8. Table: Types of Businesses90 and Their Types of Contracts
It is not always easy to understand what distinguishes our present commercial contracts from their medieval ancestors unless we understand what distinguished the guild system from capitalism. Stated more precisely: What made possible the transition from monopolistic, fixed prices and wages o to free markets for capital and labor?
Equally significant questions could be asked about the connections between the guilds’ notion of just price basic tenets of the Marxist-Leninist legal and economic systems. For, as will be discussed in Chapters 15 and 16, Marx perceived the wages a capitalist paid his workers as a principal injustice of the capitalist system. According to him, the capitalists pocketed the difference between what they paid their workers and the added value produced by the combined work of their laborers, thereby enriching themselves at the expense of their “exploited” workers.1 Were the medieval guilds, perhaps, the model of just compensation that Marxism Leninism had in mind when arriving at their formulas of compensation for workers such as that found in Article 12 of the 1936 Soviet Constitution: “From each according to his ability, to each according to his work.”?2
The Latin Notariat, as will be discussed in the following chapter, is also a legal institution that owes much to the guild system, including its “tariff” method of compensation. Since the Middle Ages, the Notariat has been a guild-like institution that provided the requisite trust and formality for the execution and enforcement of contractual rights and duties. The following chapter should help the reader understand why a key legal institution like the Latin Notariat became part of important seventeenth- and eighteenth-century commercial statutes and of nineteenth-century codes.
The emergence of capitalism has been attributed to factors as diverse as the active presence of Jewish businessmen in central and northern European trade,3 the 192perception in the Protestant-Calvinistic ethic that the accumulation of wealth is a sign of divine salvation or election4 and the “dialectic materialism”5 of economic forces that placed capitalism as a way-station between feudalism and communism. These and other efforts to trace the roots of capitalism are characterized by a search for ultimate causes, often at the expense of factual evidence.
Factual evidence is not in short supply in the writings of the French economic historian Fernand Braudel. In his monumental trilogy, Civilisation Matérielle, Economie et Capitalisme, XVe-XVIIIe (1967) (Capitalism and Material Life, 1400–1800), which first appeared in English in 1973,6 Braudel pays little attention to the ultimate or metaphysical causes of capitalism, or to what will happen after it is gone, if it is. Braudel’s interest lies in describing when, where and how capitalism first showed its face. He seems to rely on a rather basic definition of capitalism: the use of money and of other capital resources by merchants willing to buy or finance labor in a manner that makes profitable production and distribution possible. Accordingly, he searches for the time, place and method when such an organized purchase and financing began.
In this search, he gathers information on all of the possible forces that brought about such a use of capital, regardless of whether the data was related to geographical, cultural, legal, economic or religious factors. This eclectic (or “total history”) methodology brought about his conclusion that capitalism started its lengthy process of development in twelfth-century Europe and progressed through cities and states such as Venice, Antwerp, Amsterdam and London to become what it is today. It did so, in Braudel’s opinion, by relying on social structures or organized behavior that in due course became transformative legal institutions. On the one hand, capitalism had to struggle against the regulations of guilds that prevented competition and the formation of capital. On the other hand, it was propelled forward by the competition for hired or purchased labor that resulted from the failure of the monopolistic regulations to provide steady and reasonably compensated employment.
The two conflicting social structures that acted as propelling forces of capitalism were: 1) the European associations of artisans or craftsmen known as guilds in 193England, corps de métiers in France, Zünfte in Germany, arti in Italy and gremios in Spain; and 2) the independent (non-guild) merchants who commissioned manufactured or handcrafted goods from cottage industries. These merchants supplied the money and, in some cases, the raw material necessary for the manufacture of the goods. They were known in Germany as “Verlegers” and their work as “Verlag.” In France, the commissioned work was known as “travail à domicile,” and as “domestic” or “putting out” work in England. The following sections summarize, with the help of Braudel’s writings as well as the writings of other economic historians, key features of legal institutions whose imprint is still apparent in European civil and commercial codification and, to a much larger degree, surprising though it may sound at first, in socialist economies.7 Thus, the reader will soon find that relatively recent amendments to the French commercial code still involve guild-like associations of merchants whose function is to make sure that their younger, less expert or well-endowed colleagues succeed, or at least are not wiped out by their competition, or merge their assets with others as best as possible.8 The will also find that many socialist state sponsored monopolies and cooperatives are still being managed as if they were medieval guilds, except that their hidden profits are distributed not among guild masters, but highly placed party or government officials.9
Guilds were associations formed by artisans and craftsmen and later joined by merchants, although in much smaller numbers. While they may have existed from the beginning of commerce,10 the guilds that immediately preceded the emergence of capitalism started in Europe during the twelfth century and reached their high point three centuries later.11 The appearance of the European guilds was tied to the incipient money-economy and to the growth of European cities. Before this time, commodity-money and barter were a normal way of doing business.
The main purpose of the guild as a legal institution was to protect its members against competitors and harsh market conditions by assuring them a survival wage, at times paid in money and at times in kind. The fact that Guild members were, among others, manual workers such as bakers, tailors, winemakers, glass and shoemakers, cobblers, blacksmiths and metal workers, played an important role in the development of capitalism. As noted by Braudel, Karl Marx’s summary of the typical sequence of a capitalistic transaction had three steps. In the first, the capitalist, the holder of money, paid workers for the goods they produced for him. In the second, he sold those goods 194and thereby acquired new money. In the third, he continued to purchase goods with the new money and to accumulate money and goods produced by others.12
The fact that manual labor or its product was bought with money, and was not bartered for other goods, was an important step in the road to capitalism because it empowered the holders of money to create their own as well as a residual social wealth. This empowerment of intermediate merchants was destined to collide with the monopolistic franchises granted to the guilds. And the fact that some guilds practiced their trades or professions collectively in the same shop or hall while others practiced them individually in their own shops made this proto-capitalist transaction easier.13 For merchant guilds were at times as small as that of the providers of drinking water in the Seine River valley of France or as large as that of the international merchants and carriers of the “Hanseatic League,” who did their business in and out of northern European sea and river ports.14 Eventually, the incipient ventures between guild artisans and craftsmen on the one side and merchants on the other broke down when merchants began contracting directly with workers whether or not they were guild members. Once this happened, the conditions were ripe for the emergence of capitalism. What follows, then, is a discussion of the peculiar features of guilds and, as they lost their market dominance, of the key characteristics of the different types of emerging European merchants-capitalists.
