By the end of the 14th century the Hanse is at the top of its game. The Cologne Confederation had shown that they could act in unison if the need arises, can defeat the largest and best run kingdom in Scandinavia. And even the mighty duke of Burgundy had to yield to the power of the merchant cities.

But just 10 years into the new century the association faces a mortal crisis. Not because of retaliation from the outside but due to internal tensions. Not everyone in the great trading cities is happy about the war efforts and the impressive infrastructure projects…

Hello and welcome to the History of the Germans: Episode 121 – A Constitutional Crisis

By the end of the 14th century the Hanse is at the top of its game. The Cologne Confederation had shown that they could act in unison if the need arises, can defeat the largest and best run kingdom in Scandinavia. And even the mighty duke of Burgundy had to yield to the power of the merchant cities.

But just 10 years into the new century the association faces a mortal crisis. Not because of retaliation from the outside but due to internal tensions. Not everyone in the great trading cities is happy about the war efforts and the impressive infrastructure projects…

But before we start it is again time to say thanks to my patrons and one-time contributors who maintain a truly astounding level of generosity. I am well aware that we are going through a cost-of-living crisis and that many people are struggling. If you are one of those and you feel uncomfortable about not making a contribution – don’t be. There are many other ways to support the podcast for instance you could comment or share a post from the History of the Germans on Facebook or Twitter. Just so you know, sharing and commenting has a much bigger impact on the algorithm than just liking a post. And those of you who feel so inclined, you can become a patron at or you can make a one-time donation at It is really, really appreciated. Thanks a lot to Gavin E., Axel J., OldPivi and Michael M. who have already done so.

Last two weeks we talked about how a Hanseatic merchant operated. How he, and sometimes she could ensure that their business partners were reliable and worked in their interest, how they could get hold of the necessary market intelligence. What products were in demand where, what price one may achieve, how risky the journey would be and whether there were any new taxes, tolls or regulations. And we looked at the ways a Hanseatic Merchant transferred the funds to pay for the goods bought in Bruges or the copper from the Falun Mine in Sweden.

This week we are resuming our narrative. We have come to the beginning of the 15th century. The Hanse had fought and won a war with Denmark. As consequence the gemeine kopman had gained even more extensive privileges on the herring market in Scania, privileges that allowed them to push out the English and Dutch competition. And they had received some major political concessions, for one they had occupied the main fortresses controlling the Oresund for a period of 15 years. And they had been given the right to select the ruler of Denmark upon the death of King Waldemar Atterdag.

And they had not only won this conflict, but had also defended their rights in Bruges, England and Novgorod against some strong opposition. And last, but not least they had gained the upper hand over the Victual Brothers, the famous Baltic pirates.

By 1405, it looks as if the Hanse is invincible.  Their political opponents are subdued, their privileges confirmed, and trade keeps growing strongly. Some of the most iconic Hanseatic buildings, like the Holstentor in Lubeck, the town hall of Danzig and the façades of the Rathaus in Stralsund and Lubeck, were constructed during this period.

But if you look under the bonnet, things are not quite as rosy as they seemed. Tensions are rising, both inside the cities and between the different cities. The kings and major princes are consolidating their power and competition with England and Holland intensifies.

Internal conflicts and revolts were a feature of the 14th and 15th century, much more than in the High Middle Ages. Flanders was the epicentre of both peasant revolts and conflict between the city dwellers and their overlords. It started with peasant rebellions in 1280, 1302 and then 1323-1328. The cities shook off the princely control, at least temporarily, first under Jacob van Artevelde in 1337-1345 and then his son Philip in 1381/82. More rebellions followed in the 15th century.

Other notable uprisings were the Jacquerie in France in 1358. Etienne Marcel a rich merchant in Paris use the Jacquerie to force the Dauphin to sign the Great Ordinance of 1357, a document that could have become the Magna Carta of France had it not been rejected by the king. And let’s not forget the Peasant’s revolt in England in 1381.

In Sweden we had the Engelbrekt rebellion in 1434-36 which played a major role in maintaining the country as a separate entity within the Kalmar union.

The largest and most successful of these revolts were the Hussites in Bohemia, modern day Czech republic who rose up against their king in 1419, a story we will explore in quite some detail in an upcoming series on the Luxemburger emperors.

These revolts were all different. Some were led by peasants rebelling against the heavy taxation, others involved rich burghers fighting for the freedom of their cities, others again were triggered by political and economic inequality within the cities. Some, like the English Peasant’s revolt and the Hussite Wars had strong religious components.

There are many reasons for this rising unrest amongst the people. The change in the economy is the most obvious component. The economic boom that underpinned the High Middle Ages had ended. That was in part due to the end of the medieval warming period. The climate in europe was now on a cooling trajectory known as the little Ice Age that hit its Nadir in the 17th century. But we also find that innovation had stalled. The improved agricultural tools and practices of the 11th and 12th century are now rolled out across almost all of Europe.

What has also ended was the colonisation of the East. The option to emigrate first into the eastern marches and then further into Poland, Prussia and the Germanic enclaves along the Baltic shore was no longer there. The local rulers no longer needed or were able to accommodate large numbers of foreigners looking for land to cultivate.

Plus the Black Death and the waves of epidemics following it had reset the relationship between Landowners and peasants and between burghers and city labourers. Labour had become scarce and hence wages had risen. Keeping peasants as serfs on the estate became seen as more and more unfair as they knew they could find better work and better living conditions elsewhere.

And finally, the moral decline of the church following the move of the papacy to Avignon fed into this general sense of discontent. We are now at the hight of the great schism where various attempts to return the pope to Rome has resulted in first two competing papacies and now three contenders. Not only did they raise tithes to fund their lavish courts and the fight against their opponents, but they were too engrossed in their conflicts to care much about the souls of their flock.

The cities of the Hanse weren’t free from such tensions. They did erupt in many cities and shared a similar background to what happened in Flanders. But they did have some specific Hanseatic characteristics.

