Power and Profit: The Merchant in Medieval Europe 
by Peter Spufford.
Thames and Hudson, 432 pp., £24.95, September 2002, 0 500 25118 5
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In the fifth circle of Dante’s Paradiso, the poet and his guide Beatrice encounter the spirit of his Florentine Crusading ancestor Cacciaguida. Together they discourse on the contrasts between Florence as it is now and as Cacciaguida knew it, in the mid-12th century. The city then was only a fifth of its present compass, Cacciaguida tells them. Its population has since been swelled by a host of immigrants; the grandfather of one who now prospers changing coin (cambio) and doing commerce (merca), was, he says, a countryman begging his way about Semifonte. The citizens lived soberly and simply; Sardanapalus (the type of luxurious living) had not yet entered to teach them new, ostentatious and wasteful manners. There is a familiar ring to this denunciation of consumerism, with its nostalgia for a past of simpler, thriftier ways of living. What Dante could not see, but that those two key words, cambio and merca, betray, was that what he identified as moral degeneration was in reality the social consequence of a commercial revolution which, between his ancestor’s time and his own, had for Florentines irreversibly shifted the scale of the structures of mercantile exchange and the perceptions of the use of money. This commercial revolution, and the changes in the fabric of European commerce that it generated over the three centuries from 1200 to 1500, provide the themes for Peter Spufford’s splendid book.

Spufford’s magisterial study Money and Its Use in Medieval Europe (1988) laid the foundations for this larger project; it is the fruit of extensive further research, both in the archives and on the ground, following the routes along which the commerce it describes travelled. It’s a scholar’s book, in terms of the authority behind its interpretations; at the same time, it is written in such a way as to be easily accessible to the general reader. Spufford presents the results of complicated statistical calculations with a clarity and simplicity that makes their import immediately apparent even to those who (like me) normally find themselves tied in mental knots by the arithmetic of economic history. He combines with this an understanding of businessmen and a gift for using their observations, calculations and miscalculations, as their notes and letters record them, to bring life to his story. This is a story that is pre-eminently worth recording, because it is about the birth of the commercial world as we have since known it.

In contrast with the later, and more famous, Industrial Revolution, to which the mechanisation of production (and transport) was crucial, the medieval commercial revolution was consumer-led, Spufford stresses. Two developments had marked the hundred years or so preceding 12o0, the rough date he assigns for its take-off. There had been a rapid and very substantial increase in population (so there were more consumers, as was also true of the early days of the Industrial Revolution). At the same time, the dominant landowning elite had begun to insist on the discharge of a much higher proportion of the dues of their now more numerous agricultural tenants in the form of money rents, rather than labour or produce. This had two consequences. First, it substantially freed the greatest of the territorial aristocracy, the kings and princes, from the pressure to itinerate, to keep on the move between the castles and manors where the produce of their estates had been stored against their arrival, for consumption on the spot. They could now pay for supplies to be brought to them at favoured, usually urban residences, which became sedentary centres for their administrative operations and acted as a magnet to the nobles who held estates under them and came to attend on them in their courts. This led naturally towards a concentration of cash in these town centres, which in the 12th century were growing visibly into capital cities.

Paris is the classic example and Spufford devotes eloquent pages to describing the city’s 13th-century efflorescence as Europe’s prime centre of consumption. Avignon provides a telling counterpoint to that story: the town grew overnight in terms of population and commercial significance when the Popes took up residence there, but faded back into provincial insignificance when, after the Great Schism, they returned to Rome. The landed noblemen, great and less, who were drawn to Paris as a royal centre – and to other capitals such as London and Naples (and the cardinals who came to Avignon) – had, as their kings did, money at their disposal to improve their standards of living, to build themselves new palaces and town houses with ample amenities not just for themselves but for their servants, hangers-on and horses, too. Above all, they had money to spend on luxury goods, on fur-trimmed robes and rich silks, on jewels, plate and tapestries, on spiced cuisine and fine wines.

