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Mercantile Credit and Trading Rings in the Eighteenth Century

Published online by Cambridge University Press:  20 January 2017

Pierre Gervais*
Université Paris VIII / UMR 8533 IDHE


Merchant credit was the main source of profit for economic agents in the eighteenth-century. Managing cash, commercial instruments, and account books, Atlantic traders such as Gradis of Bordeaux—who dealt in colonial products (including indigo, sugar, and coffee) and exported staples (flour and wine) to Quebec—or Hollingsworth of Philadelphia (an important dealer in flour and colonial produce) achieved market domination through specialized credit networks integrating market exchange and both moral and social interactions. Since a Weberian or a Homo Oeconomicus view of these complex credit activities leads to anachronisms, this article eschews standard economic approaches in favor of more historicized views of early modern economic activity, credit networks, and profit-making techniques.

History of Credit in the Modern Era
Copyright © Les Éditions de l’EHESS 2012

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1. Fonds Gradis, Archives Nationales (hereafter referred to as “AN”), Paris. I would like to thank the Gradis family, who granted me access to their archives. On the Gradis family, see: Menkis, Richard, “ The Gradis Family of Eighteenth-Century Bordeaux: A Social and Economic Study” (PhD diss., Brandeis University, 1988)Google Scholar; Martin, Marguerite, “ Correspondance et réseaux marchands : la maison Gradis au dix-huitième siècle” (Masters thesis, Université Paris I, 2008)Google Scholar; Silvia Marzagalli, “ Opportunités et contraintes du commerce colonial dans l’Atlantique français au XVIIIe siècle : le cas de la maison Gradis de Bordeaux,” Outre-mers 362-363 (2009): 87-111; and Jean de Maupassant, “ Un grand armateur de Bordeaux. Abraham Gradis (1699 ?-1780),” Revue historique de Bordeaux et du département de la Gironde 6 (1913): 175-96, 276-97, 344-67, and 423-48 (on Gradis’s career until 1760).

2. “ Journal, 1 June 1755-26 October 1759” [Journal 1755-1759], 22 September 1755, 181 AQ 7 [Fonds Gradis], Fonds Gradis, AN, Paris. Gradis accounts for 1755 are available online, courtesy of the ANR Marprof project: . I would like to express my sincere appreciation to Cécile Robin and Dominique Margairaz, who entered and verified the data with me.

3. A company name ending in “& Cie” denoted a contractual partnership. See Lévy-Bruhl, Henri, Histoire juridique des sociétés de commerce en France aux XVIIe et XVIIIe siècles (Paris: Domat-Montchrestien, 1938)Google Scholar, 78. No further information is available on this Parisian discounting operation.

4. See the following site for values in pounds sterling: /. Exchange rates are based on McCusker, John J., Money&Exchange in Europe&America, 1600-1775: A Handbook (Chapel Hill: The University of North Carolina Press, 1978)CrossRefGoogle Scholar. According to Micheline Baulant, the daily wages of a construction worker at the time was approximately 1 £.t.: see Baulant, Micheline, “ Le salaire des ouvriers du bâtiment à Paris, de 1400 à 1726,” Annales ESC 26-2 (1971): 46383.Google Scholar

5. On the Salles&Cie account balance, see “ Journal, 20 août 1751-14 mai 1755” [Journal 1751-1755], fol. 224v, 181 AQ 6, Fonds Gradis, AN, Paris.

6. Journal 1755-1759, balance “ Jacob Mendes,” 18 August 1755, and “ Mr. de la Caze,” 22 October 1755, Fonds Gradis, AN, Paris.

7. Koyama, Mark, “ Evading the ‘Taint of Usury’: The Usury Prohibition as a Barrier to Entry,” Explorations in Economic History 47-4 (2010): 42042 CrossRefGoogle Scholar. Usury has been more frequently studied with regard to principles than to practice. See, for example, Norman Leslie Jones, God and the Moneylenders: Usury and Law in Early Modern England (Oxford: Blackwell, 1989).

8. McKendrick, Neil, Brewer, John, and Plumb, John Harold, The Birth of a Consumer Society: The Commercialization of Eighteenth-Century England (London: Europa Publications, 1982)Google Scholar; Reddy, William M., The Rise of Market Culture: The Textile Trade and French Society, 1750-1900 (Cambridge: Cambridge University Press, 1984)CrossRefGoogle Scholar.

