|COMMERCE AND ITS REGULATION|
It was in the interest of most key stake-holders to, on the one hand, foster commerce and, on the other, ensure that it was not a free-for-all, but carried out under controlled conditions. Traders wanted a sufficient share of business to support themselves and their families and must have felt that a regulated system would maintain a more even playing-field by providing measures to combat those inclined to gain unfair advantage through bending or breaking moral strictures or man-made laws. Borough authorities were concerned with boosting the prosperity of the community, protecting and bolstering its reputation as a place to do business, and in keeping the populace supplied with affordable necessaries of life severe or prolonged shortages could encourage crime and popular unrest. The king sought to encourage internal and overseas trade, by both native and foreign merchants, in order to benefit the national economy and its provisioning infrastructure, keep the ruling class supplied with what it needed during peace and wartime, and expand the revenues that the monarchy could skim off the top of commercial activity; it can be argued, for example, that royal licensing of markets was not aimed so much at stimulating trading activity (which may, or may not, have been going on previously at sites subsequently licensed) but at authorizing the organization, regulation, and taxation of that activity. That the predominant form of sales unit in markets remained the open stall speaks partly to the need for ease of inspection of goods and of conduct of business. Towns were favoured by the king as foci for commerce partly because it was expected that policing regulations and collecting tolls could be handled more effectively there.
Market regulation was, consequently, not simply an imposition of legislation by a monarchy attempting to extend its control across the nation and into all spheres of life. Such legislation relied to large extent on effective enforcement by compliant local administrations, which also issued ordinances governing commerce, as well as upon acceptance, on the part of most members of the community, of the notion that controls and standards related to trade were for the common good and, indeed, reflected established market behaviours, norms, or customary practices. Market regulations could be, however, a double-sided coin. Their purposes were ostensibly to safeguard consumers against dearth and temptations to food traders to exploit necessity, as well as to uphold national and local standards. But, given that local ordinances were formulated by a governing group largely made up of prominent merchants and artisans, it should come as no surprise that some of the regulations also protected the vested interests of that group, by restricting or excluding outsiders (whether resident non-burgesses or foreigners).
As already mentioned, Anglo-Saxon kings made relatively little attempt to regulate commerce, beyond efforts (of questionable effectiveness) to restrict significant transactions to towns, where they could be better supervised, and a general prohibition of the use of false measures but withouth specifying what were the correct measures. With the weakness of secular authority in this regard, traders often resorted to divine supervision, making their deals in churchyards. King Edgar (959-75) made an attempt to prescribe acceptable weights and measures, by designating those used at London and Winchester as national standards. However, royal regulations only dealt with select issues and relied largely on local officials for enforcement; in practice most localities seem to have maintained their own standards and other rules governing trade and commerce, sometimes obtaining royal approval for them (as in the case of Newcastle-upon-Tyne).
By the time of the Angevins there was a better system of national administration in place and they made a renewed effort to impose standards, with the Assize of Wine (ca.1176), the Assize of Measures (1196/97) and Assizes of Bread and Ale (1190s); it was required that a certain number of law-abiding men in each borough be engaged in such things as setting prices and checking adherence to standards. It is possible that some of these assizes were an effort to support and regularize quality (and perhaps even price) controls that were already being operated in at least some towns. Early in the thirteenth century we see the principle of standardization enshrined in Magna Carta and the prescribed standards and administrative processes gradually being adopted in the localities, and enforcement came to be one of the responsibilities assigned to the new civic authorities that were emerging. Their compliance was motivated in part by the desire to protect consumer interests, partly by fear of incurring royal wrath through intervention by justices in eyre or other royal officials if they failed to act, and increasingly by the realization that fines for breaking the assizes or other market regulations could provide a steady, if small, revenue for the borough treasury. It is often said that the regular records on court rolls of fines of those breaking the assizes have more the appearance of licence payments than punishments; certainly they seem to have been little if any deterrent. Indeed, they were perhaps not meant to deter but offer a way of reconciling legal justice (administration of the statutes) with social justice (preserving a balance in the health of the communal body), which meant avoiding when possible imposing harsh physical punishments on poorer townspeople who were just trying to make a living, or suppressing a form of trade that was useful to the residential community; although social critics such as Langland, in Piers Plowman, might interpret the licensing system as a form of bribery of officials to turn a half-blind eye to petty trading on the peripheries of the law.
