Institutions and European Trade: Merchant Guilds, 1000–1800 (Cambridge Studies in Economic History - Second Series)

What was the role of merchant guilds in the medieval and early modern economy? Does their wide prevalence and long survival mean they were efficient institutions that benefited the whole economy? Or did merchant guilds simply offer an effective way for the rich and powerful to increase their wealth, at the expense of outsiders, customers and society as a whole? These privileged associations of businessmen were key institutions in the European economy from 1000 to 1800. Historians debate merchant guilds' role in the Commercial Revolution, economists use them to support theories about institutions and development, and policymakers view them as prime examples of social capital, with important lessons for modern economies. Sheilagh Ogilvie's magisterial new history of commercial institutions shows how scrutinizing merchant guilds can help us understand which types of institution made trade grow, why institutions exist, and how corporate privileges affect economic efficiency and human well-being. Cover 1 Half-title 3 Title 5 Copyright 6 Contents 7 Acknowledgements 8 1 Merchant guilds, efficiency and social capital 9 1.1 Merchant guilds and theories of institutions 10 1.2 Merchant guilds and social capital 14 1.3 Merchant guilds and economic development 21 2 What was a merchant guild? 27 2.1 Local merchant guilds 28 2.2 Alien merchant guilds 31 2.3 Merchant hanses 33 2.4 Early modern merchant associations 39 2.5 The decline of merchant guilds 46 3 Local merchant guilds 49 3.1 Did local merchant guilds seek legal monopolies? 52 3.1.1 Exclusive right to trade 53 3.1.1.1 Types of transaction reserved for merchant guild members 54 3.1.1.2 Wares reserved for merchant guild members 56 3.1.1.3 Routes and destinations reserved for merchant guild members 58 3.1.2 Restricting entry 59 3.1.2.1 Local citizenship 59 3.1.2.2 Group affiliation 65 3.1.2.3 Economic characteristics 66 3.1.2.4 Personal characteristics 68 3.1.2.5 Collective acceptability 69 3.1.3 Fixing prices 70 3.1.4 Restricting supply 71 3.1.5 Dictating input costs 73 3.1.6 Compulsory staple rights 74 3.1.7 Other strategies for imposing costs on competitors 80 3.2 Did local merchant guilds enforce their monopolies in practice? 83 3.2.1 Contemporary complaints 83 3.2.2 Lobbying 87 3.2.3 Inter-guild conflict 89 3.2.4 Systems of detection and punishment 91 3.2.5 Legal exemptions and shares 93 3.2.6 Guilds limited merchant numbers and trade volumes 94 3.2.7 Empirical studies of local merchant guilds 96 3.3 Conclusion 97 4 Alien merchant guilds and companies 102 4.1 Did alien merchant guilds seek legal monopolies? 108 4.1.1 Exclusive rights to trade 108 4.1.2 Restricting entry 115 4.1.3 Fixing prices 123 4.1.4 Restricting supply 127 4.1.5 Fixing input costs 130 4.1.6 Imposing costs on competitors 132 4.2 Did alien merchant guilds enforce their monopolies in practice? 133 4.2.1 Contemporary complaints 134 4.2.2 Lobbying 140 4.2.3 Inter-guild conflict 142 4.2.4 Systems of enforcement 145 4.2.5 Willingness to pay for licences and exemptions 150 4.2.6 Effects on prices and volume of trade 152 4.2.7 Guild embargoes 156 4.2.8 Variation in merchant guild monopolies 160 4.2.9 Empirical studies of alien merchant guilds 164 4.3 Conclusion 165 5 Merchant guilds and rulers 168 5.1 State privileges for merchant guilds 172 5.2 Cash transfers to rulers 175 5.3 Assistance in taxing trade 178 5.4 State loans 183 5.5 Military and naval assistance 186 5.6 Political support 188 5.7 The decline of merchant guilds 190 5.8 Conclusion 196 6 Commercial security 200 6.1 Did merchant guilds exist to solve problems in long-distance trade? 204 6.1.1 Local and regional vs. international trade 205 6.1.2 Local vs. long-distance merchants 207 6.1.3 Local merchant guilds vs. their alien branches 210 6.2 How did merchant guilds affect commercial security? 