Bristol’s experiments with various forms of company organization during the century preceding 1552 demonstrate the desire of many of its overseas merchants for some kind of common institution within which to conduct their individual commercial activities. What they sought was not a joint-stock company that would carry on business as a single firm, but a corporate status through which commerce might be regulated, competition limited, and exclusive trading rights enjoyed. The benefits from such an organization would have been large under any economic conditions, but they were a particular boon in times of economic distress, since membership in a company would assist merchants in securing credit and pooling resources under tight financial conditions, in establishing common policies to address mutual problems, and in seeking royal privileges and governmental protection to cope with crises. Finally, by limiting participation in foreign commerce, a company could insure its members a larger share of the reduced profits. Hence the incentives for creating a formal organization of merchants multiplied when trade was in decline, as was the case in the years immediately preceding Edward VI’s grant of letters patent in 1552.

We already know that the first half of the sixteenth century was one of the worst periods in Bristol’s commercial history, with trade receding on nearly every front. In the early 1550s, this general malaise combined with two more immediate crises that deepened the city’s economic troubles. The first and more significant of these crises concerned the state of the Spanish market, already crucial to Bristol’s prosperity. Just at the beginning of the 1550s Spain entered a period of serious economic difficulty, as commerce to and from her American colonies fell victim in 1549 or 1550 to what Pierre Chaunu has called a “grande récession intercyclique” that began with a rapid decline and lasted for the remainder of the decade. As Chaunu describes it, this recession resulted from the extraordinary conditions under which trans-Atlantic commerce proceeded in the sixteenth century, conditions affected by the vast distances that had to be covered and the consequent high costs of transportation.^[19]

In the early period of Spanish colonial enterprise, times of expansion such as occurred in the years preceding 1550 generally encouraged the export of such high-priced wares as English cloth, since these made the most efficient and profitable use of the available shipping. As a result, during expansions stocks of relatively cheap and bulky goods built up in Spain, while shipping accumulated in American waters waiting for lucrative cargoes to bring home. Eventually, however, serious scarcities of shipping developed in the Iberian ports, and Spanish merchants, already anxious to recover at least some of their investment from abroad, brought home their vessels, often with inadequate cargoes, to cope with the growing inventories of less profitable wares in their storehouses. This flood of returning ships then caused the prices of American commodities to collapse, with a consequent loss of profits, setting off a recession, first among Spain’s own merchants and later among foreigners like the Bristolians, whose prosperity depended on the buoyancy of the Iberian markets. The recession in Spain during the 1550s was exactly of this type. With increased shipping available in Spain in 1549, freight charges dropped, and it became profitable to reduce the heavy inventories of cheaper and bulkier goods that had been growing in Andalusia during the expansion of the 1540s. Demand declined for the wares that the English and other non-Spaniards usually sold in Spain. In addition, foreign shipping, which had been attracted to Spain by inflated freight charges, was no longer required in the same quantities as before. Hence foreigners engaged in colonial commerce—such as the Bristolians based in Seville, San Lucar, and Cádiz, who operated in the American market by license—felt the effects of the recession before most other merchants and tradesmen.^[20]

Within a short time the recession touched nearly everyone trading in Spain, whether or not they were directly dependent on colonial commerce. By the mid-sixteenth century, the American trade had become systematically integrated into the Spanish, and particularly the Andalusian, economy, causing Spanish prices to fluctuate with changes in this traffic. As the flood of ships returning in the early 1550s created an incentive to export, old stocks were cleared out. By 1552 the prices of domestic Spanish commodities began a steep rise. In Spain at large, prices increased by nearly 3 percent between 1551 and 1552, while in the Guadalquivir valley, where the Bristolians did the majority of their business, the rise was more on the order of 12 percent.^[21] The prices Bristolians paid increased especially for certain key trading items that they regularly bought in Spain. Between 1551 and 1552, olive oil rose by 8.5 percent, sugar by 10.5 percent, and pepper by more than 22 percent, while wine, which had been relatively cheap throughout the 1540s, jumped by almost 43 percent, to a new plateau at which it would remain throughout the 1550s.^[22] These facts meant that in 1552 Bristolians and other foreigners frequenting Spanish ports were faced with inflated prices both on the goods they imported from Spain and on the victuals and other goods they needed to fit out their ships in Spanish harbors. Although it is possible that their own goods also rose in price during this year, we have already learned that they earned very small profits, if any, from sales of these exports. Moreover, the general condition of the Spanish economy suggests that any increase in the price of English wares in Spain would have compensated only partially for their extra outlays.^[23]