Guilds enjoyed monopolistic rights given to them, usually as part of a detailed set of regulations, by the king of the realm or by town authorities, and especially by the latter as towns and guilds became highly interdependent entities. As with any monopoly, the purpose of the guild was to protect its market dominance, thereby assuring the basic subsistence of its members and their towns. Thus, medieval guilds were responsible for the reputation of products and regions such as the wine from Champagne and Bordeaux of France, the tin-glazed earthenware from Dutch cities, the lace from Chantilli, and so on. Many centuries later, this reputation gained the protection of commercial and regional trademarks. In exchange for their monopolistic rights, guilds were expected to strictly follow the terms and conditions of their grant, including the payment of taxes, which could often be oppressive.15
This monopolistic scheme meant that guilds regulated and policed their craft or profession, exercising control over admission to their ranks and also over the prices and quality of their products.16 Eventually, the trades represented in the guilds proliferated and subdivided. Braudel notes that in 1260, Paris had more than one hundred guilds. At the same time, Nuremberg “was ruled by a strict and vigilant 195aristocracy, the metal-working guilds … divided … into several dozen independent professions and trades.”17 At the other end of the social spectrum, Basle and Frankfurt sported guilds of beggars who got together for no other purpose than to prevent the competition by colleagues likely to wander in or settle in their towns.18 Some towns had no guilds and were known as “free” towns. Yet, the number of “free” towns was small, and until the end of the fourteenth century, a significant number of the handicrafts concentrated in urban areas were controlled by guilds.
Generally, guilds were formed by masters, journeymen and apprentices. The masters were experts in their field of handicraft. Before a new employee could become a master, he had to undergo a schooling period that lasted several years during which he was first an apprentice and then, after completing his training, a journeyman. Masters earned the highest compensation, and journeymen the lowest. Moreover, journeymen could spend an entire lifetime earning the same wages. For example, a historical survey of customary wages in southern England found that the wage paid to “building [journeymen] craftsmen remained at sixpence a day for 120 years after 1412….”19 This bare “living wage” feature of the guilds was supplemented by religiously-inspired duties of mutual aid and assistance, especially for handicapped or disabled guild members.20
It is apparent from this organizational scheme that guilds favored the interests of masters (who ran them) at the expense of the interests of other members. The Spanish scholar Isaias Covarrubias notes that from the fourteenth century onward, admission to the guilds became even more restricted as the sons of masters were preferred as apprentices over other applicants.21 Eventually, these sons also became the preferred replacements for their fathers, thereby making the status of guild-master de facto hereditary.22
The overriding purpose of the guilds was not to accumulate profits.23 In Spain, for example, priests who frequently sat on the guild boards or who appointed board members insisted on the observance of religious and charitable duties, which displaced profit-making when necessary.24 What really mattered to the guilds was preventing competition among members and non-members because competition was regarded as a 196menace to the members’ ability to earn a living wage. Thus, guilds forbade their members from diminishing the quality of products by changing their components so as to justify selling the products cheaper than competitors, substituting components in order to change prices, or doing business before or after the designated hours of business and subject to different terms and conditions.25 Even the addition of rye to wheat when making bread (because it could lead to product differentiation and competition) required approval by the bakers’ guild.26
The reason behind this apparently unbridled regulation was to enforce fixed prices by standardizing product ingredients and appearance. Products of the same quality were to be sold for the same price. In theory, fixed prices would assure a modicum average income to guild members. This outcome was preferable to that offered by the laws of supply and demand. Additionally, the uniform quality and prices prevented competition among guild members (and non-members) who might otherwise try outselling their competitors by lowering prices. Simply put, anything that could endanger reliance on fixed prices undermined the guild system.
The same fear of competition was apparent in segments of the agricultural sector. Fixed prices supported by uniform quality standards were relied upon in the sale of farm products during the guild period by farmers who grazed their cattle in common lands, also known as “commons” in central and northern Europe.27 In basic terms, contractual bargaining was not a guild feature.
It is clear from the preceding section that an important legal and economic feature of the guild system was that contracts—the tools that implement supply and demand in capitalist societies—played only a minimal role (or no role at all) in setting the members’ wages or the prices of the products. Wages were not the result of individual or collective bargains as is true in many contemporary capitalist societies. They were the product of a principle referred to by Max Weber as Nahrungsprinzip (the provision of sustenance, or mere survival, to its members).28 According to Raymond de Roover, the noted historian of medieval economic thought, there were two influential views on the meaning of a just price among medieval thinkers. One view, which he attributed to Henry of Langenstein, held that a just price was the reasonable charge which would allow the producer “to live and to support his family on a scale suitable to his station in life.”29 If the producer charged more for his labor and expenses to retain his status (per quanta res suas vendendo statutum suum continuare posit), he committed the sin of avarice. Max Weber believed this to be the moral foundation of the guild system.
The other view belonged to Albert Magnus and Saint Thomas Aquinas. It first appeared in a thirteenth-century directive to parish priests: Flocks should be 197admonished not to charge wayfarers more than the price obtainable in the local market (quam in mercato vendere possint); otherwise, the wayfarers can complain to the priest, who is then required to set the price with “humanity.”30 The same reference to the market appears in Albert Magnus’ definition of the just price as a price “according to the estimation of the market” (secundum aestimationem fori).31 I should note, however, that the market that Magnus and Aquinas were talking about was one of farmers and producers selling products in a village marketplace, whereas the market discussed in the next section in connection with the Verlagssystem was a market of intermediaries where capitalists purchased products from laborers to sell to third parties.
The transition from the guild system to the Verlagssystem was summarized by Braudel as follows:
The purpose of the guilds was to bring together the members of a single trade which they defended against all others…. But money, the money economy and external trade—in other words the merchant—were now beginning to intervene…. At the end of the twelfth century, woollen [sic] cloth from Provins … was being exported to distant Naples, Sicily, Cyprus, Majorca, Spain and even Constantinople. Spires (Speyer), a very modest town … which did not even possess a bridge over the nearby Rhine, was in the same period producing a rather ordinary woollen [sic] cloth…. And yet this somewhat inferior product was being marketed as far away as Saint-Gall, Zurich, Vienna…. And at the same time the towns were being invaded by money…. Above the mass rose the profile of a whole community of money-lenders and merchants, Milanese, Venetian, Genoese and Florentine….
