An Interlocking Community of Risk

These subsequent events bring our attention to several important points. We might first of all note that, in Tuscany, the creditor of the sea loan did in fact cover GA payments – a thing we can hardly take for granted given the regional variation noted by the existing literature on sea loans.4 Other examples include ASP, CM, AC, 322-27 (9 December 1670); ASP, CM, AC, 419-9 (17 August 1700); ASP, CM, AC, 322-16 (9 November 1670). Though the sea loan creditor and subsequently the underwriters were obliged to ‘run the risk’, they did not cover the GA losses in a blanket fashion. Instead, the creditor and the underwriters contributed to the GA in proportion, i.e. they were liable to pay 7.2 per cent of the amount they had underwritten.5 ASP, CM, AC, 321-26 (25 August 1670), Testimoniale e domanda. Rather than picking up the tab for all 1,532 pieces then, Forno instead contributed 7.2 per cent of the total value of his sea loan of 4,000 pieces, thus contributing 288 pieces towards the GA.6 ASP, CM, AC, 419-9 (17 August 1700). As Zanini remarks of relationship between GA and sea loan in Genoa, ‘the sharing of damages and charges deriving from general Average was the price that he was required to pay in order to avoid a total loss of the mortgaged objects’.7 Zanini, ‘Financing and risk’, p. 349.

With Forno’s mode of contribution established, we are thus in a position to suggest an (almost) final answer to the fundamental question: who paid? The following tables and graphs show the origin of the various damages incurred during the voyage of the Cavallo Marino. This can then be compared with the distribution of these expenses after they had passed through GA, a sea loan, and premium insurance on that loan. These charts take into account the fact that, in addition to the sea loan offered by Forno at the outset of the voyage, Garzille had been forced to accept two emergency sea loans in the Levant from merchants named Truillard and Costeau in order to finance the high upfront of the sums levied by the French consul in Aleppo.8 ASP, CM, AC, 319-20 (18 March 1669), Relation of the French consul. These were repayable to two associates in Livorno at the high interest rate of 30 per cent. Since these contracts too ‘ran the risk’ of the voyage, a portion of the costs was presumably paid by these Tuscan associates. Two graphs are used to show who paid the damages: one shows how the damages would have hypothetically been split in an ‘idealised’ GA, with the ship and freight contributing their full values, while the second shows how they were actually distributed, using the ship-friendly custom in Tuscany of valuing the ship at half, and the freight at a third, of their real values.

Some caveats must be borne in mind here: firstly, that although we know how much Forno contributed to the damages, it is unclear in what proportion he covered the costs payable by the shipmaster, Garzille, and in what proportion his contribution covered those payable by the merchants, Gilles and Dilman, since the sea loan was in the name of both parties.9 ASP, CM, AC, 321-26 (25 August 1670), Sea Loan Contract. This information is not included in the original contract, and would presumably have been arranged privately between the parties themselves although we have no evidence about this. To overcome this, it has been assumed that Forno’s contribution (and the subsequent contribution of the insurers) diminished Garzille’s and Gilles’s contributions proportionally, i.e. that Forno’s contribution was first subtracted from the total damages, and then the remaining damages distributed according to each man’s share in the venture. The second caveat is that, as shipmaster, Garzille would only have paid contribution for the ship-side in the first instance: he would only have been personally liable for a contribution based on a third-value of the freight, and only for the vessel if he happened to own shares in it. The final caveat is that the calculation only gives us the names of the receivers. These receivers may then have sought the payment from their principals – the actual owners of the goods. Alternatively, much of the cargo may have been insured in its own right. These graphs thus do not quite display the final resting place of these costs, which would have travelled further down the chain and been further distributed.

A comparison of the graphs lays bare the potentiality of GA for the shipmaster and ship-owners. Garzille and/or the ship-owners ended up paying just over 100 pieces of eight towards a GA of 1,532 pieces. Yet a full 28 per cent of the GA expenses were related to the refitting of the ship. We might therefore summarise this situation by saying that, effectively, Garzille and the ship-owners ended up paying just under 30 pieces of eight (28 per cent of their GA contribution) in return for a new mast (estimated by Garzille himself at 100 pieces), a new anchor rope (120 pieces), new caulking (65 pieces), and other general repairs (‘legnami per acomodar la nave’, 27.25 pieces): the Galley of Salamis indeed.10 ASP, CM, AC, 319-20 (18 March 1669), Expenses; Baldasseroni, Delle assicurazioni marittime, vol. 3, p. 15. With savings like these, the existence of GA would also have reduced running costs and would surely be having an impact on freight rates (lower upfront costs for freighting the ship), as well as lowering the amount of cash which ship-owners would have to set aside for fitting out their vessels.

