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Monetary credit market in the cities of the southern Baltic coast in the late Middle Ages (Greifswald, Gdansk, Elbing,Toruri, Rewel)

Introduction

The colonization and urbanization of the south-eastern coast of the Baltic Sea integrated these areas into the Latin culture and the European economic system. Settlers from Germany brought along to Baltic cities credit forms and institutions known in Western Europe (Sprandel 1975, p. 55). The 14th century saw a significant development of credit markets. At that time, the purchase of rents became the most popular form of raising and investing capital in cities located on the southern coast of the Baltic Sea. The flexibility of this legal form enabled its rapid evolution and expansion. From the 12th century, lifetime contracts concluded with monasteries to the credit transaction, a fully developed form used in the 14th and 15th centuries. Late medieval source materials, in addition to the basic form of rent transactions, contain information on number of other rent types used according to the needs of counterparties - from perpetual rents, which disappeared in the 14th century, arising when the original creditor sought to recover the invested cash from older rents, through ratione muri rents used in the acquisition or reconstruction of a property, to lifetime rents which played an important role in municipal economy (Kardasz 2013, pp. 31-42).

Social aspects of credit markets in Baltic cities – social structure of the participants

The degree of development of the capital market is one of the basic indicators of economic advancement. The social scope of the market - the percentage of the entire public, as well as individual social and professional groups participating in it - allows us to determine the degree and dynamics of its development, and, in turn, the city and country in which it operates. It is assumed that the wider the group of market participants, the higher the degree of socio-economic development. It is not only the social scope that is important here, but also the degree and nature of market share of particular social and professional groups and institutions (merchants, craftsmen, women and minors, clergy and the Church, as well as municipal authorities).

The condition of the source base and the dynamics of this phenomenon make us dependent on estimates when trying to determine the social scope of the credit market in Baltic cities in the Middle Ages (Cf. Wenner 1972, p. 51). The analysis of credit records shows that a monetary credit enjoyed moderate interest among the society. In Greifswald, over the period 1300-1442, 3,129 people were recognised as being creditors or debtors at least once. At that time, five generations of the town’s inhabitants could be active on the market; in Elblqg, over the period 1330-1417, it was 3,008 people. With some caution, we can estimate the percentage of inhabitants of the studied cities who were active on the credit market at 10 to 20% of the total population. In Greifswald and Rewel, it was about 10%, a higher percentage was recorded in the Old Town of Elblqg (20%).

Debtors prevailed on all studied markets. The percentage of people in both groups was low (5-7%). This clearly demonstrates a specialisation of credit market activity resulting from the economic situation of particular groups. The clear division between those granting credit and those incurring debts was not associated with high prevalence on the market. The majority of both creditors and debtors (50-60%) have granted or taken out a loan only once. However, creditors outnumbered debtors on the market.

The identified merchants constituted from 10 to 20% of market participants but they contributed almost half of the capital to the market. The average value of loans granted by the representatives of this group was a result of its financial capacity and demand for loans. Merchants dominated both among those granting high loans and in the group of those making high financial commitments. This indicates high income and investment activity on the market. However, a significant part of the loans granted by the representatives of this group were small and medium transactions, which proves the influence of demand on the value structure.

The share of craftsmen in the markets was between 10 and 20%. Like merchants, they often appeared on the market only once, yet in contrast to them, they took out debts much more often than they granted loans. The average value of debts and investments, compared to the representatives of the merchant stratum, is much lower in this group. There were some significant differences with regard to wealth within the group, which were reflected also in the nature of activity on the credit market. There were numerous representations of craftsman’s related to trade (coopers), food industry (bakers, butchers), and metal’s craft (goldsmiths, blacksmiths). The representatives of these crafts stood out from the group in terms of the amount of loans taken out.

Women and minors were present on the credit markets of all the studied towns. They accounted for 10 to 15% of all participants. Their market share is characterized by low prevalence on the market and a visible advantage of the granted credit value over debt. Representatives of these groups granted high loans, which, combined with their low prevalence on the market, indicates searching for financial security. The activity of women, chiefly widows and minors, on the market was associated with local factors (e.g. epidemics). With the exception of Greifswald, we do not observe an increase in investments made by these groups in the examined cities in late 1340s and early 1350s, which indicates that they were not directly affected by the plague outbreak of that period.

When talking about the market share of minors, it is impossible to ignore the capital introduced to the credit market on their behalf by municipal authorities. Based on the analysis of the sources from Torun and Gdansk, it can be concluded that there are clear differences in this field. The authorities of Torun, having at their disposal the capital of minors, granted low-interest loans to merchants suffering from the negative effects of the downturn in Hanseatic trade in late 14th century.

Clergy and church institutions were a permanent element of the late medieval capital market. The market share of these groups in the studied urban centres ranged from 0.4 to 15.4%. Representatives of the clergy and church institutions were relatively rare on the credit market - they usually appeared once or twice, mainly as creditors. However, the only exception to this rule were municipal hospitals, which made repeated appearances on the market. The representatives of this group invested large sums of money on the market - this particularly applies to institutions.

Apart from church institutions, municipal authorities were some of the most important institutional participants of the credit market in late medieval cities (cf. Huang 2019). In the studied cities, the share of municipal authorities in the turnover of the credit market ranged from 0.1 to 8.8% in the case of granted loans and 1.4 to 4.7% of the debt value. Municipal councils were mainly active on the credit market as debtors, seeking capital to cover growing expenses. A characteristic feature of their market share is the high value of transactions concluded which could be associated with their high credibility as debtors. However, the market share of municipal authorities was not limited to borrowing only to meet current needs. The example of Rewel’s authorities shows that they sometimes also conducted extensive lending operations related to the investment of capital belonging to church institutions that remained under their patronage.

When reflecting on the social side of credit market in late medieval cities, it is impossible to ignore the question of the allocation of the funds obtained in this way. It can be stated that part of the credit was earmarked for investments - the borrowed money was used, for example for the purchase of real estate, commercial activity, modernisation of the workshop -however, we cannot unfalteringly determine the scale of this phenomenon. In Hoxter, a city in Westphalia, at the turn of the 14th century, only in less than 10% of cases the moment of selling a rent can be linked to the purchase or reconstruction of a house or workshop, and in 50% of cases the debt was the result of a bad economic situation (Rüthing 1986, p. 244). Studies on the rent market in other regions show that non-economic factors such as family situation, marital status or age may have played a significant role in making a decision whether to be active in this field and thus allocate the capital.

 
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