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Home -> Orville Marcellus Powers -> Commerce and Finance -> Chapter III

Commerce and Finance - Chapter III

1. Chapter I

2. Chapter II

3. Chapter III

4. Chapter IV

5. Chapter V

6. Chapter VI

7. Chapter VII

8. Chapter VIII

9. Chapter IX

10. Chapter X

11. Chapter XI

12. Chapter XII

13. Chapter XIII

14. Chapter XIV

15. Chapter XV

16. Chapter XVI

17. Chapter XVII

18. Chapter XVIII

19. Chapter XIX

20. Chapter XX

21. Chapter XXI

22. Chapter XXII

23. Chapter XXIII

24. Chapter XXIV

25. Chapter XXV

26. Chapter XXVI

27. Chapter XXVII

28. Chapter XXVIII

29. Chapter XXIX

30. Chapter XXX

31. Chapter XXXI

32. Chapter XXXII

33. Chapter XXXIII

34. Chapter XXXIV

35. Chapter XXXV

36. Chapter XXXVI

37. Chapter XXXVII

38. Chapter XXXVIII

39. Chapter XXXIX

40. Chapter XL

41. Chapter XLI

42. Chapter XLII

43. Chapter XLIII

44. Chapter XLIV

45. Chapter XLV

46. Chapter XLVI

47. Chapter XLVII

48. Chapter XLVIII

49. Chapter XLVIX

50. Chapter L

51. Chapter LI

52. Chapter LII

Medieval Commerce.

Decline And Fall Op Rome; Decay Op Commerce; Confusion
And Ignorance; Charlemagne; Venetian Commerce.

About the middle of the fourth century the Roman power
began to decline. It had held unbounded sway over an immense
empire for five hundred years, and had created a high degree

of civilization and an extensive commerce among
commerce * a ^ ^ ^s diversified provinces, but riches finally

brought luxury and corruption, internal dissen-
sions weakened the state, and wars, with bad government, de-
stroyed, in a large measure, the commerce of the empire.
Excessive taxation and extortion seriously crippled the pros-
perity of the provinces. Thus Brutus made Asia Minor pay five
years' tribute at once, and shortly after Anthony compelled it
to do the same thing again. To bolster up the failing revenues
of the state and supply needed money for the extravagance and
profligacy of Rome, the coinage was debased by reducing its
weight and increasing the alloy. Thus under Vespasian the
silver coin consisted of one-fourth copper and three-fourths pure
silver. This was later reduced to one-third copper and two-
thirds silver, then to one-half copper, and finally the coin of the
realm contained but about one per cent, of silver, tin being sub-
stituted. From such debasement of the coin it was only a short
step to the repudiation of debts, and this step was often at-
tempted by the demagogues. Law ceased to have any value.
A suitor must deposit a bribe before a trial could be had. The
increase of immorality proceeded. The virtues which had
adorned the earlier history of Rome disappeared, and in the
end were replaced by crimes such as the world had never before



To the north of the Roman Empire, occupying what is now
France, Austria, Germany and Russia, had grown up powerful,
semi-barbarous tribes of sturdy hunters and warriors. These
"barbarians," as they are called, were of immense stature,
dressed mostly in skins, were well mounted on a superior breed
of horses, and used the customary shields, helmets
and other implements of war. They had some
semblance of laws, but paid no. taxes, and their
civilization and commerce were of the rudest character. These
rugged tribes, known as the Goths, Vandals, Franks, and by
other names, had given the Romans trouble along the border all
through the second and third centuries, and frequent expeditions
had been sent out to quiet or subdue them. They had been
students of Roman discipline and methods of warfare, and some
of them had even enlisted in the Roman army for this purpose,
and thus, as the power and internal strength and prosperity of
Rome began to decline," these hardy peoples, which had not been
enervated by luxury, were in a condition to dispute Roman
supremacy. The Roman Empire had been divided in the year
364 into two parts, with two capitals, viz.: Rome and Constanti-
nople, and this separation divided its strength and made it all
the more liable to defeat.

