Atlantic Frontier, ch. 5.
28 Peter Mathias
the heart of this truth lay personal trust and the need to maintain the
respect of one’s fellows. In formal terms this was endowed with Christian
obligations, following in medieval theological and moral traditions (with
oaths normally sworn on the Bible), but broadened in secular dealings in
the seventeenth century to cover general contractual obligations in civil
society (taking up a later philosophical position).
20
Such conceptual and
moral premises, when translated into the context of business dealings,
rested upon more elemental empirical foundations. Personal trust was in
its nature reciprocal and forward looking, usually with the implications
that a transaction was not to be seen as unique, isolated, one oV, but
potentially as part of a sequence. To gain personal trust and establish
conWdence, dealings needed to be honest, conWdentiality respected, com-
mitments fulWlled, agreements and promises kept, pledges redeemed.
Reciprocal honesty was a precondition for on-going business relations. As
an observer put the point in 1717:
To support and maintain a man’s private credit, ’tis absolutely necessary that the
world have a Wxed opinion of the honesty and integrity, as well as ability of a
person . . . indeed a readiness and willingness to perform one’s engagements is
such a fundamental of credit, that all the aZuence of money and the most
immense riches are of no consequence if there be ground for the least suspicion of
disingenuity.
21
Parallels drawn between a lady’s honour and the maintenance of
creditworthiness in a business were commonplace, with the assumption
that once personal credibility had been forfeited it could never be re-
gained. Such respectability could not be asserted, bought or acquired in
the short run. Reputation, standing, status in the trade depended on the
perceptions of others. It was other people, upon whom he depended in
trade, rather than the businessman himself, who created his respectabil-
ity by according him status, and such credibility had to be built up over
time and won by performance as well as words. There was no distinction
to be made between the Wrm and the person in this respect, as there was
none in law. Continuity was itself important as a demonstration of
survivability – with continuity over the cycle of business booms and
depressions. The sobriquet of ‘the Old Bank’, for example, sent its own
message.
With continuity went roots: respectability could be conWrmed by ac-
cepting positions of voluntary oYce – itself a mark of trust within one’s
community. In minority-group communities such appointments would
be virtually elective by the seniors of the community. In trusts and
20
A. B. Seligman, ‘The changing pre-contractual frame of modern society’, in The Respon-
sive Community (Winter 1995–6, Washington, D.C.), pp. 28–40.
21
A. A. Sykes, A Letter to a Friend . . . (London, 1717).
29 Risk, credit and kinship
charities appointments were oVered by existing trustees – all a mark of
social and personal standing. This dynamic operated at virtually all
levels of ‘respectable’ society – from village level upwards. The word
‘friend’, widely in use in the eighteenth century when referring to a
trusted personal acquaintance or collaborator in business (not just with-
in the Quaker community as the formal mode of address to fellow
Quakers) is resonant with the implications of personal trust and the
obligations which friendship entailed. In business the assumption would
be that mutual dealings had established a bond of reciprocity, a pre-
sumption of good will and willingness to help. Personal and business
considerations would not be separated. A request to oblige would be
made in the personal conWdence that previous obligations fulWlled on
the other side had established a moral credit balance in the ledger of
personal dealings which could be drawn on, an expression of the matrix
of personal trust and obligation upon which successful business dealings
always rested.
Interest has revived recently in non-market modes of transaction and
the ways in which considerations other than the naked economic calcu-
lus of price and quality become integrated with such dealings. The
spectrum between gift exchange, barter and purely economic consider-
ations is a wide one. Avner OVer has recently called this the ‘economy
of regard’.
22
The reality is not so much that these were alternative moti-
vations and mechanisms for exchange to impersonal market transac-
tions, but how market mechanisms were integrated with such other
considerations and (in the circumstances of the context under dis-
cussion here) necessarily complementary, if markets were to operate
eVectively. As well as requiring a framework of law and public regula-
tion, together with a set of market rules for governing the niceties of
market dealings, a further dimension of what can most easily be de-
scribed as ‘moral’ obligation upon participants was also present. Of
course, taking a past, present and future time frame into consideration,
‘moral’ conduct brought material advantage as personal trust built up
such conWdence, and conWdence encouraged business. As emphasized
above, the higher the level of risk and uncertainty the greater the pre-
mium on such personal qualities and their recognition in the market.
The classical economic theory of the market took such considerations
largely for granted, at least to the point of not seeking to integrate them
conceptually into a formal model. ‘The neoclassical paradigm ‘‘neglects
social inXuence on economic decision-making’’, whereas historical re-
search seems to indicate their overriding importance in early-modern
22
Avner OVer, ‘Between the gift and the market: the economy of regard’, EcHR (1997),
450–76.
30 Peter Mathias
merchant rationality.’
23
The same was true of the political requirements
for an eVective market – another precondition for the market economy
which was seldom articulated in formal terms. The platitudes of con-
temporary commentators about personal probity nevertheless rested
upon a truth of profound signiWcance for success in business, when
rooted in its institutional context.