The Hanse cities were quite different to places like Bruges and Ghent or the capital cities of Paris and Prague.

All the Hanseatic cities were dominated by an upper class of long-distance traders and major landowners. These were men of significant means, usually commanding a fortune of more than 5,000 mark. They were members exclusive merchant associations, the Artushof in Danzig, the Great Guild in Reval, the Richerzeche in Cologne or the Circle society in Lübeck. They sat on the city council and one of them was the city mayor, the Burgermeister. These were the patricians. The cities on the shores of the Baltic and the North Sea tended to be dominated by the long-distance traders, whilst the inland cities like for instance Cologne, Dortmund, Muenster and Brunswick had a higher proportion of landowners amongst the patricians.

Being a patrician was in principle a function of birth, but at least in the 14th and 15th century this was more theory than practice. As we have seen with our two Tallin merchants, Bernd Pal and Hans Selhorst. Bernd Pal’s father sat on the city council in Lübeck as did his grandfather. But Bernd did not manage to get there. The scale of his business and his failure to make a suitable marriage effectively relegated him from the patrician status of his forefathers. Hans Selhorst on the other hand had come from Hamm in Westphalia with at best a modest amount of money and no connections. He rose to be member of the great guild and the city council thanks to his great commercial acumen and a favourable marriage.

Across the Hanse patrician families stayed in the top flight for a few generations before they are relegated. But that varied considerably between cities. Membership in the Richerzeche in Cologne for instance was very stable with some dynasties like the Lyskirchen sticking it out for 500 years. On the opposite end were Hamburg and Stralsund who had a materially higher turnover, chucking out families after just 2 to 3 generations. Lubeck and most others were somewhere in the middle averaging a staying time of 3 to 4 generations before disease, inbreeding or incompetence pushed them out of their position.

It is also notable that the patricians were perfectly happy to admit foreigners into their ranks, even allowing them to become Burgermeister, provided they were successful, rich and fitted in. Hinrich Castorp, the legendary Lübeck Burgermeister was originally from Dortmund and was admitted to the city council just 7 years after gaining citizenship.

Most cities did not have something akin to the Golden Book of Venice where the names of all the patrician families were entered. Patrician status in the Hanse city was mainly achieved by getting admitted into one of these great societies and from there into the city council.

By the 15th century these patrician societies operated a bit like English gentlemen clubs. First you have different grades of those, from the top, top level, like the Circle Society and then further down the society of St. Lawrence or St. Anthony and at the entry level the society of Blackheads that admitted unmarried new merchants who had finished their apprenticeship.  To get into the higher levels, you needed not only a certain minimum wealth, but you also needed to be the right sort of chap. For instance, the circle society in Lubeck was so snobbish the rejected Nouveau Riches set up their own club, the Koplude Kompanye, the company of merchants.

Once one had joined one of these societies, one had a chance to get on to the city council. Membership there was for life. Once a member had died, the existing members co-opted somebody new to the council, again usually from one of these societies. In some cities there were rules on how many members from each society should have a seat on the council.

Below the patricians was a quite large upper middle class comprising the smaller long-distance merchants, brewers, shippers, clothmakers and sometimes horse traders. These people were well off and well connected across the Hanse world, but they were excluded from the levers of power and the great information exchange within the patrician societies.

As membership of the patrician societies was relatively fluent, members of this upper middle class could expect that over a number of generations there was a good chance they could join these societies and become a member of the city council, either at home or in a different city. But these aspirations were often several generations in the future, too far off for many.

Whether or not this upper middle class joins a rebellion depended very much on the question how amenable or open the patricians were to let others in. In Cologne, the power of the very exclusive Richerzeche was broken under widespread pressure in 1396. In Hamburg where society was more permeable, there was much less tension.

Below these two layers, the patrician and the upper middle class were the artisans. The size,  composition and importance of this group depended upon the economic structure of the city. A place like Cologne with a broad set of industries had many and powerful artisan guilds. In the mainly trading-driven settlements like Riga or Tallin, the artisan community was smaller and much less politically significant. In most Hanseatic cities the artisans had no representation on the city council and other than the Upper Middle Class, did not have a realistic option of moving into the patrician class over time. What added to their frustration was that their interests are often diametrically opposed to that of the merchants. They had little benefit from wars fought over trading privileges or major infrastructure projects.

And finally, we have the lower classes, the labourers and servants. The size of this group again depended on the economic structure of the city. In Flanders with its huge cloth production, labourers were a large group, and they played an important role in the various rebellions. The Hanseatic cities tended to have a lot less manufacturing activity so that they made up just 25% of the population of Hamburg or 38% of Rostock.

You can see where the fault lines lie. The artisans are constantly frustrated and ready to rebel. To succeed they need the support of the Upper Middle Class to overthrow the patricians. Sometimes it worked, sometimes it didn’t.

The first such conflict erupts in Magdeburg. In 1301 the artisans demand more representation in the city council. The archbishop together with the council responds with utter brutality and has 10 guild masters burned at the stake. But by 1330 the artisans succeed in the next uprising and a new city constitution is passed, giving Magdeburg artisans an important voice on the council.

Brunswick was the next epicentre. There had already been an uprising of the artisans in 1293/94. Things got worse when two brothers, both dukes of bits of Brunswick fought for control over the city. One supported the artisans, the other the patricians. The patricians won and the successful duke had all the members of the artisan’s city council executed.

In 1374 another uprising occurred in Brunswick when the patrician city father increased taxes to deal with the huge debt burden accumulated in the wake of the Black Death. This was quite a bloody affair and the mob murdered 8 members of the patrician council. The remaining council members fled to Lubeck where a Hanseatic diet was in session. They told the assembly of their plight and demanded that the Hanse excluded the city of Brunswick from the Hanse privileges until the old council is reinstated and its members compensated.