9. Pierre Jeannin, Marchands du Nord. Espaces et trafics à l’époque moderne, eds. Philippe Braunstein and Jochen Hoock (Paris: Presses de l’ENS, 1996); Jeannin, Marchands d’Europe. Pratiques et savoirs à l’époque moderne, eds. Bottin, Jacques and Pelus-Kaplan, Marie-Louise (Paris: Presses de l’ENS, 2002)Google Scholar; Paul Butel, “ La croissance commerciale bordelaise dans la seconde moitié du XVIIIe siècle” (PhD diss., Université Paris 1, 1973); Charles Carrière, Négociants marseillais au XVIIIe siècle. Contribution à l’étude des économies maritimes, 2 vols. (Marseille: Institut historique de Provence, 1973); André Lespagnol, Messieurs de Saint-Malo. Une élite négociante au temps de Louis XIV (Saint-Malo: Éd. l’Ancre de Marine, 1991); Jacob M. Price, “ Transaction Costs: A Note on Merchant Credit and the Organization of Private Trade,” in The Political Economy of Merchant Empires, ed. James D. Tracy (Cambridge: Cambridge University Press, 1991), 276-97; Kenneth Morgan, Bristol and the Atlantic Trade in the Eighteenth Century (Cambridge: Cambridge University Press, 1993); Joseph Symson, An Exact and Industrious Tradesman: The Letter Book of Joseph Symson of Kendal, 1711-1720, ed. Simon D. Smith (Oxford: Oxford University Press, 2002); Thomas Doerflinger, A Vigorous Spirit of Enterprise: Merchants and Economic Development in Revolutionary Philadelphia (Chapel Hill: University of North Carolina Press, 1986); David Hancock, Citizens of the World: London Merchants and the Integration of the British Atlantic Community, 1735-1785 (Cambridge: Cambridge University Press, 1995); and Matson, Cathy D., Merchants and Empire: Trading in Colonial New York (Baltimore Johns Hopkins University Press, 1998)Google Scholar.

10. Muldrew, Craig, The Economy of Obligation: The Culture of Credit and Social Relations in Early Modern England (Basingstoke: Palgrave Macmillan, 1998)CrossRefGoogle Scholar; Finn, Margot C., The Character of Credit: Personal Debt in English Culture, 1740-1914 (Cambridge: Cambridge University Press, 2003)Google Scholar; and Laurence Fontaine, L’économie morale. Pauvreté, crédit et confiance dans l’Europe préindustrielle (Paris: Gallimard, 2008). See also: Karl Polanyi, The Great Transformation: The Political and Economic Origins of Our Time (New York: Farrar & Rinehart, 1944); Mark Granovetter, “ Economic Action and Social Structure: The Problem of Embeddedness,” American Journal of Sociology 91-3 (1985): 481-510; Marcel Mauss, “ Essai sur le don. Forme et raison de l’échange dans les sociétés archaïques,” L’Année sociologique special issue 1 (1923-1924): 30-186; Avner Greif, Institutions and the Path to the Modern Economy: Lessons from Medieval Trade (Cambridge: Cambridge University Press, 2006); and Boyer, Robert, “ Historiens et économistes face à l’émergence des institutions du marché,” Annales HSS 64-3 (2009): 66593.Google Scholar

11. Marzagalli, Silvia, “ Establishing Transatlantic Trade Networks in Time of War: Bordeaux and the United States, 1793-1815,” Business History Review 79-4 (2005): 81144;CrossRefGoogle Scholar David Hancock, Oceans of Wine: Madeira and the Emergence of American Trade and Taste (New Haven: Yale University Press, 2009); Jacob M. Price, Overseas Trade and Traders: Essays on Some Commercial, Financial and Political Challenges Facing British Atlantic Merchants, 1660-1775 (Aldershot: Variorum, 1996); and Trivellato, Francesca, The Familiarity of Strangers: The Sephardic Diaspora, Livorno, and Cross-Cultural Trade in the Early Modern Period (New Haven: Yale University Press, 20091)Google Scholar.

