FINANCE FOR THE WEST INDIES, 1780–1815

Abstract

A DAM SMITH described 1 in general terms the way in which West Indian production and trade was financed, but said little about the medium of this expansion-West Indian commercial paper, or of the London West Indian houses which, at the centre of the system, acted as its general controlin short, its bankers. The system was certainly well-developed by Smith's day; the credit crisis of I 772 revealed the dependence of the West Indian economy upon London acceptances.2 The increasing and unprecedented extension of credit to the West Indies in the later eighteenth century meant that West Indian commercial paper became very important in the London money market. Indeed it seems probable that it had been, since the early eighteenth century, one of the first major extensions of City financing beyond the old circle of official debt, the great chartered companies, and a short list of public utilities. The East India trade had access to the City at long term; the West Indian, in dramatic contrast, was a trade involving the provision of capital equipment-slaves-out of current account, financed by bills, which constituted a formidable part of the total circulation of business paper in the country.