1Ever since Aristotle, the theoretical understanding of market exchange has remained stable in one of its key characteristics: at its core is this well-known duo, a buyer and a seller. To quote Robert Frank and Ben Bernanke’s classic textbook, “the market for any good consists of all the buyers and sellers of that good” (76). The idea of two actors, or more recently two sets of actors, facing each other can be tweaked in a variety of ways: exchange can be asymmetrical —oligopoly and its variants come to mind; a host of external constraints and influences, such as various institutions or incomplete information, can come into play. But the basic act of trading does seem to require some kind of confrontation between the two sides of a transaction. And while the theories trying to clarify the other major dimension of any trade, price determination, have evolved considerably more, especially with Alfred Marshall’s marginalist revolution and the replacement of straightforward supply and demand on a “simple” market by supply and demand curves, more or less influenced by the aforementioned variety of external elements, there again the basic concept of a price still links a buyer or buyers on one hand, and a seller or sellers on the other.

3Several researchers have pointed out the need to develop specific analytical tools when dealing with early modern trade, especially among French economic historians. Jean-Yves Grenier argued that price formation had to be reconceptualized as a cyclical, path-dependent process rather than a simple confrontation of supply and demand curves (Grenier). Guillaume Daudin stressed the highly segmented nature of early modern markets, and the consequences of this segmentation on the mechanics of growth (Daudin). On the investors’ side, Philip T. Hoffman, Gilles Postel-Vinay and Jean-Laurent Rosenthal for Paris (Hoffman et al.), and Naomi Lamoreaux for North America (Lamoreaux) have highlighted the role of information-controlling insiders, in very different contexts. A large body of evidence has also been gathered in the past fifteen years or so on the key role played by insider information, privileged access, and cartellization in the structuration of early modern markets (Marzagalli; Hancock, Oceans of Wine; Trivellato; Lamikiz; Vanneste; Gervais, “Mercantile Credit”; Gervais et al., Merchants and Profit; Gervais, “Facing and Surviving War”; Cutterham)

Exchange in the early modern era: the conundrum of expertise

5The key element of any transaction in the early modern era was the lack of contractual certainty on both sides. Let us start with the buyers, who were faced with a world of highly diversified goods, the quality of which was in most cases extremely difficult to assess with any degree of precision. In the absence of standardization, there was no way to develop specifications precise enough to serve as a basis for a contract; assessing quality was an art. It took Steven L. Kaplan seven full pages to give a mere overview of the devilishly complex process bakers used to assess the quality of such an apparently simple product as flour. They would take into account ideally the soil quality of the farm on which the wheat was grown, or at least the reputation, i.e., more or less, the average quality of the wheat and flour of a given area, a reputation often specific to a few square miles; the time lapsed since the wheat had been harvested and ground, “new” grain being paradoxically less appreciated than wheat stored over the winter, and flour stored for at least a month; the color, texture, shape, density, taste, odor, and moisturizing properties of the grains or the flour bought, which would roughly lead to a classification on a scale of qualities (in eighteenth-century Paris, blé de tête, blé marchand and blé commun for wheat, fleur de farine, farine blanche, gruau fin, gruau gros, recoupettes for flour); the actual properties of the specific batch the baker was using, which combined these various parameters in a unique way and therefore had to be properly taken into account in the bread-making process; and, because of these peculiarities of each batch, the extent to which it would be possible to combine, work and bake the batch they were testing with other batches of various origins, much as winemakers combine grapes, so as to obtain the best final product possible (48-54).

