Monopoly power in Germany in the 1500s

(written by lawrence krubner, however indented passages are often quotes). You can contact lawrence at: lawrence@krubner.com

An amazing bit about the politics of fighting monopoly in Germany in the 1500s. I can imagine the merchants did a lot to keep Germany fractured as it helped them. No united government to impose strict rules on them.

The end of the fifteenth century witnessed Germany’s high noon of prosperity. Old and insignificant towns like Augsburg Nuremberg and Ulm blossomed forth into wealthy and populous cities. The great merchants vied with princes and kings in magnificence and luxury. Their gardens palaces and entertainments were the envy of the poorer nobility. Aeneas Sylvius writing in 1458 says: “We proclaim it aloud Germany has never been richer or more prosperous than to-day. She takes the lead of all other nations in wealth and power One can say truly that God has favored this land above all others On all sides are seen cultivated farms cornfields and vineyards and gardens Everywhere are great buildings, walled cities and well-to-do farmers.” Jacob Wimpheling, the famous humanist, declared fifty years later that Germany was never more prosperous than to day and she owes it chiefly to the untiring industry and energy of her people artisans as well as merchants. The peasants too are rich and prosperous.” The desire for wealth became the all absorbing passion and we find the popular preacher Martin Butzer denouncing the materialistic spirit of the time. “All the world,” he says, “is running after those trades and occupations that will bring the most gain. The study of the arts and sciences is set aside for the basest kind of manual work. All the clever heads, which have been endowed by God with capacity for the nobler studies are engrossed by commerce, which nowadays is so saturated with dishonesty that it is the last sort of business an honorable man ought to engage in.” The headquarters of German capitalism was the city of Augsburg which because of its situation acted as a distributing center for all Eastern goods received from both Lisbon and Venice.

But the importance of ports and trade routes shifting. Venice, which was relatively close to German merchants, was declining while farther-away Lisbon was rising. Doing business at this greater distance tended to favor the larger German merchants, who could afford to have dedicated representatives in Lisbon to manage their transactions, warehouses, and shipping. As Schapiro explains, this shift provided a launching pad for Germany’s wealthier merchants to act as price-fixing monopolists. He wrote:

The wealthier merchants quickly took advantage of this condition and organized themselves into associations or “companies.” At first they united for the purpose of buying and transporting in common in order to reduce expenses; but very soon they united for the purpose of selling as well. These associations quickly developed into monopolistic combines that controlled the entire Asiatic trade in and arbitrarily fixed the prices of all Eastern articles. The small merchant found himself crowded to the wall. All methods familiar to monopoly everywhere and at all times were used to drive him out of business.

The monopolists defended themselves using language that sounds very modern:

It is impossible to limit the size of the companies for that would limit business and hurt the common welfare; the bigger and more numerous they are the better for everybody. If a merchant is not perfectly free to do business in Germany he will go elsewhere to Germany’s loss. Any one can see what harm and evil such an action would mean to us. If a merchant cannot do business, above a certain amount, what is he to do with his surplus money? It is impossible to set a limit to business and it would be well to let the merchant alone and put no restrictions on his ability or capital. … Some people talk of limiting the earning capacity of investments. This would be unbearable and would work great injustice and harm by taking away the livelihood of widows, orphans and other sufferers, noble and non-noble, who derive their income from investments in these companies. Many merchants out of love and friendship invest the money of their friends–men, women and children–who know nothing of business in order to provide them with an assured income. Hence any one can see that the idea that the merchant companies undermine the public welfare ought not to be seriously considered. …

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