The rise and fall of the Hanseatic League

Today, we typically think of coalitions in the context of modern electoral politics. So it might be surprising that one of the greatest case studies in the history of coalitions is a community of medieval German merchants known as the Hansa.

Starting as individual traveling traders, the Hansa built up coalitions for collective bargaining, collective action, and collective security. Through this process, they formed Northern Europe’s first ever long-distance trade network.

Without corporate structures, they built supply chains that distributed goods between Northern Europe’s major ports, with capillaries that spread into each city’s hinterlands. Without formal territory, their laws governed trading hubs spanning thousands of miles, from London all the way to Western Russia. And, despite being composed of hundreds of member cities, the Hanseatic League had no head of state. Yet the Hansa still managed to sign treaty after treaty with foreign rulers and, a few times, even fought (and won!) wars.

The Hanseatic system lasted for nearly 500 years. Like any governing system, it struggled with division, factionalism, and defection – and eventually, it would succumb to these forces. While Hansa alliances proved impermanent, their impact was enduring. They made Northern Europe’s trade routes secure and grew European state capacity to support commerce.

The birth of long distance trade

Europe during the Dark Ages was in a state of dire subsistence. Europe’s population declined for several centuries after the collapse of the Roman system due to low crop yields. Historians and archaeologists have not yet reached a consensus on the causes, but there are a few suspects. The collapse of Roman state capacity made it harder to collect taxes, which meant that irrigation infrastructure like aqueducts fell into disrepair, and the yields of the surrounding farms fell with them. A volcanic eruption in 536, likely in Iceland or North America, triggered the Late Antique Ice Age, which chilled the climate of the northern hemisphere for approximately 200 years.

While the causal story is hazy, its impact on European life is painfully clear. The Roman system of smallholder farms collapsed, which dragged previously independent farmers into serfdom on large manors controlled by landowners. Without significant agricultural surpluses, Europe could no longer support a large population of craftsmen and artisans. As the artisan class vanished, so too did urban markets, and even money. Copper and silver coins, which Romans had used in day-to-day transactions, fully disappeared. Some kingdoms still minted gold coins, but these were primarily stores of value to pay administrative fees and rarely used in trade. Europe’s population by the 600s, reduced to subsistence, serfdom, and barter, was just 14–18 million people. But shortly after hitting rock bottom, its fortunes began to reverse.

Starting in the 800s, the flow of goods and people – especially in Northern Europe – began to pick up tempo. Temperatures recovered during what is known as the Medieval Warm Period (900–1300) which improved agricultural yields by making more regions arable for longer stretches of the year. Simultaneously, medieval farmers advanced their agricultural processes in a period that archaeologist Helena Hamerow describes as a Medieval Agricultural Revolution. Northern European farmers adopted the moldboard plow, an oxen-driven heavy plow that significantly increased the amount of highly arable land available for farming by making it possible to plow nutrient-rich but badly drained river silt.

Crop rotation got more advanced. What started as a two-field rotation system (farmed and fallow) became a more advanced three field system: where one field grew grain, one lay fallow, and a third grew either legumes (which nitrogenated the soil that had been depleted by a previous grain cycle) or oats (to feed the farm horses). By approximately 900, the horse collar arrived in Northern Europe, making it possible for horses, faster and more powerful than oxen, to pull plows for the first time.

Better climate, more arable land, and better farming techniques lifted Europe’s crop yields to above subsistence levels for the first time since the Roman period. After several centuries of decline, Europe’s population grew from 18 million in the 600s to over 70 million by the 1300s – nearly triple the population of the Roman period. The nutritional surplus allowed for Europe’s first significant artisan class since the Roman empire. Each town had common craftsmen like blacksmiths, leatherworkers, and carpenters. But local skills and resources allowed for the emergence of specialized crafts, which were unique to specific regions and could therefore be traded.

Tax-hungry lords across Europe began to set up permanent marketplaces for their growing communities. And so hundreds of towns formed in Europe, filled with workers who had flocked from countryside manors. These towns were the first substantial permanent markets in Northern Europe’s history.

