Chapter 21
Anna Paulina Orłowska
Introduction
While analysing the town books of Gdansk, Cezary Kardasz presumed that the merchants of Gdansk had either no financial surpluses or were not interested in investing into short and middle-term credit as those credits were only rarely mentioned in the town books (Kardasz 2013, p. 115). In this chapter, I would like to demonstrate that, on the contrary, a merchant of Gdansk used a multitude of credit forms due to the development of pragmatic literacy. Those private credits were, therefore, not registered in the town books and their variety is often not recognized enough in the historiography.
This chapter is a case study based on a merchant account book. This microhistorical approach offers us insights in the diversity of credit forms and allows to examine the functioning of credit in its full extension hence, in the merchant account books, we can also find information on credit on small sums, as well as given in the informal way and under the circumstances of high level of trust.
The merchant and his book
The merchant in question was active for 35 years, from 1421 till 1455, the year in which he probably died. He spent all this time in Gdansk where he lived in houses of city’s aldermen. Although his origin is unknown, what we know about him is that he neither got married nor had children and in 1421 he immigrated to Gdansk. Due to his language, we can assume that his birthplace in the south-eastern part of the Baltic Sea basin is very likely. The man was rather a middle-range merchant with a maximum of the annual turnover of 6,500 Mark Pr (Stark 1985). His main economic activities involved trading along the East–West axis typical for Hanseatic trade, connecting his partners from Riga and Prussia with counterparts in Flanders and Lubeck. He also traded intensively with English merchants and maintained various contacts with Lithuanians from Vilnius. The range of his merchandise was very wide, covering fishes, grains, oils, fats, leathers, beverages, clothes, spices, metals, and wood but the four most important groups were wax, furs, cloths, and salt (Slaski 1905; Schmidt-Rimpler 1915; Stark 1985; Orłowska 2020/1).
The primary source for the analysis of his activities is his account book preserved in the Gdansk archive (Archiwum Państwowe w Gdańsku). It is a paper notebook bounded in plain leather, containing 113 sheets and three additional pieces of paper, two of them were issued by the merchant’s partners. Nearly all entries of the book were written by one hand and in Middle Low German, in a version typical for the south-eastern part of the Baltic Sea basin.
For years, this account book had been the only source of information about its author and his business activities. He never wrote down his name but, in a promissory note preserved in the book, he was named as the creditor. On this basis, he was identified as Johan Pisz. After having analysed all town books of Gdansk from the given period of his activity, I was able to correctly determine his name as Johan Pyre (also written as Pyr or Pire). This name is repeated a few times in the primary sources in Gdansk, however, it was not found in any documents outside of this town. The information from further primary sources offers us additional clues and allowed to refute some of the hypotheses regarding the merchant but his account book remains the main source to examine the business activities of Pyre.
The question is what was the practice of using a credit in everyday life of a merchant? To better understand the limitations of examining the credit notes in the merchant book, a short description of the accounting techniques shall be provided.
The bookkeeping
Pyre structured his notes in the typical North German fashion which means that he largely worked with slips of paper on which he made notes (‘Zettelwirtschaft’) (Arlinghaus 2002). They were kept inside a book by a fold-over flap. Only the most relevant or long-term transactions were registered in his merchant book. Unfortunately, with two exceptions, those slips of paper were lost so that we only have his book at hand. This way of taking and keeping notes was very common for merchants of the Hanseatic region who, unlike their Italian counterparts, noted also only a minority of their transactions in cash and this rule applies also for Pyre’s bookkeeping (Arlinghaus 2000).
Furthermore, he employed a typical North German notation style but in an extreme shorthand of his own creation as he did not mention his name nor even a praenomen and he also omitted some verbs and did not properly register the dates of transactions (Tophinke 1999). Pyre also tended to omit the word ‘schuldich’ (‘due’) as he wrote, for example: ‘Item soe ys my Hans Monyk ½ mk’ (‘therefore Hans Monyk is [due] to me ½ mk’) (Orłowska 2020/2, 95v 6).
Pyre started writing his merchant book in a quite traditional way, trying to use some techniques regarding the double-entry accounting. Therefore, during the first years, he annotated personal accounts and multiplied entries about diverse transactions in which a growing number of partners were involved. However, already in the fourth year of his economic activity, 1424, he introduced a major change and arranged the notes according to the transactions and not to his business partners. In this new system, all the data regarding one transaction was written down in direct vicinity. The final due was clearly put at the end of a note, also in typical North German fashion (Tophinke 1999). The final due was usually calculated in the local currency poor Mark Pr.
