Risk and Uncertainty in Spanish Atlantic Trade: A Reinterpretation of the Fleet System

Early modern, long-distance trade was fraught with risk and uncertainty, driving merchants to seek means (i.e. 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. This paper 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. Specifically, the presentation will focus on the carrera de indias in the late eighteenth century. The fleet system is usually portrayed as an institution manipulated to provide extraordinary profits to powerful merchants. I argue that the main benefit to merchants came from characteristics that reduced the riskiness and uncertainty of long distance trade, making tolerable what were otherwise highly risky ventures. Indeed, as I show, the end of the fleet system produced major commercial turmoil and widespread mercantile bankruptcy.