That exclusion lasted from 1375 to 1380. The city of Brunswick took a serious economic hit, but the artisans were unwilling to give up. Brunswick had become hugely important since the time of Henry the Lion who had built his great palace of Dankwarderode here. It sat right on the intersection of two major long distance trading routes, one the Via Regia, an east west connection from Magdeburg to Aachen and the north south salt route from Lüneburg to Erfurt and Nürnberg. Cutting Brunswick out led to major deviations and delay in the shipping of Eastern European and Baltic goods south and west. Many even patrician Hanse merchants therefore opposed the exclusion of Brunswick.

Things moved back and forth and by 1380 a compromise was found. The exiled council members were compensated and allowed to return and a new city constitution is established sharing power between patricians and artisans.

From the perspective of the patricians both in Brunswick and across the majority of the Hanseatic cities, the exclusion policy had been expensive and still ultimately had resulted in failure. As a consequence, the Hanse did not get involved in the following conflicts between artisans and patricians in Cologne in 1396, Dortmund in 1399, Danzig in 1416 and Breslau/Wrocław in 1418.

But when these problems hit Lübeck the situation became precarious.

Like everywhere else in the Hanseatic League, the artisans were unhappy with the rule of the patricians. First ructions happened in 1380 and 1384 when a man called Hinrik Paternostermacher conspired to topple the city council. He wasn’t an artisan but the son of an upper middle class merchant. He blamed his lack of commercial success on the snobbishness of the Lubeck societies and teamed up with the guild of the butchers. Before the conspiracy could get going properly, it was discovered. 18 of the 47 conspirators, including Hinrich Paternostermacher were executed.

Things heated up again after 1403. The city was in a very challenging financial situation. On the one hand they were fighting the war against the piratical Victual Brothers, which included a two year closure of the herring market in Scania. At the same time, they were building the Stecknitz Kanal that linked the Trave River to the Elbe, creating a waterway connecting the Baltic and the North Sea from Lubeck to Hamburg. And finally, Lubeck had taken an ever-increasing role in the management of the Hanse. Most Hanseatic diets took place in Lübeck, requiring the city to lay on festivities and banquets for their honoured guests at vast expense.

Somebody had to pay for that and the patrician-led senate decided that the artisans of the city should make a sizeable contribution. This was as unsurprising as it was unpopular. The artisans could see how much these initiatives were supporting the great long-distance merchants, what they could not see is what benefit any of these things would have for them.

As one would expect, the brewers and artisan guilds objected. In the subsequent negotiations the Council made some material political concessions and the artisans agreed to this one-time tax.

Two years later the financial situation still had not improved and another tax was proposed, this time on beer. This again was unpopular. The council was forced to admit the creation of a committee of 60 representatives of the different boroughs to debate the proposals. This committee of 60 quickly became the place where all sorts of grievances against the council were aired.

A list of complaints was compiled, ranging from excessive taxes all the way to the expense associated with the leading role of the city in the Hanse. The Committee of 60 then assumed control of parts of the city bureaucracy. To top it off, they proposed a reform of the city constitution which included the election of members of the council.

Things went back and forth, but by 1408 a minority of the council members agreed to the reforms. At which point the conservative majority, 15 out of 23 left the council and the city. A new council was formed that allowed for a representation of Artisans and whose members had to face re-election every 2 years.

Those of you who have studied the French revolution may see some rather obvious parallels in the way you get from financial difficulty to loss of power.

 We now have two city councils, the old patrician council that has gone into exile and a new more democratic council that controlled the city.

The new Council went straight to King Ruprecht of the Palatinate to gain recognition as the official representatives of the city of Lubeck. Lubeck was a free imperial city and as such the emperor had at least theoretically the final say in such a matter. In exchange for the imperial grace they offered an oath of allegiance and payment of the outstanding imperial taxes the patrician council had so far refused to pay.

Ruprecht graciously grants the new council what it wants, but the old council then sues them in front of the Reichshofgericht and wins, at least in so far as it demands the reestablishment of the old council.

At this point the new council orders the confiscation of the possessions of the members of the old council and refuses to follow any future imperial or court summons. That – and the fact that he had never seen a dime of the promised taxes – turns king Ruprecht against the new council. He places the whole city into the imperial ban, which means that in principle everyone can apprehend anyone form Lübeck, put him in chains and take all their goods.

As one can imagine, this creates chaos in the city and devastates the Lübeck trade. But not only that. By now Lübeck had become some sort of secretariat of the Hanse. They kept the records, they sent out the invitations for the Hanseatic diets, they coordinated the activities of the Hanseatic Kontors. All that is now on hold. The New Council is banned and therefore cannot send envoys plus many of its members do not want to take a lead role in the Hanse in the first place. The old council is in exile, is short of funds and has no venue for these kind of events.

Effectively for 8 years the coordination mechanism of the Hanse is stalling. Many merchants fear the whole thing will collapse. In particular the traders inside the Kontors are struggling to maintain their position in what is effectively hostile territory.

Moreover, the Hanse itself is split. Some cities like Brunswick, Cologne, Dortmund had undergone a transformation towards a more open constitution. They are now joined by Wismar and Rostock in their support of the New Council in Lubeck. Meanwhile the other cities who were still ruled by the patrician class sided with the old council, fearing that their defeat would bring about their own downfall.

To keep things rolling, a Hansetag was called in Hamburg and it was decided that all correspondence from the Kontors should be sent there. But then Hamburg formed its own committee of 60 and expelled Lubeck’s Old Council who were staying there at the time. The old council moved to Luneburg and this city became the new secretariat city.

The leader of the Old Council was Jordan Pleskow, an accomplished diplomat. He initiated a policy to undermine the new Council by cutting the city’s trade off from key routes of the Hanse. In 1411 he showed up in Bruges and demands the return of the property of the exiles. He placed his demands not just with the Konor, but also with the duke of Burgundy and the four main cities of Flanders. Using the judgement by the Imperial Court, this would have authorised the Flemish to seize the whole of the Bruges Kontor, effectively killing it. Surely not something Pleskow wanted, but it was the lever that forced the Kontor to join the side of the Old Council.

