On Effect of the Law of One Price in the Baltic Region in the late 14th – early 15th centuries
On Effect of the Law of One Price in the Baltic
Region in the late 14th – early 15th centuries
N.A. Khan. [1]
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Author of the article shows how the Novgorod feudal republic participated in the Baltic trade in the framework of the Hanseatic trade union. Economic base and the price policy of the Novgorod Republic in this region has not yet been studied. The aim of the article is to identify both the economic mechanism of one of the first trade unions and the direction of commodity-export flow from Russia to the west. Based on the analytical use of the Law of One Price (LOP), the author has studied the cash flows that served international trade in the Baltic Sea. The results of this study have allowed to raise the question about the meaning of rent in the medieval commercial handling.
The main conclusion of this study is the assertion that free trade was not violated as the most important principle. The Hanseatic League contributed to the development of commodity exchanges, prices’ preservation and efforts to overcome the monopoly position of the union on the market of certain products. The latter led to the search and discovery of new trade routes and communications.
Keywords: medieval economic history, medieval resource base, comparative economic history, international trade, Hanseatic trade union, tariff and pricing policy, price rent, Law of One Price.
INTRODUCE.
Scientists have spent a lot of energy and effort to find out the mechanism of functioning of the HL, because it is clear that the practice of contract should be supported by economic decisions. Right are those scholars who write about what ports accumulated goods, as follows from the data Pegolloti, when the volume of exported goods was related to the tonnage of ships i.e. made standardization.
Here we come to the problem of economic historiography, which has led us to conceptualize trade in the Benelux countries as well as in the eastern Baltic. The hierarchical structure and modeling on a two-tier basis. Lesger. Stabel 1992, p.341.Uatven 1992 3
But at this time modern historiography – the histriogrphy of last 20-years showed that HL was studes on both towns categories: London – Brugge (in general England – Low countryes); Bergen — Lubeck; Eastern Prussia –Brugge. “Traditionally the northernmost outpost of Hanseatic influence was seen as a peripheral trading place. According to this view, its only purpose was the supply of continental Europe with dried cod as a supplement to the more numerous supplies with salted herring from Scania”. (Burkhard 2010, s.65).
Densely populated areas of Belgium, Holland and northern Germany, were provided with paved roads, numerous rivers, as well as the construction of navigation channels. In particular, the channel was dug Antwerp-Brussels.
These cities through trade pereracpredilyali products, providing port and logistics services to traders and seafarers. Bruges — not a port city, and here to carry imported goods — is unprofitable.
Veer divergent goods Novgorod — Danzig, Riga, Revel, Staraya Ladoga just brilliantly demonstrates the hierarchy of goods delivery of content to the depths of the sea coast. Here Krakow and Polotsk — the balance in the hierarchical structure. I describe the London trade with Cologne \ Novgorod, as and Polotsk, Krakow, Frankfurt, Cologne, Kaunas, Lithuania, Luxembourg (Hẽlin, s.435-436; MORSA, p.458) were the major centers of the deep hinterland. And it has become a solid achievement of European historiography, when strongly hierarchical Hansa in the second half of 13 per cent., Political power coat Cities (Oxford Encyclopedia, 2003. Volume 2. p.495L, 497L.).
Materials on trade and monetary flows related to the activities of the Hanseatic trade union occupy a significant place in the history of economic relations in the Baltic region in the Middle Ages.
In terms of economic analysis, we should highlight the monetary and financial cooperation and trade. Modern researchers are paying special attention to the identification of financial integration’s problems consonant with current financial realities of Europe. If the earlier studies of the economic history were based on statistical data, then now they are increasingly focusing on the numismatics evidences helped by the state of their statistical database.
Materials introduced into scientific circulation by M.P. Lesnikov constitute the primary source for the Hanseatic trade in the Baltic countries and northwestern Russian lands. This material is systematized and is quite suitable for the historical and economic reconstruction of the fur trade in the Baltic Sea.
However, Lesnikov have not studied the balance of trade, turnover dynamics of trade houses and companies, as well as the direction of commodity flow, credit, salaries of employees, trade and payment balances, etc.
While publishing the accounting books of the merchant corporations, Lesnikov complained about insignificance of data on the trade with the cities of the Baltic States and focused on the trade of Danzig. It should be noted that the main work of this historian was published in the GDR. Therefore, the author seems to have forgotten to describe the Königsberg trade, although such material is available.
It is believed that there were tradable and non tradable goods in the Middle Ages, after the ancient times.
TRADE UNIONS.
The coalition combined several methods to ensure that its members had an incentive to remain honest. The first was to pay the other members they dealt with a premium. The source of this premium was the gain from cooperation, wrote in Oxford Encyclopedia (2003, Vol.1. S.532), -. By raising the gains to the agent from cooperating, paying a premium raised the cost of cheating— anyone who cheated would be giving up even more future income.
Acceding Oliver Hard, the contract including as high description revealed, In the Middle Ages, as we assume in the framework of concrete scientific hypothesis, trade within the HL was based on LOP that institutional and theoretical terms, this was an invisible contract, where the contracting party contractors as it took the price of default, we write so that this economic mechanism. Hart and Moore ceremonially write that it is probable deviations such as force majeure, such as rain on a wedding, but the conflict is not the case, it is a different understanding of the value and the cost of the parties to a contract, that is. HL became members. (Hart & Moore, 2008. P.10, 18).
Sable represented the most luxury article of the medieval Novgorodian export. Squirrel, in turn, was the most numerous product. There were five varieties of the exported squirrel fur. Its highest grade, the Shönewerk, cost 30 Prussian marks. Moreover, as it has been established, this price was of the same amount throughout the Baltic region: it was the purchase price. This phenomenon can be explained by the effect of tariff restrictions by the Hanseatic trade union (Лесников, 1952. P. 106; Хан, 2008), which united 72 (73) cities known both from the Russian and German documents.