The merchant split the transactions into two main categories – the simple purchase and sale transactions as well as more complicated transactions. The latter, he used to place in one segment of the book and described usually in a traditional way, one transaction after the other, using merchant signs of his partners in the headline of notes for a quick recognition of the notes. He developed a different system for purchase and sales. This system, called Methode der Gegenseiten (‘method of opposite sides’), was unique and very innovative (Schmidt-Rimpler 1915). The merchant registered all the details of a given transaction on the left page of the book and the information including the name of the trade partner, the description of the merchandise, the amount, the price per unit, the sum to be paid, the payment date and, in some cases, also the date of the transaction, and further details. He did not have to leave any empty space underneath the note, contrary to other merchants of the same period. He instead described the next transaction directly under the previous one. The details of the payments were noted on the right page, parallel to the description of a transaction. As the details of a payment were usually shorter than the description of the transaction, he had enough space to elaborate on even most complicated payment processes. This is how he avoided the problem of lacking space for the description (a problem which led other merchants to write down this information in randomly chosen empty spaces in their books). This approach allowed him to maintain a clear structure and to diminish disarrangements. Additionally, such a structure better fulfilled the function of memory aid and allowed to omit details of the notes such as dates.
Since Pyre was able to collect all details of a given transaction in the same place, so that they followed each other chronologically, he could retrace them at a glance. This made noting down dates largely redundant which is why Pyre’s merchant book contains few time stamps – usually at the beginning of each page and, on average, one more in the middle of the page. The book in its final state therefore contains mostly crossed-out notes without any temporal data on when a transaction was initiated and when it was paid. Thus, determining those dates is challenging and often downright impossible.
The main influence on whether a note contained both a date of the transaction and a due date was its position in the book and on the page. As the entries at the top of a page were usually dated, they contain both dates with a higher likelihood. In addition, Pyre dated his notes in the middle of the page (usually about the tenth note on a page) more often when a larger amount of time had passed since the date at the top so that his memory needed another prompt. Furthermore, Pyre dated almost half of the entries in the last ten years of his activities with both dates, the majority of which in the last five years. Since Pyre also reduced his activities in this time frame by reason of the loss of faculties due to aging, this trend can be attributed to dealing with his decreasing memory. The net effect is that the portion of dated transactions was many times higher in those last years of Pyre’s life.
Credit
As the Hanseatic merchants have rarely noted the cash transactions, most of the entries in Pyre’s account book describe credit transactions. He used a variety of credit forms such as cash credits, trade credits, annuities, and so-called wedderlegynge. The loan was described either with some form of verb ‘lenden’ (‘lend’) or with the adjective ‘schuldich’ (‘due’). However, it occurred very often that the credit transaction was not explicitly described but can be interpreted from the merchant’s remarks.
Cash credit
Pyre mentioned cash credit he granted or received in more than 130 instances. The sums varied a lot, from just half a Mark to up to nine hundred Mark Pr.1 Usually, no collaterals were involved, neither in the form of deposits nor with warrantors. The omission of securities might be due to the fact that all those credits were granted within existing business relationship. Nevertheless, promissory notes could have been used in addition (which will be explained below). A significant fraction of Pyre’s credit transactions was processed in foreign currencies. We can assume that some monetary loans could have been granted to permanent business partners when they suddenly needed a specific currency. The paybacks were either in the same currency or in Mark Pr. Therefore, in some transactions, the credit in foreign currency evolved into currency exchange.
Unfortunately, it is not possible to deduce the interest rate in spite of the notable number of mentions in his book because Pyre did not use to add information regarding the loaned and the paid back sum, and the complete dates when the credit was granted and cleared.
Credit in commodities
In Pyre’s merchant book, we can observe that he used to lend and borrow not only coins but also commodities. The description of such transaction is very similar to the description of cash credits. In 1423 he noted ‘Item noch Hans gelent 500 clesemes, ed stont 30 ½ mk. Item noch gelent 1 gulden sware krone [ed stont] 6 ferd’ (‘Furthermore, I lent Hans 500 [furs], it was 30,5 mk. Furthermore, I lent [him] 1 gold heavy crown, [it was] 6 ferd) (Orłowska 2020/2, 3r 10). Such transactions could occur similarly to the transactions regarding foreign currencies, when particular merchandise was needed, that the merchant did not own. Consequently, in 1445, Pyre should provide wax to Bernd Pynyg but he was not able to purchase enough wax before the delivery so he borrowed one piece of wax from Hynryk Vosse ‘Item soe lende my Hynryk Vosse 1 stucke wasses, dat Bernd Pynyg untffenk […]’ (Orłowska 2020/2, 82v 5). As it happened with currencies, the return could be done with the same merchandise or later paid up, converting a loan into a simple sale.