Accepting the obligations of reciprocity, as an underlying principle,
provided the common denominator for the rules of conduct in so many
instances, even if the actuality of reciprocity and its modes could be
subtle, delicate and oblique as well as direct. Reciprocity remained a
fundamental feature of interpersonal relationships. Obligations of
friendship in the business context – where business dealings were the
main focus of transactions – impinged indirectly on a dynamic which
could become complex.
24
If businessman A had bonds of trust and
mutual conWdence with businessman B, then A could recommend a
third party C, in whom he placed his own personal conWdence, to B –
with B having an obligation through his friendship with A to oblige C,
provided that this was within the limits of prudence and reasonableness
(in his view). A, for his part, would not wish to put his friendship with B
under strain by seeking an ‘unreasonable’ favour on behalf of C. C then
had the obligation of dealing honourably with B or risking his friendship
with A, who had intermediated on his behalf. Networks of mutual trust
and obligation were built up on such personal recommendations to
mutual advantage. Of course, the chain of personal trust might be bro-
ken if obligations were not fulWlled, and this could then ramify through
the network as the reverse dynamic took hold. The ramiWcations of such
relationships spread widely beyond the purely commercial nexus.
Credit, clearly, was fundamental in such a matrix – a precondition for
its operation – and a means of attaining mutually advantageous results.
In Jacob Price’s words,
Most contemporary correspondence reveals that merchants fully understood the
uses of credit in creating a business clientele . . . credit could also be a highly
rational, mutually advantageous relationship for both clear-sighted lenders and
intelligent borrowers.
25
But social, and even political, obligations often lay behind the granting of
credit, by family and kin, by patrons to clients, by merchants to members
of the social and power elite to whomthey might be beholden, actually or
potentially in past, present or future. These non-economic imperatives,
23
Sleeswijk, ‘Social ties and commercial transactions’, p. 211. A subsection of the text is
entitled ‘The social embeddedness of merchant behaviour’ (pp. 203–4).
24
See in Scott, Social Network Analysis.
25
Price, Capital and Credit in British Overseas Trade, p. 16.
31 Risk, credit and kinship
in a society held together by interpersonal dealings, might well be at the
expense of economic rationality, narrowly considered. Professor Law-
rence Fontaine has written with great perception of those credit relations
in French provincial society in the eighteenth century. She sees credit ‘not
so much part of a money market but concerned with social obligations
and power over men’ – apart from credit transactions between mer-
chants.
26
EVective commercial transactions, even in the most market-
orientated contexts, still operated within the matrix of personal trust and
reputation – the congenial aspect of this being social reciprocation, but
the dark side fear of adverse material consequences. A correspondent
pleading with John Norton in 1772 not to refuse a bill of exchange wrote,
‘I should look upon it as so fatal a stab to the reputation of a trader that I
should never be able to recover it.’
27
John Norton himself wrote ‘when
once my credit is lost all is lost with me’.
28
More positively came the
recognition of ‘something that may not improperly be called a commer-
cial friendship . . . which takes its rise from a long correspondence and is
established by a punctual and steady integrity on both sides’.
29
Thus the
command of credit in times of commercial pressure may have been of
more strategic importance than technical and administrative skills and
this, in turn, depended on personal reputation, inspiring mutual trust,
which had grown up over a long period, and was demonstrably proof
against adversity.
30
‘The commercial ideal of honour – and hence of
trust’, writes Professor Fontaine, ‘was initially constructed to guard
against the twin fears of personal insolvency and collective bankruptcy: it
functioned simultaneously as a safeguard against risk and as a framework
for a mutually supportive society.’
31
Minority groups – religious minority groups or communities of diVer-
ent nationals in an alien setting – oVer the clearest examples of the
importance of kin, closely associated other families and the personally
known networks of individuals for the operation of business. The main
concern here is not the long-argued debate about the role of diVerent
theologies and their associated value systems as a motivating force for
business success, whether Jewish, Calvinist or other variants of Protes-
tantism in the European context such as the Huguenot, Quaker or
26
Lawrence Fontaine, ‘Antonio and Shylock: an essay on credit and trust in eighteenth-
century France’ (given as the Tawney Memorial Lecture at the Economic History
Society Conference in Lancaster, 1996).
27
W. Reynolds to J. Norton, 28 November 1772, in Frances Norton Mason, ed., John
Norton & Sons: Merchants of London and Virginia (Newton Abbot, 1968), p. xvi.
28
John Norton to J. H. Norton, 16 February 1773, ibid., p. xvii.
29
R. Corbin (planter) to Osgood Hanbury (merchant), 13 June 1758, ibid., pp. xvi–xvii.
30
Robert A. East, ‘The business entrepreneur in a changing colonial economy, 1763–
1795’, JEcH (Supplement), 6 (1946), 22–3.
31
Fontaine, ‘Antonio and Shylock’.