Trade restrictions and tariff policy of the Hanseatic League should be reconsider in a special historical and economic context, as a preliminary analysis shows that in Novgorod itself both the Russian and German (foreign) merchants were exposed to regulation. For example, as referred Kulisher, furs were purchased only in lots of 1000, 500, 250 pieces (1923. P. 76). The Germans were forbidden to sell imported goods at retail by trading them from house to house and they had to weigh the non-ferrous metals, such as lead, tin or silver, deficient in Novgorod, on their own weights, excluding princely (Novgorod was in the political alliance with Moscow). But the most important restriction for foreigners, in our view, was that they were categorically forbidden to bring goods to Novgorod for the sum exceeding 1000 marks (186,5 grams of silver per one mark) under the threat of confiscation by the same Hanseatic offices (Goetz, 1922. P. 74-75). Moreover, these restrictions have been registered in the so-called IV skra (charter – the word having Scandinavian origin) (See: Squires, 2009, p. 23, 68-69). We can make a cautious assumption that these restrictions were not discriminatory measures, but rather they reflected the capacity of the medieval market and served for the corresponding price maintenance. It is obvious that as the data comes from Shnuraman that the absence of economic trade interaction mechanisms of Cologne and London led to administrative rulings, when Cologne London contacts have been held only in Antwerpen, where it is loaded onto another vessel and under the other team. (Shnuman, S.198).This hypothesis is supported by the terms of goods’ acquisition in Polotsk, where traders were allowed to purchase goods in the amount of not more than 500 skins in size of the half berkovets (Хорошкевич, 1963. P. 79-87).
Limitations in the volumes of single purchase reflect the non-tariff regulation, explainable, largely, both by the desire of authorities to protect their market from bulk purchases of foreign merchants and the narrowness of the medieval market in general. According to Robert Sandberg, Rural inhabitants in Sweden could not by right trade with the person of their choice, and were absolutely forbidden any contact with foreign merchants (Sandberg 2001. P.38).
This official view of rural trade was already hinted at in town laws of the 1350s, although it was not mentioned in contemporary rural legislation
Theoretical debates about the doctrines of free trade and protectionism of the middle of the 18th–19th centuries have found extensive coverage in modern economic historiography and, in particular, in Sweden (Magnusson, 2004, P. 11, 30-31). In this case, in an attempt to find an explanation through theoretical laws, researchers have drawn attention to the importance of studying international (foreign) trade as a division of labor, given the specificity of domestic and foreign trade.
This phenomenon is the forerunner of the General Agency for Trade and Tariffs, founded in 1945. Krugman P.R. and Obstfeld M. describe in their work the history of international organizations regulating the trade and set out the first actions undertaken by the United States in 1930, which led to a similar trade regulation. Subsequently, the main principles of General Agreement on Tariffs and Trade became export subsidies, quotas and duties (2003, p. 272).
An agreement between Belgium and Luxembourg united in 1921 in the BLEU, led to the founding of the first trade association after World War I, which can be called economic union. The still famous Benelux was founded after the merger of the Netherlands to this union (Neal, 2007, p. 34-35, 187-189).
Stressing the importance of the trade and commercial relations’ studies , the WTO Director-General Roberto Azevêdo, in a speech to the UNCTAD Trade and Development Board on 22 September 2014, said that the Bali package that delivered big gains for WTO members “is now at risk”. He said “at present, the future is uncertain”, adding that if the impasse is not solved “many areas of our work may suffer a freezing effect, including the areas of greatest interest to developing countries, such as agriculture”. [2]
“I would not talk so much – wrote in his time J. Hicks (J.Hicks, 1969, p. 33-34), explaining the motivational structure of merchant associations – about the need to protect property from violence, although it is well worth. This fact is one reason why we find the clustering of merchants in the cities and trade communications, where they can unite to protect their property. And this is slightly better than what they could do on their own. In this issue, even in the beginning, they have a major interest”.
So, the return car makers in framework of Trumponomics from Mexico into US territory not conversation base economical laws on of them here will be discuss.[3]
Everybody political, trade, monetary, diplomatic, currency, military, and even marital union involves the known limitations of counterparties who have entered into it.
THE NOVGORODIAN EXPORT OF SQUIRREL FUR.
The squirrel trade turnover in the eastern Baltic region was based on the price of highest grade of the squirrel skin, the “Shönewerk”, which amounted to 30 Prussian marks in Danzig, Riga and Königsberg, as it has been clarified by Lesnikov (Лесников 1952, p.276, table 6). This price does not correspond to any measure of the General Agency. Apparently, we are dealing here with the Law of One Price (LOP). And in order to avoid deviations from the adequate interpretation, we give it in full. The Law of One Price (LOP) states that “in competitive markets with the absence of transportation costs and official barriers to trade (for example, trade duties), one and the same product marketed in different countries should be sold at the same price, if this price is denominated in the same currency” (Krugman, Obstfeld, P. 447-448).
Operation of this law is currently being studied in a specific economic studies on the US materials as well as on the materials of economic history (Lo, Zivot, 2006. P.53).
Operation of the LOP presupposes the presence of trading platform outside the Hansa Union, where the price must exceed the same price of the product turnover. That is, the silver exchange rate expressed through given goods in a given country-purchaser should go beyond the actions of “one price” of the mentioned law. The solvability of the problem is possible in the event that such a platform function performs the stock exchange as it was in Bruges (Belgium, at the time, also the Netherlands).