Now it happened about this time, viz., the fourth cen-
tury, that vast hordes of Huns and other tribes from the north-
ern parts of Asia, now Siberia, swept over into Europe, driving
the Goths and other European tribes before them and stirring
up general confusion. The reason for this migration of the
Huns is supposed to have been a gradual upheaval of the plains
of Siberia, which geologists tell us actually occurred, thereby
causing the rivers to run dry, and forcing the
Huns to move westward with their herds and
flock^ in search of better pastures. A large num-
ber of the Goths were forced over the Danube and settled within
the boundaries of the Roman Empire. They had their own king,


and this led to a conflict with Home, the result of which was that
Alaric, king of the Goths, in 410 penetrated into Italy and
marched, despite all oppositions, to the very gates of the Eternal
City. It had been over six hundred years since Rome had felt
the presence of a foreign enemy at her door, and that was Han-
nibal, the Carthaginian. Alaric laid siege, captured and sacked
the city. His successor made inroads into what is now France
and Spain, and set up a Gothic kingdom there, while other
tribes made similar incursions into Greece, and at the same time,
too, still other Teutonic tribes, the Angles and the Saxons, were
settling in Britain and laying the foundation for an Anglo-Saxon
civilization. Later the Saracens conquered the eastern and
African provinces of Rome and established themselves in Spain,
where they remained for several centuries.

These great waves of migration which passed over Europe
destroyed for a time the old civilization and the old commerce.
All was chaos and disorder, and the night of ignorance and
superstition prevailed. The semi-barbarous immigrants were
content with the simplest necessaries and the products of the

soil. There was no demand for foreign wares or
d cos % articles of luxury such as the Roman world

had used. The active powers of man were devoted
to war, strife and destruction rather than the arts of peace.
The hordes of barbarians overturned and almost annihilated
every monument of science and art which then existed. The
progress of literature was arrested, and so great was the general
ignorance which prevailed that persons of the most distinguished
rank could neither read nor write. Many charters granted by
kings and others in high authority during this period have been
preserved, to which it appears they were unable to subscribe their
names, and then originated the custom for those who could not
write to make the sign of the cross a custom held to the present
time, but seldom used in this enlightened day.

.It was impossible in the four or five centuries after the fall


of Borne to carry on agriculture or other industries with any
degree of success. The bare necessities were the sole aim of
a great majority of the people. Internal trade was hardly
more successful than agriculture, and for the same reason. For
several centuries there is no trace of any important manufact-
ures except of course those domestic arts of weav-
^8 an( ^ spinning, which are absolutely necessary
for providing clothes, and which can be practiced
by separate individuals in every village or household. Rich
men, indeed, used to keep artisans in their households as
servants; but this only shows that there were no recognized
seats of manufacture from which they could easily procure
what they wanted. Even kings in the ninth century had their
clothes made by the women upon their farms. No doubt the
villages had their smiths and weavers, but these occupations
belonged to a few isolated individuals, and had not yet developed
to any considerable branch of industry. Trade between various
localities was very limited, for the general insecurity of the
times made mercantile traffic highly dangerous. The want of
means of communication and transportation prevented men from
easily moving about to supply one another's wants, and at the
same time made it difficult for them to ascertain what others'
wants were. Eobbery and violence were frequent, and robbery
by extortionate tolls still more so. The ordinary knight of
those times was nothing more nor less than a bandit, perhaps
not always as openly criminal as a highwayman, but very often
employing the same methods. Since but few could read or
write, the gates to the temple of knowledge were shut to the
great body of the people, and they did not even surmise that
they had any right to explore its treasures. Few books were
written, and there are few inventions, useful or ornamental to
society, of which this long period of nearly five centuries can

About the year 800, Karl the Great, otherwise known in


history as Charlemagne, was made king of the Franks, and under
his wise and vigorous rule learning, industry and commerce
revived; towns and cities sprang up and manu-
factures increased, thus laying the foundation for
the revival of internal and foreign commerce which
was destined to set in about two centuries later. Charlemagne
gave every freeman a share in the making of the laws, and
improved the administration of justice. He fostered education
by establishing schools and having the works of the ancient
Roman writers transcribed. Unfortunately his successors were
weak and inefficient, and his death was followed by a period
of great confusion, during which Europe was severely harassed
on the south by the Arabs, on the east by the Slavs and on the
north by the Normans.