214 6.2.1 Merchants and pirates 224 6.2.2 Violent conflicts between guilds 232 6.3 Were there no feasible alternatives? 238 6.3.1 State support for merchant guilds 238 6.3.2 Public-order institutions and commercial security 245 6.4 Conclusion 254 7 Contract enforcement 258 7.1 Guild jurisdictions 259 7.1.1 Advantages theoretically offered by guild courts 259 7.1.2 How universal were merchant guild courts? 261 7.1.3 Were guild courts independent? 266 7.1.4 Did guild courts use a special 'merchant law’? 272 7.1.5 What can we conclude about merchant guild jurisdictions? 275 7.2 Peer pressure 276 7.3 Collective reprisals 278 7.3.1 Were reprisals informal? 280 7.3.2 Were reprisals based on collective legal responsibility? 283 7.3.3 Did merchant guilds support collective reprisals? 284 7.3.4 Were reprisals efficient? 289 7.4 Alternative contract-enforcement mechanisms 293 7.4.1 Transacting with a trusted circle 294 7.4.2 Contractual instruments: pledges, guarantors, cessions of credit 295 7.4.3 Written records 298 7.4.4 Arbitration 304 7.4.5 Litigation 308 7.4.5.1 State courts 309 7.4.5.2 Ecclesiastical courts 311 7.4.5.3 Municipal courts 312 7.5 Conclusion 318 8 Principal-agent problems 323 8.1 Social capital and agency problems 325 8.2 Monopoly as a solution to agency problems 329 8.3 Alternative institutions for solving agency problems 338 8.3.1 Family firms 339 8.3.2 Legal forms of enterprise 340 8.3.3 Written record-keeping 346 8.3.4 Public law-courts 347 8.4 Conclusion 348 9 Information 352 9.1 Theoretical effects of merchant guilds on information provision 354 9.2 Evidence on merchant guilds and information 357 9.2.1 Economies of scale 357 9.2.2 Network bandwidth 359 9.2.3 Censorship 361 9.2.4 Inefficiency 363 9.2.5 Internal agency relations 366 9.2.6 Centralized information processing 368 9.2.7 Information cascades 370 9.3 Other institutions for collecting and transmitting information 372 9.3.1 Locational clustering 372 9.3.2 Brokers and notaries 377 9.3.3 Merchant correspondence 379 9.3.4 Newsletters, price lists and handbooks 384 9.3.5 Individual merchants and firms 386 9.3.6 Public information 389 9.4 Conclusion 391 10 Price volatility 399 10.1 Merchant monopolies and entrepôts 404 10.2 Preventing risky behaviour 408 10.3 Ensuring accurate information 411 10.4 Is price-setting by a single supplier desirable? 412 10.5 Competitive markets and stable prices 417 10.6 Conclusion 420 11 Institutions, social capital and economic development 422 11.1 Merchant guilds and theories of institutions 423 11.2 Merchant guilds and social capital 435 Bibliography 443 Index 484 MuPDF error: syntax error: invalid key in dict MuPDF error: syntax error: invalid key in dict MuPDF error: syntax error: invalid key in dict MuPDF error: syntax error: invalid key in dict MuPDF error: syntax error: invalid key in dict MuPDF error: syntax error: invalid key in dict MuPDF error: syntax error: invalid key in dict MuPDF error: syntax error: invalid key in dict MuPDF error: syntax error: invalid key in dict Cover 1 Half-title 3 Title 5 Copyright 6 Contents 7 Acknowledgements 8 1 Merchant guilds, efficiency and social capital 9 1.1 Merchant guilds and theories of institutions 10 1.2 Merchant guilds and social capital 14 1.3 Merchant guilds and economic development 21 2 What was a merchant guild? 27 2.1 Local merchant guilds 28 2.2 Alien merchant guilds 31 2.3 Merchant hanses 33 2.4 Early modern merchant associations 39 2.5 The decline of merchant guilds 46 3 Local merchant guilds 49 3.1 Did local merchant guilds seek legal monopolies? 