As noted by J. Martin, for the 14th century we have data on the export of squirrel furs to England from Bruges up to 300 thousand skins a year (1986. P. 158), that allows us to establish the British expenses associated with the purchase of such a volume of the squirrel fur. Information about the British costs for elite consumption of the squirrel fur from Bruges allows us to determine the amount of purchases in 646,225.5 kilograms of the more transportable gold (8 million 353 thousand 477,249 Nobel golden coins), which exactly agrees with the methodology of the British economic historian and medievalist J. Munro and other contemporary scholars: the Flemings were aware of the fact that trade deficit with Britain, ultimately, had to be balanced by transfers of silver (Munro, 1972. P. 53; Bell, Brooks, Moor, 2012. P.125).
T.H.Lloyd & L.D. Neal wrote that Hansa contour in London served the interests just merchants of League, but not English & they got priviligious form Crown in period of rule Edward III (1312-1377) & coverage costumes muster of English merchant to ask Lubeck for help export their goods into continent by Friedrich Schulz (Schulz 1911, S.18-19). In particular stimulated of exports of raw wool by Edward III to finance his war in France gave “effective protection”, as wrote R.Findlay & Kevin H.O’Rourke (2007, p.115), witch shift in composition of exports at the expense of Flanders. So it’s actually the studying of monetary balance in trade with England & Low countries.
Available sources provide information about the commercial activity of the Trading House of Fickenhausen headquartered in Bruges, from where it led his salesmen and companions.
At the same time, according to information about the market of Danzig (now Gdansk), here were gathered the Lithuanian, Hungarian, Swedish, as well as Smolensk goods. Therefore, it would be highly premature to extrapolate quantitative data on the Danzig port to Königsberg where, according to the logistics, had to come the fur from Smolensk, since Revel, for example, focused on wine imports, but delivered the low quality squirrel fur, the schewenissen-leather money.
According polish data the goods delivered from Cracov- Wrozlav- Posnan to the ports Danzig – Stettin (Samsonowixz 1992, s.471-475).
During the period from the late 12th to the late 15th centuries, domestic price of the sable and squirrel fur in Russia does not reflecting the substance of the LOP as it refers to the internal money circulation and is related to the absolute State rent extracted from trading of this principal export commodity. This price is absolute for the Russian State and reflects the feudal price formation. It was rigidly determined by cash accounts and the weight of silver content allows us to establish the devaluation of the whole monetary system on a vast chronological space of Russian economic history.
One (single) purchase price of squirrel in the Baltic region did not allow the Novgorodians to implement the dumping of export goods, despite the well-known volatility of prices in the trade, which is confirmed by the table data.
Judging by the composition of commodity expansion of the Netherlands-Belgium in the eastern Baltic region, there were delivered industrial products, such as the clothes of Ypres, Ghent, Bruges, French wine and salt (Spufford, 2003. P. 298-299). Incidentally, Novgorod could also get the latter from Galich where salters were the object of inheritance law (Хорошкевич, 1963. P. 222-223)[4].
Right now we present the materials that allows us to establish, in the light of modern ideas, procedure for the formation of theEXPORT price on Russian furs exported from Novgorod in the period of the advanced Middle Ages. (Table 1).
Table 1. Prices of the Novgorod furs in the early 15th century (CIF-Bruges)
| №№ | Denomination | Russian domestic price (Ag weight in g) | Export price (Ag weight) | CIF-Bruges |
| (Ag weight in kg) | ||||
| 1. | Squirrel (per 1000 skins) – Kind of “Shönewerk” | 5–9 rubles*
(from 925,5 g) |
30 Prussian marks
(5,595 kg)
|
10 ф./л. (6,53) |
| 2. | Marten | No information | No information | 2,5 ф./л. |
| 3. | Sable per 1 skin | 4 grivnas
(53,8 in Novgorod account and 81,88 in Moscow one) |
322,8 or 491,28 g /estimated/ | 4 – 7 ф./л |
| (2,6 – 5,222) | ||||
| 4. | Squirrel – kind of “schewenissen” (per 1000) | 139,875 (?) /estimated/ | In Prussia, 4,5 Prussian marks = 839,25 g | 27 – 38 shillings** (0,881 – 1,240, 2 kg) |
*Novgorodian ruble is taken as 175 g – the ingot of G. Lannoy
**in the last decade of the 14th century, the Teutonic Order sold the “schewenissen” in Flanders with the yield of the operation from 5% (at the price of 27 shillings) to 47,78% (with the price of 1,24 kg per 1000).
Source: (Лесников, 1952. С.270; Хорошкевич, 1963; Назаренко, 2001, с.197; Martin, 1986).
Following Lesnikov, A.L. Horoshkevich argues that the clerks of one of associations (kumpanias) of the Teutonic Order imported 205–220,8 kg of silver at the turn of the 14th and 15th centuries (Лесников, 1952. P. 263). These figures should be verified in the absence of other data on the supply of silver in the Novgorod.
But before that, it should be noted with regret that the historian made a mistake, which then passed to all other editions, in establishing a metric expressing of the silver quantity imported by the Order’s salesmen in Novgorod. Salesmen received silver on, what is called, “account” in raw pieces-ingots extracted by miners in Bohemia, Tyrol, Southern Germany. This silver was counted and evaluated in the weight marks, that is, it had the monetary value of marks (in this case the Prussian ones). Thus, one weighted mark corresponded to 1,5 Prussian marks. However, when calculating the metric value of silver, Lesnikov for some reason took the figures of 1183 weighted marks imported in Novgorod in 1399–1400 and 1099 weighted marks in 1400–1401. Multiplying them by the value of the Prussian marks, the researcher got 220,8 and 205 kg of silver imports of the Teutonic Order in Novgorod. At the same time, the historian presented the amount of Order salesmen’s purchases in Novgorod for a 5-year period from 1398 to 1403. Multiplying these figures on the value of the Prussian mark, we have obtained the following values (Figure 1).
Fig.1. Cost of goods purchased by the Teutonic Order in Novgorod (1398–1403).*
- Chronological order: left to right.
- Data for 1401 are missing.
