A history of commerce

by Clive Day

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.