As production accelerated, so did shipping. The warmer climate meant waterways in the North and Baltic Seas were navigable for longer stretches of the year. Meanwhile innovations in boatmaking dramatically improved shipping capacity. Excavations of the few surviving ships from this era show that, in the span of a few centuries, vessels tripled their average tonnage from 10 to 30 while dropping the number of rowers required by a factor of four.

The breakthrough in tonnage starting in 900 can be credited to the knarr, a Viking-style ship that was shorter and wider than the longboat that preceded it, allowing it to load substantially more cargo with a smaller crew. Prior to the knarr, trade convoys had to carry cargo on longboats, which were agile but could only carry small fractions of what the knarr could. 

When Northern Europe’s first long-haul merchants set off on their voyages, they faced a world that had not yet been ordered for trade. Sailors had to worry about pirates in the Baltic and shipwrecks at icelocked winter ports.

Riverways gave merchants access to inland communities, where they could find products at lower prices to then sell for a profit in major port cities. But riverside towns were more interested in their own engineering projects or grinding their grain and so would block rivers with dams and water mills, and they would redirect water to irrigate fields. 

And even if a river were clear of obstructive mills or dams, it might be heavily punctuated by toll stations. The Rhine River, a key shipping artery that connected inland Germany with the Baltic coast, had tolls approximately every five kilometers.

Under the laws of the Holy Roman Empire, the right to collect tolls on the Rhine could only be granted by the Emperor. But unauthorized tolling stations, or tolls levied in excess of what was authorized, were so rampant that the malpractice had a name: the lonia iniusta (Latin for ‘unjust tolls’). Some local authorities enforced toll collections along rivers by running chains from bank to bank, making it impossible for a boat to pass without paying. Others would patrol the river on their own boats and deny vessels passage until they paid up.

In the first four years of the Great Interregnum Period (1250–73​​), when the Empire had no emperor, the number of toll stations on the Rhine doubled to 20. This is the origin of the term robber baron: local barons, operating out of riverside castles, would set up illicit toll stations and demand significant shares of merchant cargo in order to pass.

The journey on land wasn’t much easier. Toll booths were similarly common. Nominally, these were to pay the landowner for the maintenance of the roads and bridges but in reality they were usually left dilapidated. Merchants voyaging on land had to load their wares on the backs of mules and horses (which were about a third the speed of ships). The narrow widths of medieval roads meant these caravans stretched out in long lines, leaving animals and cargo physically exposed. These vulnerable, slow moving, value-dense caravans attracted bandits who roamed the isolated roads between towns. It was nearly guaranteed a caravan would face an attempted robbery – either illegally by bandits or (somewhat) legally in the form of a toll shakedown – over the course of a sufficiently long trip.

As a matter of safety, Northern European merchants learned to move together in armed groups. These traveling merchant bands were called hansas, a Lower German word meaning ‘company’ or ‘troop’. When a hansa formed for a trip, they elected an alderman (literally ‘elder man’) who would speak on behalf of the group to the various authorities – lords, princes, bishops, and other rulers – they might encounter along the way.

Once they completed the arduous journey, the merchants had to deal with the local governments of their destination cities, each of which had different and constantly changing laws. To protect the local merchants and craftsmen within their city walls from competition, princes might demand exorbitant taxes from foreign merchants or deny them access to the city altogether. Merchant bands had to negotiate collectively to secure the right to trade within each city in which they wished to conduct business. And if they made it into the city walls, they might not make it out: capricious lords might suddenly imprison foreign merchants (as happened to German merchants in England in 1468 and Novgorod in 1494), raid their offices, or seize their merchandise.

Local laws threatened foreign merchants more than they protected them. Most town courts, themselves newly formed, had minimal experience adjudicating long distance commercial disputes. When such disputes did arise, courts could take weeks or months to arbitrate them, and were heavily biased towards locals over foreign traders. Without sovereign states, merchants were left dealing with a fractured landscape of town courts, where each market had its own idiosyncratic laws. And because foreign traders could evade punishment by fleeing overseas, courts in England, France, Italy, and the Holy Roman Empire often collectively punished foreign merchant communities for the unpaid debts of their countrymen.