It was largely accepted that raw materials and agricultural produce would fluctuate in availability and affect prices; the aim was to keep prices within reasonable limits and not victim to excessive profit-taking or manipulated by traders who might try to corner a market. Greater attention was given to regulating the production of processed or manufactured items and to retailing practices; wholesaling was left more to market forces, with the regulation focused on ensuring deals were made in public, where any interested parties had opportunity to participate, and that all parties honoured terms of agreements. An exception to this was English-made cloth; as the native industry developed to the point where its products began to be of value in the export market, regulations were issued (the earliest in 1278) governing the sizes of different types of cloth, and the cloth custom became an increasingly important component of the royal taxation system.
Efforts were also made to reduce the involvement of middlemen. This furthered the trend towards restricting commerce to locations where supervision was facilitated and focused attention on combatting practices that attempted to interfere with a direct relationship between producer/importer and consumers, notably forestalling, regrating and engrossing. Wealthier traders could afford the costs involved in the regulatory system, and even the risks involved in infringing regulations. Small-scale traders with low profit-margins must have found the combination of restrictions, tolls, and fines more oppressive and felt pushed towards trading outside the system. The black market (although neither term nor concept is medieval) was of concern, in terms of goods being sold outside of open markets or other supervisable contexts, so that adulterated comestibles or manufactured goods of inferior quality might be sold in private or informal locations, undercutting the artisans and retailers whose taxes contributed to the financial welfare of the community, and circumventing the collection of tolls that made a similar contribution. But on balance the market regulation system probably helped meet the needs of consumers for affordable goods of reliable quality.
The exemption of burgesses from local tolls collected at numerous places in England encouraged a long-distance trade in which urban merchants predominated. On the other hand, the king wanted a share in the growth of English prosperity and instituted a system of customs collection, as a form of tax on commerce. He also encouraged foreign merchants contributing to the growth of commerce and industry in England. A well-known milestone in this royal policy came in 1303 as the Carta Mercatoria; it assured foreign merchants active in England of royal protection, the accelerated justice of the law merchant, freedom from certain tolls, and authority to trade wholesale in towns (although retail commerce was reserved for burgesses). In his support of foreign interests in English commerce, the king was motivated in part by the possibility of loans of capital from foreign merchants. As the fourteenth century wore on, under pressure from parliament, an institution through which urban and commercial interests could find expression, royal policy fluctuated more towards protectionism, allowing English merchants to win a larger share of English and international commerce.
In their effort in 1283 to persuade the king to turn over to them, rather than assign to royal officials, the collection of borough revenues due the Crown, such as tolls on mercantile vessels and market court fines, Bristol's leading burgesses could argue that "none can know so well as those whose work is concerned with merchandise, and who earn their living by it, how to regulate the affairs of merchants properly and honestly" [petition quoted in Christian Liddy, War, Politics and Finance in Late Medieval English Towns: Bristol, York and the Crown, 1350-1400, Woodbridge: Boydell Press, 2005, p.73]. However, in their administration of regulations related to commerce and manufacturing borough authorities actually had to balance several differing interests. One was that of the community at large, which had to be assured ample regular supplies of the necessities of life, of decent quality and at affordable prices. Then there were those of the Crown and the Church, who had responsibility for, respectively, the physical and spiritual security of the people; churchmen were wary of the new-fangled morals of a commercializing society. Finally, that of the town traders and craftsmen foundation of the town's economic well-being who were motivated by the prospect not simply of making a basic living, but of generating profit that would help them better their own position in society and improve the living conditions of their families; and who, to achieve these improvements, needed not to be weighed down and constrained by an excess of restrictions and controls.
We should remember that borough policy-makers, decision-makers, administrators, and court judges/juries were drawn largely from that last interest group. They understood the practical principles on which commerce had to operate and could reconcile them with the conservative ethics of Christian dogma, and they must have felt disinclined to act with great rigour in applying royal statutes or local by-laws governing commercial activities, other than in conspicuous or notorious cases of infringement that risked bringing disrepute on the town's traders as a whole and possibly incurring royal wrath and intervention. Such laws were a weapon to be used in disciplining those who overstepped the mark; but that mark was not necessarily the letter of the law.
In very generalized terms, merchant gilds were formal associations whose members sought to influence and promote, through collective action and through the dissemination of consensual standards of socio-economic behaviour, matters of mutual interest or concern in spheres of human activity that included commerce (defined in the broad sense). They were local and urban-based institutions, though membership was not necessarily exclusive to residents or townsmen, any more than it was to merchants, as we would apply the term today.