- Source: (Лесников, 1952. P.277, table 8. P.263)
Thus, the turnover of silver decreased more than twice in the Novgorod money market within five years at the turn of the 14th–15th centuries.
The given data point to the heuristic potential of the possibility to explain this phenomenon by the cyclical fall in mutual trade, based on the alleged decline of silver in the Nordic and Eastern Alps, as mentioned by J. Nef (1941). Hardly a coincidence was the fact that in 1399–1400 the number of mines in Germany dropped sharply, which resulted later in the extinction of entire mining towns (Stromer, 1985. Р. 241).
May we in this connect to suppose about war between English & Holland merchants started T THE END OF 70-th 14 cent.? Here wee including became tension In russian-hansetic relanships in this period since 1388, which finished it seem „Kreuzküssung“, so called Niburov agreement at 1392.(Henn 2001, s.5).
The probability that the reduction of silver extraction and inflow from this area was damped by increasing the supply of squirrel to the Hanseatic trade, appears to be insignificant, because, since 1416, there was observed simultaneous increase in prices for Russian furs in Revel, Riga, and Danzig (Лесников, 1948. P. 87-88).
The mining rent (or mining right by B. Strohmer) allows us to raise the question of why, despite the presence of a developed money circulation and coin production, when the coin as commodity with high added value could serve as an impressive personification of money; the monetary authorities of Prussia brought to Novgorod semifinished silver (Attman, 1981. P. 70), thereby contributing to the development of non-ferrous metal processing and contenting therefore with merely mining profit (rent)? Here we should note that during the export-import operations along the line England – Flanders in the period under review, the English merchants exported cloth for gold, and when importing goods from Belgium bargaining went on silver. But how dependence quntitave output of English Nobles & trade turs we have question due it analis statistical data (Mishkin 1989. P.480, graph II). Apparently, these were phenomena of the same order extending the existence of scientific research.
THE ROLE OF TEUTONIC ORDER IN THE EXPORT OF NOVGORODIAN GOODS.
According the latest generalization London’s foreign trade was organizing on hundred guilds as institutional inion but London himself was a main consumer of import luxury good where provincial merchant bought for province those luxury goods brought into little ports cannot to provide neassary demand. So. By this reason contributed prosperity & growth English capital, where in period 1374-1570 the prosopography index of Londore’s 14.700 was assembled.(Colson 2016. P.104-106).
Because we see a concentration of trade capital we better understand of the growth other city’s in HL.
Right now we will try to find out the proportion of Novgorod in the foreign trade of the Teutonic Order by commodity items that were paramount to Novgorod. Later it will reveal trade turnover of the Novgorodian lands with Teutonic Order.
According to Lesnikov, of total revenue from the Order’s sale of furs in Flanders equal to 3,485 livres (pounds), the Novgorodian squirrel (there were also Ukrainian and Hungarian squirrel) constituted 90% or 3136,5 livres. Novgorodian wax, in turn, – 35%, i.e. 1706 livres. In sum, all Novgorodian items amounted to 4842,5 livres (about 28%) in the Teutonic Order’s foreign trade turnover during the last decade of the 14th century (with the exception of copper, amber and other goods of non-Novgorodian origin).
Lesnikov presented figures of the Order’s foreign trade operations on the market of Bruges, where, as we have shown, during 1391–1399 the cost of the Novgorodian squirrel fur amounted to 3136,5 livres, and of wax – to 1706 livres. The cost of Novgorodian share in the Teutonic Order’s trade of fur amounted to 2 t 50 kg, of wax – to 1 t 114 kg. A total Order’s revenue in Bruges for the 10-year period amounted to 11 t 579,3 kg of silver.
For the turn of the 14th–15th centuries great scientific importance represents the price rate quoted in such a source as the “Debt bondage of Cyprian” (1389). Therefore, it seems possible to use the business books’ data of the Teutonic Order to check the squirrel fur price purchased on behalf of the Order by its salesmen in Novgorod during the period from 1398 till 1403. To avoid confusion, we will not carry out calculations for each class of squirrel skins purchased by the Order in Novgorod. At the same time, we note that the kind of “schewenisse” was not exported from Novgorod but purchased directly in Prussia, where it might be delivered from Smolensk or from the same Novgorod by Livonian merchants (Table 2).
Table 2. Volumes of squirrels purchased in Novgorod by the Teutonic Order’s salesmen (in thousands of skins).
| 1398 | 1399 | 1400 | 1402 | 1403 |
| 89, 68 | 43,82 | 43, 25 | 43, 75 | 37,64 |
| Total: 258,14 thousands |
* Source: (Лесников, 1952, p.266, 268; table 1).
The price of thousand squirrel skins amounted to 0,9255 kg / 1000 or 5 rubles (according to the document of Cyprian) (in what follows we omit 1000), which fully corresponds to other source’s information (277,64 kg: 300 000). However, the data of the table № 2 (by Lesnikov) suggest that the number of purchased skins was somewhat smaller than the calculated one. The deficit is slightly more than 40 thousand of skins. This means that for 260,000 of skins were paid 277,64 kg of silver and the actual price of goods amounted to 1,076 kg / 1000 skins.
Further.
Publishing information on the Novgorodian foreign trade, Lesnikov argued that the margin between the price of the Novgorodian furs, wax and furs in Danzig was from 1 to 5,38%. As shown in Table 1, for 277,64 kg of money (silver) there could be bought 300 thousand squirrel skins, but not 260 thousand, as shown by the financial statements (see Table 2 by Lesnikov). They received earnings thanks to the system of over-givings and addings. For example, according to I.M. Kulisher, earnings on grain were received in that the grain was poured into the barrel beyond measure, and that was the reward for work.
However, we can not ignore the fact that the above quantities refer to bulk cargo and associated with the transaction costs of trade, shrinkage, shaking. Therefore, we can challenge the opinion of modern historians who understated in such a way the salary of specific performers of specific instructions of the Associations’ (Ltd) founders aimed at trading with Novgorod.
