GA and Sea Loans

We have already encountered this particular case in Chapter 3, where it was used to illustrate how a number of costs might be entered into GA which we would not find mentioned in any jurisprudential description of GA. These included wear and tear to the body of the ship itself, as well as some not-so-extraordinary expenses, such as anchorage and consular fees. The Provençal master of the Cavallo Marino, Antonio Garzille, managed to not only repartition some damage to his vessel by describing his actions as an ‘evasive manoeuvre’, but also, somewhat surreptitiously, entered two instances of the French cottimo, as well as anchorage charges and a number of small bribes to locals and officials, into his GA.2 ASP, CM, AC, 319-20 (18 March 1669). We can see from the GA documentation that the Cavallo Marino in fact paid two instances of the cottimo: ‘421.4 pieces … including the cambium maritimum paid in Alexandretta … to deputies of the French natio’ and ‘525.4 pieces … paid as above’.3 ASP, CM, AC, 319-20 (18 March 1669), Calculation. As evidence of these payments, Garzille produced two attestations (relazioni) authenticated by the French consuls. One opens by declaring ‘that it was deliberated by the council of 26 February 1664 that to pay the debts of the natio, a tax and cottimo should [be levied] upon every sail … a thing which has been always carried out after the aforesaid time’ for the ‘ordinary and extraordinary expenses which the natio makes daily’.4 ASP, CM, AC, 319-20 (18 March 1669), First relation of the French consul. The second attestation records that ‘we make it known that, in light of the letters patent of his majesty given in Paris in the month of last month … that the sum of twelve hundred lire is levied upon all French ships that finish their voyages in Italy’.5 Ibid. In short, one levy was the regular cottimo which had been in place for at least six years. The other was the new imposition, the ‘Navigation Act alla francese’, as Guillaume Calafat terms it, designed to protect Marseille and penalise Livorno by incentivising French ships to miss out Livorno from their itineraries when returning from the eastern Mediterranean.6 Calafat, ‘Livorno e la camera di commercio’, pp. 238–9.

At the outset of his voyage from Livorno to ‘Cyprus and other parts of the Levant’, Garzille had taken 4,000 pieces from Bartolomo Forno, a merchant based in Livorno, at ‘cambio marittimo’ (literally, ‘maritime exchange’). It is perhaps worth at this point briefly reviewing this concept, and clarifying the types of arrangement that could be covered by this capacious phrase. There have been very few studies of the family of risk-bearing loans (cambium maritimum, bottomry, respondentia) that were regularly used in pre-modern maritime commerce. Thanks no doubt in part to the widespread ‘stadial’ conception of institutional development already discussed, the early modern use of these instruments represents a region on our historiographical map which is almost entirely blank.7 Christopher Kingston, ‘Governance and institutional change in marine insurance, 1350–1850’, European Review of Economic History 18 (2014), 1–18, at p. 2; Harris, Going the Distance, pp. 110–18. Andrea Zanini, one of the few scholars to have worked on these institutions, notes that ‘despite its popularity in Genoese finance, bottomry over the course of the early modern period has not yet been examined thoroughly’.8 Zanini, ‘Financing and risk’, p. 342, note 16. In particular, he remarks that ‘the search should continue for documentation capable of shedding light, from a practical point of view, on the participation of bottomry creditors in General Average procedures’.9 Ibid.

Analysis, moreover, is beset by the range of terminology that was employed in different languages and local contexts, which raises further difficulties of comparison and translation.10 Luca Lo Basso, ‘Il finanziamento dell’armamento marittimo tra società e istituzioni: il caso ligure’, Archivio Storico Italiano 174 (2016), 81–107; Luca Lo Basso, ‘The maritime loan as a form of small shipping credit (17th–18th centuries): the case of Liguria’, in Antonino Giuffrida, Roberto Rossi, and Gaetano Sabatini (eds), Informal Credit in the Mediterranean Area (XVI-XIX Centuries) (Palermo: New Digital Press, 2016), 145–73. On the medieval incarnations of these practices see C.B. Hoover, ‘The sea loan in Genoa in the twelfth century’, The Quarterly Journal of Economics 40 (1926), 495–529; De Roover, ‘The organization of trade’; De Roover, ‘The cambium maritimum contract’. All three of the contracts mentioned above were referred to, in the Italian context, using the term cambio marittimo. The origin of the term was the practice called cambium maritimum. This was sometimes called cambio real or ‘royal exchange’ in the work of contemporary English jurists, but the term seems to have dropped out of English commercial manuals in the eighteenth century.11 Malynes, Consuetudo vel lex mercatoria, p. 379; Molloy, De iure maritimo, p. 309. The cambium maritimum was a loan disbursed for a maritime voyage in one currency and payable in another. It involved the lender shouldering sea risks as well as credit risk because repayment of the loan was dependent on the safe arrival of the ship. Raymond De Roover wrote that this was indicated by the phrase ad risicum et fortunam dei maris et gentium inserted into the medieval cambium maritimum contract, while Zanini reports that the phrase ‘risk of sea, corsairs, and fire’ conveyed this element within the early modern Genoese context.12 De Roover, ‘The cambium maritimum contract’, p. 16; Zanini, ‘Financing and risk’, p. 349.

