Ralph and Francis Smalley. An english merchant company operating between La Palma and London (1697-1725)

FRANCESCO GINORI, CÓNSUL DE LA NACIÓN FLORENTINA EN CÁDIZ dinero ajeno, y sumido en el pesar que le provoca la incertidumbre de no saber si puede seguir o no en el ejercicio de su consulado. Pero Francesco Ginori es también la voz de quien, desde la experiencia y el conocimiento que ésta proporciona, da firmes instrucciones a los diplomáticos que han de negociar las condiciones de un acuerdo comercial para que los florentinos obtengan las mismas ventajas que franceses, ingleses y holandeses y que, una vez alcanzadas, se de cuenta por escrito a los cónsules de la nación para que sus mercaderes puedan negociar conforme a ellas. Es cierto que considera que quizá haya llegado ya el momento de su retirada y de ceder a otro el ejercicio de la representación, pero no lo es menos que aun sin tener su carácter de cónsul reconocido, Francesco Ginori se aprestó a cumplir con la solicitud y eficiencia acostumbradas, el servicio que de él requirió su nación y su príncipe. Fue su último servicio. Francesco Ginori murió en Cádiz el 11 de julio de 1713. 198 RALPH AND FRANCIS SMALLEY AN ENGLISH MERCHANT COMPANY OPERATING BETWEEN LA PALMA AND LONDON (1697-I725) JOSÉ IGNACIO MARTÍNEZ RUIZ UNIVERSIDAD DE SEVILLA The production and trade of wines is a central theme in the economic history of the Canaries in the Early Modern Era, although it was most of all during the 17th Century when vitiviniculture became what may be characterised as a strategic sector in terms of the island economy. In effect, the growth in production —which carne to surpass 45,000 pipas by the mid-17th Century — led to significant changes in inter-island economic relations as, owing to the expansión of the vineyard, Tenerife and La Palma began to depend ever increasingly on the cereal grains produced on the rest of the islands. Wine exports, for their part, modified the role fulfilled by the Canaries within the Atlantic economy to such an extent that they ended up being known as — together with Madeira — the "Wine Islands". Wine that served to pay for the imports arriving from Europe and which to a large extent determined the level of activity and income throughout the archipelago. The islands offered, essentially, two types of wines: malvasía (malmsey) and vidueño (vidonia). The principal market, virtually the only one, for the first was England where its quality and flavour, immensely appreciated, allowed very remunerative sale prices to be obtained. Vidueño, with a production four times higher than that of malvasía but of an inferior quality, was consumed mostly on the islands themselves and in the New World. By the mid-1680s, the number of pipas of malvasía being offloaded annually in London —by far the principal English port of arrival for wine from the Canaries — reached its zenith, surpassing the figure of 9,200 (roughly 4,600 tons). It was precisely at that point, coinciding with the height of splendour of the wine trade between the Canaries and England, when Ralph Smalley arrived in La Palma. It is not known why he settled there rather than in Tenerife, where most production of malvasía in the islands took place —around 85-90%—and where 201 RALPH AND FRANCIS SMALLEY AN ENGLISH MERCHANT COMPANY OPERATING. a sizeable colony of English merchants resided. Ralph is likely to have chosen La Palma given the lesser presence of his compatriots and, ultimately, of competitors in the zone, a circumstance that could be exploited to start new business on the island. Another factor could have been the lower surveillance for contraband, above all, once the Juzgado de Superintendencia de Indias had been estab- Iished in 1657 and the official in charge of inspecting ships took up residence in San Cristóbal de La Laguna (Tenerife)1. Whatever the case, his settlement on the island was immediate and definitive: in 1685 he married Mauricia Ana Espino with whom he would go on to have thirteen children; four years later he acquired ownership of several houses situated in Santa Cruz de La Palma; in 1690 he purchased a plot of land measuring eleven fanegas planted with malvasía and vidueño situated in El Mocanal, between Breña Baja and Mazo, the wine región par excellence