In the fresh and detailed work A.Nedkvitne, dedicated trade Hansa with Bergen when seemingly as noted by reviewers of the new find something difficult, (Jahnke 2016) shows that in the period from 1369 by 1399, which is important in framework chronological synchronization, there was a deficit Bergen trade with Lubeck, makes a double value — 18 thousand Lübeck trademarks and 9.5 thousand in monetary value (Nedkvitne 2014, p.113-114, tabl.II.6 & II.7)… It seems that there is a deficit is offset by the supply of fish products, and it is consistent with both the analogy Novgorod trade, as demonstrated in this notes.
Managers of the Teutonic Order was performed hired labor receiving the silver of the first repartition “on account” and then drove it to Pskov and Novgorod. So they were paid after the completion of the business cycle. How it’s have connect with debasement coins which in Sweden were 5 during 1350-1594) according Rodney Edwinsson (Edvinsson 2011). Along with, besides the metrological over-giving, they also received a latent income reflected, by the way, in the accounting books. Currently there have been conducted a comparative historical studies on the European and Asian salaries, which calculation methodology consists in the silver gram definition on the basis of grain equivalent (Broadberry, Gupta, 2006, p.8, 12, 25; Mishkin 1989. P,482-483). At present, this approach is used in the Middle Eastern historical and economic studies (Pamuk, Shatzmiller, 2014).
In the medieval Netherlands of the 15th century a very large starting capital was required even for small enterprises necessary for the family business: house, tools, raw materials. In turn, the price of a simple house in Ghent was the equivalent of two-year salary of skilled workers and five-year salary of a laborer (Prevenier, Blockmans, 1986. P.163).
MONEY OF ACCOUNT – THE PROBLEM OF ACCOUNTING AND REPORTING.
The enormous difference in weights and measures and the absence of uniform standards of quality (Lesger, 2006. P.252). And since 1341, 1344 German cites became mint golden coin «Gulden» not very match numerous & England start output gold nobles (Gulbekk 2914). German monetary authority had made attempt to create untied coin system was Wend coin union (Germ. Wendischer Münzverein) of other German Hansa towns since 1379 to 1569. Because at Cologne and at Lübeck marks were quite independently trans-formed into units of account, of 12 and 16 schillings respectively, and pounds were not used there. Peter Spufford wrote (Spufford, 1986. P.XXI-XXII & map). So in modern calculation became to use weight money units in grams that allows to comprise dates from others countries (Retsö & Söderberg, 2015, S.1-5; SÖderberg 2013. P.82-85, fig. 1, 2; Khan 2015).
In this connection. With a total annual rate of squirrel purchase decline in Novgorod, i.e. the reduction of turnover, this figure was an average of 60 thousand skins on the “average-weighted” price of 5 rubles per 1000 skins. This internal cost for the economy of stationary societies taken without any natural disasters, was apparently the same, determined by a written source. And since it reflects the numismatic data, it allows us to talk about countable character of the “price” data associated with the money account (Бауер, 2013. P. 160-161, 234-236). Now no one disputes that the money of account, which are not represented by numismatic artifact, i.e. ingot or coins, were widely used in the practice of accounting and reporting. However, behind a specific nominal value always stands the silver (golden) content.
As sociologist point of weiv The futility of the assumption that if the problem of cash-strapped economy was considered sufficiently serious, it would be possible to find or develop a suitable methodology for accounting (Weber Max 1978, p.100-103).
In this regard, Lesnikov provides the following: “of 21 marks” for “Smolensk goods” for the delivered furs in Danzig, for what should have been paid 3916,5 g of silver (21 per 186,5 g).
Meanwhile, the price, as shown by Martin, could be increased to 9 rubles per 1000 skins in Revel, which results in view of the weight duties and Hanseatic fee. According to Martin and Horoshkevich, the maximum of Novgorodian export in the 14th century amounted to 500 – 840 thousand skins. In this case, the trade turnover of squirrel skins amounted to 2,5 – 4,2 т.р. annually. The figures that we have established here, are fundamental for the subsequent macroeconomic calculations, which we present below. But now we call attention to the fact that 500 thousand squirrel skins in rubles, in terms of 185 g, amounted to 462,5 kg, and 840 thousand skins – to 777 kg.
We have shown above the weighted average price for the Novgorodian squirrel equal to 5 rubles. Therefore, we can safely entrust the figures of J. Martin who wrote about the 9-ruble price for 1000 skins of this animal, which we assign to the sort of “Shönewerk”. 1000 skins of this kind will be worth of 1665 in domestic prices of the Boyar republic (185 X 9). It remains to admit that the price of 30 Prussian marks or 5595 g per 1000 skins of “Shönewerk” was the export price, which the Novgorodians set for the Teutonic Order. It was the same in all of the Hanseatic League. This is also confirmed by the barter transaction, which have been considered in detail by Lesnikov (1948, p.89 r.) and where the purchase price of squirrel, according to my calculations, exceeded 32 rubles for 1000 skins and amounted to 5,6 kg (175 x 32). We obtain the same value if we count on silver gram equivalent the amount of 132 livres for the cloth of Ypres sent in Novgorod (132 x 6527,5). We must suppose that this cloth was purchased for the British Nobels.
We can show profitability in the trade of this product having information about the price at each stage on the CIF-Bruges terms and even the squirrel delivery volumes extracted in the annalistic countries of Pechera or Perm.
