127. Types of medieval traders; pedler, shopkeeper.—Enough has already been said to guard the reader against the idea that great wholesale merchants of the modern type were common in the Middle Ages. The regular type of trader was the artisan who manufactured the goods he sold, or the pedler who collected a stock of goods in a town and carried them about in a pack for sale. The pedler’s stock was not unlike that which he would carry around the country nowadays,—sewing materials, toilet articles, etc. An illumination in a manuscript of the fourteenth century, representing monkeys opening a pedler’s box, shows vests, caps, gloves, musical instruments, purses, girdles, hats, cutlasses, pewter pots, and other articles. An English statute of the fourteenth century, describing a similar stock in trade, mentions rabbit skins as one of the articles which the pedlers took in exchange for their wares, and an English author of the period accuses them of catching cats for their skins. The petty shopkeeper stood a step above the pedler. He had a regular shop in a town, where he displayed his wares, and often went on trips to the markets of other towns, where he set up a booth and carried on such trade as the town regulations allowed.

128. Merchants.—Still another step above the shopkeeper was the real merchant, who had his warehouse, from which he supplied the retail traders, and who bought up considerable quantities of goods at the great fairs at home and abroad. It is doubtful whether we can find in this class in northern Europe any men who devoted themselves entirely to wholesale trade; and merchants had not yet specialized so that each would devote himself exclusively to the trade in a particular ware. We can illustrate the point by a German merchant, whose account books have been preserved so that it is possible to follow his business operations exactly. Vicko von Geldersen was a draper of Hamburg, where he rose to wealth and a high position. He imported cloth wholesale, and sold it both wholesale and retail. But he made use of his connection with Bruges, which was the great cloth market, to send there for sale iron, honey, meat, butter, etc., and to import such wares as oil, spices, figs, and almonds, which he sold to smaller dealers in many cities of Germany.

Members of the class to which Vicko belonged were the leaders of commerce in the North of Europe during the Middle Ages; they accumulated wealth which seemed great at the time, and formed an aristocratic class in social and political life. Their sons were brought up to follow the family business, and often trained to it by extensive study and residence in foreign countries.

129. Development of commercial association in the Middle Ages.—In the Middle Ages we find the beginnings of that process of association which can be traced step by step to the formation of the great “trusts” of the present day, and which forms one of the most important features in the development of commerce. To point out the various advantages which arise from the association of laborers and of capitalists would lead us into political economy; and to describe in detail the development of the various forms of association would require an excursion into legal history equally out of place. We must content ourselves with indicating some of the main features which are easily intelligible.

The need of association was felt especially in the Middle Ages because it was necessary that a merchant or his representative should accompany his wares on the road. It was often difficult for a merchant to look after a commercial venture in person; he could not trust it to a hireling; and the slight development of the carrying and commission profession made it impossible for him to leave it to a class of persons who nowadays make it their business to attend to such matters. The merchant, therefore, would associate with him some one who could represent his interests; and a modern author asserts that in comparison with the amount of business many more commercial companies were formed then than at present. The merchant would choose by preference a member of his family, and family partnerships were the prevailing form of association at first. With the growth of commerce, however, greater freedom of association was demanded, and the group ceased to be limited by considerations of relationship.

130. Advantages of association.—By joining together, two or more men could follow different lines; one would stay at home while another could accompany the wares, and perhaps still another could attend to sales in a distant city. The advantages of this are apparent, and of not less importance are the benefits arising from the better utilization of capital. A person who had accumulated wealth, but who on account of advanced age, physical disability, or other circumstance could not himself employ it in commerce, would join with him a man who contributed to the enterprise the necessary business activity.

Capitalists gained also in another way, for they were enabled by association to share the risks of an enterprise. A man who put all his money into one ship or cargo ran the risk of being ruined; and foregoing paragraphs have shown that the dangers in the path of commerce were by no means slight. By distributing his capital in a number of enterprises, however, as could easily be done if he entered into association with others, he could hope to make up for any probable loss by the profits of his successful ventures, and can be regarded as insuring himself. We find, in fact, that the shipping business was for the most part carried on in this way.

131. Forms of association; partnership.—Commercial association took ordinarily the form of a “commenda” (Latin commendare, entrust). The “commendator” contributed capital in the form of money, wares or a ship, while the other party, called the “tractator” contributed only his personal services to the enterprise; of the profits one fourth went to the tractator and the remainder to the commendator. The tractator who saved his earnings could in time also contribute capital, and was given a greater share of the profits and more freedom in conducting the business.

The commenda, corresponding to a “silent partnership,” was older and of more importance in commercial undertakings than the ordinary partnership of the present day; but the latter form of association grew up also at this time, and was used in commerce as well as in industry. The joint-stock corporation belongs in its important applications to a later period.

132. Spread of the practice of association from Italy.—The different forms of partnership developed especially in Italy in the last few centuries of the Middle Ages, when the growth of commerce was most rapid, and they became extraordinarily extensive and important. They secured the union of capital and executive ability which enabled far greater enterprises to be carried on than would have been possible without them. The Italian commercial house of the Peruzzi, for instance, had fourteen branches and one hundred and fifty factors or agents. Even the assistants in the business, who did not themselves contribute capital to it, were interested in its success by a system of profit sharing. From Italy the practice of association spread to the North of Europe, and it became practically universal in commercial undertakings. Each of the larger firms had its characteristic trade-mark, distinguishing its bales of goods.

