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My talk would be about the role of institutions and the the role of institutions in in some aspects of global economic history,

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the one the area that I know most or I've been doing research.

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And that's how I title this talk.

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The limits of reciprocal comparisons because in general, it is even more conventional economic history.

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There is very little of that, despite the contribution of goddess or permanence of other people.

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So she can run this. I'm going to go quickly through this narrative about the financial development.

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And a supply for growth as a narrative, would you survive a scarcity, basically?

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And that explains how institutions favour the pooling of capital, allow the diminishment that the major risk for reducing uncertainty.

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They created all the sea instruments like of exchange banks, insurance companies incorporating shots, toy stocks and so on.

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And I would add money swap account means specie bonds and fiduciary money.

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This development is associated with the international clearing of means of payment that this sort of instruments and organisations allowed.

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In other words, the arbitrage and the equity finance seems to be like the link with a subsequent development of capitalism.

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So of there first, the initial outlay of capital. Particularly the scale of the problems of scale of capital require for Europeans to trade in here,

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where is it safe specie and shorter the time for payoff?

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And this render huge efficiency gains associated with institutions more or less close to the state,

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but not uniquely, which provided liquidity financial for their financial development and and so on.

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This is very, very much a European narrative, but it is a narrative of a European businesses.

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Yeah. These were negotiated in many cities. Financial markets were integrated or so.

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Whereas the template for that parameter is Britain, that was a more centralised.

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And if you look at the literature in particular from France, this is more of an exception than Erode.

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This difference is within Europe, but also across the world.

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They are explained by state institutions, legal systems, natural features and foreign check price,

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for instance, the capacity or the inclination to repay. And being Argentinian, I can take care of that continent.

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Nothing is said or nothing. Much is said about working capital in this development.

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Bills were not grown in the colonies. Neither in the British colonies and there were by the were paid back home only,

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and they were not accepted in this trade outside the eastern companies or in the American trade.

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When I say American, I say Spanish, American or Latino.

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In the overseas grave, beyond the regulators of the companies trade in the over the Indian Ocean that is in the Atlantic and the Pacific,

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the Europeans trade in both sides with silver or for silver.

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So we're going to argue or going to base my talk on the the nature and the structure of the Spanish overseas trade that is like in many other regards,

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the usual counterfactual counterfactual for the English development of any other region.

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None of this instruments and institutions were present there. Yeah.

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Even Spanish historians call this archaic institutions traditional instruments.

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Yeah. This capitalism,

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this breed of capitalism is identified with state run and funded a trade or economy that spoil and enjoy the spoils of that colonial relation.

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In the rest of Europe, this is presented as this collusion between elites and kings,

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or sovereigns for monopoly monopolistic profits, Ice Age sons a different stance vis a vis the Netherlands or England.

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There were fleets over the Atlantic and a single ship over the Pacific that the Spanish freight it.

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For Spanish economic unions or a sense of the period,

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this is a restricted trade because this monopolist have every intent and incentive to repress demand so securely, artificially high prices.

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So these two characteristics don't match and then we have a reluctant monopolist or a very inefficient one, which is the conventional story.

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And this is interesting. I think that it matters because it's the usual counterfactual for the European or the English model.

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Sun fact, the Spanish strain was completely private.

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It was untaxed, unrecorded and unaccounted because of the low state capacity of the Spanish state and empire.

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What about it was done at the expense of the state or using state infrastructure?

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The case of the money, let alone the bureau it to the privilege to say, was granted to local locals in seedy imported cities.

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And water was that privilege was managed by local guilds.

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There wasn't any national wave or national debate why the institutions which you know,

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cooperated or organised not for profit, but for sure, distinction there were, in fact, a court.

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And they traded with the sovereign, with the king shooting victim for tax farming.

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Because this privilege was granted to the naturals or the locals or the vecinos.

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And it was a local discretion.

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Naturalisation of foreigners was feasible and very frequent companies existed much later on as a very late development and didn't have much success.

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Exceptions to this privileges were granted by the queen, yeah, for a fee or for money.

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Not to anybody else like the French that traded in the Pacific or the Dutch in the Caribbean.

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We are seeing those from the South Sea company to any Portuguese for general use that wanted to take slaves.

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That was the way that furniture went to finance the slave trade.

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And I liked this the story of the history of the incorporated companies and the king or

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the sovereign in this country where you have a competition between girls and kings.

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There was no charges. They were not negotiated whatsoever.

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One of over for the difference, the trade overseas that the Spanish enjoy either deed or intermediated was that fineness,

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you know, it was was financed by debt.