The cambio marittimo given by Forno to Garzille at the outset of the voyage, however, was in fact a straightforward sea loan – a foenus nauticum in Latin.13 Berti, ‘I rischi nella circolazione marittima’, p. 818; Davis, English Shipping, p. 85; Olivia Robinson, T.D. Fergus, and William M. Gordon, An Introduction to European Legal History (Abingdon: Professional Books, 1985), p. 156. Here, there was no currency exchange involved, and the debtor provided security. In English, this instrument was further subdivided, with the term bottomry used when the security was the ship, and respondentia when the security was cargo.14 Francesca Trivellato, The Promise and Peril of Credit: What a Forgotten Legend about Jews and Finance Tells Us about the Making of European Commercial Society (Princeton: Princeton University Press, 2019), p. 299, note 7. The use of the term cambio marittimo for sea loans in the Italian context without the element of currency exchange probably derives ultimately from the papal bull, Naviganti (1234), which had declared the sea loan usurious: merchants thus took to hiding what was effectively a sea loan under the guise of a simple exchange of currencies, the cambium maritimum, masking the payment of interest through a deliberately distorted valuation of the currencies involved.15 On Naviganti and its effect on the sea loan, see De Roover, ‘The cambium maritimum contract’, pp. 17–18. Though the interest was once again in plain sight by the early modern period, the term cambio marittimo stuck.16 Zanini, ‘Financing and risk’, p. 343. A sea loan could be taken out by the shipmaster, and used to fund the cost of making the voyage, or could be taken by the merchants and used to fund the commercial part of the venture, or could even be taken on by merchants and shipmaster together.17 Zanini, ‘Financing and risk’, p. 346. The loan was again only repayable on the safe return of the ship, and thus it is said that the creditor assumed the sea risk. The creditor thus provided both capital and risk protection, and interest for the sea loan reflected this high degree of exposure.

It is, however, unclear in the existing literature what place GA occupied in all of this. Zanini notes that in Genoa, ‘theoretically, losses related to Averages and jettison were borne by the creditor [of the sea loan]’, but that this ‘corresponds to a somewhat nebulous operational context’, and that this might be affected by law, practice, or the agreements struck between parties.18 Zanini, ‘Financing and risk’, p. 350. This variation no doubt in part resulted from the fact that conventions surrounding the absorption of Averages by a sea loan creditor were vexed even at the time, thanks in part to the different norms adopted in different places. William Benecke, an English maritime jurist writing in the early nineteenth century, noted an

The case of the Cavallo Marino can shed some light on the operational context. The security in this case was both ship and cargo. The loan had been taken by the shipmaster Garzille along with the merchants Carlo Gilles and Federigo Dilman, two traders based in Livorno. Garzille had pledged the ship, with Gilles and Dilman pledging their cargo as security.22 ASP, CM, AC, 321-26 (25 August 1670), Copy of original contract. More than half of the cargo of the return journey (by value) was received by Gilles (12,205 pieces, 63.3 per cent of the total), who was presumably working in partnership or at least in tandem with Dilman. The remainder was received by merchants who took no part in the sea loan.23 ASP, CM, AC, 319-20 (18 March 1669), Calculation. The loan was made at an interest rate of 24 per cent (960 pieces to be paid after the ship had been safely unloaded in Livorno).24 ASP, CM, AC, 321-26 (25 August 1670), Copy of original contract. Forno, having made the loan, then partially insured it. He bought 2,700 pieces worth of insurance on the Livorno market for a premium of 13 per cent, i.e. a fee of 351 pieces.25 ASP, CM, AC, 321-26 (25 August 1670), Insurance policies. The principal underwriter of the insurance contract was Thomas Dethick, another Livorno-based merchant, who underwrote just below half the total amount (1,300 pieces). We learn from the GA calculation that Thomas Dethick already had a financial interest in the voyage, receiving a significant portion of the cargo on the return journey (1,980 pieces, 10.3 per cent of the total value of the cargo).26 ASP, CM, AC, 319-20 (18 March 1669), Calculation. The remainder was shared between ten other underwriters insuring between 100 or 200 pieces each.27 ASP, CM, AC, 321-26 (25 August 1670), Insurance policies. There were thus three levels of cost redistribution in play: the GA, activated post hoc; the sea loan, partially covering the GA; and the premium insurance, partially covering the sea loan.