Many of the luxuries in question, and the materials necessary to the finishing or preparation of nearly all of them, originated in the Orient. They were brought into Europe via northern Italy, and in consequence the merchants and the mercantile cities of Italy – Venice, Genoa, Pisa and Florence – became the architects of the commercial revolution. The turning point, as Spufford identifies it, came when the volume of trade increased to a point where the division of commercial labour became feasible. Whereas in former days the merchant had travelled with his goods and had responded to enlarged demand simply by loading more pack animals, by around 1200 the scale of business in which the Italians were involved had become sufficiently large and sufficiently sustained to render it more efficient and more profitable to organise three vital activities separately from one another. The merchants of northern Italy made themselves specialists in the financing and direction of the import and export trade. Their operations kept them at home, and from there they sent out instructions, by letter and courier, to the second group of specialists, their agents resident abroad, who bought and sold on these instructions. Already in the 12th century there were settled colonies of Italian merchants in most of the great ports of the Levant; in the course of the 13th, most of the great Italian merchant companies established agencies in Paris, in London, in Champagne (for the fairs), and later in Bruges, which had become the principal market centre for the Low Countries’ cloth industry and for goods coming from the Baltic region. The third specialist group comprised the professional carriers, wagoners and shipowners, who took on independently the business of moving goods for sale or purchased on merchants’ instructions. This division of labour promoted and dramatically accelerated the volume of trade. It also, at every stage, added value to the goods and products which were ultimately sold, and sustained demand ensured a satisfactory profit for all parties.

The old-style merchant had traded essentially as an individual, perhaps in partnership with an investor with whom he would share the profit of a specific voyage or venture. The great Italian merchant clans of the 13th century and after – the Bardi, Peruzzi, and later the Medici – worked likewise through partnerships, but partnerships now greatly extended to form companies with perhaps fifty or more shareholders pooling their investment, and covering not one but a whole series of ventures over a period of anything from six to twenty years. The very substantial capital thus mobilised enabled such companies to operate commercially on a scale more ambitious than it had previously been possible even to contemplate. At the end of the contracted period, the capital and accumulated profits of a company’s dealing were available for distribution to the shareholders; usually, however, they preferred to form a new company, under the old name, and to reinvest. Most of the greater Italian firms were general merchants, dealing in a wide variety of goods, but the company structure was adaptable to specialist businesses, too, such as milling or shipowning. Branch agencies and particular enterprises could be organised on the same kind of company basis, with their own capital and shareholders, operating under the broad aegis of a dominant holding company.

The investors in these Italian companies were by no means all merchants: princes, prelates and great noblemen soon came to see the attraction of depositing money with them, so further increasing the operating capital available for commercial enterprise. This drew companies into banking, in which the Tuscans came to be the supreme specialists. Investment also fostered the development of surer accounting, better insurance and new financial instruments. These developments form perhaps the most striking and visible legacy of the revolution that Spufford describes.

The sheer range of the operations of major trading companies and their duration, whether the companies were involved in banking or not, made necessary the keeping of much more systematic accounts; double-entry bookkeeping had been adopted by the Italians before the end of the 13th century. Effective insurance was equally an obvious necessity for large-scale traders whose goods were in the control of others – shippers or wagoners – while in transit. By 1350 at the latest, the recognisable ancestor of the insurance policy had been developed; in a surviving contract of that year, the Genoese merchant Leonardo Cattaneo underwrote a shipload of wheat (value 300 florins) during transit from Sicily to Tunis, for a premium of 54 florins. Before the end of the 14th century we find insurance becoming a significant business, and syndicates of brokers underwriting cargoes, at premium rates rising according to the length of the voyage (4 per cent of total value, say, from Pisa to Palermo, 12 per cent from Pisa to London).