6Only the latest part of this exercise was related to craft skills. For every previous step, the knowledge and experience of the buyer played a crucial role in setting a level of quality, hence a price —no price could be set before solving the quality puzzle. This was all the more true for products for which quality assessment was far less straightforward than in the case of flour. While one could at least taste and touch agricultural produce, manufactured goods offered an even wider range of possibilities for misjudgment. Categorizations, both for purpose of official control by guilds and/or the State, did little to reduce the dizzying number of variations one could be faced with for any given product; a single manufacturer of the luxury Sedan woolen cloth offered nineteen different broad categories of varying fineness and width, each with its own seal guaranteeing quality, and half of them developed into a rainbow of fifty-three different colors —and the list was not even complete, being punctuated as it was with "etc." and "generally of all kinds" (Gayot, Les draps de Sedan 388). But the real issue with manufactures was the extent to which they were open to fraud. Gérard Gayot gave the following list for textile: “cheating on raw materials [;] on the thickness of yarn and on waste [;] on warp quality and number [;] on dyes and finishing [;] on weights and weighing instruments [;] on ells [;] on folding [;] on the selvage which was supposed to help identify the cloth [;] through fake scels [seals;] by selling outside of designated selling places” (“Réflexions sur les fraudes textiles” 511-12 ; translated by the author of this article).

7Buyers thus had to contend with highly complex and largely continuous scales of quality, and also with the fact that even products apparently certified by seals of origin and careful inspections in the manufactures, areas of production in which either local guilds or the royal State enforced common standards, could actually come from production centers set up specifically to churn out poor imitations of this higher-quality cloth, which would then be passed as the genuine product. Bakers and other specialized producers at least could concentrate on a narrow range of products, and hope to acquire the expert knowledge necessary to navigate their commercial universe, but traders could not adopt the same strategy, if only because no reasonable trader in the early modern era would have specialized in a narrow set of products. Risk had to be spread across several markets, given the multiplicity of exogenous shocks on these markets one could expect at any moment – war, loss of a ship, bad weather slowing communications or ruining a crop, unexpected bankruptcies breaking the chain of credit on which all traders depended, etc. (Yamey; Gervais “Mercantile Credit”; Gervais, “Facing and Surviving War”). All traders were faced with the apparently impossible task of mastering dozens, potentially hundreds of product universes, with each one characterized by the same kind of elaborate quality control needs outlined above for wheat flour and Sedan cloth.

8While buying was difficult, selling was hardly simpler. A seller met equally baffling hurdles when trying to determine both dimensions of payment, quality and quantity. Qualitatively, “money” was not an obvious proposition; absent legal tender, one faced a jumble of metallic currencies of dubious contents and values, and anyway most transactions took place on credit. Which credit to allow, to whom, at what interest rate or discount if any, was a difficult decision because any credit entailed the risk of default, or at least of delayed payment, and embroiled its recipient in a complex relationship with the debtor. Most payments were made not in actual metallic currency, but rather in commercial paper: sometimes formal letters of exchange, but much more frequently "notes of hand", written acknowledgments of a debt, which were usually "promissory", i.e. including a due date, at least among traders. These traders’ notes could be endorsed to business relations, then to relations of these relations, so much so that by the mid-Eighteenth century a large merchant dealing on several European places would routinely accept, endorse, and give in payment notes written by people he had never met or dealt with (Baxter, “Credit, Bills, and Bookkeeping”; Rogers; Baxter, “Observations on money”; Gervais, “Mercantile Credit”). These chains of credit were shaky and could easily end up with the note being protested and turning out to be worthless, some more “bad paper” to write off as a loss. A good trader would try to obtain “good” paper, and avoid or at least get a significant discount on more dubious offerings, a process which required just as much expertise – and diplomatic haggling – as product quality assessment. In many ways, means of payment, whether commercial paper or metallic currency, should be seen as one more commodity, just as hard to trade as any other, indeed more so than most.