Trade credit
An even significantly larger portion is the trade credits. While Pyre only explicitly noted that a payment was done on borrow (‘tho borge’) in five transactions (Orłowska 2020/2, fol. 68r 1, 71r 7, 91r 13, 106r 9, 107v 6), analysis of the source, however, demonstrates that most of the sales and purchases were done by borrowing. Thus, the number of implicit trade credits constituted the majority of entries in Pyre’s merchant book.
There are only roughly 25 records per year in which any date is mentioned, however, it is usually the day of payment. Only in 71 transactions (ca. two per year) both the date of the transaction and of the payment were recorded.
The spread of the payment periods is huge and varied between 14 to 289 days. The median was 99 days, the average 115. If the payment should be done in two rates, the first payment was, on average, due already on the 71st day, the second on 138th day. However, there were only six fully described cases of payment with two rates so that the analysis of this type of payment has to be done very prudently. Even if we examine all the cases with two requitals, including those where the day of the payment was not noted, there is no pattern regarding merchandise or the size of a transaction. The only pattern that can be observed is that the business partners were usually living in Gdansk which probably made the split payment easier as no additional effort or cost of money transfer arose.
Within these 71 transactions, for which both the date of transaction and payment were noted, 11 partners are named twice, seven of them traded additionally with the same merchandise so that ceteris paribus a comparison can be made. The hypothesis was that the development of the transaction should have influenced further transactions: the more punctual the repayment was the better conditions should be offered in the second transaction. This assumption turned out to be false. Neither the price of the merchandise nor the length of the payment period changed in favour of the punctual partner or got worse for partners that were very late with their first payment. The only exception is the monger Herman van Eymken, who bought oil twice. As for the first transaction made in 1448, the amount was small and the payment period very short as it spanned only over 21 days. One year later, he bought threefold and the payment period was extended to 283 days. Furthermore, in the second transaction, his surname was also noted while, in the first one, he was described only by his given name and occupation (Orłowska 2020/2, fol. 77r 7, 75r 9). However, it has to be admitted that all partners with the exception of monger van Eymken were Pyre’s long term partners and thus trust could have been established and, therefore, the delayed repayment had no influence on the relation.
The current date of a payment was documented in approximately every tenth note (Orłowska 2020/2 fol. 68r 7, 69r 5, 74r 5, 75r 1, 76r 1,2, 106r 6). The analysis of these seven cases has not revealed any patterns other than that the requital was never on time. The payment periods varied from 57 to 218 days, the requital was late by at least eight days with a maximum of 333 days (14–222%). Even very late remunerations were not higher than the sum named in the loan transaction therefore the delay in repayment was not punished with an additional fee.
The payment scheme of these seven transactions reflects the majority of the cases, however, in some cases, the debts were paid before the due date. The date of debt clearing was much more determined by the presence of the debtor, or one of his partners, in Gdansk than by any calculations. Therefore, dates were seen rather as indices than as strict terms. Sometimes, this ambiguity is obvious by the definition of the date. In a number of transactions, Pyre noted that the payment (or delivery) should be done in spring with the ‘first open water’, when the water is free from ice (‘toe betalen op ed vorjar met den eyrsten oppen water’, Orłowska 2020/2, 83r 12). The further case, in which this term was used, shows quite clearly the understanding of payment dates as Pyre noted ‘to be paid on Easter, with the first open water’ (‘op Ostern betalen med dem eyrsten open water’, Orłowska 2020/2, 84r2). This is one of the reasons why Easter was the second most popular payment date and was chosen 75 times. Nearly as popular as Easter was Pentecost which was mentioned 72 times, followed by the date of the only annual fair of Gdansk – St Dominic (August, 4), that was chosen 70 times. St Michael’s Day (September, 29) was the most popular date in Pyre’s business, chosen 84 times, and the second popular date of clearing, St Martin’s Day (November, 11) selected 64 times.
Often, credit was also repaid in different rates than initially agreed upon, usually divided into more but smaller rates. In addition to the local currency, Mark. Pr., payments were often made in foreign currency or in different currencies at the same time. Pyre’s descriptions of such payments clearly demonstrate that the use of coins was purely conceived in the amount of precious metals. As we could prove, he was able to quantify the gold content of the coins as he correctly appraised the price of gold coins of rapidly changing quality. He often just noted the type of metal and their converted value in Mark Pr. Rates were often cleared with debts of other merchants thus a debtor paid his dues by having one of his own debtors pay them. The debt clearing could include multiple stages. Despite this convolution, the portion of debts paid was very high so that very few credits in the merchant book remained unpaid. This demonstrates the enormous importance of reputation and credibility to a Hanseatic merchant.
