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Erasmus Forum Bulletin / Volume II 2018 4 Notes on Contributors Hywel Williams Hywel Williams is Director of the Erasmus Forum and editor-in-chief of its Bulletin. His new book The Seven Ages of Britain (Head of Zeus 2021) is the first post-Brexit history of the British Isles. David Abulafia David Abulafia is Professor of Mediterranean History at the University of Cambridge and a Fellow of the British Academy. His interests embrace the economic, social and political history of the Mediterranean lands in the Middle Ages and the Renaissance. His most recent book, The Great Sea (Penguin), explores the history of the Mediterranean from 22,000 BC to AD 2010. In 2013 he was awarded. A British Academy Medal for the ‘landmark academic achievement’ which the book represents. He has written many other books including The Discovery of Mankind: Atlantic Encounters in the Age of Columbus; The Western Mediterranean Kingdoms, 1200-1500; The Struggle for Dominion, Mediterranean Encounters, Economic, Religious and Political, 1100-1550 and A Mediterranean Emporium: The Catalan Kingdom of Majorca. Huw Bowen Huw Bowen is a specialist on British economic, imperial, maritime, and political history, with a particular interest in Britain’s commercial relations with Asia between 1600 and 1850. Among his many publications are three books published by Cambridge University Press: Revenue and Reform: The Indian Problem in British Politics, 1757-1773 (1991); War and British Society, 1688-1815 (1996); and The Business of Empire: The East India Company and Imperial Britain, 1756-1833 (2007). He is currently exploring how the global copper industry shaped the industrial development of the Swansea Valley. Huw Bowen is the founding editor of the research monograph series 'The Worlds of the East India Company'. Anne Murphy Before embarking on an academic career Anne Murphy worked for twelve years in the City of London trading interest rate and foreign exchange derivatives. She is now Reader in History and Associate Dean Research in the School of Humanities, University of Hertfordshire. Her publications include The Origins of English Financial Markets : investment and speculation before the South Sea Bubble (CUP 2010). Thomas Adamson-Green A graduate in Modern History of University of Oxford, Thomas Adamson-Green studied for his Master's degree at Mansfield College at the same university.

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Erasmus Forum Bulletin / Volume II 2018 5 Introduction by Hywel Williams he development of towns and cities, whether ancient, medieval or modern, is scarcely conceivable without the impact, in one way or another, of trading patterns such has been the length and depth of their influence in the shaping of human history. Urban life, a complex weave of commercial transactions, civic engagement and cultural energy, is therefore the focus of attention for the scholars whose work and conclusions may be read in From Polis to Metropolis: Essays in the History of Economic Development. The Hanseatic League, a grouping of towns and cities with its own distinctive ethos both commercially and culturally, is the subject of the essay authored by David Abulafia. Victoria Bateman, returns to her native Manchester with an account of that northern powerhouse whose distinctive urban culture made Britain’s 19th century industrial revolution possible. While Huw Bowen, brings to life one of the great early centres in the history of urban capitalism, Swansea or Copperopolis and its role in the development of the copper industry. Catherine Schenk sheds new and unsparing light on Hong Kong’s development as a city-state in the late twentieth century. “As safe as the Bank of England” was once the proud boast of an institution that was deeply integrated in the development of the history of both the city of London and the capital as a whole. Anne Murphy’s history of the bank casts a spotlight on some surprising aspects of this venerable institution. Thomas Adamson-Green's account of a research seminar which investigated China's trading past in the context of its present 'One Belt,One Road' policy leads to an appraisal of the relationship between myth and history in the development of the idea of a 'Silk Road. I am grateful to Thomas Adamson-Green for his editorial attention to this collection of essays. T Erasmus of Rotterdam, by Quentin Massys, oil on panel, transferred to canvas, 1517

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Erasmus Forum Bulletin / Volume II 2018 7 uring the Middle Ages, intensive maritime networks developed in the connected space of the Baltic and the North Sea, the ‘Mediterranean of the North’.1 This became an organised space; that is to say, the activities of merchants were controlled with increasing attention by a loose confederation of towns that had itself emerged out of corporations of merchants. During this period, from about 1100 to about 1400, the Mediterranean became a theatre for contest between the Genoese, the Pisans, the Venetians, and eventually the Catalans, who were often as keen to challenge one another as they were to join campaigns against the real or supposed enemies of Latin Christendom in the Islamic lands and in Byzantium.2 In the ‘Mediterranean of the North’, by contrast, the unity of purpose of the merchants is striking—there were, of course, rivalries, and efforts were made to exclude outsiders from England or Holland, but cooperation was the norm. This confederation of merchants from towns along the shores of the Baltic and the North Sea, and across great swathes of the north German hinterland, is known as the German Hansa. Hansa or Hanse was a general term for a group of men, such as an armed troop or a group of merchants; in the thirteenth century the term Hansa was applied to different bodies of merchants, German or Flemish, from a variety of regions, for instance the Westphalian towns that gravitated around Cologne, or the Baltic towns that were presided over by the great city of Lübeck. However, in 1343 the king of Sweden and Norway addressed ‘all the merchants of the Hansa of the Germans’, and the idea that this was the Hansa par excellence, a sort of super-Hansa embracing all the little Hansas, spread thereafter.3 The phrase used here was ‘Deutsche Hanse’; but the official term that the early Hanseatic (or, as they are sometimes called, Hansard) merchants used for themselves in places where they successfully installed themselves, such as Bergen in Norway or the Swedish island of Gotland, was rather different— ‘The Merchants of the Roman Empire’.4 For even in German lands far beyond the Rhine and the Danube that had never fallen under Roman rule, nobles, knights, and merchants took pride in the imperial authority of the medieval German kings, most of whom received the crown of the Holy Roman Empire. The major Hansa city in the Baltic, Lübeck, was elevated to the special status of a free imperial city by Emperor Frederick II in 1226, having already received privileges from his grandfather Frederick Barbarossa in the twelfth century. Accounts of Hanseatic history have been moulded by modern political concerns. In the late-nineteenth century, Bismarck and the Kaisers dreamed of making Germany into a naval power capable of confronting the British at sea; as Admiral von Tirpitz explained, “Germany’s most dangerous enemy at sea is England”. The difficulty was that Great Britain appeared to possess a naval tradition that Germany lacked; with a little probing, however, just such a tradition was discovered, in the fleets of the Hansa cities. Such ideas were taken still further by historians writing under the Third Reich. By now the Hansa was associated not just with racial purity but with German conquest, because the cities founded along the shores of the Baltic by merchants and crusaders could be presented as glittering beacons of the ‘Drive to the East’ that had subjugated, and would once again subjugate the Slav and Baltic peoples. Even after the fall of the Third Reich, the politicisation of Hansa history continued, though in new directions. Since several of the most important Hanseatic towns, such as Rostock, lay along the shores of the now D

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Erasmus Forum Bulletin / Volume II 2018 8 vanished German Democratic Republic, East German historians took an interest in the Hansa. They were wedded to Marxist ideas about class structure, and they made much of the ‘bourgeois’ character of these cities, which were by and large self-governing communities, able until the fifteenth century to fend off the attempts by local princes to draw them into their political web. East German historians also laid a strong emphasis on evidence for political protest among the artisan class in the Hansa towns, and they asked themselves whether these were places where a precocious proto-capitalism came into existence (whatever that term might mean).5 Following the collapse of the discredited East German regime, interpretations of the history of the Hansa have swung in a different direction, with German historians once again taking the lead. The Hansa is now held up as a model of regional integration, an economic system that crossed political boundaries by linking together Germany, England, Flanders, Norway, Sweden, the future Baltic States, and even Russia. Andrus Ansip, Prime Minister of Estonia, celebrated the entry of his country into the Eurozone by declaring “the EU is a new Hansa”. Modern German accounts of the Hansa barely conceal their authors’ satisfaction that German economic dominance within Europe has what appear to be inspiring precedents going right back to the Middle Ages—the German Hansa encouraged free trade among its members and constituted a ‘super-power of money’.6 There was even a degree of political integration, since over time the commercial law followed in Lübeck became standard. On the other hand, a leading French historian of the Hansa, Philippe Dollinger, took exception to the common term ‘Hanseatic League’, because the German Hansa was not one league with a central organisation and bureaucracy, like the European Union, but a medley of leagues, some created only in the short term to deal with particular problems. Professor Dollinger therefore suggested, very sensibly, that the term ‘Hanseatic Community’ really fits best of all.7 In fact, all these ways of reading the history of the Hansa distort its past in a broadly similar way. The German Hansa was not simply a maritime trading network. By the fourteenth century, certainly, it had become a major naval power, able to defeat rivals for control of the waters where its members traded. Less often noticed is the significance of the inland cities that played a very important role in Hanseatic trade with England, in particular, operating under the leadership of Cologne.8 Of its three major trading counters outside the network of Hanseatic cities, places where the Hanseatics were permitted to create their own towns within a town, one, Novgorod, lay inland, though the other two, Bergen and London, were only accessible by sea. The Hansa was a land power (or maybe one should say river power) as well as a sea power, and its ability to draw together the interests of cities in the German hinterland and cities that gave access to goods carried across the sea gave it enormous economic strength. It was a source of supply for luxury goods such as furs from Russia, spices from the Levant (by way of Bruges), and amber from the Baltic; but its members were even more active carrying uncountable barrels of herring, vast supplies of wind-dried cod, or the rye produced along the shores of the Baltic on the lands of allies such as the Teutonic Knights. Dried and Salted Cod

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Erasmus Forum Bulletin / Volume II 2018 9 Indeed, the link to this crusading order of knights and lords of large parts of Prussia and Estonia was so close that the Grand Master of the German Order, to give the Knights their correct name, was a member of the Hanseatic Parliament or Diet. As well as supplying a good part of the food the Hansa cities required if they were to survive and grow, the Grand Master was overlord of several of the towns that the German merchants had set up along the southern coasts of the Baltic.9 The presence of a crusading Military Order in the deliberations of the German Hansa also acts as a reminder that the medieval conquest of the Baltic was not simply the result of merchant endeavours. Just as the Genoese, Pisans, and Venetians took full advantage of the crusades in the Mediterranean to install themselves in the trading centres of the eastern Mediterranean, the arrival of German merchants in Prussia, Livonia (roughly Latvia) and Estonia was rendered possible by the victories of the ‘northern crusades’, wars against pagans, and sometimes against the Orthodox Russians in which two German Military Orders, the Sword Brethren and the Teutonic Knights, played a leading role, as did the Danish and Swedish kings. The Sword Brethren came into existence at the start of the thirteenth century, when Albert von Buxhövden, an enterprising cleric with close family links to the archbishop of Hamburg-Bremen, arrived in Latvia with 23 ships, carrying 500 crusaders. His aim was always to create a permanent German presence in the area, and so he established a trading centre at Riga in 1201. This also became the base for the crusading brethren, whose mission was to convert the local Livs (a people related to the Finns and the Estonians), if need be by force. The northern crusades borrowed concepts and vocabulary from the more celebrated crusades to the Holy Land. Without constant supplies of state-of-the-art weaponry brought across the Baltic on Hansa ships, these campaigns against wily, well-trained, obstinate native peoples had little chance of success; as it was, the ferocity of the German onslaught did more to unite the opposition than to break it down.10 II Why the Germans became dominant in the Baltic and the North Sea is a good question. After all, around 1,100 German ships were not seen as often in the North Sea or the Baltic as Scandinavian ones, while the Flemings were a notable presence on the river routes of northern Europe, and further south in Germany there were busy communities of Jewish merchants, especially active in the wine trade. Whether deliberately excluded or simply not interested in the far-flung north, the German Jews took no part in the transformation of the Baltic and the North Sea led by the Hansa.11 Until Lübeck began to flourish in the twelfth century there were no German towns on the Baltic, and the area that became the German Democratic Republic did indeed have a different identity to the rest of Germany; its inhabitants were pagan Slavs, notably the Wends or Sorbians, who still survive in the Spreewald near Berlin. The predecessor of Lübeck, Liubice or Alt-Lübeck, consisted of a fortress established by a knes or prince of the Polabian Slavs, while not far off another very small Slav settlement lay at Rostock, in Abotrite territory; beyond lay Rugians, Wagrians, and Pomeranians – Szczecin (Stettin), close to the modern German-Polish border, was famous for its three pagan temples and its strong walls.12 There was an enormous variety of different peoples speaking different languages and dialects, and the fragmentation

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Erasmus Forum Bulletin / Volume II 2018 10 into small groups rendered all of them much more vulnerable to the organised onslaughts of the Germans and the Danes. But there was plenty of peaceful contact too; several of these Slavonic peoples were happy to trade across the sea, which was also visited by Russian merchants, who were arriving in Gotland off Sweden.13 The transformation of this region was, however, the work of Germans, by which one means speakers of a group of languages which (in their late medieval written form) goes under the name of Middle Low German, and which, at first glance, looks more like Dutch than the High German of further south, which meant that relations with Flemings and Hollanders were easy to maintain. Two places dominated the Baltic in the early days of the Hansa—Gotland, particularly its largest town, Visby, of which more later, and Lübeck. Lübeck was not on exactly the same site as the old town of Liubice, which seemed to be more exposed.14 The foundation of the new city happened in stages, first with the destruction of Liubice in wars between Slavs and Germans, and then with the creation of a new town by the ruler of Holstein, Adolf von Schauenburg, in 1143. During the wars against the Wends, the Abotrite ruler Niklot attacked Lübeck (1147); but it was already well-enough defended to resist him. On the other hand, it proved more difficult to resist the growing power of Henry the Lion, the duke of Saxony and one of the greatest princes in Germany, who refounded Lübeck in 1159, and granted it the iura honestissima, ‘the most honourable charter of town rights’. This gave the leading citizens power over law-making, and established them as the city elite.15 A German chronicler, Helmold von Bosau, was strongly of the view that Henry was only interested in making money, and did not really care whether the Slavs in the surrounding countryside turned Christian; but Henry certainly had a good sense of what was needed to make his new city flourish, “The duke sent envoys into the northern towns and states, Denmark, Sweden, Norway, and Russia, offering them peace and free right of access through his town of Lübeck. He also established there a mint and a market and granted the town the highest privileges. From that time onwards there was ever-increasing activity in the town and the number of its inhabitants rose considerably”.16 He was particularly keen to attract merchants from Visby, for he well understood that a network linking Gotland, situated right in the middle of the Baltic, and Lübeck, with its access to the interior, would be extremely profitable. From 1163, Gotlanders were allowed to come to Lübeck free of tolls. Lübeck grew and grew; although the size of its population before 1300 is pure guesswork, the city is thought to have had 15,000 inhabitants at the start of the fourteenth century, and in the late fourteenth century—a time when plague had depopulated much of Europe—the population may have reached 20,000.17 Lübeck looked in two directions. Westwards, a short overland route connected the new city to Hamburg, giving access to the North Sea, and this was guaranteed by a formal agreement between the towns in 1241; by the fourteenth century, the narrow sea passage through the Øresund, or Sound, between Denmark and what is now southern Sweden took priority. Naturally, use of that route depended on the approval of the king of Denmark, and relations between Lübeck and the Danes were not always easy. There was always the danger that the king of Denmark would come to regard these shores as his own little empire. One important result of these conquests was the foundation of satellite towns within the

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Erasmus Forum Bulletin / Volume II 2018 11 commercial orbit of Lübeck, towns that followed the Lübeck legal code: Rostock, Danzig (Gdansk), and so on. This ‘Drive to the East’ (Drang nach Osten), in older parlance, was both maritime and terrestrial.18 Lübeck enjoyed special status as a free imperial city, master of its own destiny. Its triumphs were expressed in the handsome Gothic buildings that the Lübeckers constructed out of brick, an expensive way to build at that time. There were grand churches, such as the Marienkirche and Sankt Petri in Lübeck itself, but also streets of gabled merchant houses, and these became the model copied by the masons of Rostock, Greifswald, Bremen, and of city after city along the great arc that stretched from Bruges to Tallinn. The design of these houses was determined by the simple need to incorporate a warehouse as well as an office and living quarters, because the Hanseatic merchants looked after their own goods rather than depositing them in central warehouses, as often happened in the Mediterranean. III Late medieval Lübeck gloried in the title ‘Head of the Hansa’ (Caput Hanse), but it is a mistake to write the history of the Hansa as the history of Lübeck. In the early days of the evolving network of what was to become the German Hansa, Gotland exercised more influence than Lübeck, benefiting from its excellent position in the middle of the southern Baltic.19 It had long been a centre of Viking activity, and is the source of many of the finest images of Viking ships, carved on memorial stones. The Gotlanders laid the basis for the later successes of the German merchants who made Gotland their base.20 For it was as a German base that it really flourished, and it owed a great deal to Henry the Lion’s insistence that its merchants should work closely with those of Lübeck. Here, a self-governing community of German traders began to coalesce; on its seal it proudly proclaimed itself to be the ‘the corporation of merchants of the Roman Empire visiting Gotland’. In the thirteenth century, enough Germans had settled permanently on the island to form a second, parallel, self-governing group, with a similar seal, but the words ‘remaining in’, replacing ‘visiting’. The Germans had their own very magnificent church, St Mary of the Germans, which now serves as the cathedral of the island; the Germans also, as was typical at the time, used it as safe place to store goods and money. In addition to a quite formidable line of walls, more than two miles (about 3.5 km) in length, Visby contains over a dozen sizeable medieval churches, but following the city’s decline at the end of the Middle Ages all but St Mary’s have been allowed to fall into disrepair. One of Visby’s grandest churches, Sankt Lars, betrays the influence of Russian architectural styles; there was also a Russian Orthodox church in Visby, though this is now buried underneath a café. For Gotland was the great emporium where Russian goods such as furs and wax were received, having travelled part of the way by river, through Lake Ladoga and up the Neva into the Baltic, and then across what could be dangerous waters to Gotland itself. At the other end of the route, in Novgorod, the Gotlanders possessed their own trading colony or ‘Gothic Court’, which included a church dedicated to the Norwegian king St Olaf, in existence by about 1080.21 Novgorod was not an ancient city, as its name, ‘New City’, suggests.22 The Baltic connection was thus of great importance to Novgorod, just as the Russian connection was of great importance to Gotland, and Henry the Lion and the Lübeckers were keen to tap into that. At first,

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Erasmus Forum Bulletin / Volume II 2018 12 the Germans rode on the backs of the Gotlanders. In 1191 or 1192 Prince Yaroslav III of Novgorod entered into a treaty with the Gotlanders and the Germans.23 Within 20 years another prince of Novgorod, Konstantin, granted the Germans the right to operate from their own courtyard, dedicated to St Peter (the Peterhof). Actually, they had already set themselves up there, and had built a stone church. The use of stone was a necessary luxury, since here too the merchants stored their wealth, carrying the chest containing the funds of the community back to Visby at the end of each winter. There was a close period during which no German merchants were living in Novgorod, between the winter, when trade in ermine and other Arctic goods was brisk, and the summer, which was a good time to collect wax.24 There was enormous demand throughout Europe for high-quality wax, most of which evaporated into the atmosphere when it was used in church ceremonies; and the range of furs that could be obtained from Russia and Finland was unmatched elsewhere in the north—not just plenty of cheap rabbit and squirrel furs, but pine marten, fox, and at the top of the scale white ermine (de rigueur at princely courts). Rising standards of living meant that demand for these products did not waver very much. IV Contact with Russia provided essential priming for the rise of the German Hansa; but the Baltic and the North Sea became increasingly important to the Hanseatic traders, as England and Norway became the prime focus of their longer-distance sailings, while within the Baltic, rye, herrings and other basic foodstuffs became ever more important as the German cities grew, and as their persistent demand for food outstripped local resources. These towns had been founded as centres of trade and industry, but their very success turned them into major consumers of agricultural goods. This was greatly to the advantage of those who produced such food, above all the Grand Master of the Teutonic Order, who was also master of extensive estates where subject Prussians and Estonians laboured on behalf of the Christian conquerors they would rather have seen defeated. This was also greatly to the advantage of the German traders, so long as their agreements with the Grand Master and other great lords enabled them to buy large quantities of rye.25 The ships that the Hansa merchants used were, in the early days, mainly the cogs, with their shallow draught but generous cargo capacity; they had developed in the North Sea and the Baltic over several centuries. The humble cog represents the simple realities of Hansa seafaring; silk and spices certainly reached the ports of northern Germany, whether they had been carried all the way from the Mediterranean down elongated sea routes favoured by the Venetian, Catalan, and Florentine galleys of the late Middle Ages, or humped overland from the warehouse of the Germans in Venice, over the Alpine passes until they reached the rich cities of southern Germany and then embarked on further travels to reach Lübeck and its neighbours. A modern visitor to Lübeck would be missing a great treat if he or she did not visit the famous marzipan emporium of the Niederegger family, founded in 1806; but before Niederegger the city attracted ginger, sugar, cloves, as well as almonds, and—most probably during the golden age of the Hansa—the north Germans discovered how they could manufacture sweetmeats and spicy sausages from the exotic trade goods that reached their cities.

