Trade: Methods of Exchange

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Trade: Methods of Exchange


Barter . The earliest medieval method of economic exchange for trader and nontrader alike was barter. The markets for the early trader were largely the feudal village and the manor household. Their internal economy was based on service and duties, not on payments of money. Goods that had to be secured outside the village or manor were few in number, and they could usually be procured in direct exchange for agricultural products. Even trade for some of the most prized items, salt and iron, occurred most widely by barter throughout the Middle Ages. Indeed, without money as the medium of an exchange, serving as a standard of value for whether an item had sold for more than it was purchased, it was perhaps more difficult for a medieval trader to determine whether he had gained in a single transaction. Relatively sedentary merchants could, however, barter goods purchased for goods they needed personally, valuing them as any buyer would for their esteemed value. Even the more mobile merchants of the Middle Ages could, where they developed regular trade, establish consistency in the relative values of bartered items. For example, a merchant might set the value of a pair of shoes consistently at a certain number of hen’s eggs, or a thrashing tool at a bushel of oats.

Monetization . In addition to barter, which continued throughout the Middle Ages to be a part of local trade, another main method of economic exchange entered the mercantile realm: coinage, or money, as the medium. Already in the ninth century, coins were coming into increasing use in medieval Europe. The first step in the establishment of money as the main basis of all value was the acceptance of gold and other precious metals as barter payments for goods. Most monetary transactions would involve the use of metals of known quality, determined initially by weight, hardness, and so on. Confirmation of the consensual value of gold in the Middle Ages took many forms.

Gold and Silver . Gold and silver were highly sought-after commodities of trade. Throughout the Middle Ages, Berber traders exchanged horses, copper, and tools for gold mined in the Saharan desert, much of which would become a medium of European exchange. Gold and silver were also material rewards of battle. As the most prized booty of the Vikings, these precious metals became the substance of their renowned bracelets, sword hilts, and even their decorative shipboard weather vanes. Traders’ carrying gold and silver presented a worthwhile incentive for road robbery.

Advantages . The major advantage to traders of exchanges with money—whether in selling or buying—was that they were less cumbersome than those in which both parties brought goods to the transaction. The loss of the distance trade of Roman times in Europe meant there was less need for money in the early Middle Ages. By the twelfth and thirteenth centuries, however, exchanging goods for goods proved restrictive to longer-range trade. Although its potential advantages were obvious, coinage, weighed pieces of precious metal usually stamped symbolically by a minting authority, only slowly took the place of validated gold or silver ingots. Most medieval coins were unrecognized beyond the region of their minting and hence served predominantly in local transactions of all sorts, as, for example, in the measure of what a noble owed his king, or even a peasant, his lord, in terms of service and duties.

Coin Metals and Weights . A few coins did become, outside the territory of their minting authority, respected for being of consistent metal content and therefore acceptable as a standard of value in long-distance trade. By the ninth century, silver had become the preeminent metal in medieval coins, used for the especially dominant denarius (penny) that formed the pivotal surviving part of the Carolingian monetary system, comprised of the abolis (halfpenny), solidas (equal to 12 pennies), and the libra, or pound (equal to 240 pennies). The hefty quantity of silver in an Italian coin, the grosso of Venice and Genoa, from 1200 on set the course for the silver minting of the gigliato in southern Italy, the larger gros tournois in France, the still larger groat in England, and the groschen in the German kingdom. Two gold coins became important in the later Middle Ages, the florin of Florence and the ducat of Venice. Although of the same complete purity and equal weight, just exceeding 3.5 grams, the florin dominated over the genovino of Genoa and all other coins as the trading currency of Western Europe as far north as the North Sea. Merchants gave the ducat, of the same standard as the florin, more influence in Mediterranean trade, to the point that it usurped the earlier spread in that sphere of Byzantine and Islamic gold coins.

Markets . The regular market, and at intervals the cyclical fair, were the medieval traders’ main loci for exchange. The highlight of town life was the market. Markets took

place on market days, once or twice a week in most towns or cities, which welcomed mercantile activity. Concentrations of people and trade proved mutually reinforcing in the Middle Ages. The towns and cities that eventually grew into the most prosperous trading locations had often sprung from sites where people had originally gathered to trade, at perhaps a fortification or a prominent church. Since life was safer and easier near the castles of the nobles or the possible sanctuary of the church, people settled where they were most protected from wars and other dangers. As the more secure of these trade towns grew from little more than colonies within walled fortresses, many people had to reside outside the original walls, creating a newly inhabited area. An actual marketplace often became the center of a town’s new quarter, and eventually the center of the entire town as it expanded even more. Bruges, in present-day Belgium, for example, which grew from a small fortress site in the mid ninth century into a fortified settlement for various merchants and craftsmen by the eleventh century, had long since exceeded its walled jurisdiction by 1350, with an estimated population of 46,000 and a huge cloth market to which foreign traders crowded. By the fourteenth century, formerly small walled towns had many merchants in residence. For example, Carcassone, with a population of about 9,500, counted 42 merchants, and the much larger Florence had 1,500.

