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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.

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.

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 moneychangers 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.

54. THE LAW MERCHANT1

The law by which the commercial life of the mediaeval trader was governed was not the common law of the land but the law merchant, aptly termed by Maitland "the private international law of the Middle Ages," and identified by a fifteenth-century chancellor with the law of nature. This was a special body of legal usages and doctrines binding on merchants throughout Europe in their mercantile relations. While at the outset a uniform system of law was only gradually developed out of the conflicting practices of the different localities, there ultimately grew up a definite body of law distinct from common law and of international bearing. It had several well-defined features, and foremost among these the author of a treatise on the Lex Mercatoria places the summary nature of its procedure. Again, it was unwritten, customary law, created by the merchant "out of his own needs and his own views," though to some extent it may have come under the influence of statute law. In certain respects it openly diverged from the common law of the land and in some degree anticipated modern commercial practices. Adapted by permission from E. Lipson, The Economic History of England: The Middle Ages, pp. 224-32. (A. & C. Black, Ltd., 1915.)

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Especially characteristic was the payment of a God's penny to bind a purchase; once the parties to a contract had paid "earnest" or assurance money, neither could withdraw from it. Its principle appears to be that of the festuca, or symbol of possession, which the seller of land handed to the purchaser in token of the change of ownership. Another mercantile institution was that of promissory notes, an institution of extreme importance in the development of trade and finance. The procedure of mercantile law was still often formal and marked by the retention of antiquated survivals. Thus in 1287 the party to a suit at the fair of St. Ives lost his case because one of the compurgators in taking the oath made a slip in the name, saying Robert for Henry. None the less, in certain directions there was a departure from established usage. Notably was this the case in the production of proof by tally, or by evidence based on the examination of witnesses in the open court, while professional pleaders were afforded scope for their activities. For these various reasons the piepowder court, and the law which it administered, merit the most considerable attention. Throughout the Middle Ages and beyond England was covered with a network of courts, which in number and energy were scarcely inferior to the rural courts of the townships. At the same time they must have contributed enormously to the consolidation of a body of mercantile law, which in its turn has been an important source of modern jurisprudence.

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The holding of a piepowder court was not the prerogative of the fairs alone. They were often set up in boroughs to provide expeditious justice "for merchants and foreigners passing through" in matters affecting "covenants, contracts, trespasses, and debts. The promise of speedy justice was one of the concessions extended to aliens in the Carta Mercatoria (1303). Cambridge held a court "between merchants and merchants concerning their merchandises" from day to day and from hour to hour, according to the exigencies of the complaint. London also took measures to facilitate speedy judgment in order that foreign merchants might not be delayed by a long series of pleadings.

The president of the court was the mayor or bailiff of the borough, or the steward where the franchise was not under municipal control. With the president, who executed the judgment of the court, was associated a varying number of assessors who helped to administer justice, and in cases affecting alien merchants half of them were drawn from aliens present at the fair. These assessors

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themselves merchants, and in accordance with mediaeval procedure they were the suitors who gave the verdict and, whenever difficulties arose, declared the law. There was commonly, though not invariably, an appeal from their judgment to the supreme courts. The competence of the court covered a great variety of pleas arising from debts, contracts, trespasses, breaches of the assizes of bread and ale; sometimes it also extended to pleas of land, but pleas of the Crown were excepted. Besides commercial litigation, it dealt with the collection of tolls and the maintenance of peace and order. Offenders were presented for assault, for opprobrious epithets, and for undue encroachment, for example, "annoying the beast market with carts."

55. EVILS RESULTING FROM A LACK OF COMMERCE1

It will be well to consider the results of a system which was based on the lack of commerce. With regard to the main product, food staples, the result was an alternation of waste and want. A good year brought a surplus for which there was no market outside the village, and which could not be worked up inside for lack of manufacturing skill and implements. A bad harvest, on the other hand, meant serious suffering, because there was no opportunity to buy food supplies outside the manor and bring them to it. Nearly every year was marked by a famine in one part or another of a country, and famine was often followed by pestilence. Diseases now almost unknown in the civilized world, like leprosy and ergotism or St. Anthony's fire, were not infrequent. The food at best was coarse and monotonous; the houses were mere hovels of boughs and mud; the clothes were a few garments of rude stuff. Nothing better could be procured so long as everything had to be produced on the spot and made ready for use by the people themselves. Finally, these people were coarse and ignorant, with little regard for personal cleanliness, and with practically no interests outside the narrow bounds of the little village in which they lived.

56. MEDIAEVAL VS. MODERN TRADE AND INDUSTRY2

In comparing the conditions of trade and industry inside the towns with those of the present day, very wide differences appear. Commonplaces of this century, such as capital, labour, employer,

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Adapted by permission from Clive Day, A History of Commerce, p. 36. (Longmans, Green, & Co., 1912.)

Taken by permission from G. T. Warner, Landmarks in English Industrial History, pp. 60-62. (Blackie & Son, Ltd, 1912.)

competition, have very little meaning as applied to the thirteenth century. Employer and labourer are one; the craftsman works at his craft assisted by apprentices who will, in their turn, become craftsmen; the retail shop is practically unknown, for each craftsman sells the goods he makes; there is little change in fashion, and demand is steady; large stocks are not made or held; there is no underselling or cutting out of rivals by improved process or specious goods; there are no wealthy employers struggling to become still wealthier. On the contrary, townsmen live much the same lives and aim at standing well with their gild rather than exciting envy by their individual prosperity. Craftsmen work year after year on the same method with the same materials. It is not competition which determines price, but usage and regulation. The price of any ware is to be a fair price, fair to the producer and fair to the buyer, and this was far more easy to estimate then than it is now. Under the diverse conditions of modern production, the idea of justice as a determining factor of price has gone; we do not trouble over what is the right price; we accept the price under usual conditions as being right. But when craftsmen lived similar lives and produced on a similar scale with similar advantages of market and situation and with similar costs of production, a just price was not so difficult to determine. Thus the trade of the time is pervaded with a morality that is unfamiliar to our day. Now, trade is not immoral, but it is unmoral; price is left to competition, to the conditions of the market. But in the thirteenth century current opinion, if not perhaps on so high a level as St. Thomas Aquinas would have had it, when he urged the wickedness of selling defective articles without indicating the defects to the buyer, or of asking a high price when there was a temporary scarcity, yet made strongly against deceit, fraud, and concealment. Neither buyer nor seller was to take advantage of the other's necessities, but payment was to be fair return for the labour expended upon honest work.

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