The lack of early medieval records makes it difficult to quantify just how much Northern European commerce grew as a result of continuous long distance trade. Before the late medieval period, Northern Europe’s archaeological record of trade shows just several dozen sites known as emporiums: small, temporary settlements outside of towns where foreign merchants traded with locals. But starting in the late medieval period (1300 to 1500), Lower German merchants began to change this.

We can grasp that scale from fragmentary snapshots of surviving port records. In the 1390s, London received over 350,000 squirrel pelts from Novgorod annually, eventually reaching 600,000 pelts per annum. Starting in the late 1400s, Poland exported over 9,000 tons of grain annually to Western Europe, eventually growing to 180,000 tons per annum by the 1600s.

Better flows of raw materials and finished products permanently transformed regional crafts from artisanal to proto-industrial scales. We can see this vividly in the case of Europe’s consumption of fish. Fish was a staple in medieval Europe, especially during the more than 130 days of the year that the Church required its adherents to abstain from meat. In the periods where we’re able to reconstruct the data, fish accounted for 10–20 percent of medieval Europe’s spending on food and about five percent of its caloric intake. So as Europe’s population grew, many towns began to deplete their local fisheries.

This was not the case for Scandinavia, whose coasts had such ample stocks of fish that legends arose saying that you could scoop them up from the water with your bare hands. And the region’s cold climate was perfect for preserving fish. Since the pre-Viking Iron Age, Scandinavian artisans used the region’s months-long sub-zero temperatures and strong coastal winds to naturally freeze dry their fish, making them shelf stable for years. Centered around Skania, on the southern tip of Sweden, Scandinavia’s cured fish industry processed up to 84 million herrings annually, or 7,000 barrels per year between 1366 and 1369. The industry was dominated by Hansa merchants, who supplied salt from Lubeck and shipped Skanian fish to ports across Northern Europe.

But the most important change was in the industrialization of cloth. Before this, peasants had woven wool clothing for themselves and their families. Weavers used vertical looms to weave worsted fabrics, like the felt of a wool jacket or the green of a pool table, from coarse wool. Starting around 1100 AD, the horizontal loom began to change this. It improved weaving productivity in terms of rate, size, and quality. A worker on a horizontal loom could weave more than three times as fast as they could on the legacy vertical loom. 

As cloth output grew, so did the demand for wool – particularly English wool, which was famed for its fineness. In 1280, England exported 25,000 sacks of wool. Its wool exports peaked in the early 1300s at approximately 45,000 sacks per year. The English then started to tax wool exports to encourage the growth of a local industry for weaving and English woolen cloth production. As a result, English cloth exports grew from 10,000 cloths exported in 1350; to 60,000 in 1446; to 140,000 in 1540. Wool merchants and farmers in England’s wool regions became so wealthy that they funded the construction of beautiful, imposing ‘wool churches’ that are still around to this day. 

The trade created a regional industrial cluster in Flanders, just across the English channel, that specialized in pre-made clothing. The Flemish cloth trade turned Bruges, the region’s only town with sea access, into the heart of medieval European commerce. Hanseatic merchants exported English cloth, wool, and dyes to Bruges and imported goods from across Northern Europe to satiate Bruges’ sizable middle class.

By the 13th century the cog usurped the knarr as the dominant trading ship on the Baltic. Vikings had probably preferred knarrs for their rounded, V-shaped hull that could handle rough, open waters, were easy to repair at sea, were faster, and could be rowed away when winds were unfavorable.

By the 13th century, however, merchants began to opt for the cog. Instead of being built with overlapping split logs, these cogs used internal frames and planks of sawn wood. This meant that cogs could be built much larger, with flat rather than rounded bottoms. Together these things increased the ship’s capacity tenfold, so a typical cog could carry up to 200 tons burthen. This required high sides, meaning it couldn’t be rowed. Cogs also tended to have a single-square sail, making sailing so simple that cogs needed a much smaller crew. Flat bottoms make ships less stable in high seas, keeping them in shallower, coastal waters, but they give them the ability to beach on shores instead of needing to find a port.

Theoretically, they could have been built much earlier, but the tradeoff may not have made sense until the seas became safer. Alternatively, they could have been too expensive to build until water mills made sawing planks and hammering iron nails less labor-intensive.