of the island2; and in 1699, at long last, he began the process of seeking an official seal of naturalization from the King3. Thus, the Smalleys became the most important English merchants of La Palma. The primary documentary source for this investigation is the accounts ledgers for Smalley and Co, kept in the London School of Economics archive4. The first contains shipments of merchandise to La Palma made by Francis Smalley, Ralph's brother, from London between 1697 and 1729; the second, shipments of malvasía to the British capital between 1698 and 1725. It is an exceptionally valuable source although, regrettably, an isolated example. Despite these limitations, the accounting records of Smalley and Co have made it possible to reframe some aspects of the exchanges between the Canaries and England which were believed to be conclusively settled. Therein lies, from our point of view, the principal interest of this study. 1 A. Lorenzo Tena; "Ingleses en La Palma durante los siglos XVII y XVIII", Anuario de Estudios Atldnticos, 56, 2010, pp. 139-168. The references to Ralph Smalley, on pp. 63-64. See also M. Lobo Cabrera, "Los ingleses y su actividad mercantil en La Palma en el primer cuarto del siglo XVII" en Historia y perspectivas de investigación. Estudios en memoria del profesor Ángel Rodríguez Sánchez, Mérida, 2002, pp. 221-225. 2 J. Pérez García, Casas y familias de una ciudad histórica: la calle Real de Santa Cruz de La Palma, Santa Cruz de La Palma, 1995, pp. 28-34 and Archivo Histórico Municipal de La Palma (AHMLP), 766-1-7-26 and 766-1-7-29. 3 Archivo General de La Palma (AGLP), Protocolos Notariales (PN), Pedro de Mendoza, 26-11-1699. 4 Shelfmark: SR 1020 (Accounts books of Smalley and Co., merchants, 1697- 1729). 202 JOSÉ IGNACIO MARTÍNEZ RUIZ THE WINE TRADE BETWEEN THE CANARIES AND ENGLAND (I640-1725): BRIEF STATE OF THE ISSUE The study of the production and trade of wines between the Canaries and England relies on three essential reference works: those from A. Béthencourt Massieu, G. Steckley and A.M. Macías Hernández. Béthencourt was the first to propound the main features of the subject under analysis. Among them, the growing difficulties facing Canarian wine in external markets as a consequence of the restrictions imposed on cargoes destined for America (Spanish, Portuguese and English) at different times during the 17th Century; the attempt by a group of merchants to monopolise exchanges with England through the creation in 1665 of a company having exclusive rights, the so-called Canary Company; and, lastly, declining exports of malvasía from the Canaries in the 18th Century. Despite these difficulties, Béthencourt concludes: "durante los setenta y cinco primeros años del siglo XVII la exportación de malvasía irá en aumento. El número de comerciantes británicos crece año tras año. La abundancia de la demanda hace que los precios suban, mientras que decae el de las mercancías británicas, por exceso de oferta". Under these circumstances, "los ingleses viéronse obligados a cubrir el déficit de la balanza con reales de a ocho y otras clases de moneda labrada, que obtenían en otras partes", a circumstance that was cause for scandal in their own country, where warning was given of the necessity to reduce consumption of malvasía in England and/or the purchase price at source (Josiah Child)5. The path chosen was to increase customs duties upon entry of Canarian wine into the country. The principal contribution by Steckley with regard to what was noted by Béthencourt consists of the quantification of arrivals of malvasía in London between 1595 and 1729. As remarked previously, the said arrivals reached their height in 1681-2. Thereafter or, better yet, from 1692-3 onward, when the 8,000 pipas mark was still surpassed, the figures did nothing but decrease. So much so, that in 1700-1 they had fallen to 5,100 pipas per year, in 1713-4 to around 3,000 and in 1722-3 to a mere 900 (Figure 1). This decline would have been the result, essentially, of the rise in taxes due on 5 A. Bethéncourt Massieu; Canarias e Inglaterra: el comercio de vinos, Las Palmas, 1991, pp. 29-30 (first edition dates from 1956 and was published in Anuario de Estudios Atlánticos). 