12. In English-language historiography, this is called “ whig” history, modeled on what Herbert Butterfield criticized in The Whig Interpretation of History (New York: W. W. Norton & Co, 1931; repr. 1965). See also Jardine, Nick, “ Whigs and Stories: Herbert Butterfield and the Historiography of Science,” History of Science 41-2 (2003): 12540.CrossRefGoogle Scholar

13. Stanziani, Alessandro, “ Information, institutions et temporalité. Quelques remarques critiques sur l’usage de la nouvelle économie de l’information en histoire,” Revue de Synthèse 121-1/2 (2000): 11755.CrossRefGoogle Scholar

14. Grenier, Jean-Yves, L’économie d’Ancien Régime. Un monde de l’échange et de l’incertitude (Paris: Albin Michel, 1996)Google Scholar; Guillaume Daudin, Commerce et prospérité. La France au XVIIIe siècle (Paris: Presses de l’université Paris-Sorbonne, 2005); Dominique Margairaz, “ Économie et information à l’époque moderne,” in L’information économique XVIe-XIXe siècle. Journées d’études du 21 juin 2004 et du 25 avril 2006, eds. Dominique Margairaz and Philippe Minard (Paris: Comité pour l’histoire économique et financière de la France, 2008), 3-16; and Maxine Berg and Pat Hudson, “ Rehabilitating the Industrial Revolution,” Economic History Review 45-1 (1992): 24-50.

15. As suggested by Guy Bois, “ Marxisme et histoire nouvelle,” in La nouvelle histoire, ed. Jacques Le Goff (Bruxelles: Éd. Complexe, 1978; repr. 2006), 255-74.

16. Dictionnaire de l’Académie française (Paris: Vve de B. Brunet, 1762), 363. “ Confidence” here is therefore not understood in the same way as in the field of sociology, which is relatively vague and ahistorical: see, for example, Aghion, Philippe et al., “ Regulation and Distrust,” The Quarterly Journal of Economics 125-3 (2010): 101519.CrossRefGoogle Scholar The authors apply the same term to each instance in which the good intentions of an interlocutor are asserted, regardless of his or her nature and intentions.

17. One’s word of honor can therefore not be reduced to a combination of the components of standard economic analysis such as information and sanction, contrary to Timothy W. Guinnane’s assertions: see Timothy W. Guinnane, “ Trust: A Concept Too Many” (Economic Growth Center Discussion Paper no 907, Yale University, 2005), .

18. Jeannin, Marchands d’Europe, 309-20. See also Gérard Béaur, Hubert Bonin, and Claire Lemercier, eds., Fraude, contrefaçon et contrebande de l’Antiquité à nos jours (Genève: Droz, 2006).

19. Stanziani, Alessandro, ed., La qualité des produits en France, XVIIIe-XXe siècles (Paris: Belin, 2003)Google Scholar; Grenier, L’économie d’Ancien Régime.

20. Examples can be found in Matson, Merchants and Empire, 237-40.

21. “ Journal L (20 February 1786-31 January 1788),” 86, pp. 514-15, Coll. 0289, Hollingsworth Collection, Historical Society of Pennsylvania, Philadelphia.

22. Nathan Appleton to Samuel Appleton, 17 September 1813, Box 2: “ General Correspondence, etc. 1791-1814,” Folder 25: “ 1813,” Ms. N-1778, Appleton Family Papers (hereafter referred to as “ Appleton Papers”), Massachusetts Historical Society, Boston. I already cited this example in Pierre Gervais, “ Neither Imperial, Nor Atlantic: A Merchant Perspective on International Trade in the Eighteenth Century,” History of European Ideas 34-4 (2008): 465-73.

23. Nathan Appleton to Samuel Appleton, 6 February 1813, ibid., Appleton Papers.

24. Hancock, Oceans of Wine.

25. Pierre Jeannin, “ La clientèle étrangère de la maison Schröder et Schyler de la guerre de Sept Ans à la guerre d’indépendance américaine,” in Marchands d’Europe. Pratiques et savoirs à l’époque moderne, eds. Jacques Bottin and Marie-Louise Pelus-Kaplan (Paris: Presses de l’ENS, 2002), 125-78. For an effective analysis of how information circulated at the time, see Silvia Marzagalli, “ La circulation de l’information, révélateur des modalités de fonctionnement propres aux réseaux commerciaux d’Ancien Régime,” Rives méditerranéennes 27 (2007): 123-39.

26. I exclude account closings and the transfer of value between two accounts referring to physical assets belonging to Gradis himself, for example “ Marchandises pour la Cargaison no 7 dt. à Marchandises générales.” When there is a doubt (which is the case with Cargo no 7, which could have belonged to a partnership of which Gradis was a member), the entry has not been used. Gradis’s account with Chabbert & Banquet, who served as a discounting bank for Gradis, is considered a treasury account.

