For part one go here
For part two go here
Trade, just like during the Late Roman Empire, was the lifeblood of the Byzantine Empire, and its importance kept on escalating with time.
Modern historiography identifies three different types of trade in Pre-Industrial Societies.
Local exchange is classified as short distances under 50km (30 miles) on land routes or one day sailing on sea routes.
Regional exchange is classified as trade on distances between 50 and 300km (30 to 185 miles) on land routes or between two and seven days sailing on sea routes.
Anything longer is classified as long distance trade.
In Justinian’s time and up to the Muslim Wars, trade of all three kinds was largely internal, meaning the bulk of trade was undertaken inside the Empire. As already hinted in the previous installments, although long distance and regional trade dwindled during the Great Crisis of the VII century it didn’t stop altogether: good evidence is provided for example by a VII century shipwreck found near the Sicilian coastline, laden with sculpted marble from the island of Prokonnesos (modern day Marmara) and bound for North Africa or by late VII century pottery originating from Constantinople found in present day Marseilles.
Trade was all-important to supply with Constantinople herself with everything she needed, from luxury goods for the Imperial court to raw materials for her industry. The chief commodity Constantinople needed, however, was food, especially grains. With her huge population, the Great City swallowed prodigious quantities of food each day. The XII century Jewish traveler, Benjamin of Tudela, wrote only Baghdad could compete with her appetite.
Until the Persian Wars, Constantinople largely depended on Egypt for grain shipments: modern historians have estimated the Great City consumed 175000 tons of Egyptian wheat each year, a truly enormous quantity. This wheat was sent by Egypt in lieu of tax payments and required 500 ships working in three rotations to be delivered.
Under Justinian the wheat was shipped by a guild of shipowners (the naukleroi), who provided this service in return for tax exemption. Later the guild was disbanded (to tax the shipowners, not to stimulate a freer economy) and wheat was shipped by paid transporters.
Once Egypt was lost, Constantinople had to find local sources of food.
With time a system developed: fresh fruit and vegetables were grown locally, mostly in the area centered around the Theodosian Walls, oil, wine, dried and salted food was shipped from as far as Crimea, cattle chiefly came from Bithynia and grain from Thrace.
In Thrace the chief grain market was the city of Raidestos, where peasants and landowners sold their grains to customers from Constantinople. It was a completely unregulated market: the Empire levied no taxes on grains (to avoid raising the price too much) and made no attempt to regulate the great market of Raidestos, apparently somehow understanding a free market resulted in lower food prices in Constantinople. The only thing remotely resembling central control was sellers had to pay rent to the local Church, which owned the area where the great wheat market was held.
Under the reign of Michael VII Doukas-Parapinakes (r. 1071-1078), Nikephoritzes, the Logothetes tou genikou (finance minister), desperate for cash, decided the free market of Raidestos had gone on for long enough.
He moved the market outside the city to an area (phoundax ) owned by the State, to which the sellers had to pay rent. All transactions were now subject to a transaction tax (kommerkion). Those who attempted to buy and sell wheat outside the phoundax were to be persecuted.
The results are easy to image: the huge number of small customers from Constantinople was replaced by a few big buyers, usually Court officials or their relatives, who bid the prices low and, due to restricted competition and/or the existence of a cartel, inflated the prices enormously when reselling in Constantinople. In short an oligopsony developed due to State intervention. Michael Attelaiates, a judge in the Great City who also owned agricultural property in Thrace, tells us the inflated food prices drove the price of “almost everything” up, enriched only “a few great merchants and the Emperor” and “made everybody else poorer”.
Once Alexios I Komnenos (r. 1081-1118) took power, one of his first actions was to order the Raidestos phoundax torn down, abolish the kommerkion on wheat and reinstate the previous situation. Alexios may have not be driven by free market principles, but his actions had the desired effect: sellers got higher prices due to the increased number of bidders, food prices in Constantinople plummeted due to competition and the big grain traders (most of them connected to the Komnenoi’s personal and political enemies) were ruined. A free market Byzantine fairy tale with a happy ending in short.
Raidestos remained a completely unregulated free market ever after.
Constantinople, like Baghdad and a very few other great cities of the Ancient World, was quite an extraordinary case, as it was both a huge market for any kind of good and an enormous trading hub.
The only other Byzantine city which came remotely close was Thessalonika, the Empire’s second largest, which was well known throughout the whole Mediterranean for the great yearly fair of St Demetrios. It appears this fair was very specialized, dealing mostly (if not exclusively) in textiles and cattle but was so important as to attract traders from the Peloponnese, Serbia, Syria, Venice and even as far away as Spain.
This leads us to discuss another characteristic of trade in the Ancient World: the so called trading hubs.
The most widespread was the so-called local hub, where producers from a given area gathered to sell their products to traders and buy from them goods they didn’t find locally: a good example is the city of Ochrid, where the production of Epiros was gathered to be sold to merchants which took it to Constantinople, Corinth, Venice and even as far away as Cairo and where locals could purchase those goods they didn’t manufacture or grow locally.