203 RALPH AND FRANCIS SMALLEY AN ENGLISH MERCHANT COMPANY OPERATING. each pipa of wine from the Canaries upon entering England; taxes that multiplied threefold between the I670s and I690s to reach 12 pounds and 15 shillings per pipa, that is, almost 50% of its wholesale price in London. The preference given by the British authorities to other Atlantic wines and, in particular, to wines from Madeira and Porto, through which they sought and obtained access under the best conditions possible to the Portuguese market and, above all, to Brazilian gold, did the rest. On another level, Steckley's doctoral thesis served to confirm Béthencourt's conclusión that the price of malvasía at source did nothing but rise during the 17th Century. In effect, the average price per pipa in Tenerife went up from 309 reales in 1620-9 to 569 in 1690-9, the latter decade witnessing the highest levéis of the century6. Figure 1 Imports of Canarian wine through the Port of London (1675-1725) {pipas) 10000 i— ~ ~ 6 The following works by G. Steckley were consulted: Trade at the Canary islands in the Seventeenth Century (Ph.D., University of Chicago, 1972); The Letters ofjohn Paige, London Merchant, 1648-1658, London, 1984 and "The Economy of Tenerife in the Seventeenth Century: Anglo-Spanish Partnership in a Luxury Trade", Economic History Review, vol. XXXIII, 3, 1980, pp. 335-350. 204 JOSÉ IGNACIO MARTÍNEZ RUIZ As regards, lastly, the works of Macías, his most valuable contributions stem from having incorporated the sphere of production into certain studies, those that had been carried out up to the publication of his investigations, centred exclusively on the trade aspect, by means of the analysis of the processes of the initial expansión and subsequent restructuring of the Canarian vineyard, part of a wider study on the principal macroeconomic indicators of the islands in the Early Modern Era; from the construction of an annual price series for wine that completes and clarifies Steckey's and, ultimately, from attributing responsibility for "la incapacidad de la oferta vitícola isleña para hacer frente a sus nuevos competidores en los mercados del Noroeste europeo y coloniales" to the decline that took place during the 18th century7. What does the present study add to the current state of knowledge of the wine trade between the Canaries and England? Besides allowing the geographical framework of analysis to be widened, to date limited to the island of Tenerife, through the inclusión of La Palma, the second wine-producing centre of the archipelago, this work pays greater heed to the period when exports of malvasía to the British market were in decline, that is to say, the latter years of the 17th Century and initial decades of the 18th Century, than to the preceding heyday. This has made it possible to evalúate, probably in a more balanced manner than hitherto, the impact that the interruption of exports of malvasía had during the more than ten years for which the War of the Spanish Succession lasted, on the long and medium-term development of exchanges between the Canaries and England. In addition, and not as a secondary issue, this paper provides authoritative data on the trend in prices of manufactured goods that were exchanged for Canarian wines; data that casts doubt over the theory on the deterioration of the terms of trade of wines from the Canaries with respect to the manufactured goods being imported from England during the closing decades of the 17th Century and initial decades of the 18th Century. Finally, this study challenges the long-established idea that the balance of trade between the Canaries and England, until well into the 18th Century, was always favourable towards the islands. 7 The publications by A.M. Macías Hernández on the wine economy of the islands are rather numerous, although from the point of view of this study two are noteworthy: "Explotación directa o medianería en el viñedo canario durante el siglo XVIII: estrategias para una crisis", Revista de Historia Económica, 1988, 1, pp. 43-71 and "Canarias y la 'crisis' del siglo XVII: la singularidad isleña", Revista de Historia Canaria, 176, 1992, pp. 179-206. I am grateful to Prof. Macías for providing me with some unpublished data and his observations with regard to the final draft. 