Organizing Crafts and Commerce

In the Middle Ages, most manufactured goods were produced by hand or with primitive machines and tools. Though not mechanized, most medieval industries, crafts, and trades were highly organized. The fundamental unit of organization was the guild. Originally guilds were religious and charitable associations of people in the same line of business. In Ferrara, Italy, for example, the shoemakers’ guild started as a prayer confraternity, an association whose members gathered and prayed for one another. But soon guilds became professional corporations defined by statutes and rules. They charged dues, negotiated with lords and town governments, set the standards of their trade, and controlled their membership.

The manufacture of finished products often required the cooperation of several guilds. The production of wool cloth, for example, involved numerous guilds—shearers, weavers, fullers (who thickened the cloth), dyers—generally working under the supervision of the merchant guild that imported the raw wool. Within each guild was a hierarchy, starting at the bottom with the apprentices, who were learning the trade, moving up to the journeymen and journeywomen (that is, male or female day laborers—the word comes from the Middle English for “a day’s work”), ending with the masters at the top.

It was hard to become a master. Young people might spend many years as an apprentice and then as a day laborer hired by masters who needed extra help. But most journeymen and journeywomen aspired to be masters because then they would be able to draw up regulations for the guild and serve as its chief overseers, inspectors, and treasurers. Most masters eventually had a chance to serve as guild officers. Occasionally they were elected, but more often they were appointed by town governments or local rulers.

In addition to guilds, medieval entrepreneurs created new kinds of business arrangements through partnerships, contracts, and large-scale productive enterprises—the ancestors of modern capitalism. Although they took many forms, all of these business agreements had the common purpose of bringing people together to pool their resources and finance larger initiatives. Short-lived partnerships were set up for the term of one sea voyage; longer-term partnerships were created for land trade. In northern and central Italy, for example, long-term ventures took the form of a family corporation formed by extended families. Everyone who contributed to this corporation bore joint and unlimited liability for all losses and debts. This provision enhanced family solidarity because each member was responsible for the debts of all the others, but it also risked bankrupting everyone in the family.

Pooling resources meant that money had to be available. Small silver coins were excellent for small-scale transactions; larger ones were also minted. The widespread use of coins meant that entrepreneurs got rich from mines and minters from stamping the coins. Where rulers were strong, they insisted on controlling or at least authorizing both mines and mints. Only in the thirteenth century did gold coinage become important in the West.

But commerce needed credit as well as coins. In the Middle Ages, as now, entrepreneurs had to take out loans to finance their projects. Creditors were induced to give out loans in return for interest. But the church banned usury—lending money at interest. This led to various ingenious ways to get around the prohibition. For example, often contracts specified a “penalty for late payment” rather than an interest charge. The new willingness to finance business enterprises with loans signaled a more positive attitude toward credit, risk, and profit.

Contracts and partnerships made large-scale productive enterprises possible. In fact, light industry began in the eleventh century. One of the earliest products to benefit from new industrial technologies was cloth. Water mills powered machines such as presses to extract oil from fibers, and flails to clean and thicken cloth. Machines also exploited raw materials more efficiently: new deep-mining technology provided Europeans with hitherto untapped sources of metals. Simultaneously, forging techniques improved, and for the first time since antiquity, iron was regularly used for agricultural tools and plows. Iron tools—which were more durable than wood—made farming more productive, which in turn fed the commercial revolution.