Danish trade monopoly in Iceland
| History of Iceland |
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| File:1630 IJsland Blaeu HR'.jpg |
The Danish–Icelandic Trade Monopoly (Icelandic: Einokunarverslunin) was the monopoly on trade held by Danish merchants in Iceland in the 17th and 18th centuries. Iceland was during this period a territory controlled by the Danish-Norwegian Crown. The origins of the monopoly may be traced to the mercantilist policies of Denmark-Norway, and its aim was to support Danish merchants and Danish trade against the Hanseatic League of Hamburg, increasing the power of the King of Denmark in Iceland. The monopoly was enacted by a set of laws passed in 1602 and lasted until 1786. Trade took place in 20 (later 25) designated trading posts, according to a fixed rate of prices determined by the king. The merchants divided the trading posts between themselves in exchange for a fixed rent. The Westman Islands were rented at a higher price. Danish merchants were forbidden to participate in economic activities in the country other than trade until 1777.[1] From 1602 until 1619, the trading monopoly was tied to the Danish cities of Copenhagen, Malmö (now in Sweden) and Helsingør. From 1620, trade was limited to Copenhagen exclusively.[1]
History
Through the Old Covenant of 1262 the king of Norway had the power to control trade to and from Iceland. With the union of the Danish and Norwegian Crowns in the 14th century, that power was effectively overtaken by the Danish state. However, this power was scarcely excercized until the 17th century.[1] In 1602 all foreign merchants were expulsed from Iceland and only subjects of the Danish-Norwegian Crown were permitted to trade in Iceland. According to the state, this restriction on foreign trade was implemented to help 'stimulate trade and seamanship' within Denmark–Norway. In practice, it was designed to prevent the growing cohort of merchants from Hamburg from renewing their trade privileges, instead handing these trade privileges to Danish and Norwegian merchants, particularly those in Copenhagen, Helsingør, and Malmö. Merchants wishing to trade in Iceland paid rent to the Crown for trade rights.[1] In 1619, restrictions were tightened. There further restrictions are believed to have been in response to the continued presence of German mercantile interests in Iceland, who used Danish merchants as puppets to circumvent the restrictions. To further prevent this, the Crown prohibited the export of Icelandic goods to Hamburg in 1620. The 1619 restrictions mandated that only the Crown's trade company in Copenhagen was allowed to trade with Iceland. The Iceland, Faroe and Northland Company's prices were fixed by the Crown. These prices remained relatively stable, however, between 1684 and 1702 they blatantly favored the Danish merchants. Although prices were fixed, not all goods were purchased by Icelanders with capital. Imported rye, for example, was typically exchanged for domestic goods, often fish products. Danish merchants exploited this bartering system and routinely undervalued Icelandic goods. This was the case with Icelandic cod, for example, which Danish merchants sold in Europe for more than three times the price they paid Icelanders.[1] The Iceland, Faroe and Northland Company collapsed in the 1650s in the fallout of war between Denmark and Sweden. Foreign merchants quickly filled the vacuum left by the trade company. The Crown had difficulty re-establishing its monopoly on trade after the conflict subsided in 1660. After 1660, the crown increased the price of rent for trade rights and four merchants in Copenhagen emerged in control of trade with Iceland.[1] In 1684, changes were again made to trade rules by the crown in an effort to make larger profits. The trade rent was again increased with each port of trade being auctioned off to the highest bidder within Copenhagen. As a result, each port in Iceland came to be controlled by its own merchant. At the same time, the crown changed its fixed prices, increasing the price of goods imported to Iceland, and decreasing the price of goods produced by Icelanders.[1]
References
- ↑ 1.0 1.1 1.2 1.3 1.4 1.5 1.6 Gunnarsson, Gísli (1983). Monopoly Trade and Economic Stagnation: Studies in the Foreign Trade of Iceland 1602–1787. Lund: Studentlitteratur. ISBN 9185611069.
Further reading
- Gunnarsson, Gísli (1983). Monopoly Trade and Economic Stagnation: Studies in the Foreign Trade of Iceland 1602–1787. Lund: Studentlitteratur. ISBN 9185611069.