All in all, the merchants of Bristol were confronted by extremely worrisome circumstances in Spain. By 1552 the more experienced among them would have known that they were in the midst of an extremely unstable and dangerous season. They were bound to have felt anxiety about their long-term prospects and the correct commercial strategy to follow. These fears would only have been compounded by the troubles into which the English economy itself descended in the early 1550s as a result of the chaotic state of monetary policy. From 1542 to 1551, English coinage had undergone a series of debasements that doubled or more than doubled the amount of currency in circulation. This policy undoubtedly contributed in some degree to the inflation and falling exchange rates that England experienced in the 1540s and early 1550s, though recent scholarship has shown that the correlations among the value of English coin, domestic prices, and foreign exchange rates are very rough. This same debasement of the currency also seems to have promoted the expansion of English cloth exports in this period, but in a significant way only during 1549–1551. The sharp rise in cloth exports from Bristol in this two-year period supports this conclusion. In April 1551, however, Edward VI’s council began a policy of “calling down” or deflating the currency. This course was followed very haphazardly for almost a year until, in March 1552, the metal content of the coinage was once again restored to its pre-debasement level. The effect of this new policy was to reduce by half the existing circulating medium, thereby severely tightening credit.^[24]

The initial effect of the announced calling-down of the currency in April 1551 was just the reverse of what was intended, which was to cool the overheated economy and consequently lower domestic prices. But prices rose rather than fell. The currency exchanges appeared in disarray and were at most only intermittently in operation. The main cause was that the government proceeded with the revaluation using a series of half-measures, which themselves were undermined by confusions and missteps. For example, it announced in April 1551 that in four months English currency would be worth 25 percent less than at present, but in the interval it issued the most debased currency of the period. The English appropriately began to hoard goods, to settle their outstanding debts in the newly debased coin, and to buy whatever was available on the open market. At the same time, foreigners ceased or nearly ceased all exchange transactions until the dust settled. Matters were only made worse when announcement of a further 25 percent revaluation was made in August and new coins were issued twice before the following March. Since no one could be certain what course events would take, the adverse effects of this initial calling-down of the currency in the spring and summer of 1551 lingered well into 1552.^[25]

As might be expected, English cloth exports dropped dramatically in 1552. But the depression was probably felt more severely in London, where trade was already tied more closely to the exchange markets, than in the outports, where local merchants might have been able to profit from London’s difficulties.^[26] In Bristol, however, disarray in the Spanish economy almost certainly wiped away any such short-term advantage.^[27] Whatever the immediate effect of the recoinage on Bristol’s trade, its merchants must have become extremely wary of conditions, unwilling perhaps to forego the profits that might be won during this unsettled period, yet fearful of committing their wealth to new business while prices, currency values, and exchange rates fluctuated so wildly. Their instincts would have warned them to be cautious and draw in their investments, but they must also have found it necessary to continue to trade at or near their usual levels just to stay even with inflation. In such times, the hope of security often supplants the desire for profits as the primary economic goal.

The crisis of the Hispano-American trade and the great debasement and recoinage set the background for the Bristol merchants’ petition to the Crown for a chartered company. Events in another quarter gave added urgency to the situation and made such an effort all the more essential. The dissolution of the chantries had destroyed St. Clement’s Chapel, the last vestige of their common efforts. In December 1550, moreover, the building and its lands had been ceded to Sir Ralph Sadler and Laurence Winnington, who quickly made a bargain with the city government for its use, thereby eliminating the direct control over the property previously exercised by the merchants.^[28] Whatever remnants of commercial organization had survived in Bristol into the mid-sixteenth century were no more. For those merchants who looked to an institutionalized fellowship among themselves to limit competition and provide mutual aid and protection, a new company was now required.