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Erasmus Forum Bulletin / Volume II 2018 13 The fortunes of the Hansa were not, however, built out of marzipan and gingerbread. Fish, grain, and salt, apparently humble animal, vegetable, and mineral staples, were not quite such modest sources of profit as might be supposed when they were traded in the astonishing quantities handled by the German Hansa. Herrings had a special place in the diet of European Christians, as far away as Catalonia; when Lent arrived, they provided the perfect substitute for forbidden meat, all the more because methods of preserving them became more sophisticated. The difficulty with herring is that it is a very oily fish, and oily fish rot much faster than those with a very low fat content, notably cod. For this reason it was possible to produce wind-dried cod, which remained edible for a good many years (after soaking), whereas herring had to be salted and pickled as quickly as possible after it was caught.26 Tradition records that a Dutch sailor, Willem Beukelszoon from Biervliet in Zeeland, transformed the future of the herring fisheries in the fourteenth century when he devised a method of pickling partly eviscerated herrings and placing them between layers of salt in great barrels.27 Pioneer or plagiarist, Beukelszoon has been rated as the 157th most important Dutchman in history, not surprisingly in a nation that loves its Nieuwe Haring so much, but also in tribute to the fortune that the Dutch made out of exporting this humble fish in later centuries. Nothing, though, compared to the quantities of herring to be found in the Baltic when the fish spawned off the coast of Skania, now the southernmost province of Sweden but during the Middle Ages generally under Danish rule. It was said that you could wade into the sea and scoop them out of the water with your hand; rather than sea, there was a mass of wriggling fish, “The entire sea is so full of fish that often the vessels are stopped and can hardly be rowed clear through great exertion”, to cite an early medieval Danish writer.28 All this gave great impetus to the fair held on the shores of Skania, which dealt in many goods, but was most famous for its herring market. Temporary shacks were set up along the shore which provided not merely housing for the thousands of people who came to the fairs, but factory space for the labour force that cured, dried, salted, and in a myriad of other ways, treated the fish. Visitors arrived from northern France, England and even Iceland.29 But at its peak it was not unusual for 250 ships, all loaded with herring, to come into port at Lubeck alone, as happened in 1368.30 Yet none of this could have happened without the availability of salt to preserve the silver harvest of herrings—indeed, some Dutch observers went further, and less poetically called it a ‘gold mine’. Here lay Lübeck’s great advantage. Not far away, near Lüneberg Heath, there lay very extensive supplies of salt.31 As these supplies ran out they penetrated to salt flats along the north coast of France, and eventually all the way to Portugal, in search of yet more salt for yet more herrings. This meant that their trading world embraced a great arc stretching from the Baltic through the North Sea and the English Channel to the open Atlantic. V Late medieval Europe needed feeding after the calamity that struck first the Mediterranean and then northern Europe from 1347 to about 1351, followed by further periodic visitations of bubonic and pneumonic plague. The heavy toll of the Black Death—as much as half the population in some areas—reduced pressure on supplies of the most basic foodstuffs, notably grain, but had distorting effects on the production and distribution of food. Land went out of cultivation as villages lost their manpower and became unviable. Migration to the towns, where artisans were in short supply, shifted the balance between

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Erasmus Forum Bulletin / Volume II 2018 14 urban and rural population, so that it was no longer broadly true that up to 95% of the population of western and northern Europe lived and worked in the countryside; and even those peasants who remained in the countryside often managed to cast off what remained of the shackles of serfdom. This was the beginning of a great economic transformation, but the reconfiguration of the economy depended on the easy movement of large quantities of food. Here, transport by sea was of crucial importance, since it rendered possible the movement of really substantial quantities of grain, dried fish, dairy goods, wine, beer, and other necessities or desirables. The ability of the Hansa merchants to exploit these opportunities meant that the years around 1400, often characterised as a period of deep post-plague recession, were for them, as for merchants in many other parts of the Atlantic and Mediterranean, a time when it was possible to reap handsome profits and to answer back to rulers who up to then had seen them as rather troublesome creatures, valuable as sources of supply of prestige items, but otherwise greedy and unreliable. It comes as no surprise, then, that within a few years of the Black Death the Hansa merchants began to organise themselves much more tightly, holding regular Diets, or Hansetag (which were also an opportunity for Lübeck and some other leading cities to throw their weight around). This has generally been characterised as a shift from the ‘Hansa of the Merchants’ to the ‘Hansa of the Towns’, even the true creation of what one might call a ‘Hanseatic League’.32 The first Diet was held at Lübeck in 1356, mainly to deal with the growing threat of piracy; by 1480, 72 Diets had been held. It is no surprise that 54 of these gathered in Lübeck; and, apart from a single meeting in Cologne, they were always held in towns next to or quite near the sea.33 This development did not mean that the Hansa had become a state-like body; it remained a loose super-league, bringing together groups of allied cities from regions as diverse as the Rhineland, where Cologne dominated, the southern or ‘Wendish’ Baltic, which was Lübeck’s informal imperium, and the newer cities of the eastern Baltic, of which Riga was the most important. Minutes of the Diets were kept, but there was no administrative super structure, and there were no formal treaties that members signed to gain entry to the Hansa. Maybe, indeed, this was one of its sources of strength. On the other hand, the lack of a constitution allowed the citizens of Lübeck to turn their ‘de facto’ leadership of the Hansa to their advantage, and, despite grumbles from Danzig and Cologne, the special status of Lübeck was never really in doubt. Its size, wealth, and location gave it formidable advantages. Including every city that at some stage was regarded as a Hansa town, the total comes to about 200, far too many to fit in the assembly hall provided by the good burghers of Lübeck. Most were far too small to exercise any political influence, and what they sought was tax advantages and trading opportunities. This was particularly true of the horde of inland towns, such as Hameln, of Pied Piper fame, or Berlin, as yet not a place of great significance.34 After 1356 the Hansa did show much more muscle, resisting predatory pirates known as the Vitalienbrüder who made a nuisance of themselves at the end of the fourteenth century. The Vitalienbrüder preyed on Hanseatic and other vessels in the Baltic. The herring fisheries were placed in danger, and for a few years supplies to the rest of the world faltered. Over the centuries the Vitalienbrüder have acquired a more romantic image; plenty of novels and films present one of their pirate leaders, Klaus Störtebeker, in a better light than he deserves. Before they were checked, they were well enough organised to grab hold of Gotland for a time and then, when conditions in the Baltic became too risky, they decamped to the East Frisia in the North Sea and carried on marauding there. Störtebeker was captured,

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Erasmus Forum Bulletin / Volume II 2018 15 and in 1401 he and his close companions underwent a grim execution at the hands of the resentful citizens of Hamburg. Such problems meant that the Hansa Diets did have matters of real political and military (or rather naval) importance to discuss, and this helped it to coalesce as a ‘Hansa of the Towns’; but there was no sense in which the cities sought ‘ever-closer integration’ after the manner of the European Union. Beneath the level of the grand Diet, there existed other regional groupings of Hansa towns that met regularly, and here, as might only be expected, petty local rivalries transcended the major issues such as relations with Denmark or the competition of Dutch and English merchants.35 In addition to internal tensions, there was the problem that the Hansa Diet expected to make its decisions unanimously, and that delegations would often insist that they had no authority to support a particular position. The Diet was not a parliament where common problems were aired, discussed, and resolved, but a place where decisions (often those of Lübeck and its major allies) were recorded and announced—that, indeed, was how a good many late medieval parliaments functioned. Cities might or might not bother to send delegates to the Hansetag, though not surprisingly the larger and more powerful ones were more careful to do so. But this did not make it easy to address the issues that were in the air. It must at the time have seemed that this was Lübeck’s opportunity to show off its commanding position. The effectiveness of the Hansa lay in the expertise of the merchants who inhabited its cities rather than in its institutional structure, which remained fragile. VI The different communities that made up the Hansa were bonded together by the presence of travelling merchants, some passing through briefly and others settling alongside their fellow Lübeckers (or whoever they were). Members of the Hansard family felt at home in the ports of a great swathe of northern Europe. In the early fifteenth century, two brothers, Hildebrand and Sivert von Veckinchusen, worked with family members and agents in London, Bruges, Danzig, Riga, Tallinn, and Tartu (also known as Dorpat), as well as Cologne and distant Venice, sharing the same work ethic, business methods and cultural preferences. In 1921, a mass of over 500 letters between members of the family was found buried in a mass of peppercorns within a chest that is now in the State Archives of Estonia at Tallinn. In addition, their account books survive. No other Hanseatic family is as well documented. The Veckinchusens are of interest precisely because they were not always successful, and their careers show clearly the risks that needed to be taken if the trade routes were to be kept alive at a time when piracy remained a constant threat, when the Danes were still flexing their muscles in the Baltic, when English sailors were trying to carve out their own niche in the market, and when internal tensions within the Hansa towns threatened to upset the apple cart.36 The Veckinchusen brothers originated in Tartu in what is now Estonia, although they eventually became citizens of Lübeck.37 They are known to have been based in Bruges in the 1380s. They therefore operated between the two most important trading centres of northern Europe, which were linked by the Hanseatic sea route through the Øresund.38 The Hansa community in Bruges operated rather differently from Novgorod, London, and Bergen, where the German merchants possessed a reserved space and were closely concentrated together. The concentration of merchants of different backgrounds provided Bruges

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Erasmus Forum Bulletin / Volume II 2018 16 with its raison d’être. Although a very large city by medieval standards, with up to 36,000 inhabitants on the eve of the Black Death, Bruges itself was not the prime target of all those traders who came there, though the arrival of large amounts of Baltic rye and herring did help to keep the citizens well fed. Particularly in the fifteenth century, one of the main functions of the merchant communities in Bruges was quite simply to settle bills. The city became the major financial centre in northern Europe, which meant that even as its port silted up and fewer goods actually passed through the city, there was, for a time, still plenty of work for those well practised in the art of accounting. The Veckinchusens were primarily dealers in commodities, but currency exchange and the provision of letters of credit was a source of profit for them and their peers, even though the Hansards left the creation of international banks mainly to the Italians—the Medici had an important branch in Bruges.39 Generally, the Hansards showed a suspicion of reliance on credit that meant their financial methods never reached the sophistication of those achieved by the Florentines and Genoese. Even so, late medieval Bruges was to the economy of large swathes of Europe what modern London has become within the global economy.40 The Veckinchusens were not wedded to Bruges. Indeed, when Hildebrand found a bride, she was a young women from a prosperous Riga family.41 Going to Riga for his wedding, which had been arranged by one of his brothers, gave him the chance to experience the route to Novgorod, where the Hansa Kontor continued to flourish, and where he brought thirteen bolts of Ypres cloth for sale, the total length of which would have been about 300 metres—in other words a sizeable quantity of some of the best woollen cloth Flanders looms were producing. This he sold for 6,500 furs, which gives some idea not just of the high value of Flemish cloth but of the easy availability of squirrel, rabbit, and finer skins in fifteenth-century Russia.42 In good years, the Veckinchusens could hope for profits in the range of 15% to 20%.43 Meanwhile his brother, Sivert, now living in Lübeck, warned him that he was taking too many financial risks, “I’ve warned you again and again that your stakes are too high”, which led him to send his wife and children to live in Lübeck; but he was convinced he could make money by staying put in Bruges.44 This obstinacy in his business dealings was to cost him dearly over the next few years. Hildebrand returned to Bruges and tried to keep himself afloat with Italian loans, but he began to realise he could not repay them, and fled to Antwerp in the vain hope of escaping his creditors. Lured back to Bruges by promises that his friends would help him sort out his affairs, he soon found himself in the debtor’s prison, where he lingered in misery for three or four years.45 Conditions in the prison were not too bad, if means could be found to pay for food and the rent of a private room, but by the time he was released, in 1426, Hildebrand was evidently a broken man. One of his old partners wrote in pity, “God have mercy on you, that it has happened to you this way”.46 He set out for Lübeck but he died within a couple of years, no doubt worn out by his trials.47 His ambitions had never been matched by his success. By the end of his life Hildebrand had been let down by his family, but family solidarity was the key to the success of these Hanseatic trading families. None is quite as well documented as the Veckinchusens, but there is no reason to suppose their rise and fall was unusual; trade was about risks, and in an age of piracy and naval wars the chances of always making a profit were slim. Interestingly, the places that attracted the strongest interest of the Veckinchusen clan were cities on or close to the sea, with the exception of the Hanseatic outlier Cologne and their mistaken ventures overland through the south

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Erasmus Forum Bulletin / Volume II 2018 17 German cities to Venice. This suggests that the routes across the sea carried the lifeblood of the Hansa, and that the many towns of northern Germany that became members were mainly interested in the goods that traversed the Baltic and the North Sea. In other words, when the Kaiser’s historians laid all the emphasis on the Hansa fleets and ignored the inland towns, they were not completely distorting the character and history of the German Hansa. VII The Veckinchusens differed from many Hansard contemporaries in their lack of strong interest in fish and grain. Making a fortune from fish was possible outside the Baltic too, and success did not depend entirely on humble herrings. The cod fisheries of northern Norway, and the opportunities for catching the same fish out in the open Atlantic off Iceland or even Greenland also brought prosperity to the willing partners of the Hansa and the Norwegian monarchy. There were several types of dried and salted cod, but the development of wind-drying in little harbours along the coast of Norway, where Atlantic winds turned the supple flesh of these large fish into leathery triangular slabs, created an article of trade that lasted for years without rotting, and that satisfied the increased demand for high-protein foodstuffs that the smaller post-Black Death population found itself able to afford. Norway also became a good source of dairy goods for grain production was poor, while mountain pastures were abundant, and dairy products were exchanged for imported rye and wheat. As diet improved, so did the revenues of the Hansa merchants and the king of Norway. But even before that, the German merchants had identified Bergen as the obvious centre in which to concentrate much of their North Sea business. It was the seat of a royal palace, and not much could be achieved without the king’s protection. The town had emerged by the twelfth century—tradition recorded its foundation by King Olaf the Tranquil in 1070, but evidence from excavations shows that the wooden structures that lined the shore began to be constructed around 1120, though again and again (even in very modern times) fire has laid waste this cluster of buildings, the Bryggen or ‘wharves’ that became the home to the Hansa merchants in the city. Judging from this evidence, it is now clear that the prosperity of Bergen was not created by the German merchants, but that they chose this site as their base because it was already a flourishing centre of exchange for furs, fish, seal products, and all the other products of the forests, fjords, and open sea further to the north. As has been seen, it was already the harbour to which ships moving back and forth to Iceland would come, a ‘natural gateway’ and ‘nodal point of trans-shipment’, to cite a Norwegian historian of the city’s origins.48 By 1300, the German community in Bergen consisted not just of those who arrived by sea each spring, but the ‘winter-sitters’ who took up residence over the winter, and alongside them there were shoemakers and other German craftsmen who had been settling in the town since at least 1250. By 1300 the Hansa merchants in Bergen had learned how important it was to work together in the face of the combination of suspicion and welcome that they faced in their dealings with the kings of Norway. Within Bergen, a corporate identity emerged, and this was recognised by the crown. In 1343, for the first time, the Hanseatic traders were described as ‘the merchants of the Hansa of the Germans’ (mercatores de Hanse theotonicorum). What came into being over the next few years (certainly before 1365) is known as the Kontor (Counter), a tightly controlled organisation that negotiated for and managed the lives of the German merchants trading through Bergen. It was, in effect, a body of Lübeckers, operating under the

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Erasmus Forum Bulletin / Volume II 2018 18 commercial law of Lübeck, though there were also members from Hamburg, Bremen, and elsewhere; ‘the counter was a branch office of Lübeck’, in effect an extraterritorial enclave.49 The fact that the Germans lived under their own law is just one sign of their separation from the other inhabitants of Bergen, but after the middle of the fourteenth century the great majority of Hansa merchants lived in Bryggen, in closely-packed wooden houses right by the harbour that formed a German enclave.50 The Bryggen area was a tight fit; around 1400 there were about 3,000 Germans in a city of 14,000 inhabitants, but of course some were seasonal visitors. Many were quite young apprentices and journeymen who faced a tough life during the seven to ten years that carried them up a strict hierarchy from the modest status of Stubenjunge through the honourable status of Meister. Living conditions were strictly controlled, and for part of the year apprentices were largely confined to the house where they were attached. They were male-only settlements, and the apprentices lived in narrow dormitories, working a twelve-hour day, excluding mealtimes. The fact was that many crept out at night, finding their way to the red light district that lay just behind the Hansa quarter, but to do so meant avoiding massive guard dogs that were placed around the outer edges of the Bryggen houses, to deter not just intruders but escapees. Fear of liaisons with Norwegian women was stimulated by the assumption that people living in the Kontor would give trade secrets they had learned away to local wives or whores; they might ‘tell the native woman under the influence of her charm, as well as that of liquor, things she had best not know’. The fine for being found with a ‘loose woman’ was a keg of beer—the woman suffered much worse, by being thrown into the harbour. Journeymen were subjected to brutal initiation rituals, which might include such wholesome entertainment as being roasted by a fire while suspended in a chimney, being half-drowned in the harbour, or being ceremonially flogged.51 Life in the Kontor can best be described as harsh and hard, but not insufferable. The Kontor was a place where German merchants learned the art of honest trade, and where they were made fully conscious of the fact that they were Hanseatics (mainly Lübeckers) first, and inhabitants of Bergen second. Moreover, as in Novgorod, the Bergen Kontor provided access to lands and products far beyond the intricate network of Hansa members. Novgorod, Bergen, London, and Bruges were not members of the Hansa, but these and smaller centres outside the Hansa area were vital components in the Hanseatic system. VIII London, by far the largest city in England, was, not surprisingly, their headquarters. There, they operated from their Kontor next to the Thames at what was known as the Stahlhof (Steelyard). The name seems to be a corruption of the term Stapelhof, ‘courtyard for trading staple goods’, and has nothing actually to do with steel. The site of the German Kontor in London has been covered over by Cannon Street Railway Station, constructed in the middle of the nineteenth century; the builders swept away the entire steelyard down to its foundations. There were three gateways, the largest of which was rarely used, and there was a great hall; there were warehouses and sleeping quarters, as well as administrative offices. Nonetheless, the steelyard was not a particularly imposing place, compared to the courtyards and quadrangles that existed elsewhere in London, such as the Inns of Court, by now an enclave for lawyers. Rather, the steelyard was a packed space, a business quarter where hardly an inch of space was wasted. The Hansards wanted privileges, not fine buildings.