32 Peter Mathias
Unitarian. Such attributes do not seem to have had an exclusive speciWc-
ity to any one theology – minority groups identiWed with diVerent relig-
ions acquired such characteristics, while secular motivational norms of
entrepreneurship could become integral with religious values almost
independently of the underlying theology. Many aspects of the behaviour
of a minority group in business are not exceptional or sui generis, although
often more visible, more clearly identiWed and better documented than
with non-minority groups in the same area of business. The degree of
articulation of minority groups varied greatly with context, ranging from
formal ‘ghetto’ status (with personal freedom, terms of settlement, range
of permitted business operations, legal privileges current within a deWned
area and the like being subject to legal authorization by state or monarch)
to a self-imposed separateness conditioned by race, religion, national and
cultural identity, reinforced by reciprocal alienation on the part of other
social groups.
32
But many of what are often taken as the key characteris-
tics of minority group business behaviour and which gave cumulative
resilience and self-reinforcing economic strength were not speciWc to a
minority group role but a more general response to context. The
commonest attributes – often cast in terms of accusations – are those of
being clannish, secretive, doing business where practicable, lending and
borrowing within the kinship group or a magic circle of coreligionists or
fellow nationals, consolidating business interests with kinship links. This
traditional charge of maintaining a ‘commonwealth within themselves’
was a universal attribute of minority groups in business, most clearly
visible to competitors or would-be suppliers and customers outside the
group in question, who were doubtless parties to alternative networks
themselves. Apart from providing a basis for normative values, legitimiz-
ing the lives and work of fellowsectarians, religion provided the matrix for
the coherence of the community in the sense of social organization, and
the basis for networking. The social matrix of religion therefore became of
great signiWcance in the establishment of communities of personal trust,
through membership of churches (membership of a particular church
congregation could provide a focus for such consolidation), chapels,
Quaker meetings and synagogues.
To the extent that hostility and alienation were projected against
32
See, for example, Andrew Pettegree, Foreign Protestant Communities in 16th Century
London (Oxford, 1986); P. W. Klein, ‘Little London: British merchants in Rotterdam
during the 17th and 18th centuries’, in D. C. Colemanand Peter Mathias, eds., Enterprise
and History: Essays in Honour of Charles Wilson (Cambridge, 1984); D. J. Ormrod, ‘The
Atlantic economy and the protestant capitalist international, 1651–1775’, Historical
Research, 66 (1993), 197–208; H. Pohl, ‘Die Portugiesen in Antwerpen, 1567–1698’,
Vierteljahrschrift fur Social- und Wirtschaftsgeschichte, 63 (1977); C. H. Yungblub, Stran-
gers Settled amongst Us (London, 1996).
33 Risk, credit and kinship
minority groups, all the forces in the context of business which have been
identiWed as increasing risk were maximized, and encouragedthe consoli-
dation and internal coherence of the minority group in question. An
‘alien’ merchant coming to a foreign country would Wnd the church at
which his fellow countrymen and fellow sectarians worshipped his own
natural focus. Apart from worship he could participate in social inter-
course in his own language. Information networking as well as business
collaboration were advantageous attributes of active participation. Vir-
tually all the Dutch merchants in London in the early modern period
worshipped at their own Dutch church in Austin Friars. The Scottish
Presbyterian community at Veere, near Middelberg, was the mirror im-
age on a smaller scale. Marriage partners were also potentially to be found
within the same communities linked by a common faith, as social rela-
tionships endorsed the religious. Where a minority group had an interna-
tional nexus as with the Quakers in transatlantic commerce or the
Huguenots or – preeminently – the Jewish Sephardic communities more
widely, a conWdential information network had high value for all those
with access. Non-local connections along the trade routes gave great
strength.
Financial independence and strength were a necessary basis for the
security of minority groups in a hostile environment. For the poorest
members of the group there would be no public welfare. Private charity
had strings attached which might threaten religious independence. At a
higher level minorities would be excluded from the spoils of oYce. Fixed
assets in land and property (where allowed) could also be more at risk,
because less easily transferred or realized than Wnancial assets, which
could provide a better basis for current income. Some attributes of the
context of high risk, that is to say, applied more forcibly to minority
groups identiWed and segregated by religion, race or nationality. Equally,
money lending, banking and Wnance were the most conWdential of deal-
ings with the highest premiums on personal trust and individual wealth.
Personal family wealth with accumulation through the continuity of
generations (if the hazards of genealogical discontinuity could be avoided
– and a wide cousinhood could help with that) meant that well-
established kinship groups enjoyed the beneWts of cumulative advantage.
These may well have been particularly important in banking, exempliWed
in Jewish and Quaker circles, although, as Jacob Price has shown, the
family continuity and strength in banking and brewing of London Quaker
families did not lead to their continuing as practising members of the sect
– rather the reverse.
33
The dynamics of assimilation as against the surviv-
33
Jacob M. Price, ‘The great Quaker business families of 18th century London’, in his
Overseas Trade and Traders, ch. 3.
34 Peter Mathias
ing identities of minority groups are complex. The greater the alienation
and hostility of the host environment, the greater the degree of separate-
ness in the identity of the minority group by race, nationality and religion
– with interacting inXuences – then the greater tended to be its continuity.
Where conditions of high risk survive, whether by location and context or
by the nature of the business, we see surviving the modes of business
which were almost universal in the period under discussion in these
pages, which Jacob Price has made his own.
35 Risk, credit and kinship

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