Excavations indicate Northern Europe’s shipbuilding industry at this time started building ships according to common standards for the first time, suggesting a diffusion of techniques between shipyards. These standards did not just make it easier to produce more ships. They also improved the quality of the ships – most notably by better sealing hulls to protect cargo from moisture. Before the waterproof hulls, grain had to be shipped in individual barrels, introducing significant packaging overheads. By the 1400s, shipyards began producing hulks, a model of ship that could carry 500 tons and moved even faster than the cog. Fast sailing hulks, with their waterproof hulls, allowed the Livovian towns on the Baltic to start shipping grain to Western Europe.

The merchants didn’t just build better ships; they navigated them more deftly, too. Sailors in Northern Europe developed a shared tacit knowledge on how to traverse the North and Baltic Seas. For example, when sailors needed a more precise bearing, they would drop a lead weighted line overboard to measure the water depth. The North and Baltic Seas are so shallow – with average depths of 300 meters or less – that sailors learned the water depths along their routes with great fidelity. The lead was such a reliable form of navigation that northern European vessels didn’t use compasses regularly until the modern era and charts even later.

These improvements in market access and shipping caused a permanent acceleration in the pace of medieval commerce. For the entire history of the region, merchants had had to travel with their merchandise from its origin to its destination and remain at the destination until they collected payment for their goods. This meant that a merchant’s commercial impact and personal earnings were bottlenecked by the fact that they could only ever make one expedition at a time. And while they were on that expedition, they would lose touch with their home market where new trade opportunities may have arisen.

Starting around the 1200s, this began to change. For the first time in Northern Europe’s history, merchants could remain stationary while they conducted the business of coordinating shipments between origin and destination ports. Stationary commerce created a totally new division of labor. It separated the work of a merchant into specialized layers of procurement, shipping, selling, and financing. Each of these functions could be fulfilled by different people and these people would build their careers in their specialized professions, deepening the cumulative expertise in each one. A merchant could now trade continuously and in parallel, with several shipments in progress, rather than in individual discrete voyages. In an analysis of the wills of Hanseatic merchants, Ulf Christian Ewert and Stephan Selzer estimate that a typical Hansa merchant may have had as many as 40 different trading partners over the course of his career, with many of these relationships lasting decades.

From hansas to the Hansa to the Hanseatic League

The original hansas were bands of Germanic merchants who traveled together for protection against pirates at sea, robber bandits on the riverways, and bandits and brigands on land. Each hansa originated from a common region. There were hansas from Cologne, Hamburg, Lubeck, Dortmund, and scores of other towns. 

The Hanseatic system would ultimately organize around four major trading outposts, known as kontors: London in England, Bruges in Flanders, Novgorod in Russia, and Bergen in Norway. Each of these kontors has its own history, but the most significant lessons in Hanseatic coalitions can be drawn from London.

In England, each of the hansas initially looked after only its own individual interests. Merchants from Cologne secured their first trading privileges with London in 1157, in a charter where King Henry II outlined:

(a)  I grant permission for the inhabitants of Cologne to sell their wine . . . And I forbid anyone to prevent them from doing this or to do them any harm or hindrance.

(b)  I command you to guard, care and protect as closely as my own subjects and friends the subjects and citizens of Cologne and their goods and possessions.

By 1175, the Cologne merchants earned the right to trade freely across England. By the early 1200s merchants from Lubeck arrived at the English ports of Yarmouth, Boston, Hull, and Lynn, bringing in-demand products from Novgorod like beeswax, tars, and furs. 

Starting in the 1260s, English officials began to lump all of the different German merchant communities into a single unit. This big-H Hansa aggregated the little-h hansas of different Lower German regions. Initially this unity was an externally imposed fiction, as Cologne and Lubeck still saw each other as rivals in England.

But the English authorities regulating them as a single group ultimately united the disparate German communities. In 1275, London officials charged German merchants with the repair and maintenance of Bishopsgate, the city’s northern entrance. Simultaneously, London began to charge the merchants murage, a tax on goods entering and exiting the city. 

