The Online Library of Liberty

A project of Liberty Fund, Inc.

• Notice.
• Mr M C Culloch’s Publications.
• Treaties and Essays On Subjects Connected With Economical Policy; With Biographical Sketches of Quesnay, Adam Smith, and Ricardo
• A Treatise On Money. 1
• Sect. I.—: Circumstances Which Led to the Use of Money. Principal Properties Which Every Commodity Used As Such Ought to Possess. Not a Sign Or a Measure of Value, But a Real Equivalent.
• Sect. II.—: Circumstances Which Regulate the Exchangeable Value of Money.
• Sect. III.—: A Moderate Seignorage On Coined Money Advantageous. Principles Which Should Regulate Its Amount. 1
• Sect. IV.—: Expense of a Currency Consisting of the Precious Metals.
• Sect. V.—: Paper Money. Principle On Which Its Value Is Maintained.
• Sect. VI.—: Whether Gold Or Silver Should Be Adopted As the Standard of the Currency, Or Whether It Should Consist of Both.
• Sect. VII.—: Standard of Money. Degradation of the Standard In Rome, France, Great Britain, and Other Countries. Effects of This Degradation.
• Tables Relative to the Money of the United Kingdom.
• Treatise On the Circumstances Which Determine the Course of Exchange.
• Inland Exchange.
• Foreign Exchange.
• Sect. I.—: Nominal Exchange.
• Sect. II.—: Real Exchange.
• Sect. III.—: Computed Exchange.
• History and Influence of Bills of Exchange.
• Essay On Interest and Usury Laws.
• A Treatise On the Letting and Occupancy of Land.
• 1.: Money Rents.
• 2.: Proportional Rents.
• 3.: Produce Rents.
• 4.: Service Rents.
• An Essay Showing the Erroneousness of the Prevailing Opinions In Regard to Absenteeism.
• Sketch of the History of Commerce, to the Sixteenth Century.
• Sect. I.—: PhŒnician Commerce.
• Sect. II.—: Grecian Commerce.
• Sect. III.—: Roman Commerce.
• Sect. IV.—: Italian Commerce In the Middle Ages.
• Sect. V.—: Vasco De Gama and Columbus.
• An Essay On the Rise, Progress, and Decline of Commerce In Holland.
• An Essay On the Rise, Progress, and Decline of the Hanseatic League.
• Essay On the Origin of the Compass.
• Sketch of the Progress of Maritime Law.
• An Essay On the Colonial System of the Ancients.
• Sketch of the Life and Writings of Francis Quesnay.
• Sketch of the Life and Writings of Adam Smith, Ll.d.
• Sketch of the Life and Writings of David Ricardo, Esq., M.P.

AN ESSAY ON THE RISE, PROGRESS, AND DECLINE OF THE HANSEATIC LEAGUE.

The Hanseatic League is the name given to an association formed in the 12th and 13th centuries, of the principal cities in the north of Germany, Prussia, Poland, etc., for the better carrying on of commerce, and for their mutual safety and defence. This confederacy having contributed, in no ordinary degree, to introduce civilisation and good government into the North, a short account of it may not be deemed uninteresting.

Hamburg, founded by Charlemagne in the ninth, and Lubeck, founded about the middle of the 12th century (1140), were the earliest members of the League. The distance between them not being very considerable, and being alike interested in the repression of those disorders to which most parts of Europe, and particularly the coast of the Baltic, were a prey in the 12th, 13th, and 14th centuries, they early formed an intimate political union, partly in the view of maintaining a safe intercourse by land with each other, and partly for the protection of navigation from the pirates, with which every sea was at that time infested. There is no very distinct evidence as to the period when this alliance was consummated; some ascribe its origin to the year 1169, others to the year 1200, and others to the year 1241. But the most probable opinion seems to be, that it grew up by slow degrees, and was perfected according as the advantages derivable from it became more obvious. Such was the origin of the Hanseatic League, so called from the old Teutonic word hansa, signifying an association or confederacy.