[This shows] that [the money] could be accumulated, and that once accumulated it could play … [a] role. The unequal struggle had begun: some guilds were to become rich; others, the majority, remained modest…. The organization it concealed was the system known to historians as the Verlaggsystem or putting-out system. A new age had dawned.32
The new age which Braudel refers to consisted of a Verleger, or merchant who commissioned or “put out” work that resulted in re-saleable goods. He provided the artisan with the raw materials and a part wage or payment for final products. Upon delivery of the finished product, the verleger paid the remainder. In this “putting out” system, guild masters were being transformed into wage earners. Gradually, contracts, occasionally in the form of notarial or public deeds, replaced the system of fixed wages and prices, and, with them, the purportedly assured “station in life” (or status) of the guild system. Braudel notes that “[c]ontracts signed with the weavers were often witnessed by a notary and their conditions could vary.”33 Associations whose specific purpose was to profit from the labor of manufacturers of desirable goods began to be formed. For example, a 1400 partnership agreement between two Italian silk 198merchants stated that its “principal activity … [was] to have silk sheets made.” (il trafficho loro serà per la maggiore parte in fare lavorare draperie di seta).34 But as a new class of merchant-venturers started to emerge, so did an ancestral prejudice against the merchant, who was suspected to be of non-Christian, (Jewish, or Moorish) blood and regarded as an exploiter or trickster contrasted with the blue-blooded benefactor of his fellow man. A quote by Diego de Colmenares, the historian of the Spanish city of Segovia, reflected this prejudice. While referring to the manufacturers of cloth of his city, he stated:
[These manufacturers] who are improperly described as merchants … are really the heads of great families, for in their own houses and outside they provide a livelihood for a great many persons (some 200, others 300) employing other men’s hands to manufacture all kinds of magnificent cloth.35
Prejudice aside, it became clear that the merchants who shaped the Verlagssystem were indispensable intermediaries in the production and distribution process. They bought raw materials from the producers, hired of and lent to the artisans, and they also sold to consumers or to retailers, who would in turn sell to consumers. In these activities, the Verlager significantly participated in and contributed to the vitality of international fairs which became hubs for networking with other merchants, thereby expanding significantly the volumes of production and the sizes of the consumption markets.36
In The Wealth of Nations, Adam Smith attributes the demise of the guilds (which he refers to as corporations) to the following causes:
It is to prevent his reduction of price, and consequently of wages and profit, by restraining that free competition which would most certainly occasion it, that all corporations, and the greater part of corporation laws have been established…. [A]nd when any particular class of artificers or traders thought proper to act as a corporation, without a charter, such adulterine guilds, as they were called, were not always disfranchised upon that account, but obliged to (pay a) fine annually to the king, for permission to exercise their usurped privileges.37 (Parenthesis added)
The Merriam-Webster dictionary defines mercantilism as:
an economic system developing during the decay of feudalism to unify and increase the power and especially the monetary wealth of a nation by a strict 199governmental regulation of the entire national economy usually through policies designed to secure an accumulation of bullion, a favorable balance of trade, the development of agriculture and manufactures, and the establishment of foreign trading monopolies.38
The protection given to some producers, often at the expense of others, first at the town level and eventually at the national or regional level, eventually became a defining feature of European mercantilism.39 Yet, mercantilism was (and in many countries and regions of the world still is) a product of the selfish (and uncooperative) elements of nuclear commercial transactions. Thus, as a reflection of human nature, these elements are not easily confined to isolated transactions or policies. Sooner or later, they permeate the nuclei of transactions between family and friends in a manner that prevents non-family members or non-friends from engaging in the transactions in question and monopoly or oligopoly becomes not only a macro, but also a micro form of doing business, especially in nations whose markets are week and susceptible of being corrupted.
Thus, when Mexico adopted the North American Free Trade Agreement, it found it necessary to strengthen its antitrust legislation and break down some professional, guild-like monopolies such as those enjoyed by notaries public when drafting formal documents. It then created the profession of “public brokers” (corredores públicos) and encouraged their competition with notaries public. Yet, as will be discussed in the following chapter, similarities remained with the monopolistic features of guilds, such as the fact that certain transactions can only be executed in front of notaries. Meanwhile, public brokers are carving out their own exclusive niches. As also discussed, some Central American nations allow any licensed lawyer to easily become a notary public. Could this “open entry” approach to the practice of the notarial profession avoid the objection of it being an officially sanctioned professional monopoly? If so, is there a “slippery slope” here? How about the allegation by many non-lawyers that the legal profession itself is another manifestation of the medieval guild and that its status as a professional monopoly is unjustified?
The transition from a highly regulated system of production and distribution that attempts to assure subsistence to its participants to one where subsistence is left to the outcome of contractual relations was, as will be recalled,40 a central theme of Sir Henry Sumner Maine’s evolutionary view of the law. Yet, far from being the end of an evolutionary period, many of the features of the guild system reappear in the garb of the Marxist-Leninist socialist “planned economy” in the twentieth century. As will be discussed in connection with Soviet and Chinese commercial transactions law, state monopolies as well as fixed prices and wages, which were designed to assure basic sustenance, became part of everyday life under Soviet and Chinese (pre-1978) law, while truly bargained-for contracts faded into the background.41
In June of 1275, the Provost of Merchants of Paris enacted an ordinance “forbidding the spinsters of silk to pawn the silk the mercers [gave] them to work, or to sell or exchange it, under pain of banishment.”42 At first sight, this would appear to be a reasonable restriction; after all, the silk about to be pledged, sold or exchanged was delivered by the commissioning merchant to the spinsters on the assumption that it was to be the exclusive property of the merchant. Yet, what if the spinsters had asked the merchants to lend them the silk or the money with which to buy it? Assume further that the amount lent on the silk by the merchant to the spinster was considerably lower than the value of the silk, and even lower than the value of the products the spinsters would produce with the lent silk. In that case, would not this prohibition clearly immobilize the silk and the proceeds of its sale, at least while it was in the possession of the spinsters, depriving them of the opportunity to obtain additional credit beyond that which had been extended by the silk merchant?
With the lack of such a “mobilization” of assets, the result of not having access to production and commercial credit at reasonable rates of interest,43 by laborers such as the Paris spinsters were condemned to the perennial status of barely surviving laborers. What if, instead of deeming the silk merchant an exclusive owner of the silk and the laborer its mere custodian, both parties were deemed holders of rights of possession in the silk? The merchant could still hold a superior right to the possession of the silk or to the proceeds of its sale until his investment and expected profit were paid; the spinsters could produce more, earn more and eventually become merchants themselves.
As will be discussed in connection with the European codification of commercial law,44 with the exception of those code chapters devoted to ocean navigation,45 the nineteenth-century French commercial code was designed to apply mostly to local commerce and to merchants who, with few exceptions, were deemed equal before the law.46 In France, the commercial code was preceded by enactments known as “Ordonances” that dealt with both local and international trade, of which the most important was a 1673 Ordonance attributed to Minister Colbert, about whom more shortly.47 The purpose of the Ordonances that dealt with international trade was to 201provide France with the best international trading status and advantages possible. One could find in these policies numerous echoes of the guild system. Not surprisingly, a “mercantilistic” or highly preferential treatment of local merchants and products became the law of France’s international commerce.
As just noted, mercantilism had strong ties with the remains of the medieval guild system. However, as noted by Professor Carlton Hayes:
Industry in the eighteenth century meant far more than baking bread, making clothes, cobbling shoes, and fashioning furniture for use in the town; it meant the production on a large scale of goods to sell in distant places,—cloth, clocks, shoes, beads, dishes, hats, buttons, and what not. Many of these articles were still manufactured under the regulations of the old craft gilds [sic]. For although the gild [sic] system was pretty well broken up in England, it still maintained its hold on the Continent.48
The above-mentioned Jean Baptiste Colbert, born in 1619 in Reims, France, was the son and grandson of French merchants.49 In 1665, he became King Louis XIV’s comptroller general of finances and later France’s secretary of state of naval affairs. One of his goals was to transform France into an industrially and commercially self-sufficient nation; his policies were largely responsible for France’s economic resurgence during the end of the seventeenth century.50 He encouraged the growth of French industry through subsidies and tariff protection, but also regulated qualities and prices of manufactured and agricultural products often by guilds in order to make them highly competitive, especially against the Dutch and British merchants.