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Erasmus Forum Bulletin / Volume II 2018 19 As in Bergen, the London Kontor formed a privileged enclave, enjoying both royal protection and self-government. England was a highly desirable market for both Flemish and German traders. The country supplied excellent wool, which was hungrily consumed by the looms of the Flemish cities, while the English developed a taste for Rhineland wines by the late eleventh century, and probably much earlier. Yet wine was by no means the most important item to cross the North Sea from Germany. So strong was demand for English produce that silver flooded into the kingdom, which was able to maintain a high-quality silver currency in the thirteenth century while other parts of Europe constantly devalued their silver coinage by adding base metals. No other European kingdom was as rich in silver and of no other no other kingdom can it be said that the silver content of its coinage remained stable all the way from the ninth century to 1250. By 1200 the influx of silver, mainly from the rich mines that had been opened up in Germany, led to quite serious price inflation that affected basic commodities such as foodstuffs.52 ‘Sterling silver’, today set at a standard of 92.5% , has a long history. There were ugly moments when Germans were accused of piracy against ships bearing English wool across the North Sea, leading to exemplary confiscations of German property in the kingdom. The relationship between the Hansa and the English crown was not, then, a smooth one, and there were quarrels that led to Hanseatic boycotts, or royal arrests of Germans. But on balance the two sides needed one another. In the fifteenth century, the entire space between England and the eastern Baltic was abuzz with trade, and, more than ever, it makes sense to describe this area as the ‘Mediterranean of the North’.53 And what is really striking is that—by contrast with the heavy involvement of the Italian merchants in the Mediterranean in luxury trade—the Hansards were, by and large, making their money out of humbler products where quantity rather than quality was the real source of profit. But in the process they created a commercial network that dominated the seas of northern Europe for hundreds of years.REFERENCES 1 P. Dollinger, The German Hansa (London, 1970), p. 3. 2 Abulafia, Great Sea, pp. 287-369. 3 Dollinger, German Hansa, pp. xix-xx.. 4 G. Graichen, R. Hammel-Kiesow, A. Hesse, N. Mehler, J. Sarnowsky, Die Deutsche Hanse: eine heimliche Supermacht (Reinbek bei Hamburg, 2011), p. 115. 5 J. Schildhauer, K. Fritze, W. Stark, Die Hanse (Berlin DDR, 1982); J. Schildhauer, The Hansa: History and Culture (Leipzig, 1985). 6 Graichen et al., Die Deutsche Hanse, p. 6. 7 Dollinger, German Hansa, p. xx. 8 See the EU-funded Hansekarte, Map of the Hanseatic League (Lübeck, 2014). 9 J. Sarnowsky, ‘Die Hanse und der Deutsche Orden – eine ertragreiche Beziehung’, in Graichen et al., Die Deutsche Hanse, pp. 163-81. 10 Kasekamp, History of the Baltic States, pp. 12-13. 11 Dollinger, German Hansa, p. 4. 12 Christiansen, Northern Crusades, pp. 29-31. 13 Schildhauer, The Hansa, p. 20. 14 Dollinger, German Hansa, doc. 1, p. 379. 15 Dollinger, German Hansa, p. 22. 16 Dollinger, German Hansa, doc. 1, p. 380; Schildhauer, The Hansa, p. 19. 17 R. Hammel-Kiesow, ‘Novgorod und Lübeck: Siedlungsgefüge zweier Handelsstädte im Vergleich’, in N. Angermann and K. Friedland, Novgorod: Markt und Kontor der Hanse (Quellen und Darstellungen zur Hansische Geschichte, neue Folge, Bd 53, Cologne, 2002), p. 53. 18 Dollinger, German Hansa, pp. 31-35; R. Bartlett, The Making of Europe: Conquest, Colonization and Cultural Change 950-1300 (London, 1993).

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Erasmus Forum Bulletin / Volume II 2018 20 19 D. Kattinger, Die Gotländische Gesellschaft: der frühhansisch-gotlandische Handel in Nord- und Westeuropa (Quellen und Darstellungen zur Hansische Geschichte, neue Folge, Bd 47, Cologne, 1999). 20 Dollinger, German Hansa, p. 7. 21 Dollinger, German Hansa, pp. 7-8, 27; North, Baltic, pp. 43-46. 22 M.W. Thompson, Novgorod the Great: Excavations at the Medieval City 1951-62 directed by A.V. Artikhovsky and B.A. Kolchin (London, 1967), p. 12; Hammel-Kiesow, ‘Novgorod und Lübeck’, p. 60; E.A. Rybina, ‘Früher Handel und westeuropäische Funde in Novgorod’, in Angermann and Friedland, Novgorod, pp. 121-32. 23 Dating revised from 1189: A. Choroškevič, ‘Der Ostsee Handel und der deutsch-russisch-gotländische Vertrag 1191/1192’, in S. Jenks and M. North, eds., Der Hansische Sonderweg? Beiträge zur Sozial- und Wirtschaftesgeschichte der Hanse (Quellen und Darstellungen zur Hansische Geschichte, neue Folge, Bd 39, Cologne, 1993), pp. 1-12; also B. Schubert, ‘Die Russische Kaufmannschaft und ihre Beziehung zur Hanse’, ibid., pp. 13-22; B. Schubert, ‘Hansische Kaufleute im Novgoroder Handelskontor’, in Angermann and Friedland, Novgorod, pp. 79-95; E. Harder-Gersdorff, ‘Hansische Handelsgüter auf dem Großmarkt Novgorod (13.-17. Jh.): Grundstrukturen und Forschungsfragen’, ibid., pp. 133-43. 24 Dollinger, German Hansa, pp. 27-30. 25 North, History of the Baltic, pp. 40-43. 26 Fagan, Fish on Friday, pp. 51-56. 27 J. van Houtte, An Economic Hitory of the Low Countries 800-1800 (London, 1977), p. 90. 28 Saxo Grammaticus (c.1150-c.1220), cited by J. Gade, The Hanseatic Control of Norwegian Commerce during the Late Middle Ages (Leiden, 1951), p. 17. 29 Gade, Hanseatic Control, pp. 17-18. 30 Schildhauer, Fritze, Stark, Die Hanse, pp. 99-100. 31 A.R. Bridbury, England and the Salt Trade in the later Middle Ages (Oxford, 1955), pp. 94-8. 32 H. Spruyt, The Sovereign State and its Competitors: an analysis of systems change (Princeton NJ, 1994), pp. 109-29; T. Brady, Turning Swiss: Cities and Empire, 1450-1550 (Cambridge, 1985). 33 Dollinger, German Hansa, pp. 88-93. 34 Dollinger, German Hansa, p. 91. 35 Dollinger, German Hansa, p. 96. 36 W. Stieda, Hildebrand Veckinchusen: Briefwechsel eines deutschen Kaufmanns im 15. Jahrhundert (Leipzig, 1921); M. Lesnikov, Die Handelsbücher des Hansischen Kaufmannes Veckinchusen (Berlin, 1973); M. Lesnikov and W. Stark, Die Handelsbücher des Hildebrand Veckinchusen (Quellen und Darsellungen zur hansischen Geschichte, Band 67, Cologne, 2013); A. Lorenz-Ridderbecks, Krisenhandel und Ruin des Hansekaufmanns Hildebrand Veckinchusen im späten Mittelalter: Untersuchung des Briefwechsels (1417-1428) (Hamburg, 2014), pp. 13, 15, 27, 32-33; Graichen et al., Die Deutsche Hanse, pp. 222, 233 [illustrating the chest full of pepper]. 37 Graichen et al., Die Deutsche Hanse, p. 223. 38 Graichen et al., Die Deutsche Hanse, p. 227; Lorenz-Ridderbecks, Krisenhandel und Ruin, p. 25. 39 Graichen et al., Die Deutsche Hanse, pp. 231-2. 40 Van Houtte, Bruges, pp. 41, 57-8; J. Murray, Bruges, Cradle of Capitalism, 1280-1390 (Cambridge, 2005), pp. 244-5. 41 Graichen et al., Die Deutsche Hanse, p. 229. 42 J. Martin, Treasure in the Land of Darkness: the Fur Trade and its Significance for Medieval Russia (Cambridge, 1986). 43 Graichen et al., Die Deutsche Hanse, p. 234. 44 Gies, Merchants and Moneymen, p. 206. 45 Gies, Merchants and Moneymen, p. 214; Graichen et al., Die Deutsche Hanse, pp. 240-2; Lorenz-Ridderbecks, Krisenhandel und Ruin, pp. 69-95. 46 In modern German: Gott erbarme, daß es mit Dir so gekommen ist: Lorenz-Ridderbecks, Krisenhandel und Ruin, p. 13. 47 Dollinger, German Hansa, pp. 165-6, 173-6; Gies, Merchants and Moneymen, pp. 209-14. 48 K. Helle, ‘The emergence of the twon of Bergen in the light of the latest research results’, in A. Graßmann, ed., Das Hansische Kontor zu Bergen und die Lübecker Bergenfahrer – International Workshop Lübeck 2003 (Veröffentlichungen zur Geschichte der Hansestadt Lübeck heruasgegeben vom Arciv der Hansestadt, Reihe B, Band 41, Lübeck, 2005), pp. 12-27; also A. Nedkvitne, The German Hansa and Bergen 1100-1600 (Cologne, 2013). 49 Gade, Hanseatic Control, p. 55. 50 G.A. Ersland, ‘Was the Kontor in Bergen a topographically closed entity?’, in Graßmann, Das Hansische Kontor zu Bergen, pp.41-57; Gade, Hanseatic Control, p. 51. 51 Gade, Hanseatic Control, pp. 74-7, 80-81. 52 P.D.A. Harvey, ‘The English Inflation of 1180-1220’, Past and Present, no. 61 (1973), pp. 26-27. 53 Richards, ‘Hinterland and Overseas Trade’, p. 19; W. Stark, ‘English Merchants in Danzig’, in Friedland and Richards, eds., Essays in Hanseatic History, pp. 64-6; Fudge, Cargoes, Embargoes, p. 10.

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Erasmus Forum Bulletin / Volume II 2018 23 t might be surprising to some that Swansea features in a series of essays on cities and regions that loom large in the history of capitalism, but there is little need to spend much time justifying its inclusion.1 Strictly speaking, for much of the period discussed, Swansea was a town not a city, but, semantics aside, it nonetheless almost completely dominated the development of the global copper industry, and, in doing so, exemplified the ways in which the key elements of capitalism combined to catalyse the early growth of industrialisation. So dramatic was this process that Professor Chris Evans speaks of a ‘Swansea moment’ in world economic history, between ca. 1830 and 1870, as Swansea and its hinterland were transformed into ‘Copperopolis’, the epicentre of the first globally-integrated heavy industry.2 As we will see, the case of Swansea throws considerable light on some of the key avenues of enquiry set out in the prospectus for this series: it will examine the making of a certain moment in time; it will explore the interaction of the global and the local; and it places emphasis on how the capitalist dynamo, driven by aggressive, innovative entrepreneurialism, shaped patterns of economic development. But the Swansea case also offers scope to examine some of the downsides to be found in the history of capitalism, as were evident in the consequences of its rapid and devastating deindustrialization, and by bringing the story right up to date the lecture will explore how the legacy of the industrial past is now being incorporated into the regeneration of the area. HEYDAY When the annual conference of the British Association for the Advancement of Science paid its second visit to Swansea in 1880, one of the images used for publicity purposes was a view of the Lower Swansea Valley as it would have looked from the air. The message being conveyed was not simply that Swansea was an ‘Intelligent Town’, a Welsh crucible of modernity and intellectual enquiry whose scientists and scholars had established its own Royal Institution in 1835;3 emphasis was also placed upon the density and intensity of its industrialisation, and foregrounded in the image was the bustling port that provided the lifeblood of the town by facilitating a wide range of global linkages. There was very good reason for doing this. Swansea had been a very early starter in terms of its industrialisation, and not just within Welsh frames of reference, and by 1880 the whole area and its infrastructure was defined by the haphazard, cheek-by-jowl development of copper smelting that had taken place over the previous 150 years or so. It is estimated that as early as 1800 Swansea smelted 90 percent of Britain’s total copper output, and by the 1860s it was producing around 65 percent of total world output. The port was central to this success, not only because it enabled the export of smelted, refined, or manufactured copper, but because it allowed the importation of the very large quantities of copper ore that found their way to Swansea from mines scattered across the globe. Indeed, herein lies perhaps the most remarkable aspect of Swansea’s growth to industrial ascendancy: it had no local deposits of copper ore, and from the very beginning was wholly dependent upon imported raw materials. In view of this resource issue, the obvious question that needs to be addressed is why, in the absence of copper ore deposits, did the smelting industry locate in the Lower Swansea Valley in the first place? The answer lies in the agency provided by a small number of highly mobile and innovative entrepreneurs who had the capital, knowledge and practical skills necessary to organise long-distance supply chains. I

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Erasmus Forum Bulletin / Volume II 2018 24 Small-scale metal smelting had been undertaken in the nearby Neath Valley in the sixteenth century, but Bristol emerged as the main centre of British smelting as local merchants took advantage of Cornish ore deposits to develop copper and brass production. With local sources of charcoal depleted, there was a move to the Wye Valley at Redbrook, before, in the face of further resource depletion, a search began for more sustainable places of production. Technological advance was achieved by the development of coal-fired furnaces, and a search began for suitable coal deposits. This extended along the South Wales coast and by 1717 it was recognised that the Lower Swansea Valley possessed not only rich seams of easily extracted coal but also a suitable navigable river, the Tawe, capable of taking larger ocean-going vessels. The key factor in this transfer of the industry to Swansea lay in the fact that three tons of coal were required to smelt one ton of ore, and this meant that it was far more economical to ship Cornish ore to Swansea than it was to take coal to Cornwall. Moreover, the emerging ‘Welsh method’ of smelting ore in reverbatory furnaces required up to twenty of these roasting in long lines of smelters and this served only to increase the amount of coal required. The first operational smelter in Swansea was at Landore and belonged to John Lane of Bristol, the forerunner of a significant number of inward investors in an area where local gentry wealth, although not absent from industrial enterprise, was limited.4 Others followed from Bristol such as the Coster family who had strong links with the West African slave trade, which was oiled by copper trade items. London-based financiers also spotted the emerging opportunities and at the forefront, in 1729, was Richard Lockwood, a merchant who had strong links with the Levant Company. Of course, finance was no guarantee of success without technological expertise and a skilled labour force, and, recognising this, Lockwood formed a partnership with Robert Morris, originally from Shropshire, who had acted as the Landore works manager before Lane went bankrupt. This type of combination of finance and expertise was replicated time and again in the next century and a half, first by Bristol and London-based individuals and followed by entrepreneurs from Birmingham and Cornwall. By 1730 the pioneers had established a connection between resources, expertise and capital, but to make the nascent copper industry sustainable it was necessary to ensure that there was a steady demand for its products. Demand is often absent from economic history because emphasis is placed on the supply side, but all forms of capitalism are dependent on demand for goods and services. In this case, a key element in the rapid early growth of Swansea’s copper industry was provided by overseas markets. Some products went to the slave trade and consumer markets in colonial America, but rising amounts of copper were directed towards India via the East India Company.5 Through Richard Lockwood’s city connections, Lockwood, Morris & Co. were the early beneficiaries of the company’s attempts to open up Asian markets to British copper from 1729 onwards, with Lockwood’s connections forging enduring relationships that provided an expanding outlet for their bars, ingots, sheets and manufactured items. The expansion of British India from 1750 onwards provided further scope for expansion, and a second wave of Swansea companies, established by men such as the serial industrialist Chauncy Townshend, were all involved in the East India trade, which, by 1780, accounted for between one-sixth and one-quarter of total British output. Indeed, the successful and rapid penetration of Indian markets by the copper smelting firms of southwest Wales had a considerable long-term effect upon the maritime economy of Asia. A recent detailed study demonstrates that, from the 1760s, the importation of copper from Britain eclipsed the long-established inward flow of that commodity from Japan, and this process of substitution enables

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Erasmus Forum Bulletin / Volume II 2018 25 the author to claim, with some degree of justification, that “it was British copper, not British cotton textiles, which acted as the harbinger of the Industrial Revolution to the world economy”.6 Virtually all of that copper was produced in Swansea by eight smelting works located in very close proximity to one another. Until about 1780, copper smelted in Swansea used Cornish ore supplemented by small quantities imported from southern Ireland, but Anglesey then emerged as a new source of supply. This was largely as a result of the aggressive entry into the industry by Thomas Williams, a north Wales solicitor who has been described as the ‘near-dictator’ of the copper industry. Williams had secured the rights to mine large ore deposits discovered on Parys Mountain, and embarked on an ambitious attempt to exert control over the entire industry. He proved to be remarkably efficient and systematic in his organisation of the supply, production and distribution chain, a process that brought an unprecedented and unparalleled degree of integration and cohesion to the industry. This meant that in addition to his mining interests, he purchased the Upper and Middle Bank smelting works in Swansea, obtained a fleet of ore-carrying vessels, and established a rolling mill on the Thames which enabled him to supply copper sheathing to the Royal Navy. He was ruthless in his price-cutting strategy, which was aimed at his main Cornish competitors, and relentless in his pursuit of overseas markets, which meant that by the 1790s he had been able to establish a near-monopoly over supply to the East India Company. It is perhaps little wonder that Williams’s biographer labelled him the ‘Copper King’.7 Thomas Williams flashed like a comet over Britain’s late-eighteenth-century industrial landscape, although he does not loom large in economic histories of Britain. He died in 1802, and, although his enterprise survived for another 23 years in the form of Williams, Grenfell & Co., his legacy was not enduring because the supplies of ore from Anglesey were exhausted shortly after the time of his passing. This loss of supply represented a serious problem for Swansea smelters because it was also becoming evident that Cornish ore alone was no longer sufficient to sustain an industry that was still expanding, not least through the development of Cornish entrepreneur John Vivian’s new, state-of-the art Hafod works which went into production in 1810, and the adjacent Morfa works of Williams, Foster & Co. which opened in 1835 and was destined to become the largest enterprise of its type in Europe. The ore supply crisis was the catalyst that fully extended the global reach of the Swansea copper industry. A worldwide search for alternative sources of ore was initiated during the 1820s, and this process (about which we know very little) saw Swansea connected with far-flung mines on several continents. Shipments of ore from Chile first arrived during 1823 and the ports of Valparaiso and Coquimbo soon became vital nodal points in the supply chain, as Swansea’s copper barques, known as Cape Horners, plied the notoriously difficult trade route around the Cape of Good Hope to and from the west coast of South America. Similar supply chains were established in Cuba, where ore was mined by slaves operating under the harshest of regimes at the infamous El Cobre mine;8 and from South Australia where, at Burra, the Monster Mine produced ore that was shipped to Swansea from Port Adelaide during the 1850s. Other sources tapped over time were located in the United States (Montana, New Mexico), South Africa, and different parts of Europe. The value added to the volume of this global trade lay in the fact that the quality of the ores was much greater than those located closer to home, with the copper content per ton being twice that still being extracted from Cornish and Irish mines. This reconfiguration

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Erasmus Forum Bulletin / Volume II 2018 26 of the copper trade put Swansea itself at the heart of a worldwide network which facilitated flows of not only raw materials and finished products, but also migrant labour, expertise and knowledge. The price of copper was set in Swansea, and global connections were inscribed into a townscape - home to 15,000 people in 1821 and 31,000 by 1851-through the establishment of consulates and the naming of wharves, streets, public houses and hotels. The effect that the copper industry had on the development of Swansea itself was profound.9 The Great Western Railway arrived in 1853, a process facilitated by Brunel’s construction of his extensive Landore viaduct which spanned not just the River Tawe but also some of the copper works that nestled on its banks. The nine major works operating in 1850 provided employment for some 10,000 men, women and children. The wealth generated by the copper magnates enabled estates and country houses to be established around the edge of Swansea Bay in picturesque places such as Singleton, Clyne and Grenfell Park, and it trickled into the burgeoning urban infrastructure through the construction of the aforementioned Royal Institution, as well as assembly rooms, banks, shipping offices and a multitude of chapels and churches. More prosaically, copper magnates sought to provide housing and basic amenities for some of their labour force, and this gave rise to the satellite industrial townships of Morris Town, Vivian’s Town and Grenfell Town. These have been strangely neglected in the literature on the planned company towns of the nineteenth century yet they were, in many ways, highly innovative and their imprint is very visible today even though they have been subsumed into the wider urban environment. One must be careful not to exaggerate the localised effects of the growth of the copper industry on the port and town of Swansea, because the very nature of copper smelting was such that both output and the size of the workforce were modest in comparison to the coal industry and the later-emerging ferrous metal industries of the region.10 Nonetheless, the effects of interconnected copper-related expansion upon Swansea are reflected across a range of statistical indicators.11 Equally, it is important not to portray the development of the industry as an unqualified triumph of the onward and upward march of industrial capitalism. The human costs were considerable, not least because copper smelting required long hours of hard labour in intense heat and an atmosphere poisoned by the constant output of noxious sulphurous fumes that were produced when arsenic and other impurities were burnt off during the roasting process. The works themselves were blighted by giant waste tips formed of these by-products, and the surrounding landscape became devoid of plant, tree and animal life as the ever-present copper smoke took a heavy toll on the natural environment.12 The effect was to transform a once scenic valley into a vision of a living hell, which found expression in many artistic representations produced in the mid-nineteenth century. And, as one poet put it in 1897: It came to pass in days of yore, The Devil chanced upon Landore. Quoth he, by all this fume and stink, I can’t be far from home, I think. DECLINE

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Erasmus Forum Bulletin / Volume II 2018 27 If the construction of global supply chains of ore represented a remarkable achievement for those involved in the copper industry, then so too did it sow the seeds of decline. Economic logic dictated the creation of shorter supply lines or indeed more tightly-integrated operations in which smelting took place as close to copper mines as possible. Smelting in places such as Chile had occurred on a small scale since 1830 but a robust challenge to Swansea became a reality from the 1850s onwards as far more extensive and systematic smelting was undertaken in South America, North America and Australia as large coal seams were opened up. Ironically, Swansea knowledge and labour played a key role in this process as workers migrated and took their skills with them, but technological improvements to furnaces also played their part. If Swansea smelters were ultimately unable to prevent their loss of a tight grip on the copper industry, which fully manifested itself by 1880, they were not passive in their acceptance of decline. Most of them, by inclination and outlook, had always been portfolio industrial capitalists and as such had run multiple enterprises. During the 1850s, for example, Vivian & Co. operated an iron works, a cobalt and nickel works and a phosphate plant close to its Hafod copper works, and when in 1874 it took over the White Rock works, copper smelting was ended there and replaced by silver and lead refining.13 Diversification and adaptation were key in the survival game, and the effect of this was evident in the type and distribution of enterprise that was emerging just as the tag ‘Copperopolis’ was being applied to Swansea. It was calculated that in 1883, within a five-miles radius of the centre of Swansea, there were 36 collieries, 8 iron works, 6 tin works, 3 steel works, 6 spelter or zinc works, 12 copper works, 5 fuel works, and 13 miscellaneous works. This represented a second wave of industrialisation, and the effects of this were evident in 1908 when the Daily Mail produced a supplement guide to Swansea and its economy. The map published on the front page demonstrated that the Lower Swansea Valley was now arguably the most intensively and diversely industrialised part of Great Britain. Yet, the process of diversification could not mask the long-term decline of the copper industry in the face of ferocious international competition. Smelting ceased in 1924 and although mergers and takeovers enabled the manufacturing of semi-refined copper to continue at the unified Hafod-Morfa works until 1980, most works were either given over to other forms of metallurgical production or abandoned to become derelict. Together with the deeply polluted landscape and the general effects of the interwar depression, this created a very strong sense of stagnation and decay, which accelerated after 1945 to the point that the Lower Swansea Valley became the largest post-industrial landscape in Western Europe. REGENERATION Processes of regeneration were evident in Swansea from the late 1950s, and just as it was one of the first places in Great Britain to experience intensive industrialisation so too was it the first to attempt a strategic programme to reverse deindustrialisation and environmental degradation. The problems were complex and interlocking, but the simple underlying motivation was that something had to be done to offset the ravages of capitalism that now manifested themselves in mile after mile of dereliction, desolation and despoliation created by more than two hundred years of industrial activity conducted in an environment that was largely unregulated at a time when notions of corporate responsibility were almost non-existent.