205 RALPH AND FRANCIS SMALLEY AN ENGLISH MERCHANT COMPANY OPERATING.. In addressing all these issues, the analysis focuses primarily on the activities of Ralph and Francis Smalley and their financial results. The malvasía crisis — did it imply that the companies carrying out this business no longer profited and, consequently, saw themselves doomed to disappearance or, on the contrary, did the exportation of wine, although reduced, continué being lucrative? After answering this question, the paper goes on to deal with the issues of terms of trade and balance of trade between the Canaries and England in light of the data from Smalley and Co's accounting records. The results obtained are integrated into the general explanation of the decline in exports of malvasía to the United Kingdom in the initial decades of the 18th Century. ACTIVITIES AND FINANCIAL RESULTS OF SMALLEY AND CO (1697-1725) In 1700 Francis Smalley, "merchant in this city of London", granted powers to his brother Ralph, resident in La Palma, to carry out all manner of commercial transactions on his behalf, such as collect debts, demand and examine accounts, do business, make agreements, settle accounts, commence legal proceedings and serve writs of summons, among others. The deed, once translated, was presented to the juez conservador of the English nation in La Palma, Juan de Guisla, becoming a public deed on 22 December of the same year8. In reality, the collaboration between the brothers had begun several years before, as inferred from the accounts ledgers analysed below, but for reasons unknown Ralph did not require his brother's notarial authorisation to be able to act on his behalf up to that point. Whatever the case, this collaboration would be maintained for more than two decades, with Francis in London and Ralph in La Palma. The principal activity of Smalley and Co was the exchange of malvasía wines for manufactured goods and foods imported from England. Between 1697 and 1725 they sent to London 2,334 pipas of wine with an estimated valué of £16,338 (at £7 per pipa) (see below), 18 pipas of brandy, 18 tonnes of logwood, 600 pounds of almonds and 46 arrobas of sumac, and they imported from the British capital goods with a net valué of £21,221 (after deducting taxes, insurance, risks, commissions and freight that, jointly, are assumed to be around 10% of the valué of the invoices). The data in Table 1 would suggest the need to distinguish between two periods in the history of Smalley and Co, separated by the War of the Spanish Succession. During the first (1697-1701), the valué 8 AGLP, PN, Antonio Jiménez, 22-10-1700. 206 JOSÉ IGNACIO MARTÍNEZ RUIZ of the shipments of wine to London was very inferior to that of the goods brought from England — £ 3,477 and £9,504, respectively — while during the second (1713-1725) precisely the opposite occurred, that is to say, the valué of shipments of wine from La Palma was about 10% higher than that of the merchandise brought from London — £11,079 and £9,993, respectively. This issue, which will be revisited below, is fundamental in understanding the history of the company and, certainly also, of the wine trade between the Canaries and England during this period. Table 1 Smalley and Co.: Major Figures (1697-1729) SHIPMENTS TO LONDON SHIPMENTS TO LA PALMA (valué in £, s, d) (valué in £, s, d) 1697 521 9 11 1698 392 3186 3 7 1699 588 1445 13 0 1700 1151 10 2722 0 10 1701 1345 15 1629 11 5 1702 1703 773 10 1704 658 1705 1706 1018 12 1 1707 1708 1709 350 1710 1711 552 2 1,5 1712 1713 1278 751 5 5 1714 231 1295 19 11 1715 1316 1134 5 11 1716 1355 1166 5 12 1717 871 1078 10 11 1718 952 1719 630 1587 13 9,5 207 RALPH AND FRANCIS SMALLEY AN ENGLISH MERCHANT COMPANY OPERATING.. 