Pleskow then went to Prussia and convinced the Grand Master of the Teutonic Knights to place an embargo on all Lubeck trade.

Meanwhile a new king had ascended the throne, Sigismund. The New Council thought that this was the option to gain the upper hand. They offered him 6,000 guilders if he was to lift the imperial ban and declare for them. Sigismund said yes, but only if they paid 24,000 guilders, a first tranche to be paid on all saints day 1415 in either Paris or Bruges.

The problem for the new Council was that after years of tensions and ban, that kind of money was simply no longer there. When no cash arrived, Sigismund changed tack, revoked all imperial privileges for the city of Lubeck and reconfirmed the imperial ban.

The final blow came when Eric of Pomerania, the new king of Sweden, Denmark and Norway took the opportunity to confiscate Lubeck ships and incarcerate Lubeck merchants.

The New Council had to give up. They admitted the 10 surviving members of the Old Council back into the city. They co-opted a further 10 patricians allowing just 5 members of the new Council to remain. That meant the patricians were back in control. A tax was imposed to pay emperor Sigismund 13,000 guilders so that he lifted the ban. Meanwhile patrician rule had also been reintroduced in Rostock and Wismar wiping out artisan participation in the Wendish cities.

The return of the patrician was remarkably bloodless. There were only 2 executions and also during the reign of the New Council the patricians who had stayed behind had been unharmed. That is where the comparison with the French revolution no longer holds.

This episode had however a major impact on the way the Hanse thought about itself. Having come to the brink of dissolution so soon after its great string of successes urged its members to rethink the association.

They came together in one of the largest Hanseatic diets ever, in 1418.

The Hanse was to get a proper constitution. In 32 articles the member cities agreed to several innovations:

  • The Hanseatic diet can now intervene in the internal affairs of a city. Specifically, cities whose population had replaced the patrician council were no longer admitted to the diet.
  • A merchant who wants to partake in Hanse privileges must now prove that he is a burgher of a member city of the League.
  • Lubeck and the Wendish cites were put in charge to look after the interests of the overall organisation in between the times the diet was sitting.

And Lubeck was trying to go further and initiated formal alliances between several cities that committed each member to provide a specific number of ships and soldiers and to place them under the command of Lubeck. That the Hanseatic diet rejected, but over the next century at times cities came together in such alliances, called Tohopesaten.

The general trend towards formalisation continued after 1418. The Hanseatic diet issued regulations on shipping, trading, production, quality control, all intended to facilitate trade. Since Lubeck convened the diets and drafted the proposed regulations, the city on the Trave became not the capital of the Hanse as some had said in the past, but some sort of general secretariat that could steer the organisation’s policy in a direction that benefitted them, sometimes more than others.

The dominance of Lübeck became a problem as the century progresses. Other important participants, Cologne, Danzig and the Livonian cities find the dominance of the city on the Trave River increasingly chafing. Their interests are diverging and with a city council now stacked with members of the great families, all fearing the next uprising, the leader of the League finds it harder and harder to cope. How this pans out we will discuss next week. I hope you will join us again.

Before I go just a big thank you again to all my Patrons who kindly keep this show on the road. I really, really appreciate your generosity. And if you want to join, there is still a chance to grab one of the unlimited patron subscriptions at or

This was supposed to be an episode where we talk about the challenges the Hanse was facing after the victory over the Danes and the Peace of Stralsund. But that is not to be. Listeners Mehmet and Nina pointed out a few gaps in what I had been talking about last week and now these need to be filled.

It is all good talking about the trading network and the flow of goods across the Baltic and northern Germany. But what about the opposing flow, the flow of money? How do the Merchants get paid? How can they pay for all the goods they, or their agents, are buying way down in Flanders and England? How do they cope with the sometimes erratic monetary policies of late medieval rulers?

After all, it is money that makes the world go round!

Hello and welcome to the History of the Germans: Episode 120: Money, Money, Money

This was supposed to be an episode where we talk about the challenges the Hanse was facing after the victory over the Danes and the Peace of Stralsund. But that is not to be. Listeners Mehmet and Nina pointed out a few gaps in what I had been talking about last week and now these need to be filled.

It is all good talking about the trading network and the flow of goods across the Baltic and northern Germany. But what about the opposing flow, the flow of money? How do the Merchants get paid? How can they pay for all the goods they, or their agents, are buying way down in Flanders and England? How do they cope with the sometimes erratic monetary policies of late medieval rulers?

After all, it is money that makes the world go round!

But before we start, let me thank all of you Patrons and one-time supporters out there. I really, really appreciate that supporting a show you can listen to for free is an act of immense generosity. To say it with the author Roman Payne: “Of all public figures and benefactors of mankind, no one is loved by history more than the literary patron. Napoleon was just a general of forgotten battles compared with the queen who paid for Shakespeare’s meals and beer in the tavern.” You see, there is a chance to outdo Napoleon for a mere £2 a month, less than a chocolate croissant. All you have to do is go or And thanks so much to Mary Teresa H., Raphael F., David C. M. and Michael S. who have already signed up.

Last week we talked about how the Hanse worked, or more precisely how current historians believed the Hanse worked. Because the interactions between the merchants and cities are so multifaceted that for the last 200 years each generation of writers picked elements of the story and wove their own narrative, curiously matching contemporaneous political or economic developments.

So, for now the prevailing story is that the Hanse was a complex network that allowed both information and trust to be exchanged so that merchant could send bulky goods to exactly the right place at exactly the right time over vast distances.

Each trader would have a number of associates in each of the main ports. And these associates would send not only the merchandise ordered but also regular reports about the goings on in their own location, as well as what they heard from elsewhere. These letters would contain things like: prices for squirrel pelts are up because winter has come early, the abbot of the local monastery has decided to build a new church and needs wood and other building materials, old Hinrich Warendorp has died and his company is being dissolved, people are gossiping that Jan de Waal is in financial trouble…etc., etc.,

This information is crucial because the goods the Hansards traded in were usually bulky and meant for consumption. Once the ship full of grain had reached Bruges, the grain would have to be sold in Bruges, because shipping it elsewhere was very costly. Knowledge of the likely prices this grain would fetch at Bruges made the difference between a handsome profit and a crippling loss.

