Wednesday, May 23, 2018

Privateering


War between the European powers was not always detrimental to Anguillian enterprise.  War provided economic opportunities for those Anguillians who dared to take the risks.  The surviving documents in the Anguilla Archives show Anguillians participating in the physically dangerous and financially risky enterprise of privateering.  The industry seems to have peaked in the later wars of the eighteenth century, just outside our period.
A privateer is a privately owned and manned ship, commissioned by a government to fight or harass enemy ships.  The commission, also known as a ‘letter of marque’, empowered the person to carry on all forms of hostility permissible at sea by the usages of war.  This authorised him, if he could put up sufficient security to guarantee his correct conduct, to sail as a private man-of-war, at his own risk, against the King's enemies.  He was able to attack foreign vessels during wartime and seize them as ‘prizes’.  A captured ship was subject to condemnation and sale under ‘prize law’ in a Court of Admiralty.  The proceeds of the sale in Anguilla were divided between the ship-owner, the captain and crew, and the court.  Normally, a share would go to the Crown as issuer of the commission.  In Anguilla, the Crown had no representative other than the deputy governor who was also the judge of the ‘Court of Admiralty’.  If the deputy governor also owned the privateering ship, and if his son or son in law was the captain of it, most of the proceeds of the sale could be kept in the family.  Needless to say, that is just what happened in Anguilla.
Privateers were a large part of the total military force at sea during the seventeenth and eighteenth centuries.  In the First Anglo-Dutch War of 1652,[1] English privateers in European seas attacked the trade on which the United Provinces of the Netherlands depended, capturing over 1,000 Dutch merchant ships.  During the subsequent Anglo-Spanish War of 1654,[2] Spanish privateers captured 1,500 English merchant ships, helping to restore Dutch international trade.  English trade was also attacked by Dutch privateers in both the Second Anglo-Dutch War of 1665[3] and the Third Anglo Dutch War of 1672.[4]  During the Nine Years War,[5] the French encouraged privateers to attack English and Dutch shipping.  England lost roughly 4,000 merchant ships during that war.  In the following War of Spanish Succession,[6] privateers took 3,250 English merchant ships.
When the Emperor Charles V died in 1700, his closest heirs were members of the Austrian Habsburg and Bourbon families.  The acquisition of the Spanish Empire by either of them would threaten the European balance of power.  Charles left his throne to the French Philip of Anjou, and he was proclaimed King of Spain the same year.  His right to the Spanish throne was recognised by England and the Dutch.  A Grand Alliance of other European powers promoted Archduke Charles, the younger son of the Habsburg Emperor Leopold, as their candidate for the Spanish throne, and war broke out in Europe in 1701.  In 1711, England, or Britain as she now was after the 1707 Union with Scotland, was tired of the war.  When Archduke Charles on the death of his older brother succeeded to the Habsburg throne, Britain withdrew from the war, and the Treaty of Utrecht followed in 1714.

The capture of St Eustatius by the British fleet in 1781.[7]
The Fourth Anglo-Dutch War of 1780-1784 is just outside our period.[8]  Locally, the most important impact was the capture in 1781 by Admiral Rodney of the neighbouring Dutch international free-trade entrepot of St Eustatius (Statia). 