9What kind of payment one would receive was only part of the problem of the seller, for there was also a question of price. The most important parameter setting the price was the recognition by the buyer that a product was of a certain quality. It could be argued that consumers chose according to the scales of quality and associated scales of prices they had in mind; these scales could be negotiated, but always self-referentially, i.e. based on past scales (Grenier). Prices were cyclically fluctuating, following cycles of production (seasons for crops, end of the winter closure of transatlantic shipping for colonial products, etc.). All kinds of exogenous shocks, as well as variations in supply and demand and long-range trends in the reputations of a product, as with Languedoc cloth in the Levant (Lupo) could also move prices. All this produced at any given time a range of acceptable prices, rather than one set price. The goal of the seller was to get the best possible price for the given level of quality one had managed to get the consumer to validate. In order to do so, the first step was to provide a description of the goods that would be recognized and accepted by the consumer. Once the quality had been agreed upon, however, the result would still be a more or less limited set of acceptable prices, of which the seller would try to obtain the highest. This, too, required expertise in identifying the proper consumer, developing a convincing sales pitch, taking into account the market environment at the time of the sale, and pushing the price up to the limit of what was acceptable for the customer one was pursuing. Obviously, such a process required a thorough knowledge of the local market segment on which the transaction took place, and of both the tastes and the price elasticity characterizing the customer preferences on this particular segment. And again, no single merchant could hope to know so intimately every market segment on which he would want to operate.

• 5 Nathan Appleton. Letter to Samuel Appleton, 17 September 1813. Box 2 “General Correspondence, etc. (...)

I should like however to have some good merchandize for me should they be reasonably low. Say to am(t) of £ 5000 – if you have not already purchased any for you M. Stone is an excellent judge of goods + I should like to have you get him to purchase them if you do not wish to do it yourself [...] It is [also?] necessary that I should give a particular order as I wish the goods to be of the most staple kinds say Cambrics Calicoes shirtings ginghams +c. to am(t) of £ 3000 or 4000 - + 1 or £2000 in staple woolens as in my former letter [pr?] I + T Haigh for goods in their line – I leave it however to your judgement from the state of the market + the prospect of peace or a continuance of the war to purchase or not at al.5

12There are no less than three instances in which Appleton explained that he would receive whatever goods his correspondents in England would choose to send him; and what he suggested was explicitly presented as a mere suggestion to people better placed than him to decide, “excellent judges of goods,” to use his words. It is also important to underline that this kind of broad delegation of power with complete trust in the supplier was not specific to transatlantic exchange, nor to relatively complex manufactured products like cloth imports, as will be illustrated by the following examples, provided by two business correspondents of one Levi Hollingsworth, a Quaker merchant in Philadelphia who dealt both in general merchandize and in flour and colonial products. Both wrote to him in very similar terms:

• 6 Enoch Story [in London]. Letter to Levi Hollingsworth. 19 August 1786. Box 30, Folder 1. Series 1.a (...)

I am of opinion a small speculation in apples and good sorned sweet dear Cyder, say not more than one hundred Barrels of Apples and twenty or thirty Barrels of Cyder. If they could be here on or before the 20(th) december, and delivered in tollerable good order at a reasonable freight say about three shillings p(r) Barrel delivered here and bought with you at a dollar p(r) barrel for apples and three dollars for cyder including Cask, would yield a profit of near 50 p(ct) provided they were of the Best Kind.6

• 7 John T. Ricketts. Letter to Levi Hollingsworth. 1 January 1787. Box 30, Folder 1. Hollingsworth Inc (...)

I know you to be a good Judge of this kind of [ill] and I request that you will please to look out for 2 pairs of 4 feet 4 Inches Diam(r) Burs [iron bars] of the First Quality, one inch more or less in size will meke but little difference if they are good, [ill.] Good Twenty tempered Burs neither too open or too Close, and Tollerable hard. […] They must Be such as I decret if they should Cost [ill.] more then Common, for it there is one Bad Bur in the [ill] I won’t have them, I wish to have them down in as short a Time as possible.7

13Terms such as “good”, “tol[erably] good”, “reasonable”, “the best kind”, “of the first quality”, “good”, “neither too open or too close”, “tolerably hard”, “such as I decree” (with no further specification given save approximate dimensions) are as many testimonies to the extent to which these networks of chained expertise operated cooperatively. Of course each time a transaction went wrong everybody blamed everybody else, and the bickering quite often spilled over into courts of law; and because expert chains were also credit chains and everybody was everybody else’s bank, a failed debtor somewhere could easily bring all his correspondents down into bankruptcy. But the basic leap of faith, blindly trusting an agent, commissioner or correspondent, was both so compulsory and so compelling, and the cost of breaking the link thus created so high, that most participants used legal enforcement of debts only gingerly, and as a last resort. Indeed such falling outs could turn out to be temporary, and two merchants find themselves in litigation one year, and in partnership the next (Mann; Wegener 15).