Having multiple associates in each city also kept one’s business partner honest. The business community, even in a place like Lubeck was small enough that many people would know if a merchant was taking advantage of one of his partners abroad. Information about that would quickly find its way back to the injured party who could take corrective action.

One success factor I had not mentioned last week, despite its crucial importance was language. The Hanse merchants, from Narva to Bruges, from Cologne to Bergen all spoke the same language – Middle Low German. Middle Low German had developed from Old Saxon, spoken in the duchy of Saxony and is most comparable to modern day Dutch. This was the language not just of the people, but also the written language. All these letters the merchants wrote to each other were written in Middle Low German, not in Latin. This was a crucial advantage, as it meant business partners could understand each other across the whole of the Hanseatic world, along the 2,500km from Narva to Bruges and the 1000 miles from Westphalia to Bergen. They held their court sessions in Middle Low German and even the recesses of the Hanseatic diet changed from Latin to Middle Low German in 1369. There were various dialects of Middle Low German, though Lubeck, thanks to its role within the Hanse managed to dominate. Even the Scandinavian courts would maintain diplomatic communication in Lübeck dialect. Middle Low German was the Lingua Franca of Northern Europe. As it happened that state of affairs lasted only for a short period. By the 16th century Low German was gradually replaced by High German spoken by the protestant preachers who used Luther’s bible. This  linguistic development mirrored the political development, as the largely separate history of the North we have followed in the last 25 episodes was converging with the history of the south.

A tight network of traders who shared information, trust and a common language sounds very neat and efficient, leaving only one question, a question some of you have asked and I have clearly overlooked last week. What about the money?

Oh, such a grubby word. No honourable Hanseatic merchant would talk about money. Or as my grandfather used to say, money is no object since it is non-existant.

And he wasn’t so far off the truth. 14th century moneybags had no money. At least no ready cash.

There weren’t even any banks in the Hanse before two Florentines, Ludovico Baglioni and Gerardo Bueri founded one in 1410. They were associates of the Medici, presumably sent out into this frontier market to test the waters. The waters prove to be rather cold, and the bank closed when Bueri died in 1449. A few years later a group of Hamburg merchants led by Godeman von Buren tried again but that experiment also failed in 1472. After that there were occasional attempts, including by associates of our friend Bernd Pal from Tallin to set up banking operations, but they never gained much traction and by the 16th century the competition from southern Germany, from Nurnberg, Augsburg and Ravensburg took charge of these activities.

Moreover, the Hanseatic diet banned merchants from borrowing on several occasions, namely in 1401, 1411, 1415, 1417, 1418, 1423, 1434 and 1447.

Does that mean the Hanse was some sort of commercial paradise of honest brokers who traded on fair terms and shunned excessive leverage, never touching the filthy lucre?

Obviously not. They liked a bag of cash as much as the next man. They just did not think that Uncle Scrooge’s Money Bin was the best way to manage wealth. Their wealth was in constant circulation.

One of the reasons the merchants no longer travelled around with their goods but had become fixed in one location, was that it allowed for a much more efficient investment of cash. Goods they had sent to one place were sold there and turned into other wares that would then travel to the next place, where again, they would be sold and replaced with something else.

Take our friend Bernd Pal, the merchant from Tallin we met last week. He had partners in Lübeck, Narva, Gdansk and Antwerp, but he himself mainly stayed in Tallin. He would ask one of his associates to procure furs from Novgorod via Narva. Those he had shipped to Lübeck where another associate would sell them on his behalf. The proceeds of that transaction would then be used to buy English cloth as per Bernd Pal’s instruction and send back to him in Tallin. Meanwhile he would do the same for his associates and partners who wanted to buy or sell goods in Tallin.

As a consequence, Bernd Pal’s warehouse was full of stuff belonging to his trading colleagues, whilst the goods he owned were in someone else’s cellar. The same goes for the money. The money in Bernd’s strongbox were mainly the proceeds of the sales he had made on behalf of his business partners, whilst again, money he owned was somewhere else in the network. A full reconciliation and payout only happened when Bernd Pal died, and his inheritance was settled.

As long as these transactions operate on a bilateral basis, there is not much need for financial instruments. But the trade had grown a lot more sophisticated than that. Let’s say Bernd Pal has an associate in Lubeck he wants to sell his furs but does not trust to get him a good deal on the English cloth. In that case the money raised by selling the furs needs to go to the broker who will procure the cloth. The way to do that was a bill of exchange.

A Bill of Exchange works is as follows. Bernd Pal wrote an instruction to his fur dealer to pay the cloth dealer an amount of 100 Lübeck Mark at Michaelmas, which is September 29th. This document will be sent to the cloth dealer who would then go to the fur dealer and ask him whether he would honour this instruction. If the fur dealer accepts this Bill of Exchange he becomes the Payor, meaning that at Michaelmas he has to pay the cloth dealer 100 Lübeck mark, no ifs or buts. Now the cloth merchant has a claim against the fur trader who lives in his town and who he could take to court if he fails to pay on time. There is a shortened court procedure for bills of exchange, meaning that he could send the bailiffs round in no time. And if the fur merchant is bankrupt, he could still claim the money from Bernd Pal.

From the cloth merchant’s perspective this Bill of Exchange is almost as good as cash, which means he is happy to find Bernd Pal some English cloth and send it across to Tallin.

Bills of exchange are very common in the Hanse world, as it is in many other trading systems. What the Hanse merchants also use are bearer bonds, which are less common elsewhere.