Anguillian privateers in the earlier part of eighteenth the century were not able to get their captures lawfully declared prize of war by a Court of Vice Admiralty in Anguilla.  That was very inconvenient for deputy governor Gumbs,[9] one of the chief privateering financiers through the period.  So, we see him defending a case brought in 1756 by Captain John Watts before the Anguilla Council. From the record in the Anguilla Archives, it appears that George Brooks was the captain of either a schooner or a sloop owned by deputy governor Gumbs.  The deputy governor was in the happy position of being able to issue a commission to Mr Brooks to operate as a privateer.  Brooks captured the Brigantine Lucretia, captained by John Watts and owned by William Moore,[10] and brought it into port in Anguilla.  It is not clear from the record where Lucretia was registered, but from the names of her owner and captain she does not sound French.  Before Gumbs, sitting as his own informal Court of Admiralty, could confiscate the vessel and order it sold, Watts and Moore brought an action before the Anguilla Council for the release of the vessel.  Their claim was that their vessel was not engaged in enemy trade, and that it was unlawfully being detained and kept in Anguilla when it should be immediately brought before a Court of Vice Admiralty so that they could establish Lucretia’s true status.  The Anguilla Council, after hearing the parties, decided that governor Gumbs had done all in his power to persuade the Governor in Chief in Antigua to establish a Court of Vice Admiralty in Anguilla, but this had not yet been done.  So, it was not governor Gumbs’ fault that the Lucretia could not be either confiscated or freed.  Watts’ and Moore’s case was thrown out and they were moreover penalised by an order to pay the costs of the law suit.  This finding of no liability is no surprise when we consider that these are deputy governor Gumbs' own Council members sitting as a Court of Common Pleas.  It is not clear what happened to the Brig Lucretia in the end.  It was only some years after this incident that the Governor-in-Chief appointed the deputy governor and his Council to act as a Court of Vice Admiralty for Anguilla, but the exact date of the establishment of the court is not known.  The consequence of this appointment was that the court in Anguilla could now legally order foreign (which in Anguilla’s case always means ‘non-Anguillian’) ships confiscated and sold.  Once established, the Anguillian Court of Vice Admiralty was kept busy hearing appeals by outraged traders whose vessels were seized by Anguillian privateers.
Anguilla's most famous privateer of our period was Captain Edward Richards.  He moved to Anguilla from Antigua in about the year 1757 during the Seven Years War, and settled here.  He married well, choosing Tabitha, deputy governor Benjamin Gumbs' daughter.  Now well-connected, he lived in Anguilla for a several years during the 1760s.  He purchased land at Crocus Bay, Anguilla’s main port of entry, and just down the hill from the deputy governor’s house which doubled as the Council room and the Courthouse.  He engaged in trade when not privateering, and from time to time he acted as a court-appointed arbitrator in trading disputes over shipping accounts.
There are a number of documents of the period preserved in the Anguilla Archives that deal with Edward Richards’ career as a privateer.  In deputy governor Gumbs, he had a merchant and planter willing to invest in equipping his boat with guns, ammunition, supplies and men, in the expectation of sharing in the profits of his capture.  He would have received his letter of marque from the same deputy governor Gumbs.
Once he captured a prize he would bring it to Anguilla for trial before the Court of Vice Admiralty.  If the vessel was condemned, the Court would itself receive a part of the value of the prize for the King's revenue.  This would include the judges' own fees and expenses.  It is likely, given this arrangement, that many unlawfully seized ships were ordered to be sold.
At no time during this period was any account kept of the King’s revenue in Anguilla.  Needless to say, any revenue earned by the Court went into the judge’s pocket.  That is how Anguillian judges of the day were expected to be paid.  It might have occurred to Richards, therefore, that it would be somewhat advantageous to him to have as President of the Court of Vice Admiralty his own father-in-law and co-investor in his venture.  However, we do not know from the sparse records  whether this arrangement ever resulted in any great profit to Richards.
When Richards died in 1765, his young widow was left to pay his debts.  His simple will of that year left her all his estate, both real and personal.[11]  She was obliged to mortgage the family property in 1767.  The mortgage was only paid off fifteen years later in 1782 after she recouped her fortune by marrying the wealthy St Martin merchant, Morgan Beaumour Marchant.  Mr Marchant also conveniently resided at least part of the time in Anguilla and served on deputy governor Gumbs' Council.[12]
In return for the letter of marque, a privateer was expected to put up a bond with two sureties to guarantee that he would only seize legitimate enemy ships.  In the Anguilla Archives for 1762 we find Edward Richards giving a typical privateering bond.  Why are we not surprised to see that the two sureties signing the bond with Richards are none other than deputy governor Gumbs’ captain George Brooks and the local merchant Joseph Burnett?  They bind themselves in the sum of fifteen hundred pounds sterling.  The condition of the bond is for the lawful performance by Richards of his commission, or letter of marque.  This commission authorises him to arm and equip the sloop the Fry to seize and take ships of the French.