The second type was the regional trading hub, which dealt both with trade in a larger area and where a reasonable quantity of products originating from long distance trading was exchanged. Good examples of this kind of trading hubs are Thessalonika, Amorion and Dyrrachion.
The final type was made up by the cities were long range trade concentrated: these could be huge cities like Constantinople and Baghdad, where goods were sold both for local consumption in large quantities and shorter distance exchange, or highly specialized center like Artze, Cherson and Trebizon. These three cities deserve a particular treatment to better understand the complexity of trade in the Ancient World.
Cherson was the capital of the Byzantine territories in Crimea. Until the X century it was a modest trading hub, mostly supplying Constantinople herself with the agricultural products of Crimea. However at the beginning of the X century, for reasons still debated by historians, two things happened.
First the Rus shifted their preference in trade from the Arabs (through Khazaria) to the Byzantines. The Rus sold furs, high quality weapons and, much more importantly, large numbers of slaves. In return they bought wine, foodstuff and enormous quantities of luxury goods. Since the Rus didn’t start converting to Christianity in significant numbers until the close of the X century, the reasons for this shift in preference are still the source of much debate.
Second, the Caucasian silk route shifted its final point of arrival from Etil on the Caspian Sea to Cherson on the Black Sea. Here Russian archeologists and historians have only started very recently to uncover evidence which promises not only to shed light on this shift but also to rewrite a good part of Central Asian history in that period.
This rapidly turned Cherson from a moderately wealthy provincial capital into a bustling center of activity, where merchants from Kiev met with long distance traders from the Bactriana and Genoa and where prodigious quantities of goods, worth thousands of nomismata, changed hands every day.
Artze and Trebizon were the traditional arrival points of the Southern silk route and major outlets for Persian and Indian Ocean trade. The Empire levied a 10% transaction tax on goods traded there which, for Trebizon alone, was worth 74000 nomismata a year, an incredible sum.
However in the late X century political instability in the Persian Gulf area sent deep shock waves whose effect were felt far afield.
The Fatimid Caliphs of Egypt were quick to seize this opportunity: al-Aziz (r. 975-996) and his son, the great al-Hakim (r. 996-1021), started aggressively promoting Alexandria as a major center of trade, offering incentives to merchants who chose their reign to conduct trade. Merchants were actively encouraged to shift to a more southerly route through the Red Sea, thus avoiding the unstable situation in Persia and the Persian Gulf.
While Artze and Trebizon remained trading hubs, they were eclipsed not only by Alexandria herself, but also by Attaleia, which became the main hub through which goods traded in Alexandria entered Byzantium.
Modern historiography has completely overhauled the concept according to which the Byzantine trader shunned risk and made money thanks to government protection and traded with more dynamic foreigners who brought trade to him.
As said in a previous installment, Byzantine traders grew enormously rich by buying slaves from the Rus in Cherson and reselling them to the Arabs and chroniclers from Fatimid Egypt say in the late X-early XI century the wealthiest and most powerful merchants in Cairo were all Byzantine.
Since the most profitable kind of trade was invariably sea trade, we luckily have original sources which help us shed light on how Byzantine traders operated.
As testified by the huge numbers of wrecks, sea trading was as dangerous as it was profitable. To reflect this risk, the law allowed for much higher interest rates for maritime loans: up to the late X century this interest was 12% maximum but during the reign of Basil II Bulgaroktonos the maximum was increased to 16,67%. Ordinary loans in the same period remained remarkably stable, going from 8 to 8,33%.
Now, it must be understood according to Byzantine law, there was no cap on interest rates in the modern sense, according to which anybody charging anything more than the officially approved rate will be charged with usury and persecuted. These maximums were the values enforceable in court. It meant a creditor had legal protection up to the maximum value: he could charge more but then if the debtor refused to repay the full amount due, he could only hope to recover the official maximum interest through legal means. It appears, however, real loans generally carried interests below these maximum values: throughout most of her history Byzantium had no shortage of capital and it appears capital available for investments literally skyrocketed in the X century, when aristocrats were finally allowed to charge reasonable interests. 
Then why didn’t Byzantium develop into a commercial powerhouse like Venice or The Netherlands? It had a powerful Pre-Industrial economy, a healthy financial system and, starting with the late IX century, it appears there was a serious tendency towards deregulation which favored free trade and private enterprise.
The causes are hotly debated but a few points have been made clear.
The chief cause was the internal crisis which followed the Battle of Manzikert (1071). This battle was not the military disaster previous historians believed it to be (in fact it appears Byzantine losses were quite light): however it set in motion a catastrophic series of events which undermined the solid political basis on which Byzantium had been built.
The civil war which followed had two immediate effects: it emptied the treasury and it destroyed one of Byzantium’s chief assets, its powerful military fleet, which had so effectively protected the Empire from all attackers, be them Arabian Caliphs or Rus princes.