Historians have, for a long time, struggled to characterize, explain the raison d'être of, and contextualize within theoretical models of economic development the numerous instances of the pan-European phenomenon referred to in English medieval documents variously as the gilda mercatoria, gilda mercatorum, or gilda mercanda, and on telling occasions (at Canterbury ca.1100 and at Leicester) by what appears to be an even older name, "chapman's gild". A concise valid definition encompassing all historical manifestations continues to elude, partly because of the diverse local forms such gilds took, the differing niches they seem to have occupied from town to town, and the variant courses their development followed over time; the challenge is complicated by the question of whether merchant gilds were virtually indispensable to urban development, for they are not evidenced in many towns (though whether due to true absence or to loss of archives we are uncertain), while in some their existence is documented for only a relatively brief space of time.
The most recent (at this time of writing) study, by Sheilagh Ogilvie , although a useful contribution to the topic, not restricting itself to English examples, falls short because of its focus on the institution as a test case to assess theoretical concepts of economics and because of its presentist bias, drawing lessons for modern developing economies; its almost wholly negative view of merchant gilds as monopolistic, exclusivist cartels, whose members colluded to prevent the benefits of economic growth becoming more generalized across the population, divorces them somewhat from their historical context, entails the peripheralization of their non-economic functions, and consequently fails to appreciate the ways they benefited the wider urban community. This reflects not on the scholarly abilities of Professor Ogilvie but on the difficulty in coming to terms with the subject. Medieval merchant gilds cannot be understood purely from the perspective of economics; they had important political and social dimensions as well. We have to examine them as institutions developing over time, and must be careful not to judge them solely from a modern perspective on how the economy and society interface. As an almost dangerously broad generalization it might be suggested they were interest groups formed with a primarily political purpose, subsequently acquired both coercive and consensual powers of economic regulation (limited in the formal sense, but more efficacious through the exercise of informal influence), then without necessarily eschewing their political and economic roles surviving in a number of cases as institutions with a predominantly social role in a society that had developed other instruments for administering political and economic affairs; yet throughout intimately tied to what was, or at least what their members perceived to be, the essence of the urban community.
Due to the wide-ranging documentation, the contrast between the institution's fundamental role in some towns and its apparent irrelevance to others, the evolution of these gilds along variant paths, and unbridgeable gaps in our knowledge, merchant gilds may always remain one of the more nebulous and thornier aspects of medieval urban history. Needless to say, the brief discussion that follows can barely scratch the subject's surface and risks over-generalization.
Merchant gilds provided, particularly where there was no other satisfactory vehicle for organizing trade-oriented townspeople, the institutionalization of a perhaps somewhat loose association whose members sought to present an ostensibly united front for realizing, asserting, and protecting common interests in regard to the commercial sphere of urban activity. This definition makes the assumption that there existed some rival or opponent against whom it was desirable for such an interest group to coalesce and evince a common front, in its particular manifestation of territoriality. It is important to keep in mind the broad definition of 'merchant' when looking at these gilds in their emergent phase; artisans (who engaged in trade to obtain raw materials and sell finished products) and retailers can often be identified among members, and sometimes so can individuals whose involvement with commerce was more remote. Despite the breadth of membership, we should probably understand the merchant gild, in its initial phase of existence, as a contractual vehicle for giving identity and a voice to an emerging 'class' within the social hierarchy, and of defining the status of members of this group in terms of rights and obligations (that is, the benefits the association might reasonably expect in return for the social functions it performed).
At a later point in time, as the size and heterogeneity of the trading group grew to the point where divergent interests became more pronounced than the common ones, some or most of the gilds became dominated by, if not restricted to, merchants in the narrower sense of the word, while others merged with, or became in essence a branch of, borough governments (in which mercantile interests were prominent). London, as so often, represents an exception in having sufficient numbers of merchants to encourage specialization and the emergence of gilds representing different groups of wholesalers, notably mercers, drapers, pepperers (later, grocers), vintners, and fishmongers; its trading community and its commerce were perhaps too large and diversified for a merchant gild to have come into being, and the only medieval reference to one existing there is from a source we cannot consider reliable. Besides, as already noted, London's government was aggressively protectionist against foreign merchants, without requiring any prompting from an organized interest group.
What is perhaps more important than the precise character of the membership of each gild is that, by defining membership as the sole avenue for enjoyment of certain privileges or advantages, a gild could in theory disadvantage competitors (by denying membership) and had a means of exercising some control over the behaviour of members (the threat of expulsion).
It is also important to appreciate that the societal context in which English merchant gilds initially arose was one where neither national legislation or protocols regulating economic interactions and providing security for commercial participants, nor national institutions implementing economic policy, were yet well-developed; such as there were had been designed largely by non-experts, and motivated by concerns of international relations and social control, as much as of economic development that would benefit the community at large. It consequently fell to some extent to the prime participants in economic activities to protect and further their interests by organizing corporately in localities, and to use such organizations to define standards of economic behaviours and try to ensure that members, and non-members, adhered to those standards. This was inevitably a rather self-interested approach, and historians debate whether the social capital it created was beneficial for economic growth, or whether it had a retarding effect through efforts to monopolize the most profitable areas of commerce for a closely defined membership and to restrict, disadvantage, or suppress competition. Over the course of the Late Middle Ages, the economy and economic administration outgrew the need for such gilds as institutions for commercial regulation, though in places they remained of some political or social value.
