The economic surge of the High Middle Ages led merchants to invent new business procedures. Beginning in Italy, merchants formalized their agreements with new types of contracts, including temporary contracts for land and sea trading ventures and permanent partnerships termed compagnie (kahm-pah-NYEE). Many of these agreements were initially between brothers or other relatives and in-laws, but they quickly grew to include people who were not family members. In addition, they began to involve individuals — including a few women — who invested only their money, leaving the actual running of the business to the active partners. Commercial correspondence, unnecessary when one businessperson oversaw everything and made direct bargains with buyers and sellers, proliferated. Accounting and record keeping became more sophisticated, and credit facilitated business expansion.

The ventures of the German Hanseatic League illustrate these new business procedures. The Hanseatic League was a mercantile association of towns. It originated in agreements between merchants for mutual security and exclusive trading rights, and it gradually developed into agreements among towns themselves. At its height, the league included perhaps two hundred cities from Holland to Poland. From the fourteenth to the sixteenth centuries, the Hanseatic League controlled the trade of northern Europe.

The dramatic increase in trade ran into two serious difficulties in medieval Europe. First, despite investment in mining operations to increase the production of metals, the amount of gold, silver, and copper available for coins was not adequate for the increased flow of commerce. Merchants developed paper bills of exchange, in which coins or goods in one location were exchanged for a sealed letter, which could be used in place of metal coinage elsewhere. This made the long, slow, and very dangerous shipment of coins unnecessary and facilitated the expansion of credit and commerce.

The second problem was a moral and theological one. Church doctrine frowned on lending money at interest, termed usury (YOO-zhuh-ree). As money-lending became more important to commercial ventures, the church relaxed its position. It declared that some interest was legitimate as a payment for the risk the investor was taking, and that only interest above a certain level would be considered usury. The church itself then got into the money-lending business, opening pawnshops in cities.