INTRODUCTION

Victor N. Zakharov, Gelina Harlaftis and Olga Katsiardi-Hering

The purpose of this book is to examine the history of merchant colonies and their importance in the European international trade in the early modern period (late fifteentheighteenth centuries). Traditionally the term merchant colony has been used in connection with the formation of European economic empires as territories under the immediate political control of an empire. This book, however, is not about European colonization in overseas territories but about foreign merchant colonies or merchant communities in Europe established to carry international and national trade between empires and states. Frederic Mauro defines a merchant community as an association or unit of merchants who shared a similar background and provided each other with any cooperative assistance needed in their foreign environment.1 He then proceeds into a chronological and systematic distinction of the merchant colonies in two periods: the first one covers the period of the fourteenthsixteenth centuries and the second one from the seventeenth to the eighteenth century. It is commonly accepted that European land and seaborne trade has traditionally been connected with the establishment of foreign merchants in major European cities where the terms merchant community and community of foreign merchants were often synonymous. The foreign merchant communities were characterized by solidarity, mutual aid, kinship and a desire to preserve their culture. They had a similar international commercial outlook as well as sufficient capital, credit or connections, and adequate commercial experience. Moreover, they shared a sectarian outlook that interlocked families in chains of partnerships and marriages.2 This kind of attitude and practices are generally attributed to the ethnic minorities of eastern origin. International business has always implied cultural minorities and the European miracle would never have taken place without entrepreneurial minorities, Antony Reid has also written.3 The significance of the issue of the merchant colonies is highlighted by their influence on inter-local and world economic development throughout history. Long-distance transnational trade has traditionally been carried out by foreign merchants in the main Eurasian fairs and cities. The foreign merchants
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were either western European traders, such as the Italians, French, Spanish, Portuguese, English, Dutch, Germans or Scandinavians, or eastern European traders such as the Russians, or eastern European/Levantine traders like the Greeks, the Armenians or the Jews who formed their own merchant colonies in foreign lands. In current bibliography, these foreign merchants residing in different countries often tend to be studied by scholars of their own ethnicity, and, consequently, not only is the comparative perspective lost, but nationalistic interpretations along the lines of superiority and uniqueness are also quite common. The present collection has made a conscious effort to overcome narrow national or nationalistic lenses in their articles and examines these foreign merchants within and beyond the national boundaries. The term merchant colonies, which can also be termed communities of foreign merchants, nations, ethnic minority merchants, diaspora merchants confraternities or compagnies characterizes the establishment of groups of merchants of a shared ethnicity in foreign lands and the creation of international commercial networks in the early modern period. The function of the merchant colonies became particularly significant when foreign trade expansion became the most influential factor in economic growth initially in a number of European countries and subsequently the world over. The merchant colonies increased turnover, boosted profits and developed various forms of economic activities (trade companies, banks, insurance companies, etc.) nursing the essential prerequisites for the Industrial Revolution of the eighteenthnineteenth centuries and consequently the modern world economy. In the last decade, the upsurge of globalization has stimulated interest in global economic history and this trend has drawn greater attention to the history of the fifteentheighteenth-century world trade. Academic interest focuses largely on the structure and dynamics of trade and shipping. Additionally entrepreneurship has attracted a good deal of attention over the last couple of decades, particularly the organization of individual firms and family companies including their national and international contacts and networks. Scholars of several countries have also touched upon the activities of merchant colonies and a considerable body of material has already been accumulated. There are, however, no comprehensive studies focusing on the history and function of merchant colonies. What is more, most of the studies of merchant colonies in the early modern period focus either on a specific nation, like the Dutch or British, or an ethnic minority, like the Jews or Huguenots, or a specific city-port like Livorno or London, or a specific geographical region, like western Europe and its overseas territories of the big merchant maritime empires such as the Venetian, the Portuguese, the English and Dutch. Essentially this book, rather than focusing on a specific merchant community of an ethnic minority in a part of Europe, proposes to bring together the