To make up for these losses, the various Emperors turned to unlikely allies: the Italian Merchant Republics. Venetian and Amalfitan traders, as nominal Byzantine subjects, had always operated inside the Empire and the Venetians were considered a force to be reckoned with in the late IX century already (apparently having grown so powerful thanks to silk trade and smuggling). Amalfi quick fell to the margins of history, but Venice was more than ready and willing to lend money and naval assistance.
Of course the Venetians didn’t help Constantinople out of their own good heart: over time they requested (and obtained) a long list of privileges which included permission to trade without restrictions in the tightly controlled goods on the kekolymena list  and a complete exemption on the kommerkion, a privilege later extended to all those who traded directly with the Venetians.
It’s obvious Venice’s astounding success attracted other merchant nations, eager to reap the rewards to be had in Eastern Mediterranean trade.
The Pisans became major player until they were soundly defeated (at the Battle of Meloria in 1284) and completely replaced by the only merchant nation which seriously challenged Venice’s domination: Genoa.
The Genoese were relatively late comers to the Eastern Mediterranean, having only become firmly installed in the wake of the First Crusade but proved to be as formidable as the Venetians and, if possible, even more ruthless.
The main difference between Venice and Genoa is that while the former concentrated on obtaining a dominating position in trade (at least initially), the Genoese were more focused on becoming firmly installed in the Byzantine Empire. They even went as far as building a city of their own, Galata, on the other side of the Golden Horn and started to aggressively market it to traders as an alternative to Constantinople: the Byzantines levied a 10% transaction tax, while the Genoese contented themselves with a paltry 2%.
The Genoese fortunes took a decisive turn for the worse when a direct military attack on Venice herself met with disaster (at the Battle of Chioggia, 1380) and their influence in the Eastern Mediterranean declined steadily as Byzantium was reduced to a third rate power. While Venice had kept all doors open (for example by keeping good relationships with the Muslim rulers of Egypt), Genoa had stacked all her chips on the Christian States: with the balance of power now steadily shifting towards the Muslims, Genoa was doomed.
It’s pretty obvious in such conditions, there was little native Byzantine traders could do little to compete. While they didn’t disappear, most of them became merely junior partners to foreigners, usually the Venetians, due to the benefits given to those of traded with them and the general contempt the Genoese were held in.
It’s curious to note this situation didn’t generate an oligopsony: individual Venetian and Genoese merchants competed fiercely among themselves (thus bidding prices up) and the two Republics hated each other with such a passion any idea of cartelization was completely out of question.
As said before it appears this situation led to a continuous increase in standards of living in Byzantium up to the middle XIV century: Europe had developed quite an enormous appetite for eastern goods and due to conditions of general stability in Asia , trade flowed almost seamlessly from China to Spain.
Byzantium’s armies in the XIII-XIV century may have not been the formidable hosts Nikephoros Phocas and John Tzimisces led to countless victories against the Arabs, the Turks, the Bulgarians and the Rus, but the Empire itself was as a whole better off than it was in that period of continuous territorial expansion.
Next up: monetary policies and conclusions!
 Benjamin of Tudela was a Jewish scholar whose Itinerary, a chronicle of his travels from his hometown in the Kingdom of Navarra to Basra and back, is one of the best sources on the Mediterranean in the XII century.
 Much has been written about the reduction in area of the cities in Persia and Byzantium following the ravages of the wars and the plague. Constantinople herself never recovered fully: just like many other cities the availability of large areas inside the walls allowed for production to be moved inside the city proper. A most famous example is how the Zeuxippos Baths were first abandoned and then turned into an industrial complex.
 Properly speaking a phoundax (from the Arabian funduq) was a well defined area where foreign traders were allowed to reside. In Constantinople herself all merchants (except the Venetians and the Amalfitans) were originally housed in a quarter called Mitata and allowed to reside for no more than three months. Why this name was applied to Raidestos, is still a mystery.
 The question of interest charging in Byzantium is very interesting but, sadly, not especially well documented. We know that up to the late IX century there was strong ideological opposition to interest charging: Basil I (r. 867-886) even went as far as forbidding any interest charging, a situation reversed by his successor, Leo VI The Wise (r. 886-912). Aristocrats, who were supposed to give the “good example”, were subjected to many restrictions in lending (for example they could only charge half as much as the argyropratai) which were only lifted by Basil II Bulgaroktonos.
 The kekolymena was a list containing items whose export was subject to a special (and expensive to obtain) authorization or, more rarely, completely forbidden. The list was subject to continuous alterations but two items remained on it through Byzantium’s history: the highest quality purple silks used by the Emperor and a few selected Court officials and weapons. This has led to many myths about the quality of Byzantine weaponry.
 This period of remarkable political stability in an area known for being up to then incredibly turbulent has been called, not without reason “Pax Mongolica” (1250-1350).