Thorstein Veblen
AN EARLY EXPERIMENT IN TRUSTS.

The Journal of Political Economy, Vol. 12, No. 2. (Mar., 1904), pp. 270-279.
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[270] According to Much,(1*) following in the main the views of Penka, Wilser, 
De LaPouge, Sophus Müller, Andreas Hansen, and other spokesmen of the later 
theories touching Aryan origins, the area of characterization of the West-
European culture, as well as of that dolicho-blond racial stock that bears this 
culture, is the region bordering on the North Sea and the Baltic, and its 
center of diffusion is to be sought on the southern shores of the Baltic. This 
region is in [271] a manner, then, the primary focus of that culture of 
enterprise that has reshaped the scheme of life for mankind during the Christian 
era. Its spirit of enterprise and adventure has carried this race to a degree of 
material success that is without example in history, whether in point of the 
extent or of die scope of its achievements. Up to the present the culminating 
achievement of this enterprise is dominion in business, and its most finished 
instrument is the quasi-voluntary coalition of forces known as a Trust.
In its method and outward form this enterprise of the Indo-germanic racial stock 
has varied with the passage of time and the change of circumstances; but in its 
spirit and objective end it has maintained a singularly consistent character 
through all the mutations of name and external circumstance that have passed 
over it in the course of history.
In the earlier, more elemental expression this enterprise takes the form of 
raiding, by land and sea. A shrewd interpretation might, without particular 
violence to the faces, find a coalition of forces of the kind which is later 
known as a Trust in the Barbarian raids spoken of as the Völkerwanderung. Such 
an interpretation would seem remote, however, and not particularly apt. The 
beginnings of a bona fide trust enterprise are of a more businesslike character 
and have left a record more amenable to the tests of accountancy. A trust, as 
that term is colloquially understand, is a business organization.
Now, the line of enterprise, of indigenous growth in the north-European cultural 
region, which first falls into settled shape as an orderly, organized business 
is the traffic of those seafaring men of the North known to fame as die Vikings. 
And it is in this traffic, so far as the records show, that a trust, with all 
essential features, is first organized. The term "viking" covers, somewhat 
euphemistically, two main facts: piracy and slave-trade. Without both of these 
lines of business the traffic could not be maintained in the long run; and both, 
but more particularly the latter, presume, as an indispensable condition to 
their successful prosecution, a regular market and an assured demand for the 
output. It is a traffic in which, in order to get the best results, a relatively 
large initial investment must be sunk, and the period of turn-over - the "period 
of production" - is necessarily of some duration; the risk is also considerable. 
Further, certain technological prerequisites must be met, in the way 
particularly of shipbuilding, navigation, and the manu-[272] facture of weapons; 
an adequate accumulation of capital goods must be had, coupled with a sagacious 
spirit of adventure; there must also be an available supply of labor. There 
appears to have been a concurrence of all these circumstances, together with 
favorable market conditions, in the south-Baltic region front about the sixth 
century onward; the circumstances apparently growing gradually move favorable 
through the succeeding four centuries.
The viking trade appears to have grown up gradually on the Baltic seaboard, as 
well as in the Sound country and throughout the fjord region of Norway, as a by-
occupation of the farming population. Its beginnings are earlier than any 
records, so that the earliest traditions speak of it as an institution well 
understood and fully legitimate. The well-to-do freehold farmers, including some 
who laid claim to the rank of jarl, seem to have found it an agreeable and 
honorable diversion, as well as a lucrative employment for their surplus wealth 
and labor supply. From such sporadic and occasional beginnings it passed 
presently into an independently organized and self-sustained line of business 
enterprise, and in the course of time it attained a settled business routine and 
a defined code of professional ethics. Syndication, of a loose form, had begun 
as early as the oldest accounts extant, but it is evident from the way in which 
the matter is spoken of that combination had not at that date - say, about the 
beginning of the ninth century - long been the common practice. It was not then 
a matter of course. The early combinations; were relatively small and transient. 
They took the form of "gentlemen's agreements," pools, working arrangements, 
division of territory, etc., rather than hard and fast syndicates. In those 
early days a combine would be formed for a season between two or more 
capitalist-undertakers, for the most part employing their own capital only, 
without recourse to credit; although credit arrangements occur quite early, but 
are not very common in the earlier recorded phases of the trade. Such a loose 
combine, say about the middle of the ninth century, might comprise from two to a 
dozen boats. What may be called the normal unit in the trade at that time was a 
boat of perhaps thirty tons' burden, with an effective crew of some forty men. 
