A recent archeological finding tells a story that should be of some interest to the banking community.

During the reign of a particular king, three powerful groups found themselves in political and economic conflict. The merchants, who from the earliest days had enjoyed a somewhat rough-and-tumble, laissez faire existence, were reined in by a royal decree.

The decree circumscribed their operating freedom at the time of an especially severe famine that was blamed partially on some of their excessive practices.

The sorcerers and magicians, longtime foes of the merchants, enjoyed particularly strong influence in the king's court. Over the years, they used this influence to have laws and traditions established to prevent the merchants from selling virtually any commodity that could be used as an ingredient in the practice of magic or in support of the casting of spells.

A Fight for Influence

However, the merchants enjoyed some influence in the court, too, although it was diminished by squabbling among their various groups (large vs. small, crafts vs. guilds, country vs. city, etc.). This influence allowed them to maintain certain small exceptions to the general prohibition against their sale of tools of sorcery.

But, as can be imagined, courtesans who were friends of the magicians continually strove to influence the king to close off those few exemptions.

Following the limitations placed on the merchants, and the establishment of detailed rules defining a merchant as both a buyer and seller of various broad categories of merchandise, another group began to amass large amounts of commercial and political influence.

This third giroup, the importers, had earlier operated mostly in a wholesaling role. They would sell to merchants large lots of goods brought by ship from other lands.

The importers also bulk-purchased manufactured goods from the merchants to export to foreign buyers. As the importers were able to identify and participate in certain highly profitable retail enterprises that fell outside the classifications that would have counted them among the merchants, their wealth, power, and prestige - as well as their arrogance - grew immensely.

Merchants' Woes Grow

Meanwhile, the merchants, as they squabbled among themselves, irritated the king who, on more than one occasion, was heard to express frustration at the babble of their conflicting requests.

To add to their woes, other groups exerted influence which resulted in decrees that further increased the merchants' burdens.

The police were able to have the merchants assigned some of the kingdom's law enforcement duties (with no payment, of course; the new duties were simply regarded as an appropriate service to the crown); the tax collectors similarly prevailed to conscript the merchants' help in gathering in a portion of the king's levy; the artists and musicians were able to require the merchants to allot them rent-free space for their exhibits and concerts; the clergy obtained a decree requiring all prices and quantities to be posted in each of the measures and languages used throughout the land.

Stiff Penalties

Following particularly egregious behavior by one small group of merchants, the enraged king enacted a set of new accounting rules on the entire merchant community. These rules required very detailed tracking and reporting of virtually every part of every transaction that each merchant engaged in, and applied penalties for transgressions that in many cases exceeded those exacted for violent crimes.

The penalties even included forcing a merchant to forfeit all of his or her possessions in certain instances when a customer failed to pay for purchases.

A Mixed Blessing

While the merchants groaned under their persecution, the importers' ability to increase the size and effectiveness of their retail enterprises grew.

As the situation began to worsen, a respite came in the form of several successive devaluations of the kingdom's currency. Each of these left the merchants, by virtue of their relatively large commodity stocks, well ahead of most of the rest of the country, which was then going through hard economic times.

But even this blessing was a mixed one, because pleadings from the merchants for relief typically met with a skeptical response.

Nonetheless, the wise men of the kingdom grew increasingly worried about the unsustainable burden on the merchants and the toll that burden would exact once the successive devaluations ceased.

Deepening Plight

In particular, they worried about the vast areas of their nation that the importers could not or would not serve.

Others in the court also recognized the merchants' plight. Some encouraged the merchants to abandon all of their internecine rivalry so they and their courtesans could speak to the king in unison; others advised the merchants to forge whatever alliances they could with the magicians; still others urged them to try to encourage the king to equalize the competition with the importers.

Many of the merchants themselves took up their own cause, while others believed it better to simply enjoy their current prosperity and bear up under the persecution as best they could.

Moral of the Story

At this point, there is a break in the historical record. We do not know what happened to the merchants or whether their problems contributed to the ultimate fall of the kingdom.

However, it is interesting to observe that, from our 20th century vantage, the merchants' only hope was clear - follow all of the advice to act in concert, build out-of-industry alliances, seek to compete on equal terms with the importers, and make whatever sacrifices were necessary to achieve the political clout needed to halt their decline.

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