133. Position of the Jews in medieval commerce.—The Jews held a peculiar position in medieval Europe. They were distrusted and disliked by the Christians, because of their difference in religion, and because of their business ability, which made competition with them a difficult matter. Though they were scattered throughout Europe they kept touch with each other, and so enjoyed exceptional advantages in the pursuit of commerce and the extension of business relations. In the early part of the Middle Ages they were indispensable; Christians were not educated up to their level in business, and had to leave to them the major part of the slight commerce of the times. As Christian peoples developed, however, they demanded for themselves the place which the Jews had won; and by a long series of restrictions and persecutions they forced the Jews into some particular branches of business where the Christians could not follow them. The church taught for a time that it was wrong to lend money at interest, and discouraged Christians from seeking gain by this means. The Jews, therefore, seized the opportunity which was denied to Christians, and became money-lenders. Their position was always precarious, for the law gave them no protection, and they were subject constantly to robbery by feudal princes and by the people, who believed everything evil of them. From England they were banished altogether, for several centuries. They showed astonishing skill and fortitude, but in the last centuries of the Middle Ages they lost their position even as leaders in credit operations. The church then permitted money-lending if the terms were not extortionate; and Christians from southern Europe, “Caursines” (named from Cahors, in the south of France) and “Lombards,” succeeded the Jews as the money-lenders of Europe.

134. Character of currency in the Middle Ages.—One of the serious obstacles to the development of commerce was the character of the currency in the various countries of Europe. Assuming that the reader appreciates the importance of money as facilitating the operations of exchange, and knows the qualities of good money, we may confine ourselves to pointing out some of the characteristic faults of medieval currency.

(1) Merchants could not rely upon the government to maintain the standard of value. In many countries the kings debased the coinage again and again, to secure the means of carrying on war or paying public expenses of other kinds. Every debasement, as it left the coins with less pure metal, lowered their purchasing power and raised prices; many innocent people suffered and everybody grew reluctant to make bargains and contracts.

(2) In many countries, especially those on the Continent, the privileges of the great feudal lords included the right to keep a mint and to issue coins. The central government restricted this right, as it grew stronger, but in general the currency of medieval Europe was made up of a vast variety of coins of standards even less reliable than that of the king’s coinage. There was danger that a coin, even if it was of good weight, could not be passed at its full value outside the locality where it was minted.

(3) Even in countries like England, where feudal coinage was put down and where debasement by the government was exceptional, counterfeits were not rare, and the clipping of coin was very common.

These characteristics of medieval currency made the money-changer a necessary figure in the commercial world; he was to be found everywhere, even in the small towns, buying and selling the various coins in circulation.

135. Difficulty in making payments in distant places.—While the money-changer facilitated payments in any given place, he was not of much assistance to a merchant desirous of making a payment in a distant town or country. The merchant, it is true, could buy from him foreign money with which to make the payment; but the transportation of the actual coin was not only dangerous and expensive, but also subject to legal restriction, and was to be avoided if possible. The merchant would probably prefer to send instead of money some ware, which he could sell to advantage at the destination, and then with the proceeds make his payment. For example, when Michael Behaim of the Nuremberg Company wanted to send 1,000 gulden from Breslau to Nuremberg, he found it expedient to buy an amount of wax which he could sell in Nuremberg for the required sum, and he shipped that instead of money.

136. Introduction of the bill of exchange.—It might not, however, always be convenient for a man to meet his obligations in this way; he might not have the commercial knowledge, or perhaps he might have no good opportunity to ship a ware. Behaim, in the case cited, had in fact resorted to the wax shipment only from necessity, after he found it impossible to make his payment by the means of remittance now become general, the bill of exchange.

Suppose that B. in Breslau owed the 1,000 gulden, to A. in Nuremberg, for spice; and suppose that D. in Breslau was the creditor of another Nuremberg merchant C, to the extent of 1,000 gulden, perhaps for furs. It would be absurd for B to ship the money or to go out of his way to ship wax to A, and for C to ship the same value to D, when the payments could be made to cancel each other. Why should not B pay to D in Breslau the 1,000 guldens due him, and tell C to pay the same amount to A in Nuremberg? This could be accomplished by means of bills of exchange; D could write out an order to C directing him to pay the money, and sell it to B, who would thus have the means of paying his debt in Nuremberg to A.

Such an operation implies, however, not only regular commerce of considerable volume but also mutual confidence among the participants. How could B know whether D actually had a correspondent in a distant place who would meet his obligations promptly? It was not, in fact, until the thirteenth century that bills of exchange were used to any considerable extent; then they were developed in Italy, and spread from there.

137. Development of banking in Italy.—In Italy, also, the money-changers developed other forms of banking. As they were dealers in money, business men in want of capital for their operations naturally sought it of them. The money-changers might lend it from their own stock or act as brokers and secure the money from some man who had a surplus. The short step from this to the common form of modern banking was made when merchants deposited their surplus cash with the money-changer, and he had thus a considerable stock, which he could lend so long as he kept sufficient reserve to meet the demands of depositors. It soon became unnecessary for money to pass at all in large transactions; a man could get a loan from a bank simply by having a deposit ascribed to him on the books, and could assign this loan to others as he chose to pay it out. The characteristic danger of banking, the attempt to make a great deal of credit out of a little capital, appears early in Italy, with its results of failures and crises. The advantages of the banking system, however, the economizing of time and money and the facilitating of business operations, were so clear that banking kept its place, and spread toward the close of the Middle Ages from Italy to other countries.

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