Adam of Bremen, who flourished in the 11th century, is the earliest writer who has given any information with respect to the commerce of the countries lying round the Baltic. And from the errors into which he has fallen in describing the northern and eastern shores of that sea, it is evident they had been very little frequented, and not at all known, in his time. But from the beginning of the 12th century, the progress of commerce and navigation in the North was exceedingly rapid. The countries which stretch along the bottom of the Baltic, from Holstein to Russia, and which had been occupied by barbarous tribes of Slavonic origin, were then subjugated by the kings of Denmark, the dukes of Saxony, and other princes. The greater part of the inhabitants being exterminated, their place was filled by German colonists, who founded the towns of Stralsund, Rostock, Wismar, etc. Prussia and Poland were afterwards subjugated by the Christian princes and the knights of the Teutonic Order. So that, in a comparatively short period, the foundations of civilisation and the arts were laid in countries whose barbarism had ever remained impervious to the Roman power.

The cities that were established along the coast of the Baltic, and even in the interior of the countries bordering upon it, eagerly joined the Hanseatic confederation. They were indebted to the merchants of Lubeck for supplies of the commodities produced in more refined countries, and they looked up to them for protection against the barbarians by whom they were surrounded. The progress of the League was in consequence singularly rapid. Previously to the end of the 13th century, it embraced every considerable city in all those vast countries extending from Livonia to Holland, and was a match for the most powerful monarchs.

The Hanseatic confederacy was at its highest degree of power and splendour during the 14th and 15th centuries. It then comprised from sixty to eighty cities, which were distributed into four classes or circles. Lubeck was at the head of the first circle, and had under it Hamburg, Bremen, Rostock, Wismar, etc. Cologne was at the head of the second circle, with twenty-nine towns under it. Brunswick was at the head of the third circle, consisting of thirteen towns. Dantzic was at the head of the fourth circle, having under it eight towns in its vicinity, besides several that were more remote. The supreme authority of the League was vested in the deputies of the different towns assembled in congress. In it they discussed all their measures; decided upon the sum that each city should contribute to the common fund; and upon the questions that arose between the confederacy and other powers, as well as those that frequently arose between the different members of the confederacy. The place for the meeting of congress was not fixed, but it was most frequently held at Lubeck, which was considered as the capital of the League, and there its archives were kept. Sometimes, however, congresses were held at Hamburg, Cologne, and other towns. They met once every three years, or oftener if occasion required. The letters of convocation specified the principal subjects which would most probably be brought under discussion. Any one might be chosen for a deputy; and besides merchants, the congress comprised clergymen, lawyers, artists, etc. When the deliberations were concluded, the decrees were formally communicated to the magistrates of the cities at the head of each circle, by whom they were subsequently communicated to those below them; and the most vigorous measures were adopted for carrying them into effect. One of the burgomasters of Lubeck presided at the meetings of congress; and during the recess the magistrates of that city had the sole, or at all events the principal, direction of the affairs of the League.

Besides the towns already mentioned, there were others that were denominated confederated cities or allies. The latter neither contributed to the common fund of the League, nor sent deputies to congress. Even its members were not all on the same footing in respect to privileges; and the internal commotions by which it was frequently agitated, partly originating in this cause, and partly in the conflicting interests and pretensions of the different cities, materially impaired the power of the confederacy. But despite these disadvantages, it succeeded for a lengthened period, not only in controlling its own refractory members, but in making itself respected and dreaded by others. It produced able generals and admirals, skilful politicians, and some of the most successful and wealthy merchants of modern times.

As the power of the confederated cities was increased and consolidated, they became more ambitious. Instead of limiting their efforts to the mere advancement of commerce and their own protection, they endeavoured to acquire the monopoly of the trade of the North, and to exercise the same dominion over the Baltic that the Venetians exercised over the Adriatic. For this purpose they succeeded in obtaining, partly in return for loans of money, and partly by force, various privileges and immunities from the northern sovereigns, which secured to them almost the whole foreign commerce of Scandinavia, Denmark, Prussia, Poland, Russia, etc. They exclusively carried on the herring fishery of the Sound, at the same time that they endeavoured to obstruct and hinder the navigation of foreign vessels in the Baltic. It should, however, be observed, that the immunities they enjoyed were mostly indispensable to the security of their commerce, in consequence of the barbarism that then prevailed. And notwithstanding their attempts at monopoly, there cannot be a doubt that the progress of refinement in the North was prodigiously accelerated by the influence and ascendancy of the Hanseatic cities. They repressed piracy by sea and robbery by land, which must have broken out again had their power been overthrown before civilisation was fully established; they accustomed the inhabitants to the principles, and set before them the example, of good government and subordination; they introduced amongst them conveniences and enjoyments unknown by their ancestors, or despised by them, and inspired them with a taste for literature and science; they did for the people round the Baltic, what the Phœnicians had done in remoter ages for those round the Mediterranean, and deserve, equally with them, to be placed in the first rank amongst the benefactors of mankind.

