Cities of Commerce: The Institutional Foundations of International Trade in the Low Countries, 1250–1650 by Oscar Gelderblom (review)

This is a big book about a very little space. The distance between Bruges and Amsterdam is barely 200 kilometers, but the four centuries that Gelderblom chooses witnessed the rise and fall of no less than three great commercial cities there—Bruges, Antwerp, and Amsterdam. Big questions are also addressed: What drives economic growth, strong states, virtuous institutions, or something else? What is the role of individuals, politics, or the vagaries of business? Finally, how do the micro-histories of three cities of the Low Countries matter in the broader context of Europe and the world?

The author is entering an already buzzing field with his own argument that seeks to supplant or nuance those of Greif, North, Ogilvie, and others.¹ He seeks to show that the three great commercial cities of the Low Countries owed their rise to successful competition between urban centers, in a richly urbanized landscape, allowing for adaptation, innovation, and, ultimately, domination of an economic hinterland, albeit for a limited time. Moreover, although the dynamic of change was similar in the three cases, the details differed significantly from one case to the other.

Bruges rose to prominence after c. 1200 when its role as port/ entrepôt took hold. Key to the city’s rise was the Flemish textile industry in which Bruges was both producer and market for regional cloth centers. These products and the broad privileges granted to foreign merchants by the counts of Flanders resulted in a complex urban economy with much interaction between resident foreign merchants and native institutions. Crucial to Bruges’ success was the mediation of the city’s hosteller/broker guild, the members of which functioned as intermediaries both in trade and in urban politics on behalf of their merchant clients. According to the Gelderblom, the implied and real competition of nearby port cities often provided the catalyst for trade privileges granted to merchants. Masters at this political game were the German Hanse, which seceded from Bruges on several occasions in the fourteenth returning only after they secured enhanced privileges. Thus, exchange facilitated by hosteller/brokers, embedded in a continuous process of negotiation and accommodation with resident foreign merchants, explains the rise of the first commercial capital. So successful was this process that it endured well into the fifteenth century, even beyond the era of hosteller/broker dominance.

Antwerp emerged from the shadow of Bruges through a gradual accumulation of advantages, most significantly the political support of the reigning Burgundian dynasty, which unified the Low Countries during the fifteenth century. Bruges rose in revolt against Maximilian of Habsburg, who succeeded in ordering foreign merchants to leave the city for Antwerp. By 1530, Antwerp resembled the Bruges of a century earlier in its reliance on a broker/hosteller network and its role as a both market and transit point for goods. Amsterdam in turn profited from Antwerp’s example and ill fortune in the Dutch revolt, which led to the city’s capture and sack by the Spanish army of Philip II. In the wake of this violence, both foreign and native merchants fled to other commercial cities of their network, Amsterdam chief among them.

Unlike either of its commercial forerunners, Amsterdam refused to grant individual privileges to foreign merchant communities. Instead it improved the distribution of public information, publishing exchange rates and commodity prices, while allowing brokers to mediate and supervise trade. A game changer was the invention of the joint-stock company, which financed voyages of discovery and made its shares negotiable at the Amsterdam Bourse (a name that harkened back to a square in Bruges).

Gelderblom’s Cities of Commerce, a work informed by both history and economic theory, should evoke both discussion and further work about the origins of the Western European economy.