The History of the Corporation by Bruce Brown

Chapter Nine

LIKE SILICON in the 20th century and steel in the 19th century, alum was the premier industrial material of the medieval and ancient world. A mordant commonly used in dying cloth, it was crucial to the most commercially important industry of the time.

This had been true since the later days of Rome, when Antioch in Judæa, Patræ in Greece, and Tarsus in Cilicia were among the cities which became so identified with textiles that they lent their names to their products. In the fourth century AD when a Roman adopted the ascetic life, he wore “unbleached Antiochenes.”

Throughout Asia Minor and the rest of the Roman Empire, this highly prized industry was organized into guilds. Called collegia like the ubiquitous Roman social guilds, these corporations were compulsory associations of men practicing the same craft or trade, such as silk weavers (seraii), embroiderers (plumarii), dyers (tinctores) and fullers (fullones).

Although these guilds all died with the fall of Rome, the guild impulse lived on in both Europe and Byzantium. Guilds were mentioned around 600 in the letters of Pope Gregory I, as well as the laws of Charlemagne and Gottschalk's antagonist, Archbishop Hincmar of Reims. There is also the intriguing story told by a tenth century monk concerning a guild of traders at Tiel near the mouth of the Rhine, who pooled their resources and shared the profits, part of which they spent on wild feasts.

The Germanic guilds built their unity around a traditional ceremonial meal, called the gilda, which dates at least to the last days of the Roman Empire. Our word guild is derived from the Middle German geld, or money, which referred to the initiation fee that the guilds charged members. Styling themselves “fraternities of young warriors practicing the cult of heroes,” these guilds also offered mutual protection to their members, as well as assistance with the wergeld, a sort of death tax common in Anglo-Saxon and Germanic law.

Meanwhile, Rome's complex guild system of collegia lived on in Byzantium, where it was codified in The Book of the Prefect during the reign of Leo the Wise (886-912). Here we find a rigid system of trade and craft monopolies where virtually every aspect of commercial endeavor was regulated by the guilds and the state, which tended into one. The power of the guilds in Byzantium can be seen in the fact that virtually everyone in society belonged to one. Even the slaves had their own collegium.

All of Byzantium's guilds were swept away by the fall of the eastern empire, but one important collegium lived on in Rome. This was the Sacred College of Cardinals, the Cardinalium Collegium. Since 1179, the Cardinalium Collegium has served as the electoral college of the papacy, gathering in holy conclave to select the new pope on the death of his predecessor. Although modified in later centuries, the Sacred College remains the oldest surviving collegium in the world.

The History of the Corporation
"Q Morph" from the cover of The History of the Corporation by Bruce Brown

Astonisher.com is pleased to present The History of the Corporation, Volume One by Bruce Brown.

Here is the Table of Contents for excerpts from the entire book, which covers 1,000 years from the birth of the first modern corporation through the the First Dominion of the corporation.

The History of the Corporation
Volume One
by Bruce Brown
Introduction
Ch. 1 Ch. 2 Ch. 3
Ch. 4 Ch. 5 Ch. 6
Ch. 7 Ch. 8 Ch. 9
Ch. 10 Ch. 11 Ch. 12
Afterword

About the Author: Bruce Brown is the author of eight books, including Mountain in the Clouds, an environmental classic, and The Windows 95 Bug Collection, which was put on display in the Smithsonian Institution in Washington, DC.
He has done investigative reporting for the New York Times (the Karen Silkwood story), foreign correspondence for Atlantic Monthly (baseball in Cuba), and book reviews for the Washington Post Book World, as well as script-writing for PBS-TV (The Miracle Planet).
He is also a successful businessman and CEO, having created BugNet and built it into the world’s largest supplier of PC bug fixes before it was acquired by a Fortune 500 company at the height of the dot com boom.

About the Q-morph: to understand modern corporations, you have to understand where they are coming from, literally. All modern for-profit corporations (like Quest, whose blue Q logo is a common sight in 21st century America) are descendants of the oldest surviving corporation, the Benedictine Order of the Catholic Church (which produced the illuminated Q,during the 9th century).

During the twelfth century, European craft guilds emerged in Italy, the Rhineland, the Low Counties, and along the Baltic coast. It is unclear whether they represented a revival of the old Roman guilds, or an outgrowth of the crude German social and trade guilds that persisted in the old Roman territories after the fall of the Western Empire. Scholars have argued this point for centuries; what is clear is that the craft guilds played a major role in Europe's commercial renaissance.