To enhance the reputation of French goods, Colbert painstakingly listed the quality and measure of each article. Thus, he issued numerous regulations on best practices for the dyeing and weaving business so that French dyers and weavers could acquire a reputation for excellence.51 Breach of his regulations was punished by public 202exposure, destruction of the goods, and, on the third offense, by the pillory. Similar policies protected inventors and attracted foreign skilled workmen to France, while they forbade French skilled workers from emigrating. Many of his policies were far from subtle. Typical of his “carrot and stick” approach were measures such as: Ships built in France earned a premium, while those bought abroad had to pay a punitive duty, and French workmen forbidden to emigrate and serve foreigners could face the death penalty if they ignored the prohibition. “Privileges, titles of nobility, exemption from taxation, generous grants of money, and other favors were accorded to enterprising business men who undertook to introduce new branches of manufacture.”52
“The[se] regulations caused much inconvenience and loss to many [competing] manufacturers, and the privileges granted to new enterprises often favored [uncompetitive] industries at the expense of more natural and valuable trades.”53 Yet, France’s inability to develop large-scale national and international trade was not all the fault of mercantilism. Trade was hindered by poor roads and the diversity of laws from one province or region to another was as common as the need to change horses in a long and continuous journey.54 In addition, tolls had to be paid before passing a knight’s castle, a bridge, or a town gate, and customs duties were levied on commerce between the provinces of a single kingdom. As noted by Hayes, the cost of transportation was “thus made so high that the price of a cask of wine passing from the Orléanais to Normandy—two provinces in northwestern France—increased twenty-fold.”55
Despite the mercantilistic European trading policies, as exemplified by Colbert’s Ordonances, Europe, as a whole, had already experienced what Fernand Braudel referred to as a “fresh start in America”56 following its discovery in 1492. Europe’s international and internal commerce, although still shackled by excessive, diverse and often conflicting regulation, continued to grow and with this growth, capitalism and codified law emerged.
This “fresh start” precipitated unparalleled business opportunities for the European retail and wholesale trades, as well as for industry and banking. Braudel describes many of the transactions associated with this fresh start, many of which found their way into the nineteenth-century commercial codes of France and Germany: First was the commerce practiced in street markets, on the backs of peddlers, in permanent shops, and in periodic fairs. Subsequently, he described how this mostly-retail trade was nourished by “higher commerce.” This was a commerce carried out by specialized intermediaries in commodity and stock exchanges, warehousing, banking, 203long-distance carriage and insurance. The following sections summarize Braudel’s exhaustive description.57 As the reader visualizes each form of doing business, he should keep in mind that the types of merchants and commerce described by Braudel are the same ones whose transactions were codified, with greater or lesser precision, by the nineteenth-century codes and which continue to be significant players in the market of our day. I should also note that the following is a broadly-gauged description of European markets. A more detailed description of the French and German markets that are more closely connected with legal institutions regulated by the respective codes will be provided in future chapters when discussing each code.
The modus operandi of these seventeenth and eighteenth-century European street markets can be traced to the manner in which business was conducted by the thirteenth-century merchants who were not members of guilds. The medieval as well as pre-codification (eighteenth century) European street markets were held once or twice per week.58 In these markets, independent bakers sold their coarse bread, butchers their meats, wholesalers (grossiers) their fish, butter and cheese in large quantities together with “piles of produce, slabs of butter, heaps of vegetables, pyramids of cheeses, fruit, wet fish, game….”59 Occasionally, the butcher would cut up the meat on the spot and he would use the pages of unsold books (just a few years ago I saw French and Spanish butchers using discarded newspapers) to wrap up many of the above purchases.60 In addition, the countryside also provided these markets with straw, hay, wood, wool, hemp, flax and even fabrics woven on village looms.61
Braudel attributes the continued presence of this market to its low and often flexible prices, especially as compared with the prices paid to guild members. In addition, he identified two other features: one was the close inspection of the goods or wares by their purchasers. The German expression that depicted this form of buying was “Hand-in-Hand, Auge-in-Auge Handel—selling hand to hand, eyeball to eyeball….”62 This was a method of immediate exchange of goods for money and it pointed to the presence of another peculiarity: “[T]he goods are sold on the spot, the purchases are taken and paid for there and then. Credit is hardly used between one market and another.”63 The importance of this description can hardly be overemphasized.
For when Article 1582 of the Code Civil defined a sale as an “agreement whereby one party obligates herself to deliver a thing and the other to pay for it,” its transactional model was not that of a sale between parties dealing at a distance from each other (Inter Absentes). Can you see why such sales require special legal tools, in addition to special means of communication? How about those promises we refer to as offers and acceptances? Can you visualize a butcher patiently awaiting his customer’s written acceptance of the price of the meat he has just cut and wrapped in the nearest available newspaper? The butcher’s and his customer’s transaction was a “cash on the barrelhead” sale agreement, one that was completed once the parties agreed on the meat to be purchased and its price. In this sense, it was—in the terminology of the Code Civil and its interpreters—a “consensual” and “synallagmatic” agreement, i.e., one that that transferred title of the meat to its purchaser from the moment of the agreement on its price. This meant that for many code interpreters, sales with retention or reservation of title simply “could not exist.”64
From these street markets eventually emerged the permanent shops. The first people to have shops were the artisans. As described by Braudel:
‘Real’ shopkeepers arrived later: they were the middlemen of exchange, inserting themselves between producer and consumer, and confining their activities to buying and selling: the goods they sold were not (or not entirely at any rate) the work of their own hands. From the start, they were like the capitalist merchant as defined by Marx: he begins with money (M), acquires goods (G) and returns regularly to money, in an MGM pattern.65
The middleman, a separate and before long a very frequent figure, was the man of the future….
[Yet] the representatives of commerce were still bewailing the fact in 1788 that even at this date, négociants were considered as ‘occupying one of the lower classes of society.’ One would not have heard this kind of talk in Amsterdam, London or even Italy.66
Gradually a distinction appeared between those who sold by weight: [mostly] grocers … [and] those who sold by measure: drapers and tailors; [between] those who sold objects: [such as] ironmongers; [and] those who sold used utensils, clothes or furniture: second-hand dealers….
[The] special kinds of shop, encouraged by the development of ‘services’, were those of the apothecary, the pawnbroker, the money-changer or banker, the 205innkeeper who was [also] often an intermediary for carriers, and the tavern-keepers or ‘wine-merchants who keep tables and linen and serve meals….’67
Among shopkeepers, most sales were still consensual and credit was extended only in small quantities and mostly just to their well-known customers.68
Pre-codification Europe evidenced a commercial hierarchy:
‘[S]hopkeeper’: at the top, a few very rich merchants, specializing in longdistance trade; at the bottom, the poor pedlars of needles and oilcloth [among many other items], of whom the proverb cruelly says ‘small trade, small basket’ (petit merrier, petit panier) and whom even a servant-girl, especially if she had some savings, would not stoop to marry….69
Pedlars were merchants, usually poor ones, who carried on their backs their very meager stock. Nevertheless, taken in the mass, they add up to an appreciable volume of trade. They filled in the gaps in the regular channels of distribution, even in towns, though mostly in villages and hamlets.70
As with some shopkeepers, peddlers also extended credit to some of their most trusted customers and, as such, became the beneficiaries of informal, usually oral, executory promises of repayment.71 And as will be discussed in Chapter 20, English peddlers were much more willing to extend credit to their customers and thus they became a significant source of consumer credit during England’s remarkable eighteenth century embrace of consumerism.72
As will be discussed in this section, some of the European fairs, active between the thirteenth and seventeenth centuries, were responsible for institutions such as commercial credit, payment and settlement systems as curators or incubators of commercial legal institutions.