The merchants found these obligations too burdensome. When they resisted, King Edward I summoned both the merchants and London authorities to the Exchequer in 1282. He ruled that Germans would be responsible for the repair of Bishopsgate and pay one third of the wages of a watchman at the gate. As part of the agreement, Edward I granted the German merchants the right to elect their own alderman, and freedom from murage in perpetuity.

Around the time of this ruling, merchants from Dortmund, a Lower German town, mediated a peace between the Cologne and Lubeck communities in London. There are few surviving details about this mediation, but we can infer from the timing that it involved common grievances over murage and Bishopsgate. With collective responsibilities, collective privileges, and inner alignment, the Hansa in London was fully unified.

Their privileges in London confined Hansa merchants to live and work within a 45,000 square foot (0.4 hectare) area called the Steelyard on the banks of the Thames. As the site of all of the city’s Hanseatic trade, it was also known as the London kontor. Members of the Steelyard also had to elect a council of aldermen to represent them to city and court officials. To overcome factionalism, they designed an electoral system where merchants could only vote for alderman candidates who had been born in a different Hansa region than their own.

Shortly after uniting, they learned the importance of confirming their trading privileges with English authorities. In 1316, Hansa merchants entered a legal battle with William de Widdeslade, a London merchant who accused them of pirating a vessel leaving Flanders for England. While they successfully contested the claims in court, the risk of collective punishment drove them to confirm their rights with the crown. 

The next year, Edward II reaffirmed Hansa merchants’ freedom from taxes, travel, and arrest in exchange for £1,000 (which would have been three percent of the Crown’s total annual tax revenues). Remarkably, he even promised that neither he nor subsequent kings would place new restrictions on the Hansa without their consent. These privileges ensured that Hanseatic merchants paid even lower tax rates than their English counterparts.

At the start of each new reign, the Hansa sought a fresh reconfirmation of its charter. Each successive reconfirmation deepened the precedent and authority of Hansa privileges in England. But they weren’t static. Their strength ebbed and flowed depending on events that strained and strengthened the merchants’ relationship with the crown.

When they could, Hansa merchants won additional concessions by supporting the crown financially. Sometimes they made direct payments for charter renewals, such as they did in 1317. In other cases, they paid for clarifications of the charter. For example, in 1311, in exchange for £100, Edward II amended the existing charter to specify that their privileges extended to Hansa merchants’ heirs. 

But most consistently, the Hansa extended loans to the crown. In 1298, London citizens brought a case against Hansa merchants, claiming they illegally discharged a consignment of wax from a ship in Greenwich when it could only be discharged from London (Greenwich was not yet part of London). The Hansa appealed their case directly to the king and also, perhaps not coincidentally, loaned the king about 500 marks. They won the appeal.

The Hansa’s financial leverage over the crown became even more important at the start of the Hundred Years’ War in 1337. Edward III urgently needed funds to wage the war. In 1338, a year after it began, Hansa merchants lent him small sums in exchange for individual exemptions from his trade blockade on Flanders. In 1339 Edward III’s Hanseatic creditors formed a consortium to better protect their interests. The next year, after extending him a £8,300 loan, Hansa creditors earned the right to collect taxes in 15 English ports until the debt was repaid. When the king was at risk of losing his physical crown, which he had offered to another creditor as collateral, the Hansa creditor consortium purchased the claims.

Even with all the effort the Hansa put into securing privileges, it required ongoing work to ensure they were honored. English kings did not always honor Hansa privileges and sometimes levied taxes on them from which they were supposed to have been exempt. In response, the Hansa would all refuse to pay. In 1347, for example, Edward III raised the duties on English cloth exports. Hansa merchants, citing their privileges, refused the tax and the king eventually gave in.

Such protests against taxation were challenges of collective action. Authorities were much more likely to honor Hansa protections if all the merchants refused to pay a tax. If a Hansa merchant paid such a tax to gain access to some market, it would call into question the legitimacy of the privilege for the whole group. To prevent these defections, the London kontor would revoke Hansa membership to any merchants who broke ranks. This happened in 1385 to Christian Kelmer, a prominent merchant who paid an export duty the Hansa were exempt from, and was thus barred from the London kontor.