We see another bond in the Archives for the sloop the Lyon, of thirty tons.[13]  This was again captained by Richards.  In other documents in the Archives, we see him captain of the sloops War Trial and the Hawke.  At various times during his career, he captured several ships including the Dirkinsen Sara, the sloop Three Friends, the snows[14] Justice and Gereghteyheidt, and the privateer Amazon.
There is also in the Archives a 1758 bond of the Hon Benjamin Gumbs, Peter Harrigan and Richard Rogers for Jacob Gumbs, to be captain of the 30 ton privateer Rebecca.  Jacob Gumbs along with John Smith also owned the sloop Diamond.  Jacob Gumbs was probably deputy governor Benjamin Gumbs’ uncle who is recorded as killed before 1760, probably in a naval action which went wrong.  There is no record in the files as to whether he made his fortune at privateering before he died.  We can be sure that he would have received a sympathetic hearing concerning any prize vessels he brought into Anguilla prior to his death to be tried before his nephew’s prize court.
There are few other specific references to other Anguillian privateers during our period, 1650-1776.  Given the dearth of Anguillian records, we can be sure that those who are memorialised in the Anguilla Archives are not the only ones who tried their hand at this venture.  There is for example, a later privateering commission of October 1782 issued by the Court of Vice-Admiralty at Antigua to Richard Browning of Anguilla, commander of the brig Revenge.  This authorises him to seize the shipping of the revolting American colonists and against British ships trading with them.  There is also the later 1782 privateering commission issued by the Court of Vice-Admiralty at Antigua to Richard Browning of Anguilla, commander of the brig Revenge, against the shipping of the revolted American colonists and against British ships trading with them.[15]
We can be reasonably certain that, with her long tradition of ship building and sea faring, Anguilla produced her share of privateers in all the wars of our period.  From Richard Browning’s commission it appears that by 1782 the authorities decided to end Anguilla’s authority to issue commissions.  Anguillian privateers were now obliged to obtain their letters of marque from the Governor in Chief in Antigua, and to bring their prizes in to St John’s where they could be tried in an independent court.  Deputy governor Gumbs and his successors were deprived of a lucrative source of additional income.  This was not to be the last time that the greed and excesses of Anguilla’s leaders in flouting international norms and laws in pursuit of lining their own pockets was to lead to the slapping down of some of the more borderline Anguillian enterprises.  But, that is another story.


[1]       1652-1654. To protect its position in the Americas, in October 1651 the English Parliament passed the first of the Navigation Acts, which mandated that all goods imported into England must be carried by English ships or the vessels from the exporting countries, thus excluding the mostly Dutch middlemen. This led to a number of skirmishes between the vessels of both nations, culminating in the declaration of war by the Commonwealth on 10 July 1652.
[2]       1654-1660. This was a conflict between the English Protectorate under Oliver Cromwell and Spain. It was caused by commercial rivalry.  Each side attacked the other’s commercial and colonial interests in various ways such as privateering an dnaval expeditions.  In the West Indies, the most significant development was the capture in 1655 of Jamaica by Penn and Venables.
[3]       1665-1667. The year after the 1666 fire had gutted London’s commercial centre, the Dutch fleet under Admiral de Ruyter sailed up the Thames Estuary and set fire to the ships of the English fleet. The Dutch victory had a major psychological impact throughout England. This, together with the cost of the war and the extravagant spending of Charles’ Court, produced a rebellious atmosphere in London.  King Charles ordered his envoys at Breda to sign a peach quickly as he feared an open revolt against him.
[4]       1672-1674. Without much public enthusiasm, Charles II joined the French Louis XIV in his attack on the Republic. Admiral de Ruyter gained several strategic victories against the Anglo-French fleet and prevented them from invading the Netherlands.  After these failures, parliament forced Charles to make peace.
