The far side of capitalism: Institutions and trade financing in Manila during the long eighteenth century

Sustained long-distance trade in the early modern era necessitated institutional mechanisms capable of solving three interrelated challenges: the need to mobilize an unprecedented volume of capital and to lock it in for long periods of time, ways of mitigating the principal–agent problem across continents, and methods to internalize and distribute the high risks associated with intercontinental sailing. The case of Manila represents an alternative institutional approach to achieving market impersonality and solving the three fundamental challenges without the need for joint-stock corporations, and extending beyond private and cultural networks. By adapting urban religious institutions such as brotherhoods and using legacy funds to facilitate pooling savings, Manileños managed to establish a capital market capable of mobilizing large resources towards trade finance during the long eighteenth century.