A bearer bond works as follows. Let’s take again our friend Bernd Pal in Tallin. Assume he wants to buy English cloth for 200 Lübeck mark, but the fur he is sending is worth only 100 marks. He also does not have 100 marks in ready cash to send along with the furs to make up the difference. So, what he can do is issue a document that says he would pay anyone who presents this document back to him the sum of 100 mark. This he sends to the cloth merchant, together with the Bill of Exchange.

The cloth merchant is a long-standing associate of Bernd Pal’s so he knows that Bernd is good for a 100 marks. However, Mr. cloth merchant is unlikely to go to Tallin any time soon to collect the 100 marks. That issue is overcome by the fact that Bernd Pal promised to pay to whoever shows up with this bearer bond. So, cloth merchant can take the bearer bond and swap it with someone else who needs to pay 100 marks in Tallin. In return he receives either cash or another bearer bond or Bill of exchange, for instance in London where cloth merchant gets his cloth from.

Normally bearer bonds do not work very well between individual merchants engaged in long distance trading for the simple reason that they normally do not know each other well and more importantly have no current information about their creditworthiness. In the Hanse with its tight network of information exchange and social control, bearer bonds can work between individual merchants.

Bills of exchange and bearer bonds are not only means to facilitate payments, but they also have a short-term credit element. Bernd Pal knows that it will be several weeks before the bearer bond he issued to pay for the cloth will make it back to Tallin. The 100 marks he will need to pay out once the bond returns in say 6 weeks can be used to finance some short-term investment. In practice this makes the bearer bond a short-term loan. So is a Bill of Exchange. These instruments cover a big art of the liquidity needs of Hanse merchants.

But there are financing needs beyond covering liquidity. For instance, our other Tallin trader, the ambitious Hans Selhorst needed to borrow money to buy himself a large and representative house in the centre of town to convey his new status as a member of the Great Guild. The funds for that he seems to have borrowed from fellow merchants.

We find that some of the large merchants ran a financials business alongside their wholesale franchise. What they mostly did was extending credit to their suppliers of wares. The burghers of Tallin would for instance extend credit to owners of the large Estonian estates, who were also their suppliers of grain and other agricultural produce. They would even lend large sums to bishops and the Teutonic Knights themselves. The reason for these loans was mainly to tie the suppliers to the traders. In Bergen this was an integral part of the business model as the Hansards linked their lending to the exclusive right to purchase the fishermen’s catch at a predetermined price.

Another major finance activity was money exchange. Currencies across the Baltic differed considerably. The silver mark of Lübeck was a key reference currency but most of the large cities, like Riga and Gdansk had their own currencies. The Scandinavian rulers as well as the German princes were minting coins and tried to enforce their use in the cities belonging to their territories. Burgundy and England too had important currencies, which meant that traders were constantly obliged to use foreign exchnage. To avoid having to ship vast amounts of gold and silver in various denominations around the place, a lot of this was done through Bills of Exchange. Say Bernd Pal in Tallin would issue Bill of Exchange, drawn on himself in Riga Mark of silver. That could be exchanged into a Bill of exchange drawn on a Lübeck merchant in Mark of Lübeck at an agreed exchange rate. The exchange rate was also often use to hide the interest on the loan element of the instruments.

Again, the people who would do that were Hanseatic merchants, rather than banks. Once a merchant has risen through the ranks and joined the city council, he will have to spend a lot of time on political issues, sometimes even go on long missions abroad. Unless he has an excellent setup with great apprentices or a competent successor, it will be difficult for him to keep all the different balls in the air, making sure goods arrive on time, payments are made when due etc., That makes finance and real estate more attractive. Lending money or renting out houses requires less oversight and leaves room for political passions, which is why most creditors tend to be the most senior and most powerful people in town.

Bottom line is that there was a lot of banking activity in the Hanse, just that it wasn’t performed by banks. In the same way that the network system precluded the emergence of large trading firms, it also prevented the creation of large banks.

In most markets banks can offer loans on commercial terms superior to individuals. That is down to three reasons. First, they make a spread on the difference in the interest rate they pay on deposits and the interest they charge on loans. The second element is diversification. Banks have large portfolios of loans so that if one borrower fails, the bank can sustain the loss. And third, at least in principle Banks have superior information and sophisticated tools to assess the probability and severity of default.

When the Hanse was at its height, none of these advantages cut through. Deposits were quite rare in a system where merchants kept running their business literally until they dropped dead. They never cashed out. Diversification too was of limited benefit given that the market was comparatively small and major events, such as wars or climate effects led to correlation between defaults. And finally, the network was a much more efficient information and risk mitigation model than a medieval banking house.

Only in the end markets of the Hanse, in London and Bruges did a banking model have a major advantage over the individual merchants, and that is exactly where you find the great banking houses operating. The victim of the privateer Paul Beneke was a banker, Tommaso Portinari, main representative of the Medici bank in Bruges. These banks would offer loans secured by bonds or Bills of exchange. For instance, it allowed a German merchant to use a Bill of Exchange drawn on another Hansard back in Hamburg to purchase goods from a Catalan. The Catalan would not accept the Bill of Exchange on a guy he had never seen or heard of, but the bank would.

We know from English records that the Hanse merchants were some of the most prolific users of lending services in 15th century London.  One example of such a heavy user of banking services was Hildebrand Veckinghusen.

The largest set of papers relating to the business of a Hanse family is the Veckinghusen archive consisting of 12 account books and 600 letters, today part of the UN World Heritage. They trace the career of Hildbrand Veckinghusen whose ambition exceeded many of his contemporaries. He had based himself in the Hanse Kontor in Bruges from where he rapidly expanded, trading not just in the classic Hanseatic markets but down into Southern Germany and even Venice. The scale of his business was impressive. In 1411 he claimed to have bought goods worth 70,000 ducats after having sold wares for 53,000 ducats. He traded in everything, including luxury goods like amber from Prussia and furs from Novgorod. But also bought salt in vast quantities. To fund this expansion, he turned to Italian bankers. But he was just not lucky enough to play in that league. His associates lost goods and one defrauded him, the figs he ordered from Italy arrived rotten, as did some rice. When the economy tanked in the early 15th century, leverage ended up biting him back and in 1422 he was arrested for not paying his bills and was put into debtor’s prison.