Warrantors, promissory notes, entries in town books
Due to such high reliabilities, warrantors for credits rarely play a role in Pyre’s merchant book. There were only two situations in which Pyre used a warrantor. A promissory note, on the other hand, was much more common.
Johan Pyre’s merchant book constitutes a valuable example of the prevalence of promissory notes in the Hanseatic sphere. A detailed analysis of his documentation offered only scarce evidence of using a promissory note or a demand for payment. Pyre called those papers ‘letters’ (‘breyve, breyffe’). The most interesting case, where a promissory note was used, occurred in 1437: Pyre paid 100 Mark Pr. to Tomas Schenkendorp for a promissory note issued by Nychawes Otten, which had initially been issued to Hynryk van den Berge. This transfer of the promissory note is the first known example of such a procedure.
However, transferred duties are relatively often present in Pyre’s merchant book. Due to its convenience, this pattern emerged especially often with business partners who did not travel to Gdansk and therefore could use promissory notes to move capital from afar.
The use of promissory notes must have drastically exceeded the cases in which Pyre registered them. How they were employed can be seen with the promissory note which remained in Pyre’s book and helped to identify his name (Orłowska, 2020/2, 66v). Said note is not mentioned anywhere in the book. The transaction connected to the note can be identified (Orłowska 2020/2, 67r 1) but Pyre did not consider the use of a promissory document noteworthy. Thus, the use of promissory notes and transferred promissory notes was such an ordinary occurrence that it often did not even make it into our sources. This could cause an illusion of their rarity and create an image of a credit-unfriendly Hanseatic League.
The other method to guarantee the payment was to register a debt in the town books. In the case of Pyre, who was commercially active for 35 years and involved in the multiple credits and loans, there is only one mention in the town books as, in 1442, Vincentius Schulte confessed in front of judges that he owed Pyre 64 Mk. Pr. (Liber scabinorum, 1435, ff. 359v). The conditions of payment were very generous, as the first rate of 24 Mk. Pr. was expected to be paid after more than a year, at Easter of next year, the second and third should also be paid at following Easter, respectively. Vincentius Schulte was not mentioned in the merchant book of Johan Pyre nor was he very well known in Danzig as he is mentioned only twice in the town books. These two factors – the limited relation and the very unusual scheme of repayment spread over three rates and three years – could be the argument for the choice of credit guarantee.
Regarding the land register, Pyre mentioned having three entries in this register. However, the entries from the 15th century were erased in the book of land register which is the reason why we cannot confront his notes and entries from the land register (Grulkowski 2009).
Life annuities
Pyre acquired an annuity for life three times. All transactions were made in summer and autumn of 1453, two years before his death, probably when he struggled with health problems. In all those cases mentioned, the life annuities were paid out in money. On the other hand, the purchase price was not covered in coins but in goods. Therefore, those annuities can be considered as a delayed payment for goods sold by Pyre.
The first transaction entailed two purchases of one bale of cloth each which Peter Bemen bought on June 24 and July 12 (Orłowska 2020/2, 68r 5, 6, 67v, 5–6). The total value of both bales was 865 Mk. Pr. Peter Bemen promised to pay 100 Mk. Pr. per year, each on St Martin, November 11. The interest rate was set at 12.12%. Pyre noted that the annuity was secured by an entry in the town ground book so that Peter Bemen’s real estate functioned as collateral. This runs in parallel with the currency flow in Prussia because the sum noted in official town sources had to be expressed in good Mk. Pr. (as opposed to the lower quality variety of the poor Mk. Pr.) which Pyre mentioned in his notes. For his convenience, he also wrote down the amount in poor Mk. Pr. which was more commonly used in mercantile practice.
The second transaction is worth analysing because the annuity was not fixed during the initial purchase but rather agreed upon as the payment was due (Orłowska 2020/2, 68r 8, 67v, 8). On August 2, 1453, Jacop Vligen bought 12 pieces of Russian wax from Pyre which cost 476 ½ poor Mk. Pr. minus 4 ½ Schilling Pr. After the first rate of 150 poor Mk. Pr. had been paid, Vligen and Pyre agreed on a life annuity. 229½ poor Mk. Pr. should be converted into an annuity sum with an interest rate of 11.33%. The annuity was to be paid to Pyre in rates of 26 Mk. Pr. The due dates were not specified. Similar to the case above, the house of the debtor served as collateral, recorded in the town book as a guarantee. The remaining 97 Mk. Pr. minus 4 ½ Schilling Pr. were paid by regular means.