1720 3234 516 18 0 1721 372 633 15 10 1722 280 540 10 8 1723 280 503 4 4 1724 26 1 6 1725 280 758 17 8 1726 1727 97 9 3 1728 1729 54 15 1 TOTAL 16337 15 0 21221 4 0 According to the ledgers of imports and exports kept by English customs, between 1698 and 1701, 18,826 pipas of wine from the Canaries were offloaded in the port of London with another 26,002 between 1713 and 1725. In view of the fact that shipments by Smalley and Co during one and the other period amounted to 496.75 and 1,582.75 pipas of wine, it is possible to conclude that their market share was 2.6% and 6.1%, respectively. As for imports, those of Smalley and Co and the total arriving from England stood at £9,504 and £236,987 between 1697 and 1701, and £9,993 and £356,863 between 1713 and 1725 (data is unavailable for 1718), respectively. Thus, Francis and Ralph Smalley would have carried out 4.0% and 2.8% of the total imports coming from England during each of the indicated periods (Table 2)9. The figures for Smalley and Co may seem small but if considered that the majority of exchanges between the Canaries and England were concentrated on the island of Tenerife, it seems unquestionable that the Smalleys became the leading English merchants on the island of La Palma. 9 National Archives (NA), CUST 3 and E.B. Schumpeter, English overseas trade statistics, 1697-1808; Oxford, 1960. 208 JOSÉ IGNACIO MARTÍNEZ RUIZ Table 2 Smalley and Co. in Anglo-Canarian trade (1697-1729) SHIPMENTS TO THE CANARIES BY SMALLEY AND CO ENGLISH EXPORTS To THE CANARIES (valué in £, s, d) (valué in £, s, d) 1697 521 9 11 51851 3 2 1698 3186 3 7 43170 9 6 1699 1445 13 0 35973 7 10 1700 2722 0 10 65257 4 6 1701 1629 11 5 40735 10 9 1702 1703 1704 1705 1706 1018 12 1 34857 3 11 1707 1708 1709 1710 1711 552 2 1,5 30517 10 8 1712 1713 751 5 5 30714 0 3 1714 1295 19 11 32161 19 8 1715 1134 5 11 46218 16 10 1716 1166 5 12 32184 10 10 1717 1078 10 11 39179 1 3 1718 1719 1587 13 9,5 5499 12 2 1720 516 18 0 19845 11 8 1721 633 15 10 21082 14 10 1722 540 10 8 21754 7 8 1723 503 4 4 29064 3 1 1724 26 1 6 33894 18 9 1725 758 17 8 45263 11 10 1726 1727 97 9 3 16514 2 4 1728 1729 54 15 1 38089 10 4 TOTAL 21221 4 0 713829 11 10 209 RALPH AND FRANCIS SMALLEY AN ENGLISH MERCHANT COMPANY OPERATING. When estimating the profits obtained by the company and, more specifically, the profitability of wine shipments to London, the procedure to be followed consists of comparing income and expenses resulting from the purchase, export and sale transactions of malvasía10. The calculation of income is very straightforward to perform, as the sale price is known for each and every pipa traded in London. With regard to expenses, to the purchase price per pipa of wine in the Canaries it is necessary to add the total costs incurred from that point until the moment of sale in the target market". The biggest of these were two: freight from the Canaries to the port of London and, especially, customs duties payable on the malvasía upon arrival in England. With an estimated price at source of £7 per pipa (see below), freight of £2 per pipa and customs duties of £10.12.08 per pipa until the year 1704 (£12.08.09 thereafter), did the Smalleys manage to profit from this Une of their business? The answer is yes, although only £2,438.16.11, equivalent to an average annual profit of 4.8% for the nineteen years that they exported wine to London (Figure 2). Needless to say, it is an extremely low figure12. Whatever the case, it is worth highlighting that in each and every one of the years between 1698 and 1704 there were profits and that at certain points these reached percentages superior to 20% (in 1698 and 1700) and even 30% (in 1703 and 1704). The profits obtained in 1721 and 1722 were also extraordinarily high (29.6% and 23.1%, respectively). Between 1709 and 1720, by contrast, there were either losses or else very low profits (6.7% in 1717, 5.4% in 1720 and 1.5% in 1719). 10 Most of the wines were exported by Ralph and Francis Smalley (almost always individually or in partnership; on some occasions, sharing the risks with other English merchants of La Palma —such as Francis Tey— or of Tenerife —such as John Tilomas). The islanders, then, scarcely exported wines themselves using for that the services of Smalley and Co which, in such cases, limited itself to receiving a commission. In effect, of the 2,334 pipas accounted for, no more than 69 or 2.9% of the total were shipped on behalf of La Palma islanders. The profits from this phase of the wine trade carne to fall almost entirely, as a consequence, into the hands of English merchants. 11 In this respect, the reference is the price of wine loaded on board, not the one paid to the producer, to which it would be necessary to add the costs of transportation to Santa Cruz de La Palma and of warehousing and local taxes in order to estímate the composition of the valué of the pipa loaded on board and the distribution of profits. 