Merchant guilds

Dutch: Koopmansgilde, Italian: Casa dei Mercanti, Arte dei mercanti

A merchant guild was a local association of merchants directed towards international and interlocal trade. Merchant guilds were very similar to craft guilds, but distinguished themselves in a few notable ways. Merchants were the first to establish associations such as guilds, not only in North-Western Europe, but also in China (Moll-Murata, 2008, 213): merchants possessed the capital and the education to set up these types of associations, and were the first to realize its potential uses. The collective bargaining position offered merchants protection from greedy feudal rulers, enabled commercial trust – even over long distances, and spread financial risks (Greif, Milgrom, and Weingast, 1994, 747; Grafe and Gelderblom, 2010, 508-10). Merchants thus created a secure trading environment even when political circumstances were less stable. In the long run, merchant guilds were also the first to dissolve. In large markets, the transaction costs of guild membership were high, yet necessary when other institutional options were slim. Improvement of the legal position of merchants by means of contracts etc. meant that merchants could operate more cheaply without the guilds, causing a decline in their popularity in the sixteenth and seventeenth centuries (Grafe and Gelderblom, 2010, 485). Not all merchant guilds disappeared though, and sometimes this led to a transformation of an association that facilitated trade into a monopolistic organization that hindered trade expansion (Greif, Milgrom, and Weingast, 1994, 773).
Merchant guilds were very similar to craft guilds in many ways: the formation of a closed member group with its own regulations and a guild monopoly enabled both types of guilds to regulate membership, competition, supply and demand and quality control, while at the same time offering protection against arbitrariness from rulers and curbing cheating by fellow tradesmen. Differences between merchant and craft guilds existed as well, especially in reference to the transfer of technical knowledge. Apprenticeship or the creation of a master piece were not common among merchant guilds, but essential to craft guilds. As a result, there was no differentiation between masters and journeymen in merchant guilds.

Merchant guilds in Italy

Merchant guilds in Italy were present in several cities. They included local merchants (Casa dei Mercanti, Arte dei mercanti) and they organized trade within the local territory. Merchant guilds also had specific courts (the Mercanzia), where disputes between merchants and others —concerning the act of commerce — were resolved. Merchant guilds were normally founded at the end of the Middle Ages.

Apart from the local merchant guilds in commercial cities such as Venice, Florence and Genoa, foreign merchants also organized their affairs through institutions such as ‘merchant colonies’ or ‘nations’. Foreign colonies generally had a local consulate (where members resolved their own disputes and maintained a relation with the home-country), which was the formal institution to contract duties and rights with the local power. Their decline was a result of the economic trends of the trade and the abolition of the other guilds at the end of the eighteenth century.