As pointed out by Braudel, there were fairs and then there were fairs. Some town or country fairs acting as local or regional markets limited their trade to one or two commodities or products, and if the sole product was, say, wool, and a winter was long enough to prevent the peasants from timely shearing of their sheep, that year’s fair had to be cancelled.73 Other fairs combined the wholesale and retail trade of all sorts of commodities and products, although mostly from an agricultural origin. Larger fairs were not daily or weekly affairs (as were street markets), but were associated with religious holidays. In his inimitably vivid style, Braudel describes fair time near Florence, Italy and in Carpentras, France:
Fairs meant noise, tumult, music, popular rejoicing, the world turned upside down, disorder and sometimes disturbances. At Prato near Florence, where the fairs dated back to the fourteenth century, every September the trombetti (trumpets) of all the towns of Tuscany would come to suonare (make music) in competition in the streets and on the town squares. At Carpentras, the day before the fairs of St Matthew or Saint-Siffrein, the piercing sound of the trumpets would be heard at the four gates of the town, then on the squares, and finally in front of the lawcourts.74
The methods of retail sales and pricing at the fairs did not differ much from those practiced in street shops or stalls. This was not true, however, with respect to credit transactions; fairs meant a place to extend or obtain commercial credit and to effectuate payment and settlement of accounts in a quick, efficient and inexpensive manner. The principal instrument of both credit and payment was what we refer in our day as a draft or bill of exchange.75 This draft or bill of exchange was, and is, a written order of payment drawn by a merchant who could have been the seller of goods or the exchanger of currency or a buyer who bought goods or foreign currency on credit (the drawer). This order of payment was drawn on or directed to another merchant who either had funds that belonged to the drawer or who owed money to the drawer as a result of an unpaid purchase, loan or exchange of currency transaction. Depending upon who owed money to whom, the creditor or person entitled to claim the payment under the bill of exchange was named its payee. The drawer signed his order of payment, and the drawee expressed his willingness to pay the bill by signing it in the drawee-acceptor’s column. Often the order was for payment at a future time and at a designated fair where the payee and the acceptor were likely to be present. The mutual presence of debtors and creditors or of their agents facilitated the setting off of debits and credits among numerous traders. It is worth noting that the acceptor’s promise to make a future payment was executory, and thus it was the same type of promise denied enforcement because it was deemed a nudum pactum both under Roman law and most medieval feudal law, except among Jewish and Arab merchants.76
Fairs usually ended with a payment or settlement session where acceptors and payees of bills of exchange settled their accounts, frequently adding up what each owed to the other and paying the unpaid balances either in cash or by issuing another bill of exchange to be collected at a subsequent fair. This method of settlement of accounts was the predecessor of today’s bank clearing mechanism used by both local and international banks. As a result of these payment and settlement or clearing sessions, numerous bills of exchange converged upon the most populous fairs. In Braudel’s words:
[D]ebts met and cancelled each other out, melting like snow in the sun: such were the miracles of scontro [the discounting of negotiable bills of exchange] [and of] compensation [set off]. A hundred thousand or so ‘ecus d’or en or’—that is real coins—might at the clearing-house of Lyons settle business worth millions; all the more so as a good part of the remaining debts would be settled either by a promise of payment on another exchange (a bill of 207exchange) or by carrying over payment until the next fair: this was the deposito which was usually paid for at 10% a year…. So the fair itself created credit.77
Eventually, an informal international network of credit, payments and settlements for international traders emerged, and it was centered in fairs such as the one in Piacenza, Italy, which started meeting periodically (usually four times a year) since 1579 and was run by a small group of highly trusted merchant-bankers. Again in Braudel’s words:
No merchandise came to the [Piacenza] fair, and very little cash, but literally masses of bills of exchange, which in fact represented the entire wealth of Europe, with payments by the Spanish Empire as the mainstream. About sixty businessmen attended, Genoese banchieri di conto for the most part, a few from Milan or Florence. They were members of a club to which one could not be admitted without paying a very heavy caution [indemnity bond]. These privileged men fixed the conto, that is the exchange rate for liquidation at the end of each fair…. There was a total of perhaps 200 initiates, behaving with great discretion and handling vast amounts of business, perhaps 30 to 40 million ecus’ worth at each fair….78
The importance of these initiates should not be underestimated. As the reader will recall, it was this very exchange rate mechanism that bankers (banchieri) fixed for each fair and that Raymond de Roover, among other scholars of the medieval economy, identified as the most commonly used disguise for the payment of interest for loans that the Roman Catholic Church would have otherwise characterized as usurious.79 Accordingly, these merchant-bankers acted as “elder commercial brothers” and boni viri of fair merchants. They were entrusted not only with overseeing the settlement of vast sums of debt money that belonged to thousands of traders, but also with ensuring that the bills of exchange that these traders used for payment and settlement of their debts, as well as to document their new lines of credit, provided the appearance of legality. Thus, fairs and bills of exchange and the banchieri di conto helped institutionalize commercial credit for the first time throughout the trading world.
[I]f the Piacenza fairs were the centre of commercial life in the late sixteenth and early seventeenth century, the new centre of this [commercial] world was soon to be Amsterdam…. And while the Amsterdam Exchange took over the vast capital market unchallenged, it also controlled … the movement of commodities (pepper and spices from Asia, grain and other products from the Baltic)…. [W]ith the increase in population, the headlong expansion of the towns, and improvements in consumption, the wholesale trade could not fail to develop too, spilling out beyond the channels offered by the fairs and becoming organized independently. This autonomous organization, through 208the use of depots, warehouses, granaries and stores was tending, with its regularity of supply … to replace the periodic bustle of the fairs.80
Adopting the terminology of a 1681 commentator, Braudel refers to the merchant who did his business at this Exchange as “The New Businessman” (Le Nouveau Negociant).81 He could be a banker, exchange currency dealer, agent or broker. Regardless of his specialization, “every self-respecting businessman had to look in at the Bourse at the end of [every] morning…. [Thus], [s]omething like 4500 people were said to crush inside every day between noon and two o’clock, in [1722]. On Saturdays it was less crowded, as the Jews were absent.”82
The method of purchase in these exchanges, which was much the same throughout Europe, did not rely on the close inspection of each item as in the street markets. It relied on samples of the commodities bought and sold, as it also relied, increasingly, on various types of intermediaries. For example, in the Corn Exchange of Amsterdam:
[E]very merchant had his factor ‘who is responsible for bringing there samples of the grains he wants to sell … in bags holding about one or two pounds. As the price of grain is fixed as much by [specific] weight as by good or bad quality, there [were] at the back of the Exchange various little scales on which, by weighing three or four handfuls of grain … one can estimate the weight of the sack.’83
Braudel concludes that one peculiar feature of the Amsterdam Exchange was the speculative freedom of many transactions. As reported by a Spanish visitor merchant, “there was forward buying of herring before it had been caught and wheat and other goods before they had been grown or received.”84 Yet, betting on commodities contracts or on shares, in expert hands, could bring a comfortable income. In his words:
[S]peculation on the Amsterdam Stock Exchange had reached a degree of sophistication and abstraction which made it for many years a very special trading-centre of Europe, a place where people were not content simply to buy and sell shares, speculating on their possible rise or fall, but where one could by means of various ingenious combinations speculate without having any money or shares at all.”85
Having read the previous chapter, the reader of this chapter should ask himself: What did Lazarillo de Tormes’ trade have in common with speculation in the Amsterdam stock exchange? The term “adventure” appears increasingly in the lexicon of business associations and insurance contracts beginning with the eighteenth century: Is there any connection with the behavior of picaresque or even Quixotic 209characters? Why was such adventurous behavior seldom found in the literature of chivalry during the Middle Ages?