In the domestic market of Rus the squirrel price amounted to 5 rubles. The wholesale price in Novgorod amounted to 30 Prussian marks or 5,595 kg of silver. The goods were delivered in Danzig (Gdansk) along the Volkhov, Neva, and the Baltic Sea, from where they got in Bruges. Possibly, there were other logistics. The fur goods from Novgorod could be delivered to Riga or Revel, and from there – in Bruges (Fossion, 1992. P. 329).[5] Here, in Bruges, the British purchased in bulk European goods. In the capital of Flanders the squirrel fur cost 10 livres or 6527,5 g of silver. Thus, the price was increased 2 times: first, at the moment of its payment in Novgorod (delivered ex-ship), and the second time in the market of Bruges. In the first case, it increased to 5,5 times, and the merchants of Livonia, of the Teutonic Order, had to be content with only 18% of revenue from the Russian squirrel trade. Only the cloth brought them greater yield of 35%, which was recorded by the salesmen of G. Fickenhausen. Thus, also in the Middle Ages the trading according to barter schemes cost the partners more than the trade for money.
The price volatility, peculiar to global trade, might be 2 or even 3 times higher than the model indicated here. This was related, inter alia, to the meteorology of fur animals reflecting also on the domestic prices of medieval Russia. But the margin of the Baltic trade, apparently, preserved reflecting on trade volumes.
We can find a certain analogy between the supply of natural resources and commodity trade in contemporary life. In their current works, J. Akerlof and R. Shiller (2009, p.142) noted in particular how the recession of the 1980s collapsed oil prices, and interest to the thesaurus of “non-renewable resources” fell sharply according to the leading US newspapers.
THE INSTITUTIONAL PRICE OF LOP.
The above is not a some kind of rescript. There is some numismatic evidence, where Russian and Swedish ingots have identical external features that have been found both in Sweden and in large areas of the Russian Plain (Потин, 1961. P. 106-107). They can be confirmed by hoards’ metrology of silver ingots found, inter alia, in the Baltic States. Meanwhile, we are aware of the documentary evidence that the merchants of Bruges paid off in transactions in Riga and Revel with ingots, called Stucke (Лесников, 1948. P. 84-86). Without denying the possibility of their presence in the Russian monetary circulation, we note that they obviously were of the Swedish origin and known since the time of the Vikings (Härdh, 1996. P. 39-40. 140-145; Mugurevićs, 1964. P. 12-14). Finding of the Swedish ortug / coins of the 14th and 15th centuries by Russian numismatist D.I. Prozorvsky (2012, p.14, 15) already in 1856, can serve as an argument in favor of this direction of research.
We can continue to give examples but this is beyond the scope of this article, since numismatists have not identified the Stucke with a specific numismatic artifacts neither they have defined its weight characteristics. So, providing data on the fur purchases from the report of a certain Steinhus, Lesnikov (1948, p.86-87 r.) has recorded in different tables the price of one and the same type of squirrel in different currencies. According to one table, in Riga in May 1407 it was paid 12,25 Stucke for 1000 skins. However, in another table he indicates 34,5 Riga marks. An attempt to compare these data was not successful. However, these data are presented as identical, although most likely it is not the same thing.
By trading with Novgorod in exchange for silver semi-finished goods, merchants of the Teutonic Order might have been competitors, if we compare such sales in the calculations on the Swedish silver ingots. But the Swedes having a silver, a leftover from the Viking era, could play to a price increase of the first level, especially since the margin allowed to do it. We can express a cautious assumption that there was not a particular competition here and in any given case Novgorod received silver at about equal prices, taking into account redistribution. However, we can determine quantitative parameters of the Swedish and German silver ratio in the Baltic States and Novgorod (Myrdal & M. Morell, 2011. P.115).
Given the domestic price of 5-9 rubles (2 kg of silver) and the price within the LOP framework of 30 Prussian marks (5,595 kg of silver), we can assert that the economic sense of the difference consisted in the price rent generated through the HU tariff regulation. Apparently, in the late 14th century, no one offered to the Novgorodians or Smolensk residents to raise domestic fur prices on the level of world prices. Finally, a single purchase price of squirrel in the region did not allow the Novgorodians or their private corporations to use any other tools of market conditions (Маевский, Акатова, 2007. P. 28).
The study of prices leads us to the conclusion about the effect of differential rent (economical distance, geography deference, long & little trade distance), which put the final consumer of commodity flow in the most unfavorable position. To this also were imposed the medieval rules of the LOP interpretation that hampered in practice to circumvent its requirements for those who wished to do this.
There is an opinion that the HU of the Baltic cities remained unchanged until the end of the 15th century providing local merchants with significant privileges. And therefore, merchants, consignees and fishing fleets of the English and Dutch origin fought with such “individual” position (Cameron, Neal, 2003. р.76).
As D.S. Noth wrote, under the effect of LOP the price becomes the pivotal institutional parameter acquiring political and economic importance (Allen, Robert C., See: Safley, 2014, p.628). In general, reminder Cl.Lesger with the references on Fr.Huyek, the price coordinate actions of other people (Lesger 2006. P.250). LOP is to establish the institutional organized on economic rules and laws of the retail space, ensuring the operation of merchant associations profitable. LOP not simply institutional sign, but the base of intuitional organization of monetary stream. If we shall use formula of Irving Fisher: MV = PQ, where M — the amount of money in circulation; V — velocity of circulation of money; P — price level; Q — volume (quantity) of goods. This data was published in his book «The purchasing power of money» (1911), than establish money stream into Novgorod in generally not a problem. The last don’t mean that the Hansa League did’t prevent the outflow of silver in Novgorod, but it requires a separate study by historians.
The possibility of explaining the historical and economic situation seems correct LOP framework HL because geographically coherent hierarchical arrangement of subjects of foreign economic activity. So, two-tier organization of the trade, where cities various levels reflect the movement of goods from the periphery to the external markets, the emergence of the pricing mechanism, where the margin of prices as a force feedback products moves in the same direction-towards the sea, as well as goods fromIMPORT to domestic consumer economy. The first maps HL published B.Bartold, where the Hanseatic cities grouped as a single Trade Union. Among them in this Alliance marked the farthest-London, Bergen, Visby, Novgorod. But Interestingly not even Bruges cities of Low counters are at the extreme west, except maybe Calaus.
