The Hanseatic League was a late-medieval commercial and defensive confederation of independent merchants that operated mainly from the Baltic to the North Sea--from Britain to Finland--during the Late Middle Ages and early modern period (c. 13th–17th centuries). The league was based on trust, reputation and reciprocal relations; created to protect economic interests and diplomatic privileges in the cities and countries along the trade routes the merchants visited. Lübeck, the largest German port on the Baltic Sea, was for several centuries the ‘capital’ of the Hanseatic League. The league’s impact was profound enough that it not only structured economic life, but it is also associated with a specific architectural style--Brick Gothic--that characterises cities such as Lübeck, as well as Tallinn (Estonia) and Gdansk (Poland).
Given the geographical reach of the merchants' trade relations, the question arises as to how the Hanseatic League managed to hold together and dominate this commercial space for more than five centuries. Looking at characteristics of the rise and fall of the League, one can draw interesting parallels with many of today’s commercial issues and ideas.
Factors explaining the rise of Hansa:
- Independent cities, local economy, small scale - Hansa was based on small, independent commercial network of trading cities and stations
- Network model - Hansa was an enterprise network based on the needs of the merchants that featured a non-hierarchical, intangible, little formalised and constantly changing structure
- Common business culture and common goals - The cohesion of the network was produced less through formal rules and contracts than through the presence of a common business culture and common goals
- Actor-centred approach - Hansa was a complex web of social relations and the actor was at the centre of the analysis, unlike the market, the relationships between the actors are not solely regulated according to competition and price or supply and demand
- Reciprocity - The League’s transactions are determined by a web of social factors such as obligation, trust, solidarity and reciprocity
- Networks of trust - Hansa’s merchants developed strategies for holding together this geographically extensive network of contacts over the centuries. In network theory, trust is seen as a key variable in economic activity
- Tradition of apprenticeships - The Hanseatic tradition of apprenticeship contributed to results in the creation of a pool of reliable partners who were personally known and whose trustworthiness could be reliably assessed
- Low transaction costs - Hansa merchants kept their transaction costs low. ‘Transaction costs’ are understood as all costs incurred in the exchange of goods and costs associated with the loosely formalized organizational structure
- Culture of openness - In the Netherlands, for instance, the initial relative openness of the Hanseatic trade network had been a crucial ingredient for the expansion along the Atlantic coast to Portugal and the Mediterranean.
Factors explaining its decline.
- Homogeneisation and segregation - Lübeck undertook measures that were aimed at homogenization in the interior and at closing ranks against outsiders. For instance, ever more restrictive admission standards were introduced so that finally only merchants who were actually born in a Hanseatic city could become members
- Hierarchy - Another constraint was instituted at the turn of the 16th century. Given the growing dependence of smaller Hanseatic cities on their rulers, merchants from these cities were excluded from enjoying privileges abroad or participating in Hansa. This created, as it were, a two-tiered society
- Higher costs and war - The growing number of regulations to standardize and secure trade, along with the task of financing warships and wars proved to have a boomerang effect that ultimately drove up again the previously lowered transaction costs
- The introduction of ‘management’ - Due to the accumulating signs of deterioration, efforts to reorganize were undertaken which culminated in 1556 in a binding agreement of confederation that was signed by 63 cities. For the first time the Hanseatic cities named a permanent managing director: syndic Heinrich Sud
- Currencies instead of trust - New vehicles of credit imported from Italy outpaced the Hansa economy, in which silver coin changed hands rather than bills of exchange
- Greed - The individual cities that made up the League had also started to put self-interest before their common Hanseatic interests.