Can the merchants who engaged in what Braudel described as the “ingenious combinations” associated with the Amsterdam Stock or Commodity Exchange be likened to the Lazarillo’s methods of survival and occasional prosperity in late medieval Spain? What differences existed with respect to their respective “ingeniousness” and honesty? After all, if one is willing to advance a serious commitment to buy or trade based upon a mere sample of the goods or products offered for sale by an intermediary, does not one have to trust the intermediary and the sample’s aptness to represent, more or less accurately, the actual goods or products?
During Lazarillo’s day, there were numerous merchants or aspiring merchants who were described as “picaros malos” (swindlers or evil tricksters). How did their commercial behavior differ from Colbert’s mercantilistic policies and from the practices of the “picaros” of the Amsterdam Stock or Commodity exchanges who did not hesitate to sell herring yet to be fished or crops yet to be harvested? Could it be that there were some trustworthy and good picaros (picaros buenos) among the emerging commercial class? If so, what made these intermediaries trustworthy? Recall that trustworthiness in the medieval Mediterranean trade of Arab and Jewish merchants depended upon the religiously inspired duties among commercial-religious brethren.86 Was there an institutional equivalent in the emerging law of commercial transactions, especially in what Braudel described as “High Commerce”? If so, how did the law reflect and reward desirable and trustworthy conduct? Recall Braudel’s reference to the creation of “consular tribunals” in France (to which questions and disputes relating to bankruptcies were referred) and which constituted a privileged and expeditious justice for merchants, “in accordance with commercial law” (per legem mercatoriam), designed to safeguard class interests. Could this special legal treatment be justified if it applied preponderantly to picaros malos?
Can Braudel’s following description be generalized to all types of trade: “[G]oods are sold on the spot … purchases are … paid for there and then. Credit is hardly used between one market and another”?87 Would it also be true for street markets, shops and peddlers? In interviews with shopkeepers and former peddlers in Central America during the 1960s,88 many of the interviewees described a form of credit sales that in the case of the shopkeepers was only documented by entries in the shopkeepers’ store booklets (libretas), and in the case of the peddlers, totally on trust (nothing written) to their occasional customers. Similar practices prevailed in other Latin American countries as far back as the late nineteenth century. From the standpoint of the contemporary law of sales, what difference does it make if the sale is made on a “cash on the barrelhead” basis or on a credit basis? How about the so-called documentary sales such as C.I.F., F.O.B., C.F.A. and others in which payment is supposed to be made not against the tender of samples or of inspected goods, but merely against the presentation of documents? Do these transactions require greater or lesser trust by buyers? Or is it by sellers, or by both buyers and sellers?
What made the replacement of goods and eyeball-to-eyeball, hand-to-hand inspection by mere pieces of paper possible in these sales? If it was the presence of trusted intermediaries such as brokers and commission agents, who were these trusted intermediaries? Were they religious, professional brethren? How important was it for these intermediaries to be properly empowered by their principals? How important was it for third parties dealing with these intermediaries to be able to rely on the appearance of empowerment rather than on the actual terms and conditions of the empowerment? What if third parties were confronted with the allegation that the agents’ powers had been exceeded by the agents and that, as a result of restrictions known only to the principal and his agent or intermediary, the principal was not liable for the acts of the intermediary? On this point, it would be worthwhile to revisit the appendix to Chapter 5.89
What contemporary commercial contracts are missing from the above typology? Chapter 21 on the legal institutions that helped shape the United States’ capitalist economy provides an additional typology of businesses and contracts which may well help answer this question.
To an Anglo-American lawyer, one of the most striking features of the private law (or the law of the “mine and the thine”) of many civil law countries is the partitioning of this law into “civil” and “commercial” codes. While this feature will be discussed extensively in the following chapters,91 now is a good time to call attention to the effect that the guilds had upon this dualism. Regardless of the doctrinal reasons adduced to justify the dualism, and there are many, the gradual departure of merchants from the guild system and their modus operandi as individual profit-seeking producers, distributors and intermediaries is reflected in the adoption of commercial codes, whether of the French or German type.92 Hence, while the commercial codes were designed to apply to the transactions of all the merchants described by Braudel—from the modest peddler to the high powered wholesaler, insurer, carrier or broker—the civil codes were not. They were designed to apply to self proclaimed non-profit transactions whether by individual or associations (the latter being frequently referred to as “civil” as opposed to “business” associations) as well as services rendered by non-merchant artisans, craftsmen and professionals such as lawyers, physicians, engineers or architects. In fact, one of the distinguishing features of professionals is that their members are supposed to charge often regulated “honoraria” or “tariffs,” as in the case of notaries public and not “synallagmatic” or negotiated prices for their goods as done by merchants. Hence, the guilds seemed to continue to live in many of the transactions governed by the Civil Code.
Thus, the dualism of codes promotes opposing attitudes with respect to the policies that should govern private law transactions in many countries. This is particularly true in countries or jurisdictions governed or influenced by the French and Spanish civil and commercial codes. All too often, “civilists” will oppose—either overtly or covertly—the inevitable commercialization of civil code institutions, such as sales or loan agreements and methods to secure repayment of obligations by secured 212transactions statutes. As will become apparent in later chapters, this opposition has consequences beyond the endless debates in academic or professional associations. Sadly, to this day, many civilists have failed to realize that by opposing the commercialization of some (though certainly not all) traditional civil law institutions, they are in effect attempting to retain guild like institutions that are inconsistent with economic growth and development..93
While the primary focus of this book is commercial contracts and commercial enactments, such as the various commercial codes, one cannot ignore the influence that civil codes have upon the interpretation of their commercial counterparts. This influence is all the more notable if one considers that civil codes should, in theory, have no involvement with commerce. As will be discussed in connection with the Latin notaries in Chapter 7,94 civil codes are supposed to deal with a person’s (non-commercial) legal status from birth until death, including familial rights and obligations, non-profit contractual obligations, civil associations, liability for torts and not-for-profit acquisition, and the use and disposition (inter vivos and mortis causa) of personal and real property. On the other hand, many civil codes provide default rules, including general principles that are applicable to commercial disputes.
