Brazil on the Atlantic Sugar Trade in the 17th Century

During the first half of the 17th century, trade in Brazilian sugar was as a profitable enterprise, despite Maghrebi piracy and imperial rivalry between the Netherlands and the Iberian Crowns. Then, Brazil was the Western Hemisphere’s main producer of sugar, which attracted high prices in Europe. Trade profitability diminished in the second half of the century as competition from the Caribbean dropped prices in Europe while nominal prices in Brazil were fixed. Regulated shipping reduced price gaps further and increased transaction costs. Finally, French and English mercantilist policies closed their markets to Brazilian sugar, and credit grew increasingly risky in Brazil. To make this trade feasible and profitable, merchants developed of a wide range of maritime transportation strategies, risk mitigation methods, and payment and credit practices. The organization of shipping sought to make the most of the supply and demand along the route and reduce transportation costs with idle cargo space. By mixing more expensive goods along with cheaper products, merchants tried to keep many vessels sailing between those ports to increase the flow of information, to profit from arbitrage, and to spread the risk. Being a semi-luxury item, the value sugar in absolute terms afforded insurance premiums more than the products with lower value per volume traditionally traded by the Dutch. Yet the value of sugar was not as high as Asian spices or Spanish American bullion, therefore, the costs of concentrating shipping in convoys protected by well-armed vessels was burdensome to the sugar trade. Attempts to coerce sailing in convoys and establish monopolies on certain exports (and imports) to Brazil by the Dutch and the Portuguese found fierce opposition among most traders, particularly modest ones. Being quite fungible, easily priced, and widely traded, sugar roughly fit the modern concept of a commodity. As such, it was convenient means of payment and also functioned as commodity money in Brazil, where it was the main merchandise sourced in the colony. As planters grew increasingly indebted, they secured various legal hindrances to their properties’ foreclosure and compulsory acceptance of sugar as payment at officially tariffed prices unless otherwise stipulated, which increased merchants’ credit risk while reducing their gains.