52 3.1.1 Exclusive right to trade 53 3.1.1.1 Types of transaction reserved for merchant guild members 54 3.1.1.2 Wares reserved for merchant guild members 56 3.1.1.3 Routes and destinations reserved for merchant guild members 58 3.1.2 Restricting entry 59 3.1.2.1 Local citizenship 59 3.1.2.2 Group affiliation 65 3.1.2.3 Economic characteristics 66 3.1.2.4 Personal characteristics 68 3.1.2.5 Collective acceptability 69 3.1.3 Fixing prices 70 3.1.4 Restricting supply 71 3.1.5 Dictating input costs 73 3.1.6 Compulsory staple rights 74 3.1.7 Other strategies for imposing costs on competitors 80 3.2 Did local merchant guilds enforce their monopolies in practice? 83 3.2.1 Contemporary complaints 83 3.2.2 Lobbying 87 3.2.3 Inter-guild conflict 89 3.2.4 Systems of detection and punishment 91 3.2.5 Legal exemptions and shares 93 3.2.6 Guilds limited merchant numbers and trade volumes 94 3.2.7 Empirical studies of local merchant guilds 96 3.3 Conclusion 97 4 Alien merchant guilds and companies 102 4.1 Did alien merchant guilds seek legal monopolies? 108 4.1.1 Exclusive rights to trade 108 4.1.2 Restricting entry 115 4.1.3 Fixing prices 123 4.1.4 Restricting supply 127 4.1.5 Fixing input costs 130 4.1.6 Imposing costs on competitors 132 4.2 Did alien merchant guilds enforce their monopolies in practice? 133 4.2.1 Contemporary complaints 134 4.2.2 Lobbying 140 4.2.3 Inter-guild conflict 142 4.2.4 Systems of enforcement 145 4.2.5 Willingness to pay for licences and exemptions 150 4.2.6 Effects on prices and volume of trade 152 4.2.7 Guild embargoes 156 4.2.8 Variation in merchant guild monopolies 160 4.2.9 Empirical studies of alien merchant guilds 164 4.3 Conclusion 165 5 Merchant guilds and rulers 168 5.1 State privileges for merchant guilds 172 5.2 Cash transfers to rulers 175 5.3 Assistance in taxing trade 178 5.4 State loans 183 5.5 Military and naval assistance 186 5.6 Political support 188 5.7 The decline of merchant guilds 190 5.8 Conclusion 196 6 Commercial security 200 6.1 Did merchant guilds exist to solve problems in long-distance trade? 204 6.1.1 Local and regional vs. international trade 205 6.1.2 Local vs. long-distance merchants 207 6.1.3 Local merchant guilds vs. their alien branches 210 6.2 How did merchant guilds affect commercial security? 214 6.2.1 Merchants and pirates 224 6.2.2 Violent conflicts between guilds 232 6.3 Were there no feasible alternatives? 238 6.3.1 State support for merchant guilds 238 6.3.2 Public-order institutions and commercial security 245 6.4 Conclusion 254 7 Contract enforcement 258 7.1 Guild jurisdictions 259 7.1.1 Advantages theoretically offered by guild courts 259 7.1.2 How universal were merchant guild courts? 261 7.1.3 Were guild courts independent? 266 7.1.4 Did guild courts use a special 'merchant law’? 272 7.1.5 What can we conclude about merchant guild jurisdictions? 275 7.2 Peer pressure 276 7.3 Collective reprisals 278 7.3.1 Were reprisals informal? 280 7.3.2 Were reprisals based on collective legal responsibility? 283 7.3.3 Did merchant guilds support collective reprisals? 284 7.3.4 Were reprisals efficient? 289 7.4 Alternative contract-enforcement mechanisms 293 7.4.1 Transacting with a trusted circle 294 7.4.2 Contractual instruments: pledges, guarantors, cessions of credit 295 7.4.3 Written records 298 7.4.4 Arbitration 304 7.4.5 Litigation 308 7.4.5.1 State courts 309 7.4.5.2 Ecclesiastical courts 311 7.4.5.3 Municipal courts 312 7.5 Conclusion 318 8 Principal-agent problems 323 8.1 Social capital and agency problems 325 8.2 Monopoly as a solution to agency problems 329 8.3 Alternative institutions for solving agency problems 338 8.3.1 Family firms 339 8.3.2 Legal forms of enterprise 340 8.3.3 Written record-keeping 346 8.3.4 Public law-courts 347 8.4 Conclusion 348 9 Information 352 9.1 Theoretical effects of merchant guilds on information provision 354 9.2 Evidence on merchant guilds and information 357 9.2.1 Economies of scale 357 9.2.2 Network bandwidth 359 9.2.3 Censorship 361 9.2.4 Inefficiency 363 9.2.5 Internal agency relations 366 9.2.6 Centralized information processing 368 9.2.7 Information cascades 370 9.3 Other institutions for collecting and transmitting information 372 9.3.1 Locational clustering 372 9.3.2 Brokers and notaries 377 9.3.3 Merchant correspondence 379 9.3.4 Newsletters, price lists and handbooks 384 9.3.5 Individual merchants and firms 386 9.3.6 Public information 389 9.4 Conclusion 391 10 Price volatility 399 10.1 Merchant monopolies and entrepôts 404 10.2 Preventing risky behaviour 408 10.3 Ensuring accurate information 411 10.4 Is price-setting by a single supplier desirable? 