Boats and crews gradually increase both in size and efficiency for a century and 
a half after that time.
Syndication, of an increasingly those texture and increasingly permanent effect, 
appears to have rapidly grown in favor through the nineth and tenth centuries. The 
reasons for this movement of [273] coalition are plain. The volume of the trade, 
as well as its territorial extension, increased uninterruptedly. The technique 
of the trade was gradually improved, and the equipment and management were 
improved and reduced to standard forms. The tonnage employed at any given time 
can, of course, not be ascertained with anything like a confident approximation; 
but its steady increase is unmistakable. Year by year the boats and crews 
increase in average size as well as in number, until by the middle of the tenth 
century the number of men and ships engaged, as well as the volume of capital 
invested in the trade, are probably larger than the corresponding figures for 
any other form of lucrative enterprise at that time. It is, at that time, 
altogether the best organized line of enterprise in the West-European region in 
respect of its business management, and the most efficient and progressive in 
respect of its equipment and technology. At a conservative guess, the aggregate 
number of ships engaged about the middle of the tenth century must have 
appreciably exceeded six hundred, and near have reached one thousand; with crews 
which had also grown gradually larger until they may by this time have averaged 
seventy or eighty men. There was consequently what would in modern phrase be 
called an "overproduction" of piratical craft - overinvestment in the viking 
trade and consequent cut-throat competition. The various conditions came into 
violent conflict, and many of them went under, with great resultant loss of 
capital, impoverishment of well-to-do families, hardship and demoralization of 
the entire trade.
Added to these untoward conditions within the trade was the open disfavor of the 
crown, in each of the three Scandinavian kingdoms. The traffic had long passed 
out of the stage at which it had offered a lucrative opening for farmers' sons 
who were tired of the farm and eager to find excitement, reputation, and 
creature comforts in that wider human contact and busier life for which the 
tedium of the farm had sharpened their appetites. The larger capitalists alone 
could succeed as organizers or directors of a viking concern under the changed 
conditions. The common run of well-to-do farmers had neither the tangible assets 
nor the "good-will" requisite to the successful promotion of a new company of 
freebooters. At the best, their sons could enter the business only as employees 
and with but a very uncertain outlook to speedy promotion to an executive 
position. On the other hand, as the trade became better organized in stronger 
hands, with a larger equipment, [274] and as the competition within the trade 
grew more severe, the blackmail from which much of the profits of the trade was 
drawn grew more excessive and more uncertain both as to its amount and as to the 
manner and incidents with which it was levied. As competition grew severe and 
the small vikings practically disappeared, and as the demoralization that goes 
with cut-throat competition set in, the livelihood of the common people, at 
whose expense the vikings lived, grew progressively more precarious, and even 
their domestic peace and household industry grew insecure. Popular sentiment was 
running strongly against the whole traffic. So much so, indeed, as to threaten 
the tenure of courts and sovereigns if the popular hardship incident to the 
continuance of the trade were not abated.
The politicians, therefore, made a strenuous show of effort to regulate, or even 
to repress, the viking organizations. Outright and indiscriminate repression was 
scarcely a feasible remedy, certainly not an agreeable one. The viking companies 
were a source of strength to the country, both in that they might be drawn on 
for support in case of war and in that they brought funds into the country. The 
remedy to which the politicians turned, by preference, therefore, was a 
regulation of the companies in such a manner as to let "the foreigner pay the 
tax," to adapt a modern phrase. If the freebooters of a given state could be 
induced, by stringent regulations, to prey upon the people of the neighboring 
states, and particularly if they worked at cross-purposes with similar companies 
of freebooters domiciled in such neighboring states, it was then plain 
to the sagacious politicians of those days that the companies might be more of a 
blessing than a curse. On trial it was found that this policy of control gave at 
the best but very dubious results, and consequently the repressive hand of the 
authorities perforce fell with increasingly rigorous pressure on the viking 
organizations, particularly on the smaller ones which were scarcely of national 
importance. The competition in the trade was too severe to admit of a consistent 
avoidance of excesses and irregularities on the part of the vikings, and these 
irregularities obliged the authorities to interfere.
