Category Archives: Trading

Genoa money trade

Genoa This medieval Ligurian city-state also referred to as the city of Saint George, evolved as a merchant port and city before Venice, and also organised itself as a republic. It minted gold coins before Florence Florin coins came out in 1250, and the Venetian ducat (called zecchino or sequin) was issued by the mint – the Zecca – in Venice in 1284. Its very wealth made it a target of foreign powers who wanted to take it over – French king (1396), Milan’s duke (1462), Spanish rulers (1522), Sardinians (1746), and the Austrians. Like Venice, Genoa lacked the land area to source its own needs. Perched on the narrow plains between the bay and the steep high hills, it imported food, fuel, clothing and essential supplies from outside, filling its narrow streets with a traffic of goods and capital. Its strength was in its strategic location along the sea-trade route, buttressed by the financial creativity of the merchants controlling trade traffic between east and west. Its money of account – the lira di banco – known for its stability, was the forerunner of the Italian lira, before Milan became an industrial centre. Although Genoa beat Venice in a straight battle, its powers as a trade centre went down from 1627.

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European Banking Trade History

Trade required credit which led to banking which led to accounting. By 1100AD, spices, cinnamon, pepper, ginger, saffron, alum, sulphur, camphor, incense, myrrh, velvet, sandalwood, dyes, perfumes and tafetta from the Muslims were traded by Italians towns for woollen cloth, salt and salt meat, slaves, grains and iron – in wrought or pig form. An investing merchant who stayed at home (called the stans) would make a contract called commenda* with a travelling partner called the tractator* who invested nothing himself but went on the trading voyage, with three quarters of the profits going to the stans. In another contract type called the societas maris*, the stans provided two-thirds of the capital, the travelling partner a third, and the profits were shared equally. The contracts defined the limits of partner’s liabilities in cases of loss, except in the contract type called compagnia* in which case there was no limit to the partner’s liability in case of a loss. Although this contract type gave us the term company*, the related term shareholding* in a company as we know it today is traced to sea-trade ventures in which each shipping vessel set in was too big for an individual to own. Several investors therefore joined together to own it, each holding shares* in English (partes* in French or loca navis* in Italian).Money lending or credit lending against interest payment was held back by church condemnation of the practice which it called usury. Muslim banks still charge no interest on loans today, but instead agree to share in the profit or loss resulting from the specific venture. Since Jews had no objection to usury, credit lending concentrated into their hands. Economists justify interest charges with the argument of opportunity cost*, or lucrum cessans* in the time of Thomas Aquinas, quite apart from the deprivation called damnum emergens* suffered by the lender if repayment of the loan came too late. Pawnbroking – lending against the deposit of a surety, and other banking practices reached Italy from Byzantine and earlier Greek and Roman traditions.

The earliest banker* called bancherius was essentially a money changer around 1100 AD. Financial record keeping for joint ventures, for loan settlements and for trading on credit called for merchants to keep tallies* or to record debits next to credits in bank accounts, which in turn ushered in the practice of double-entry* book-keeping in Italy by the middle of the 14th century. Accounting ledgers* emerged from a practice as early as 1281 in Siena, of noting down receipts besides the expenditures covered. Money changers accounts ad usum banchi* were laid out in tavole* which gave us the word tables* or tabular records by 1327 in Genoa – medieval forerunners of today’s spread sheets. By the way, the first spread sheet program was Visicalc developed for the Apple computer. Six centuries earlier, Trial balances* were used in Milan, Genoa and Venice, while bills of lading*, bills of exchange* and insurance* forms were already common.

Firms in medieval Siena, Florence, Genoa and Lucca which prospered as banks included Salimbeni, and Buonsignori, with Bardi, Alberti, Scala, Rocci, Scotti and Peruzzi among the famous mercantile companies operating as widely as Bruges, Avignon, Sardinia, London, Venice, Naples, Tunis and Cyprus before the Medici emerged in the 15th century. The first public bank was St George bank established in Genoa 1408, but dissolved by 1444. If the purpose of record keeping in trade was to reduce disputes, it could not eliminate it entirely. Judicial administrative systems evolved whose personnel sitting on benches gave us today’s term of the bench* as a judicial hierarchy of law experts.

By 1238, Italian merchants from same towns organised themselves into gilds called universitas* – which later gave us the term university*. The earliest universities were teacher’s cooperative organisations – studia generalia - around specific visions of knowledge called schools of thought. Each gild or universitas was headed by a rector* or capiteneus*. Towns like Venice had permanent consulates to protect the interests of their merchants in specific major trading centres. Such joint cooperation created the hanse* for example for cloth-selling French and Flemish towns aiming at monopoly of trade in their commodities. Hansa* as term initially in the 1360’s referred to merchants right to form associations, essentially German traders from Cologne in London seeking protection from Anglo-Flemish domination of commerce, but also in Bruges and Novgorod where German factories* and their Kontor (origin of the Dutch word kantoor) featured  a hof* or yard with hostels and warehouses for their merchants. Hanseatic* war of 1360 to 1369 on conflicts between Denmark and Flanders united towns more closely into the league called the Hanseatic League.