27. Journal 1755-1759, 10 November 1755, Fonds Gradis, AN, Paris. On Leris’s involvement with Canada, see the entries for March 4, 20, and 31, in addition to April 23 and 24, 1755, which note his participation in the embarcation of the ships La Renommée and Le David as well as “ Cargo no 7.”

28. Martin, “ Correspondance et réseaux marchands,” 136; Jean Cavignac, Dictionnaire du judaïsme bordelais aux XVIIIe et XIXe siècles : biographies, généalogies, professions, institutions (Bordeaux: Archives départementales de la Gironde, 1987), 41 and 152.

29. Journal 1755-1759, 21 March 1755, Fonds Gradis, AN, Paris.

30. Gervais, Pierre, Les origines de la révolution industrielle aux États-Unis. Entre économie marchande et capitalisme industriel, 1800-1850 (Paris: Éd. de l’EHESS, 2004).Google Scholar

31. And not to his investment in Le Sagittaire, as I erroneously asserted in Pierre Gervais, “ A Merchant or a French Atlantic? Eighteenth-Century Account Books as Narratives of a Transnational Merchant Political Economy,” French History 25-1 (2011): 28-47. This investment had been credited to Marchand Fils on October 29, 1754, and reimbursed by letters of exchange from Gradis on February 19 and March 19, 1755.

32. The “ Canada Affair” erupted in the Fall of 1761 with the arrest of Bigot, Péan, and their associates on the order of the new Secretary of State of the Navy, Nicolas René Berryer. In 1763, Bigot was banished for life, and his property was confiscated. He spent his final years in Switzerland, living relatively comfortably thanks to funds he was able to preserve through Gradis’s efforts, among others. See Denis Vaugeois, “ François Bigot, son exil et sa mort,” Revue d’histoire de l’Amérique française 21-4 (1968): 731-78. Due to the possible impact on the ability of the French colony to resist the British enemy, the monopolizing behavior and influence-peddling of Bigot and his merchant allies, including Gradis, have been the ongoing focus of often violent condemnations in Quebec. John-Francis Bosher and Jean-Claude Dubé express the belief, however, that it is difficult to determine whether Bigot “ was an especially corrupt intendant or simply a type of intendant that emerged within a corrupt system,” a conclusion previously reached by Guy Frégault in François Bigot. Administrateur français (Montréal: Guérin, 1948; repr. 1996). See Bosher, John-Francis and Dubé, Jean-Claude, “ François Bigot,” in Dictionnaire biographique du Canada en ligne Google Scholar, (original ed.: vol. IV, 1771-1800, 1980).

33. Hancock, Citizens of the World, 247.

34. Raymond De Roover, L’évolution de la lettre de change, XIVe-XVIIIe siècle (Paris: Armand Colin, 1953); James Steven Rogers, The Early History of the Law of Bills and Notes: A Study of the Origins of Anglo-American Commercial Law (Cambridge: Cambridge University Press, 1995).

35. On each of these points, see: Mann, Bruce H., Republic of Debtors: Bankruptcy in the Age of American Independance (Cambridge: Harvard University Press, 2002)Google Scholar; Fontaine, L’économie morale; and Muldrew, The Economy of Obligation.

36. Journal 1751-1755, 22 January 1755, Fonds Gradis, AN, Paris.

37. This is true of 753 entries observed at least one day apart and at most ninety-nine days after the previous entry in the same personal account. Entries separated by a more than a one hundred-day delay are relatively rare: only seventy-one were noted.

38. Menkis, “ The Gradis Family,” 111 and 124.

39. Such a return rate is comparable to the rates found in long-distance trade, including the slave trade: see Daudin, Guillaume, “ Profitability of Slave and Long-Distance Trading in Context: The Case of Eighteenth-Century France,” The Journal of Economic History 64-1 (2004): 144-71, especially table 4, p. 167.Google Scholar

40. On the absence of cash transactions in the United States, see: Baxter, William T., The House of Hancock: Business in Boston, 1724-1775 (Cambridge: Harvard University Press, 1945 CrossRefGoogle Scholar); Grubb, Farley, “ The Circulating Medium of Exchange in Colonial Pennsylvania, 1729-1775 Google Scholar: New Estimates of Monetary Composition, Performance, and Economic Growth,” Explorations in Economic History 41-4 (2004): 329-60.

