BALANCING PROFITS AND LOSSES : MEDIEVAL TRADE
Changing the very nature of trade
During the thirteenth century, trade blossomed within nations, internationally and even across continents. The big movers in this change were Italian merchant cities such as Venice, Pisa and Genoa. These cities were relatively peaceful and secure, which provided them with opportunities to expand their trading operations significantly. As the following sections describe, they introduced big changes in how trade was organised, paid for and accounted to drive this trade, as opposed to any single specific event.
Hiring agents
Traditionally, merchants had been always on the move, travelling with their goods and being present at the point of sale. This arrangement changed in the thirteenth century when mercantile businesses in Italy became prosperous enough for the merchants to stay at home. A three-stage process developed: merchants employed specialist goods carriers who made their livings by transporting things from place to place, delivering items along established trade routes to distant agents, who sold the items at prices determined by the merchants.
The following letter is an excellent example of this new three-stage trade practice. The quote comes from an acknowledgement note dating from 1248, written by an agent to a merchant that he represents:
"June tenth. In the year of the Incarnation of the Lord 1248. I, Bartholomew, son of the late Benedict of Lucca, confess and acknowledge to you Rolland Vendemmia, of Lucca, that I have had and received from you as an order twenty-three pounds and ten solidi [Genoese currency], invested in armor and in prepared silk and gold wire from Lucca and in two cross-bows, renouncing, etc. With that order I shall go, God willing, on the next journey I make to Montpellier, by sea or by land, for the purpose of selling the said things, with God’s favor and at the risk of the sea and to your profit. I promise by this agreement to repay you all the capital and the profit of the said order, retaining for myself what I expend for the transport and sale of the goods, pledging all my goods, etc."
I wonder whether he ever came good on the agreement?
Founding trade colonies
After a while, towns with large numbers of agents began to form their own kinds of colonies. Venice, Pisa and Genoa all had colonies throughout the Mediterranean. The purpose of colonies was to establish a distribution centre for goods as well as a place for agents to be permanently based so that they could find new customers and markets. For example, the territory of Galata in Constantinople was a Genoese colony and they built the large Galata tower that still stands in modern-day Istanbul to protect their interests.
Competition for trade colonies was fierce. For example, Venice’s involvement in the Fourth Crusade was primarily based on the city’s desire to establish more control of trade in the Adriatic and colonies in Constantinople. These colonies also provided handy bases for long voyages. Venetian ships travelling to Constantinople were able to stop at a number of (usually island) bases on their way to the Byzantine capital.
Establishing trading companies
The concept of the trading company emerged during the thirteenth century. Merchants had worked together before but usually just agreed to invest jointly in a single voyage or series of trading operations. These arrangements gradually became more permanent to the point where companies were formed.
The main reason for the creation of these trading companies was the evolution of financial practices. Amazingly, all the following practices developed hugely in the thirteenth century:
✓ Accountancy took on the tasks of recording everything that was happening financially. Merchants had previously dealt personally with customers, but now a whole new network of transactions needed to be recorded. These new skills first developed in various Italian cities, particularly Genoa, which developed schools for these ‘notaries’.
✓ Banking had been going on for hundreds of years, but during the thirteenth century it got serious and went international. The biggest development was the creation of bills of exchange, which freed merchants from having to carry bucketloads of cash around all the time. Instead, bankers as far apart as Paris and Antioch were able to pass credit notes, which encouraged larger deals to take place. Most major European cities became part of an ever-growing network of banks. Usury (money lending) also became a far more complex business.
✓ Communication became increasingly important. During the thirteenth century, several Italian cities and business guilds began their own courier services. These companies were in addition to the services started by large religious organisations such as the Templars and the Teutonic Knights. A lot of business letters survive from the period and show how up-to-date the authors were with events taking place some distance away.
✓ Insurance was increasingly necessary as trade deals became riskier and more complex. An early system developed in which the ship owner transporting goods advanced a loan to the merchant covering any losses that may occur. Gradually this system changed into separate companies providing this service, enabling merchants to buy insurance cover.
✓ Share options first came into being around the middle of the thirteenth century. Several investors grouped together in a contract, or commenda, and agreed to undertake mutually the risks in a series of trading ventures and share whatever profits came out of it as a dividend.
Essentially, the stock market was born!
