Risky Ventures: Reconsidering Mexico's Colonial Trade System*

Abstract

Historians of colonial Mexico have long condemned Spain's highly regimented system of colonial trade and the merchants who v^ere its primary beneficiaries. Observing what they have perceived to be anti-competitive behavior, historians have concluded that an elite group of merchants, most notably the members of the Mexican and Spanish Consulados, were engaged in the erection of commercial monopolies designed to generate extraordinary profits. This view was even espoused in the colonial period itself by Jose de Galvez and other critics of the wealthy and politically connected merchants who sought to reform the Carrera de Indias. Focusing especially on late colonial Mexico, this article questions historians' typical assumptions about the colonial trade system and the customary image of the rapacious colonial merchant. The thesis put forth here is that many of the business practices and trade institutions of the early modern Spanish empire that have been identified as the predatory creations of monopoly merchants need to be understood instead as adaptations to risk, attempts to reduce the tremendous uncertainty that characterized long-distance trade between Spain and Mexico. Risk and uncertainty were dominant characteristics of transatlantic trade. Merchants exposed their valued cargo to loss from hurricanes and other bad weather. Pirates and privateers preyed on vulnerable ships. Perhaps the greatest risk stemmed from the poor communication and great delays that characterized transatlantic trade: merchants always feared that the sudden appearance of competing supplies or even changing tastes might render their shipments worthless. According to one early modern economic historian, it is impossible to understand pre-modern economies without elevating risk and uncertainty to the center of analysis. He argues that risk and uncertainty and their potentially great consequences often produced 'odd economic behaviour.' 'Without uncertainty and its consequences, much of the economic and social history of the pre-modern world is, if not completely inexplicable, at least deeply mysterious' (Musgrave 1996, 38).