41. On the difficulties faced by creditors when debtors defaulted, see Mann, Republic of Debtors.

42. Sombart, Werner, The Quintessence of Capitalism: A Study of the History and Psychology of the Modern Business Man, trans. Mortimer Epstein (London: T. Fischer Unwin, 1915 Google Scholar); Weber, Max, General Economic History, trans. Knight, Frank H. (New York: Greenberg, 1927 Google Scholar). Current perspectives on this issue are summarized in Edwards, John R., Dean, Graeme, and Clarke, Franck, “ Merchants’ Accounts, Performance Assessment and Decision Making in Mercantilist Britain,” Accounting, Organizations and Society 34-5 (2009): 551-70 CrossRefGoogle Scholar. See also Derks, Hans, “ Religion, Capitalism and the Rise of Double-Entry Bookkeeping,” Accounting, Business and Financial History 18-2 (2008): 187-213.CrossRefGoogle Scholar

43. Edwards, , Dean, , and Clarke, , “ Merchants’ Accounts.Google Scholar

44. Bryer, Robert A., “ The History of Accounting and the Transition to Capitalism in England. Part One: Theory,” Accounting, Organizations and Society 25-2 (2000): 131-62 CrossRefGoogle Scholar; Bryer, , “ The History of Accounting and the Transition to Capitalism in England. Part Two: Evidence,” Accounting, Organizations and Society 25-4/5 (2000): 32781 Google Scholar.

45. Yamey, Basil S., “ The ‘Particular Gain or Loss Upon Each Article We Deal In’: An Aspect of Mercantile Accounting, 1300-1800,” Accounting, Business and Financial History 10-1 (2000): 112 CrossRefGoogle Scholar; Jeannin, , Marchands du Nord, 82 Google Scholar; and Grassby, Richard, “The Rate of Profit in Seventeenth-Century England,” The English Historical Review 84-333 (1969): 72151.CrossRefGoogle Scholar

46. Toms, J. Steven, “ Calculating Profit: A Historical Perspective on the Development of Capitalism,” Accounting, Organizations and Society 35-2 (2010): 205-21 CrossRefGoogle Scholar. See also Chandler, Alfred D., The Visible Hand: The Managerial Revolution in American Business (Cambridge: Belknap Press, 1977)Google Scholar.

47. According to Pierre Jeannin, the only significant French author who was comparable in the eighteenth century was Jacques Savary: see Jeannin, , Marchands d’Europe, 382. See also Lemarchand, Yannick, “ Jacques Savary et Mathieu de La Porte: deux classiques du Grand siècle,” in Les grands auteurs en comptabilité, ed. Colasse, Bernard (Colombelles: Éd. EMS, 2005), 3954.Google Scholar

48. Porte, Mathieu de La, La science des négocians et teneurs de livre, ou Instruction générale pour tout ce qui se pratique dans les Comptoirs des Négocians, tant pour les affaires de banque, que pour les Marchandises, &chez les Financiers pour les Comptes (Rouen: P. Machuel et J. Racine, 1704; repr. 1782 Google Scholar), VIII-IX.

49. Mair, John, Book-Keeping Methodiz’d: Or, a Methodical Treatise of Merchant-Accompts, According to the Italian Form, 3rd ed. (Edinburgh: W. Sands, A. Murray, and J. Cochran, 1749), 2 Google Scholar. This book was first published in 1736.

50. Ibid., 6.

51. Ibid.

52. Ibid., 20.

53. Ibid., 17.

54. Ibid., 19.

55. The Order for France was declared in 1673. For England, see Chambers, R. J. and Wolnizer, P. W., “ A True and Fair View of Position and Results: The Historical Background,” Accounting, Business and Financial History 1-2 (1991): 197214.Google Scholar

56. Mair, Book-Keeping Methodiz’d, 17 and 36ff.

57. In reality, there were only seven merchandise accounts (General Merchandise; Spirits; Flours; Indigos, our acct.; Purchased Wines; Wines from Talance), since the three acounts “ Campeche Wood, our acct.,” “ Sugars” and “ Raw Sugars, our acct.” were inactive in 1755. Gradis’s two bankers were Chabbert& Banquet and Gaulard de Journy.

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