Too often we have to make inferences about the origins and early role of merchant gilds from the richer evidence of later periods. Quite a few seigneurial charters granted to boroughs, from the early twelfth century on, include merchant gilds among the privileges they grant, but often in a manner that indicates them to have had a prior existence. It is possible they originated either as older gilds of a more social character or as informal associations that were accorded, or acquired, by mutual consent, an ability to influence or control behaviour of members as it pertained to the conduct of commerce. On the other hand, the Anglo-Saxon term "chapman's gild" suggests that trading may have been the 'tie that binds' from the beginning. We must not confuse origins with function, but certainly merchant gilds' greatest value to urban development was prior to the Late Middle Ages. Ipswich is a case in which we can see a merchant gild, as an organized and regulatory body, operating informally in the twelfth century and subsequently becoming a dimension of borough self-government, after which little is heard of it though this is partly because it likely maintained its own archives, which have been almost entirely lost. Local tradition at Lynn suggests a similarly key role in the nascent borough, but the institution retained more evident importance during the Late Middle Ages. At Leicester the picture is more similar to that of Lynn than of Ipswich.
Traders formed these local associations for a number of reasons; here we are concerned with those relating to the pursuit of commerce (other aspects will be addressed in the section on Community). Keeping in mind that when we first glimpse urban-based gilds towns were not yet dominated by the merchant class and traders represented only one interest group within a larger population already fairly complex, and allowing for the fact that merchant gilds' period of greatest significance was also one when regular record-keeping was barely starting to take hold in towns, such gilds seem to have been vehicles for a range of allied purposes. These included:
It seems not unlikely that merchant gilds were often instrumental, whether directly (corporately) or indirectly (through influential members), in specifying the types of economic privileges that towns should seek through seigneurial grants, and in lobbying for local by-laws regulating commerce. In some cases, as apparently at Lynn, the fiscal resources built up by the gild may have been a source of commercial loans to members, and certainly they were applied to the benefit of the borough as a whole. It is also conceivable, although has not yet been demonstrated or disproven through documentary evidence, that merchant gilds, by widening and cementing associative links between traders, facilitated the making of apprenticeship arrangements through which younger generations were trained in mercantile skills.
Although an early expression of communal organization, operating to some extent in what was perceived to be the best interests of the community at large, a merchant gild membership can only be considered representative of the urban community to a certain extent. While it could sometimes be co-extensive with the burgess population, it was in some towns narrowed to exclude poorer residents, and in others widened to include limited membership for outsiders who regularly conducted trade in the town; this latter was a concession probably felt necessary in order to strengthen trade connections, particularly with rural producers who supplied most of the town's victuals it was important they should consider the town market a preferred venue for disposing of their produce.
Merchant gilds probably would have wished to obtain for their members monopolies in at least certain areas of commerce, particularly over local retailing of imported goods outside of formal markets and over transactions with visiting merchants, as suggested, for example, by a royal grant to Oxford (possibly intended to apply to retailing rather than discourage visiting merchants). But in this ambition they achieved only limited success. It would not have benefited either local communities or the national economy for merchant gilds to completely monopolize trade; while kings were prepared to endorse gilds' existence and allow them an advantageous role in the conduct and regulation of commerce, there is little reason to think that the monarchy even on the few occasions it approved specific, limited restrictions on the commercial activities of non-members envisaged that borough charter grants giving blanket approval to existing local privileges of gildsmen would utterly stifle the conduct of trade by non-members. These limited monopolies were, rather, intended to ensure that no borough market became dominated by outsider merchants to the economic detriment of the local community. In this sense royal policy might be seen as fostering the development of the native commercial network, by protecting their hubs and by giving native merchants an edge over foreign ones, albeit at the cost of advantaging one particular segment of the English trading community.
But it was the borough that the king intended as the prime beneficiary of such a policy, and the gild per se was simply perceived as the borough's representative institution in the sphere of commerce; it was in the king's interest to ensure boroughs continued to play a key role in trade, in part because they were major contributors to royal revenues, to national defence, and to provision of goods and services needed by the royal administration and household. While merchants might receive particular favours, and be expected to undertake particular responsibilities (e.g. customs collection, hosting of foreign merchants, acting as purchasing agents and provisioners of armies), it was the boroughs as a whole that the king wished to keep prosperous and populous. This reciprocal reliance doubtless skewed, to a degree, the course of development of the English economy, but this was no 'unholy alliance'; it is hard to imagine that the urbanization of England or the growth of its economy could have proceeded without a corresponding growth in wealth and power of a merchant class. Yet that power expressed itself primarily through the borough rather than through the merchant gild; the latter tended to fade into the former, rather than the reverse.