Things didn’t always work out in merchants’ daily lives. In Shakespeare’s play The Merchant of Venice, the merchant Antonio gets in trouble with Shylock the moneylender (or usurer) because his ships are lost at sea and he’s uninsured. A film version starring Al Pacino (2004) is a good production of this classic play with connections to medieval history and commerce.
Armour for hire!
The range of original documents regarding trade that survive is quite staggering. Modern historians can review original price lists, ship manifests, insurance documents, tax agreements and all manner of other things that I don’t have space to include.
One of my favourites is the following, written by a knight wanting to hire some armour so that he could go on Crusade in 1248:
"July twenty-seventh. In the year of the Incarnation of the Lord 1248. I, Bonfils Manganelli, of Gaeta, acknowledge and confess to you, Atenoux Pecora, of Gaeta, that I have taken and received from you a certain suit of armor at a rent of seventeen solidi in mixed money now current in Marseilles, which seventeen solidi I have already paid you, renouncing all claims, etc. This armor I should take on the next voyage I am to make across the sea, for the price mentioned, at your risk and for your profit, going across the sea and returning to Marseilles. But if, on the completion of the said voyage, I should make another voyage with the said armor, I promise to pay you by this agreement, as hire for the said armor, one augustal of gold, and on the return from the said voyage to pay you that augustal and to return the armor or its value, namely seventy solidi in mixed money now current in Marseilles, if by chance the armor should be lost through my fault. Or I promise to bring the said armor to your profit under pledge of all my goods, present and future, renouncing the protection of all laws, etc. Witnesses, etc."
This document hints at one of those wonderful lost stories from history. Did the knight make it on Crusade and ever bring the armour back? We’ll never know. Incidentally, he was probably paying about 25 per cent of the price of the suit to hire it.
Trudging through Italian trade wars and tribulations
On the one hand, these commercial advances were great boons to people throughout the Medieval World, and yet wherever money was to be made there were also fights to be had. The Italian cities were almost continually in conflict with each other, endeavouring to dominate trade routes and set up new colonies. Several notable conflicts of the era were based in trade issues.
The Sicilian Vespers
Despite its name, the Sicilian Vespers – one of the more interesting episodes in medieval history – has nothing to do with Italians riding scooters. In fact, the Sicilian Vespers took the form of a revolt on the island of Sicily in 1282 against the rule of Charles of Anjou (also known as Charles I), the king of Sicily. A series of wars followed, lasting all the way through to the beginning of the fourteenth century. The rebellion takes its name from the fact that it began during evening prayers (vespers) on Easter Monday, 1282.
The series of events following the 1282 uprising are extremely complicated, but the relevance to trade is clear: nearly all the great and good of Europe got involved at one stage or another, including the Holy Roman Emperor, because Sicily was so vitally important in the trade of sugar, wheat and cotton.
The Grand Company
For every legitimate trading company (turn to the earlier section ‘Establishing trading companies’), there was a group of what historians politely call ‘adventurers’ and who we might refer to as robbers or pirates. Piracy was still big business in the Mediterranean, but groups such as The Grand Company (also known as The Catalan Company) were even more organised.
When the Sicilian Vespers came to an end in 1302, Roger de Flor recruited the soldiers and mercenaries who had become unemployed to form The Grand Company. Roger then offered their services to the Byzantine emperor in his war with the Ottoman Turks in Asia Minor and he was quite successful. However, Roger had political ambitions and was eventually betrayed by the emperor. He took his revenge by ravaging the cities of Thrace and Macedonia and getting very rich from the proceeds.
Continuing to offer their services to the highest bidder, the Grand Company prospered under a number of leaders and eventually set themselves up as the legitimate rulers of large chunks of Greece, ruling in Thessaly and Athens all the way through until 1390. Not bad for a bunch of heavies!
Expanding in the North
Many of the advances in trade happened in Southern Europe, mostly based around the Mediterranean, but the thirteenth century also saw advances in trade in the North:
✓ Fishing, particularly herring, was one of the biggest industries, which the Scandinavians dominated.
✓ Wool and the cloth produced from it was the major import/export in England, Flanders and northern France.
✓ The mines in Germany produced large amounts of copper and silver, which were highly valued in other countries.