Wee may noted about Hierahi.strucure south Germany towns such as Colon. Frankfurt, Munich., Leipzig made the relation more better with Italy than North cost but of course they not been as angle of Hansa liegue.
Certainly, additional research in comparisons the towns of England & north Italy had hieratical structure Economic historians have used the terminology of Long-distance trade”, following idea of Adam Smith about “…the market is understood to relate to expenditure levels rather than to physical distance” (Found Brignell, Cambell, 2009. P.25). So, such trade can exist and thrive on high-margin price cities First and 2-levels, at the top of such a system and is worth a LOP. Sample HL is exceptional, but trade, prices HL, cartographic, and monetary terms highlighted P. Spafford, where Venice and Genoa also removed from a supplier of goods to the extent that this is within the scope of management. Isn’t there a different law? It should be said that this is already another story.
LOP in the Baltic best explains the break throughs British in its scope — Danzig and Riga, where they penetrated, paying off the national currency with gold Nobel. It was well known from the time of Fr.Schultz. This is consistent with the presence of the Hanseatic offices in London, as well, in Bergen, Visby, and Novgorod, as these offices do not reflect the interests of many local merchants and Hanseatic itself. Furthermore. During the Livonian War, when the royal troops of Ivan IV attacked Revel and Riga German Empire helped the eastern Baltic through England steel weapons, following the tactics of «divide and rule», and before that trade through Keln- London Business contacts for the sale of fabrics between Cologne and London by Flemish merchants were established long before the transfer of the office from Bruges to Antverpen. (Shnuman s. 116-117, 197-198).
If we come to the question of the institutional value of the LOP for the league that we come to the logical-methodological direction as one, in the study of the organization of trade in contract theory (Hart & Moore 2008. P.40-48), revealing even direct the mechanism of formation of such a contract the terms of trade in HL format.
In conclusion, it should be assumed that by trading with Novgorod for raw silver the Teutonic Order both competed with Sweden, which supplied clean silver ingots to the city on the Volkhov River, and compensated the shortage by receiving in exchange intermediary spread of commodity flow in the direction of Novgorod – BrugStoes. (Fig.2).
Fig.2. The contour graph isomorphs of trading in the framework of the Law of One Price of HU. Numbers indicate: A) In period of effect LOP; B) In overcome of LOP. 1 – London; 2 – Bruges; 3 – cities of Eastern Prussia and the Ba
ltic States; 4 – Novgorod; and 5 – Arkhangelsk.
FINANCIAL SUPPORT OF TRADE.
It is necessary to show the financial support of trade at least in a few lines. Here were in use both the primary form of promissory notes, payment orders for non-cash transactions in Novgorod, as well as credit. “The appearance of the loan, just like any voluntary transaction, while it benefits both parties, requires resources. … The natural place for the development of the capital market in Western Europe was the center of trade. For the first time, the European capital market began to operate as regional fairs, first in Bruges, then in Antwerp and finally, it shifted to Amsterdam along the development of commerce” (North, Thomas, 1973. P. 139, 140).
There was a mass of services in Germany for cashless payments, provision of promissory notes, money transfer from accounts, remittance advices, pawn, usurious, or simply speculative operations and international trade. The loans were often provided by the State (Stromer, 1985. P. 250-254). Crediting was under the tough moral pressure from the Church that can be explained by the economic anthropology of the Middle Ages, as has been shown by the example of medieval France. Medieval civilization defined 4 categories of people as well as moneylenders. “The devil-moneylenders, they will be punished not by people but demons”. For the amount of money that “they received, as a percentage corresponds to the amount of wood that was sent to hell to burn them” (Le Goff , 2010. Р. 90; Hoffman, 1996, p.74-80).
An additional of high said, in English historiography by Kaye (1997. P.120): “The lender by selling probable future profit was selling what in fret did not exist — something clearly against natural law and the requirements of equality. Moreover, the lender was selling what was not his to sell. i.e., die industry of die borrower, which was the real productive cause of any profit from the loan, rather than die money itself”.
The actual decrease in crediting noted by historians in the second half of the 14th century, should be attributed to the crisis in the trade that have been associated not only with protectionist measures of HU but also with a decrease in the flow of silver in Novgorod.
Not accidentally Peter Schofeild & Nikolas Mayhew with The reference of Pamela Nightangle showed that slimb credits on London at 1290 also in seem in general The tribulations and eventual expulsion of the Italian bankers in the 1290s by Edward I from London, but at this period increase average sum of merchant debt until 42 pound. (Schofeild, Mayhew P.82, 77).
Long credit time was 3 month as in London, as in Moscow according my observers. It’s a brief term for service trade turn, but financial professional dealers in foreign exchange could establish conspiracy, as noted Larry Neal (Neal, 2015. P.35-36).
Finally, as shown by P. Spafford, Hanseatic merchants once a year brought the Novgorodian goods from Königsberg in Bruges (Spufford 2003. P. 304.). This allows us to make the first suggestion about the speed of money circulation. The newly created model, called the “the threshold of self-regression” (TAR), has allowed to show the speed of turnover (silver points) on the major southern Baltic routes: Flanders – Lübeck and Flanders – Prussia. It ranges from 8 to 21 months, respectively (Volckart, Volf , 2006. P. 126, 129).
As a rule, two caravans were sent from Novgorod – upon payment of the weight and Hanseatic customs fees according to the winter and summer time (Gramoty .., 1949, p.60). In addition to the Hanseatic logistics on the South Baltic route, historical documents can detect the route of England – Gotland and Gotlnad – (Ladoga) Novgorod, where the main point to foreign merchants was Kotlin(g) Island / Scandinavian: Ketligen, Kattila (Squires, 2009, p.25). Also, here we can completely reconstruct trade turnover consisting of two parts, where, besides the storage costs, we must consider loading and unloading operations, not to mention the pilotage. In this case, it was advised not to indulge pilots and to pay them according to the old measure, which was already very high (Gramoty.., 1949. №№ 29-31, p.57-61).