“In order,” as has been justly observed, “to accomplish their purpose of rendering the Baltic a large field for the prosecution of commercial and industrious pursuits, it was necessary to instruct men, still barbarous, in the rudiments of industry, and to familiarise them in the principles of civilisation. These great principles were laid by the confederation; and at the close of the 15th century, the Baltic and the neighbouring seas had, by its means, become frequented routes of communication between the North and the South. The people of the former were enabled to follow the progress of the latter in knowledge and industry. The forests of Sweden, Poland, etc., gave place to corn, hemp, and flax; the mines were wrought, and in return the produce and manufactures of the South were imported. Towns and villages were erected in Scandinavia, where huts only were before seen; the skins of the bear and the wolf were exchanged for woollens, linens, and silks; learning was introduced; and printing was hardly invented before it was practised in Denmark, Sweden, etc.”1

The kings of Denmark, Sweden, and Norway, were frequently engaged in hostilities with the Hanse towns. They regarded, and it must be admitted not without pretty good reason, the privileges acquired by the League in their kingdoms as so many usurpations. But their efforts to abolish these privileges served, for more than two centuries, only to augment and extend them.

“On the part of the League there was union, subordination, and money; whereas the half-savage Scandinavian monarchies were full of divisions, factions, and troubles; revolution was immediately followed by revolution, and feudal anarchy was at its height. There was another circumstance, not less important, in favour of the Hanseatic cities. The popular governments established amongst them possessed the respect and confidence of the inhabitants, and were able to direct the public energies for the good of the state. The astonishing prosperity of the confederated cities was not wholly the effect of commerce. To the undisciplined armies of the princes of the North—armies composed of vassals without attachment to their lords—the cities opposed, besides the inferior nobles, whose services they liberally rewarded, citizens accustomed to danger, and resolved to defend their liberties and property. Their military operations were combined and directed by a council composed of men of tried talents and experience, devoted to their country, responsible to their fellow-citizens, and enjoying their confidence. It was chiefly, however, on their marine forces that the cities depended. They employed their ships indifferently in war or commerce, so that their naval armaments were fitted out at comparatively small expense. Exclusive, too, of these favourable circumstances, the fortifications of the principal cities were looked upon as impregnable. And as their commerce supplied them abundantly with all sorts of provisions, it need not excite our astonishment that Lubeck alone was able to carry on wars with the surrounding monarchs, and to terminate them with honour and advantage; and still less, that the League should long have enjoyed a decided preponderance in the North.”1

The extirpation of piracy was one of the objects which had originally led to the formation of the League, and which it never ceased to prosecute. Owing, however, to the barbarism then so universally prevalent, and the countenance openly given by many princes and nobles to those engaged in this infamous profession, it was not possible wholly to root it out. But the vigorous efforts of the League to abate the nuisance, though not entirely successful, served to render the navigation of the North Sea and the Baltic comparatively secure, and were of signal advantage to commerce. Nor was this the only mode in which the power of the confederacy was directly employed to promote the common interests of mankind. Their exertions to protect shipwrecked mariners from the atrocities to which they had been subject, and to procure the restitution of shipwrecked property to its legitimate owners, though most probably, like their exertions to repress piracy, a consequence of selfish considerations, were in no ordinary degree meritorious; and contributed not less to the advancement of civilisation than to the security of navigation.1

To facilitate and extend their commercial transactions, the League established various factories in foreign countries; the principal of which were at Novogorod in Russia, London, Bruges in the Netherlands, and Bergen in Norway.

