Chapter 16. Forms of Organization of Transportation and Commerce

The turnover of medieval commerce as measured by modern standards was extremely small.  It was carried on by mere small dealers who worked with trifling quantities.  The total trade between England and the Hanseatic League in the 14th century, at the time of its highest development, came to less than $4,000 dollars.

On account of the danger from pirates, a single ship was not in a position to determine independently its time of sailing.  Ships formed themselves into caravans and were either conveyed by armed vessels or were themselves armed.  The average duration of a voyage of a marine caravan in the Mediterranean varied from a half-year to a year.  In Genoa only one caravan a year went east to Asia, in Venice two.  The voyage in caravans resulted in an extremely slow turnover of the capital.

In the middle ages feudal lords were interested in the maintenance of commercial routes in order to make money.  They cared for the roads by putting their peasants to work to maintain them and collected tolls on their use.  There was no agreement among the lords establishing a rational layout of the roads; each located the road in a way to make sure of recouping its cost in duties and tolls.

In consequence, the volume of land trade in the middle ages was much smaller even than that of trade by sea.

The second great requirement of commerce was legal protection.  The merchant was an alien (foreigner) and would not have the same legal opportunities as a member of the nation or tribe, and therefore required special legal arrangements.

A great step in progress happened was the organization of a large number of merchants in a hanse. This was ordinarily a guild of foreign merchants carrying on trade in a distant city, who organized for mutual protection.  It goes without saying that the organization presupposed a permit from the ruler of the city.

Finally, it became necessary to establish fixed times for trading: the buyer and seller must be able to find one another.  This requirement was met by fixed markets and gave rise to the market concessions. Markets were everywhere established for the foreign traders by concession from the princes – in Egypt, India, and European antiquity, and in the middle ages.  The object of such a concession was on the one hand the provision for the needs of the authority granting the concession, and on the other, the promotion of fiscal aims: the prince wished to profit by the trade in the market.

Out of this original relation between the merchants visiting the market and the authority granting the concession, evolved still other institutions.  The merchants needed large quarters for having their goods tested, weighed and stored.

A professional trading class of the towns developed in the following way.  The resident merchant is to begin with an itinerant trader.  He travels periodically in order to market products at a distance or to secure products from a distance and is a peddler who has acquired a fixed residence.  The next stage is that in which he has the traveling done for him, either by an employee or servant or by a partner.  The third stage is formed by the system of factories.^[1]  Finally, the resident trader becomes completely fixed in his location and deals with distant regions by correspondence only.  This condition did not become possible until the late middle ages because there was not sufficient inter-territorial legal security.

The resident traders as a class had to contend against other groups.  One series of such struggles were external, such as the struggle to maintain the monopoly of the urban market.  The resident trader also contended with the merchants settled in the country, on the land.  The second great object of contention in the merchant class was in regard to internal equality of opportunity.  One of the members protected by the group must not have better chances than another, and this applied especially to retailing.  This purpose was served by the prohibition of pre-sale or ‘forestalling’ and the right of sharing.  The first of these rules prohibited dealers from selling goods before they had been brought into the town.  On the other hand, if one merchant had bought more goods than another, the right sharing became operative; it specified that any member of the association could demand that a part of the goods in question be given up to him on payment of their actual cost.

Finally, the resident merchant class was in conflict with the consumer’s interests and was divided internally according as it was interested in the local market or in distant trade.  The consumers wished as far as possible to buy at first hand from the foreign traders, while the interest of the great majority of the local merchants was opposed. So began the splitting off of a wholesale trading interest and an opposition of interest within the mercantile group, while the interests of the retailer and the consumer began to draw together.