Introduction

study of the most important merchant colonies of both western and eastern Europeans in the whole of Europe, western and eastern. This is considered one of the main strengths of this volume as the merchant colonies in the Russian, Habsburg and Ottoman Empires, are currently so underrepresented in Englishspeaking publications. The distinction of westerners and easterners has long been made by Frederic Mauro who has indicated large ethnic formations of eastern origin, which stood out against the purely European western background. Equally, Philip Curtin, a pioneer on the subject of trade diasporas, addressed both western Europeans and the ethnic formations of eastern origin trading beyond their territories as trade diasporas.4 This book reveals that merchant colonies shared similar organizations, structures and development in the English, Dutch, French, German, Russian, Greek and Armenian cases in European cities in the early modern period. Merchant colonies have also been described as trade diasporas. The term coined by Abner Cohen refers to a nation of socially interdependent, but spatially dispersed communities.5 Philip Curtin in his seminal book examines various groups of trade diasporas that carried international trade transcending national boundaries by forming world-wide networks.6 Historical diasporas, particularly the three classical ones, those of the Armenians, Greeks and Jews, epitomize the resilience of traditional forms of association in certain groups who for centuries transcended the boundaries of states and empires. In the present study we do not adopt the concept of diaspora for two reasons. Firstly, we deal with both western and eastern Europeans and this term does not apply to English, Dutch, German, etc. merchant colonies. Secondly, the term diaspora has taken another connotation as it has been used by cultural and postcolonial studies to form the discipline of diaspora studies with an immense literature; over thirty new groups have found shelter now under this term.7 Concerning diaspora people this book focuses on the trade diasporas of Greeks and Armenians, keeping a comparative perspective with the Jews. The reason for not including Jewish merchant colonies in this volume is that Jews were dispersed in all major western and eastern European countries for centuries so they, usually, formed part of the local societies. Furthermore, Jewish diaspora has been extensively studied in the Anglo-Saxon bibliography and also in a comparative perspective and in many of the chapters of this volume comparisons with the Jewish merchants are drawn (see for example, Chapter 3 by Pierrick Pourchasse, Chapter 4 by Ina Baghdiantz McCabe and Chapter 8 by Iannis Carras).8 The comparative dimension is also another one of the strengths of the present volume. Most chapters deal with more than one ethnic merchant colony in one or more countries. For example, English merchant colonies are examined in comparison with the Scottish and the Dutch in the Baltic and Mediterranean ports; German and Italian merchant colonies are examined in English

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ports; German, Dutch and Swedish merchant colonies in Atlantic French ports; Russian merchant colonies in Scandinavian Baltic ports; Ottoman and Iranian Armenian merchant colonies in Mediterranean ports; Ottoman and Venetian Greek merchant colonies in ports and landlocked cities in the land and sea trade of Ottoman, Habsburg and Russian Empires; Hanseatic, Dutch, German, English, Italian, Armenian and Greek merchant colonies in the Russian Empire. The chapters also deal with merchant colonies in port cities and land cities. Both land and maritime trade activities of the foreign merchant colonies are examined in the early modern period in the city-ports of the European waters, the Baltic Sea, the North Sea, the Atlantic Ocean, the Mediterranean and the Black Sea. Therefore, the book tends to address extraordinary structures and processes as generally prevailing, and on the other hand, generally prevailing structures and processes as extraordinary. In this way, Merchant Colonies in the Early Modern Period provides a much wider view of the international trade of the era under examination both chronologically and geographically. It enables researchers to place their work in a broader context and avoid unnecessary misinterpretations. It unveils patterns which serve as points of reference for future research. It contributes to the understanding of the early stages of commercial globalization. Some chapters of this book were presented at the XV International Economic History Association Congress in the session Merchant Colonies in the Context of the International Commerce in the Early Modern Period in Utrecht 2009, organized by Victor Zakharov and Jan Willen Veluwenkamp. More authors have been invited to participate and all papers have been rewritten according to the guidelines set by the editors. Main issues that all papers discuss are as follows: What is a colony? The concept of merchant colony or merchant community Why and when were merchant colonies formed? The politico-economic dimension How were they formed? a) The institutional dimension: legal status and privileges, b) The economic dimension: types of organization and their evolution How they functioned? a) Cooperation, interaction and competition with local and foreign merchants, b) Interconnections between partners in the mother country and abroad, the emergence of the networks connecting merchants from different countries in the system What was the effect of the formation of merchant colonies in Europe? What happened to them? a) evolution or change of this role and perspectives, b) The process of integration, adaptation and assimilation or the formation of a multiple identity of the members of a merchant colony in host countries. Crucial was the role of the naturalization on the part of the host countries and therefore the bourgeoisification of the colonists.