From expert networks to oligopolies: early modern trade and the search for market control

14None of this so far seems to point to the necessity of a reassessment of exchange itself as a process. Whether buyers, sellers, or intermediaries, all the actors of this process could easily be described as experts negotiating with other experts, final customer excepted maybe, although David Hancock has forcefully argued that the specific consuming expertise of the latter was crucial in generating tastes and orienting production (Hancock, “Female Traders” chap. 5). These “chained” intermediaries determined value through a series of negotiations, possibly within institutionalist and / or conventionalist contexts, building mutual trust along the way. Price formation would still be a function of supply and demand curves. Granted, the expression and combination of these curves would need a more constant collaboration between all participants than on less fragmented and complex markets, but the uncertainty on product quality and the risk of opportunistic behavior could be mitigated through shared experience and commonly accepted scales of risk, priced accordingly – thus there would be no need for any fundamental rethinking of the current post-Marshallian approach. As numerous authors have pointed out over the past two decades, sharing would be encouraged by the family-based structure of early modern societies, which would foster cooperation among kin spread out over several markets; a common religious or national background could also be used to buttress these networks of trust and extend them beyond the family members (see e.g. for North America Henretta; Vickers; for Europe Alfani and Gourdon; Fontaine; Muldrew; and for merchants more specifically, e.g. Hancock, Citizens of the World; Lespagnol; Trivellato). Information and expertise would be readily shared within the group thus created, ensuring a relatively efficient process of market exchange in spite of the external limitations on the latter.

15These two last points however, collaboration and the free circulation of information to mitigate uncertainty, constitute the crux of the matter here, insofar as they led to a separation of each segment of the merchant world into “insiders” and “outsiders.” To start with, merchant intermediaries had no incentive to share too much information with producers; whatever information the merchant wanted the producer to have (such as which quality was wanted) had to be given anyway, and any other information (which market the product was bought for, what the current price was, etc.) could help the producer introduce competition between merchants. Symmetrically, merchants had no incentive to give information to consumers beyond what was strictly necessary for them to buy the product, and which there again would be given for free; again, giving too much information would be courting increased competition. Because expertise brought measurable benefits, keeping it away from producers, competitors and customers alike was a logical strategy. Indeed, there was a structural incentive to hide information for opportunistic and monopolistic purposes, and in the absence of a regulating authority which would be in a position to enforce transparency on each given market segments, there was no reason to expect an outcome other than a very uneven distribution of information, which would become increasingly hard to come by as one moved further away from any given expert network.

16To put it another way, the very need for each merchant to build an expert network on a given market segment (for one product in one specific place in which the product was bought, sold, or transited) generated a very powerful incentive to engage in the constitution of oligopolies and oligopsonies. Collusion between intermediaries was a structural necessity in order to share information and credit. At the same time, unequally distributed information created high barriers to entry, with a high potential for profit. In this context, there was every reason for each trader involved to promote opacity in the markets, since it provided by far the best opportunity to exploit a very strong positional advantage. Conversely, there was no reason at all to include consumers in the expert network, and since there was a positive incentive to exclude producers, the ultimate goal had to be to concentrate expert knowledge in a few hands, all but ensuring that no competitor would be able to enter the market segment thus protected and controlled. The hypothesis proposed here is that early modern merchants turned expert networks into a specific and highly efficient tool of economic exploitation, by “weaponizing” trust and other traditional merchant practices to ensure their collective local control of segmented markets through specialized cartels, or “rings”. Through this local control, they ensured for themselves a dominant economic position on the surrounding social groups, the extent of this dominance at any given time being a direct function of the economic importance of market exchange in the social context in which they operated.