The most important development of all, though, was the bill of exchange. This was a simple written instrument, purchasable from a company or bank in one place and cashable on the company or its agent in another. Bills of exchange became the regular means of settlement in commercial transactions; the effect on mercantile activity was dramatic. The money supply available for business dealing was expanded beyond all previous proportions. At much the same time, money changers in major commercial cities began to develop the business of local banking, taking deposits and transferring credit from one account to another on the depositor’s instructions. The two systems of banking, local and international, were easily combined; a bill of exchange might be bought by debiting a local bank account (in effect with a cheque), and its proceeds could similarly be credited to an account. By the beginning of the 14th century, bank accounts were coming to constitute a part – a significant part – of the money supply in commercial Italy. Credit banking also helped to accommodate interest into the framework of commerce at rates reasonable enough to escape the Church’s condemnation of usury. A depositor would receive interest on his money; in the 1330s the Venetian banker Francesco Corner was paying depositors 5 per cent to 7 per cent, and advancing loans at 8 per cent. Later, the average interest rate on commercial loans dropped further than this. Low interest rates made it easier for the aggressive merchant to raise money cheaply.

The network of credit exchange and banking, though it dramatically facilitated the flow of commerce, did not wholly obviate the need to transport bullion. Even between centres where banking operated smoothly, imbalances ultimately had to be made up in gold or silver. Besides, the credit system could operate only where banking facilities had been established, in capitals and market centres, and at major stopping points on regular trade routes. Until well into the 15th century, Northern and Eastern Europe lay geographically outside the network; so did the Near East. Western Europe’s balance of trade with the former was favourable; but with the Near East, source of so many luxuries, it was consistently adverse. There was in consequence throughout the period surveyed by Spufford a steady drain of precious metals out of Europe into Asia. He illustrates the point with figures for the Venetian import/export trade with Alexandria in the 15th century. It has been calculated that the Venetians shipped some 480,000 ducats’ worth of goods (with a preponderance of spices of Far Eastern origin) from Alexandria into Europe, against which they sent out only 200,000 ducats’ worth of goods but some 300,000 ducats in coin. It is likely that if comparable figures could be calculated for the period from 1200 to 1340, the imbalance that had to be made up in bullion would be even more striking.

It is not therefore very surprising that the first euphoric phase of the European commercial revolution was followed, in the mid-14th century, by contraction, to which a shortage of silver contributed significantly, in combination with warfare, famine and the demographic impact of bubonic plague. This ‘depression of the Renaissance’ was not deep enough seriously to shake the new structures of commerce and finance, though there was a rash of bankruptcies among the great Tuscan firms in the 1340s, including the three principal Florentine houses of the Bardi, the Peruzzi and the Acciaiuoli. Bullion shortages presented a real problem, however, since their effect was necessarily to constrict the credit dealings which formed the heart of the new system. Spufford’s exposition of the way the problem was, substantially, circumvented, constitutes one of the most fascinating and original sections of his study.

Most of the silver that circulated as coin in Europe and was carried east by European traders was mined in Eastern Europe. So also was a significant proportion of the gold, after the opening of the gold mines of Kremnica in what is now Slovakia in the 1320s (the other principal source was Saharan gold from the Maghreb, the balance of trade with which was fortunately in Europe’s favour). Bullion was carried in two principal directions from the mines of Eastern Europe, towards northern Italy and the southern Netherlands, the two major market regions within the network of credit-based commerce. From there, much went out again: from Italy principally to the Levant and further east; from the Netherlands in many directions, chiefly for the purchase of foodstuffs and raw materials for industry, but also to Italy to cover the imbalance of trade between Southern and Northern Europe, since the value of the luxury goods that came north from Italy consistently exceeded that of the goods (above all textiles) that were carried south in return. In both regions, however, trade sales and purchases, financial operations and the wages of industrial production ensured that a comfortable proportion of the precious metals stayed put.