Marco Polo – to the ends of the earth
The vast expansion in trade also saw Europeans travel farther than ever before. The most significant traveller was Marco Polo (1254–1324). A nobleman and merchant from Venice, Marco Polo is credited with being the first man to introduce Europeans to the people and culture of the Far East. He travelled to Asia Minor, Persia (modern-day Iraq and Iran), China and Indonesia, meeting the Mongol leader Kublai Khan, who asked Polo’s entourage to visit because he wanted to meet Europeans. Polo recorded his experiences in a book called Il Milione, in which he gives a detailed account of meeting Kublai Khan at his capital located in modern-day Beijing.
At 9,000 kilometres (5,500 miles), the journey from Venice to Khan’s kingdom must have seemed almost unimaginably long. In total, Polo journeyed for 24 years (between 1271–1295), during which time he’s estimated to have travelled around 24,000 kilometres (15,000 miles).
Ironically when Polo returned home, he didn’t move much at all. Venice was at war with Genoa (over trade issues, unsurprisingly), and Marco Polo was captured and thrown in prison. He didn’t waste his time though, putting together Il Milione during his captivity (although it may have actually been written by somebody else). After being released he returned to Venice and continued to work successfully as a merchant, never leaving the city again. I suppose any more trips would have been a bit of a let-down.
Getting together: The Hanseatic League
Given the relatively separate industries throughout Northern Europe, one development of the thirteenth century was a real surprise. The Hanseatic League may sound like a football tournament, but it was an alliance of trading guilds and cities that dominated the coast of Northern Europe all the way through until the seventeenth century. Originally founded in a small way in the eleventh century, the League saw a massive expansion during the thirteenth century as more and more cities joined it.
In essence, the league was an idea similar to the agents and colonies that were used in Southern Europe (see the earlier section ‘Changing the very nature of trade’). Merchants within a northern town would form their own guild, or hansa. Under its mutual protection they agreed partnerships with guilds in foreign towns and cities, particularly far to the east where the towns were less developed but rich in important commodities such as amber, fur and timber.
The league began in the town of Lübeck in northern Germany, gradually forming alliances with other German cities such as Hamburg and eventually farther east to ports in the Baltic sea. By the mid-thirteenth century, league representatives had travelled as far as the Russian port of Novgorod, over 2,250 kilometres (1,400 miles) away across very treacherous waters.
Gradually the league expanded into Norway, England and Flanders until the vast majority of ports were associated with it, because not being so made life financially difficult. The Hanseatic League worked as pretty much a monopoly on all trade in the region. Member cities often had a hansa community where merchants and businessmen lived with their families, much like the colonies founded in the Mediterranean.
In the following 1231 agreement, the town of Riga (in modern-day Latvia) grants a house for hanse traders from Lübeck to live in:
"To all the faithful of Christ seeing these presents, the citizens and consuls of Riga wish the enjoyment of perpetual peace. Since those things which are done lapse with the passage of time, and unless they are corroborated by written testimony, will easily slip the memories of men, and be changed, we wish it to be known to all people both now and in the future that we, on the advice of the citizens of Lübeck, for the preservation of that true love and the constant faith we have in the citizens of Lübeck, have granted a court lying near to the citadel, within the walls of our city, to be held freely with every right and the income therefrom, to be possessed by them and their heirs free and forever. Therefore, in order that no calumny may arise in the future, and in order that all doubt may be removed, we have strengthened this gift of ours, corroborating it in writing and with our seal".
Finding safety in numbers
The benefits of being a member of the Hanseatic League extended beyond the financial. In the thirteenth century, although the peak of Viking activity was over, raiders from Scandinavia were still a problem, and league money paid for military protection for its members. The league fought several successful campaigns against piracy in the Baltic, and spent vast revenues to build lighthouses and schools that provided training in navigation and seamanship.
By the fourteenth century, the league’s power was so great that it was able to take on entire nations! Between 1361–1370 the league was at war with the king of Denmark, Valdemar. They were successful in this conflict too, forcing the king to hand over 15 per cent of all trade revenues to the league. Formed for the protection of its owners, at the height of its power, the league was more like a Mafia protection racket!
Expanding trade during the thirteenth century had very different outcomes in the north of Europe as compared to the south. Although trade wars were common in both areas, the Hanseatic League was formed, initially at least, for mutual protection, whereas competition was the order of the day in the south. But that’s what the free market is all about, I suppose!
By Stephen Batchelor in "Medieval History for Dummies", Wiley (John Willey & Sons,Ltd),UK, 2010, excerpts p. 261-268. Adapted and illustrated to be posted by Leopoldo Costa.
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