Even at Lynn, where the merchant gild remained powerful up to the end of the Middle Ages, membership advantages were restricted to mercantile transactions in the narrower sense and could not impede trading on the licensed market days. In 1309 Lynn's episcopal overlord, attempting to assert his authority against the gild (seen as a rival to his authority in the town), reached a settlement with the borough government which overturned local regulations that ran counter to the freedom of burgesses or visiting traders to buy and sell, partly on the belief that gild monopolies had served to discourage foreign merchants from coming to Lynn. Despite this agreement's prohibition of the gild monopoly on trade in stone, in 1318 the membership authorized gild officials to use gild revenues to buy any marble shipped into Lynn and to resell it to gild profit; by the time of the first surviving financial account of the gild (1373/74) it looks as though the gild was once more dominating, if not monopolizing, the stone trade, for it had in storage on the quayside 89 mill-stones and 26 marble stones, valued at over £200, and had that year sold other stones to the value of £45 7s. 8d. Note, however, that this was not a monopoly directly advantaging local merchants, but a means of providing revenue for the gild as a whole, just as was the case at Ipswich, and probably originating at a similar period.
Protections or advantages for local traders, independent of any gild, appear to be among the earlier privileges of citizenship sought, and expressed through borough charters or custumals. For example, Henry II's charter to Newcastle included various stipulations that benefited local traders to the detriment of outsiders, and when newly-conquered Dublin was granted much the same liberties as Bristol, they included restrictions on the scope of activity of visiting merchants. In many towns we see the right to engage in commerce as a privilege of burgess status, rather than gild membership; this is, for example, explicit at Norwich, and implicit at Yarmouth. Customs that upheld the right of all burgesses present at a mercantile bargain to claim a share in the deal might explicitly deny the same right to outsiders, as at Ipswich, or give first call to locals, as at Maldon, while also attempting to combat methods used to circumvent the principle, as at Norwich. On the other hand, at Lynn we encounter this custom only as a privilege of gildsmen.
Nonetheless, we cannot ignore that merchant gilds operated primarily, as intended, in a self-interested fashion. A major challenge facing local traders was to ensure they were not out-competed by outsiders. So one thrust of merchant gilds was to acquire and enforce exclusivist or advantageous privileges that were initially assumed, and subsequently stated in or inferred from seigneurial charters approving commercial activities. Such privileges were to be restricted to those who purchased (or obtained in some other acceptable way) membership in the gild; membership fees and conditions could be manipulated to exclude undesirables. That, however, posed the risk of placing rivals beyond gild control and in a position that encouraged them to resort to black-market tactics to obtain a share of trade.
If one side of the protectionist coin was to provide a town's own traders with advantages perhaps unfair but with the legitimacy of local or seigneurial approval over outsiders, the other side was to support members who were treated unfairly by visiting merchants or when they travelled on business. The growth of long-distance commerce brought into contact and contract merchants from different communities with different standards and customs, some of them from different countries. It was not easy or cheap to seek legal remedy for a grievance against someone from another community. Given the immaturity of national laws and of judicial or diplomatic mechanisms addressing the problems inherent in long-distance mercantile activity (such as those already mentioned, merchants saw collective action as a means of boosting their chances for grievance redress; such action might, for example, involve lobbying, reprisal, ostracism, or assisting with the defence of a member subject to legal action. Gilds may have had limited effectiveness in this regard, but mutual support was the kind of solution medieval people naturally looked to, in part as a substitute for supportive kinship groupings that became weakened particularly in immigrant-dominated communities like towns by time and distance.
Over time, as inequalities of wealth increased, these gilds might be vehicles for economic and political control over a community by the mercantile elite; although more often they outlived their original usefulness and transmuted into an agency of civic administration or into a socio-religious gild that provided a more indirect means of the urban elite to maintain its solidarity and local influence. Legal problems arising out of commercial activities came to be dealt with satisfactorily by courts of the boroughs and the king, particularly as the use of merchant law procedure was reinforced by royal mandate, thus making the supportive role of the gilds less valuable to merchants. The restrictive strategy of merchant gilds became similarly less important as the expanding community of native merchants produced more individuals able to compete with outsiders, while some restrictive advantages were retained through the borough customs of trade regulation long after the gilds themselves had withered away or transformed.