412 10.5 Competitive markets and stable prices 417 10.6 Conclusion 420 11 Institutions, social capital and economic development 422 11.1 Merchant guilds and theories of institutions 423 11.2 Merchant guilds and social capital 435 Bibliography 443 Index 484 "What was the role of merchant guilds in the medieval and early modern economy? Does their wide prevalence and long survival mean they were efficient institutions that benefited the whole economy? Or did they simply offer an effective way for the rich and powerful to increase their wealth, at the expense of outsiders, customers and society as a whole? These privileged associations of businessmen were key institutions in the European economy from 1000 to 1800. Historians debate merchant guilds' role in the Commercial Revolution, economists use them to support theories about institutions and development, and policy-makers view them as prime examples of social capital, with important lessons for modern economies. Sheilagh Ogilvie's magisterial new history of commercial institutions shows how the answers to such questions can help us understand which types of institution made trade grow, why institutions exist, and how corporate privileges affect economic efficiency and human well-being"-- "Cambridge Studies in Economic History comprises stimulating and accessible economic history which actively builds bridges to other disciplines. Books in the series will illuminate why the issues they address are important and interesting, place their findings in a comparative context, and relate their research to wider debates and controversies. The series will combine innovative and exciting new research by younger researchers with new approaches to major issues by senior scholars. It will publish distinguished work regardless of chronological period or geographical location"-- What was the role of merchant guilds in the medieval and early modern economy? Does their wide prevalence and long survival mean they were efficient institutions that benefited the whole economy? Or did they simply offer an effective way for the rich and powerful to increase their wealth, at the expense of outsiders, customers and society as a whole? These privileged associations of businessmen were key institutions in the European economy from 1000 to 1800. Historians debate merchant guilds' role in the Commercial Revolution, economists use them to support theories about institutions and development, and policy-makers view them as prime examples of social capital, with important lessons for modern economies. The author's new history of commercial institutions shows how the answers to such questions can help us understand which types of institution made trade grow, why institutions exist, and how corporate privileges affect economic efficiency and human well-being "Cambridge Studies in Economic History comprises stimulating and accessible economic history which actively builds bridges to other disciplines. Books in the series will illuminate why the issues they address are important and interesting, place their findings in a comparative context, and relate their research to wider debates and controversies. The series will combine innovative and exciting new research by younger researchers with new approaches to major issues by senior scholars. It will publish distinguished work regardless of chronological period or geographical location"-- Provided by publisher