[5]       1688-1697. This war was initially caused by King Louis XIV invading the German Palatinate, resulting in William of Orange, the Dutch-born King of England to form a Grand Alliance against France. The war raged across Europe, but France did not have the resources to defeat both the English and the Dutch, and peace was at last concluded by the Treaty of Ryswick.
[6]       1701-1713. This mainly European conflict was triggered by the death of the childless King Charles of Spain in 1700. His closest heirs were members of the Austrian Habsburg and the French Bourbon families. Acquisition of an undivided
[7]       The reason for the inscription at the top reading from right to left is that this painting is a ‘trompe d’oeil’. It is meant to be viewed in reflection in a mirror, when it would be easily readable.
[8]       1780-1784. It was caused by the Dutch Republic supporting the Americans who had rebelled against the British Crown.  The Dutch sided with the Thirteen Colonies in the American War of Independence, 1775-1783, when the mainland colonies in America declared independence as the United States of America.  Some of the southern island colonies in America, particularly Jamaica, seriously considered joining the war on the side of the mainland colonies.  But, in the end, they all remained loyal to the Crown.  Their trade was badly affected by the British blockade of the rebelling colonies, and the economies of all of the islands were badly hit.
[9]       Deputy governor of Anguilla from 1750 to his death in 1768.
[10]     Both good St Kitts names of the period.
[11]     Anguilla Archives: Edward Richard’s 1765 Will.
[12]     Chapter 17: The Council.
[13]     Anguilla Archives: A selection of 1762 privateering bonds.
[14]     A snow is a square-rigged sailing ship with two masts.
[15]     October, 7th, 1782. Bancroft Library, University of California.

Thursday, May 03, 2018

Privatising Anguilla's Electricity

Anglec is the familiar name of the Anguilla electricity company.  Structurally, it is a statutory corporation whose shares are owned mainly by the government of Anguilla and its agencies.  In 1991, when Anglec was formed, government gave it the assets of its Electricity Department.  In exchange, government got most of its shares. The Commonwealth Development Corporation (CDC) which had earlier invested in the electricity service also became a shareholder.  Government purchased CDC’s shares in 1998, becoming the sole shareholder in Anglec.  Dividends were paid to shareholders for the first time in 2002.  That dividend yield was 2.8 %.  It was paid to the sole shareholder, government.
In 2003, in the face of public protests, government offered 6 million shares to the public.  A total of 17 million of Anglec’s authorised 30 million shares have now been issued.  Government holds 40%.  The local banks and the Social Security Board purchased 40%.  A number of individuals purchased 20%.  Either directly or through its subsidiaries government now owns 80% of the shares.  In 2010 the dividend was a high of about 6%.  In 2015, the last year of its published accounts, the dividend was about 2.5%.
In the 2003 Prospectus, the stated objectives of the share issue were to improve the quality and reliability of the electricity supply, develop the professional and technical skills of employees, maintain stable and affordable prices, and achieve financial viability.  It was hoped that the Public Utilities Commission would begin to regulate tariffs by the year 2004.  (This never occurred.  To this day Anglec’s rate-setting continues to be supervised by the government’s Ministry of Infrastructure.)  Electricity rates are said to be among the highest in the region.
There are several valid arguments against privatisation of electricity.  One is that maintenance teams that were once fully staffed will be dramatically cut to reduce costs.  The effect of such cuts will be an increase in equipment failure, leading to a rise in outages.  Consequently, a privately owned electricity company may be able to blackmail government into a bailout or allowing an increase in the rates with a threat of blackouts.
The privatisation of electricity is not something that citizens normally demand or want.  Once shares are offered to the public, there is typically little interest in public participation.  On the contrary, privatisation frequently gives rise to bitter protests.
At the time in 2003, many persons objected to this transfer of the Electricity Department to a private company.  It was said that electricity was a basic human right and should not be run like a commercial enterprise.  Ownership by a government department meant that social welfare concerns could be brought to bear.  However, the majority of us knew that the Government’s Electricity Department was running the service very inefficiently and that there was a lot of waste.  We hoped that putting management under a Board of Directors would ensure the service was better managed than by the government bureaucracy.  So, the privatisation proceeded.