12 Compare these percentages with those provided by T.B. Duncan, Atlantic islands: Madeira, Azores and the Cape Verdes in seventeenth century commerce and navigation, Chicago, 1972. In 1696, according to him, a pipa of Madeira wine cost in Funchal £5 and 5 shillings "free of all customs and loading charges" while in Barbados it fetched £17. Assuming freight of 15 shillings per pipa and a loss of 10% of the cargo, the "gross profit" amounted to 155% of the capital invested (p. 50). 210 JOSÉ IGNACIO MARTÍNEZ RUIZ If the price at source had been £6.5 per pipa rather than £7, the company s profits would have totalled £3,605.16.11, equivalent to an average annual profit of 7.3% between 1698 and 1725, as for every half pound of sterling that the price per pipa of malvasía at source was reduced, caeteris paribus, the profits of Francis and Ralph Smalley increased by £1,167. This last percentage, in any case, is still very small considering the uncertainties and risks that the wine export business entailed. For the Smalleys, at any rate, obtaining the best purchase price for the wine loaded on board was a vitally important issue as it significandy influenced whether or not profits were made and to what extent, in each transaction; above all if we take into account that the possibility of reducing the amount of taxes due on the wine, upon arrival in England, was beyond their power13. Between 1714 and 1719 the company used the frigate Smalley —note the coincidence of the ñame—to transpon their merchandise, a circumstance that helped to reduce the price of freight and improve the terrible results during those years. Figure 2 Smalley and Co.: estimated profits from malvasía exports (1698-1725) (%) S 5 S E S 13 The only form of recouping the very high taxes charged on the wines upon arrival in England would have been by re-exporting them, given that English customs regulations allowed for their refund —drawhack— in such cases. Until 1688, the drawback entailed there fund of approximately half the duties paid; thereafter, almost 90%. See R. Davis, "The Rise of Protection in England, 1689-1786", Economic History Review, vol. 19, 1966, n. 2, pp. 306-317. The problem is that Canarian malvasía was only re-exported in small quantities (around 5% of imports). In 1699, for example, re-exports totalled 237 pipas only, distributed as follows: Denmark and Norway, 2 pipas; "East country", 26; East Indies, 44; Flanders, 20; France, 18; Germany, 4; Holland, 18; Ireland, 9; Portugal, 1; Russia, 17; Scotland, 26; Sweden, 1; Antigua, 6; Barbados, 9; "Straits", 1; Carolina, 2; Jamaica, 12; New York, 3; Virginia and Maryland, 16 and Nevis, 2 (NA, CUST 3/3). 211 RALPH AND FRANCIS SMALLEY AN ENGLISH MERCHANT COMPANY OPERATING.. Whatever the case, profits from the wine trade did not depend solely on the price per pipa of malvasía at source and on the amount due as customs duties upon entry of the product into England. In this regard — and pending the detailed analysis of the sale prices in London carried out below —, it is important to draw attention to the losses incurred when a portion of the pipas contení leaked away during the voyage or upon being disembarked or warehoused in London. In effect, of the 2,334 pipas of wine loaded at La Palma by Smalley and Co only 2,032 were sold, that is, 87%. What happened to the others?: 218 leaked away, 25 were used to top up other pipas and the remaining 59 seem to have been accounted for as "depleted" or as pipas whose content was thrown out for "being worthless". Thus, the profits from some years and losses from others also had a great deal do with good or bad fortune, so to speak, when trying to ensure that the wine loaded at La Palma reached London and was sold in the British capital without suffering any deterioration. In five of the eight years in which Smalley and Co experienced losses in agreement with the estimates in this study, the number of pipas that leaked away, suffered losses or were thrown out for being worthless was abnormally high, a circumstance that helps to explain the final results for the transactions carried out in each one of those years (in 1709, 7.5 pipas of 50, 15%; in 1715, 27.5 of 188, 