18Two elements are striking here. First, Maxwell planned on (and indeed succeeded in, as shown by a letter a few days later) having every single miller in an area at least forty square miles or so act in concert with him and refuse to sell to Potts. This was already quite a feat, because agriculture and milling in the young United States were dominated by small producers, particularly for such a staple as flour. Coordinating dozens of producers merely through the strength of pre-established networks points to the degree to which the merchant organizers of these networks dominated local economic life. But even more striking is the fact that this cornering of the market was not presented as in any way exceptional. Maxwell’s description of his strategy is formally similar to the famous incident of the dog in one of Conan Doyle’s Sherlock Holmes novels: it is important because it did not take place at all. How he achieved what he achieved went without saying, and thus was necessarily rather mundane and habitual, so much so that “I shall engage all near this place early tomorrow” seemed explanation enough.

21Overall, the fact that transactions could completely cease point to a very narrow group of operators dominating a local market; the presence of multiple, uncoordinated buyers and sellers would have resulted in the price signals standard economic theory posits as the main source for information on “free” markets. Since both producers (the planters) and customers (the French upper classes buying sugar) were effectively kept in the dark, they could do little but follow price and supply movements organized through these oligopolistic / oligopsonistic practices. Conversely, information within these privileged group was much more accessible, and indeed could be quasi-perfect at times, as illustrated by this letter sent in 1786 to Levi Hollingsworth, the Philadelphia merchant, by George Douglass, a business partner in New York:

• 13 G[eorge] Douglass, Letter to Levi Hollingsworth, 22 December 1786. Box 32, File 7. Hollingsworth In (...)

I have about 4000 weight of Green Granada Coffee which I propose shiping you by the Amboy Stage if the weather will permitt next thursday so that the [last?] part of it will be down by the last of the week I expect to Coopers Ferry – this I hope will fetch 22d or 21 with you – as you say there is no Qtys at your market & up to 22d – & none can arrive this same time now by water – it is scarce here I dont think there is so much in the place as I send you – tho’ the consumption is small in this place to what it is with you.13

22At that time, New York and Philadelphia were the two biggest cities in North America – and yet one merchant could seemingly corner the entire market for one of the major colonial crops, and claim to have perfect knowledge of this particular market segment, which for him – but apparently for nobody else – was entirely transparent. The only risks incurred were thus logistical, relating to time and transportation issues. Supply and demand was for all intents and purposes taken care of. And, as in earlier cases, this situation is presented as wholly unremarkable, a common occurrence which did not deserve particular comment.

23Obviously not all merchants were as efficient; if every early modern merchant had become wealthy through riskless speculation, we would have heard about it. But once a certain critical mass of activity and degree of insertion in various monopolistic groups were achieved, risk really seemed to be quite reduced. Douglass was protected from any market fluctuation by his perfect information, and even the weather he alludes to in his letter may not have an impassable obstacle. This is illustrated by another letter from Maxwell to his employer Hollingsworth, sent from the lower Delaware in January 1787:

I expected to have had clear Stores & been with you next week but in vain our Creek is full of Ice. On thursday rec(d) last of B & S Tob◦ which put on board of G Wirt with some flour for Tillay also loaded Gardner for Wilmington & expected theyd have gone down that night but both Crews got in a frolick & lays froze up at Hugils old house. Have this day collected fifteen Teams to take the Tob◦ by land on Monday morning [...] everything seems to go wrong but hope we shall be right in the end.

24The letter was sent on January 13^th, 1787, which was a Saturday. The Delaware had frozen over on Thursday evening; in two days, Maxwell had arranged to hire fifteen carting teams, drivers, draught animals, and carts, and would transfer on them over the week-end the cargo of at least one river ship, a load of tobacco, which would thus be sent on its way to Philadelphia by the following Monday. Given that carts at the time carried up to one ton per team, this was a large, complex operation, and indeed our agent this time underlined its unusual and praiseworthy aspect. But the very fact that he could pull it off does point to the degree of risk control large merchants had achieved, even when dealing with unexpected events like a frozen river.