Introduction

Although most authors tackle the first issue of what a merchant colony is according to the needs of their study, a preliminary discussion on what is a merchant colony is needed along with an analytical approach of the terminology used. Many of the authors (like Pierrick Pourchasse, Victor Zakharov, Olga Katsiardi-Hering and Iannis Carras) emphasize the ambiguity and multiplicity of the term. It is rather ironic that the editors, a Russian and two Greeks, agree in their chapters that the term merchant colony is not just right for their cases; the term is more appropriate for the merchant colonies of the Dutch or English empires. In order to make things clearer we will use the paradigm from Greek antiquity. Ancient Greek historiography makes a clear distinction between the ancient apoikies, i.e. colonies of the Greek city states - in the framework of the first and second colonization9 - and the modern paroikies10, in German Niederlassungen, i.e. communities or ethnic minority groups settled in a host country. This not only reflects a nominal difference but a functional one too. Both the ancient apoikies and the early modern colonies were groups of people who settled in distant lands, formed powerful economies but remained under the political jurisdiction of their native land. The ancient apoikies and the early modern colonies were related to a particular city state, the metropolis, and though politically sovereign, were characterized by the exploitation of the colonized region. By contrast, the paroikies balanced a dual role as they had to accept the rules and laws of the host countries and to retain the linkages with the homeland that allowed them to survive economically by a continuous back and forth movement of its members and to maintain their ethnic identity (see also Chapter 2 by Beverly A. Dougherty). Saying that, for the English and the Dutch the term colony/apoikia as is evident by Chapter 1 of Jan Willem Veluwenkamp and Joost Veenstra applies better. The reason to use the Greek word paroikia in order to describe the merchant communities of the early modern times lies on the difference among a politically autonomous ancient colony and a settlement of a legally recognized ethnic minority group that enjoyed privileged status in a country that had its own rules and political administration to which the members of a paroikia were subordinate and tended to integrate. The usage of the term paroikia in Greek is probably preferable to the word koinotita (community) which indicates both the total population of a diaspora group in a new settlement and a specific form of social organization of its people that could be identified with the General Assembly of its adult members. It might be worth noting that the studies in this volume do not examine the community from a socio-anthropological point of view but from a socioeconomic one. They do, however, often use the term community alternatively, on the one hand to describe the established group of foreigners as individuals in a host city being examined, and on the other as business institutions analyzing their administrative and organizational structure and mechanisms.

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Apart from terminology issues, another theme that must be explored in the study of the paroikies is the point of view, the methodological angle from which we observe and study the communities of foreign merchants. Historical trends usually conform to established policies or desired concepts. Therefore, when nationalism and colonialism were dominant doctrines, the paroikies were studied within a nationalistic framework, pointing out their role towards the national question, which related them mainly to their natal land, and the activities of their members were viewed from the angle of benefit or ignorance of their homeland. Another approach that followed was to view merchant communities as an influential factor that contributed to the evolution of the host country. A third view, similar to the second one but even more enriching, is the comparative approach, that is the study of ethnic minority groups in relation to others as well as to the indigenous population that operates in the same territory. Contemporary studies take into consideration the previous trends but emphasize the comparative approach. Although some Greek paroikies took advantage of European state policies, they were often founded on or near classic or Byzantine settlements. Marseille and Taganrog are good examples of this statement. Moreover, the merchant colonies form part of a continuity in the Mediterranean, that of the classic diasporas involved in international business.11 The formation of Greek merchant communities beyond the Ottoman or Venetian state were the result of a mobility organized within family and commercial networks, with profit as the sole purpose for their movements, and much less due to an organized, massive immigration instigated by push and pull factors. Ina Baghdiantz McCabe in Chapter 4 raises, however, an important issue. Looking through an ethnic lens historians tend to look at Armenians and Greeks as stateless people and as a group. Armenians, however, in the seventeenth century, for example, were Ottoman and Iranian subjects, and the Greeks were Ottoman and Venetian subjects. They were used and treated according to the Empire or state they came from by the Russian or Habsburg Empires. The second issue that the studies of this volume tackle is why and when were merchant colonies formed? In the early modern period merchant colonies served as a tool for the expansion of merchant empires. They have been associated to long-distance inter-local and international trade, by land or sea routes organized in companies or leagues in the north like the English Company of Merchant Adventurers, the Hanseatic League or in the south like the Venetian group of merchants or the Levant Company in the Ottoman Empire. At a time of difficult spatial communications and trade barriers merchant colonies operated as a catalyst in the expansion and integration of European markets. Mercantilist policy, state protection, commercial privileges, capitulations, free ports, tax-free regimes were some of the many politico-economic instruments used by the European authorities for the support and promotion of foreign merchant colonies.