- While Vikings from Denmark and Norway were invading the Atlantic board of western Europe,  the  Swedes or Rhos or Rus as they were called (origin of the name Russia) opened up an eastward trade route through the bay of Riga, up the Dvina river to Plotsk (Vitesbsk), up the Dnieper river at Smolensk to the Black Sea – a route called the Varangian route because they called themselves Varangians. This brought them to intermingle with the Khazars, Tartars and other Turkish folks, but they earned a name as Varangian guards of the Byzantine emperors. Their trade consisted of furs, timber, wax and slaves from the north for south eastern goods. Oriental goods from the crusades added citrus fruits, figs, dates, cane sugar, cotton clothes, lacquer and fine leather to European tastes which made Pisa, Genoa important centres of trade in goods from Aleppo, Damascus, Antioch and even Jaffa in the Levant in the 13th century.

Mongol expansion between Peking and Poland by 1241 intensified trade along some routes as Ghengis Khan’s dynasty made longer travel safer. This opened up European access to products across the Gobi desert, Korea, Arabia and Singapore, Malacca, Ceylon and Hormuz in the far east. This followed by Tamerlane’s rule over India, Persia and Russia allowed trade along overland routes to Asia to intensify. Weeks-long trade fairs became famous events at major towns, including the Champagne Fair of 1114, and the great Fair of St Denis just north of Paris in 1070.

To protect trade and property, towns were fortified with walls, the enclosed space within this being the burhs* in Anglo Saxon or burg*, a continuation of an ancient Celtic practice. Trading quarters (portus in Latin) at the ports of the town walls were a district called the suburbia*. Among the towns so created were Genoa, Florence, Venice, Harwich, New Windsor as plantation by the Norsemen, Portsmouth by king Richard I, and Liverpool by John, but also Maidenhead, Richmond and Flemish towns. In a town, the mercatus was the weekly market*, and the forum* was the site for craftsmen often supplying the countryside. Expansion of supplies beyond the usual fish market often created the so-called Neumarkt. As expansion called for more land, it became necessary to open up forest land and waste land in a wave of new towns, as still evident in place names that end in -rode (e.g. Nijenrode) in Dutch and -sart in French.

Free tenants as non-serfs (hospites or manentes in Latin, commendati in Italian, horigen in German) as well as serfs (case servile in Francia, Leibeigenen in German) who worked as labourers on some of these lands faced restrictions in disposing of their goods. Some of these tenants were dependent as such and were thus still subject to restrictions of movements, marital choice and disposal of their holdings – all of which fell under the jurisdiction or districtus* of the manorial lord. Peasants even had to pay formariage or leywite – a levy for permission to allow their sons to take Holy Orders.

Tenant land holding was often tied to a tenure of many years. By the 12th to 13th century, some tenant class – the castellani – emerged who were viable and independent enough to put up small fortified towns called castella (our word castle*, typified by a surrounding moat). These castellani combined being a knight with being a peasant, and eventually became burgesses. Many of these landholding forms are documented in the Doomsday* Book and in the Hundred Rolls* in England. In a later age when career freedom became more common and gilds were formed, long apprenticeship* often as long as seven years was used to extract free labour from the trainee even when mastery of the work was easy to acquire within just two years. (see Transportation Roads Sailing Flying)

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Capitalism origin and impact

Capitalism stems from a range of financial facilities that enable control of economic activities to accumulate in the hands of the elite segment of society. That those who supply labour fall below the suppliers of capital and financial instruments, is the most characteristic feature of capitalism. (see Banking) It has an inherent degree of corruption, at least in terms of ideology and deceptive promotion of idealistic slogans on ideals that in practice are nearly impossible for most people to attain. Hence its periodic outbursts of scandals at the top hierarchies of capitalist society.

The recently exposed fraud to the tune of over €50 billion euros by the Jew, William Maddof, once the most trusted Wall Street boss, plus the Enron scandal, Merril Lynch’s deceptive practices and the German billionaire banker exposed to be fraudulent are clear examples. The era of slavery in European-dominated America started with the capture of a few Indians in battle for the gold mines of Yaracuy, subsequently exploding in scale to the mass shipment of African slaves who were hunted down and sold into unpaid labour from across the ocean. Europeans with their medieval feudal history lapsed into this depth of unethical practice, carrying with them some African leaders by luring these with the promise of nearly worthless objects. The motive was accumulation of wealth from foreign sources without adequate payment – what is mistakenly termed economic profit.

Slavery, serfdom, under-paid wage-labour and profit have always been the other side of the coin regarded as profit. Socialism holds up low prices, denying the explicit declaration of profit as is done by the merchants in the name of capitalism, but just the same denies the lower classes of their true status by pretending that there are no social classes. Capitalist strength derives from a number of instruments such as the bill of exchange and access to credit limited to the established trading sector of society. Increasing gains by the privileged few at the top accumulate only at the cost of underpaying the masses whose labour produced it.

