From Forum to Futures: 2000 Years of Britain's Commodity Markets

From Forum to Futures: 2000 Years of Britain's Commodity Markets

Author: Courtney, David

Cost: £12.50


From Forum to Futures: 2000 Years of Britain's Commodity Markets

This account of Britain’s commodity markets demonstrates the central role they have played in the development of the trade and wealth of this nation. The fora and emporia of Roman Britain were the first evidence of sophisticated trading that indicated an economy operating above subsistence farming. With the withdrawal of the Romans, so trade declined and economics tended toward a hand-to-mouth existence in the subsequent Dark Ages. From there the importance of markets was proven once more, with the rise from local to regional and eventually specialised markets, bringing regularity, greater reliability and increased scale to trade – a process that benefited both producer and consumer.

This development also marked the revival of Britain’s fortunes and co-evolved with the establishment of the political realm. The subsequent heights to which Britain was to rise was first evident with the growth of the woollen trade (associated with the unique “staple” system), the guilds and the trade in grains, and then new more exotic commodities from overseas.

With the Industrial Revolution, the balance of trade in grain was reversed, and this both supported and was consequent to the emergence of laisser-faire economics and which stood in contrast to the mercantilist era that preceded it. As a major trading nation, Britain innovated in market mechanisms and regulation just as it did in science and technology, and this is most evident in the development of futures trading that began in the Liverpool-based cotton trade. Courtney also details other markets including those based on auctions such as the trade in tea, and which continued into the present age.
Ultimately the sophisticated markets of London, armed with the mechanisms, the people, flexibility and integrity, have established Britain as the home of global markets in a range of goods and services way beyond the traditional commodities, and this role, in itself, is now a vital profitable contribution to the national economy as a whole. This book was first published in 1991, and has been republished in 2004 by Hindsight Books Limited, it differs in that it lacks the original illustrations, but has been updated with an epilogue by the author.


Commodities, trading, coffee, sugar, metals, resources, futures, swaps, auctions, markets, history


Introduction vii

1 Ancient origins 1

2 The Dark Ages 13

3 The Middle Ages 26

4 The Renaissance and the winds of change 49

5 The rise of free market economics 65

6 Forward into futures 80

Epilogue 102

Bibliography 105

Index 106


I had never considered that I would someday become involved in the commodity markets, but it happened. Upon the announcement of this major career move, many of my friends and family replied 'Marvellous, aren't they a part of the Stock Exchange or something?' No doubt in my naivety I replied in the affirmative, but was nevertheless eager to get on with the job and to learn the tools of my chosen trade. To my astonishment, I found there was far more to the process of buying and selling commodities than first met the eye. Indeed, the intricacies of the commodities and their related futures markets stimulated a kind of curiosity in me, which I wanted to satisfy. Some time later, by accident, perhaps more than merit, I agreed to write a book on some of the basics of trading commodities and published 'An Investor's Guide to the Commodity Futures Markets' to help those first approaching these markets to answer questions about many of the rudiments involved. It was whilst I was compiling the chapter outlining a brief history of the commodity markets that I discovered a complete lack of specialist material on the subject. I decided at that point that I would attempt to reply to my continuing curiosity and, perhaps, fill a literary void in the process.

To my surprise and delight, I found references to markets and their practices peppered in an astonishing variety of history books. Political, economic, social, architectural and religious works each contained references to markets and their practices. It was not long therefore, before I began to realise just how important commodity markets were.

From Forum to Futures: 2000 Years of Britain's Commodity Markets

What follows in this book is, in effect, a condensation of all the various references in chronological order. It does not attempt to analyse the preponderance of the trade in commodities themselves; rather, it attempts to explain how the markets have responded to myriad influences and developed into the markets we recognise today. In so doing I found it quite astounding how complex, yet simple, they are. But perhaps the real strength and the reason for the continued existence of commodity markets, apart from their extreme efficiency, is their ability to adapt. Markets, through the direction of experienced and wise practitioners, have undergone remarkable transformations.

They have, in the space of two thousand years, developed from local, community trysts into regional fora; national, centralised exchanges; and have matured into international, if not global, affairs. At much the same time, their practices have come a long way from the barter and exchange system prevalent in their early days. For over the same period of time, commodity markets have evolved through forwards, auctions, options, swaps and futures into markets of extraordinary depth and variety.

I hope that now, asked the same question 'aren't commodity markets a part of the Stock Exchange?' I will not be quite as naive in my reply. For I have discovered many things about commodity markets. And one thing is certain: without the commodity markets we would not have a need for a Stock Market. For in turn, much of the commercial fabric of Britain was woven with the threads from the commodity trades. And so this is true, in large part at least, with regard to the banking and insurance institutions we recognise today. In many ways, therefore, the commodity markets are 'the grand old men' of commerce. So it is my hope that this book will encourage the respect for the commodity markets which they so richly deserve.

From Forum to Futures: 2000 Years of Britain's Commodity Markets

The author wishes to acknowledge the contributions and assistance of the many people who have made this book possible. Among those who justly deserve special mention are Dr Alan Bowman of Christchurch College, Oxford; and Mr James Bolton of Queen Mary College, London, who each provided many suggestions and shared their experience and expertise. However, certain interpretations of facts expressed within the text do not necessarily correspond identically to those of the afore-mentioned.

A measure of considerable indebtedness is furthermore due to The Tea Council Ltd and The Liverpool Cotton Association Ltd.

Lastly, the author wishes to thank his wife, Sally, and his family for their unending support and encouragement.



Forward into Futures

The nineteenth century continued very much as the eighteenth had dictated, characterised by rising population, greater dependence on industrial production, increasing contact with the New World, and unprecedented demand for basic raw materials and commodities. Individually, these elements created numerous commercial opportunities, whereas collectively they strained the tissues of industry and commerce. The consequence was the introduction and proliferation of a panoply of mechanical devices to improve productive efficiency and an equally vital reaction by commodity merchants and exchanges to the requirements of a more international trade and unremitting industrialism. But, if the institution of forward trading was barometric of the underlying economic climate during the eighteenth century, the establishment and formalisation of futures trading and markets during the nineteenth century was in every respect analogous, and addressed the very nature and extent of the prevailing problems.

From Forum to Futures: 2000 Years of Britain's Commodity Markets

Their inception was undoubtedly assisted by the invention of the electric telegraph in 1847, which revolutionised man's ability to communicate at hitherto impossible speeds and, thus, disseminate information and conduct negotiations almost immediately. In so doing, it eliminated the need to correspond by post or the necessity of physical transference of documents, instructions and information. Perhaps, however, the most beneficial consequence of telegraphic communications was the establishment of central market places which focused the interests of the commodity merchants onto major international fora, whereas previously they had practised at numerous regional centres.

Central markets improved the alliance between commodity producers and consumers; buyers and sellers were in closer contact with one another and, thus, able to monitor prices and supplies at the various provincial market places on a far more timely basis. The collective sensitivity of merchants to price fluctuations accelerated their response to localised shortage or abundance. Accordingly, traders were far better positioned to identify niches in markets, and act decisively. In so doing, they were able to rectify prevailing conditions, and stabilise both prices and supply as a result. Effective communication between markets and amongst traders was paramount, and undoubtedly the invention of the telephone further reduced periods of market price aberrations and thus precipitated and encouraged market unity on a national and thereafter on a global scale.

Publisher: Hindsight Books Date Published: 2004 Available Formats: Softover (115pp., 5.5" x 8.", 175g.)ISBN: 0954156730