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And that was by means of advancing capital or goods or money for that goods to be exported or sent further to America, and the sources were European,

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not in Spanish necessarily and mostly in the 18th century, not in Spanish mercantile merchant houses and mercantile capital.

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In the case of the Pacific,

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the worse this was found private money intermediated by the church or religious institutions lent in Asia for goods back to America.

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This train was not free trade, but it wasn't regulated either.

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There were exchanges in fares in which this like in the way of the mediaeval fares,

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the different corporations of the refunding oligopolies would trade on exchange.

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And more interestingly, though, this transactions were spot sales on spot.

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Yeah, the exchanges the good for were asking for for good.

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What then on spot that means makes the importer of goods price takers.

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Yeah. And that's what really the first qualification of the role of the mind of Spanish America.

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These transactions and events were clear in full.

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Yeah. And at these fairs. And there were one enough one of venture,

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every transaction was a new contract and didn't stop the recurrence of this trade because there were very high mark-ups.

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But there was no scaling up either in the fleet or the Atlantic or the Pacific in the Guardian basement instrument.

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This commerce use is a very known instrument that has different names with it in Portugal,

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in Italy or France, even in English, and there are all iterations of the same thing.

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Is he say, a loan for the duration of the voyage within with a precise length of time after arrival for the clearance of the debt?

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In this case, the what additional provisions for interest in the case of a particularly for the return or delays or the prospect of any war.

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And the difference with the village that has the interest rate implicit. The decision until the termination of the pay off.

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Which historians and economic historians justified because of the risk and has taken most

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historians or economic historians to take this instrument as a mix of insurance and credit?

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It is more complicated than that. For others, it's a way to avoid usury laws.

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But you know that that is something that probably these guys the real importance of of this.

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Interestingly, the lender is for freight in full, for the fall, for the total investment,

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if the losses are in full and there is some sort of pro-rata allocation apportioning if losses are financial.

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It's something that in in in Latin would be I won't be able to pronounce properly.

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Brisbane would talk to you in Solidum, in which there is no way there are no agents, no commission commissioners.

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Is a sort of equity loan. Yeah, but both parties are invested in the in the venture.

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These were all private transactions.

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We are about, you know, in the 25 notary public notaries in case about 60000 accountants or listed in the for the 18th century because I mean,

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just sort of an exploration on the surface of this sample of about 30000 are available.

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But as I said, so financial instruments were no negotiable and thing was this passive and active investor.

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The lenders or the borrowers, if you wish.

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Additionally, the ship masters located on the freighters or categories outright merchants before in most 40 houses participated of this financing.

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Sometimes they trade it and more later on in the 18th century, they finance the trade directly.

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And unlike the case of the joint stock companies, you have few investors.

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A few providers of capital are many, many borrowers or takers or active investors that take the the goods to America or the go to America,

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either from the Atlantic over the Pacific. There was no specialisation in these financial market, as both are lenders and adaptors.

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And there wasn't any concentration of note because it's visible that the distribution

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of this instrument of these loans shows a few very large ventures and very,

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very many small ventures, including women and so on,

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that participated in this movie frenzy of a fisherman with a business of exchange that the associated credit and exchange.

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That includes what is called the exchange in the pricing and distribution of this trade.

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The contract is priced in money of account in Spain, for instance.

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But you specifically direct is to be paid off in.

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X coin or money or metal? Yeah, a destination.

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And there were huge differences between the money of account and the physical money.

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There were differences in Europe. And that is known in the development of the of the village market and so on.

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But overseas in Atlantic to Europe, there was about a 30 percent difference in the game, conceding the beauty,

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the content of fine silver in one and another place and what was the standard in Spain vis-a-vis what was the actual coin in Spanish America?

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And you know, if you think that the Pacific is just, you know,

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what they want is an exchange rate of this coin as a demand for means of payment happens in China.

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So this contract includes the exchange trade together with the interest rate.

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So besides the of all the time value of money, this contract includes any alteration of the monetary standards in place.

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Yeah, the basement or any other change and fluctuation in the gold silver ratios that affects the terms of trade.

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Yeah. We cannot know the gain and losses from this using this instrument because the price

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is implicit and the contract is the return or the pay paying back X amount of money.

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But we should account for the secular demand for silver that comes from Asia throughout this period.

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Why there was no scaling in this contract with very high mark-ups and so on.

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It's something that most economic historians overlook and very few.

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I mean, one of the early global historians of Spanish family guy Jamie Vasquez has shown this.

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This trade suffers from blood, not from scarcity.

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And the response to gluts for this type of organisation was rationing and that so they split the cargo in smaller ships.