Novogorod, situated at the confluence of the Volkof with the Imler Lake, was for a lengthened period the most renowned emporium in the north-eastern parts of Europe. In the beginning of the 11th century, the inhabitants obtained considerable privileges, that laid the foundation of their liberty and prosperity. Their sovereigns were at first subordinate to the grand dukes or czars of Russia; but as the city and the contiguous territory increased in population and wealth, they gradually acquired an almost absolute independency. The power of these sovereigns over their subjects seems, at the same time, to have been exceedingly limited; and, in effect, Novogorod ought rather to be considered as a republic under an elective magistrate, than as a state subject to a regular line of hereditary monarchs, possessed of extensive prerogatives. During the 12th, 13th, and 14th centuries, Novogorod formed the entrepôt between the countries to the east of Poland and the Hanseatic cities. Its fairs were frequented by people from all the surrounding countries, as well as by numbers of merchants from the Hanse towns, who engrossed the greater part of its foreign trade, and furnished its markets with the products of distant countries. Novogorod is said to have contained, during its most flourishing period, towards the middle of the 15th century, upwards of 400,000 souls. This, however, is doubtless an extreme exaggeration. But its dominions were then very extensive; and its wealth and power seemed so great and so well established, and the city itself so impregnable, as to give rise to a proverb, Who can resist the gods and great Novogorod?—Quis contra Deos et magnam Novogordiam?1

But its power and prosperity were far from being so firmly established as its eulogists, and those who had only visited its fairs, appear to have supposed. In the latter part of the 15th century, Ivan Vassilievitch, czar of Russia, having secured his dominions against the inroads of the Tartars, and extended his empire by the conquest of some of the neighbouring principalities, asserted his right to the principality of Novogorod, and supported his pretensions by a formidable army. Had the inhabitants been animated by the spirit of unanimity and patriotism, they might have defied his efforts; but their dissensions facilitated their conquest, and rendered them an easy prey. Having entered the city at the head of his troops, Ivan received from the citizens the charter of their liberties, which they either wanted courage or inclination to defend, and carried off an enormous bell to Moscow, which had long been regarded with a sort of superstitious veneration as the palladium of the city. But notwithstanding the despotism to which Novogorod was subject during the reigns of Ivan and his successors, it continued for a considerable period to be the largest, as well as most commercial, city in the Russian empire. The famous Richard Chancellour, who passed through Novogorod in 1554, in his way from the court of the czar, says, that “next unto Moscow, the city of Novogorod is reputed the chiefest of Russia; for although it be in majestie inferior to it, yet in greatness it goeth beyond it. It is the chiefest and greatest mart town of all Muscovy; and albeit the emperor’s seat is not there, but at Moscow, yet the commodiousness of the river falling into the Gulf of Finland, whereby it is well frequented by merchants, makes it more famous than Moscow itself.”

But the scourge of the destroyer soon after fell on this celebrated city. Ivan IV., having discovered, in 1570, a correspondence between some of the principal citizens and the king of Poland relative to a surrender of the city into his hands, punished them in the most inhuman manner. The slaughter by which the bloodthirsty barbarian sought to satisfy his revenge was alike extensive and indiscriminating. The crime of a few citizens was made a pretext for the massacre of 25,000 or 30,000. Though it never recovered from this fatal blow, Novogorod continued to be a place of considerable trade, until the foundation of Petersburg, which immediately became the seat of the commerce of which it had previously been the centre. This ill-fated city is now reduced to an inconsiderable town, with about 8,000 or 9,000 inhabitants; and is remarkable only for its history and antiquities.