• 15 Abraham Gradis, Letter to P. Boni [in Hamburg], 22 August 1755. Gradis Correspondence.

For many days Sugars and other articles of America have sold here just as well as at your place, but still there is every sign that if we were unhappy enough to have war as we see which seems unavoidable, that prices will be even better which is why we asked our friend Mr. Jean Leris [from St Domingue] to load [400 Hogsheads] of sugar for your place at your address we assured him that his interests would never be better defended in any other hands than yours [...] the Bill of lading and bills will be as for your account and risk so as to avoid any inconvenience in case of war.15

26Even what has been billed as one of the first world wars between the two superpowers of the time was not enough of a shock to seriously disrupt Gradis’ partnership with his chains of expert correspondents; going through neutral places, the sugar he took charge of on account of the Saint-Domingue planters would still find its way into Europe. The risk-mitigating capabilities of these chains were tested at their utmost during the Revolutionary Wars, which in this respect were quasi-total wars. But even then the most nimble operators managed to maintain at least some of their activities.

27To sum up, managing information and qualities through expert networks created almost ready-made monopolistic positions, which could be used to fend off competitors and extract a surplus profit from hapless producers and consumers. The way these two groups were managed would require another paper as long as this one. But a common theme was that no information on the state of the markets was provided to them, and more often than not they ended up bearing all the risks and reaping few of the profits of the trading chains. Insiders and outsiders were firmly kept separate, and the frontiers between the two groups were defined by access to information (and credit chains, another important component of network solidarity). Of course, precisely because it was absolutely vital to keep the information away from non-cartel members, later historians would have a hard time observing this process at work. The traces we do find are usually small pieces of a larger puzzle, of the kind I have presented here. But my hypothesis is that this almost wholly unobserved process, which underpinned both European merchant expansion and its domination, possibly as a ruling class, throughout much of the early modern era, makes it imperative to differentiate “insider” trading from “outsider” exchange, if only because in the first case, the players were usually acting in concert as groups, and the result should probably be analyzed with the tools of game theory rather than as the result of the confrontation between supply and demand curves.

*

28As I hinted at in the introduction, with the proper theoretical tools, the various ways in which exchange between insiders differed from exchange with outsiders (producers on one hand, customers on the other) in the early modern era and in many areas controlled by European imperial powers could probably be reconceptualized to fit them within the standard narrative of economic transactions, as confrontations of supply and demand curves mediated by prices. For instance, one could requalify the price mediation I described as a game-theoretical interaction between two monopolies, an analysis similar to the ones developed for industrial organization. This reinterpretation would miss the point, however, which is to underline how far the daily operations of an early modern merchant were from our 21st-century ideas on cost, bargaining and price formation. Among many other peculiarities, prices were a negligible topic, because any extra cost could and would be passed to consumers as long as it did not shift the demand curve significantly, and also because negotiations centered, not on which price to ask for, but on which quality to settle upon – the price would be deduced thereafter from customary scales of quality/price pairings, factoring in temporary exogenous shocks, as well as the distribution of profit upon which the various quasi-monopolies involved had managed to find an agreement. Relative cartel power was much more important in this process than any intrinsic characteristic of the good exchanged, and indeed early modern merchants did not compute their “net profit” very often; the maintenance and expansion of their control over various market segments was the real goal, and it could not be measured as a monetary value. Maussian quid-pro-quos were frequent, in which one business partner would provide valuable information, or suffer a short-term loss, in order to reinforce a link which would bring richer rewards in the long run. Investment in networks was highly socialized, and was infinitely more important than the monetary value of the actual invested capital in this or that venture. As a consequence, a simple balance-sheet approach with a bottom-line was utterly inadequate when assessing the value of a given transaction – a lot of other considerations came into play (Gervais, “Why Profit and Loss Didn’t Matter”).