15%; in 1718, 27 of 136, 20%; in 1723, 13 of 40, 33%; and in 1725, 11 of 40, 28%). The poor results from some years had a lot to do, on a similar note, with the rising cost of freight (in 1709, for example, the highest freight during the entire period was paid, £5.00.10 per pipa, more than double the usual rate until that point and what would be paid following the War of the Spanish Succession) and with the difficulties that the company experienced — from the year 1709, never prior to that —when financing payment of customs duties and freight for the wine, which meant they had to borrow money at 6% annual interest, the legal máximum14. Between 1709 and 1725, the capital of these loans amounted to more than £13,800 and the interest paid to more than £800, which affected Smalley and Co's final results as never before. Finally, and with regard to the other end of the trade chain, did Ralph and Francis Smalley obtain profitable sale prices for their wines 14 During the War of the Spanish Succession the price of insurance also became more expensive such that if prior to the war the insurance premium on the London-La Palma voyage was 2.5-3% of the valué of the insured commodities, in 1706 it reached 10%. After the war, the premiums fell to 1-3% (see Appendix). In G. Bird, Thepractisingscrivener, andmodem conveyancer, London, 1729, pp. 14-15, two agreements for freight to the Canaries are reproduced. 212 JOSÉ IGNACIO MARTÍNEZ RUIZ in the target market, that is, in London? If to the estimated price per pipa at source (£7), we add freight (£2), customs duties (£10.12.08 until the year 1704; £12.08.09 thereafter) and 10% for miscellaneous expenses (which includes everything else, such as commissions), the reference price for determining whether the pipa of wine was sold at a profit or a loss would be £21.11.11 until the year 1704 and £23.11.07 thereafter. Thus, due to a variety of circumstances, among those that ought to be highlighted the poor quality of some of the exported wines, 34 of the 602 pipas sold between 1697 and 1704, that is, 5.6%, did not manage to reach the reference price (£21.sll. di 1). Between 1709 and 1726 these figures were 266 and 1,414, respectively, the equivalent to no more and no less than 18.8%. Needless to say that the profits of the company suffered extraordinarily as a consequence of these facts, especially in 1709, 1714, 1718, 1724 and 1726, when the wines that failed to attain the reference price (£23.11.07) were 56.1%, 100%, 39.5%, 81.3% and 26.3%, respectively, of those sold. There were also exceptionally good years, the best of all being in 1703 when the sale price per pipa in London fluctuated between £35 and £44.10.00, a real fortune. Figure 3 shows the average price in London, excludingpipas sold below the limit for making a profit in order not to distort the results (£21.11.11 until the year 1704; £23.11.07 thereafter) (none of the pipas sold during 1714 were able to attain the reference price, which is why there is no column for this year in Figure 3). The data show great stability in terms of sale price which remained slightly above £25-26 throughout almost the entire period with the exception of the years of the War of the Spanish Succession and the biennium 1722-3. Given that between 1639 and 1645 the sale price per pipa of Canarian wine in London fluctuated between £17 and £18.5, it is possible to conclude also that only part of the increase in costs, especially the rise in taxes due on malvasía upon arrival in the country which moved from less than £2 per pipa in the 1640s to £12.08.09 from the year 1704 as previously indicated, could be passed on to the buyers. In effect, with respect to the increase in taxes of more than £10, purchasers in London at the end of the 17th Century and initial decades of the 18th Century did not pay greater than between £7.5 and £8.5 more. The remainder had to be borne by the wine merchants themselves, at the certain cost of reducing their profits. 213 RALPH AND FRANCIS SMALLEY AN ENGLISH MERCHANT COMPANY OPERATING.. 