Fairs . The medieval fair was similar to a wholesalers gathering organized by an area’s local nobility on a specially determined market area along a major trade route to permit and protect trading in specific goods for a fixed number of days. Until about 1250, cyclical international fairs flourished in Europe as the traders’ most important point of exchange. Many medieval merchants would move from fair to fair during the good traveling months, carrying their products north to England, Sweden, Flanders, and Germany, south through France to Italy, and east to the Middle East. As the Duchy of Champagne in France was on the main trade route between Flanders and Italy, it hosted the most prominent medieval fairs, near Chalons-sur-Mame, Troyes, Provins, Lagny-sur-Marne, and Bar-sur-Aube. Each Champagne fair was actually a sequence of specialized fairs.

Fair Cycle . During its period in the fair cycle, each participating town would attract in turn the attendance of buyers and sellers from all over Europe. Stalls and booths would be set up, and at the Fair of Cloth, for example, textile merchants would display British wool, Asian silks, and Flemish and Italian cloth. The Fair of Fabricated Items would attract traders of armor, jewelry, and religious objects for churches and cathedrals. At the Fair of Weight, spice merchants would be present. The stalls and booths came down when the fair was over. Before setting off, merchants changed the many coins of varying denominations with which they had been paid for coinage of immediate future use or more stable value. They then went on to the next fair on the international route or to one closer to or at home, and the town settled down to its normal routine, returning to the local market for procuring goods.

Currencies . As inextricably linked as coinage with methods of economic exchange in trade were the currencies the merchants created for their own circumstances. These currencies all took the form of a written contract and hence reflected the same confidence in the guarantee behind a piece of writing that was essential to the later adoption of paper money in Europe. Medieval people learned of monetary notes by the later thirteenth century at least, from the accounts of the Venetian trader Marco Polo who, in writing of his hospitable stay in China under Emperor Kublai Khan, told of the Mongolians’ use of many important inventions, including paper money. The various written “notes” of medieval merchants were not, strictly speaking, methods of exchange as it has been understood thus far, but rather methods that created contractual obligations among specific parties. Nonetheless, each one fostered the procuring and sale of goods to other traders or end users, and some bore particularly close similarity to instruments of exchange.

Contracts . Medieval merchant contracts generally afforded financial support to a trading venture. Some were mere financial testimonials, letters of credit; others, such as bills of exchange, were statements of fund transfers, backed by credit, across different currencies. Significantly, neither type required the changing hands of goods or money before the culmination of the venture itself, which is the main reason medieval trading and what would actually pass today for banking transactions went together. Where actual financing was required, such a contractual voucher would serve as the guarantee for promissory notes presented to those offering the materiel for travel. When a trader could front his own venture, two different types of delayed compensation contracts could come into play: the emptio, a purchase contract, obliging a buyer to pay, usually at a predetermined price, for goods when delivered, and/or the venditio, a sale contract committing a seller to deliver goods once available at the agreed-upon price. The existence of these two contracts, each representing distinctly a buy or a sell, lends great credence to their role as actual methods of exchange.

Lending . The columna contract of eleventh-century southern Italy created a partnership between merchants, seamen, and shipowners, whereby a venture’s final gains and losses would be shared according to the value of each partner’s initial contribution. The commenda, known as well by other names including the collegantia, of Venice allowed for one party to finance a trade venture and the other to execute it with no financial commitment. At the conclusion of the expedition, both partners would share in the return at an agreed-upon percentage, with the financial partner shouldering any eventual losses. Outright loans, with no apparent vested expectation of gain from a maritime trading venture, carried over from the Roman period into the Middle Ages. They highlighted, however, one of the reasons the reputation of medieval merchants was often so besmirched, in that such loans, usually from one wealthy merchant to a colleague, often entailed a payment of interest on the principal investment, frequently in the guise of currency exchanges. Demands for repayment of more than an initial loan amount were interpreted as contrary to church teaching and hence to Christian faith, and all parties to such contracts were anathematized.


G. G. Coulton, comp., Social Life in Britain from the Conquest to the Reformation (Cambridge: Cambridge University Press, 1918).

Odd Langholm, Economics in the Medieval Schools. Wealth, Exchange, Value, Money and Usury according to the Paris Theological Tradition, 1200–1350 (Leiden & New York: E. J. Brill, 1992).

Robert S. Lopez and Irving W. Raymond, Medieval Trade in the Mediterranean World: Illustrative Documents Translated with Introductions and Notes (New York: Columbia University Press, 1955).