Much more orderly in their habits than the commenda, and thus able to capitalize on markets where modest but steady accumulation paid higher dividends than swashbuckling or daring-do, the guilds were well suited for medieval domestic commerce. The lack of strong central governments in Europe, and the constant threat of theft by nobles and brigands, also made them attractive, for merchants realized that there was strength in numbers that not even the greatest individual merchants of the day could match.

Spreading very quickly throughout western Europe, the guilds reached their apogee during the following century in Florence, the seat of the ancient Etruscan commercial deity, Fortuna. Unlike Genoa and Venice, which preceded it to commercial glory, and were essentially carriers of goods, landlocked Florence developed its commercial empire based on manufacturing, and later banking. It had little use for the commenda or mahonna because they did not address its needs. The new craft guilds, however, were crucial to its success.

In 1248, Florentine commerce was apportioned between seven major guilds, or arti. The most powerful guild in the early days was the Arte di Calimala, literally “Guild of the Evil Street,” a corporation of raw cloth importers and finishers who took their name from a street in Florence formerly known for its prostitutes. By the middle of the fourteenth century it was superseded by the Arte della Lana, or wool guild, whose members imported raw wool and used it to produce many types of fine cloth. Later, when the wool guild began to decline, the silk guild prospered.

Organized like miniature cities within the larger city of Florence, each guild had its own laws, council, assemblies and judges to regulate the activities of its members. Each guild also had its own “trademark,” and distinct corporate identity. The wool guild was identified by a woolly lamb on an azure field, the bankers' guild by golden coins scattered on a scarlet field, and the stoneworkers' guild by a red flag with a hammer and sickle like the 20th century Soviet emblem, along with a saw and chisel.

Unlike medieval mahonna or modern corporations, however, the Florentine guilds served only to coordinate the activities of its members; they did not generally own the means of production or directly manage the manufacturing process. They ensured that quality standards were met and contracts were honored, while allowing members ample latitude for individual operation. Guild membership was relatively open (especially in the early days), but everyone practicing a particular craft was required to belong to the appropriate guild.

Giotto, the master of the pre-Raphaelites, was a member of the wool guild. While painting tender Madonna's, he charged exorbitant sums for the looms he rented to petty craftsmen – twice the going rate according to one source. The great Medici family were members of the Arte del Cambio, or bankers' guild, while Petrarch and Boccaccio were members of the notaries guild. Dante was a member of the physicians guild, but he peopled hell in his Divine Comedy with recognizable members of the bankers guild.

By 1300, Florence was producing some of the choicest fabrics in Europe, including fine imitations of Chinese brocades utilizing cloth of gold and silver. Florentine textiles were especially renown for the vibrancy and delicacy of their dyes. When the rest of Europe had difficulty producing red, Florentine guildsmen used a lichen called oricello to obtain the most striking crimson on the continent. This development was so important that the discoverer took the lichen's name for his own, which still survives 700 years later as Rucellai.

Florence also made early use of various machines. In this respect it was following the lead of the great religious corporations, which pioneered the mechanization of the textile industry. Four decades before the Battle of Hattin, the Templars introduced the first water-powered fulling machine to England. The Benedictine abbey of St. Albans likewise installed fulling machinery, and then required all its tenants to bring their wool to the monastery for processing.

Although the Florentine machinery was often powered only by hand – or at best, the waters of the Arno – this primitive industrial equipment nevertheless represented a major advance, as the wonder of contemporary observers attests. “Any day, a new art may arise,” declared one ecclesiastic, “and the end of invention is not yet in sight.” In 1300, Pope Boniface VIII called Florence the “fifth element,” which created a powerful new commercial alchemy when combined with the four traditional elements (fire, water, air and earth).

By 1338, Florence's annual textile production was estimated at 100,000 pieces of cloth worth perhaps $10 million in modern currency. At that time, Florence boasted approximately 300 textile “factories” employing as many as 30,000 workers. Most of these workers never saw the inside of anything resembling a modern factory, however. They worked at home under a “cottage industry” system, where members of the major guilds supplied the raw materials, paid the worker by the piece, and finally marketed the finished product.