The still present civil-commercial code dualism reflects, albeit opaquely, a momentous but in many cases incomplete evolution in the economic, political and legal history of mankind. This evolution started in societies whose trade was highly restricted and monopolized and where contractual bargaining was lacking in some of its most important legal relationships. Eventually, this evolution led to societies where contractual bargaining was at the center of legal relationships and thus where markets and competition were opened to an increasing number of profit-seeking participants. Thus, when nineteenth-century commercial codes listed the acts of commerce or type of merchants to whom they applied, they took for granted what had been far from evident in medieval societies: Profit-seeking and speculation were inherent in commerce.95
By the time France and Germany faced the task of codifying their private law and especially their law of civil and commercial contracts, the socio-economic transition from a guild to a capitalistic system had seemingly been completed. Commerce was in the hands of capitalists or holders of money or its functional equivalent such as highly 213liquid or trustworthy commercial paper. Not only were parties free to enter all sorts of contracts and free to establish their own prices or fees, but commerce had been institutionalized—starting with peddlers and small retail shops through markets and fairs and all the way up to large importers and exporters, wholesalers, and their banks. The fact that it was institutionalized should not lead the reader to assume that that the codes written in the nineteenth century necessarily reflected how each of these institutional methods of doing business worked in actual practice. Similarly they should lead him to conclude that the Guild mentality was dead and that in some transactgions it was not governing from its grave.
__________________________
1 See infra § 15:3(C)(1)(b).
2 USSR Const. art. 12 (1936), available at http://www.departments.bucknell.edu/russian/const/1936toc.html.
3 See generally Werner Sombart, The Jews and Modern Capitalism (1911). He traced the success of capitalist institutions to the spirit of “acquisitiveness” of Jews and to the Jewish commercial presence in Central and Northern Europe. A controversial historian, Sombart embraced Nazism, which made possible his appointment to the University of Berlin and encouraged his work to be used as proof of Arian superiority over Jewish “acquisitiveness.”
4 See Max Weber, The Protestant Ethic and the Spirit of Capitalism (Routledge Classics 2005) (1930), available at http://xroads.virginia.edu/~HYPER/WEBER/header.html. (This electronic version is available from American Studies at the University of Virginia. Scanned, tagged, copy-edited and published by the University of Virginia American Studies Program 2001.) Charlottesville, Va. (last accessed Aug. 21, 2013). According to Weber, Roman Catholicism allowed the followers of church teachings to be assured of salvation but this was not the case with the Reformation. Protestants looked for signs of their salvation. This search found support in Calvin’s doctrine of predestination, according to which God chooses some people for salvation and others for damnation. Success in one’s accumulation of capital became an indication of having been chosen for salvation. Weber acknowledged that the religious component was but one of many factors in bringing about capitalism, especially in Western nations, including rational (as opposed to what he described as “magical”) thinking, especially as used in science, law and public administration. Id. at ch. 4.
5 Rob Sewell, What is Dialectical Materialism?—A Study Guide with Questions, Extracts and Suggested Reading, In Defence of Marxism (Nov. 2, 2002), http://www.marxist.com/what-is-dialectical-materialism.htm. As seen by Rob Sewell, a contemporary Marxist theoretician, the Marxist view of the world is not only materialist, or pre-determined by economic types of considerations, but also dialectical and “[t]he dialectical method is simply an attempt to understand more clearly our real interdependent world.” Id. He quotes Frederic Engels, Marx’s co-author in the Communist Manifesto, as stating that materialist dialectics “is nothing more than the science of the general laws of motion and development of nature, human society and thought.” Id. As Sewell states, “Put simply, it is the logic of motion.” Id. According to Marxists, therefore, this motion, as propelled by economic forces, inevitably will lead capitalist society toward communism, and with it, to the withering away of the state.
6 See Braudel I, Translator’s Note (preceding the table of contents).
7 In light of this statement, the reader should pay attention to the pricing and cost-cutting consequences of implementing the Soviet and Chinese multi-year plans. See infra chs. 15–19 (for a discussion of central planning in Russia and China). As a visiting lecturer at Karl Marx University in Sophia, Bulgaria in the early nineteen nineties, I remember purchasing a blue gabardine tailored suit with a vest and an extra pair of pants for the equivalent in Bulgarian levas of $12.00. One of my students during the course was an economist at the Bulgarian Central Bank, and I asked him to give me an estimate of the cost of the raw materials and labor involved in producing such a suit. His reply was “considerably more than the levas you paid for it.”
8 See infra § 10:5.
9 See e.g., infra § 16:1.
10 See 9 Encyclopedia Britannica 356 (1973) (describing Indian guilds in existence much earlier than the Common Era).
11 Braudel II, at 314–15.
12 See Karl Marx, I Capital 247–57 (Ben Fowkes trans., Penguin Classics 1990) (1867); see also infra § 15:3(C)(2).
13 See generally Isaías Covarrubias, La economía medieval y la emergencia del capitalismo (2004).
14 Id. at 106. The Hanseatic League (from the term “Hansa” or group of merchants in German) was an alliance of guilds that included not only traders but also carriers to monopolize the maritime trade in the Baltic and Nordic Seas during the Late Middle Ages roughly between the thirteenth and seventeenth centuries. Id. at 81. It was centered in trading towns such as Bruges in the Low Countries and Lubeck and Hamburg in Germany. On the Hanseatic League and its influence in European trade, see Braudel III, at 99–103.
15 See Braudel II, at 315.
16 See generally De Moor, The silent revolution.
17 Braudel II, at 315 (citations omitted).
18 Covarrubias, supra note 13, at 108. They were known as corps de métiers in France, Zünfte in Germany and gremios in Spain. The remnants of these guilds were still apparent in cities such as Ghent (in Belgium) and Florence (in Italy) in 1958 where specialized stores sold woolen textiles produced by the descendants of specialized textile guilds. A few decades later, I taught at the University of Aix-en-Provence and some of the best baguettes in that city were advertised as produced “by the centuries-old guild of the bakers.”
19 10 Encyclopedia Britannica 564 (1973), available at Labour Economics, Encyclopedia Brittanica, http://www.britannica.com/EBchecked/topic/326887/labour-economics/66906/Fixing-rates-of-pay.
20 4 Encyclopedia Britannica 786 (1973).
21 Covarrubias, supra note 13, at 109.
22 Id.
23 Id. at 154.
24 Id.
25 Id.
26 Id. at 108.
27 See generally Elinor Ostrom, Governing the Commons: the evolution of institutions for collective action (1990). See generally De Moor, The silent revolution (on the pricing mechanism for products of the common).
28 See Kozolchyk, Commercialization, at 11.
29 Raymond de Roover, The Concept of the Just Price: Theory and Economic Policy, 18 J. Econ. History 418, 418 (1958) (citation omitted).
30 Id. at 421.
31 Id. at 422.
32 Braudel II, at 315–16 (citations omitted).
33 Id. at 317.
34 Id. (citation omitted).
35 Braudel II, at 317 (citation omitted) (emphasis added).
36 Fairs became indispensable for merchants in different trades to establish international networks for selling, exchanging and payment purposes. Thus, in the weavers’ trade, Braudel describes how by “the sixteenth century, at the end of winter, the weavers would come to the Spanish fairs, to sell [exchange, etc.] their woollen [sic] cloth….” Braudel II, at 319–20.