As seen from the above, the rate of turnover in the Middle Ages depended entirely on commodity flows that they served. In this case, the trade was conducted according to barter schemes, where one type of product was an enriched silver. The number of trade turnovers respectively allows to establish the level of credit support to barter transactions in the trade of Flanders – Novgorod aimed at supplying textiles, horses, wine, fish, and salt.
N = 2x,
where N is a number of funds of a particular commodity position, and x is a credit.
It turns out that the cost of credit included the allowance of trading and banking revenue. This correlates with the provision that the mortgage payments were disguised by different payments such as rent and other (Prevenier, Blockmans, 1986. P. 163-164).
As shown in the article on the effects of LOP, high trade organization, its management and logistics, allowed both the credit markets to exist confident enough and the creditors to build their lending strategy. But we have yet to explore the role and importance of credit in the medieval trade in the Baltic Sea.
Here we come close to solving the parameters of monetary circulation in an enclosed economic area, where the LOP was applied. And further study of monetary turnover could be based on the credit theory of money, which develops J. Stiglitz within the new economic paradigm (2013, p.283-290).
The aforesaid is an example of the use in practice of the medieval merchant union, what was the Hanseatic League, and the Law of One Price, which is currently ranks among the cognitive tools of historical and economic studies (Ogilvie, 2011. P.32; Persson, 2012. P.76. 221-223).
At the same time, the price of silver grew in the domestic market of Ancient Russia by 3-5 times during 200 years. These calculations are comparable with the materials obtained by the analysis of representative data for synchronous medieval history of Scotland, Belgium-the Netherlands (Gemmill E., Mayhew N., 1995; Prevenier, Blockmans, 1986. P. 393).
CONCLUSION.
Study of the possibility of the Hanseatic League functioning, based on the use of LOP, allows us to reveal and explain the price parameters of the Baltic Sea trade. We can also explain the market behavior of trading counterparties, which was determined by price as institutional factor of trade.
This institutional factor has allowed us to deepen our knowledge in the management and logistics of fur delivery from Russia to the West. In particular, we have found that Gotland and Danzig (Gdansk) functioned as transport and logistics centers.
Thus, the material presented in this article will allow us to construct subsequently a synthesized model for further macroeconomic research to obtain data on the trade and payment balance of the Novgorodian feudal republic.
Available material allows us to assume the cost of the entire line of fur products supplied by Novgorod to the HU markets. And the profitability of this business can not but testify about the huge income of the Novgorodian aristocracy. We mentioned above that the mining or natural rent were the source for stabilization funds of resource-dependent economies. The study of modern achievements of monetary theory shows that sometimes the reservation of funds is carried out mechanically, regardless of knowledge of those or other laws of the money market by the actors of the market, as shown by Michael Spence (2013, p.199) on the example of excessive savings. The latter enables us to find the explanation of the nature of gold coins in savings of the Novgorodian nobility at the last quarter of the 15th century.
And finally and undoubtedly, the direct connection between producer and consumer in the countertrade of “fur – silver” certainly would reduce costs and the final price of goods. Therefore, travels of English merchants of the 16th century in Russia through Arkhangelsk via Bergen point to an intensive search for new ways to establish direct trade and economic relations (Attman, 1973. P. 26-27). From an economic perspective, these contacts occurred in the Age of Discoverya and were designed to eliminate the negative effect of rent on the Russian-British trade.
English merchants gained immediate access to the Russian furs.
Thus, this paper examines the economic foundations of the functioning of the medieval Hanseatic trade union.
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About the law of one price in the Baltic region
in the late XIV- early XV centuries.
N.Khan
Authors affiliation: Vyatka archeological expedition, ltd (Moscow, Russia). Corresponding author: Nikolay Khan Kh-niko@mail.ru,
In the article it is shown the participation of the Novgorod feudal republic in the Baltic trade within the Hanseatic merchant Union (HU), bearing the historical and economic nature. Its economic base and tariff policy were not studied. The aim of the article is to reveal the economical mechanism one of the first trade unions and the direction of commodity export flow from Russia to the West. The results obtained by the author on the basis of the analytical use of the Law of One (single) price revealed and justified the cash flows that maintained international trade in the Baltic Sea, and raised the question of the role of rent in the medieval commercial circulation.
At the same time, the main conclusion is that free trade as the most important principle was not violated, and the union contributed to the development of commodity exchanges, preserved prices and contributed to the search of overcoming the monopoly position of HU on the market of certain goods. The latter led to the search for and discovery of new trade routes and communications.
Key words: Medieval economic history, medieval resource base, comparative economic history, international trade, the Hanseatic trade union, tariff and pricing policy, pricing rent, law of one price.
JEL: N73.53, L8, F2, Q270.
[1] Khan Nikolai Alexandrovich (Kh-niko@mail.ru, PhD in History (Candidate of Historical Studies), Member of the Society of Economic History (UK); Head (one of the founders) of the research organization (LTD) “Vyatskaya Archaeological Expedition”; Moscow.
[2] http://www.wto.org/english/news_e/spra_e/spra31_e.htm
[3] http://blogs.wsj.com/economics/2016/11/21/the-donald-trump-trade-effect-watch-the-peso-not-ford/http://www.wsj.com/articles/trump-targets-gm-on-chevy-cruzes-imported-from-mexico-1483448986
[4] Salt was the first commodity of the pre-industrial chemical industry.
[5] Continuous line of the Belgian North Sea coast and the Bruges location at a distance of 10–12 km implied the existence of transfer points.
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