merchants employed “arbitrage trading” to substantially increase their profit margins. “Arbitrage” is an economist’s term for taking advantage of differing prices for a given good in distant and distinct markets by moving the good from one to the other. In the case of Upper Guinea’s Atlantic trade specifically, new patterns of arbitrage trading developed between Europeans on the coast and suppliers and consumers in the interior. Detailed accounts of arbitrage demonstrate that a canny and intrepid trader who was armed with up-to-date commercial intelligence and willing to invest the necessary travel time could leverage his exchanges advantageously. Arbitrage was the practice of Juula long-distance merchants in the West African interior and also of some Luso-African traders on the coast in the early seventeenth century who linked the mainland to the offshore Cape Verde Islands and to Portugal (fig. 1.2). In this form of trade, rooted in the earlier, western African commercial system, a merchant would structure multiple trading routes in strategically selected segments going from one location to another and based on current pricing differences, which could be skillfully exploited to produce greater profit margins. A well-known account shows how merchants from the Cape Verde Islands leveraged a local salt resource through several steps into the final goal, which was a considerable sum of Spanish silver or its equivalent.
The trade we called “coastal” is mostly undertaken, in small ships . . . by Portuguese who live on Santiago Island [in the Cape Verde archipelago]. First they load these with salt, which they conveniently obtain for nothing on the islands of Maio and Sal in the Cape Verde Islands, and they sail to Serra-Lioa with the salt and trade it for gold, ivory, and kola. Then from Serra-Lioa they sail again to Joala and Porto d’Ale in Senegal, where they trade a portion of the kola for cotton cloths. They also sometimes trade ivory obtained in Serra-Lioa for Cape Verde cloths. From there they sail again east to Cacheo, where they trade the rest of their kola and their remaining goods for slaves. They acquire fifty to sixty slaves in exchange for the goods they have obtained by trade along the coast, and each slave is worth to them 150 reals, or pieces-of-eight. So they make 9,000–10,000 reals out of nothing, in a manner of speaking. For they are willing to put up with any discomfort, to an astonishing extent; and when they occasionally catch fish or come to a place like Serra-Lioa where everything is cheap, they eat like wolves.28
Arbitrage trading overland as practiced by the Juula Jahaanke of the upper Senegal River involved the intersection of a north–south axis of trade in gold and captives across the Sahara with an east–west trade in captives and overseas imports between the interior and the coast. A late seventeenth-century account of it featured exchanges for European goods on the coast, but Jahaanke merchants could just as easily have followed this same trading pattern before the Atlantic era by offering cotton textiles from inland in exchange for coastal sea salt. It began with Jahaanke merchants taking loads of locally woven cloth from Bundu on the upper Senegal River to the neighboring Bambuk goldfields, where they sold the cloth for gold. Traveling north to a desert-side entrepôt called “Tarra,” they were then in a strong position to negotiate with merchants specializing in the gold trade to North Africa. The Jahaanke, for their part, could profitably use their gold also to purchase whatever male captives there were on hand who remained unsold, for it was usually the case that Muslim slave markets in and across the Sahara preferred women and children. From Tarra, Jahaanke caravans forced their captive men to march overland to the upper Gambia River. There they met up with merchants from downriver who were supplying the Atlantic and American markets, which preferred male slaves, and quickly sold them away in exchange for European imports. Some of these Atlantic goods could then be used to purchase gold in the Bambuk goldfields, thus beginning new circuits of arbitrage trading.29
FIGURE 1.2 Map of the Upper Guinea Coast and the Cape Verde Islands. The National Archives of the UK, Nicolas Sanson, L’Afrique en plusieurs cartes nouvelles (Paris, 1656).
Specialized merchants such as the Jahaanke were known to Europeans as being particularly adept at initiating, negotiating, and closing deals. And deals were complicated. They involved making a series of offers and refusals, some real and others feigned, on the composition of specific trade goods in each assortment to be exchanged and on the relative values of the assortments as expressed in an agreed currency of account. Francisco de Lemos Coelho, a Portuguese merchant based in the Cape Verde Islands who lived for twenty-three years in the mid-seventeenth century on the Upper Guinea Coast, recorded what he had seen of Jahaanke merchants conducting their business. Jahaanke-led caravans of merchants and their loads of goods and provisions were among the largest in the hinterlands of the Upper Guinea Coast. They regularly set out from their homelands in November as the dry season opened roads. By the time they reached the entrepôt of Barrakunda up the Gambia River in July, their caravans had swelled to several thousand people, including large numbers of captives, over two thousand donkeys, and quantities of ivory, cotton textiles, and gold. Some of the merchants continued on down to the coast, where they purchased salt with a portion of their cotton cloth. Others remained on the spot to do business with Europeans who came upriver to purchase captives, ivory, gold, and cotton cloth. It appears that the privileged and highly respected and powerful Muslim clerics who led them possessed the authority to negotiate market prices and deal directly with European agents. Several caravan leaders would meet with agents to agree on a fair equivalency in the commodities they carried for a fixed, often fictional, length of cloth, for example, and on how a purchase price was to be paid in practice, such as in units of writing paper (reams or quires), in beads, or in a combination of the two. Once these equivalents were established, the rest of the individual merchant sellers converged on the scene and, according to this witness, engaged in nonstop intense trading for up to twenty-four hours. As with Álvares de Almada in the previous century, Coelho remarked admiringly that he saw no evidence of cheating or theft.30
Other merchant groups handled their commercial exchanges through whatever different procedures they found acceptable, but again, prices would be expressed in a currency of account while the actual payments would be made in other goods and currencies of exchange. Coelho witnessed smaller caravans of a hundred men or fewer arriving at Barrakunda from nearby areas and gave a description of how these merchants operated. What they hoped for was to sell their captives and ivory tusks and to be paid as much as possible in salt, but in this case they did not have a hand in deciding and setting prices. Trading was allowed to commence only after local officials in charge of the venue determined what the relative prices of goods and values of currency units would be in their domains. The example given by Coelho was for the largest and best-quality ivory tusk, which was priced at a notional ten cotton cloths. That price was to be paid partly in salt, whose value had been set per single dry unit of measure, in this case, a bowl of a certain standard size. Prices for other possible “payment goods” were then set in relation to the units of cloth and salt. What is most interesting is what Coelho had to say about the trade at Barrakunda in gold. Valuation of the precious metal in relation to other currencies and goods was such that European merchants who bought it discovered that it was not as profitable as buying other commodities and selling them later for gold-equivalent paper or favors of the powerful in European economies. In speaking of Atlantic commerce, Coelho claimed that European merchants could realize much greater eventual profits in this part of the Guinea Coast by dealing in ivory or captives rather than gold.31 Whether or not he was deliberately trying to avoid royal interference in a profitable transaction by downplaying gold as a trade item there, it was indeed the case that Africa’s gold exports in Atlantic trade came not so much from Upper Guinea as they did from the Gold Coast.
Bar iron was the essential commodity currency for Europeans trading on the Upper Guinea Coast. We see indications of concentration on this highly useful metal from the start with the establishment of Portuguese settlements on the Cape Verde Islands in the 1460s and then, increasingly in the 1500s, among the communities that lançados (men of Portuguese descent operating independently along the coast) were establishing on the mainland. Attempts by the Portuguese crown to regulate the commerce of these settler-traders and their Luso-African descendants