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Erasmus Forum Bulletin / Volume II 2018 28 The response took the form of what became known as the Lower Swansea Valley Project (LSV), which had its origins in 1960 in meetings convened by Robin Huw Jones, the director of courses in social administration at what is now Swansea University. This brought together members of the university and borough council under the chairmanship of principal and historian J.H. Parry. The following year the group was formalised as a committee and the emerging project was supported by grants of almost £50,000, including £22,500 from the Nuffield Trust. The scope of the task was at once recognised as being considerable. As the project’s published findings of 1967 put it: “The Lower Swansea Valley … is notorious for its blighted appearance. This once economically active area has in large part become derelict and is now covered with ruins and mounds of industrial debris; there are acres of noxious land that bear no vegetation at all; over the rest the vegetation is so poor that it accentuates the bleakness of the scene. This blighted area lies at Swansea’s front door for it adjoins the principal railway station and is only a few minutes by road from the High Street and the docks. The town suffers accordingly in reputation, morale, and in its economy.”14 The aim of the project was sharply defined: “To establish the factors which inhibit the social and economic use of land in the Lower Swansea Valley, and to suggest ways in which the area should in future be used.” To achieve this, studies were divided broadly into two types: those which examined the physical problems of the valley floor; and those which undertook socio-economic analysis of the resident and industrial populations. These studies generated 12 reports, which incorporated numerous detailed recommendations, and they ranged widely from the human ecology of the valley through to analysis of the many tips and volume of material contained therein. In passing, some intriguing suggestions were made including a proposal to construct an aircraft landing strip and helicopter port. It was acknowledged at the outset that this type of project was unprecedented and one can only be struck by the boldness of the ambition and method. It was the sort of venture that modern vice chancellors cry out for because it ticked so many of the boxes that now need to be ticked in an environment in which academic research is now assessed for its impact and public engagement. It involved extensive collaboration: the college, Borough Council, Welsh Office, and also industry. It was multidisciplinary, with projects centred on six academic departments. It involved pure and applied research and ‘knowledge transfer’ with the potential to have very considerable local impact and effect. And it had very considerable levels of community activity, most notably and visibly through the planting of many thousands of trees by local schools, clubs and societies.15 As such it represented a prototype for large-scale socio-economic regeneration projects, and it attracted very considerable interest because it provided a model for actions in blighted post-industrial areas. Visitors from across Europe and the wider world came to inspect the area and discuss what was referred to as Swansea’s ‘experimental method’. The many and varied recommendations relating to the LSV project were not translated directly into action but instead framed discussion of the development processes implemented by successive local authorities after 1967 when the findings were published. Some recommendations were ignored; others eventually found incarnations but not in ways originally anticipated. The five ‘parks’ that would host different forms of economic activity were never delivered, although some of the ideas found expression in the creation of an Enterprise Zone and Retail Park. Crucially though, there was extensive land clearance and soil remediation, which provided the necessary preconditions for the development of housing, leisure, and sporting activity, and the end product was a valley that was not only green again but capable of

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Erasmus Forum Bulletin / Volume II 2018 29 sustaining new forms of economic enterprise. What is so striking is the contrast between a process of industrialisation sparked by individual entrepreneurs using private funds, and a programme of regeneration implemented by public sector organisations using public finance. One notable casualty of regeneration was the rich metallurgical heritage of the area because a guiding principle of the LSV project was that the destruction of industrial remains was a necessary precursor to improvement and progress. At a time before the statutory protection of significant historic industrial buildings was in place it was deemed imperative to turn a back on Swansea’s poisoned and polluted past so that it could be freed from a historic straitjacket and thus participate in a shining new modern world of the 1960s that was to be dominated by new build. Indeed, the project made no direct connection at all between the area’s industrial past and its future development. The response was the systematic and indiscriminate destruction of nearly all of the industrial remains in the Lower Swansea Valley. There appears to have been no archaeological study or survey of buildings, and no attempt even to make the case for selective presentation. Consequently, what has survived appears to have done so purely by chance or accident, and the listing process did not get properly underway until sometime later. In many ways, this is not surprising. Industrial heritage was not yet widely seen as acting as an agent for positive change or regeneration, and it is noteworthy that the word ‘heritage’ does not appear in either the report of 1967 or subsequent conference proceedings of the 1970s;16 this is a reminder of just how recently that word has come to feature in our lexicon. The overall effect of this process was that by 2010 almost all of the remains of Swansea’s industrial past had been swept away, and that past was not looming at all large in the public consciousness as people and communities often struggled to adapt to their place in a post-industrial world. There was not one single information sign or interpretation board in the Lower Swansea Valley to indicate what had happened there and the distinctiveness of the area had been almost entirely eradicated by the onward march of generic forms of housing, retail, and service sector development. In 2011, historians and others at Swansea University sought to address this problem through the implementation of an ESRC-funded copper project which, alongside academic research, placed very heavy emphasis upon raising public awareness of Swansea’s place in the world as a leading centre of industry, innovation, and entrepreneurship. By any measure this proved to very successful indeed and demonstrated emphatically that a wide cross-section of society wished to reconnect with the area’s history and heritage. A sudden and unexpected broadening of the project occurred in 2012 when the City and County of Swansea issued a marketing brief aimed at attracting commercial developers to the site of the former Hafod-Morfa copper works. The site, with an attractive river frontage, lies just to the south of the Liberty Stadium. It is 12½ acres in size, and contains 12 listed historic structures, including the iconic Vivian engine houses, one of which contains the ruined remains of a rare Musgrave engine that once powered the rolling mills. There was a very strong sense that these last tangible remains of the copper industry should not be lost or be subsumed within unsympathetic developments, and a case was put forward for a programme for heritage-led regeneration shaped by the area’s copper heritage. As a result of these representations, Swansea University emerged as the city’s preferred development partner for the site and the CU@Swansea project was born.

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Erasmus Forum Bulletin / Volume II 2018 30 In its first phase the project made the site safe and accessible to the public, installed trails and interpretation, stabilised buildings, and created a framework for sustainable mixed-use through feasibility studies, remediation work, and master-planning defined with close reference to the area’s historic character. It must be stressed that this is not about creating a museum or heritage park; all too often these have proved to be costly and unsustainable. There will certainly be a ‘Living History Laboratory’ drawing on a range of digital, virtual reality, and handheld mobile technologies being developed within the university, which can be applied to the interpretation, better awareness, and clearer understanding of Swansea’s multiple contributions to Britain’s Industrial Revolution. The research and educational possibilities associated with this project are very considerable indeed. But, important though it is, the project aspires to rather more than a better engagement with the past. Phase 2, which is currently underway, centres on working with private sector partners to undertake a programme of building restoration, which will ensure that businesses will secure a sustainable future for the site and generate revenue. Here an initial focus is on copper and copper-related technologies to ensure that as much enterprise as possible moves with the historic grain rather than against it, as has happened so often in the past. This is crucial both for branding and distinctiveness. But the site also has considerable potential for the enhancement of traditional industrial/craft businesses, as well as the development of new ‘green’ technologies centred on a land and marine environment that is slowly coming back to life. With the core of buildings brought into use and creating jobs, the rest of the site will become a much more attractive proposition and, in line with the master plan, the aim is to attract commercial investment for housing, leisure, and social amenities that can be located on the extensive ‘empty’ spaces. This programme has enormous potential to add very considerable real value to the existing wider economic regeneration plans for the city by attracting visitors—cultural tourists—and facilitating the social, cultural and educational regeneration of the local community through routine use of, and creative interaction with, the site in spaces given over to public use. Moreover it will also help to create a stronger sense of ‘place’, identity and civic consciousness among those who live and work in the area. Will this work? Certainly, as we move towards the full emergence of what is now being described as an ‘experience economy’ in Britain, it is clear that, even in an age of austerity, heritage (broadly defined) can act as a powerful catalyst for inward investment, the creation of jobs and the development of old and new skills. Of course, the pump usually has to be primed through grant income, but the value and distinctiveness of historic buildings do have the capacity to enable creative engagement with the private sector. Industrial heritage poses its own challenges, but the signs are positive and we have already demonstrated the ability to attract firm commitment from the private sector, where businesses see the value of aligning with striking historic narratives. This alignment is now also occurring beyond the narrow boundaries of the site. The nearby Liberty Stadium is drawing on copper heritage themes during its latest phase of development, and it is no coincidence that this season the playing colours of Premier League football club Swansea are white and copper. This essay has focused on the life cycle of an industry and the way it has shaped the rise, decline and regeneration of a city and its hinterland. In order to properly explain that historic experience and its legacy, emphasis has been placed upon the importance of interactions between the local and the global, but such interactions do not happen by accident. The capitalist dynamo was the crucial agent of that

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Erasmus Forum Bulletin / Volume II 2018 31 interaction, and it was the ambitions, knowledge, skills, resources and risk-taking of individuals that forged the complex interconnected processes that underpinned the creation of ‘Copperopolis’. Those processes were taken to the absolute limit, and Swansea suffered the consequences when the dynamo slowed. The current reinvention of the city is being driven by multiple dynamos, but I very much hope an important one is that which draws its strength and inspiration directly from Swansea’s rich industrial past.REFERENCES 1 For general studies of Swansea see Glamor Williams (ed.), Swansea: an illustrated history (Swansea, 1990); W.G.V. Balchin, Swansea and its region (Swansea, 1971): Ralph A. Griffith (ed.), The City of Swansea: challenges and change (Gloucester, 1991). 2 See Chris Evans ‘A world of copper: introducing Swansea, globalization, and the Industrial Revolution’, Welsh History Review, 27 (2014), 85-9; Chris Evans with Olivia Saunders, ‘A world of copper: globalizing the Industrial Revolution, 1830-1870’, Journal of Global History, 10 (2015), 3-26. For a general overview of the development of the Welsh copper industry see Ronald Rees, King Copper: South Wales and the copper trade, 1584-1895 (Cardiff, 2000). 3 For a detailed study of the economic and urban development see Louise Miskell, ‘Intelligent town’: an urban history of Swansea, 1780-1855 (Cardiff, 2006). 4 For detailed studies of the rise and fall of Swansea’s copper industry see E. Newell, ‘“Copperopolis”: The rise and fall of the copper industry in the Swansea district, 1826-1921’, Business History, Vol. 32, No. 3 (1990), 75-97; R.O. Roberts, ‘The development and decline of copper and other non–ferrous metal industries in South Wales’, Transactions of the Honourable Society of Cymmrodorion, (1955), 78-115. 5 On the relationship between the growth of the copper industry and exports to Asia via the East India Company see H.V. Bowen, ‘Asiatic interactions: India, the East India Company, and the Welsh economy, ca.1750–1830’ in H.V. Bowen (ed.), Wales and the British Overseas Empire: Interactions and Influences, 1650-1830 (Manchester 2011), pp. 202-28. 6 Ryuto Shimada, The intra-Asian trade in Japanese copper by the Dutch East India Company during the eighteenth century (Leiden, 2006), chapter 5 (quotation on p. 79). 7 For a detailed biography of Williams see J.R. Harris, The copper king: A biography of Thomas Williams of Llanidan (Liverpool, 1964). 8 Chris Evans, ‘El Cobre: Cuban ore and the globalization of Swansea copper, 1830-70’ Welsh History Review, 27 (2014), 112-131. 9 Stephen R. Hughes, Copperopolis: landscapes of the early industrial period in Swansea (London, 2000). 10 For a judicious and well-balanced study of the place of copper smelting in the wider economic development of Swansea, see Miskell, Intelligent town, chapter 3. 11 Thus, to take just one example, the number of ships entering the harbour increased from 694 in 1768 to 2,590 in 1800, and the registered tonnage of these vessels rose from 30,361 to 154,264 during the same period. 12 On the several lengthy legal disputes that arose over the pernicious effects of copper smoke see Ronald Rees, ‘The South Wales copper-smoke dispute, 1833-95’, Welsh History Review, Vol. 10 (1981), 480-96. 13 Robert R. Toomey, Vivian and Sons, 1809-1924: a study of the firm in the copper and related industries (New York, 1985). 14 Kenneth J. Hilton, The Lower Swansea Valley Project (London, 1967), p. vi. 15 On this see Stephen J. Lavender, New land for old: the environmental renaissance of the Lower Swansea Valley (Bristol, 1981). 16 For the proceedings of a major conference which reviewed the project and its outcomes see Rosemary D.F. Bromley and Graham Humphrys (eds), Dealing with dereliction: the redevelopment of the Lower Swansea Valley (Swansea, 1979).

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Erasmus Forum Bulletin / Volume II 2018 33 ong Kong has developed a reputation for open markets, opportunity and free trade from its founding in 1842, when the British took the “barren” island to function as the headquarters to open up the trade between China and the rest of the world, and escape the constraints of trading through Canton and Macao. Hong Kong is persistently ranked as the world’s most economically-free market by the Fraser institute (1970-2015) and by the Heritage Foundation (1995-2015). It thus forms a kind of benchmark for free market capitalism and seems, at first sight, to conform to the idea of laissez-faire, or leaving businesses and markets to do what they do best without interference. Moreover, Hong Kong is an important case study to understand the components of effective regulatory reform. While many states struggled with banking regulations in the new era of integrating capital market in the 1970s, Hong Kong carved its own path to establish a regional, and then global, international financial centre in the absence of a central bank (the Hong Kong Monetary Authority was formed in 1993). Milton Friedman once lauded Hong Kong as a preserve for free markets, even when its imperial master, Great Britain, was at its most interventionist, promoting nationalised industry, strong labour unions, and a large and generous welfare system. 1 Among Friedman’s final publications (a month before his death in November 2006) was a contribution to The Wall Street Journal where he described Hong Kong as “a shining symbol of economic freedom”.2 In 1998, Friedman specifically attributed the relatively poor economic growth of Britain compared to Hong Kong to “socialism in Britain, free enterprise and free markets in Hong Kong”.3 In 1960, Hong Kong’s per capita income was less than a third of that of the UK, but by the time of the handover of sovereignty to China in 1967, per capita income in Hong Kong was more than 10% higher than in the UK. The characterisation of unfettered markets is certainly true for international capital flows and the foreign exchange market, which operated more freely than almost any other centre in the world in the 1950s.4 But how well does this characterisation conform to more detailed historical evidence? Certainly, Hong Kong’s post-war economic development was remarkable and demonstrates a wealth of entrepreneurship, resilience, and appetite for trade. Despite Britain’s imposition of protectionist tariffs on Hong Kong’s exports of textiles in the 1960s, entrepreneurs in Hong Kong were able to nimbly shift production to new areas and deploy new models such as subcontracting for large US and European distributors to follow markets. Looking at Hong Kong’s history more closely reveals a more complex system, vulnerable to bargaining between big businesses and the state. A stylised version of Hong Kong’s post-war economic success is that the colony thrived originally on the principles of free trade as an entrepôt for Chinese trade with the West. After the Communist revolution on the mainland in 1949, China’s trade was disrupted, throwing Hong Kong into a new and challenging environment. Partly through the influx of manufacturers and labour from across the border, labour-intensive industry was quickly established in the colony to replace the traditional entrepôt role. The persistence of free markets then supported the rapid industrialisation of Hong Kong H

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Erasmus Forum Bulletin / Volume II 2018 34 during the 1960s and 1970s through export-led growth. Low tax rates, freedom from controls on investment, openness to trade, and competition led to a resilient and vibrant economy that flourished in an environment of cheap labour, predominantly English language, the strong British legal tradition, and advantageous geographical position. The growth of labour-intensive production of textiles, toys, and other light manufactures led to rising incomes per capita. When local wages began to rise after the 1960s, exports began to lose their competitiveness, but Deng Xiao Ping’s launch of China’s Open Door Policy at the end of 1978 provided the outlet for Hong Kong firms to shift their production to the low-cost Special Economic Zones on the mainland. The subsequent rise of the international financial centre, logistics, and tourism sustained the economy through the difficult decades of the 1990s and 2000s. On the eve of the handover of sovereignty to China in 1996, the colony’s per capita income had soared to 10% higher than that of the UK. But this stylised view of Hong Kong’s success is open to question when viewed in greater detail. The sections that follow will challenge the assumption that economic relations with China were suspended from 1950 to 1978, that markets were free, and that the state did not intervene in the economy. EVIDENCE OF HONG KONG’S ECONOMIC SUCCESS Figure 1 shows the dramatic rise in per capita gross domestic product from 1961 to 2013. The consistent and accelerating growth from the 1980s to the 1997 Asian Financial Crisis is particularly striking, although nominal output per person fell. Figure 1

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Erasmus Forum Bulletin / Volume II 2018 35 Figure 2 shows how output changed each year from 1961 to 2014 in constant dollars, which shows that the only years in which output fell in real terms were 1997 Asian Financial Crisis and 2008 Global Financial Crisis. This emphasizes the vulnerability of Hong Kong to global factors, partly because of the openness of its economy. What is also striking is the higher average rates of growth during the years 1962 to 1989 (8.4% per annum) compared with the period 1990 to 2014 (3.9% per annum). Hong Kong joined other so-called East Asian “economic miracles”, much praised for their rapid development.5 A few years of slower growth in the mid-1960s were associated with local political disturbances. This was followed by another brief slowdown at the time of the first Organization of the Petroleum Exporting Countries (OPEC) oil crisis and again a decade later during the negotiations for the transfer of Hong Kong to Chinese rule in the early 1980s. In the early 2000s, the Severe Acute Respiratory Syndrome (SARS) outbreak interrupted tourism and business travel to Hong Kong, which adversely affected economic activity. Nevertheless, Hong Kong grew quickly relative to most of its neighbours and certainly much faster than Britain during the 1960s and 1970s. Figure 2 Figure 3 shows the dramatic transformation of the economy that was achieved by integration with the mainland economy. What is particularly striking is the absolute decline in the value of manufacturing output from the end of the 1980s, as production was shifted across the border to Shenzhen and other coastal centres. Hong Kong has continued to be by far the largest source of foreign direct investment into China. The decline in manufacturing in Hong Kong was more than matched by an upward surge in the value of production in the service sector, particularly financial and commercial services. That this restructuring was achieved without faltering rates of growth or employment is a testament to the resilience -10-505101520196119631965196719691971197319751977197919811983198519871989199119931995199719992001200320052007200920112013rYear-on-year % change in GDP (2013 dollars)