We were soon to be disappointed in the management of Anglec.  As each administration took power after a general election, they appointed political hacks to the Board of Anglec.  These political Boards have made a mess of management.  Such political boards are now recognised to be generally unprofessional and unsophisticated.  They wrongfully dismiss employees, resulting in litigation that causes the corporation millions in damages.  Some high-ups engage in serial sexual harassment of junior female employees.  Management seems ineffective in halting this abuse.  Staff say that repeated complaints are ignored by the Board.  Morale has been falling and dissatisfaction is rising.  It is time for this to change.
The government of Anguilla now proposes to sell all of its shares in Anglec in order to raise money to meet its expenses.  This proposal has caused a renewed controversy among the talk-shows in Anguilla.  The radio waves are filled with words of condemnation against this supposed “giving away” of a national treasure.  We hear warnings that this planned privatisation will bring doom to Anguilla.  It is said to be a betrayal of the people by its own government.  That is the controversy that I want to look at today.
Normally, in the West Indies, electricity rates are controlled by an independent statutory Public Utility Commission (PUC).  Normally, no public utility can increase the rates without securing the consent of the PUC.  An electricity company should not be allowed to exploit the consumer by unreasonably increasing rates.  On the other hand, the electricity company should not be driven into bankruptcy by not being able to increase its rates to make a reasonable profit.  Such a system (of putting a PUC in the middle between the consumer and the utility company) is designed to install an independent and transparent institution to ensure fairness to both the consumer and the utility company.
In Antigua, for example, the Antigua and Barbuda Public Utilities Authority (APUA) controls the increase of rates for electricity, telephone, internet, and water.  In Anguilla this is not so.  In Anguilla there is a Public Utility Company.  But, its mandate is limited to the telephone companies.  If Cable and Wireless or Digicell want to increase their rates, they have to get the permission of the PUC.  But, in Anguilla that process does not apply to electricity or water.  There is no independent body to control the rates charged by the Water Corporation of Anguilla or Anglec.  These two utilities are under the control of the government’s department of Infrastructure.  This department is headed by a Minister of government, a politician.  In other words, electricity and water prices to the consumer are controlled by the political directorate.  There is no independent body to supervise increases rates in Anguilla.  Just as Anglec cannot increase rates without the permission of government, so any purchaser of government’s shares in Anglec will not be able to increase the rates without political permission.  I ask the question, which politician will permit electricity or water rates to be increased if there is likely to be a public outcry?
Anglec holds a Public Supplier’s Licence.  This provides for Anglec to submit a claim to government to increase rates.  The rules are that if the requested increase is refused, Anglec can submit its claim to an independent arbitrator.  That arbitrator is the High Court judge assigned to Anguilla.  You may well consider that a lawyer or judge is not the best qualified person for determining the justification for an increase in rates.  This is a technical area that requires to be dealt with by suitably qualified experts in the field.
When the Anglec shares were originally issued to the public there was a conditional promise that dividends would be in the range of 6%, or EC$0.15 per share.  This promise was subject to a number of conditions.  I am told by private investors that level of dividend is seldom met.  Over the past twenty years the average return per annum has been more like 4%.  In other words, this investment has not lived up to the promises (conditional as they were) that were originally made.
There is an overriding reason why government should be encouraged to divest itself of the remainder of its shares in Anglec if it can do so.  Given the culture in Anguilla of Ministers appointing unqualified cronies to the Boards of statutory corporations, any effort to take the appointment of such a Board out of the hands of a politician and put it in the hands of the shareholders is to be encouraged.  The present and continuing appalling lack of morale among the staff of Angec because of the unprofessional and oppressive conduct of some in high office requires that they be all swept out of office and replaced by persons chosen on the basis of merit.
The sooner that Anglec is fully privatised the better for all of us.  Any objection to such a long needed and overdue reform is nothing but the most blatant political posturing.
But, tell me again, based on the history above, without fundamental restructuring, which honest and well-advised foreigner is going to invest tens of millions of dollars in purchasing government’s shares in Anglec?