29This was true also to a certain extent with outsiders, but much less so. Mutual interest did not exist, dissimulation was the rule, and actual costs were put forward, in a way which much more closely resembles the theoretical model of a confrontation between supply and demand curves. But precisely, this is not where most of the profit was generated; monopolistic surplus extraction along the trading chain was far more lucrative, and while early modern merchants did pressure their suppliers and gouge their customers, they spent much more time organizing opaque market segments and dividing the spoils of monopoly among themselves. Occasionally, they would also try to consolidate their control over a given activity through a chartered company – a self-governing body politic usually endowed by the sovereign with the privilege of exploiting an exclusive monopoly, locally or regionally. But this happened only in rare cases involving either transcontinental efforts at penetrating closed markets, as with the various East India Companies, or temporary State action to promote a given activity, be it luxury manufactures, banks, or turnpikes and canals. States gave away these charters only gingerly, and for good reason; given the power already vested in any given merchant cartel, turning it into a permanent organization enjoying a State-sanctioned comparative advantage over all its rivals was justified only in very specific circumstances, usually a context of extreme uncertainty which would prevent regular merchant groups from attempting the venture the sovereign wanted launched. And once the path was cleared, these companies tended to wither away as State support faded, except if they could reinvent themselves as de facto voluntary local cartels, as the East India Company succeeded in doing for a time (see e.g. Blair; Freyer; Gervais, “L’entreprise privée comme privilège d’État”; Handlin and Handlin; Hovenkamp; Hurst; Maier; Erikson for the EIC; and for a different reading, ascribing a specific importance to corporations as agents of globalization, see e.g. Pettigrew and Veevers).

30Thus even chartered companies should probably be understood as the most visible and formalized (and also a rather atypical) expression of a much more general drive for merchants to organize collectively together whenever possible, and use the power of the State to further their own commercial expansion and capture new market segments. Indeed it could be argued that the early modern era was characterized by this focus on monopolistic trade – an “Age of Commerce” which was a specific political economy, with merchant intermediaries at its core. This very defined social group, which could be described as a ruling class in the Marxian tradition, used a specific tool, control of market accesses in a world of segmented markets, to ensure their economic domination over the rest of society, and kept doing so from the lower Middle-Ages to the mid-19^th c. or so. Their unique economic strategy was closely linked to European expansion overseas, and to a certain extent prompted it. Certainly, the imperialist ventures launched by European powers from the 15^th century on had all in common to be business ventures as well, very much structured as a grab for an hitherto independent market segment, to be captured and brought under the tight control of a select group of insiders; one could even go back to the Fourth Crusade and the rise of Venice, and argue that the Italian City-States were first and foremost institutionalized and militarized commercial ventures. At any rate, and whichever starting point one chooses, the resulting society was fundamentally different from the feudal order which had dominated Europe earlier, with a much more prominent role for both the State apparatus and the merchant class.

31The other important point is that this trade-based process of profit making was fundamentally different as well from the productivity-based, wage-dominated industrial capitalism that developed from the late 18^th or rather 19^th century on. Speaking again in Marxian terms, we should postulate two different modes of production, or whatever one wants to call them; the industrial revolution was indeed a transition, not just the accomplishment of some ingrained trend towards a more efficient capitalism, and brought about a significant break with earlier profit-making practices as we have described them here. Profit became calculable, and was tracked closely, as were costs and productivity; monopolies and insider trading, which formed the very air earlier traders breathed, rather suddenly became unfair practices which were eventually made illegal (think of the shock a Hollingsworth would experience upon discovering that firm rules prevented his friend Douglass from giving him proprietary information on the coffee market in New York; think of Gradis finding out that he could be dragged into court for having misinformed his investors...). Innovation in the production sphere was the main source of profit, not market segmentation and monopolistic behavior. And of course quality standards have become ubiquitous, and nobody finds strange that they should be made public as much as possible.