STUDY UNIT 6 - THE MERCHANT ADVENTURERS
In this Study Unit we leave the political scene and look instead at English trade and how it affected, and was affected by, the economy of this country and of Europe, While the economic life of the country followed its course alongside and continually interconnected with the political story, it has different highlights, crises and disruptions The deaths of Kings, which tended to be climacteric moments in the political history of the country, were often quite irrelevant to the flow of the economy.
This Study Unit has the title "The Merchant Adventurers". The Fellowship, or Company, of Merchant Adventurers was formally created in 1486 and consisted of those London merchants who controlled the profitable cloth trade with Flanders. We will see how the fluctuations in trade affected this powerful and wealthy group, and how the changes were reflected in their attitudes and activities.
We will follow the story of English trade into the turbulent days of the 1550's, and take a brief look beyond at the great expansion of markets which took place during the reign of Elizabeth I.
The cloth trade.
Throughout the Middle Ages the main English export had been wool. English wool was the best in Europe and had been highly prized on the Continent, where it had formed the raw material for the great cloth industries of Flanders and Northern Italy. But during the century and a half before Henry VII came to the throne, England had been developing a cloth industry of its own.. By Henry VIII's reign, the English carried about ten times more cloth than raw wool in the great twice or thrice yearly shipments to the fairs in and around Antwerp.
The cloth was sold in lengths - officially 24 yards long, but often quite a bit longer. There was really little standardization despite official attempts to impose it. Besides the woolen cloth which made up the bulk of the exports, there were a variety of other different sorts and qualities of cloth; light kerseys, coarse "dozens", friezes, and the northern "cottons" which were much cheaper materials.
The growth of the cloth trade throughout the first half of the sixteenth century was steady and, until the boom following the debasement of the coinage, which we will, consider later, just short of spectacular. Early in Henry VII's reign about 50,000 lengths of cloth were exported per year. By the last years of Henry VIII's reign about 120,000 were taken over to Antwerp, and even more were sold during the boom years.
To feed this cloth industry, it has been estimated there were three sheep to every person in England. The trade in cloth was an easy and profitable one and consequently it grew steadily, until the whole economy was heavily dependent on the sheep. A. large proportion of the population relied on the state of the wool and cloth trade for their livelihood: from shepherds to those involved in the cloth industry, from cloth-dealers to the Merchant Adventurers.
The wool travelled from the backs of the sheep to be made up into cloth by either workshops in the towns controlled by the gilds, or, as was more and more frequently the case, by individual workers in the country outside the gild restrictions. Those outside the towns and gild control were able to work with just the needs of the markets in mind. The gilds tried to ensure that the cloths made up by their workers were then 'finished' (dyed and made up into articles of clothing) by other members who were traditionally involved in 'finishing' processes. The trouble was that foreigners had little respect for English 'finishing' and much preferred to buy raw cloth. Thus the country workers found that the cloth-dealers who bought up cloths around the country for delivery to Blackwell Hall - the Merchant Adventurers' headquarters in London - preferred to buy from them, because they were not restricted by gild regulations and were quite happy to produce unfinished cloths. The government too tried to ensure that English 'finishers' should work on English cloths before they were taken abroad, and laws were passed at regular intervals to prevent too big a proportion of unfinished cloths being exported. The merchants, who knew what theli markets wanted, simply ignored the legislation.
From Blackwell Hall the cloths would be carried across the North Sea by the Merchant Adventurers, or by men they hired, and taken to the fairs around Antwerp. There they would be laid out. on specific days and buyers from all over Europe would come to look them over. The wool which started on the back of an English sheep might finish up on the back of almost anyone in Europe.
Profits were good for the Merchant Adventurers. Their money was made on the sale of their cloths abroad. They made little on the goods they sometimes bought in Antwerp and re-sold in England. During the 1520's and 1530's the average profit seems to have worked out at between 15 and 25 per cent0 This meant that a man could expect to double his money in four or five years.
All this growing prosperity, however, was precariously based. It depended almost entirely on the sale of a single commodity - cloth - in a single market, and if anything went wrong with that market, or with the commodity, the whole economy would be in trouble. This is just what happened.
The trade might have continued in its dull, routine and profitable way had it not been for the dramatic effects of the rise in prices which was being felt all over Europe, and Henry VIII's debasements of the currency which brought the English economy to the brink of chaos.