All the way into the 20th century historians had dismissed Veckinghusen as the exception that proves the rule. Hansards, so the story goes, were sober, calculating traders who refrained from speculation and excessive risks. In particular Hansards allegedly did not like credit, in fact they had it banned.

And indeed, there were explicit decisions by the Hanseatic Diet banning the use of credit in 1401, 1411, 1415, 1417, 1418, 1423, 1434 and 1447. Does that mean the Hanse was opposed to lending in principle? Most people believed that until the 1980s when Stuart Jenks took a close look at the background of these bans on borrowing issued in the early 15th century.

What came out was an utterly fascinating but extremely geeky story. So, if you are not particularly interested in the intersection of macros-economics, finance and politics in the 15th century, fast forward, wild guess 4 minutes and we will talk about more accessible topics.

The first official ban on borrowing was issued in 1401 and applied specifically to Bruges.

At that time Bruges, like the rest of Flanders was part of the duchy of Burgundy. The duke of Burgundy was Philipp the Bold a man much engaged in war. As such he was always short of the gold he needed to pay the troops. That seems surprising since he was the ruler of the most active commercial and financial markets in Northern Europe, Bruges, Ghent and Antwerp and should hence be immensely rich.

Being the overlord is great, but the problem was how to extract the money from the rich burghers of these cities. He could have increased taxes again, but that had been done already. Plus, it tended to affect the poor more than the rich and these wretches had a tendency to revolt.

If not by tolls and taxes, another way territorial lords funded themselves during this period was by manipulating the currency. Territorial lords, like a state today had the right to determine what was legal tender in their lands. Specifically, they could declare that new coins are being issued and that everyone had to come and exchange their old coins for the new ones. The way the lords made money from that was by handing back less gold or silver than they had received in the exchange.

The victims of this cash extraction could only avoid a loss by two means. Either they melt their coins down and send them abroad. Or they could simply hoard them and wait for better days.

To prevent the former, the lord would issue a ban on all exports of gold, silver or coin upon severe punishment. Whether that works depends a lot on their ability to enforce the ban. And quite frankly a high medieval prince did not have the means to check every transport of grain, cloth or wool for some gold ingots.

A territorial lord who had gone through a couple of rounds of these kinds of devaluation finds himself confronted with a simple question. Is the reason that so few coins are presented at the mint down to either, that there is no more gold left in the country, or is it down to people hoarding precious metal.

In 1399 the duke of burgundy came up with a way to find out. He ordered that from now on all transactions had to be made in cash. That was a shock to the system. We may be in the 14th century, but as we have seen with the Bills of Exchange and the Bearer Bonds, a lot of commercial transactions were already cashless. That was even more the case in Bruges, the financial centre of Northern Europe.

The citizens of Bruges were as unwilling to walk around with the equivalent of hundreds of thousands of pounds then as we would be today. A merchant coming to Bruges would set up an account with a Bruges banker, often the host he was staying with. This banker in turn had accounts with most other bankers in Bruges, so that any transaction could be settled account to account. Alternatively, the parties could use bills of exchange, bearer bonds or banker’s drafts. If the merchant was creditworthy, he may also be granted an overdraft on the account or could borrow funds to pay for the merchandise.

That way nobody ever saw any gold or silver coins.

But the duke was convinced they existed, based on the irrefutable evidence that these moneybags seemed to be literally coining it. So, to lure out these elusive florins, livres, pounds and marks, the duke made the city of Bruges demand that all transactions have to be done in cash.

So, instead of handing over a Bill of exchange in lieu of payment, the buyer would have to cash his paper and bring the coins to the seller. Or if the buyer was buying in credit, he needed to get the banker to give him the funds in coin and then hand them to the seller. At that point it was clear who had what coins at home and the duke’s men could come and demand them to be swapped into the inferior specie.

Somehow the grand plan backfired, and badly. Because the duke, great warrior that he was, was no economist, let alone an expert in how money is created. I guess nor are you, so let me take you through a little game.

Imagine there was only one bank in the world with a capital of $100,000 and that is all the money that exists. If I were the luckiest man in the world and was allowed to borrow these $100,000 from this bank, I would receive $100,000 in cash from the bank. The bank now books a claim of $100,000 against me on their balance sheet. I take the $100,000 dollars and buy a house. The person I buy the house from receives the $100,000 in cash and puts it into his bank account with the same bank. The bank now has the $100,000 in cash that they can lend that out again. If you are the second luckiest person in the world and allowed take this $100,000 loan and buy a house, the same thing happens. The Bank books another $100,000 loan as an asset on its books. The seller of the house puts the coins back in the bank, so that there are now loans and deposits of $200,000 in the world, whilst the total number of coins is still only $100,000.

By 2023 we have gone through a couple of iterations of that process so that today the amount of USD cash in circulation is about 2.4 trillion and the paper amount, the so-called M2 is almost 10 times that, 21 trillion.

I think we can forgive our friend the duke of Burgundy for not getting it.  How could he have known that there was a whole wall of totally legitimate money without any coins? When he demanded settlement in cash for every credit transaction, Bill of exchange etc., the financial system in medieval Bruges went into meltdown. There was already so much more paper money than cash in circulation that there was no way this could be covered. Demand for coins went stratospheric and the nominal price of goods crashed. To get an idea what happens when you do that, google Plano Collor, a more modern equivalent of a similar policy in Brazil in the 1990s.

So, this is the background to the Hanse ban on borrowing. There is financial chaos in Bruges. Coins are hard to come by, which creates hyperdeflation. Merchants who bring in goods to Bruges will get paid a lot less for their goods than they had hoped for. At the Kontor in Bruges it is panic stations.