Most of these workers were not members of the great Florentine arti. A portion belonged to one of the 25 lesser guilds that congregated beneath Arte della Lana, but many were prohibited from forming their own guilds. Isolated and tyrannized, these workers were brutally exploited by the major arti. Florence's own Saint Antonio noted that they were paid a pittance, and that was often in debased coin. Members of the major guilds could have their workers' hands cut off they failed to deliver goods at the appointed date, and the only appeal was to courts controlled by the same employers.

The church also played an important part in maintaining the system which exploited the lowly Florentine cloth workers. Georges Renard noted how, at the insistence of the Arte della Lana, local priests read pastoral letters to their flocks three times a year threatening to deny Communion to rebellious spinners. Workers thus cast out could only gain readmittance to the fold by paying large sums to the priests, which provided the church with a significant source of revenue, and made it resistant to reform, although some ecclesiastics denounced the system.

On the other hand, the church made it possible for some of Florence's poor textile workers to circumvent the laws prohibiting them from forming their own guilds. The noted medieval jurist Balthus observed how “the armourers, who cannot make an assembly for their own affairs, make one by going to Santa Maria del Monte,” where they were allowed to form a confraternity. In this way, workers cloaked their secular activities by adopting the protective coloration of the church's corporations, just as coastal traders had done with the commenda.

Religious confraternities were also used by the upper classes to disguise their own secular activities. In several communities, including Cambrai, Avignon, Arles, Digne, St. Omer, Lille, and Arras, successful political revolutions were secretly fomented by burghers meeting under the guise of religious confraternities. These groups were able to throw off the feudal sovereignty of the church or the nobility over their towns, and replace them with a communal government, which was itself a type of guild or corporate republic.

In Florence, no takeover of this sort was necessary because the city had been granted communal status shortly after 1100 by Countess Matilda, the steadfast supporter of the great corporate pope, Hildebrand. A democratic constitution was enacted in 1228, but by 1293 the arti had excluded everyone but powerful merchants from the government. Pope Martin IV, who was deeply in debt to the Arte del Cambio, gave his blessing to the Florentine merchant revolution, and many other cities followed suit. By 1300 Europe was dotted with communal cities and towns.

Recognizing all too well the subversive power of guilds, some communes attempted to outlaw or severely control all other guilds within themselves. At Berwick, all “particular guilds” were abolished, and replaced with a single “guild of the townsmen” in order to achieve “sincere love in relation to one another” by creating one large guild, “firm and friendly.” At Florence, citizens were required to swear that they would not enter into any other political association other than the “good and pure and faithful partnership and company” of the commune.

Such efforts were doomed, of course. Confraternities and other guild-like organizations – such as the Gild of Youth at Bury St. Edmunds – were a constant source of agitation in medieval society, and one of the reasons Florence was famous for its unstable governments – Mutar lo Stato declared an ancient Florentine adage. Every conceivable type of government was tried in Florence: guild rule was followed by worker rule which was followed by theocratic tyranny, and finally fascism, when in 1343 the city fell under the power of the Duke of Athens, Walter de Brienne.

Machiavelli recounts how the new dictator turned on the rich guildsmen who had initially backed him and sought the favor of the masses by executing a member of the Bardi banking firm for murdering a laborer, and then punishing another prominent Florentine for raping a common laborer's daughter...

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The History of the Corporation
by Bruce Brown

 


Key words from the remainder of Chapter 9 of
The History of the Corporation, Volume One

disguised loans
absentee ownership
Machiavelli
1378 Uprising of the Ciompi
cloth industry
Populo di Dio
Gild of Youth
German guilds, called hanse
g
rain
timber
salt
English wool
Russian furs
wax
honey
beer
hops
bacon
rosaries
the hanse of Lübeck
Miriam Beard Vagt
Hanseatic League
Second Hanseatic War in 1370
Humiliati
Ordo Vagorum
Golias
Alberto di Giussano's Company of Death
Pope Alexander III
societas armorum
consorzeria
the university as an institution of higher learning
University of Bologna
University of Paris
universitas, collegia and schola
Oxford University
King Henry II
Oxford's University College
compagnia
com panis
1383
Florentine merchant Francesco Datini
Prato
Compagnia dell' Arte della Lana
societas maris
Grosse Ravensburger Gesellschaft

"The History of the Corporation, Volume One" © Copyright 2003 Bruce Brown
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