The company and politics
A "Merchant Adventurer" was one who traded with foreign parts. The Company of Merchant Adventurers, formed half way through the reign of Henry VII, consisted of those men who controlled the cloth trade. Their aim in forming the Company was to ensure that no merchant not belonging to the Company should get any of the profits from trading in cloth. They tried to keep out other merchants by fixing the fee for membership so high that none of the less wealthy merchants from ports outside London (known as "outports") could afford to pay it. Henry VII had to intervene and reduce the fee, but in so doing he acknowleged the right of the Company to charge onee There was some justification for a reasonable fee, because the Company had to pay for the upkeep of various offices and centres in London, and others in Antwerp (London dominated the cloth trade, as it dominated all foreign trade by this time All the other ports together handled only about 1/10 as much trade as London. ). As well as the Company's need to finance various offices, it was absolutely necessary to have a strong organization to back up commercial ventures at that time. The individual merchant stood little chance of surviving against the trading organizations - like the German Hanseatic League in the Baltic, or the Venetians. in.. the Mediterranean - and a trader putting into a port which a trading organization felt was "theirs" might find himself negotiating by cannon.
The Merchant Adventurers were not a Company in the sense we tend to understand the word. They were unlike the joint-stock companies ( of whose development we will see the beginnings ) in that they traded individually. They did not pool their resources, except on occasions when they hired protective ships when there was danger from pirates. They bought individually from sources they found for themselves, and they negotiated their buying prices separately. Once across in Antwerp they sold their cloths separately, and decided for themselves whether or not to invest the money they made in other goods which they could import into England and sell when they got back.
At the end of the fifteenth and beginning of the sixteenth centuries everything seemed to be going well for the Merchant Adventurers. In 1496 Henry VII had negotiated a favourable trade treaty, the "Intercursus Magnus", with the Archduke Philip of Flanders, which was to benefit the Company enormously.
A further advantage the Merchant Adventurers enjoyed during Henry VII's reign was the smallness of the customs tax on cloth. During the Middle Ages Kings had continually increased the tax on wool, till by 1485 the tax amounted to about one-third of the value of the wool itself, whereas cloth which was a relative newcomer to the customs was taxed a barely noticeable 3 per cent.
The price rise and debasements.
During the first decades of the sixteenth century England experienced a gradual price rise. The price of goods depends on the relationship between money available and goods available. If there is not much money but plenty of goods prices are low If there is a lot of money but not many goods prices are high. The causes of the sixteenth century price rise, like any large scale economic event, are very complex and even now not fully understood. One clear cause, however, is traceable. That was the influx of silver to Spain from her newly-won territories in the Americas. There was no increase in the production of goods in Spain, so the increased amount of money available led to a price rise to balance it.
This situation made trading with Spain very profitable. During the 1520's the rise in prices was affecting Spain before other countries, so an English merchant could buy goods cheap in England and sell them at the higher price normal by then in Spain. Thus the English merchant made his normal profit and also the difference between prices in Spain and England.
Because of the heavy trade between Flanders and Spain it was not long before the price rise hit Flanders. The profits of the Flanders merchants soon increased the supply of money in relation to goods there too, helped also by trade with Germany, where the increased output of German silver mines contributed to the same effect. Again the English merchants stood in a position of advantage. As the price rise in Eng- land was still less rapid than in Flanders, the English merchants could continue to buy goods relatively cheaply in England and sell them for the higher prices prevailing in Flanders,
This state of affairs continued throughout the 1530's when despite some early trouble with the Emperor, Charles V, ruler of Flanders, the Merchant Adventurers enjoyed smooth and profitable business. They were helped by the encouragement and policies of Thomas Cromwell, who himself had been a merchant and had close connections with the Adventurers, The growing prosperity and wealth. of the English merchants, and most of those connected with cloth and wool, began to drive English prices up ever more rapidly - to the consternation of those who were gaining no profits to compensate for the increases in prices.
After the execution of Thomas Cromwell in 1542, Henry VIII took upon himself the responsibility for guiding the policies of his realm. The economic policies he pursued were short-sighted and disastrous. Involving himself in costly wars, he quickly exhausted the fortune Cromwell had made available to him, and so adopted the plan of debasing the coinage. He reduced the amount of silver in the coins, keeping the silver thus saved in his Treasury. The coins were now less valuable, and there was consequently less real money available while the quantity of goods was steadily increasing. So, suddenly prices in England shot up sharply, causing confusion and havoc throughout the country.
One immediate result of the debasements however was that the Merchant Adventurers gained enormously. In 1522, the £ English was worth 32/- Flemish, but by 15.51 after the devaluations it was worth only l3/4d This meant that if an English merchant paid £1 for goods in England he would, in 1522, have asked 32/ - (plus his profit) for them in Antwerp, whereas in 1551 he asked only 13/4d (plus his profit). So while the devaluations hit the English currency at. home, it made exporting much easier since the dealers at Antwerp were able to buy the same goods at half the 1522 price.
