The Hanseatic League

Hamburg. The majestic Rathaus imposing at the centre. Just nearby, the leviathan iron canopy of the Haupbahnhof mantling the throng of the Deutsche Bahn trains. Further besides, the deep water Port of Hamburg frilled with brick warehouses lining the angular canals of the Speicherstadt, carving into the city. The nightly indulgences of the Reeperbahn atoned for by the briny early morning fish market. The merciless spire of a Church—St. Michael’s—unwavering at the hand of the wind, funneled through by the Elbe from the icy North Sea.

Strolling through the streets of the city, Mercs and BMW’s are an undistinguished sight. Beyond the novelty of the commonplace of luxury German cars, take a closer look at the letters on the license plates: ‘HH’ short for ‘Hansestadt Hamburg’. And then in the lower right-hand corner of the plate, a crest rimmed with the words ‘Freie und Hansestadt Hamburg’ meaning ‘Free and Hanseatic City of Hamburg’.

This detail would have meant nothing to me had my German friend not gone on to explain that her native city, quite apart from most other significant German cities, possesses a special history. Hamburg’s history is one of affluence, merchants, shipyards, trade and economy. Dating back many hundreds of years, it served as a prominent city of a loose confederacy called the Hanseatic League, which forged its way ahead as a progressive transnational polity, a beacon of cooperation, prosperity and free trade in an otherwise stagnant and backwards medieval Europe.

The Hanseatic League, however, is more than a historical source of pride for native Hamburgers. That simply once upon a time, cities such as Hamburg flourished around the Baltic and North Seas. The idea of inter-city economic and political cooperation does seem like a far-fetched idea in a feudalist, pre-industrialised Europe. Nevertheless, the rise and fall of the Hanseatic League should not be overlooked, especially in today’s increasingly globalised, trade-centred world, and especially with a Europe desperate to remain intact.

The Hanseatic League was an early, if not the earliest, example of a significant effort towards economic cooperation and integration that developed to dominate Northern Europe between the 13th and 15th century. The kernel of the League was trade. Its effect was to advance the interests of merchants in cities as east as Riga, as north as Bergen, and as west as London.

Such characteristics we usually list off as key to such cooperation and integration surfaced over the League’s history, incidentally producing many uncanny parallels with the European Union of today. It was a free trade area, a customs union, a common market, and arguably even a monetary union to some extent, with the north German city of Lübeck instigating a common currency with a few other Hansa cities.

Integration between the Hansa cities happened for a number of reasons. Such cities possessed a significant degree of autonomy, and thus were able to initiate special economic zones where the norms and rules of trade and exchange between multiple coastal economic enclaves were harmonised. Institutionalising such norms and rules lowered transaction costs. It lowered the risk inherent in transport and trade as it allowed fleets of trading ships to travel as a group and stare down the threat of pirates as well as dilute the risk of loss of cargo at sea. Different cities also began to ‘specialise’ in certain commodities such as grain, timber, fur and flax. It ultimately consolidated a network of trust, and gave birth to the first common market. Thus, the League emerged from an understanding of the benefits of trade and exchange.

But the League fell into decline eventually. The rise of more organised nation states in the region, the increasing enmity between the League and the Danish and Swedish Kingdoms, and the comparatively increasing sophistication of trade and commerce in Southern Europe weakened the League’s influence and distracted it from the normal day to day business of trade. Moreover, the League weakened as a result of increasingly burdensome requirements for admission, which began to fragment the confederation, and subsequently reversed the previous advantage of the lowering of transaction costs.

The fact that it acted as a trade bloc in its mature years, much to the disdain of neighbouring realms, and lacked any sophisticated statecraft, meant that ultimately there was little power to contain and organise the confederation. It was unable to resist the greater political and technological changes occurring throughout the rest of Europe.

It is evident that as the League matured, a tension developed between economic and political goals. The objective of the Hanseatic League was unambiguously purely an economic one, but it later suffered from not having any appreciation of the potential benefits of supranational institutions to organise and strengthen the union, and help transition it into the future.

The story of the Hanseatic League is an informative one. It should be remembered also that at the time of the League’s existence, modern banking had not evolved, and the predominant economic thinking would have been a very primitive form of mercantilism, that is, wealth is measured as your stock of bullion rather than as a flow. Now, times have changed.

Sauntering along a pier of the Hamburger Hafen, relishing its sunny scene of passing ships, fishing boats and cruise liners, I am struck by the familiarity of commerce. And I wonder at how trade and exchange seem inexorable.



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