Introduction

The third issue concerns how these merchant colonies were formed, and in which institutional framework they prospered and in what types of entrepreneurial institutions they operated. Merchant colonies were firstly organized with the establishment of a few commercial agents followed by the establishment and organization of a nation. In that sense the term nation was used for the merchant association of a certain nationality12 and/or of the same geographical origin, see Chapters 3, 4 and 7 in the present volume. Foreign merchants established a formally organized community according to special privileges given by the host states. These communities were organized as confraternities/communities/compagnies (see Chapters 7 and 8). The merchant colonies functioned in the administrative framework of the host countries and covered a gap in the economic development of these countries. There were certain states that formed a regulated commercial system, like that of the English and the Navigation Act of 1651 that introduced protectionism and enforcement of national monopoly in international trade. The English also introduced a system of privileges to regulated chartered companies that monopolized trade in specific geographical areas. In all host countries there were regulations on settlements of foreign communities. In Russia, for example, for a merchant to become part of the merchants system, the merchant guilds, one had to become a Russian subject and was classified in the first, second or third guild according to his capital (see Chapter 9); in France, in Nantes one could become citizen by naturalization or by a sojourn of twelve consecutive years (see Chapter 3). As Chapter 2 by Beverly A. Dougherty and Chapter 1 by Jan Willem Veluwenkamp and Joost Veenstra indicate there are two types of merchant colonies: one type evolved during the period from the mid-sixteenth to the mid-seventeenth century, that of the chartered companies, for example of the English chartered company of Merchant Adventurers, the Muscovy Company, the Eastland Company, the Levant Company that instigated the formation of merchant communities in the European cities like that of Moscow, Constantinople, Livorno, Naples or Messina. The second type was that of the deregulation, of the trading companies and the emergence of many independent companies. Merchant colonies were formed to overcome trade barriers, asymmetry of market information and communication problems. When these were dissolved Veluwenkamp and Veenstra support the view that merchant colonies disappear. The latter happened in north-western Europe but it continued in northern, northeastern and south-eastern Europe where the trade barriers and the markets were difficult and distant. They point out how the system of chartered companies continued in the regions with trade barriers. The fourth issue examines how the merchant colonies carried out their business. Merchant colonies or communities consisted of groups of foreign merchants involved in international business. They developed into networks of

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ethnic-religious groups that formed their own unofficial international market, enabling them to operate independently of the countries or states in which they were established. The merchant colonists, whether as independent merchants or companies, were international operators that adapted the conduct of their businesses to the economic needs of nations which were engaged in imperial expansion. They sought out factors that would make them more competitive, exploiting the resources and advantages of the institutional environment that were available to them. They facilitated international trade flows because they reduced search, negotiation and transaction costs in unfamiliar and risky environments (see for example Chapter 9 and Sifneos and Harlaftis).13 To overcome the main problems of communication and trust they created informal institutions, international business networks. Business theory of networks and principal-agents are combined with historical evidence to explain the dynamism and integration of merchant colonies in the host countrys business environment as Pierrick Pourchasse indicates in Chapter 3. The structure of merchant companies was heavily based on family ties, on trust, which did not exclude resources in case of disputes to an informal system of arbitration and to systems of local justice as Chapter 6 by Victor Zakharov and Chapter 8 by Iannis Carras indicate. These kinds of trading companies have been described as network firms.14 A network is defined as a particular type of relationship that links a particular group of people, and the study of this form of relationship is performed through network analysis.15 Networks are based on the formation of an institutional framework that minimizes entrepreneurial risk and provides information flow. They allowed the establishment of transnational connections based on personal relations, bypassing official market mechanisms. Furthermore in all cities where foreign merchants were established in order to overcome difficulties in their host countries they tried to make alliances with the local government officials as well as with the local merchants. The fifth question that is tackled by the authors of this book is what was the effect of the formation of merchant colonies in Europe? The merchant colonies in Europe were needed as they covered an organizational gap in the economic and commercial development of the host countries. They became an instrument to develop new markets; Veluwenkamp and Veenstra in Chapter 1 test this hypothesis by looking more closely at the English trade system which was, along with the Dutch system, one of the great commercial systems to bloom in the second half of the seventeenth century. As all chapters indicate, these colonies were formed and evolved as long as the host states needed them: German and Italian merchant colonies in England in the beginning of the early modern period (Beverly A. Dougherty in Chapter 2); the English merchant colonies in Scandinavia, the Netherlands, Italian states and the Ottoman Empire ( Jan Willem Veluwenkamp and Joost Veenstra in Chapter 1); the nations of the Germans and the