40,0 35,0 30,0 25,0 20,0 15,0 10,0 5,0 0.0 Figure 3 Smalley and Co.: average sale price per pipa of wine in London (1698-1726) (£) S 5 o, o y « N N M (M The War of the Spanish Sqpcession, in short, clearly marks a before and after in the history of Smalley and Co and, in more general terms, in the wine trade between the Canaries and England. The decline, it is true, had begun in the final years of the 17th Century, a period in which the stark reality of the eflfects of the British authorities' preference for Portuguese wines began to manifest itself. The war, nonetheless, had devastating effects as, to begin with, it lead to the repatriation of the majority of English merchants living on the islands, many of whom had to leave behind and lost their effects. Francis Smalley, in particular, requested the English authorities in 1704 to allow him to send a ship to the Canaries in order to recover the assets that, with an estimated valué of £5,000, he had on the islands. His situation was so desperate that in order to pay the £2,500 owed by him as customs duties, he found himself obliged to sell what he had in England15. The return to his country contributed, then, to weakening the trade networks that they had put so much effort into establishing in the decades preceding the conflict. During more than ten years, moreover, the direct exchanges with England became, if not entirely interrupted, much 15 C.S. Knighton (ed.), Calendar of StatePapers. Domestic Series. Reign ofAnne; vol. IV, 1704-1705, London, 2005, n° 277. See also F. Fajardo Spínola, "La guerra de sucesión española y la comunidad británica en Canarias: el final de una época" in A. de Béthencourt Massieu (coord.), Felipe Vy el Atlántico. XIV Coloquio de Historia Canario-Americana, Las Palmas, 2002, pp. 49-88. 2I4 JOSÉ IGNACIO MARTÍNEZ RUIZ diminished, such that when the war drew to a cióse and the conditions for carrying out these exchanges returned to normal, it turned out to be very difficult to regain the malvasía wine markets —both wholesale and retail consumers — that had been lost during the conflict. The accounting records of Smalley and Co are very enlightening in this regard. When Ralph Smalley resumed his wine shipments to London in 1713, almost all the clients that he had prior to the war, large and small, had disappeared from his books. It could not have been in the least easy to find new purchasers in such a competitive and fragmented market as the London wine market was, where a huge variety of wines of different origins, qualities and prices was traded16. During these years, furthermore, the accounting records of the company also reveal, for the first time, the existence of "bad debts" (in 1715, for example, the death of John Davis resulted in losses of £120, while that of Richard Baker led to losses of £16.5; John Lucas, for his part, paid only £12.5 of the £25 that he owed), a circumstance that highlights the ever-growing diíficulties faced by the Smalleys in finding solvent purchasers to whom they could sell their wines. As for the profits obtained by Smalley and Co with regard to the other side of their business, that is, the shipments of manufactured goods to the Canaries very little can be said due to the lack of information concerning prices and conditions of sale on the islands. Steckley, in his doctoral thesis, talks of profits of 20%. It is not possible to confirm or contradict the reliability of this percentage which, if applied to Smalley and Co, would have helped to boost profits obtained from the wine trade during the good years and to reduce or elimínate losses during the bad years. In any case, the existence of profits in this Une of the business would help to explain how the Smalleys kept on operating between 1709 and 1718, a period in which losses from the wine trade were significant as shown by the previous estimates. These profits would have also helped to obtain the necessary financing to acquire the wines purchased in La Palma. The only reference from English sources to shed some light on this matter indicates that after the Treaty of Utrecht the English merchants purchased each year some 4,000 pipas of malvasía wine in the Canaries —which is certain but only for the years immediately following 16 Of the 89 individuáis to whom Smalley and Co sold its wines between 1698 and 1703, 40, that is, almost half, did not acquire more than 1 or 2 pipas. Between 1713 and 1716 the purchasers identified are 99: 23 of them only purchased one pipa and 27 two. 215