Passing over a period of perhaps two centuries after the
reign of Charlemagne, in which there were some occasional
indications of the dawn of a brighter era, the inhabitants of
Revival of Europe finally began, about the eleventh century,

Learning and to experience a change auspicious of better times.
The art of making paper in the manner now be-
come universal was invented, and greatly increased the number
of manuscripts and the general diffusion of learning. This, fol-
lowed by the discovery of the art of printing, brought the price
of books within the reach of those of moderate means. Then
came the discovery of the mariner's compass, making it possible
to extend navigation which had hitherto been confined to the
coast and the Mediterranean Sea, over the ocean, leading to new
and rich discoveries, and preparing the way for the commerce of
the future. The Feudal system* had been established after the

*The Feudal system was a combination of Roman and German laws and
customs involving the tenure or ownership of laud and military service to
the lords or the king. After the conquest of the Roman provinces in France
and Germany the land was generally divided by the conquerors into three
portions: the king took one; another he divided among his generals and
soldiers under the condition of military service; the third was left to the


reign of Charlemagne, and this favored the growth of towns and
consequently an increase in industry and commerce by the sta-
bility which it gave to property and society in general. Trade
guilds and craft 'guilds were organized, suggesting the idea of
mutual help and co-operation. Trade guilds embodied the idea
of our modern chambers of commerce, and exerted considerable
influence upon the government of the town. Craft guilds aimed
to secure good handiwork on the part of members, to regulate
the number of apprentices and to provide a common fund in case
of sickness, very much after the plan of labor unions in our day.
While the introduction of the Feudal system was an aid to com-
merce by settling society into a more stable and organized form,
it finally became a hinderance on account of the restrictions which
it imposed upon both property and persons. The service exacted
Effect of ^ vassa ^ s often interfered with their employment

Feudalism on by calling them away from agriculture or other
occupations at times when they were needed. The
lords levied heavy assessments and fines upon those who were
dependent upon them for every attempted change of occupation,
so that those who desired to give up agriculture and become
artisans or traders were hampered in their efforts. Jealousies
and rivalries between the lords of different territories caused
taxes to be laid upon the commerce between one domain and

original inhabitants upon the payment of a tax. But for the purpose of
binding certain of his subjects more closely to the throne, the king granted
out a part of his own land to them for life. This was called a fief; the
giver was the liege lord, and the receiver was called a vassah In the same
way, those who had acquired large life estates as fiefs, sub-let to those less
fortunate, portions of their estates and thus had vassals of their own.
Bishops gave fiefs to knights for services in defending convents, and thus
society was bound together by a system of service and obligations for
mutual protection and defense. Gradually the more powerful oppressed
those under them until the class which cultivated the soil became hereditary
serfs attached to the land, and in reality slaves. The Feudal system, while
affording the benefits of protection to property, was a great hinderance to
freedom of both person and property, since under it land could not be
conveyed, nor serfs transferred readily.


another, and thus the system eventually proved to be restrictive
and injurious to the development of trade and commerce.

