Trading Practices

The following perspective is attributed to DAVID S. MILLER in April 1789.
It's an excellent example of the workings of the industry.

      Previously, the captains of trading ships held "a virtually discretionary power over their destination among the islands," would travel "odysseys" in search of suitable markets, and had "much latitude in the prices at which they might sell their cargo." But Girard, having a brother in the French sugar colony of St. Domingo acting as his agent, did not want his captains to scurry from island to island looking for high prices. Jean and Stephen kept regular contact: Jean would advise or forecast the market and Stephen would acquire and send the cargo with explicit instructions for the return lading. Thus, Girard did not have to rely upon the customary international "network" of merchants who traded on potentially inaccurate market prices. 
     This method offered Girard other significant advantages. First, by restricting Edger's authority to the management of the ship and Jean's to the sale of the cargo, he maximized the usefulness of each. Second, by instructing Edger to travel directly to St. Domingo, he reduced the length of time of individual journeys, allowing more trips per year. Third, since Jean owned a warehouse in St. Domingo, were the Polly to arrive when markets were depressed, its cargo could be stored until prices rose.
     The first Girard venture was launched with both Stephen Girard and Captain Edger rushing into their respective duties in the third week of April 1789, just nine days after Girard had marked the ship as his. Edger hired a carpenter, a block and pump maker, and a blacksmith to prepare the Polly for its first "Adventure," as Girard grew fond of calling the trips. Edger also bought varnish, canvas, twine, and provisions. Girard was equally busy, purchasing 114 terces and 19 halves of rice, 304 barrels of flour, and 109 kegs of lard.
     By the late 1780s, foodstuff exporters in Philadelphia had so specialized and expanded that Girard could purchase large shipments of flour and rice. With his brother's warehouse and West Indian connections, he was virtually assured of a market for his cargo. Equally important was the acquisition of insurance. Girard used Wharton and Lewis, one of the standard carriers in Philadelphia. He insured the ship for its purchase price of £700, and the cargo for £1,300. The price of the policy was 9 percent or £63.5 for the ship, and 5 percent or £65.5 for the goods. This covered the vessel for a single round-trip voyage to St. Domingo, assuming the trip was completed within six months. After that period the penalty was 1.5 percent per month. The policy was underwritten by a large number of speculators, each of whom signed the document.
     As April turned to May and final repairs and provisions were secured, Girard wrote letters of instruction to his brother and Captain Edger. To Jean he specified that the return cargo should be molasses, coffee, and cocoa. If there were any delay in getting these items, the Polly was to be sent back in ballast. Exporting flour rapidly, Stephen felt, would be the profit-making leg of the adventure. Any importation would merely add a bonus. To Captain Edger, he provided even more explicit instructions. As the importation of flour was prohibited in St. Domingo (thus making Girard a smuggler), Girard had to prepare for the possibility that the vessel would be stopped and searched. If the Polly were to meet a "guarda costa or others," he wrote Edger, and the crew were asked what the cargo contained, say "flour, rice and lard," but add that "you are bound for St. Thomas,but having the misfortune of falling to the lower of your port, together with your vessel being deep loading you did propose to sell your rice at Cap Francais." 
     Otherwise, Edger was simply to meet Jean Girard at the wharf and hand him his sealed instructions, remaining under Jean's command while in port.On May 11, 1789, the Polly left Philadelphia, was piloted down the Delaware to Cape Henlopen at the mouth of the river, and sailed to the West Indies, arriving eighteen days later (May 29) at Cap Francais. To Captain Edger's pleasant surprise, the port was open to flour, and Jean sold the cargo for seven to ten dollars a barrel (Girard's buying price was a little more than five). The rice (bought at $2.69) he sold between $3.50 and $4.00 a quintal. The sales grossed almost £1,900. After deducting for all shipping expenses, Girard realized a decent profit.

No comments:

Post a Comment