The story in London is a microcosm of the broader Hansa saga. While they started as small disjointed cliques, Hansa merchants came together over common interests. It’s in England that we first see ‘The Hansa’ emerge as a proper noun. Their collective economic influence allowed them to deal directly with the king, and steer policy in favor of freer trade. On the one hand, the merchants were at the mercy of English authorities, who could refuse to honor past agreements, levy onerous taxes, and mete out harsh collective punishments. But, on the other hand, the merchants could exert financial leverage over the crown. They secured lower tax rates than even English merchants, regularly won exemptions from export tariffs, and in one case even earned the rights to collect taxes in England.

By the 1300s, the economies of the Hansa towns had become dependent on trade with the kontor outposts. The merchants based in the kontors had operated autonomously in their dealings with their hosts, playing hardball where they felt it necessary. But the Hansa towns grew anxious that the merchants stationed in the kontors might be too harsh, thereby costing them access to their lucrative markets.

In 1356, this anxiety brought the Hansa from different towns together. Representatives from dozens of Hansa towns gathered in Lubeck for what would be the first ever Diet of the Hanseatic League. The Diet decided to send an envoy to Bruges, another major Hansa kontor, to inform the Hansa merchants in Bruges that, henceforth, their negotiations with local authorities would only be valid if they were approved by the Hanseatic League. The League sent similar envoys to the other three kontors in London, Novgorod, and Bergen.

In 1358, Bruges was in crisis due to the Hundred Years’ War. The city government, desperate for revenue, levied taxes on salt and grain. This outraged the Hansa, as Bruges had traditionally allowed them to trade salt and grain freely from ship to ship. In response to these new taxes and previous unaddressed grievances over unpaid indemnities, the Hanseatic League planned a blockade. 

Not only would they exit Bruges, they would leave the County of Flanders entirely. The Diet required Hansa merchants to withdraw from Flanders by 1st May. When returning home, all Hansa merchants had to present official certificates issued by authorities in their destination ports to prove they had not come from Flanders. These regulations extended to merchants sailing to England, Scotland or Norway. The Hanseatic League punished defection from the blockade with the permanent exclusion from Hansa privileges.

The blockade was painful for all parties. But for the Hansa, it was a resounding success. In 1360, Bruges conceded to all of the Hansa’s demands. They were granted indemnities for their previous losses and gained the new right to conduct retail trade directly with consumers in Bruges. It demonstrated to German towns that the clearest path to prosperity was ascension into the Hanseatic League.

The League goes to war

Despite the success of the Bruges blockade, the Hanseatic League faced coordination challenges almost immediately. The first challenge arose in 1361, with King Waldemar IV of Denmark. In back to back assaults on Hansa interests, Waldemar IV kicked out the Hansa from the herring market in Skania and used Denmark’s naval power to block Hanseatic access to the Danish Sound. The Sound, a web of waterways between the Danish islands and peninsulas that separate the North and Baltic Seas, was the choke point in the east-west trade that the Hansa had monopolized.

The League’s initial response stuck to its usual playbook. Like it did with Bruges, the League attempted to embargo Denmark. But this didn’t work because other merchants, mostly from Dutch towns like Kampen, continued to trade salt with the Danes, keeping the herring trade alive.

In April of 1362, the League appointed the mayor of Lubeck, Johann Wittenborg, as the supreme commander of the Hanseatic forces. Wittenborg sailed for Copenhagen with a fleet of 52 ships. The Hansa troops were easily overpowered. Wittenborg lost 12 ships to Danish forces and was forced to flee to Lubeck where he was condemned to death for his loss.

This defeat left the Hansa in disarray for several years, during which their negotiations with Denmark dragged on but bore no fruit. Starting in 1366, things changed. Several of Waldemar IV’s enemies realized they shared a mutual interest with the Hansa in ousting him. The Grand Master of the Teutonic Order (a military-religious order that controlled territories in the Baltics) came to Lubeck to pitch the League on military intervention. And separately, Swedish nobles deposed their king, Magnuss Eriksson, and his replacement, Albert, supported war against Denmark. 

