PRIVATEERING — THE BUSINESS OF PIRACY: PART 1

The early seventeenth century was a wild, violent time. The discovery of the New World a century before—and the riches that could be extracted from it—had led to bitter conflicts between European powers. The reformation and Counter-Reformation led to even more bitter conflicts. In the fifty years spanning the last quarter of the sixteenth century and the first quarter of the seventeenth, there were no less than seventeen major wars fought on European soil, plus numerous violent rebellions within individual European nations. And while these various clashes were playing out, there was also an ongoing conflict between the European powers and the Ottoman Empire.

It is important to remember that the seventeenth century world was very different from our own. We casually refer to sixteenth/seventeenth century European ‘countries’ using familiar names—England, France, Germany, Holland, Italy, Portugal, Spain, Denmark, Iceland—and the very familiarity of these names makes it all too easy to forget that these were not what we would today recognize as nation states. Among other things, they typically did not have standing armies and navies of the size and permanence we now take for granted. As a result, during the sustained conflicts that marked this period, governments and monarchs resorted to non-state actors like merchant corporations, mercenary armies, and privateers to achieve their goals.

Privateers were employed to attack enemy ships and steal merchandise from them—and to frequently steal the ships themselves. So privateers were, essentially, pirates. They were a special kind, though: a legal pirate.

Governments and monarchs provided legal cover for privateers in the form of an official license, usually referred to as a letter of marque. A privateer in possession of such a license was given legal sanction to attack ‘enemy’ shipping—the definition of ‘enemy’ being given in the letter of marque. As long as the privateer kept within the bounds of his letter of marque, everything he did was completely legal. In other words, he became a lawfully authorized pirate.

For the ruling governments or monarchs, the beauty of this system was that the costs of equipping a privateering expedition were born entirely by the privateers themselves and by the financial backers of individual privateer ships. The profits, however, were shared with the governments/monarchs. So the use of privateers allowed governments/monarchs to increase the number of armed ships available for the various conflicts without having to incur the expenses necessary to permanently enlarge their navy—while at the same time bringing in much needed extra revenue.

Everybody did this. It was standard operating procedure for both European and Ottoman states.

It was piracy, but it was also business—a business in which people could get very, very rich. As with all business, however, there were rules, and privateering was carefully regulated.

The Dutch provide us with a good example of how the piratical business of privateering worked.

The Dutch privateering enterprise involved three participants: 1/ the government actors (the Stadholder, the various naval Admiralties), 2/ the financial backers, 3/ the privateers themselves. The government actors provided the legal authorization and generally oversaw the various steps in the process. The financial backers raised the capital necessary to get the ships equipped for their sea voyages. The privateers sailed the ships.

The process required to launch a legal privateering expedition in the Republic of the Netherlands at the beginning of the seventeenth century went like this.

First, those sponsoring the expedition had to get the patronage of one of the five Admiralties that supervised Naval and merchant shipping—the Republic of the Netherlands had five separate Admiralties, each with local jurisdiction: Amsterdam, Friesland, Noorderkwartier, Rotterdam, and Zeeland. Once this patronage issue had been taken care of, the sponsors of the privateering expedition had to apply for and receive an official letter of marque.

During this period, both privateering and outright piracy were universally common. Every major European power made use of privateers. At the same time, though, every major European power also did its best to combat piracy. By general consensus it was accepted that the difference between a privateer and a pirate was that the privateer had legal authorization. If caught, licensed privateers were generally treated as prisoners of war; pirates were hanged. To be recognized internationally as legitimate, the privateer’s official authorization—the letter of marque—had to be issued by a ruling sovereign. In the Republic of the Netherlands, that sovereign was the Stadtholder (the titular head of the republic).

Letters of marque spelled out in great detail (some of them had as many as 30 separate clauses) exactly what the privateer captain could and could not do. Such official authorization was crucially important to guarantee the legality of the privateering expedition—and the lives of the privateers if they were ever caught by the ‘enemy’.

Once the sponsors of the privateering expedition had received the support of one of the Admiralties and had acquired a signed, legal letter of marque, they were in a position to raise the funds necessary to finance the expedition.

Very wealth men might individually finance an expedition, but this was pretty rare. Mostly, the money was raised via consortiums. Pooling the cost like this had the benefit of reducing both the financial outlay of each individual contributor and of lessening the financial risk if the expedition failed to produce a return—which happened not infrequently, privateering being a chancy enterprise: something like a quarter of all privateer ships sank, or were captured, or returned without significant booty. The consortiums could range in size from a handful of members to upwards of forty, including ordinary people with a little extra cash in hand. Financial backers with sufficient wealth sometimes invested in multiple privateering expeditions simultaneously in order to decrease their financial risk even further.

Sometimes the captain of the privateer ship would be part of the consortium; sometimes the consortium would hire a captain. In any case, a captain had to be found. That captain was then responsible for the critical decisions required in outfitting the ship and hiring the crew.

One final step was still necessary before a privateering expedition could officially be launched.

The consortium financing the expedition (and sometimes the captain himself) had to post a security bond, typically known as caution money. This bond would be refundable if the expedition went well, but if the captain transgressed the limits of his letter of marque—if, for example, he attacked a ship belonging to a friendly nation—the security bond would be forfeit. This could serve quite effectively to deter delinquent behavior on the part of privateer captains—especially if a captain had himself personally contributed to the security bond.

After all the necessary steps had been taken—getting an endorsement from one of the Admiralties, receiving the letter of marque, arranging financing, outfitting the ship, choosing the captain and crew, paying the security bond—the privateer ship was ready to set out to sea in search of enemy vessels to loot.

For the details of looting and of how the loot was sold and proceeds divvied up, see Privateering — The Business of Piracy: Part 2.