Under these circumstances it is plain that no viking combine could hope to 
prosper in the long run unless it were strong enough to take an international 
position and to maintain a practical monopoly of the trade. "International" in 
these premises means within the Scandinavian countries. In the days of its 
finest development the viking trade was domiciled in the Scandinavian countries, 
almost [275] exclusively. This means the two Scandinavian peninsulas, with 
Iceland, the Faroes, Orkneys, Hebrides, and the Scandinavian portions of 
Scotland. To this, for completeness of statement, is to be added a stretch of 
Wendish seaboard on the south of the Baltic and a negligible patch of German 
territory. The trade, so far as regards its home offices, to use a modern 
phrase, gathered in the main about two chief centers: the Orkneys and the south 
end of the Baltic. Outlying regions, such as the Norwegian fjord country and the 
Hebrides, are by no means negligible, but the two regions named above are after 
all the chief seats of the traffic; and of these two centers the Baltic - 
chiefly Danish - region is in many respects the more notable. Its viking traffic 
is better, more regularly organized, is carried on with a more evident sense of 
a solidarity of interests and a more consistent view to a long-term prosperity. 
As one might say, looking at the matter from the modern standpoint, it has more 
of a look of stability and conservative management, such as belongs to an 
investment business, and has less of a speculative air, than the trade that 
centers in the western isles.
Perhaps it is just on this account, because of its greater stability of 
interests and more conservative animus, that the traffic of this region responds 
with greater alacrity to the pressure of excessive competition and political 
interference, and so enters on a policy of larger and closer coalition. It may 
be added that many of the great captains of adventure in this region are men of 
good family and substantial standing in the community. As may often happen in a 
like conjuncture, when the irksomeness of this competitive situation in the 
Baltic was fast becoming intolerable, there arose a man of far-seeing sagacity 
and settled principles, of executive ability and businesslike integrity, who saw 
the needs of the hour and the available remedy, and who saw at the same glance 
his own opportunity of gain. This man was Palnatoki, the descendant of an 
honorable line of country gentlemen in the island of Funen, whose family had 
from time immemorial borne an active and prudent part in the trade, and had been 
well seen at court and in society. He was a man of mature experience, with a 
large investment in the traffic, and with a body of "good-will" that gave him 
perhaps his most decisive advantage.
During the reign of Harald Gormsson, about the middle of the tenth century, 
Palnatoki seems to have cast about for a basis on which to promote an 
international coalition of vikings, such as would [276] put an end no headlong 
competition in the trade and would at the same time be placed above the 
accidents of national politics. To this end it was necessary to find a neutral 
ground on which to establish the home office of the concern. Such a mediaeval-
Scandinavian New Jersey was the Wendish kingdom at the south of the Baltic.
Jómsborg (on the island of Wollin, at the mouth of the Oder) seems to have been 
a resort of vikings before Palnatoki organized his company there and 
strengthened the harbor, which may have been fortified by three who held it 
before him. Here the new company was incorporated under a special franchise from 
the Wendish crown, with the stipulation that it was to do business only outside 
the Wendish territories. The tangible assets of the corporation were the harbor 
and fortified town of Jómsborg, together with the ships and other equipment of 
such vikings as were admitted to fellowship; its intangible assets were its 
franchise and the good-will of the promoter and the underlying companies. Its 
by-laws were very strict, both as to the discipline of the personnel and as to 
the distribution of earnings. The promoter, who was the first president of the 
corporation, was given extreme powers for the enforcement of the by-laws, and 
throughout his long incumbency of office be exercised his powers with the 
greatest discretion and with a most salutary effect.
This neutral, international corporation of piracy rapidly won a great prestige. 
In modern phrase, its intangible assets grew rapidly larger. Backed by the 
competitive pressure which the new corporation was able to bring upon the 
smaller companies and syndicates, this prestige, of the Jómsvikings; brought a 
steady run of applications for admission into the trust. The trust's policy was 
substantially the same as has since become familiar in other lines of 
enterprise, with the difference that in those early days the competitive 
struggle took a less sophisticated form. Outstanding syndicates and private 
firms were given the alternative of submission to the trust's terms or 
retirement from the traffic. There was great hardship among the outstanding 
concerns, especially among that large proportion of them that were unable to 
meet the scale of requirements imposed on applicants for admission into the 
trust. The qualifications both as to equipment and personnel were extremely 
strict, so that a large percentage of the applicants were excluded; and the 
unfortunates who failed of admission found themselves in a doubtful position 
that grew more precarious with every year that [277] passed. Practically such 
concerns were either frozen out of the business or forced into a liquidation 
which permanently wound up their affairs and terminated their corporate 
existence.