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Erasmus Forum Bulletin / Volume II 2018 36 and vitality of Hong Kong’s economy, and the importance of economic integration with the mainland two decades before the handover of political sovereignty. Figure 4 confirms the increasing role of mainland China in Hong Kong’s trade. Before the Open Door Policy, only about 10% of Hong Kong’s trade was with the mainland, but by 2008 this had increased to close to 50%. Almost all of the increase in the intensity of the trade relationship has been through imports and re-exports, most of which is related to the export processing industries located on the east coast of mainland China. China’s international trade and investment are thus closely related and Hong Kong’s trade is increasingly dependent on the vibrant mainland economy. Figure 4 Hong Kong GDP HK$ million 1980-2007 0 50000 100000 150000 200000 250000 300000 350000 400000 450000 500000 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 Wholesale, retail and import and export trades, restaurants and hotels Transport, storage and communications Financing, insurance, real estate and business services Manufacturing Figure 3

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Erasmus Forum Bulletin / Volume II 2018 37 Hong Kong’s financial centre is also increasingly dependent on the mainland. Figure 5 shows the share of China-related companies in Hong Kong’s stock market capitalisation since the early 1990s. Figure 5 By the time of the Global Financial Crisis, Chinese companies represented over half of Hong Kong’s stock market capitalisation and although this share has subsided, it is still significant at over 40%. Thus far, the evidence supports the traditional story of Hong Kong’s rapid economic growth as a free market economy, first through trade, then manufacturing, and the importance of integration with the mainland starting in the 1980s. The following sections look more closely at the evolution of cross-border relations and then at the extent of free market capitalism. INTEGRATION WITH CHINA BEFORE 1978 It is important to recognise that the economic relations between Hong Kong and the People’s Republic of China were crucial to Hong Kong’s development, not only well before the 1997 political handover, but also during the early decades of Hong Kong’s post-war economic development. This economic integration persisted despite the political isolation of China from the 1950s to the 1970s. The embargoes on trade with China imposed by the US in 1949 and then by the United Nations in 1951 did not end Hong Kong’s dependence on trade with the mainland. During the 1950s, recorded (re)-exports to China certainly tailed off (although there was considerable smuggling), but imports from the mainland were still 15–25% of Hong Kong’s total imports. Even more important was the nature of these imports; Chinese food, including vegetables and pork, were staples in the diet of the low-wage industrial workers of Hong Kong. About 80% of Hong Kong’s food was imported and about half of this came from Mainland China. The ability to source cheap food was an important factor depressing the cost of living and therefore 0%10%20%30%40%50%60%19931994199519961997199819992000200120022003200420052006200720082009201020112012201320142015*Hong Kong Stock Market Capitalization (% Total)H shares % of market Red chips % of market

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Erasmus Forum Bulletin / Volume II 2018 38 the cost of labour during the period of labour-intensive industrialisation that drove Hong Kong’s “economic miracle”. 6 The second main link between Hong Kong and China before 1978 was financial. During the 1960s twelve PRC-registered, or controlled banks, operated in Hong Kong, ranging from the powerful Bank of China to the small Po Sang Bank, which mainly traded in gold. Together, this group held 14% of deposits in Hong Kong in the mid-1960s.7 Moreover, after the American authorities blocked the use of US dollars in 1950, the Chinese state relied on sterling and other currencies to purchase essential imports. China’s trade surpluses with Hong Kong generated much-needed foreign exchange that could be converted in the free exchange markets in Hong Kong. Figure 6 shows the monthly sales of sterling to the Bank of China, which equate to between £350–£600 million per month in today’s money. This essential flow of foreign exchange covered between a quarter and a third of China’s total import bill at the time.8 Figure 6 The ability to run a trade surplus and to use this surplus to import food and capital goods from third countries was an important boost to China’s development planning during the decades before the Open Door Policy. Trade and financial relations between Hong Kong and China were, therefore, of significant mutual benefit despite the relative isolation of the People’s Republic of China during these decades, well before the Open Door Policy linked China more strongly to western markets from 1978. LAISSEZ-FAIRE AND POSITIVE NON-INTERVENTIONISM As noted in the introduction, Hong Kong’s exceptional reputation for free markets makes it an important benchmark to understand the nature of capitalism. But the way that the relations between the state and the market have evolved in Hong Kong is quite nuanced and contested. Certainly in the early 01020304050607019571958195919601961196219631964196519661967196819691970197119721973Sterling Sold to China Against HK$ (£ million)

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Erasmus Forum Bulletin / Volume II 2018 39 post-war years the state, and in particular the Financial Secretary, J.J. Cowperthwaite, was strongly averse to interfering in markets even to the extent that pressure from London to regulate markets or even to collect financial statistics was resisted.9 In the 1970s the Financial Secretary, Sir Philip Haddon-Cave, coined the phrase “Positive Non-Interventionism” and this awkward form of words has come to dominate perceptions of Hong Kong’s successful post-war economic development. 10 The phrase was meant to express the deliberate (positive) effort by the state not to intervene in the allocation of productive resources. This attitude was in marked contrast to the “governed market” approach that prevailed in other newly-industrialising East Asian economies in the 1970s such as South Korea, Singapore and Taiwan, where the state had a strong influence over the direction of economic development.11 It also diverged strongly from the British Labour government’s approach in the UK in the 1970s, as noted by Milton Friedman. But Haddon-Cave drew a distinction at the time between laissez-faire and non-interventionism, noting that there was a positive role for government to overcome market failure, i.e. when the public good was not best served by unfettered market forces. One of the clearest private expressions of positive non-interventionism is in a letter from Haddon-Cave to the famous entrepreneur and businessman Li Ka-Shing in 1981, months before Haddon-Cave demitted his post as Financial Secretary to become Chief Secretary. After thanking Li for an entertaining evening at his home, Haddon-Cave expresses the difficulty of sticking to his commitment to free competition: “…the way in which so many in the market place, in these scratchy times, damn us if we even suggest something and simultaneously damn us if we do nothing is beginning to get me down! I am determined, for as long as I am here, to keep the economy, and all the markets within it, free and that means free from unnecessary and clumsy Government intervention, free from fiscal discrimination, free from the stifling effects of excessive taxation and an over-large public sector and free from all other influences which inhibit competitive forces.”12 Haddon-Cave’s successors embraced his philosophy although the death of positive non-interventionism has been announced several times, as early as 1992 by Financial Secretary Hamish Macleod, then by Chief Executive Donald Tsang in September 2006, and again in August 2015 by his successor Leung Chun-Ying. 13 Nevertheless, the slogan has survived despite a turn to “big market-small government” in the mid-2000s. But how non-interventionist was the Hong Kong government during the period of high speed growth? And how influential were Haddon-Cave’s adversaries “in the marketplace”? INDIRECT STATE SUBSIDIES A first important qualification to Haddon-Cave’s own assessment is to note that the state played an important role in promoting the economic and business environment of Hong Kong in ways that went far beyond allowing market forces to operate freely. First, the state controls the scarcest resource in the

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Erasmus Forum Bulletin / Volume II 2018 40 economy; land.14 Through leasing, zoning and other allocations of land, the state had considerable influence over the nature and distribution of economic activity across the colony during the period of high-speed growth in the 1960s and 1970s. Secondly, the state is very active in subsidising the cost of living in Hong Kong (and therefore the cost of labour). From 2005 to 2015 housing absorbed only about 6% of government spending, which may not sound like much, but in 2015, 30% of the population was able to take advantage of subsidised public housing, which represents either significant income foregone or government competition with the market. During this period, rents in public housing were less than a quarter of the cost of smaller private flats on Hong Kong island (only 14% in 2015).15 Access to cheap accommodation keeps down the cost of living, and therefore the cost of labour for industry and services. In this sense, the state has been indirectly subsidising the labour-intensive industries that were the foundation of Hong Kong’s successful industrialisation. TIGHT CONTROLS ON THE BANKING SYSTEM Even more striking than this positive support for markets, however, was the extent of controls on the banking system that restricted free competition. The financial sector is often a target for regulation, even by most adherents of free markets, because of the prevalence of market failure due to information asymmetry. Thus, depositors do not usually know the purpose to which their funds are put by banks (how liquid or risky the banks’ loan portfolios are) and therefore they cannot measure the risk of not getting back their deposits. Banks, in turn, do not have perfect knowledge of the likelihood of default by their customers. Private information is a key asset of banks so they have an incentive not to disclose commercially-sensitive information to the public. This generates a need for rules to govern bank liquidity, insider lending, minimum capital, and a system of prudential supervision to ensure that the rules are being followed. Prudential bank regulation increases transparency and supports the operation of competitive markets. At first, the Hong Kong Government was very reluctant to regulate the banking system, preferring to allow banks to seek deposits and make loans without restriction or supervision. There was no central bank and currency notes were issued by HSBC, Chartered Bank, and the Mercantile Bank under an effective currency board system operated through the government-managed Exchange Fund.16 Bankers merely registered under the company ordinance and were allowed to collect deposits from the public; by 1947 there were about 250 different banking institutions in the colony. The first banking regulation in 1948 required a nominal license fee to be paid but imposed no prudential controls on minimum capital, no reserve requirements or liquidity ratios, and little guidance on balance sheets. As commercial business in the colony slowed down after the restrictions on trade with China, banks began to compete for deposits by offering higher interest rates and engaging in more risky loans so that, in 1961, Hong Kong suffered

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Erasmus Forum Bulletin / Volume II 2018 41 its first major banking crisis. This woke the authorities and leading bankers to the dangers of contagious bank runs because of weakly capitalised or corrupt banks. HSBC and Chartered Bank began to draft a new and tighter set of bank regulations that included prudential controls, and they organised a cartel to control interest rates offered on deposits to constrain competition.17 From 1964 a subcommittee of the Hong Kong Exchange Banks’ Association met periodically to set deposit rates that could be offered to their customers. HSBC and Chartered Bank would then adjust their best lending rates in concert to reflect any changes in deposit rates. Interest rate cartels were not unusual in the 1960s; similar arrangements existed in both the US and the UK. However, most countries abandoned interest rate controls in the 1970s, while Hong Kong maintained their Interest Rate Rules in amended form until 2001. The new Banking Ordinance was debated and amended and finally came into force in 1964, just in time for a second, larger, banking crisis which required the government to bail out depositors and led HSBC to take over Hang Seng Bank. The diagnosis from this troubled period was that competition among banks was excessive and needed to be curbed to ensure stability. This view was strongly argued by the leading incumbent banks, but also supported by Bank of England advisors and (somewhat reluctantly) by the Hong Kong state. This diagnosis had long-lasting implications since the medicine prescribed was a set of anticompetitive measures that included not only the cartel on interest rates, but also a moratorium on new bank licences that lasted from 1965 until 1981 (with a brief hiatus for Barclay’s Bank), and limits on the number of offices that new banks could operate until 2001. Foreign banks, in particular, were considered “parasitic” by the Banking Commissioner even though this was the era in which Hong Kong emerged as an international financial centre.18 While the moratorium was aimed at increasing the stability of the banking system, it had the effect of decreasing the regulatory breadth of the government, and reducing incentives for mergers and acquisitions that might have improved governance. Widespread evidence of fraud, immediately after the moratorium ended, showed that it was not a lasting cure for the governance problems of the Hong Kong banking system.19 Even the powers of supervision that were granted under the 1964 Banking Ordinance (and subsequent amendments) were circumscribed in practice. The office of the Banking Commissioner was underfunded and he repeatedly had to fight for resources to hire staff that would allow effective inspection of banks. His frustration was expressed clearly in a letter in 1969 to the Financial Secretary J.J. Cowperthwaite: It is abundantly clear that there is a complete lack of comprehension or knowledge of the duties that my office performs; this is a point upon which I have spoken to you many times in the past and more recently concerning the status and authority of this office. I am asking for an interview with HE [His Excellency the Governor] upon this last point. The time has come, in my opinion, to establish whether the Colony’s banking authority is to have the independence and status which it deserves or not.

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Erasmus Forum Bulletin / Volume II 2018 42 No change arose out of this plea and his successors still found the office understaffed 15 years later.20 In the meantime, hundreds of new financial institutions opened and operated outside the Banking Ordinance to avoid the interest rate cartel and prudential capital requirements imposed on banks. The moratorium on new bank licenses combined with the interest rate cartel created a large unsupervised financial sector that increased the fragility of the financial system as a whole. In the 1980s there was yet another series of banking failures and this time the costs were even greater.21 From 1983 to 1986 seven banks collapsed and a further 100 other deposit-taking companies went out of business. Of the seven banks, three were taken over directly by the government to be restructured and sold off and the rest were supported financially to facilitate private acquisition.22 The causes were linked to poor supervision including overexposure to volatile asset markets like property and equity, insider lending and outright fraud. CONCLUSIONS This lecture has emphasized the need to be careful about generalisations about policy environments based either on stylised facts or on constrained quantitative indicators such as government spending as a share of GDP or nominal tax rates. Looking closely at how state-market relations actually work in practice, including the obscure and sometimes shady relationships between individuals and institutions, can be revealing. We must also be careful to assess the trade-off between a light regulatory hand and the influence of special interests. Goodstadt, for example, has claimed that rather than promoting a competitive environment, non-interventionism left the Hong Kong public ripe for exploitation by “business cartels and other anticompetitive practices”.23 The anticompetitive controls on the banking system that protected incumbents introduced damaging distortions which contributed to financial instability in Hong Kong in the longer term. While it is challenging to accumulate detailed evidence of the interactions between the state and the market, the economic history of Hong Kong as a benchmark of free markets suggests there may be considerable benefits from closer historical treatment of capitalism(s) through archival research. REFERENCES 1 M. Friedman, ‘Asian values: right…’, National Review, 31 December 1997. M. Friedman, ‘Hong Kong Wrong’, The Wall Street Journal, 6 October 2006. 2 Friedman, ‘Hong Kong Wrong’. 3 M. Friedman, ‘The Hong Kong Experiment’. 4 C.R. Schenk, Hong Kong as an International Financial Centre: emergence and development 1945-65, London: Routledge, 2001. 5 See for example, World Bank, The East Asian Miracle: economic growth and public policy, Oxford University Press, 1993. The others included South Korea, Taiwan and Singapore. 6 C.R. Schenk, ‘Economic relations between Hong Kong and China 1945-51’, in Lee Pui-tak ed., Colonial Hong Kong and Modern China, Hong Kong University Press, 2005, pp 199-218. 7 C.R. Schenk, ‘The re-emergence of Hong Kong as an International Financial Centre 1960-1978: contested internationalisation’ in L. Quennouëlle-Corre and Y Cassis eds., Institutions, Markets and Capital Flows: Why are Financial

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Erasmus Forum Bulletin / Volume II 2018 43 centres attractive?, Oxford University Press, 2011, pp. 229-253. See also, L. Goodstadt, Profits, Politics and Panics; Hong Kong’s banks and the making of a miracle economy 1935-1985, Hong Kong University Press, 2007, pp. 115-128. 8 C.R. Schenk, ‘Banking and exchange rate relations between Hong Kong and mainland China in historical perspective: 1965-75’ in C.R. Schenk ed., Hong Kong SAR’s Monetary and Exchange Rate Challenges; historical perspectives, 2009, pp. 45-72. 9 L. Goodstadt, Uneasy Partners: the conflict between public interest and private profit in Hong Kong, Hong Kong University Press, 2005, pp. 118-20. 10 P. Haddon-Cave, ‘The making of some aspects of public policy in Hong Kong’ in D. Lethbridge ed., The Business Environment in Hong Kong, Oxford University Press, 1980. 11 R. Wade, Governing the Market: Economic Theory and the Role of Government in East Asian Industrialization, Princeton, 1990. 12 Letter from Haddon-Cave to Li Ka-shing, 11 March 1981. Italics underlined in the original. HSBC AP, Financial Secretary, 1983-86. HKO 196/088 Carton II. 13 Macleod quoted in S. Staley, Planning Rules and Urban Economic Performance: the case of Hong Kong, Chinese University Press, 1994. p. 37. Tsang, South China Morning Post, 13 September 2006. Chief Executive Leung Chun-Ying quoted in South China Morning Post, 15 August 2015. A.B.L. Cheung, ‘Repositioning the state and the public sector reform agenda; the case of Hong Kong’, in M. Ramesh, E. Araral Jr and X. Wu eds,. Reasserting the Public in Public Services: new public management reforms, Routledge, 2010, pp. 79-101. 14 R. Nissim, Land Administration and Practice in Hong Kong, Third Edition, Hong Kong University Press, 2011. 15 Hong Kong Housing Authority, Housing in Figures, 2015. In the New Territories public rents were 42% of private rents in 2005, falling to 20% in 2015. The comparison is to private flats less than 70m2 . https://www.housingauthority.gov.hk/en/common/pdf/about-us/publications-and-statistics/HIF.pdf 16 Hong Kong is not, therefore, a case of ‘free banking’ in the sense of a competitive market in bank-issued notes. 17 C.R. Schenk, ‘Banking Crises and the Evolution of the Regulatory Framework in Hong Kong 1945-70’, Australian Economic History Review, 43(2), pp. 140-154, 2003. On the origins and operation of the Interest Rate Agreement see, Schenk Hong Kong, pp. 66-68. 18 C.R. Schenk, ‘”Parasitic Invasions” or Sources of Good Governance: Constraining Foreign Competition in Hong Kong Banking 1965-81’, Business History, Vol. 51(2), March 2009, 157-179. 19 C.R. Schenk, ‘Banking Crises and the Evolution of the Regulatory Framework in Hong Kong 1945-70’, Australian Economic History Review, 43(2), pp. 140-154, 2003. 20 Memo by Bank Commissioner Colin Martin, September 1980, Bank for International Settlements Archive, Offshore Centres Meeting of Supervisors BS/80/41e5. 21 This round of financial crisis was prompted in part by the government’s mismanagement of the monetary system as well as contagion between bank and non-bank financial institutions. J. Goodwood, Hong Kong’s Link to the US Dollar: origins and evolution, Hong Kong University Press, 2008. T. Latter, Hong Kong’s Money: the history, logic and operation of the currency peg, Hong Kong University Press, 2007. 22 R. Li, ‘Banking Problems: Hong Kong’s experience in the 1980s’, Bank for International Settlements. 23L. Goodstadt, Uneasy Partners; the conflict between public interest and private profit in Hong Kong, Hong Kong University Press, 2005, p.5.