A special Hanseatic Diet met in 1367 to decide whether to prosecute another war. The Diet laid out taxes to be levied at all Hansa ports, as well ship and soldier contributions required from each town. But even at this existential crossroads, the coalition was not united. Many towns pledged only financial but not military support. The inland towns were uninterested in fighting a war at sea. And the Westphalian towns didn’t even commit financial support. Despite this, the Hanseatic League’s expanded alliance, united with Danish nobles rebelling against their king, pushed Waldemar IV out of Denmark on Easter of 1368.

Defeating Waldemar IV marked a zenith in the history of the Hansa. In its first two decades, the League had won an economic war with Bruges and had defeated one of Europe’s most powerful kings. But even at its height, the Hansa struggled to maintain unity.

Nothing is certain except for death and taxes

Politically, the Hansa was a coalition. But economically it was a cartel. It did not just fight obstacles to trade but, specifically, obstacles to their trade. Those obstacles could include competing merchant communities, which they addressed with the most thinly veiled threats. Consider this message dispatched from the Prussian Hansa towns to Nurnberg merchants in 1399:

Dear friends. We wish to inform your worships that some of your fellow burgesses have this year sent copper and other goods by sea to Flanders, which has never happened before and has no precedent. Therefore, dear friends, we warn you and yours in all friendship and beg you to ban and forbid this practice in the future, as we fear – if this practice should continue – that you and yours would thereby suffer loss, for which we would be very sorry . . . 

The Hanseatic cartel was mighty and menacing when it was united. But as it found out, cartels are notoriously difficult to keep together. The cartel had to navigate defection at every layer. At first, the challenge was maintaining unity between different regional communities. But even after the kontors established themselves, they had to deal with individual merchants defecting from boycotts. And then, when the Hanseatic League formed, it had to deal with the issue of local Hansa merchants ‘leaking’ their trading privileges to their non-Hansa partners.

The Hansa had a single cudgel to deter defection: revoking trading privileges. This cudgel only became viable once there was a formal League of Hansa towns, who could collectively shun a town for failing to keep its merchants in line. But it didn’t keep the towns themselves in line.

For example, the Hansa Diet issued multiple edicts requiring ships to travel in convoys during the late 1300s, when the Baltic was unsafe – at first due to a hostile Denmark and then, later, to Mecklenberger pirates. But enforcement of these edicts fell onto the towns. These towns were either unable or unwilling to hold back skippers who didn’t want to wait for other ships before they set sail.

When the Hansa pooled resources to go to war, many towns would free ride or only begrudgingly contribute finances but not troops. In some cases, the towns completely went the opposite direction of Hansa policy. For example, the Wendish towns of Rostock and Wismar harbored the same Mecklenburger pirates that terrorized Hansa merchants on the Baltic. Whenever a Hansa town felt that the responsibilities that came with membership exceeded the benefits it would simply exit, as Breslau did in 1474.

But if the Hansa privileges were so coveted, why would any town ever risk losing them? We can find the answer by tracing the evolution of European commerce from the late 1300s. The Hansa were trying to hold together a monopoly built on legacy advantages and legacy alliances. But a group that was united by shared economic interests will naturally fall apart when those interests drift apart.

Membership of the Hanseatic League was national, and the privileges were meant only for Lower Germans dealing abroad in kontors in London, Bruges, Novogrod, and Bergen, outside the region. The League went to great lengths to prevent foreigners from benefitting. This limited their possible membership, which meant that, as merchants from other places started to compete in the Baltic, they were able to undermine the League’s collective bargaining power.

The Dutch built their own industries and were able to outcompete key, Hansa-controlled industries on price. Instead of depending on Lubeck’s salt to cure fish, they developed their own techniques in which they took evaporated seawater, which had impurities and bitters, and refined it by boiling it down with cheap Dutch peat as fuel. They used this salt to cure fish, which Dutch fishermen caught as far-afield as Norway and Scotland. The faster you can gut and salt a fish after it has been caught, the longer it will last. The Dutch built large, specialized ships with space for salt barrels and workers on board, which allowed them to harvest fish offshore and salt them immediately on deck. While Dutch cured fish was lower quality than its freeze dried Skanian competition, it was cheaper.

