The Hanseatic League

Tracking interesting signals, new and old ideas in the field of economics and business — The Hanseatic League

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.
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