Introduction

Dutch in France in the eighteenth century (Pierrick Pourchasse in Chapter 3); those of the Russians in Sweden ( Jarmo Kotilaine in Chapter 5); the merchant communities of the Italian, the English, the Dutch, the German and the French in Russia (Victor Zakharov in Chapter 6); the ones of the Greeks and Armenians in central Europe and Russia in the seventeenth and eighteenth centuries (Ina Baghdiantz McCabe in Chapter 4, Olga Katsiardi-Hering in Chapter 7, Iannis Carras in Chapter 8, Evrydiki Sifneos and Gelina Harlaftis in Chapter 9); or the establishment of the privileged Venetians in the Ottoman Empire. In the meantime, apart from maintaining the flow of trade and its smooth operation, they contributed to the evolution and diffusion of information and commercial know-how in the places and societies of the east and west. In this way, on one hand the French nations and partially the English ones played an important role through the beratlis (protected) system16 in the formation of local groups of merchants in the Ottoman Empire and their transformation in independent merchant groups fully engaged in the international European trade. On the other hand the merchants from the east established in central Europe and western European city-ports diffused their institutions, business and artisan techniques in the host societies. As long as they were useful, the foreign merchants were supported; when the local merchants learned the business and foreigners hindered their interests they were either kicked out or forced to integrate and eventually assimilate. An evident example is given in Chapter 2 by Dougherty when the German merchant colony in the Steelyard of London was ended by Elizabeth I and merchants were asked to leave. It is also evident in the Russian colonies in Sweden as Jarmo Kotilaine indicates in Chapter 5. Similarly the Greeks in Hungary had to become naturalized by the end of the eighteenth century in order to maintain a trade business as is evident in Chapter 7 by Olga Katsiardi-Hering. The cycle of a merchant colony, its rise and decline in the trading cities of Europe, is discussed by Veluwenkamp and Veenstra in Chapter 1 relating to theories that try to understand the economic development of Europe. The sixth issue deals with what happened to merchant colonists. According to the time of establishment of the colonies in host countries, some had a lifespan of one or two generations, others a longer one, that, according to the migration rhythms of the moving groups of foreign merchants, reached sometimes more than a century as all chapters in the present volume indicate. In the latter case, different timing of integration and assimilation of the colonists is observed, depending on the rate of development of the local society. In the urban web of the host cities merchant colonists usually formed neighborhoods or places where they resided. For example, in London there was the Steelyard for Germans; in Moscow there was, until the beginning of the eighteenth century, the so-called Nemetskaia sloboda (German quarter or settlement),

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where not only Germans lived, but also foreigners from other western European countries; in Nantes the Little Holland for the Dutch; in Venice the Campo dei Greci or the Sottoportego dei Armeni; in Vienna the Griechengasse; and in Smyrna the francomahalla (Frankish neighborhood).17 They also contributed to the urban and residential expansion as well as to the differentiation and renewal not only of city regions, but also of cities themselves (see for example Jarmo Kotilaine in Chapter 5 and Evrydiki Sifneos and Gelina Harlaftis in Chapter 9). It is worth noting that the tendency of integration and assimilation was stronger among the eastern groups of merchants established in central and eastern Europe. The fact that they resided in distinct neighborhoods did not prevent many of them from fully integrating in the local society either as members of the local authorities or local aristocracy or the local business circles; see the case of the merchant colonies of Italian city states in England and central Europe (Chapter 2 by Beverly A. Dougherty and Chapter 7 by Olga Katsiardi-Hering). The process of naturalization did not hinder the preservation of the ethno-religious identity of merchant colonists in almost all the cases examined in this volume. The case of the commercial interaction between Sweden and Russia as presented by Jarmo Kotilaine in Chapter 5 about the permanent and sometimes semi-permanent presence of large numbers of ethnic Russians in Swedish-controlled areas, the so-called Ingrian and Karelian Russians, is indicative. In many cases the host-cities were characterized by cosmopolitanism and as Pierrick Pourchasse mentions cosmopolitanism seems to be a characteristic feature of all international emporium. However, were many city-ports really cosmopolitan or was there a parallel symbiosis with the locals? In new city-ports like Trieste, Odessa or Taganrog, formed by immigrants, the society was mixed. In other north-western European port cities with more rigid structures of societies the foreign merchants seldom became integral members. This collection of essays consists of two kinds of articles geared to bringing out historiographical results and methodological discussions. The first one is composed of surveys, some of them more or less historiographical, and the second one of research articles based on archival research, incorporating discussion of the historiography. All merchant colonies studied by the scholars of this volume indicate the importance of groups of foreign merchants in seaports, river ports or land ports in promoting international trade. Merchant colonies or communities have played a major role in the process of globalization trading beyond boundaries.