About the twelfth century a number of Italian cities came
into prominence on account of the trade and manufactures which
they had built up. Among these Venice, situated on a group
of sandy and barren islands in the Adriatic Sea, whither its in-
habitants had been driven by the armies of Attila, was the most
important. The wealth of Venice was originally due
* ^ wo articles of commerce, viz., salt and fish, these
being the only products obtainable on account of
the location of the city. The Venetians built up a large trade
with mainland cities, and eventually embarked in the carrying
trade. Their ships went up and down the coast, as far east as
Greece and west to Spain. Salt and fish were exchanged with
other cities for oil, wine, lumber and metals. Extending her
commerce, Venice brought the products of Egypt and the East
to her wharves, and the city soon became the emporium of
southern Europe. Her ships now touched every shore and part
of the then civilized world, and her commerce included every
article of value. To protect her ships from robbers and pirates
she built an extensive navy, and each fleet of ships was convoyed
by a man of war. Her merchant squadrons numbered in all over
3,000 ships, and made regular sailings. Besides her maritime
commerce, Venice built up a large overland trade with Germany
and central European points.

By her extensive trade and navigation Venice raised herself
to a degree of prosperity and magnificence which recalls the
memory of the most flourishing period of ancient Greece. She
established a republican form of government,
built gorgeous palaces (that of the Doge or Gov-
ernor), magnificent churches (the Cathedral of
St. Mark), and splendid squares (that of St. Mark), and made
the city the wonder of the world. The Venetians supplied salt
and fish to nearly the whole world, a trade in which they had


a complete monopoly; and in every instance where a treaty was
made with a foreign power a clause was introduced reserving
to Venice the exclusive privilege of supplying these commodi-
ties. Besides its enormous trade, Venice engaged extensively in
manufacturing, and exported its wares to all parts of Europe and
Asia. Silk was one of the most valuable products of its artisans,
the art of weaving this into beautiful tissues having been learned
from the Persians. Another product was glass, which they made
from the sand of their own islands in such a high degree of
skill that Venetian glass became celebrated everywhere for its
clearness and beauty. This art the Venetians had learned from
the Arabs, and, with the decorative art and skill which they
possessed, were able to produce glass work of rare beauty. They
also made woolen and cotton cloths from the raw products which
they imported from Spain, Greece and Egypt, and carried on
extensive manufactures in brass and iron, so that their shields
and armors were the most beautiful and excellent in Europe.
The Venetians kept constantly developing their shipping facili-
ties. They made extensive improvements in the methods of
marine and naval construction, established arsenals and eventu-
ally acquired naval supremacy.

But this energetic and progressive people seemed possessed of
a natural faculty for finance and commerce. They were natural
born traders and financiers. A great feature of the wealth of
the city was its banking facilities. The bank of Venice, estab-
lished in 1171, was the first regularly organized bank in the
world, although it did not develop all of the func-
tions of a modern bank until long after. The
republic, being hard pressed for money, on three
different occasions was obliged to levy forced contributions upon
the citizens, and in return gave them perpetual annuities at
certain rates per annum on the amount loaned. The offices for
the payment of these annuities were consolidated and became
the Bank of Venice. The annuities or interest on the govern-
ment loans being punctually paid, the amount of the loan as
registered upon the books of the bank came to be considered as
a species of property and passed from one person to another by
devise, descent and assignment. Debts were frequently paid
in this manner, and by allowing the mutual cancellation of
debts by the transfer of credits on the books of the bank,the use
of money was at first saved to a considerable extent, and later
certificates, payable to bearer, the equivalent of bank bills, were
used to obviate the necessity for entries upon the books.

The "Kialto" was their great commercial exchange where
the merchants met and did their trading. The transactions
of this exchange had a wider influence on the commerce of the
world at that time than any other market. The Venetians were
the first to reduce finance to a science. They were the origin-
ators of the system of double entry book-keeping,
which we use with modifications to this day. They
are credited by some authorities with having a
knowledge of printing prior to Coster and Gutenberg (A.D.1440),
having (as has been asserted) received it from the Chinese, by
whom the art had been practiced for two thousand years. We know
that Venice took the lead of all Europe in the manufacture of
books and that newspapers were first issued by them, thus indi-
cating that Italy stood in the van of progress and enlightenment
at the close of the fifteenth century.

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