Beyond the particular advantage of GA for the shipmaster, we might also note that, despite the risk-sharing potentiality of the sea loan, the distribution through GA was still an important part of cost sharing. In the end, Forno and his insurers ended up assuming just under a fifth of the overall load. GA thus remained an important absorption mechanism even for cargo interests. We cannot necessarily say it was the foremost mechanism as it seems likely that the receivers, as noted above, would have insured their merchandise in turn, leading to further redistribution. Without this data we cannot assess the exact importance of GA within the overall picture. Nevertheless, we can see that through the use of GA and sea loan, Gilles and Dilman, receivers of 63.3 per cent of the cargo by value, had reduced their contribution to 43 per cent of the damages.

The sea loan, despite ultimately assuming quite a modest portion of costs, also demonstrated its advantages. By taking the sea loan at the beginning of the voyage, Garzille was already in possession of Forno’s money at the time of the accident. This also meant that when it came to the GA, Garzille could simply repay a lesser amount to Forno, extracting his contribution before returning the loaned sum. He could then continue sailing, rather than keeping his ship in port while he awaited payment. If Garzille had availed himself of premium insurance rather than a sea loan, he would have risked one or more of the underwriters not paying up (as indeed happened when Forno tried to extract payment for the GA from his own insurers). Though enforcement via recourse to the court was, in the event, fairly straightforward, this would have been precious time wasted for Forno in which his asset was not making him any money. As Carlo Targa remarked in 1692:

Other cases allow us to further clarify the practice concerning GA and sea loans. While sea loan creditors were eligible for GA payments, it appears they were not expected to contribute towards PA. The shipmaster Giovanni Lombardo declared GA after two corsair attacks and a storm on his way back from Biserta in North Africa.12 ASP, CM, AC, 322-27 (9 December 1670). The calculation explicitly calls upon Giuseppe Rossano, who had given Lombardo a sea loan, to answer for the GA pertaining to the cost of ransoming the ship from corsairs in Biserta, plates and glass broken in the attack, damage to the cargo during the attack and anything stolen by the corsairs, as well as all things jettisoned. Damage to the sail, iron fixtures, and wooden beams on the other hand, inflicted directly by the storm, were explicitly not assigned to Rossano.13 ASP, CM, AC, 322-27 (9 December 1670), Calculation. While the partition of damages in this case is somewhat questionable – it is not clear, for example, why things stolen by the ‘Turks’ after boarding should have been considered GA – there is nevertheless a division made between Averages relating to the saving of the ship on the one hand (GA), and accidental damage on the other (PA), with the creditor of the sea loan clearly only responsible for the former. The Tuscan practice thus seems to be closest to that outlined in the French Ordonnace de la marine (1681), with the sea loan creditor taking responsibility for GA but not for PA.14 Valin, Nouveau commentaire (1828), p. 436.

One further aspect of the relationship between GA and the sea loan emerges from the documentation but can only be briefly sketched here: the validity or otherwise of ‘free from Average’ clauses in sea loan contracts. The French Ordonnance de la marine (1681) decreed that such contractual clauses were not valid: they were, however, acceptable for premium insurance contracts, and may have been equally so for a sea loan in a Tuscan context. The issue is hinted at by a case which we have already had cause to examine in some detail in Chapter 3: the case of a ship also named Madonna del Rosario, part-owned by shipmaster Giuseppe Reali, whose ill-starred boat party had ended with his ship sinking in Livorno harbour. In that case too, Reali had taken a series of sea loans from Livorno merchants, Lorenzo Madasco being his largest creditor.15 ASP, CM, AC, 321-14 (23 July 1670). When Reali was trying to secure his GA from the Consoli, Madasco pointed out that his contract specifically excluded the risk of Average, and therefore asked that he be absolved of the payment.16 ASP, CM, AC, 321-14 (23 July 1670), Testimoniale e domanda. The Consoli, however, did not pronounce on this issue when they made their judgement, instead declaring that Madasco should bring a separate case against the relevant party: no such case was ever brought, and perhaps the issue was resolved privately.17 ASP, CM, AC, 321-14 (23 July 1670), Judgement. It seems likely that, if such clauses were being inserted into contracts, then they were generally respected. However, it could equally be a novelty, or a point of confusion or contention. Further research could provide clarification on this point.