Capitalist society is marked by the social hierarchies it relies upon to survive. Trader’s formed societies, producers formed guilds, merchants associated as ‘Hansa‘, which functioned as chambers of commerce in various far-flung districts where they dominated the flow (exchange and shipment) of valuable goods and money. Capitalist society is also marked by unwieldy long chain of middlemen who acting as ‘go-between’ for a dubious profit, intervene between producers (as brokers, commission agents, entrepreneurs) and ultimate consumers of goods and primary services. The middleman, as sweat-shops show, makes his money off the backs of his under-paid workers as well as his clients. In the past, he typically ran factories for which he subcontracted units of production.
The industrial revolution made capitalism possible and turned career-making into day-labourer, labour-market and unionism. It restructured trade relations and empowered imperialism. Mercantile capitalism gave way to industrial capitalism which gave way to finance capitalism, concentrating wealth into the hands of a few by making multinationals rake up the product of multiple economies. Capitalism is a social order that weighs crushingly on the state order, sucking bounties wherever sums accumulate. The capitalist as a self-made man often becomes that through questionable ethics. (see Banking, Revolution, Hansa, Venice, Florence, Genoa).

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Commission Commissioner

Commissionaire Commission trading consisted of an order by one trader – the principal or Commettant given to someone – the commission agent or commissionaire to help him trade or perform specified transactions, a service paid for with a commission – a proportional charge on the return or yield from the transaction. The practice is middlemanship. In warehousing it involved the agent in the receipt and dispatch of goods to destinations on behalf of the principal; in banking, it involved the agent in accepting, paying and withdrawing money for the principal. Much of today’s so-called tertiary sector or service sector is based directly or indirectly on commission agency. (see Capitalism)

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Dollar history

Dollar as currency was made popular by the USA – the American Dollar, but some other countries also have their own dollar valued differently this days. There is the Australian dollar, and the Canadian dollar for example. How did the word dollar originate? The Dutch Estates-General started minting their thaler in 1579, which they called the rijksdaalder in Dutch, but was quickly variously called rigsdaler, rixdollar, riksdaler, rixdale by their trading partners in other countries. Dutch trade in Riga and Narva in the Baltic in the 1650’s involved the payment for Russia’s hemp and grain in ‘riksdalers‘ . From the Turks, horses and oxen were bought for four and two ‘rixdales‘ respectively. The term daalder came from ‘thaler‘ – coins minted from metals won from Bohemian (Czechian) mines in the land of the Slavs. Some trace the word dollar to Joachim-thaler – a Jewish origin.

Milan also minted silver coins called thalers (Maria-Theresa thalers) which merchants in Marseilles used to pay for imports from the Levant. Russian trade was state controlled and focused mostly eastwards towards Turkey, Bukhara and lands to the south of the Black Sea and the Caspian Sea. The Tsar’s men (merchants chosen by him for their loyalty) firmly took charge of the monopoly in spirits, tobacco, coffee, potassium, beer, furs and other essential commodities. Alcohol drinks were sold only in ‘kobaks‘ or taverns opened by the state. Soldiers, navy men and state workers were paid partly in cash and partly in rations of bread or flour and hemp. Along with the geographical spread of these soldiers and merchants, went the spread of the terms they used for money – thaler, daalder and florin (from Florence). In particular, Dutch domination of trade in the 17th century brought much focus to the rijkdsdaalder and the Dutch florin. As is widely known, the Dutch established what later became New York, and they built the wall that gave Wall Street its name. The Dutch also pioneered the financial exchange which became Wall Street. It is therefore not surprising that the Dutch coin the daalder became the word dollar when the USA was formed.

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Stock Exchange Chamber of Commerce Exchange Board

Exchange Boards The origin of Boards of Exchange like the Stock Exchange, chamber of commerce and even the exchange of ambassadors now common between nations can be traced to Europe’s early merchant trading centres like Venice where credit/debit and balance-sheet accounting evolved, Brugges where merchants founded a Bourse in 1309, and Lübeck where the Hansa gained strength. The stock exchange fixed the prices of commodities, fixed the interest rates on public loans, thereby opening the way for funding public expenses other than by tax levy, and fixed maritime insurance premiums on shipped cargo. (see Banking)

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Florin Florence

Florence gold coin the florin came out in 1250 after Genoa’s own. The first cheques were issued in Florence where double-entry book-keeping started, and the first holding companies also emerged. There too maritime insurance procedures first eliminated the need for a notary. Industrial manufacturing developed in Florence before the British industrial revolution. (see Dollar, Lira, banking)

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Pound Sterling Silver

Since Roman times, the word pound has normally referred to a unit of weight. The currency unit Pound Sterling was stabilised by queen Elizabeth I in 1560 by fixing its value at the equivalent of four ounces of sterling silver. By maintaining this intrinsic value at its face value as a money of account until 1931, while other currencies varied by direct state manipulation or due to market forces, the pound gained reputation as a point of reference in exchanges. Isaac Newton as Master of the Mint reduced the guinea (gold currency) to 21 shillings in 1717 which in 1816 officially became the gold standard as a gold coin of 7.988 grams and eleven-twelveth fine metal. By that time Britain was no longer melting silver coins for re-minting. Rather, she was exporting silver to India, Holland, China, Russia and Europe and importing gold from Brazil and elsewhere. By 1774, British money in circulation consisted of notes issued by the Bank of England.

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