Successful mining of precious metals depended on locating seams from which sufficient ore could be extracted to make the operation profitable. Miners were usually self-employed and working in groups on a claim; technological limitations meant that seams could rapidly become worked out if they were not substantial enough. The mining history of the period consequently revolves round a sequence of discoveries and their exploitation, punctuated by periods of shortage as seams became exhausted. The first significant new discovery of Spufford’s period was of silver in Meissen in 1168, which made the fortune of Freiberg. In the mid-13th century, important silver mines were opened at Jihlava on the Moravian/ Bohemian border; in 1298 still more prolific silver mining commenced at Kutna Hora in Bohemia. Then there was the discovery of gold at Kremnica and later there were finds of silver in Serbia, and in the late 15th century in the Tirol and Saxony. Each new discovery prompted a rush comparable to the gold rushes of the 19th century. Though the extraction of ore remained in most places largely in the hands of small groups of ‘free miners’, smelting and minting were large-scale, labour-intensive operations, and they were significantly lucrative ones. Immigration consequently swelled the populations of the towns of southern Germany and further east, stimulating demand there for consumer goods. The capitals of the princes, who took a royalty on the ore extracted, prospered and became centres of demand for luxuries. Industries also developed around the working up of iron and copper. By the end of the period of Spufford’s survey, southern Germany was emerging as a third major centre of commercial activity alongside Italy and the Netherlands, and the merchants of Nuremberg and Augsburg were beginning to rival those of Venice and Florence in riches and enterprise.

At the beginning of the 16th century, Nuremberg stood at the convergence of a series of new improved roads, linking the commerce of southern Germany with northern Italy, the Netherlands and the capitals of Eastern Europe. This was the result of the latest chapter in what Spufford, following Johan Plesner, calls a road revolution, a development which was integral to his story of commercial transformation. From the late 12th century to the early 14th major efforts were made to improve the capacity of commercial routes to enable them to carry the steadily increasing volume of trade, by widening and paving roads to make them suitable for the great two-wheeled and four-wheeled wagons that were replacing the old teams of pack horses, and by building bridges (one was the famous bridge of Avignon). Much energy also went into improving the Alpine passes, so vital to north-south trade. Princes, city governments, ecclesiastical communities and merchants all helped to fund this road revolution. To princes it brought added revenue from the tolls they charged on goods passing through their territories; to towns that were principal stopping points it brought prosperity, especially to the professional carriers who commonly had a monopoly of transportation through their own region, and to the innkeepers, whose business increased. Spufford offers a fascinating account of the range of the innkeepers’ activities: negotiating with carriers for the transport of distant merchants’ goods and for their warehousing during pauses in transit, and arranging (at a commission) for the payment of tolls and dues.

The development of maritime transport was no less startling. It was always cheaper (and often quicker) to send goods by sea (or river) than by road, especially if the goods were bulky. Mediterranean trade between Europe and the Levant had of course always been sea-borne, but its growing volume had impressive effects: better organisation by the Venetians and Genoese of their larger fleets and their convoy systems; the development of the Catalan shipping business; the building of bigger and better designed transport vessels, great galleys, carracks and cogs. The development of Atlantic sea traffic had still more eye-catching consequences. It was the Venetians, at the end of the 13th century, who first grasped the potential of sending goods by sea round the Spanish coast to Bruges in Flanders; others followed suit. The consequent switch of trade from land routes to the sea made Bruges probably the busiest harbour in Europe, a place of repair for ships ‘of all the nations of the world’; and was a contributory cause of the decline of the great fairs of Champagne, which in the 13th century had been the most important meeting places and centres of exchange for the merchants and agents of Italy with their counterparts from Europe north of the Alps. All this said, and for all the improvements, transport whether by sea or land remained a slow, laborious, expensive and often dangerous business. A wagon train might manage thirty or at most forty kilometres a day; a fast galley in fair weather perhaps 160 kilometres. The limitations imposed on transport by dependence on sail, oar and horsepower contrast sharply with the streamlining of financial exchange towards its modern shape. Nevertheless, without the huge advances in both land and sea communication that made possible the movement of a once unimaginable volume of trade, there could have been no medieval commercial revolution.

