Merchant Guilds

Merchant Guild: Definition

What is the definition of a Merchant Guild? The roots of the term "guild" are Germanic. The word is a blend of gildi (brotherhood) and gield (payment). The etymology accurately describes its concept: in a guild, its members (or brotherhood) had to pay subscription fees to be subscribed to it. They were groups of traders in Medieval times who banded together to obtain benefits as a collective that they couldn't access if they were working on their own.

There are two main types of guilds:

• merchant guilds: for people who sold certain goods
• craft guilds: for people who made certain goods

History of Merchant Guilds

Merchant guilds started as cooperative groups created by traders who voluntarily joined. Benefits included negotiating power against lords and landowners, protection from theft, and improved networks and resources. Over several centuries guilds became more powerful and shifted into becoming economic and political institutions in their own right.

Guilds often created their own insignia and jewels, such as the Archer's Guild necklace pictured above. Source: Sam.Donvil, Wikimedia Commons, CC-BY-SA-4.0

Merchant Guilds in the Medieval Time Period

The first guilds were formed throughout Europe around the 11th century. One of the first guilds was formed in the modern-day Netherlands, called the Merchants of Tiel in Gelderland, in 1020. Some of the first guilds throughout Europe contributed to the formation of the University of Bologna in 1088, the University of Oxford in 1096, and the University of Paris in 1150.

Why Were Merchant Guilds Formed?

Merchant guilds provided important protections and resources during feudal times. Under the feudal system, lords could tax their subjects significantly according to their trades. Taxes grew excessive over the years, and individual traders had little power to try to change it. The idea of guilds was born to allow people to collaborate and negotiate with the lords. Together, they were strong enough to fight against the taxes than they were if they operated alone.

Charters and Taxes

After the guilds and the lords reached an agreement on things like taxes, the lord would issue them a charter. The charter provided an official document for the guild's formation in exchange for an annual lump sum payment.

Protection

Additionally, the Middle Ages were a difficult time, especially for merchants. Traders were often attacked while traveling from town to town, or their warehouses were raided. The guild provided them and their goods with protection.

Structure of Merchant Guilds

In the early stages of the merchant guilds, merchants paid a membership fee to be considered full-fledged members. As time went on and the guilds became more powerful throughout the 14th and 15th centuries, they began requiring that merchants be a member of the guild to do business in that town. The ban on trade by non-members prohibited outside people and poor people who could not afford the membership fee from doing business. Additionally, any members who violated the charter regulations would be heavily fined.

Growth of Merchant Guilds

As the structure of the merchant guild grew throughout Europe, guild leaders became influential members of the political class, and guilds began to provide community services. Guilds sometimes provided structure and administration in towns. They were known for caring for sick members, orphans, and widows. In some towns, the guild leader became the mayor or spokesperson.

Guilds and Social Class

Membership requirements also became stricter. Guild members created their own "bourgeoisie" class and asserted their higher status over those working under them. Instead of allowing anyone to join for a fee, as guild membership became more of a status symbol, it became much more difficult for "regular" people to join the guild. Sometimes they blocked people from entering unless they paid higher fees and practiced favoritism with sons or other male relatives of current members.

They also began taxing craftspeople more heavily to control prices and supply. This led to the creation of craft guilds, which, similar to the merchant guilds, provided protection and a central authority for craftspeople.

Craft & Merchant Guilds

Craft guilds, in particular, instituted stricter requirements around the skills of their members. To become a member, you had to first be an apprentice, then a day worker, and later you could be eligible to submit a "masterpiece" in your craft to receive the designation of "master" and be an official member of the guild.

Guild masters controlled the prices of goods and wages for the workers under them. Even during times of famine or labor shortages, the guilds did not raise wages, which led to some protests and revolts among laborers.

Merchant Guilds Examples

London became one of the most important hubs for guilds during late Medieval times. The livery companies were the wealthiest guilds in the city, and their members often formed the political class and eventually became significant financial institutions. The chief speaker for the guilds became the mayor of London, and other higher-ranking guild officials took on city administration roles as well. In 1411, they created the "Guildhall," a central building where all the guilds could meet to discuss business.

This classic Rembrandt painting from 1662 depicted the Draper's Guild in Amsterdam. Source: Wikimedia Commons

Paris also had successful merchant guilds. Water merchants monopolized the Seine and controlled trade quotas. In 1260, four water merchant's guild members were appointed as city magistrates.

The Decline of Merchant Guilds

Over time, several factors led to the decline of the merchant guild economic system and ultimately to the market-based financial system. Many historians argue that by the 16th century, the guilds were a dead weight on the economy, extorting rent fees from laborers without providing any societal good. Throughout the 16th century, merchant guilds in London, Amsterdam, and Hamburg began to decline as they were replaced by financial institutions.

Critics of Merchant Guilds

Leaders of Enlightenment Age thinking in the 18th century felt guilds were just another type of ruling class.

Historians often debate whether merchant guilds did more good for society than bad. Indeed, they provided an essential service in their early days by protecting working people and preventing lords from exploiting them. But over time, as they gained power and status, they became their own "ruling class" and exploited workers under them.