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They split the investment amongst many freighters. They have different rates for each flat.

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They space out in the fleet. They restrict the fleet to one gallon.

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That's the response to not SkyCity, but to glut.

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Let markets in Spanish America is a recurring feature in both coasts, the Pacific and the Atlantic.

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Nevertheless, this comment has apparently very low rate of business failure.

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And the way that they dealt with it was with voluntary liquidation.

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The serve up to two feet of sort of like two big waves of failure that apparently and I would guess they are related with exogenous factor.

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One is the massive scam in Potosi alteration of the currency in the middle of the 17th century that was felt elsewhere.

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On the other one is the impact of the French wars in the commerce over the Atlantic.

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The insurance policy, and I say you should know an institution.

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Everyone else for these type of trade only happens in in after the 1780s.

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And the reason for that low rate of failure is because there is a propensity of these position to avoid taking recourse to legal and procedures.

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This consular course works the right and the arbitrator or in the case of Manilla,

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the War Chest I court of vested parties to deal with with this problem and that solve the problem of commitment.

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In fact, from this mutual acceptance on systemic monitoring,

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which is very much what the banking system was in England before the Bank of England became the lender of last resort.

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That was a way to sort the commitment problem. So we have a very different situation when finances are available.

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The initial outlay for this commerce, Israeli and the working capital not only is plenty but rising throughout.

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I describe how was this stunning many land colonels, but we have a case already that by the late, you know, support of the 18th century Spanish.

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How many guys are investing in Europe in this train?

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Or, you know, basically they are finance the state over the Pacific.

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And it's not that the Spanish or the Spanish, how many not know or not used fiduciary instruments?

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They did, and they did it in their domestic trade. You know how big this was?

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Again, because these are, there's no centralised record of any sort.

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These are fully private business. It's been, you know, that this information comes from, you know, private archives and and and some litigation.

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But the trains somehow replicate what is the trend of the production and the coinage on the export of silver out of Spanish America?

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You would have to believe me or read other articles. Well, I want to look for credibility.

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But well, I want to mention now is that this instrument was way more ubiquitous than we think.

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He was in Europe. I mean, in the European trade with America was used by the Dutch, by the French, by the Genovese and the Irish.

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It was used by the suppliers of goods to the fleet and in Asia it was equally prevalent.

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Yeah, it was the means. I mean, the instrument of finance for the Guardian was the way to finance any business outside the company.

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It was used in pretty much Indonesia. In 17th century Nagasaki in Portuguese.

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Macao was the source of revenue for the local council and the Danish and the Swiss cheese companies use this instrument in the Asian trade.

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The British themselves did it.

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Yeah, and we have this interesting case that the British see similar company gives respondents to loans, but doesn't take it.

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So that is a question for the big practise. The idea of best practise, right,

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if this financial development that we associated with the European model was the best practise and how universally this was.

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Just to prove the point, you have an excerpt from the correspondence with the council at St George's,

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where precisely they explain how they use this instrument as a means to trade for metals for silver mainly or any other foreign money.

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And as the great historian of the European trading can tell them, he has bonded.

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It is the single way. To do with our pesos is a way to get pesos, particularly in Asia, with which to carry this trade on.

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So to conclude, we know well this European model,

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which is somehow what informs the literature and financial history and financial economics

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that bills and all these sort of innovations and institutions that characterise Europe.

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That worked for Europe because Silver was cast, there was short.

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And there were institutions that could indeed determine the exchange rate that they fixed exchange rate.

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That is the difference between the less conventional loans of the East India Company with anybody else.

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The company fixed exchange rate at which the money will be returned and they have the capacity to do that.

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And so these Bank of England and the Mint in England, elsewhere, all these sort of archaic traditional instruments can not be qualified like that.

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There were still adequate.

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And in fact, they were not exclusive, but supplementary bills and responding here, particularly in the trades that demanded known fiduciary money.

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I am not talking here about commodity money. I am talking about silver money.

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So in thinking, you know, the role of institutions and the possibility of reciprocal comparison,

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I think that we have to go back to the different conditions, namely endowment and the appropriateness of the institutions for the specifics of trade

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in each case to deliver scarcity or with the lack of as it was in English or Spanish for

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America to think back on the necessary or sufficient conditions that we use on the explanations

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and probably look back at the counterfactual of the European financial development.

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Maybe I have a suggestion or an idea on trying to develop,

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but only knowledge somehow to go back to the universality of the experience that if I were of the institutions that we are dealing with us today.

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It's more than a minute. Finding my voice, thank you very much.

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My pleasure.