The chapters in which Spufford systematically examines, commodity by commodity and product by product, the goods that professional shippers and carriers transported north, south, east and west are stiff going. They are, though, vital to his survey. This is not just because it is important to know where the luxuries and consumables that gave the commercial revolution its first impetus originated, and to understand the interconnections between the European trading area and trading areas further east. The distinction, which Spufford makes central to his analysis, between trade in raw materials and trade in manufactured goods enables him to draw elegantly into its compass two crucial aspects of his commercial revolution: the stimulus that consumer demand for finished goods, especially fine cloths, gave to urban-based industry; and the demand that industry generated for raw materials, and for foodstuffs to supply the needs of urban populations swollen far beyond the agricultural capacity of the surrounding countryside.

Textiles were easily the most important manufactured product in European trade: linen, cotton, silk and above all woollen cloth. Flanders and Tuscany dominated their industrial production. Flanders led the way, but once the Italians had learned to carry English and Castilian wool directly by sea to the spinners and weavers of Florence, Tuscany rapidly caught up, especially in the weaving of fine cloths. The manufacture of cloth from raw wool involved a series of processes, all of them labour-intensive: combing, spinning, weaving, fulling and dyeing. Expensive dyestuffs, and most of the alum needed to fix them, had to be imported from the East. Tuscany also dominated the weaving of silk and silk fabrics, brocade, taffeta and velvet (though to the end the very finest silks continued to be imported from the Orient). These needed the same dyes as ordinary cloth, and those again had to be imported. Besides textiles, other urban-based industries made significant contributions to Europe’s internal trade, and likewise tended to require for their processing raw materials which had to be transported over long distances. Venetian glass manufacturers needed soda ash from Syria; the iron and copper workers of Germany and the armourers of Milan and Nuremberg needed metal mined in Eastern Europe.

The armies of industrial craftsmen and labourers in all these various industries also needed to be fed; and the merchant patricians and their aristocratic clients of course expected better food – and drink. Grain had to be imported from the Black Sea regions and Sicily to feed the northern Italian cities, and from the Baltic areas to feed Paris, London and the industrial cities of the Netherlands. Salt was another necessity that was carried to them in bulk, and so was wine (France alone, it seems, produced enough of it for its own needs). Sugar from Cyprus and spices from India were in high demand among the rich. The routes along which goods travelled were also, as Spufford reminds us, those along which ideas, technology and enterprise travelled, all contributing to the transformation of commerce that defined the basic shape of its operations far beyond the period that he studies.

Spufford’s deeply impressive survey is also spectacularly well illustrated. We are shown the wooden crane at Lüneburg that once heaved bulk salt from the brine wells of the region into ships (it still survives); a Saxon hillside dotted with miniature silver mines on individual claims (from an Annaberg altarpiece by Hans Hesse); Joachim Patinir’s evocation of a road leading into the mountains and the amazing bridge carrying it across the river gorge at their foot; the wharves of Antwerp, crowded with ships, as an anonymous artist caught them in the early 16th century. The illustrations that best reflect Spufford’s themes, though, are those that give vivid expression to the richness of the luxury goods and products demanded by the wealthy: a suit of fine armour from Milan, made to measure; the tapestry, illustrating the Book of Revelation, woven in Paris for the Duke of Anjou (c.1380); Fouquet’s portrait of Etienne Chevalier, treasurer of France, in his rich gown of red wool; Crivelli’s painting of Mary Magdalene, dazzlingly clothed, with the sleeves of her dress embroidered in gold thread and studded with pearls. In a commercialised society, Spufford’s book makes clear, spending can be a surer buttress to prosperity than saving.

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