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Erasmus Forum Bulletin / Volume II 2018 45 n the night of 7 June 1780, rioters made a number of attempts to storm the Bank of England. Their failure was no reflection of lack of numbers or passion but was rather a measure of the strength of the defence force that fought for the institution. That force included a troop of Horse and Foot Guards, the Northumberland Militia, the voluntary London Military Association and willing members of the general public, including John Wilkes, the radical journalist and politician.1 Indeed, Wilkes was clearly very active in the Bank’s defence, recording in his diary: ‘Fired six or seven times at the rioters at the end of the Bank. Killed two rioters directly opposite to the Great Gate…’.2 The Bank’s own staff also turned out in its support. Legend has it that their guns were loaded with bullets cast from the melted-down ink stands from their desks, although it does seem rather unlikely that the Bank would have had to resort to such measures since it kept a reasonably well-stocked armoury. It was nonetheless thanks to the efforts of the staff, the protection of men like Wilkes, and the Foot Guards, who kept up a constant fire thus dispersing the rioters, that the Bank remained safe and, indeed, opened for business (although a much reduced business) the next day. At first sight, the Bank was not an obvious target for the mob. Their actions originated in Lord George Gordon’s invectives against Catholicism and, in particular, the presentation on 2 June of a petition to the House of Commons calling for the dissolution of the 1778 Act by which some of the disabilities against Roman Catholics had been removed.3 On that day a crowd of some 60,000 people gathered in St George’s Fields in Southwark to hear Gordon speak and join the march on Parliament to present a ‘Protestant petition’. The crowd, although certainly containing disorderly and possibly criminal elements, was comprised largely of ‘well-dressed decent sort of people’.4 Once at Westminster, it made its presence felt; Westminster Hall was invaded, the Court of the King’s Bench forced to adjourn, and peers were attacked on their way to Parliament. Gordon succeeded in getting the House to consider his petition and made periodical, and rather inflammatory, reports on the debate to the waiting crowd. His actions all but ensured that when the petition against Catholic relief was rejected, the mob would become violent.5 The initial targets were chapels and properties used and owned by Catholics but surrounding properties were often damaged in the confusion and, as the week went on, the rioters turned their attention to symbols of authority including prisons and the houses of those magistrates most active in the attempted suppression of the violence.6 On 7 June, a day dubbed ‘Black Wednesday’ by Horace Walpole, the rioters targeted shops, businesses, offices and two Catholic schoolhouses. As night drew in, the tolls on Blackfriars Bridge were destroyed and further attacks were made on London’s prisons. The climax to the day’s events were those ill-fated attacks on the Bank of England. We can’t spend too much time investigating the motivations of the crowd but it is clear the rioters were not just spurred on by rumours that the Bank contained a quantity of popish money. Arguably, since the Bank was regularly active in the courts, as it sought to protect both its business and the financial system against the activities of coiners and forgers, it was itself viewed as a symbol of both authority and repression. Historians also acknowledge a strong ‘class’ bias in attacks on Catholic and other targets. As Rudé suggested, there was, in the actions of the rioters, ‘a groping desire to settle accounts with the rich, if only for a day’.7 In this respect, the Bank was a natural target. It had, for a long time, been the focus of resentment among those of London’s middling sorts who were losing ground to the monied men supposedly making their fortunes in the financial markets. It had also attracted the ire of a broader section of society who suffered the burden of taxation that resulted from the wars of the period. Moreover, while it is certainly going too far to suggest that the mob understood that ‘whoever is master of the bank and O

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Erasmus Forum Bulletin / Volume II 2018 46 the tower will soon become master of the city, and whoever is master of the city will soon be the master of Great Britain’, the rioters must have seen the Bank as a strong symbol of political and economic power.8 The attacks on the Bank, therefore, were not merely an anomaly in a set of actions more properly directed at the symbols of state repression.9 The Bank was, in fact, a legitimate target for the mob. Fortunately for our story, it was also seen as worthy of strong protection and, as we have seen, the defence force with which it was provided was more than a match for the rioters. My aim is to investigate why and how the Bank of England became worthy of such protection. How did a hastily-constructed, temporary solution to the funding of a late seventeenth-century war turn into a great engine of state; a symbol of oppression to some but a symbol of trust, solidity and British geopolitical power to others. A BRIEF HISTORY OF THE BANK Let’s start by returning to the late seventeenth century, a time of significant political and economic change. It was also a time when there was much support for the idea of a public bank. There were very few banks in Britain at this point and all were small and limited in scope. But some projectors looked overseas for examples of different ways to stimulate the economy and, in particular, pointed to the advantages conferred by larger public banks of Venice, Genoa and most prominently, in the minds of Englishmen at least, Amsterdam. They also argued that a public bank was necessary to regulate and stimulate the increasingly complex English economy. Specifically, William Paterson, one of the Bank of England’s founders, suggested that a public bank was needed ‘for the convenience and security of great Payments, and the better to facilitate the circulation of Money…’.10 He went on to assert that such a bank would bring down the rate of interest and increase the availability of capital, “which for some time past hath born no manner of proportion to that of our Rival Neighbours [a situation that was inexplicable] considering the Riches and Trade of England, unless it were the want of publick Funds; by which the Effects of the Nation, in some sort, might be disposed to answer the Use, and do the Office of Money, and become more useful to the Trade and Improvements thereof.”11 But not everyone was in favour of the creation of such an institution. Notably, important questions were raised about its potential relationship to the Crown. This was a particular concern because, following the Glorious Revolution of 1688, the English Parliament had gained greater powers. It used those powers to impose a restrictive financial settlement on William III that was intended to ensure his continuing dependence.12 It was argued that a public bank might be used by William to circumvent this financial settlement and thus undermine the power of Parliament.13 But although these arguments are interesting and provide the context for discussions about what a public bank might look like and do, the Bank of England was not a response to any of these points. It was quite simply a product of war. The Glorious Revolution of 1688 deposed the Catholic James II and brought the Dutch William and his wife Mary, James’s daughter, to the throne.14 Although William had been invited to England for the preservation of Protestantism at home, the new king had larger ambitions in mind. He wanted to check the power of Louis XIV’s France and thus one of his first acts was to take Britain into a European war. The Nine Years’ War raged from 1689 to 1697. It was indecisive and it was expensive. Public spending rose from under £2m per annum to over £6m per annum.15 Where was the money to come from? At first it was raised through increased taxation and through short-term borrowing, which was facilitated either by funds raised from a few rich individuals or by paying contractors in ‘IOUs’ instead of cash. By 1692,

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Erasmus Forum Bulletin / Volume II 2018 47 however, the funds were running dry as was the collective patience of the state’s creditors. Other means of raising money had to be sought and essentially what was needed was the ability to access funds from more (many more) willing lenders and to secure a much longer time to pay them back. These innovations, the details of which are summarised in table 1, encompassed a number of experimental schemes and some proved to be more successful than others. The Million Adventure lottery, with its £10 tickets, offer of large prizes and guarantee that all players would at least get their money back, went down very well. The tontine loan, with its complex rules, was rejected by the perhaps too cautious British investor. Date of royal assent to Loan Act Amount raised £ Interest % Loan details Jan 1693 108,100 10 until midsummer 1700, then 7 Tontine Jan 1693 773,394 14 Single life annuities Feb 1694 118,506 14 Single life annuities Mar 1694 1,000,000 14 Million Adventure lottery Apr 1694 1,200,000 8 Subscribers to the loan were to be incorporated as the Bank of England Apr 1694 300,000 10,12 and 14 Annuities for one, two and three lives Apr 1697 1,400,000 6.3 Malt lottery; this lottery failed and the government subsequently issued the tickets as cash July 1698 2,000,000 8 Subscribers to the loan were to be incorporated as the New East India Company 6,900,000 If we judge it by its longevity, the Bank of England was one of the most successful of these innovations. And indeed, it appeared to be a success from the very start; it was in April 1694 when the Table 1: Government long-term borrowing, 1693-1698 Source: P. G. M. Dickson, The Financial Revolution in England: a study in the development of public credit, 1688-1756 (London, 1967), pp. 47-49.

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Erasmus Forum Bulletin / Volume II 2018 48 promoters of the Bank were granted the right to raise £1.2m by a subscription that was open to all: ‘Natives and Foreigners, Bodies Politick and Corporate’.16 The subscription books were opened on 21 June 1694 and, despite some expectations to the contrary, filled rapidly. By 2 July the full amount had been subscribed by 1,268 individuals.17 By early August it had opened its doors to new business. Imagine that… a new bank established, funded and opened in a matter of weeks. Moreover, by 1 January 1695 the Bank had honoured its pledge to transfer its capital to the Exchequer.18 Yet, in spite of the enthusiasm of the subscribers and the prompt fulfilment of its promise to the state, the new Bank of England remained merely a temporary measure. Indeed, its impermanence was enshrined in the terms of its first charter, which extended for a mere 12 years or, more properly, until 1 August 1705, at which time the Bank could be wound up at 12 months’ notice and on the repayment of the capital. This was no brave new world; it was a sticking plaster for a wound that was expected to quickly heal. The Bank of England was to remain vulnerable throughout most of the early eighteenth century, beset by rival schemes such as the proposed Land Bank, and the much more threatening rival, the South Sea Company. It lived in a rented home until 1734. Moreover, while the Bank served the state, its relationship with Parliament was not always easy; despite the Bank’s longevity, security took time. Its charter was subject to periodic renewals until well into the nineteenth century.19 It took many years for the Bank to establish its reputation and secure its place at the heart of Britain’s finances. It also had internal struggles about what its role might be. What secured the Bank’s position and ensured that it survived into the late nineteenth century while the other key companies of the seventeenth and eighteenth centuries, the East India Company and the South Sea Company, were eventually wound up? Figure 1 sums this up for us; the costs of war. Britain was at war for a little over half the period between 1688 and 1815. When not fighting, resources were often employed in preparing for war. Moreover, the financial cost of sustained conflict was immense. By 1819 the total unredeemed capital of the public debt stood at a little over £844m. This was a staggering sum for an industrialising nation and Britain’s ability to sustain such a high burden of debt without descending into political and economic chaos forcibly demonstrates both the effectiveness of its system of state finance and how much the British war machine owed to the willingness of investors to lend to their government. And this is where the Bank’s primary purpose lay throughout the eighteenth century. This is why it survived and why, by the early nineteenth century, it was unassailable: its management of state debt; its role as banker to the state; and its role as mediator between the state and its creditors. It is through these tasks that the Bank made the majority of its profits, on which it built its reputation and where it saw its own purpose.

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Erasmus Forum Bulletin / Volume II 2018 49 Figure 1: Levels of public debt, 1691-1815 (in millions of £s) Source: Mitchell, B.R., with Phyllis Deane, Abstract of British Historical Statistics (Cambridge, 1962). THE BANK AS A SYMBOL OF TRUST IN THE STATE’S FINANCIAL PROMISES The consequences for the Bank of England were not just the development of proficiency in the practicalities of managing the national debt, although that certainly came. Glance through any of the Bank’s beautifully-preserved ledgers and you will find very few errors and seemingly meticulous record keeping. Given the scale of the work, this was no small achievement. But the nature and scale of the work undertaken by the Bank also meant that over the course of the eighteenth century, the institution became embedded in public life and in the life of the City of London. If we look at some of the very many records kept by the institution we can see indications of the crowds that gathered and can witness the extent to which the Bank was part of the rhythms of city life. The clerks who reported to a 1783 audit noted the crowds who arrived on dividend day, the stockbrokers all tended to come to the Bank to make their transfers at a certain time. Equally, the notaries came to inspect in the ledgers, in order to certify the sums standing in particular names.20 In addition, the keepers of the cash books noted that extra facilities were laid on ‘towards evening when the Bankers come in’.21 There are hints that the crowds were so large at certain times that prostitutes found the Bank's environs a good place to find customers! Sources also contain several mentions of thieves operating there. A report in 1783 noted the activities of a pickpocket who had robbed a lady of 30 guineas.22 The Old Bailey Proceedings Online offers a report of John Smith, 010020030040050060070080016911695169917031707171117151719172317271731173517391743174717511755175917631767177117751779178317871791179517991803180718111815

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Erasmus Forum Bulletin / Volume II 2018 50 a stockbroker who, while going about his business at the Bank of England at ‘about twelve o’clock [when] there is generally a very great croud [sic]’, was robbed of a silk handkerchief.23 The frequent mentions of great crowds should not surprise us. The amount of business managed by the late eighteenth-century Bank was staggering. For example, the issue of 4% annuities during the War of American Independence resulted in the need to open 19,500 new accounts in one day.24 Around the same time, it was estimated that the work of compiling a list of unpaid dividends for the Exchequer was so time-consuming that it could take up to five or six months.25 More than 65,000 dividend warrants were issued for payment on 5 January 1783 and nearly 59,000 in April 1783.26 The clerks who kept the K cash book, in which were recorded notes in long lists for the Exchequer, other public offices and some bankers, estimated that they made up around 20,000 notes a month.27 Mr Isaac Pilleau estimated that 137,000 bills of exchange had been discounted in the course of 1782. The clerks effectively worked in two shifts to ensure that all the work got done. The business day was from around 9am to 5pm. An evening shift started at around 4pm and extended sometimes late into the evening to ensure that all records were updated for the start of the next working day. As the business grew so did the Bank itself. It opened with a staff of just 17 in 1694. The number of clerks had expanded to over 100 by mid-century; more than 300 by 1783; and by 1815 there were over 900.28 The space the Bank occupied naturally expanded as the number of staff grew. Its first permanent home was in Threadneedle Street on the site on which it now stands. The house had belonged to Sir John Houblon, the first governor, and was left to the Bank in his will. But the house was surrounded by St Christopher Le Stocks Church and other houses. Thus the Bank’s directors took a number of measures during the mid- to late-eighteenth century to buy up the surrounding buildings and land. In doing so, they made much of the need to enlarge the streets and passages around Threadneedle Street, making them more ‘commodious’ for visitors and customers.29 But when this issue was raised during the 1760s, the risk of fire was also observed: ‘buildings, papers and property…may be in danger of being destroyed to the irretrievable loss of the publick’.30 Those fears were heightened by fires in Cornhill in 1748, when around 100 houses were destroyed, and in Sweetings Alley near the Royal Exchange in 1759.31 When contemplating these actions, we must conclude that the Bank was a predator during this period. It was aggressive in its control of its surroundings. It eventually bought up the whole block, destroyed St Christopher Le Stocks church, and pushed out residents from the area. It was resented for doing so; but what the Bank was doing served a greater purpose. It was protecting the public creditor and that presented quite a problem because here was an institution acting in an aggressive way to push out one set of people, but not just to protect the state, it was also protecting public credit; an act which affected another equally ordinary group. Indeed, we must remember that the Bank was the servant of two masters – the state and the public creditors – and the public creditors were a very large group of people who may have included the greatest in the land but also included very ordinary people who might have kept their life savings in the funds. If some saw the Bank as a symbol of oppression, what did the public creditors see when they went to the Bank of England? The architecture of the Bank was redolent with strong messages for the public and when designing the new buildings that made up the institution during the eighteenth century, there is evidence to suggest that both its architects and its directors were concerned not just with mundane security matters but also with the image its buildings and their adornments presented to London. The

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Erasmus Forum Bulletin / Volume II 2018 51 historian of the Bank’s architecture, Daniel Abramson, argues that the Bank was designed along lines that represented corporate virtue and connections to the state. Thus, overt ostentation was eschewed, although the aesthetic of the building was considered important and did surpass that of the Exchequer and at least equal that of the grand new buildings of the Treasury and the Admiralty.32 The classical stone façade of the Bank was in obvious physical contrast to the high and narrow brick, wood and stucco buildings that surrounded it.33 Because of the need for security, there were no windows facing the street at street level, thus passers-by were presented with an elegant but essentially blank façade. Iain Black labels those windowless walls ‘exclusionary’, linking them to the Bank’s aggressive protection of its privileges and monopoly position.34 Yet, while the building may have been in some ways reminiscent of a fortress, it did send another clear message to those who used its services; capital invested will be secure here. The iconography within and outside of the building underlined that point and emphasised the Bank’s usefulness to the country and its government, and its connections to the same. Thus the entrance to the Pay Hall was topped by a figure of Britannia pouring out the fruits of commerce from her cornucopia, while also carrying the shield and spear which symbolised the defence of the nation. While the exterior of the Bank communicated a message of security, the fortress analogy cannot be pushed too far because the Bank was essentially a public space. By the later part of the eighteenth century it had more square foot of space open to the public than closed off and despite the doormen and porters, whose job it was to keep undesirables out, there is plenty of evidence that all manner of individuals did enter the Bank. We have already seen the emphasis in some of the sources on the crowds and confusion in the public spaces of the buildings. Despite the undesirable company that might have been kept at the Bank, when the public did visit, for whatever purpose, the external messages of security were reinforced in the interior of the buildings. Britannia was prominent inside the building too; stamped on every ledger, visible on every note. Visitors witnessed a set of interiors that were grand and decorated with royal iconography as reassurance of the Bank’s probity and connections with the state. It is interesting here that royal iconography was prominent. Despite our understanding of the chief connections of public credit being between the individual and Parliament, the Bank did, and indeed had since its foundation in 1694, emphasised its connections to the Court as well as Parliament. But the wider point that is intended here is that in all its design, the Bank was making a statement of probity and security. This message was also demonstrated in how the Bank’s directors thought about their roles and the role of the institution they managed. Again, from the 1783 audit of the Bank’s functions, in their final report the auditors noted a ‘religious Veneration for the glorious fabric [of the institution and] a steady and unremitting attention to its sacred Preservation’.35 It was their view that given: “the immense importance of the Bank of England not only to the City of London, in points highly essential to the promotion & extension of its Commerce, but to the Nation at large, as the grand Palladium of Public Credit, we cannot but be thoroughly persuaded that an Object so great in itself & so interesting to all Ranks of the Community, must necessarily excite care & solicitude in every breast, for the wise administration of its Affairs, but principally and directly in theirs who are entrusted with the immediate management of them.”36

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Erasmus Forum Bulletin / Volume II 2018 52 This message was not just one that found approval within the Bank. In essence it can be found in perhaps the most famous image of the Bank from the late eighteenth century and the one which gave the institution its nickname ‘The Old Lady’, James Gillray’s Political Ravishment. Here we have in Gillray’s portrayal, the Bank as a fragile elderly lady who was in need of protection herself from the unwelcome overtures of Pitt the Younger, who is after her gold reserves. Here is the Bank in danger again and worthy of protection. CRITICISMS OF THE BANK So far I have focused on demonstrating the importance of the Bank to the process of establishing the integrity of public credit and its operation as a symbol of sound finance. I have offered you a view of Gillray’s Old Lady of Threadneedle Street as a warning to public creditors that increased scrutiny was warranted and a message to Pitt’s government that its actions put not just the Bank but the entire edifice of public credit at risk. Yet, it would not be true to say that all shared the conviction that the Bank must be protected. Over the course of the eighteenth century there were many vocal critics of the institution. During the charter renewal of 1781, for example, the Bank’s close relationship to the state was deemed problematic, its monopoly was dangerous, its control of the system of public debt too expensive to maintain. Sir George Savile argued that the ‘public had an estate to sell’ and was selling it too damned cheap.37 Whig MP David Hartley also challenged the Charter renewal, arguing it had a value and should, therefore, be offered to the highest bidder.38 These views were coupled with a general feeling, especially in the aftermath of the loss of the American colonies, that public finance had grown impossibly corrupt and that the men at its heart were making money from the state’s bellicose nature and thus encouraged reckless and lengthy wars instead of prudent husbanding of resources. An equally interesting battleground was the issue of the Bank guard, the military force that was stationed at the institution following the Gordon Riots every night for nearly 200 years; another symbol of the connection between Bank and state. Given the occasional complaints made by the Bank about the quality and attentiveness of the Guard, one might be forced to wonder whether they would have always been in a fit state to respond in an emergency. In April 1793, for example, a complaint was made when two gentlemen who had come into the Bank to dine with the Guard’s officer became abusive, broke bottles and glasses and started a fight with the officer himself.39 But it was not this sort of behaviour that made the Guard a bone of contention in the city, resented by both the City Corporation and the local populace. It was resented, in part, because on their march from Westminster via the busy streets of The Strand, Fleet Street and Cheapside, they went two abreast jostling the public out of their way. In 1787 their march was satirized by Gillray who presented an arrogant Guard trampling over those who dared to get in their way, whether men, women or indeed infants. This negative view was reinforced the following year when, one evening, a guard named Joseph Mitton bayoneted and killed a member of the public who was too slow to get out of the Guard’s path. Mitton was arrested and tried for murder but convicted only of common assault because the judge deemed his actions to have not arisen from any pre-conceived malice.40 Leaving aside specific grievances against the Guard, resentment also centered on the mere presence of a military force protecting what was supposed to be a civilian institution. In particular, the Corporation of

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Erasmus Forum Bulletin / Volume II 2018 53 London considered the Guard both unconstitutional and an infringement of the city’s ancient privileges.41 As such, the Lord Mayor and Court of Aldermen wrote to the Bank’s directors in July 1788 asking for the Guard to be replaced with a militia from the City of London. The Bank’s directors were not sympathetic, replying: “that [they] could not be induced to say, they thought the Guard unnecessary as they had great reason to believe it was highly approved in foreign countries, and there considered as a great security to the property of the Stock-holders; who deemed a Guard, established from the King’s own Guards, as a greater security than any private Guard. And that the majority of the Proprietors [shareholders] appeared to be pleased with it.”42 There, it seems, was an end to the argument. Shareholders and public creditors, both domestic and foreign, approved of the Guard and thus it would stay in spite of the city’s objections. Other elements of Bank policy directed at preserving the institution’s property were equally resented. The ruthlessness with which it was perceived to pursue suspected bank note forgers, for example, was regarded as highly problematic. This was a particular problem after 1797 when, as a means of protecting its gold reserves, the Bank suspended the convertibility of its notes. The suspension resulted in a significantly increased note issue and extended that issue, for the first time, to small denomination notes.43 One of the unintended consequences was a rising tide of forgery. The newly-issued £1 and £2 notes were a magnet for criminals but the peculiarities of the eighteenth-century legal system made the Bank not only victim but also detective and prosecutor. This required a significant operation to manage not only note issue but also identification of forgeries and detection and capital prosecution of the forgers.44 The response of some to the Bank’s seeming zeal in the pursuit of forgers is exemplified in George Cruikshank’s Restriction Note, in which the Bank has been transformed from a vulnerable elderly lady into a vicious baby-eater. Here we are offered the Bank as the bringer of suffering and death in the protection of its interests. The questions being raised here were about the role of this most complex of organisations; a private company answerable to its shareholders which viewed itself as the mediator between the state as borrower and the public as lenders but was still dependent on that state and the taxpayer for its existence and the chief of its profits. How should this Bank behave? What should it contribute? If we return to what was mooted as its original purpose, the circulation of credit, did it fulfil that promise? Arguably the privileges offered to the Bank of England, as banker to the state and manager of the public debt, had compromised that purpose. Particularly problematic was the fact that the Bank of England had been granted a monopoly over joint-stock banking in 1708. Despite numerous campaigns, its monopoly was not rescinded until 1826 and up to that point it certainly acted to retard the growth of a national banking system. The consequence was that by the mid-eighteenth century, when banking in Britain was already more than a century old, provision of banking services was still predominantly concentrated in London. Indeed, as Leslie Pressnell’s seminal study of the country banks in Britain notes, in 1750 there were still not even a dozen bankers outside London.45

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Erasmus Forum Bulletin / Volume II 2018 54 Having said that we should acknowledge that it is not quite the whole story, there is evidence of a vibrant financial services industry which emerged out of existing business enterprises. I’ll offer you just a couple of examples. One interesting case is that of the drovers' banks which evolved out of the need to finance the cattle trade between South Wales and London.46 The textile manufacturers of the West Riding of Yorkshire form a better-known example. Pat Hudson's study found that bank and industry connections formed a framework of trade and credit. Indeed, she cites many examples of the banker-industrialist, in other words men who were simultaneously involved in trade, industrial production and the provision of banking services. The latter activities grew from connections to London and other parts of the country and permitted remittances to be made and bills of exchange to be discounted. In return, deposits taken could be ploughed back into the non-banking sides of the business.47 Although admirable in its adaptability and innovation, the financial services sector of the late-eighteenth and early-nineteenth century was subject to frequent crises.48 The relatively small scale of financial service providers meant that they were vulnerable to panics in their customer base and to potential runs. Localised banking problems could easily spread and led to banking collapses which impacted on the wider economy. These problems were compounded by the Bank of England’s own business agenda, which was very much focused on the provision of services to the state and to the public creditors in London. By 1815 it had grown very large and was remarkably efficient but it did not need to focus on the provision of services to industry or to entrepreneurs; its eyes were turned to other more familiar prizes. It did not create a branch network until the mid-nineteenth century. While it did accept a role in bringing stability to the financial system, its route to becoming a mature ‘central bank’ was long and arduous. But that is hardly a surprise. The Bank of England had to break new ground. It was the first of its kind to operate in a complex industrialised country that had significant international obligations and commitments.49 CONCLUSIONS Did the Bank of England let down the British economy in the eighteenth century? Perhaps. The measures it took to protect its monopoly and position arguably had negative economic consequences outside London. The Bank’s monopoly certainly retarded the development of the banking system. But there is also strong evidence to suggest that an efficient and trustworthy system of public debt with the Bank of England at its heart met the needs of both the state and those who wished to use that debt for the disposal of savings and the provision of nest eggs, retirement funds, dowries and legacies. A sound national debt also created a virtuous circle as that debt went to mobilise resources for the waging of wars which sought to protect existing markets and claim new ones. Those markets in turn yielded the fiscal and financial returns which supported the state.50 REFERENCES 1 Ian Gilmour, Riots, Rising and Revolution: Governance and Violence in Eighteenth Century England (London, 1993), p. 355; W. Marston Acres, The Bank of England from Within, 1694-1900 (London, 1931), pp. 208-209. 2 Quoted in Daniel Abramson, Building the Bank of England: Money, Architecture, Society, 1694-1942 (New Haven, 2005), p. 83. 3 In fact, the proposed repeal was not very radical and could only be granted to those Catholics prepared to take a special oath of allegiance. Gilmour, Riots, Risings and Revolution, p. 345.