The merchants of the Hanse towns, or Hansards, as they were then commonly termed, were established in London at a very early period, and their factory here was of considerable magnitude and importance. They enjoyed various privileges and immunities; they were permitted to govern themselves by their own laws and regulations; the custody of one of the gates of the city (Bishopsgate) was committed to their care; and the duties on various sorts of imported commodities were considerably reduced in their favour. These privileges necessarily excited the ill-will and animosity of the English merchants. The Hansards were every now and then accused of acting with bad faith; of introducing commodities as their own that were really the produce of others, that they might evade the duties with which they ought to have been charged; of capriciously extending the list of towns belonging to the association; and obstructing the commerce of the English in the Baltic. Efforts were continually making to bring these disputes to a termination; but as they really grew out of the privileges granted to and claimed by the Hansards, this was found to be impossible. The latter were exposed to many indignities; and their factory, which was situated in Thames Street, was not unfrequently attacked. The League exerted themselves vigorously in defence of their privileges; and having declared war against England, they succeeded in excluding our vessels from the Baltic, and acted with such energy, that Edward IV. was glad to come to an accommodation with them, on terms which were anything but honourable to the English. In the treaty for this purpose, negotiated in 1474, the privileges of the merchants of the Hanse towns were renewed, and the king assigned to them, in absolute property, a large space of ground, with the buildings upon it, in Thames Street, denominated the Steel Yard, whence the Hanse merchants have been commonly denominated the Association of the Steel Yard. The property of their establishments at Boston and Lynn was also secured to them; and the king engaged to allow no stranger to participate in their privileges. One of the articles bore that the Hanse merchants should be no longer subject to the Judges of the English Admiralty Court, but that a particular tribunal should be formed for the easy and speedy settlement of all disputes that might arise between them and the English. And it was further agreed that the particular privileges awarded to the Hanse merchants should be published as often as the latter judged proper, in all the seaport towns of England, and that such Englishmen as infringed upon them should be punished. In return for these concessions, the English acquired the liberty of freely trading in the Baltic, and especially in the port of Dantzic and in Prussia. In 1498, all direct commerce with the Netherlands being suspended, the trade fell into the hands of the Hanse merchants, whose commerce was in consequence very greatly extended. But, according as the spirit of commercial enterprise awakened in the nation, and as the benefits resulting from the prosecution of foreign trade came to be better known, the privileges of the Hanse merchants became more and more obnoxious. They were, in consequence, considerably modified in the reigns of Henry VII. and Henry VIII., and were at length wholly abolished in 1597.1

The different individuals belonging to the factory in London, as well as those belonging to the other factories of the League, lived together at a common table, and were enjoined to observe the strictest celibacy. The direction of the factory in London was intrusted to an alderman, two assessors, and nine councillors. The latter were sent by the cities forming the different classes into which the League was divided. The business of these functionaries was to devise means for extending and securing the privileges and commerce of the association; to watch over the operations of the merchants; and to adjust any disputes that might arise amongst the members of the confederacy, or between them and the English. The League endeavoured at all times to promote, as much as possible, the employment of their own ships. In pursuance of this object, they went so far, in 1447, as to forbid the importation of English merchandise into the confederated cities, except by their own vessels. But a regulation of this sort could not be carried into full effect; and was enforced or modified according as circumstances were favourable or adverse to the pretensions of the League. Its very existence was, however, an insult to the English nation; and the irritation produced by the occasional attempts to act upon it, contributed materially to the subversion of the privileges which the Hanseatic merchants had acquired amongst us.

By means of their factory at Bergen, and of the privileges which had been either granted to or usurped by them, the League enjoyed for a lengthened period the monopoly of the commerce of Norway.