Yet even today the merchant gild is not quite extinct. Although not a direct successor nor following in quite the same footsteps as the medieval institution, the present-day Lavenham Merchants Guild may be said to exist in much the same spirit of a quasi-voluntary association of members for mutual support and pursuit of communal interests. It sees its role as improving commercial prospects, acting as an interest group within political decision-making in the village, and accumulating funds from membership fees to be applied to the furtherance of its aims. Its expressd aims are:
This seems much, though not wholly, in the tradition of the medieval merchant gild.
As long-distance commerce revived and expanded in war-torn Europe of the High Middle Ages, the particular needs of traders for legal protections for their types of activity gave rise to local practices which, in certain respects, were similar from place to place, although variant in other respects. Since at least a sizable proportion of trade, by its nature, tends to foster interaction between people from geographically distributed locations, it is not surprising that a certain amount of consolidation and standardization of core judicial practices would have taken place, influenced also by the crystallization of national, statutory law. By the time of the common law treatise known as Fleta (ca. 1290) at least, it had become possible for lawyers to speak of a type of law, applicable in cities and fairs, serving merchants and/or mercantile transactions; by which was meant not a specific written code of law, but rather a distinctive process administered by dedicated courts, both often known under the name of piepowder, though more formally as lex mercatoria. Although critics have argued that there was no such thing as code of merchant law, only a set of special procedures for cases involving merchants, most medieval minds did not differentiate the substantive rules governing human behaviour, social relationships, and communal obligations from the judicial procedures involved in enforcing those rules; to them it was all part of the same package designed to achieve justice understood partly in terms of personal rights and partly the 'common good' (as well as in a moral sense).
There has been some debate among historians as to the origins of this lex mercatoria, usually rendered in English as law merchant, although it might almost be valid to refer to it as market law where 'market' is a generic term used to refer not to a marketplace in the modern sense, but to any place officially licensed for regularized and supervised commercial trading to take place; in the same way gilda mercatoria might be more meaningfully translated as traders' gild, rather than merchant gild. The purpose of the lex mercatoria was, however, not to govern all market activities, but primarily to serve the particular needs of professional merchants who, by the nature of their work, travelled from place to place buying and selling; when they encountered legal problems, it would in many cases have benefited them to be able to deal with those problems on the basis of legal principles with which they were not unfamiliar, and to be freed from some of the cumbersome aspects of common law procedure, particularly in cases where commercial debts or other transactions were not evidenced by written proof. Merchants were given the option of having their legal disputes conducted by law merchant or by common law. What historians have disagreed about has been how this merchant law came into being: whether it began as some distinctive code independent from other branches of law (such as civil law), or was an expression of natural law, or arose as customary practices, varying from place to place, that gradually received recognition in judicial courts.
That it was assigned the distinctive appellation of lex mercatoria suggested to some historians that it must have been a specific code independent of other codes, such as English common law, administered in special courts, and only gradually integrated into the national judicial system in the post-medieval period. Furthermore, the appearance of the term across medieval Europe led some to assume it represented a law code that was uniform internationally. It is beyond the scope of this Web-site to address the latter issue although we may note the arguments of Emily Kadens ["The Myth of the Customary Law Merchant", Texas Law Review, vol. 21 (2012), 1153-1206] that mercantile customs which emerged in one country were not necessarily transposable to others, and that such transposability was made unnecessary by merchants' use of local intermediaries who would be familiar with local laws. Stephen Sachs ["From St. Ives to Cyberspace: The modern distortion of the medieval law merchant", American University International Law Review, vol.21 (2006), 685-812, ] has also argued that even at the local level there was a considerable degree of procedural variation, while J.H. Baker had already pointed out that even when administrators or lawyers referred to the lex mercatoria "it is far from clear that this law merchant was conceived of as a distinct body of substantive law." ["The Law Merchant and the Common Law before 1700," Cambridge Law Journal, vol.38 (1979), p.299]
The question as to whether merchant law has its roots in local customs, in the case-law of royal courts dealing with contractual disputes, and/or in national statutes, is to some extent a red herring. The various systems of law in medieval England had a cross-fertilizing relationship. Common law and national statutes were certainly among the sources of an evolving system for dealing with problems stemming from commercial transactions. But common law was itself to a large degree a generalization, rationalization, and elaboration of customary laws; while statutes were typically a response to emerging problems, as communicated to the king by his subjects, that could not be satisfactorily dealt with by existing common law, and were prone to revision or refinement according to how well they were found to work (or create new problems). All these types of law evolved in parallel.