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Erasmus Forum Bulletin / Volume II 2018 55 4 G. F. E. Rudé, ‘The Gordon Riots: a study of the rioters and their victims’, Transactions of the Royal Historical Society, 6 (1956), p. 95. 5 Gilmour, Riots, Risings and Revolution, p. 349. 6 Rudé, ‘The Gordon Riots’. 7 Rudé, ‘The Gordon Riots’, p. 109; Gilmour, Riots, Risings and Revolution, p. 361. 8 Watson, biographer of Lord George Gordon quoted in Abramson, Building the Bank, p. 84. 9 See for example J. H. Clapham, The Bank of England: a history (Cambridge, 1966), pp. 184-5; Acres, Bank of England, pp. 208-210. 10 William Paterson, A Brief Account of the Intended Bank of England (London, 1694), p. 1. 11 Ibid., pp. 1-2. 12 For further discussion of this issue see C. Roberts, ‘The constitutional significance of the financial settlement of 1690’, The Historical Journal (1977), 20, pp. 59-76. 13 Clapham, Bank of England, vol. I, p.17. 14 For an account of the Glorious Revolution and its consequences see Steven Pincus, 1688: the first modern revolution (New Haven, 2009). 15 P. G. M. Dickson, The Financial Revolution in England: a study in the development of public credit, 1688-1756 (London, 1967), p. 46. 16 John Giuseppi, The Bank of England: A History from its Foundation in 1694 (London, 1966), p. 12. 17 Bank of England Archives (hereafter BEA), M1/1, List of initial subscribers. 18 Clapham, Bank of England, vol. I, p. 20. 19 Broz, J.L. and R.S. Grossman, ‘Paying for privilege: the political economy of Bank of England charters, 1694-1844’, Explorations in Economic History, 41 (2004), pp. 48-72. 20 BEA, M5/213, Minutes of the Committee of Inspection, vol. II, fos. 68-69. 21 BEA, M5/212, Minutes of the Committee of Inspection, vol I, fo. 91. 22 BEA, M5/213, fo. 120. 23 Old Bailey Proceedings Online, John Davis, theft, 29 October 1783 t17831029-41. 24 BEA, M5/213, fos. 43-44. 25 Ibid., fo. 62. 26 Ibid., fo. 126. 27 BEA, M5/212, fo. 91; fo. 99. 28 Anne L. Murphy, ‘Learning the business of banking: the recruitment and training of the Bank of England’s first tellers’: Business History, 52 (2010), pp. 150-168; Giuseppi, Bank of England, p. 56; David Kynaston, The City of London, Volume I, A World of its Own (London, 1995), p. 30. 29 See, for example, BEA, G4/23, Minutes of the Court of Directors, fo. 167. 30 Acres, Bank of England from Within, I, p. 191. 31 Ibid., I, p. 191, n1. 32 Abramson, Building the Bank. 33 Ibid., p. 57. 34 I. S. Black, ‘Spaces of Capital: bank office building in the City of London, 1830-1870’, Journal of Historical Geography, 26 (2000), p. 357. 35 BEA, M5/213, fo. 179. 36 Ibid., fos. 178-79. 37 Clapham, Bank of England, vol I, p. 181. 38 David Hartley, Considerations on the proposed renewal of the Bank Charter (London, 1781), p. 19. 39 Acres, Bank of England from Within, p. 222. 40 Ibid., p. 223. 41 Ibid., p. 224. 42 BEA, M6/19 Memorandum on the introduction of the King’s Guard. 43 Clapham, Bank of England, vol. II, p. 5; E. Newby, ‘The suspension of the gold standard as sustainable monetary policy’, Journal of Economic Dynamics and Control, 36 (2012), pp. 1498-1519. 44 R. McGowen, ‘The Bank of England and the Policing of Forgery, 1797-1821’, Past and Present, 186 (2005), pp. 81-116; R. McGowen, ‘Managing the Gallows: The Bank of England and the Death Penalty, 1797-1821’ Law and History Review, 25 (2007), pp. 241-82; C. Wennerlind, ‘The Death Penalty as Monetary Policy: The Practice and Punishment of Monetary Crime, 1690-1830’, History of Political Economy, 36 (2004), pp. 131-161. 45 L. S. Pressnell, Country Banking in the Industrial Revolution (Oxford, 1956), p. 4. 46 R. O. Roberts, ‘Banks and the economic development of South Wales before 1914’ in Barber C. and Williams L. J. eds. Modern South Wales: Essays in Economic History (Cardiff, 1986). 47 Pat Hudson, ‘The role of banks in the finance of the West Yorkshire wool textile industry, c. 1780-1850’, Business History Review, 55 (1986), p. 381. 48 F. Capie, ‘The emergence of the Bank of England as a mature central bank’ in Winch, D. and O’Brien, P. K. eds. The Political Economy of British Historical Experience 1688-1914 (Oxford, 2002), p. 295. 49 Ibid., p. 313 50 R. T. Sánchez, ‘The triumph of the fiscal-military state in the eighteenth century: war and mercantilism’ in Sánchez, R. T. ed. War, State and Development: fiscal-military states in the eighteenth century (Navarra, 2007), p. 28.

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Erasmus Forum Bulletin / Volume II 2018 57 or many of us, the ‘Silk Road’ retains an intrinsic glamour. The phrase instantly conjures sepia-soaked images of stoic merchants traversing vast distances, their pack animals laden with exotic luxuries destined for sale in the markets of Europe or the Far East. This image seems to have an almost timeless quality. As a result, it is both enduringly potent and detached from any historical context. Indeed, the term, rather appropriately, carries a great deal of intellectual baggage, and obscures far more than it reveals about the reality of trans-continental trade in late antiquity and beyond. It has long been understood that the ‘Silk Road’ is a myth of modern historiography. Yet, for all its inaccuracy, the idea has proved difficult to shake. In an era in which the territories of Central Asia have become synonymous with instability and division, the ‘Silk Road’ appears as a golden age of cross-cultural exchange; a period of benign international commerce that tied Occident and Orient together into a unified international trading network. In this sense it seems to presage the modern globalised world, and provide a valuable historical precedent. It is perhaps for this reason that the concept of the ‘Silk Road’ has enjoyed such longevity, constantly being reworked and reinvented in various guises. It has found its latest incarnation in the form of China’s ambitious new trade and infrastructure initiative, the ‘One Belt, One Road’ policy, unveiled in 2013. President Xi Jinping has sought to harness the name and symbolism of the ‘Silk Routes’ in his presentation of the policy, which sees China as the original creator and coordinator of this ancient continental trading system, and is now bringing about its revival. The need for a greater contextual understanding of the ‘Silk Road’ has therefore become particularly pressing. To shed more light on this, a half-day seminar, bringing together historians, economists and foreign policy experts, demythologised the silk routes, both ancient and modern. This essay gives an account of this discussion, and expands upon it to discuss the historiographical foundations of the ‘Silk Road’ concept and deconstruct some enduring misconceptions. Chiefly, it will emphasise the vital role played by urban centres in the shifting dynamics of maritime and terrestrial trade networks in late antiquity. Ultimately, despite the on-going focus on routes, corridors and networks, it was cities, from Byzantium and Baghdad, to Samarqand and Susa that provided the infrastructural depth upon which the ‘Silk Road’ depended. DEMYTHOLOGISING THE SILK ROUTES The idea of a transcontinental bridge between East and West has its origins in the classical world. Pliny the Elder notably railed against the extravagantly expensive and revealing silk clothing flooding into the Roman Empire from Serica (northern China) which was, in his view, at the heart of the moral and financial decline that was plaguing Rome.1 It was only in the nineteenth century, however, that the specific term Silk Road entered the lexicon when the German geographer Ferdinand von Richthofen, uncle of the First World War flying ace, first coined the phrase ‘Die Seidenstrasse’ in a geological survey of China in 1877.2 Richthofen’s phrase, which initially had a very narrow application, was later popularised, and much of the mythology developed, in the archaeological works of Sir Aurel Stein and Sven Hedin in the early twentieth century. As a historiographical term it has since gained notoriety,3 achieving the status of hackneyed cliché. While this undoubtedly true, it is not only the name that is problematic but rather, the whole concept of a ‘Silk Road’ must be deconstructed and demythologised if we are to better understand the reality of late antique Eurasian trade. F

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Erasmus Forum Bulletin / Volume II 2018 58 The first issue surrounds the role of China. Hellenic geographers situated at one edge of the continent were mirrored by Chinese language histories, in seeing China as both the epicentre and the progenitor of the Silk Road. The traditional story begins with the journey made by an envoy named Zhang Qian under the orders of the Emperor Wu of the Han dynasty in c.126 BC, to the Ferghana region of modern day Uzbekistan to gather information on the peoples residing there.4 This valley was already known to the Chinese as a source of highly prized horses, so famed for their strength and power that that they were often referred to as tianma or ‘heavenly mounts’. Qian’s accounts also revealed vibrant trading centres, peoples ‘clever at commerce’, and opened up China to a hitherto unknown world of trade beyond the mountains. Nascent trade with the Steppe world developed from this point into the grand continental highways of which we know. In fact, Chinas interest and role in the establishing of trading links with the steppe world was fairly limited. According to Zhang Qian’s own account, he was astonished at the extent to which Chinese goods had preceded him. This ‘initial’ contact with the Asian interior in reality formed part of a strategy of regional diplomacy and client management. The central purpose of Zhang Qian’s foray into Central Asia was to forge an alliance with the Yuezhi people against the troublesome Xiongnu tribal confederation to the north, rather than an exploration of business opportunities. As a whole, goods exchange between China and the Steppe world was not principally a commercial venture. Substantial payments were made regularly to nomadic military elites such as the Xiongnu in exchange for peace. Incoming commodities, on the other hand, were almost always characterised as the extraction of tribute (kung-hsien) from subordinate peoples. Chinese silk travelling in the opposite direction only did so in large quantities in the form of payments for soldiers garrisoned at the various military outposts on the Taklamakan desert. Local taxation could not possibly support the fiscal requirements of Chinese military administration and, since access to silver was highly variable for the central treasury, bolts of un-dyed silk soon became the standard medium for state salaries. Under the Tang dynasty (618-907), the peak of Chinese military involvement in Central Asia, silk was being shipped in vast quantities back and forth to support the occupation of east Turkestan. In 742, the Tang made payments of 1.1 million bolts of silk to this area alone.5 This was a gigantic administrative undertaking—on another occasion, in 745, two convoys with a total of 15,000 bolts were sent from the army stationed in Dunhuang to the state warehouse 700km to the east to bring back the salaries of the soldiers.6 As such, the majority of Chinese silk that found its way into the markets of Central Asia did so, initially, as currency rather than as a commodity. As a consequence, a huge surplus of unworked silk, amongst other goods, was handed over to Central Eurasian elites who looked westwards and found expanding markets in the alluvial lands of Mesopotamia which were witnessing dramatic demographic and economic growth. How far the silk of the Seres travelled, however, is questionable. Contrary to the view of classical geographers, silk was by no means a Chinese monopoly. The ability to weave fabric from the discarded cocoons of silk moths had long been understood in India, as well as on the island of Cos in the Mediterranean. Knowledge of this process arrived in the Byzantine Empire by the sixth century through the espionage of the Emperor Justinian, and thereafter Byzantium became the principal source of silk cloth for the European market. Indeed, Hansen has pointed out that from over 1000 pieces analysed from European churches, only a single piece of definitively Chinese silk has ever been identified.7

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Erasmus Forum Bulletin / Volume II 2018 59 Despite the name, silk was hardly the raison d’etre of the trading routes at any stage in their long history. Many other luxury goods, such as glass, precious metals, medicines, ammonium chloride, spices, wools, and, particularly in its latter stages, porcelain; were traded in much higher volumes, over both maritime and terrestrial routes.8 Although there are very few official records quantifying the trade conducted between merchants along the routes, fragments of several remarkable documents have been uncovered at Turfan, an important trading centre at the edge of the Tarim Basin, which demonstrate the comparative paucity of silk in local transactions. Perhaps the most instructive of these is an official record of ‘scale fees’—taxes paid on the weight of merchandise under the Kao-ch’ang kingdom in c.600. This reveals that across 37 separate tax payments over the course of a year, not a single merchant purchased silk cloth.9 The idea of a ‘road’ is equally deceptive. There was no single arterial conduit along which goods and merchants travelled. Trade was split at the most general level between the terrestrial and maritime routes, and further fragmented into a multitude of what Jason Neelis has memorably described as interconnected ‘capillary routes’.10 Indeed, as Hugh Kennedy remarked in his contribution to the seminar, there were many routes over land, which meandered relatively freely. Long distance travel in this period was perilous and arduous, with the consequence that trade was overwhelmingly conducted at the local level, from town to town, rather than along a single transcontinental highway. As the scale-fee document discovered at Turfan demonstrates, these were markets supplied by relatively frequent but low volume trade, with merchants generally travelling in small caravans of around 10-20 animals.11 It was not just silk that was traded in small amounts, but overall quantities over land were very limited. In fact, large-scale trade was not conducted by road at all, but by sea. LAND v SEA David Abulafia argued in his opening contribution to the seminar that the truly transcontinental links between East and West were the maritime routes. Their origins can be traced to the gradual expansion into the Indian Ocean made by Roman merchants operating from ports in the Red Sea. Eventually, Roman ships penetrated southern India and were able to link up with Chinese merchants trading locally. From this point onwards, it was the maritime networks that witnessed the greater volume of trade and exhibited the greatest durability. Chinese porcelain and stoneware, in particular, were transported in vast quantities to western markets. A single shipwreck found off the coast of Java from the 9th century was carrying around 70,000 pieces of Chinese pottery, as well as a great quantity of ornate metalwork and jewellery. Indeed, the sheer scale of maritime trade simply dwarfed that which could be taken overland, even in the largest overland caravans. One text from the sixth century describes a huge caravan of 600 camels accompanied by 240 Sogdian traders. It carried, amongst other goods, 10,000 rolls of silk, that is c.5 tons of silk out of a total possible load of c.120 tons. An even bigger caravan is mentioned in the early tenth century travelling between Central Asia and the Upper Volga, consisting of c.3000 beasts of burden which could carry c.600 tons. Yet, a single boat, described in the Muziris papyrus, arriving from the Malabar coast of India c.150 AD might have carried as much as a whole large caravan—the average Roman boat trading with India carried 300 tons. 120 of these boats were sent every year to India during

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Erasmus Forum Bulletin / Volume II 2018 60 1st century AD, making for a total annual cargo weight of around 36,000 tons. To carry a similar quantity by land would have been required 180,000 camels.12 These maritime links became reinforced rather than diminished overtime and persisted even into the eighteenth and nineteenth centuries. Maritime networks spanned the length of the known world and grew with it. As the borders of the map expanded after the expeditions of Columbus and Vasco de Gama, the nexus of trade shifted with them. Singapore, for instance, having long been the fulcrum in trade between China and the rest of the world via the South China Sea, was, by the fifteenth century, no longer at the centre. After 1453, as the Portuguese began to trade South American silver for Chinese goods, Macau replaced it as the hinge, not just of the South China Sea but of the Atlantic. These routes, Abulafia argued, are wrongly overlooked as being part of the same history of global commerce. Focusing on the overland routes risks too parochial a view of the dynamics of trade links between East and West. Moreover, we have too often taken a Eurocentric view, which sets out to understand how Europe came into contact with China, when in fact a much greater volume of trade was being sent between China and the Spice Islands. Europe was just one element in a much broader picture. Instead it was the creation of maritime links between diverse peoples–with trade networks eventually stretching from the islands of the Moluccas, to the silver mines of Potosí in modern-day Bolivia, to the ports of Venice and Riga in Europe–that was at the true heart of this global phenomenon. In contrast to the remarkable continuity exhibited by the maritime routes, the overland trade was nowhere near as robust. Hugh Kennedy emphasised this transitory nature in his seminar contribution, giving a historical account of its rise and fall. Sogdian and Bactrian merchants were the principal conduits for the trade in luxury goods from the 1st century BC, and came to dominate the overland routes. According to the Turfan document, eighty per cent of those undertaking transactions in the area were of Sogdian origin.13 By doggedly treading the harsh terrain through the mountains and deserts of Central Asia, pursuing marginal profits from town to town, these itinerant merchants laid much of the groundwork for long-distance trade along the terrestrial Silk Road. From the 4th century AD onwards, the Sogdian diaspora began to integrate a series of urban centres into a coherent trading system. Operating from the major Sogdian cities such as Samarqand, they established a profitable trade in silk, musk, precious metals, silver, spices and medicines between the sixth and ninth century.14 This was a trading network, based largely on interpersonal relationships, which linked major Chinese cities, via the Indus Valley, with the major ports of the Indian Ocean as well as inland to the outer fringes of the Iranian Empire. There was, however, significant and demonstrable decline in the overland routes after c.750 AD, before they later reappeared under the Mongol Empire. Our main indicator of trade flows is the circulation of coinage, which was the hallmark of long distance trade. Silver coinage was the principal medium of exchange for nomadic merchants and in particular Sasanian drachms and Arab-Sasanian dirhams because they guaranteed a high purity of silver. These coins were used to pay government duties, purchase supplies, and pay for transportation and lodging. At Turfan, for instance, we can see a gradual decline in the circulation of silver coinage following the 670s, before it ended conclusively in 706. Indeed, no coins produced under the ‘Abbāsid caliphate (749-1258), based in Iraq, or from the Sāmānid dynasty (819-1005) in Iran have been discovered in China or east Turkestan, pointing to a rather dramatic decline for these trade routes.15