The principal factory of the League was at Bruges in the Netherlands. Bruges became, at a very early period, one of the first commercial cities of Europe, and the centre of the most extensive trade carried on to the north of Italy. The art of navigation in the 13th and 14th centuries was so imperfect, that a voyage from Italy to the Baltic and back again could not be performed in a single season; and hence, for the sake of their mutual convenience, the Italian and Hanseatic merchants determined on establishing a depôt or storehouse of their respective products in some intermediate situation. Bruges was fixed upon for this purpose; a distinction which it seems to have owed as much to the freedom enjoyed by the inhabitants, and the liberality of the government of the Low Countries, as to the conveniency of its situation. In consequence of this preference, Bruges speedily rose to the very highest rank among commercial cities, and became a place of vast wealth. It was at once a staple for English wool; for the woollen and linen manufactures of the Netherlands; for the timber, hemp and flax, pitch and tar, tallow, corn, fish, ashes, etc., of the North; and for the spices and Indian commodities, as well as their domestic manufactures imported by the Italian merchants. The fairs of Bruges were the best frequented of any in Europe. The Hanseatic merchants were the principal purchasers of Indian commodities; they disposed of them in the ports of the Baltic, or carried them up the great rivers into the heart of Germany. The vivifying effects of this commerce were everywhere felt; the regular intercourse opened between the nations in the north and south of Europe made them sensible of their mutual wants, and gave a wonderful stimulus to the spirit of industry. This was particularly the case with regard to the Netherlands. Manufactures of wool and flax had been established in that country as early as the age of Charlemagne; and the resort of foreigners to their markets, and the great additional vent that was thus opened for their manufactures, made them be carried on with a vigour and success that had been hitherto unknown. These circumstances, combined with the free spirit of their institutions, and the moderation of the government, so greatly promoted every elegant and useful art, that the Netherlands early became the most civilised, best cultivated, richest, and most populous country of Europe.

From the middle of the 15th century, the power of the confederacy, though still very formidable, began to decline. This was not owing to any misconduct on the part of its leaders, but to the progress of that improvement which it had done so much to promote. The superiority enjoyed by the League resulted as much from the anarchy, confusion, and barbarism that prevailed throughout the kingdoms of the North, as from the good government and order that distinguished its towns. But a distinction of this sort could not be permanent. The civilisation which had been at first confined to the cities, gradually spread from them, as from so many centres, over the contiguous country. Feudal anarchy was everywhere superseded by a system of subordination; arts and industry were diffused and cultivated; and the authority of government was at length firmly established. This change not only rendered the princes, over whom the League had so frequently triumphed, superior to it in power; but the inhabitants of the countries amongst which the confederated cities were scattered, having learned to entertain a just sense of the advantages derivable from commerce and navigation, could not brook the superiority of the association, or bear to see its members in possession of immunities of which they were deprived. And in addition to these circumstances, which must speedily have occasioned the dissolution of the League, the interests of the different cities of which it consisted became daily more and more opposed to each other. Lubeck, Hamburg, Bremen, and the towns in their vicinity, were latterly the only ones that had any interest in its maintenance. The cities in Zealand and Holland joined it, chiefly because they would otherwise have been excluded from the commerce of the Baltic; and those of Prussia, Poland, and Russia did the same, because, had they not belonged to it, they would have been shut out from all intercourse with strangers. When, however, the Zealanders and Hollanders became sufficiently powerful at sea to be able to vindicate their right to the free navigation of the Baltic by force of arms, they immediately seceded from the League; and no sooner had the ships of the Dutch, the English, etc., begun to trade directly with the Polish and Prussian Hanse towns, than these also embraced the first opportunity of withdrawing from it. The fall of this great confederacy was really, therefore, a consequence of the improved state of society, and of the development of the commercial spirit in the different nations of Europe. It was most serviceable so long as those for whom its merchants acted as factors and carriers were too barbarous, too much occupied with other matters, or too destitute of the necessary capital and skill, to act in these capacities for themselves. When they were in a situation to do this, the functions of the Hanseatic merchants ceased as a matter of course; their confederacy fell to pieces; and at the middle of the 17th century the cities of Lubeck, Hamburg, and Bremen were all that continued to acknowledge the authority of the League. They still, indeed, preserve the shadow of its power; being acknowledged in the act for the establishment of the Germanic confederation, done at Vienna in 1815, as free Hanseatic cities.

[1 ] Catteau, “Tableau de la Mer Baltique,” tom. ii. p. 175.

[1 ] L’Art de vérifier les Dates, 3me partie, tom. viii. p. 204.

[1 ] A series of resolutions were unanimously agreed to by the merchants frequenting the port of Wisby, one of the principal emporiums of the League, in 1287, providing for the restoration of shipwrecked property to its original owners, and threatening to eject from the “consodalitate mercatorum” any city that did not act conformably to the regulations laid down.

[1 ] Coxe’s “Travels in the North of Europe,” vol. ii. p. 80.

[1 ] Anderson’s Hist. Com. Anno 1474, etc.