Remember how the bill of exchange works. Our friend Bernd Pal is sending beeswax to his partner in Bruges for sale as well as a bearer bond for him to cash so that the company can buy some cloth. What he does not send is coins, silver or gold.

His partner in Bruges now has a problem. He has to turn the Beeswax and the bearer bond into local currency and not just into money as an accounting measure, but into actual coins. Even if he manages to do that, the exchange rate is likely absolutely terrible. He then goes and takes the coins to buy the cloth. Cloth prices too have fallen thanks to the deflation, but that is unlikely to be enough to make up for what has been lost on the exchange rate.

That causes a heavy loss to Bernd Pal for which he will blame his partner. Now imagine if Bernd Pal had issued his Bill of exchange in local Bruges currency, in Pound Grote. At that point the associate in Bruges is really in the dumps. Either he accepts the Bill of exchange and pays out the Pounds Grote which means he takes the loss on the exchange rate, or he refuses the Bill of exchange, at which point his own and Bernd Pal’s credit is utterly destroyed.

The merchants at the Hanse Kontor in Bruges realise that something needs to be done urgently. They need to stop this flow of Bills or exchange and other credit instruments coming in from Cologne, Danzig, Riga or Lübeck, at least until this madness is over. The Kontor writes to the Hanseatic diet in Lubeck and asks for them to ban the use of credit in Flanders. Initially the participants in the diet did not quite understand why this was such a big issue. But in the second round they realised that they may lose either the Kontor in Bruges or the good credit of the Hanse merchants in Flanders. So, they reluctantly issued an order to block the issuance of credit. Once the madness is over, the ban is lifted again, and things return to normal.

The duke of Burgundy tried the same stunt again 2 or three times and the Hanseatic diet responded again with a ban on the use of credit. These bans were again lifted once the issue was over.

And that means the Hanse had no problem or objection to credit or cashless payments at all. They blocked its use in circumstances where princely shenanigans caused serious harm to some of the merchants.

So, banking and the use of financial instruments was an integral part of the Hanseatic trade. There was nothing unusual about the way they operated.

However, there was one significant difference between Hansards and their Italian, English, Flemish and Spanish counterparts. They did not use double bookkeeping. The trading records we have from this period suggest that accounting was a complete mess. A Hansard merchant literally had no idea whether his assets and liabilities were balanced, nor did he have a reliable cash forecast. It often took years to work through the collection of letters and order books to reconcile the accounts of a company once one of the partners had left.

Not knowing how much equity a business has is not something that one would want to disclose to the bank when looking for a loan. That may be another reason that there were no banks and that Hanse firms never grew to the size of a Fugger or Ravensburger. They simply could not handle it.

I actually struggle to imagine how they even managed what they had. As we have seen with Bernd Pal, even relatively small merchants would be involved in 3 or 4 different companies whose goods and finances he had to keep separate from his own. Some of his Bills or exchange or bearer bonds were issued in his own name, some in the name of the company, all with different due dates. Cash had to be kept separate and tracked. It really is mindboggling.

And finally, a word about all these currencies. Having all these different coins and frankly mad monetary policy must have been a major problem. A large part of banking in the Middle Ages was foreign exchange. Either direct exchange of foreign coins into local currency or by issuing some sort of traveller cheques which allowed a crusader or merchant to draw funds in lands far away. In both cases the foreign exchange banker would make a handsome profit, usually about 5%.

This made trade more expensive than strictly necessary which is why the Hanse tried to resolve the problem. Many cities had acquired the right to coinage during the 12th and 13th century. The cities did not try to turn their currency into money-making schemes the way the dukes of Burgundy and pretty much all princes were doing. They wanted their currency to remain stable. Cities would form currency clubs that attempted to regulate the quality of the coinage. The most important one was the Münzverein of the Wendish cities. This was formed immediately after the peace of Stralsund and included Lubeck, Hamburg, Wismar and Luneburg as well as a number of associated members. They committed to rules about the minimum silver content in the mark, they had ordinances about how the mint and its personnel, and they would procure the precious metal together from Bohemia. This did help a bit, but even within this club discipline was sometimes lax and it took until the 16th century before they issued their first joint coin, a large silver 1 mark containing 18g of sterling silver.

Having a stable currency would have been a huge benefit to the Hanseatic League and Northern and Eastern Europe in general. But the currency clubs operated outside the context of Hanseatic diets, which did slow down financial integration across the association so that there never was a common currency across the region.

How important this could be is shown by the example of England, the great rival of the League in the 15th century and the emerging world trading power. England had one currency, pound sterling that was legal tender across a sizeable territory, and – most importantly – could not be used as an ATM for the royal purse. Since the 12th century the quality of the English coins is checked every year by the Chancellor of the Exchequer, financial leaders, representatives of the Royal Mint and the Worshipful Company of Goldsmiths. And this is not a joke, the process happens every year and once the Assay office has confirmed the accuracy of the coins, the verdict is read out by the clerk of the Goldsmith’s company on behalf of the Senior Master and Kings Remembrancer, a title going back to 1154…..only in England.

Which is where we will be going next week. We are now in the period where the Hanse begins to notice the unintended consequences of its success in the war with Denmark. Taking control of the herring market in Scania and banning the Dutch and the English from access sets off a sequence of events that turns the great victory into a smouldering calamity. I hope you will join us again next week.

Before I go just a big thank you again to all my Patrons who kindly keep this show on the road. I really, really appreciate your generosity. And if you want to join, there is still a chance to grab one of the unlimited patron subscriptions at or

And finally, bibliography. This episode relied heavily on:

Jahnke, Carsten: Die Hanse | Reclam Verlag

Jahnke, Carsten: Netzwerke in Handel und Kommunikation an der Wende vom 15. zum 16. Jahrhundert am Beispiel zweier Revaler Kaufleute. Netzwerke (

Stuart Jenks: War die Hanse kreditfeindlich? on JSTOR

Historical documents of Hanseatic League added to UNESCO archival heritage list | Tallinn