37 Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations 107 (Penn. State Univ. 2005) (1776) (citation omitted).
38 Mercantilism, Merriam-Webster, http://www.merriam-webster.com/dictionary/mercantilism.
39 See infra § 6:2(D)(1).
40 See supra § 3:2.
41 See infra § 16:4(A) (Soviet) and § 17:4(A) (China).
42 Braudel II, at 317 (citation omitted).
43 See Kozolchyk, Reduction of Poverty, at 732.
44 See infra chs. 8–12.
45 See, e.g., HGB, 1897, Book IV, Maritime Commerce.
46 See infra § 9:2(B) (on the books that had to be kept by certain merchants and not by others). Similarly, see HGB (Goren 1998), at art. 3 (on the exclusion of commercial transactions performed by those who cultivate or exploit farm and forest land).
47 See Note titled “The Codification of Commercial Laws with Special Reference to the French Ordonnance of 1673 and to Accounting,” available at http://sol.cs.trinity.edu/rjensen/readings/history/forrester/a03codes.htm (last visited Oct. 27, 2011), which describes the process of legislative compilation of Ordonnances by the Council of Chambers of Commerce on instruction by Louis XIV. From 1664 on, Minister Colbert had met fortnightly with this Council and particularly with a group of distinguished bankers, lawyers and other government officials. One of them was Jacques Savary, the author of Le Parfait Negociant (1665), a landmark compilation of commercial and admiralty law opinions and commentaries. The final product of this Commission, also known as the Savary Commission, was the 1673 Ordonnance which contained 13 Titles and 122 Articles. They contained rules on remnants of the guild system such as on apprenticeships but also included rules on post-guild subjects such as partnerships and other forms of business associations, bills of exchange and bankruptcy. As pointed out by the anonymous author of this Note, there were some notable omissions that are particularly surprising in light of their importance in present-day commerce: No attention was given to the subject of interest on loans and to long-term contracts. As to the drafting of this Ordonnance, the nameless author of the Note also points out that: “The enquiries made by the Savary commission were not of the Parlement [a judicial tribunal that often heard commercial matters] or other lawyers throughout France nor indeed of prior collections of the law…. Instead questions [or consultations “Pareres”] on acceptable and actual practice were sent out to the main commercial centres of Europe.”
48 Carlton J. H. Hayes, I A Political and Social History of Modern Europe 399 (1916), available at http://www.fullbooks.com/A-Political-and-Social-History-of-Modern9.html.
49 On the life and influence of Colbert, see generally Charles Woolsey Cole, I Colbert and a Century of French Mercantilism (Columbia Univ. Press 6th ed. 2007) (1939).
50 Id.
51 Hayes, supra note 51, at 400 (“French weavers were given careful orders about the quality of the thread, the breadth of the cloth, and the fineness of the weave. It is said that in 1787 the regulations for French manufacturers filled eight volumes in quarto; and other governments, while less thorough, were equally convinced of the wisdom of such a policy.”).
52 Id. at 400.
53 Id. at 400–01.
54 Id. at 401.
55 Id.
56 Braudel II, at 272.
57 Id. at 63–100. The following paragraphs summarize extracts from Braudel II.
58 During my last visit to Paris approximately ten years ago, some of the street markets described by Braudel were still being held twice per week.
59 Braudel II, at 29 (citation omitted).
60 Id.
61 Id.
62 Id. at 29 (citation omitted). As a child growing up in nineteen forties Cuba, I was often instructed by my parents to accompany my grandmother on her bi-weekly purchases in the old Havana street markets. Her method of inspecting the freshness of the chicken did not endear her or me to the sellers of chickens; nonetheless as with the European street markets, the Cuban street market sellers of chicken did, albeit, grudgingly tolerate her close inspections.
63 Id. (citation omitted) (emphasis added). Braudel adds:
In the early days, and often until the nineteenth century, shopkeepers would sell, indiscriminately, goods obtained at first, second or even third hand. The name they were originally given, mercer in English (mercier in French) is revealing: it comes from the Latin merx, mercies, merchandise in general. A French proverb says “A shopkeeper (mercier) sells everything, makes nothing.” And whenever we have records of the stock in such shops, we find the strangest assortment of goods….
Id. at 64.
64 See supra § 2:2(A)(4).
65 See Braudel II, at 62 & 64; see also supra note 12 and accompanying text (discussing Marx’s archetypal capitalistic transaction).
66 Braudel II, at 64 (citations omitted).
67 Id. at 67 (citations omitted).
68 Id. at 73–74.
69 Id. at 68.
70 Id. at 75.
71 Id. at 73–80.
72 See infra § 20:4(B)(1).
73 Braudel II, at 83.
74 Id. at 85 (citation omitted).
75 See Kozolchyk, Negotiable Instruments, at 22–2 (discussing the contemporary law of bills of exchange in a comparative fashion).
76 See supra § 5:9(C).
77 Braudel II, at 90–91.
78 Id. at 91 (citation omitted).
79 See De Roover, Business, Banking and Economic Thought, at 32.
80 Braudel II, at 94–95.
81 Id. at 97.
82 Id. at 100 (citation omitted).
83 Id. (citation omitted) (emphasis added).
84 Id. at 101 (citation omitted).
85 Id. (emphasis added).
86 See supra § 5:9.
87 Braudel II, at 29 (citation omitted).
88 Kozolchyk, Toward a Theory on Law, at 724–25.
89 See supra § 5:13.
90 The information for this table came from Braudel’s preceding description of seventeenth and eighteenth-century commercial practices, as well as from related descriptions of practices for the same period. Wyndham Beawes, Lex Mercatoria Rediviva 352–521 (1772); see also Jacques Savary, 2 Le Parfait Negociant 60–65 (Parere IX) (1742) (describing the setting of prices among merchants in French cities). On the utilization of bills of exchange and other commercial instruments in commercial contracts by non-merchants and merchants, see id. at 12–27.
91 See infra chs. 8–12.
92 Id.
93 This point is also made with an increasing degree of urgency in my following publications: Kozolchyk, Roadmap; Kozolchyk, Commercialization; Kozolchyk, Reduction of Poverty.
94 See infra ch. 7.
95 See, e.g., Cod. Com.(Mex) art. 75(1) (2008), which defined acts of commerce as:
The law considers to be commercial transactions: (I) All purchases, sales and rentals entered into for the purpose of commercial profit, involving maintenance, personality, or merchandise, regardless of their natural state, whether they have been improved or manufactured; (II) The purchase and sale of realty when carried on for commercial speculation….
Mexican Commercial Code (Abraham Eckstein & Enrique Zepeda trans., West Publ’g 1995).
The model for this definition was Article L110–1 of the 1807 French Commercial Code:
The law provides that commercial instruments are:
1° All purchases of chattels in order to resell this, either in kind or after having worked and developed this; 2° All purchases of real property in order to resell this, unless the purchaser has acted in order to construct one or more buildings and to sell these en bloc or site-by-site….
French Commercial Code (English trans.), available at http://195.83.177.9/code/liste.phtml?lang=uk&c=32.