CHAPTER XVIII

MERCANTILE GUILDS ¹

The mercantile guild is not a specifically German institution; it is found spread over the entire world, except that there are no unquestionable records of it in antiquity and in any case it did not in antiquity play a political role. In form the guild is either an organization of foreign traders for the purpose of legal protection against those of the locality, or it is an organization of native merchants. In the latter case it develops out of tribal industry and trade, as in China. The two forms are also found in combination.

In the occident, for example, we find to begin with only guilds of foreigners in particular localities; for example, the German trading guild in London of the 14th century, which established a storehouse called the “Steel-yard.” Of an interlocal character were the hanses, a designation met with in Germany, England, and France, whose development varied much in detail. Closely related to them technically is the institution of the Hansgraf or count of the hanse, found in a number of towns. The hansgraf is an official granted a concession by the political authority, if not constituted by it, who is responsible for the legal protection of the merchant population engaged in interlocal trade represented by him; he never interferes in the form of trade itself.

Of the second type of guild, made up of resident merchants with the object of monopolizing the trade of a district, there is an example in China, in the tea traders’ guild of Shanghai. Another is the kohong guild in Canton, whose 13 firms dominated the whole of external commerce as a monopoly down to the Peace of Nanking in 1842. The Chinese guild practised price regulation and guaranty of debts, and held the power of taxation over its members. Its criminal power was draconic; a breach of regulations led to lynch justice on the part of the guild members and even in the 19th century there were executions for violation of the set maximum number of apprentices. In domestic commerce, bankers’ guilds, and trading guilds existed in China, as for example the bankers’ guild in Niu-Chwang. The Chinese guilds possessed great significance for the development . of the monetary institutions of the country. Debasement of coinage by the Mongol emperors resulted in the disintegration of the coinage system. The ensuing paper money regime led to the use of silver in bars in the wholesale trade, and the guilds took in hand their preparation. Thus the guild became the center of monetary policy, achieving control of the determination of weights and measures, and appropriating to itself criminal jurisdiction.

In India, the guilds appear in the time of Buddhism, from the sixth to the fourth century B. c., and reach their greatest development from the third century on. They were hereditary organizations of traders with hereditary rulers. Their highest development was reached when they became money lenders to the various princes who were in competition with each other, and their decay was the result of the revival of castes which had been partly pushed into the background by Buddhism; after the Indian middle ages the policies of the princes again became dominant. Thus was formed the caste of the lamani or banjari which appeared in the 16th century in the pursuit of the corn and salt trade and the provisioning of the army and was perhaps one of the roots of the present day banya or trading caste. In India we also meet with the differentiation of forms of trade according to various confessional sects. The dschaina sect is restricted by ritualistic considerations to trading at fixed points; the wholesale and distant trade based on credit is a monopoly in the hands of the Parsees, who are not restricted by ritualistic considerations and are distinguished by responsibility and truthfulness. Finally, the bhaniya caste carries on retail trade and is to be found in every connection where gain which is off-color from an ethical standpoint is to be made. Thus its members engage in tax farming, official money lending, etc.

In contrast with China, the regulation of the coinage, weights, and measures has in the west remained in the possession of the political authority, which either itself exercised the power or turned it over to the political agencies, but has never granted it to guilds. The great power of the guilds in this part of the world rests entirely on political privileges. The forms of guilds are various. First to be noticed is the city guild. This is a group which dominates the city and controls especially in the economic interests of industrial and trading policy. It is met with in a two-fold form. Either it is a military union, such as the campania communis in Venice and Genoa, or it may be a separate union of the traders within the town (mercadanza), growing up with the craft guild. The second main type is the guild as a taxation unit, which is a specifically English institution. The English guilds derive their power from the fact that they took over from the king the function of collecting taxes (firma burgi). Only those who paid taxes were members and one who paid none was excluded and possessed no right to trade. The English guild owed to this fact its control over citizenship in the city.

In detail the evolution of the occidental guilds was highly various. The English guild merchant reached the peak of development of its power in the 13th century, after which began a series of internal economic revolutions. In the 14th century followed its separation from craft work; one who wished to remain in the guild must renounce craft activity. Immediately, however, the trading members began to come to the fore in the craft guilds and separated out as “livery companies,” that is as members in full standing, being raised above the poorer craft workers by the cost of the livery or regalia, which the latter were unable to meet.

The separation of the wholesale traders from the retail was not yet complete in the 16th century, although at that time the first guild of foreign traders, the Merchant Adventurers, was founded by a concession. It is true that English legislation endeavored to restrict the guilds along craft lines, permitting their members to trade only in one type of goods. On the other hand, the power of a strong state always stood over the guilds in England, although their interests were also represented in Parliament. In consequence the cities never had the power over the country which they obtained in Germany, and rural traders and land holders were always admitted to the guilds.

In Italy the development went forward within the individual city states. The guilds kept their purely local character; after the separation-leagues (Sonderbund) obtained the victory over the consular constitution, there began a struggle within the guilds, between the craft guilds and trading guilds. In Germany we find at first traces of a development similar to that in Italy. A symptom is the appearance of the burgomaster, who to begin with was an illegitimate guild master and whose position suggests that of the Italian capitano del popolo. In addition we find in many cities of north Germany a development resembling the English, a guild merchant determining the economic policy of the city. In a number of old rich cities of middle Germany we find, on the other hand, a guild which manages the city unofficially, as in Cologne the “Richerzeche,” the guild of the rich merchants which financed the revolution against the archbishops, binding the citizens together under oath against the town lords and thenceforward ruling permanently in the city and controlling admission to citizenship. The rule in Germany, however, is the presence of trading guilds, among which the shop keepers and merchant tailors stand out. The shop keepers correspond to the retailers of today. The merchant tailors, who cut up imported cloth and sold it to consumers, became dominant in the smaller towns in the north; they always had to contest the market with the weavers, but generally obtained the victory, while in the large towns the patrician families stood over them in rank and dignity.

One cannot speak of a systematic trading policy on the part of the towns dominated by guilds, and especially of the town leagues, in the middle ages. The towns carried on no trade on their own account; this did not begin until the 16th century. The policy of the German Hanse may stand as an exception. It alone consciously pursued a consistent commercial policy, which shows the following characteristics.

1. Only the citizens of the Hanse had a right to share in the commercial privileges which the Hanse secured. 2. It aimed at direct retail trade in foreign countries and abstained from the forwarding or commission business, a policy on the basis of which it went to pieces as soon as a local commercial class arose in England, Scandinavia, and Russia. 3. The Hansards made use in trade of their own ships only; they could not lease those of outsiders nor sell Hanse ships or shares in them to outsiders.² 4. The Hansards carried on trade in merchandise only, entering into neither money transmission nor the banking business as did the Florentines. 5. The Hanse everywhere secured concessions for settlements and warehouses in order to keep its own members under control. All its business activities were subjected to strict regulation; weights and measures were prescribed; no credit business could be transacted with outsiders, the object being to prevent outside capital from becoming influential in the organization; even marriage with non-members was prohibited. 6. The Hanse made the first effort toward standardization, carrying on trade in fixed types of goods—wax, salt, metals, fabrics.

7. On the negative side, the Hanse had no customs policy ; at most it collected duties for war purposes. Its internal policy was directed toward the dominance of a mar.-ket aristocracy, and especially in the sense of suppressing the craft guilds. In the aggregate these measures represent a policy organized in the interest of a resident foreign trading class.