Likewise, the holding of special court sessions to administer merchant law, sometimes in locations separate from those of other borough courts, and the generation of their own series of court records, gives a somewhat misleading impression that the administration of justice to merchants was differentiated from other judicial administration, to the point where some scholars have described it as a 'private' system. Medieval references to piepowder courts or piepowder justice have reinforced this impression. However, the administration of mercantile law was really only a specialized application of the judicial system, and the dedication of particular sessions to that administration no different than the distinction made between sessions that dealt with disputes over real estate (which were the focus of the common law) and those dealing with civil actions of less weight (called petty pleas, governed more by local custom and, increasingly, statutory law). The differences between common law and law merchant are not of underlying principles, but of the procedures used. Indeed, this is explicitly stated in the single treatise on the law merchant to have survived from medieval England. This seems to be reinforced by the occasions in which the king instructed local courts, or his own justices, to proceed in a case according to law merchant, the intent being to hasten proceedings by eliminating procedural delays permitted under common law.
Insofar as it is tempting to see mercantile law as an international system, this is because its principles tended to be common to the needs of travelling traders wherever they engaged in commercial dealings. Anthony Musson [Medieval Law in Context, Manchester University Press, 2001, 11] has noted that some of these principles good faith and plain justice stemmed from natural law. Others were more pragmatic. Keeping in mind that the merchants for whom this set of legal procedures was developed were not necessarily wealthy wholesalers pursuing international ventures, but any traders who frequented markets and fairs, it was recognized that many traders made their living by buying in one or more locationa and selling in one or more others; their time was valuable, particularly when the goods in which they traded were perishable. Common and customary law were notable for their drawn-out legal processes, providing more than ample time for participants to attend to legal matters while still pursuing their occupations and/or fulfilling other obligations. This was detrimental to the needs of travelling traders, so mercantile law was based on the principle of expeditious justice. Less a reduction of the basic steps in judicial procedure, and more a general speeding up by reducing the time between court sessions, limiting the options for a party to delay proceedings, and requiring less onerous and time-consuming methods of proof.
New methods of proof were also necessitated by the fact that parties to mercantile lawsuits were often not from the local area, making it difficult if not impossible for them to find supporters to act as pledges or compurgators, or for local juries to have knowledge either of the character or behaviour of those parties. Greater reliance was therefore placed on examination of witnesses to bargains, tallies, written agreements, and increasingly (recognizances of debt made before authorized officials and registered in official records.
Fairs must have provided an early venue requiring the speedy justice of a piepowder court, and thus contributed to the development of merchant law. But the focusing of everyday commerce on towns played at least as important a role. The Carta Mercatoria of 1303, as an incentive, provided an across-the-board guarantee of justice through merchant law procedurality to foreign merchants who came to do business in England. When the staple system emerged for exercising greater control over certain key components of English trade, the courts operated by staple officials naturally adopted the law merchant.
The chronology of the emergence of the law merchant is not easy to identify, however. It may have been used first at English fairs, since they were the original focus for the activities of wholesale merchants; yet the customs of Newcastle-on-Tyne (mentioned above) purportedly approved by Henry I included a requirement that legal disputes involving outsider merchants should be resolved promptly, suggesting what would become a fundamental principle of merchant law. That the Bracton treatise shows no awareness of it is not necessarily an indicator, since its focus was common law, under which merchants had no special or distinctive status or legal privileges; in the next generation Fleta shows awareness of lex mercatoria, but its author also is concerned with central tenets of law rather than specialized applications. In its chapter on commerce (Bk. II, ch.58) it states:
"Buying and selling are contractual when a price has been agreed upon between the contracting parties, provided that something by way of earnest has been received by the seller, because what is given by way of earnest is evidence that the buying and selling have been contracted. And if a written instrument should be introduced, the buying and selling will be no contract until the writing has been handed to the parties and made absolute ....When anything has been paid over before delivery by way of earnest, if the buyer regrets his purchase and wishes to recede from the contract, he shall forfeit what he has given. If, however, it is the seller who regrets what he has done, he shall give the buyer double what he received by way of earnest money, unless this conflicts with the custom of merchants, which lays it down, in accordance with the law merchant, that the seller in this case is either to deliver to the buyer the thing bought or to pay five shillings for every farthing of earnest-money."
[H.G. Richardson and G.O. Sayles, eds. Fleta vol. 2, Selden Society, vol.72 (1953), 195-96.]