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Erasmus Forum Bulletin / Volume II 2018 61 Why was this the case? Hugh Kennedy argued that, in order to understand this fluctuation, we must pay attention to shifting patterns of demand rather than supply. This locus of demand moved gradually westwards. A critical moment was the Arab conquest of Iran in the seventh century, which bound Central Asia to a more western and Mesopotamian economic focus. As the centres of demand in the Arab world shifted location, the routes moved with them. From the tenth century onwards, the centre of the Islamic world was to be found at Cairo in Egypt, which could be accessed most effectively by the Red Sea. Yet, for Kennedy, it was changes in elite tastes in these regions that were at the heart of the decline in overland routes. In the 8th and 9th centuries, within the ‘Abbāsid Empire there was a notable shift in demand away from textiles, and a growing demand for oriental ceramics. Pack animals were particularly ill suited to carrying delicate porcelain in bulk. It was from this point onwards that the maritime trade started to become the truly dominant medium. Yet, we cannot rely solely on demand to understand the shifting dynamics of late antique trade. What these periodic cessations in trading reveal, most importantly, is that the routes did not exist in a vacuum, extant in and of themselves and subject only to economic forces. Rather, they were contingent on geopolitical realities, which caused them to fluctuate in location, direction and endurance. THE ROLE OF URBAN INFRASTRUCTURE The dynamics of trade across Central Asia was shaped by the interaction between nomadic and sedentary populations. These worlds had to operate in symbiosis for long-distance trade to function. At ground level, it was itinerant merchants who transported goods from town to town, but these merchants could not operate independently. The desire of central governments to profit from the trade passing through their territory was key and gave new infrastructural depths to the informal, highly localised trading routes that had been laboriously established. Even the early Sogdian and Bactrian merchants, paragons of independence who utilised a system of familial and interpersonal networks, were in reality forced to operate within an institutional context when trading with Chinese cities. Under the T’ang, traders had to obtain travel permits, which could only be done if the merchant had a guarantor who promised to be responsible for their taxes if they did not return. Members of the Sogdian trade diaspora had to be settled in Chinese cities to assist the mobile contingent in their dealings with the administrative bureaucracy of local authorities.16 Thus the concept of industrious and intrepid nomadic traders operating independent of political boundaries is a myth. Ultimately, while trade operated predominantly at the local level, it was subject to the vicissitudes of a wider political context. Merchants were dependent on the institutional structures of both sedentary and nomadic empires, which created the necessary conditions for transcontinental trade to occur. The early development of the Sasanian Empire (224-651) provides a striking example of the role played by top-down infrastructure in dictating the flow of late antique trade. From the 3rd century, the early Iranian court sought to assert its control over maritime trade in the Indian Ocean by redirecting existing trade routes from the Red Sea to the Persian Gulf. The Red Sea had been the principal access point to the Mediterranean. In the second and third centuries, luxury commodities from India had started to flow along this route and a nascent maritime network had begun to form along the eastern Arabian Peninsula, as the cities dotting its coastline began to profit from the passing trade. Centres such as

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Erasmus Forum Bulletin / Volume II 2018 62 Failaika, Mleiha, Thaj, al-Dur, and Qala’at al-Bahrain had initially flourished as the nodal points of this profitable mercantile network. 17 Yet, they fell rapidly into decline after the third century, as is borne out by the archaeological record, as the early Sasanians undertook a series of military campaigns and infrastructural projects to assume control of the trans-Eurasian corridors. By establishing a network of centrally planned imperial cities, known as sahrestan, along the northern rim of the Persian Gulf, they were able to redirect the mercantile traffic and extract taxation from the burgeoning international commerce. In doing so, the Sasanian court was capitalising upon a distinct geographical advantage. The new cities lining the edge of the Persian Gulf offered a substantially more efficient route for merchants travelling to the Mediterranean–allowing cargo to reach the ports of the Antioch three months earlier than via the Red Sea route.18 The same was true in the opposite direction as spring monsoon winds allowed merchants travelling to India from the ports of the Persian Gulf to arrive much earlier than their rivals in the Red Sea. The revenue generated was reinvested in additional emporia along the Gulf Coast, most notably the port of Siraf, which was founded in the fourth century as the royal court extended its reach eastwards to the outer edges of India and expanded the maritime trade.19 Excavations at Siraf have shown thousands of shards of Chinese stoneware, and later porcelain. By comparison, only a few shards of chinaware have been discovered at Samarqand.20 By the end of the third century, the vast majority of maritime traffic passed through Sasanian territory and its imperial cities. The Sasanian court had managed to establish itself at the heart of a complex network of commercial links, spanning the Persian Gulf. Goods not only flowed in, but also outwards from the cities of Central Asia. Its metropoles were not merely locations of demand, the passive recipients of goods produced further afield, but they also acted as centres of production, driving the expansion of the Silk Road in both its geographical reach and its economic complexity. Sasanian imperial cities worked the raw materials that streamed across their borders into higher-value commodities that could be sent back out into the trade routes. Iranian textile production expanded and huge quantities of silk and wool garments were augmented with ornate brocading and embroidery. A similar reputation developed in metalworking and saw the wide circulation of Iranian silver bowls and plates. Sasanian products became a hallmark of elite status across the continent as Central Asia was integrated into a common cultural framework. Cities were also critical in the creation of perhaps the most important centres of production in the entire Eurasian trading system–central mints. The central mints at Khuzestan produced huge quantities of silver coinage during this period,21 which was the vital lubricant for long distance trade. As we have already seen, silver coins were the principal medium by which between merchants paid their taxes when travelling over long distances. Iranian dirhams in particular became the most accepted coinage in Turkestan and China because they guaranteed a high silver content of c.85-95%, compared to the rather debased coinage of the oasis states of Turkestan, such as Bukhara and Samarqand.22 The sedentary world, therefore, provided the infrastructural framework for trade in its most tangible form, through the construction of cities. It is, however, increasingly being recognised that steppe nomadic empires also established highly developed political structures that were geared towards providing a context in which trans-Asiatic trade could flourish. These sat above the sedentary populations, facilitating trade flow across Eurasia in order to profit from its results. Control of the silk routes was the raison d’etre for the Hun, Turk and later Mongol Empires, which sought to support and facilitate long

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Erasmus Forum Bulletin / Volume II 2018 63 distance commerce by integrating disparate trading networks into a cohesive and stable political order. Political disturbance, fragmentation and warfare were anathema to trading activity. The decline of central Tang government control of the Tarim basin in the 670s and 680s led to a drop off in international trade passing through Turfan.23 The fighting that ensued was a serious impediment to trade and ultimately resulted in the decline in the eastern overland routes after 750 AD. The primary function of these nomadic imperial formations was to reduce political disturbance and conflict, which created the main barriers to trade. It was the security provided by these structures that allowed Sogdian urban infrastructure to develop in the first place, and as a consequence, the merchant networks of Transoxiana, grew alongside the Hun and Turk Empires between the 4th and 7th centuries. The Turk empire funnelled trade through Turfan so that the Kao-ch’ang government, who acted as their clients, could tax it, and launched punitive expeditions against any tribes who threatened to destabilise this profitable system. Yet, it was not only through fostering stable conditions that they sought to profit from long distance trade. The Hun and Turk political elites supplemented this with a hands-on approach, regularly lending money for caravans, and even provided liquid capital for merchants in exchange for a share of the profits. Once a nomadic overlord had received large funds in the form of tribute, it was passed on to an ortaq (partner) trader to sell with the resulting profit split 70/30.24 Through a system of intermediaries, non-commercial exchange was used to oil the machinery of inter-regional commerce. Although it was made most famous under the Mongols, the origins of the Ortaq system can be traced to the very early stages of the Turkic Empire. In c.567, a Byzantine text describes Maniakh, who proposed to increase the profit earned by Turkish prince Sizabul through Chinese tribute by selling it to the Sasanians.25 This use of tax farmers to harvest the profits of long-distance trade was the centrepiece of the nomadic imperial political economy, which integrated disparate local markets into continental networks and turned the silk routes into an immensely profitable international cartel. The empires of the steppe, therefore, were instrumental in reducing the risks of long-distance trade through the creation of a trans-Eurasian institutional structure that worked in tandem with the urban outposts of the sedentary world. Thus, while an undeniably important factor, we cannot rely solely on demand to understand the ebb and flow of late antique commerce. Top-down infrastructure was fundamental to the system and it was urban centres that were its principal manifestation. The development of these crucial nodal points was rarely organic, the result of the routes that ran through them, but quite the reverse. Trade networks on both land and sea were threaded onto a framework of urban centres, an infrastructural skeleton along which the many arteries and capillary routes could grow. The notion of oasis towns springing from the desert in the fertile presence of passing trade is simply a mirage. NORTH/SOUTH V. EAST/WEST It is commonly accepted that the 8th century marked the point of decline for the overland silk roads, which were only to be revived by the Mongol Empire in the 13th century. As we have seen, the economic centre of gravity in Sasanian Persia was drawn south, towards the Gulf and the profits to be derived from taxing maritime routes. This transition from inland cities to coastal emporia meant that steppe nomads were no longer required to act as the conduit for trade with the East. While it is certainly true that overland trade along the East-West axis was rapidly superseded by the maritime routes, the

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Erasmus Forum Bulletin / Volume II 2018 64 Eurasian overland trade in luxuries did not end in its entirety. At around the same point at which lateral trade started to decline a new axis was coming to the fore based on a highly profitable trade in furs between from the wooded steppe zone of northern Eurasia to the Islamic world in the south. As Mesopotamia witnessed huge economic growth and alluvial plains were brought under extensive cultivation, there was a corresponding growth in urbanisation and concentrated populations with increasingly disposable wealth. From this came social stratification and the creation a cadre of governmental elites desperate for luxury goods. From the latter half of the 8th century, there was a dramatic increase in demand for furs amongst the elites of Abbāsid Baghdad. Clothing which had long been reviled in both the civilised Roman and Chinese worlds as barbarian attire, had become highly fashionable in the upper echelons of the Islamic world. The insulating properties of furs were increasingly recognised, as they shed their uncivilised associations. Furs became a mark of elite status, extremely expensive due to the fact that they could only be sourced in the forests of the taiga, where pelts of small mammals had to be hunted individually over vast distances. Once procured they were sent on the arduous journey southwards, through the markets of the Volga Bulgars, before crossing the Caspian Sea into northern Persia. Traditionally, the trade in luxuries is seen as fairly limited in terms of volume–indeed scarcity often determines desirability. However, by the end of the ninth century into the 10th century, due to a near insatiable demand in ‘Abbāsid Persia and its orbit, furs were being traded in vast quantities from north to south. The Arab geographer Muqaddasī, writing in 985-90, described the sheer array of furs being exported from the entrepot at Khwarāzm: ‘sable, grey squirrel, ermine, mink, fox, marten, beaver, spotted hare’,26 These took their place amongst many other goods sourced in the forest zones: wax, amber, honey, swords, hazelnuts and slaves, many of whom became court eunuchs in Baghdad. This was trade in luxuries but on a grand scale–the maritime routes did not have a monopoly on bulk. Although furs themselves, like many other articles of medieval trade, do not survive in the historical record, the many coin hordes discovered across north Eurasia are testament to the extensive circulation of silver dirhams in the northern markets, and consequently are revealing as to the sheer volume of trade being conducted along this new axis. It has been suggested that we should envisage the cumulative inflow of hundreds of millions of coins into the north from the Caliphate.27As with the coinage record at Turfan in the East, the presence of Iranian silver was the hallmark of flourishing long distance trade. This northward flow of coins eventually reached Scandinavia, and a substantial number of coin hordes have been found in Gotland in the Baltic. The expansion of the ‘fur road’ also demonstrates the rather false dichotomy that is often made between maritime routes and land routes. Of course, overland caravans were limited in what they could carry compared with ships–waterborne transport was undeniably crucial to trade in any significant volume–but the sea was not the only means by which goods could be transported by boat. The river networks of central Asia that flowed for hundreds of miles acted as the main conduits for north-south trade, connecting the Baltic with the Black and Caspian Seas. A new people known as the Rus, who had emerged in the steppe world at the end of the 8th century, were particularly adept at utilising the arterial river routes of the Volga, Don and Dnieper.28 Their use of shallow hulled boats, known as ‘monoxyla’, along this network of navigable waterways, allowed furs and other items to be carried in sufficiently large quantities to meet ‘Abbasid demand. This was accompanied by the rapid growth in urban centres in the

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Erasmus Forum Bulletin / Volume II 2018 65 forest zones, situated on the banks of the river routes–the largest being Kiev on the Dnieper and Novgorod. They quickly supplanted the Khazar Khaganate as the dominant force of the northern trade, destroying the capital Atil in 961. In the process this new axis was greatly expanded, drawn further north to incorporate the Scandinavian and Baltic world, and westwards to the Byzantine Empire.29 By the end of the 10th century the Rus State was positioned at the epicentre of a vast river-based trade network that connected the deep inland territories of the Asian continent with the coastal emporia of the Persian Gulf. Thus, the maritime and inland trade networks should not be thought of as distinct from each other, or acting in opposition, since they were necessarily interconnected. This had long been the case at the other end of the continent. Chinese inland production centres were linked to the Indian Ocean via the river networks of the Hindu Kush. The rise of the maritime routes to the East was not the death knell it is often assumed to be for the terrestrial route and the Asian interior. Unprecedented demand for furs in the Islamic World led to the rapid development of a new axis of Eurasian trade, the growth of new urban centres and the unmitigated expansion of the northern markets. Overland trade flow through Central Asia had not disappeared in the 8th century but merely changed direction. CONCLUSION The story of the ‘Silk Road’ is, in reality, a story of cities. The roads only account for half of the narrative. The traditional focus on the routes themselves has reduced Central Asia and its societies to little more than a conduit for goods being transmitted from East to West (or from pole to pole as Sven Hedin had it). In fact, trans-continental trade, over both land and sea, was for large portions of the Silk Road era driven by the empires of Central Eurasia. The sedentary and nomadic populations of these territories were not merely passive recipients of goods and merchants, who occasionally capitalised upon the passing trade, but were active agents who orchestrated long-distance commerce and, eventually, integrated diverse peoples within a continental trading and cultural framework. To understand where the focus on routes over populations began, we have to return to the historiography of the term, and recognise it as a product of modernity. It is often assumed that Richthofen’s coining of die Seidenstrasse in his works on China was an exercise in German Hellenist romanticism, in which he revived Greek notions of a route to the East. In fact, he was an attempting to add greater scientific precision to the more impressionistic East-West routes mapped by the classical geographers such as Ptolemy, by cross-referencing their data with Chinese sources. He claimed that his incorporation of Eastern sources “cast a new light on the structure of the [Tarim] basin” and on the inaccuracies of present-day maps of the basin and its topography in particular.30 The purpose of his geographical surveys, funded by European and American business corporations as well as the German State, was not purely academic and they were rather intended to provide a route-map for German colonisation in China and demarcate the optimum locations for new railroads. Indeed, railway construction exploded in the decades following the publication of Richthofen’s work on China in 1877. The notion of the ‘Silk Road’ as we know it today grew from the broader attempts in the nineteenth and early twentieth centuries to harness geology and geographical knowledge and in the service of political power and specifically as a result of the ‘Great Game’ rivalry between the European powers, Russia and Qing China. Unsurprisingly in this context, Eurasia was seen as a passive stage. In the process, it popularised the rhetoric of reviving ancient East-West commercial and cultural exchange.31 The ‘One

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Erasmus Forum Bulletin / Volume II 2018 66 Belt One Road’ policy is the heir to Richthofen and other’s efforts to tie the ‘Silk Routes’ to the geopolitics of Central Asia. But why has it persisted? The endurance of the term, and the powerful image with which we began, is due to several factors. Firstly, it provides a foundation story for globalisation, presenting it not as a modern phenomenon but as part of a historical longue durée. More importantly, though, the ‘Silk Road’ era acts as a vital historical precedent for non-commercial exchange and soft power–the practice of diplomacy through trade. Indeed, it is this consideration that underpins Xi Jinping’s attempt to emphasise China’s role as the historic driver of global engagement; a kind of demiurge of a benign global trading system–from the Pax Mongolica to a new age of Pax Sinica. The ‘Silk Road’, therefore, has always been a geopolitical concept rather than a historical one, which sees the routes as existing of their own accord, just needing to be rediscovered and dredged up from the sand. The complex web of overland routes making up the ‘Silk Road’ are reimagined as a geological feature of the landscape; a latitudinal line tying Rome and Constantinople with Samarqand and Susa. These geographical lines seem to represent a tangible link with a golden age of international trade. To this extent, the Silk Roads have always acted as a blueprint as well as a maREFERENCES 1 Pliny the Elder, Naturalis Historia, 6.20, in Pliny, Natural History, trans. H. Rackman, W.H.S. Jones and D.E. Eichholz (London, 2012). 2 Ferdinand von Richthofen, China: Ergebnisse eigener Reisen und darauf gegrundeter Studien, 5 vols. (Berlin, 1877–1912). 3 Most notably through the work of Valerie Hansen in The Silk Road: A New History (2012) and in The Open Empire: A History of China to 1600 (2000). 4 Hansen, V. The Silk Road, Key papers, Part 1–The Pre-Islamic Period (Leiden 2012) p.xi. 5 Karam Skaff, J. ‘Sassanian and Arab-Sassanian, ‘Silver Coins from Turfan: Their Relationship to International Trade and the Local Economy’ Asia Major 11 (1998), pp.67-115. 6 Trombert, E. ‘Textiles et tissus sur la Route de la soie: Éléments pour une géographie de la production et des échanges’ in Jean-Pierre Drege (ed.), La Sérinde, terre d’échanges: Art, religion, commerce du I-er au X-e siècle (2000) pp.109-111. 7 Hansen, V. The Open Empire, p.154. 8 Mair, V.H. ‘The “Silk Roads” in Time and Space: Migrations, Motifs, and Materials’ Sino-Platonic Papers, 228 (July 2012), p.3. 9 Hansen, The Silk Road, Key papers, Part 1–The Pre-Islamic Period (Leiden 2012) p.xiv. 10 Neelis, J. ‘La vieille route reconsidered: Alternative paths for the early transmission of Buddhism beyond the borderlands of South Asia’, Bulletin of the Asia Institute, 16 (2002), pp. 143-164. 11 Hansen, The Silk Road, Key papers, Part 1–The Pre-Islamic Period (Leiden 2012) p.xiv. 12 De la Vaissière, É. ‘Trans-Asian trade, or the Silk Road deconstructed (antiquity, middle ages)’, in Neal, L. and Williamson, J.G. (eds.) The Cambridge History of Capitalism (2014) pp.112-113. 13 Karam Skaff, J. ‘Sassanian and Arab-Sassanian Silver Coins from Turfan’ p.93. 14 Hansen, The Silk Road: A New History (2012) p.4. 15 Karam Skaff, J. ‘Sassanian and Arab-Sassanian Silver Coins from Turfan’ pp.99-100. 16 ibid. p.97. 17 Kennet D. ‘The Decline of Eastern Arabia in the Sasanian Period’, Arabian Archaelogy and Epigraphy 18 (2007) pp.103-4. 18 Seland, E.H. ‘The Persian Gulf or the Red Sea? Two Axes in Ancient Indian Ocean Trade, Where to Go and Why’, World Archaeology 43 (2011) pp.398-49. 19 Whitehouse D. and Williamson A. ‘Sasanian Maritime Trade’, Iran 11 (1973) pp.33-35. 20 De la Vaissière, É. ‘Trans-Asian trade, or the Silk Road deconstructed (antiquity, middle ages)’ (2014) p.104. 21 Howard Johnston, J. ‘The Sasanian State: The Evidence of Coinage and Military construction’ Journal of Ancient History 2 (2014) pp.159-60. 22 Karam Skaff p.68. 23 ibid. p.100. 24 De la Vaissière, É. ‘Trans-Asian trade, or the Silk Road deconstructed (antiquity, middle ages)’ (2014) p.107. 25 Menander Protector. The history of Menander the Guardsman. (ed.) Blockley R. (1985) pp.111-115. 26 ‘Muqaddasī on the Land of the Khazars’ in Ibn Fadlān and the Land of Darkness, tr. P. Lunde and C. Stone, p.169. 27 Howard-Johnston, J. ‘Trading in fur from classical antiquity to the early middle ages', in E. Cameron, Leather and Fur. Aspects of Early Medieval Trade and Technology, (1998). 28 See in particular, Franklin, S. and Shepard, J. The Emergence of Rus 750-1200 (1996) 29 Whittow, M. The Making of Orthodox Byzantium, 600-1025 (1996) p.243. 30 Chin, T. ‘The Invention of the Silk Road, 1877’, Critical Inquiry, 40 (2013) p.207.

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