Just as they broke the Hansa’s monopoly on salt and preserved fish, the Dutch flooded Hansa towns with their own, cheaper cloth – driving down the profits of Hansa merchants who ran the lucrative trade routes between Bruges and Lower Germany. Similarly they undercut Hansa shippers’ freight rates and disintermediated Hanseatic port merchants by sailing upriver to the inland German towns, where they sourced merchandise directly from producers.

Under competitive pressure from the Dutch, the Hansa monopoly unraveled. Trade with the Dutch benefited some Hansa towns while it threatened others. Most notably, the Livovian towns and the Teutonic Order profited from Dutch exports of their grain to western Europe thanks to the hulk ships that allowed grain transport at scale. Danzig – the de facto leader of the Livonian flank of the Hanseatic League – benefited so much from the Dutch trade that, by 1475, almost one third of all the ships that docked in its port were Dutch.

It became clear in Lubeck and other leading League towns that the Dutch threatened the very existence of the Hanseatic order. As a result, the Hanseatic League went to open war against the Dutch in 1438, restricting their access to the Sound. Unfortunately, their old ally the Teutonic Order took the Dutch side and retaliated by impounding the assets of Lubeck merchants.

The Dutch ushered in a new era of European commerce, on a course that had been charted by the Hanseatic League. The Dutch scaled their new trading empire in a Baltic Sea free of pirates, in large ships that had already been invented, navigating riverways with few unjust tolls, and dealing in cities whose authorities were used to dealing with foreign commerce.

At the same time, political tides shifted away from the centers of Hanseatic power. In Flanders, the Hansa were preoccupied with keeping the Dutch out of Bruges, but the inlet connecting Bruges to the sea was silting over, shifting local economic gravity to Antwerp. By 1520, the Hansa set up a kontor in Antwerp, but only decades after the city had eclipsed Bruges and long after the Dutch had set up shop.

As a new generation of commercial centers rose in Europe, they built on the lessons learned in previous times. Most importantly, these cities developed comprehensive commercial codes. Antwerp unveiled a code of customs in 1545 after consulting with merchants from Spain, Italy, Portugal, and Germany. They could provide a safe and reliable rule of law on their own, eliminating the need for foreign merchant communities to negotiate the right to adjudicate their own commercial disputes.

Hansa trade suffered a similar decline in Novgorod. Over the 1400s, London’s elite increasingly saw Russian squirrel pelts as less of a luxury and more of a commodity, while the forests around Novgorod thinned from overhunting and overlogging. In 1494, Ivan III shut down the Novgorod kontor and jailed the remaining 49 Hansa merchants. They would be released three years later, but all of them perished on the journey home. This permanently collapsed the Novgorod-Tallin-Lubeck-Bruges trade route that the Hansa controlled. Trade between Russia and Europe continued but was re-routed through the Frankfurt-Nürnberg-Leipzig-Posen, a corridor controlled by the South Germans. And with the rounding of the Cape of Good Hope in 1488 and discovery of the New World in 1491, a universe of possible trade corridors opened up that further slid the old Hansa system into irrelevance. 

Starting in 1618, the Thirty Years’ war destroyed Germany, claiming four to eight million lives, up to 50 percent of the population. In 1666, the Great Fire of London burned down the Steelyard. Three years later the Hansa Diet convened for what would be the final time, a full 40 years after their previous meeting. Only a few towns sent representatives. Most were reluctant to reconstruct the London kontor. The League limped on until 1862 as a husk of its former self, with only Hamburg, Bremen, and Lubeck as members.

The Hansa instructs us on the power and fragility of coalitions. They only work for as long as their interests are united. It is easy to keep a coalition together so long as you have shared goals, but very few will remain loyal to a coalition for reasons of national unity or tradition if their interests are no longer being served.

The Hansa’s structure was always ambiguous. The League was not a state, though it was state-like in many of its actions. It was unique in the history of Northern Europe because unlike kingdoms or counties, it had no formal territory. It lacked a central decision making body, or a robust mechanism to enforce its policies. And even as a formal League, no definitive list of its members has ever been found.

While the League may not have lasted, its impact was enduring. Its members would retain unobstructed trade, more shipping, stationary commerce, and a better legal system long after its influence had peaked. Coalitions are often short-lived things. Their fruits need not be.