Nor did merchant law greatly draw the attention of writers of legal textbooks or the compilers of case law in the Year Books. When in 1548 the attorneys of the borough of Cambridge laid claim to borough jurisdiction over a certain lawsuit being tried in the king's court, they claimed that King John had granted Cambridge a merchant gild and independent judicial jurisdiction in most civil matters, and they implied that it was consequent to this that the gild held a court "between merchants and merchants, concerning their merchandises, from day to day and from hour to hour, according to the exigence of the complaint." [F.W. Maitland and M. Bateson, The Charters of the Borough of Cambridge, Cambridge: University Press, 1901, p.85]
The opening chapter of the Ipswich custumal, a more reliable source dating from the late thirteenth century, distinguishes between the types of lawsuits over which its various courts had cognizance: most real actions and those initiated by royal writ proceeded at a slow pace, with court sessions held once a fortnight; most petty pleas were tried at sessions held twice a week; complaints made by outsiders who were visiting the town for purposes of trade could be entertained daily; while those at fair time would lead to the bailiffs convening an impromptu court session at any hour of the day. The custumal recognizes the rationale for merchant law (cap.34), is able to differentiate common law from law merchant and see the need to curtail essoins in the latter (cap.4), can describe particular characteristics of a process under common law in cases of contract (cap.33) and debt (cap.40), and addresses the need for cap.36) extraordinary measures to force defendants to be accountable and to compensate injured parties. A separate procedure for handling complaints stemming from market transactions is also implicit in Norwich's custumal, probably dating from the opening years of the fourteenth century, while at Yarmouth an ordinance of 1272 shows that judicial enforcement of commercial debts was being handled in a special way, though not quite as law merchant would come to prescribe it.
At London, a royal enquiry of 1221 into judicial administration at London posed, as one of its questions, whether city officials held piepowder proceedings to serve the needs of visitors who could not afford to tarry for the infrequent sittings of the husting court; the commissioners received the answer that such pleas had not previously been held, but that the mayor and sheriffs would thereafter hear piepowder pleas on a daily basis. Whether the authorities followed through on this promise is not certain; in the royal charter of liberties to London of 1268, there is a passing reference to the law merchant as an area of jurisdiction applicable to commerce and limited to boroughs and fairs, but the reference does not indicate whether this jurisdiction was being used by London's court. The legal treatise preserved in a Bristol register refers solely to London's sheriff exercising the jurisdiction, but this might be explicable if it was compiled at a period when mayoral administration had been suspended. When Edward I, exasperated by political factionalism, social conflict, and lawlessness within the city, took control of the city in 1285 and imposed a sweeping set of reforms on civic administration, they included benefits to protect and encourage foreign merchants trading through London: it was prohibited to impede such merchants from unloading their cargoes, ordered that any reputable foreign merchant wishing to live and trade in London be allowed to obtain citizenship of London (thus according them the associated commercial advantages), that cases of debt in which one party had a tally should be dealt with by merchant law, and that cases to which foreign merchants were a party be held on a daily basis, to avoid a drawn-out legal process injurious to travellers. This last continued to be a concern for Edward I, who provided again for it in his Carta Mercatoria.
We can thus say with some confidence that a merchant law was, in the thirteenth century, emerging from the shadows of earlier local but undocumented usage, as a distinctive alternative to the legal procedure of common law, but not substantially at odds with common law. By mid-century we can find even in a modest port town like Torksey this procedure in operation; in response to an enquiry into the town's liberties, a jury stated that two kinds of court were held in the town, one being the weekly burghmoot, while:
"One court, which is called piepowder, is held from day to day, and twice a day when necessary (this being before lunch and after lunch), for merchants and outsiders who are travelling; it has cognizance of agreements, contracts, transgressions and debts (both under and over 40s.), and deals with lawsuits, pledges, and like matters, just as is the case elsewhere. Plaintiff and defendant may each or either have two essoins before they appear [in court] and after they appear, if they wish. [The record goes on to describe judicial procedure ...] And should they proceed in the lawsuit by inquisition, it is to be made by [a jury of] foreign and resident merchants who are then in the town. And no-one who resides in Torksey or has lands or tenements in Torksey is obliged to come to the court of piepowder, nor ought to be impleaded or amerced in that court unless by his own free will; however, they can only conduct a plea in that court in the way described above."
[Charles Gross, Select Cases Concerning the Law Merchant A.D. A.D. 1270-1638, vol. 1, Selden Society, vol.23 (1908), xxxvii-xxxviii, my translation]
Nonetheless, although the underlying principles of merchant law were evidently in widespread use in English towns by the late fifteenth century, there remained a certain degree of local variation in application and court procedures. By this time, however, royal statutes and ordinances were addressing, and taking precedence over, some aspects of merchant law that were previously only customary in nature. It was natural that there would be a trend towards standardizing merchant law, and the easiest way to do this was to absorb it into common law; however, this took place after the close of the Middle Ages.