Because of the cheapness in their selling price, English merchants found they could sell as much cloth as they could carry, and there were complaints from abroad that short sizes and inferior cloth were being sold: an indication that English merchants were taking across everything they could lay their hands on, sure of a ready market
But in 1551, after social unrest and riots, the Government took steps to reform the value of the English coinage. Once this had been done it became much more difficult for the merchants to sell their goods because they now had to ask higher prices to recoup the cost of the more valuable money they had paid out in England. During the boom years the merchants bad encouraged the expansion of the cloth industry, and it had responded by increasing its output enormously - only to discover in 1551 and the following years that there was suddenly no market for the increased output. Producers were angry, many independent cloth makers ruined, and even the merchants, finding themselves with more cloth than they could sell in the normal markets of Antwerp, were desperate to find new outlets.
The diversification of trading efforts.
Largely because of this crisis, we see in the 1550's the first really adventurous voyages from London in any quantity. The ease and ensured profits of the London-Antwerp trade made the London-based Merchant Adventurers reluctant to try further abroad. Earlier adventurous trading voyages like those of the Bristol merchants to Newfoundland, or Plymouth merchants to South America, were nearly all undertaken by 'outport' merchants who were excluded from the cloth trade to the continent by the self-protective policies of the Merchant Adventurers' Company.
Earlier in the century, for political reasons English merchants had been discouraged from seeking new markets around Africa to the south, and to the Americas in the west. The Tudor throne had needed the support of foreign monarchs, and so the newly found 'empires' of Spain and Portugal had been left alone. But by the 1550's relations with Spain were growing worse, despite Queen Mary's marriage to Philip II of Spain, and the need for new markets made English sea-men less inclined to respect Spanish and Portuguese 'property'.
With the trade collapse after the reforming of the coinage came a spate of voyages along new routes. Much of the money to pay £ or these more risky adventures came from the tremendous profits made in the years between the debasements and the reforming of the coinage.
Attempting to find a passage round the north east of Europe to India, and its spice trade, English merchants found instead the great Russian Empire, and entered into trading relations with Ivan the Terrible. Contact was made with the Levant (the eastern end of the Mediterranean) where spices from Asia came through to Europe. With the weakening power of Portugal in the Indian Ocean, more of these Asian spices were finding their way overland.
Soon trade was carried on with North Africa and Guinea. Expeditions went to North America, again looking for a way to India. A new line in English trade was struck out by Hawkins, who raised money in London for expeditions to West Africa to buy slaves from native rulers. He then crossed to the West Indies or the Spanish Main, where he made large profits selling the slaves, and returned home with full holds of American goods.
Many of the expeditions of these years ended in failure, as trading also involved a possibility of fighting and the probability of becoming involved in politics. Merchants often had to negotiate rights to trade from various rulers - for which rights they might have to pay dearly. Occasionally, especially in Spanish or Portuguese possessions, merchants ran into local administrators who refused permission to trade, and so they were left with the choice of simply moving on empty-handed or fighting their way into the ports where there might be people only too ready to trade with Englishmen, or anyone, provided they carried goods that were wanted.
Protection.
After the crash of 1551 and the following years, the Merchant Adventurers continually lobbied the government for protection from the economic consequences of reforming the coinage. Sir Thomas Gresham brought help in the form of a reorganization of the Merchant Adventurers' relationships with the State and with the 'Staple' town of Antwerp (the town at whose markets all the cloth was sold, in exchange for certain privileges). He gave the Company the monopoly in the export of white cloth for which they had struggled so long. But for these privileges, protected by the government well into Elizabeth's reign, the Merchant Adventurers' Company was heavily taxed in the same way is the wool merchants during the Middle Ages. Throughout the latter part of the century the Company concentrated on consolidating the gains it it had won, trying to protect their government-given rights from 'interlopers' who
tried to trade with Antwerp despite the Company's monopoly. Again, over the problem of interlopers, they turned to the government demanding protection.
Later, in Elizabeth's reign, the Company introduced 'stints'. That. Is, they allowed only a certain amount of cloth to be exported, and by this means tried to keep prices high and preserve and protect their sure sales and profits. But while they continued theit routine and especially after the destruction of Antwerp in 1576, their slowly declining trade with the nearby continental coast, the foundations of greater things were being laid around the world.
New adventures and adventurers.
The 'joint-stock' companies which were formed in London wet e made up by men and women risking an investment of money in expeditions to all parts of the world, On the completion of the expedition - in it. were successful the profits were shared out according to the investments made, or sometimes held over to equip a bigger expedition. By such means Hawkins and Drake found the money for their adventures. Many were just excited by the prospect of quick returns from attacks on Spanish treasure ships, or hopeful that, they too might find gold and silver' somewhere with the ease and in the abundance that the Spaniards had.
The step from respectable trader to buccaneer was not very great in these times. Every merchant ship would be armed, and what was permitted in English law might be Illegal in Spanish. Drake's adventures made him a hero at home, and respectable enough to be knighted by the Queen herself, whereas to the Spaniards to whom he caused terror he was nothing but a pirate. Those were violent times, and while the force of law was spreading on land, there was no law on the open sea that everyone would respect. The law of the cannon ruled.