The last transaction was initiated on September 8, 1453: Leyffart Blomendael bought one bale of Merdesches worth poor 215 Mk. Pr. (Orłowska 2020/2, 67r 3, 65v, 3). In this case, the payment in the form of an annuity was also agreed upon later. Pyre wrote down neither collateral nor the height of the rates or their due dates. Yet, he noted that he was paid 15 Rhein Gulden (ergo 17.5 Mk. Pr.) on St Michael in 1455. Below that, he remarked that 27 Mk. Pr. were still due. If this was the annuity rate or a different debt, it cannot be determined due to the brief note. Thus, we cannot determine the interest rate.
Furthermore, in this entry, Pyre clearly defined what a life annuity is: ‘when I am dead, it shall be dead, too’ (‘wan yk dœt sye, soe sal ed ok dœt syen’). He states the central concept of an annuity for life: it ends with the death of the recipient. The interest rate of two of those life annuities was 12.12% and 11.33%. Thus, they were set significantly above the interest rate common in Gdansk in that period, which was approximately 8.3% (Grulkowski 2009). On the other hand, this fits the pattern which C. Kardasz identified for annuities for life – i. e. a higher age resulted in higher interest rates (Kardasz 2013). In addition, Pyre had a strong stance in the negotiations since all those annuities were agreed upon as payments for already existing debt and he could just as well have demanded immediate payment from a debtor in line with the original contract.
As a result, we can observe that Pyre never paid for the purchase of life annuities in hard currency, instead, they were used as a form of payment that Pyre used as an indirect exchange for his merchandise. As most of the time this kind of payment had not been written into Pyre’s original note but came up over the course of a business venture, the reasons for this change should be better investigated. They might simply reflect a temporal lack of liquidity of the relevant business partner.
Wedderlegynge
The wedderlegynge constituted the typical form of passive income in the Hanseatic League and was also a form of loan given to a young merchant in order to allow him to run his own business, in most of the aspects similar to comenda (Cordes, 1998). This traditional form of business was implemented by two partners, one of which purely offered capital (socius dormiens) while the other took the holdings of the wedderlegynge with him to travel and trade. The partners usually contributed in equal parts to the capital of the venture. Since the socius dormiens did not take part in the activities, merchants mainly employed this type of capital investment in their later years. They were even employed by people who were no merchants at all. This was largely due to the low risk of such an investment.
Four instances of wedderlegynge can be identified in Pyre’s merchant book. Atypically, they were formed in the first phase of his activities, rather than as a capital investment at a higher age. The founding capital of those wedderlegynge differed a lot: 29.5 Mark Pr., 82 Mark Pr. and 150 Mark Pr. In one case, the founding capital cannot be reconstructed. In three cases, neither the duration nor the profits can be determined. The wedderlegynge with Steven van Ummen constitutes the exception from this rule: his business with Pyre was already documented in 1421. It lasted until 1425, id est five years. Over the course of those five years, van Ummen and Pyre made 213% of the profit.
Conclusion
According to what Agnieszka Bartoszewicz stated about the use of account books and promissory notes, they were a standard solution of merchants in the big towns of Vistula basin in late Middle Ages (Bartoszewicz 2017). The economic implications of this development should not be underestimated: the ability to secure a loan without engaging the town officials or even warrantors gave the late medieval merchants new financial tools. The credit market boomed without leaving traces outside of merchant books.
During the 35 years of his business activity in Gdansk, which are documented in his account book, Johan Pyre used the official town books only four times in order to secure his loans – he used the ground books three times in order to secure his life annuities but he secured his merchant credit by using an entry in the town bench book only once. In the same period, he granted more than 130 cash credits for sums up to over 900 Mark Pr. and a multitude of trade credits. He used no collaterals and nearly no warrantors. His primarily guarantee was the relationship of trust with his partners and the entry in his book. However, we can also presume that the promissory notes were often used but not mentioned, as in the case of the promissory note that survived in the book. In addition, Pyre’s merchant book provides evidence on transfer of the promissory note as early as in 1437.
Note
1The highest loan in town books of Gdansk achieves 1,800 Mark Pr. (Liber scabinorum, 1435, ff. 73r).
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