The accounts extant are of course not reliable in minute details, being not 
strictly contemporary, nor are they cast in such modern terms as would give an 
easy comparison with present-day facts. The chief documents in the case are 
Jómsvikingasaga, Saxo Grammaticus, Heimskringla, and Olafssaga Tryggvasonar; but 
nearly the whole of the saga literature bears on the development of the viking 
trade, and characteristic references to the Jómsviking trust occur throughout. 
The evidence afforded by these accounts converges to the conclusion that toward 
the close of the tenth century the trust stood in a high state of prosperity add 
was in a position virtually to dictate the course of the traffic for all that 
portion of the viking trade that centered in the Baltic. Its prestige and 
influence were strong wherever the traffic extended, even in the region of the 
western isles and in the fjord country of Norway. It had even come to be a 
factor of first-rate consequence in international politics, and its power was 
feared and courted by those two sovereigns who established the Danish rule in 
England, as well as by their Swedish, Norwegian, and Russian contemporaries. It 
is probably not an overstatement to say that the Danish conquest of England 
would not have been practicable except for the alliance of the trust with Svend, 
which enabled him to turn his attention from the complications of Scandinavian 
politics to his English interests.
The extent of the trust's material equipment at the height of its prosperity is 
a matter of surmise rather than of statistical information. Some notion of ist 
strength may be gathered from the statement that the fortified harbor of 
Jómsborg included within its castellated seawall an inclosed basin capable of 
floating three hundred ships at anchor. In the great raid against the kingdom of 
Norway, whose failure inaugurated the disintegration of the trust, the number of 
ships sent out is variously given by different authorities. The Jómsvikingasaga 
says that they numbered one long hundred. This fleet, however, was made up of 
craft selected from among the ships that were under the immediate command of 
four of the great captains of adventure. The fleet, as it lay in the Sound 
before the final selection, is said to have numbered 185, but the context shows 
that this feet was but a fraction of the aggregate Jómsviking tonnage. Of this 
disastrous expedition but a fraction returned; yet various [278] later 
expeditions of the Jómsvikings are mentioned in which some scores of their ships 
took part.
The trust having become an international power, it undertook to shape the 
destiny of nations and dynasties, and it broke under the strain. It, or its 
directors, took a contract to bring Norway into subjection to the Danish crown. 
Partly through untoward accidents, partly through miscalculation and hurried 
preparations, it failed in this undertaking, which brought the affairs of the 
trust to a spectacular crisis. From this disaster it never recovered. With the 
opening of the eleventh century the viking trust fell into abeyance, and in a 
few years it disappeared from the field. There are several good reasons for its 
failure. On the death of its founder the management had passed into the hands of 
Sigvaldi, a man of less sagacity and less integrity as well as of more 
unprincipled personal ambition, and somewhat given to flighty ventures in the 
field of politics. It was Sigvaldi's overweening personal ambition that 
committed the corporation to the ill-advised expedition against Norway. The 
trust, moreover, being supreme within its field, the discipline grew lax and its 
exactions grew arbitrary, sometimes going to unprovoked excesses. As one might 
say, too little thought was given to "economies of production," and the charges 
were pushed beyond "what the traffic would bear." But for all that, in spite of 
its meddling in politics, and in spite of jobbery and corruption in its 
management, the trust still had a fair outlook for continued success, except 
that the bottom dropped out of the trade. For better or worse, the slave-trade 
in the north of Europe collapsed on the introduction of Christianity, at least 
so far as regards the trade in Christians; and without a slave market the viking 
enterprise had no chance of reasonable earnings. At the same time, the risk and 
hardships of the traffic - the "cost of production" - grew heavier as the 
countries to the south became better able to defend their shores. The passenger 
traffic failed almost entirely, and the goods traffic was in a disorganized and 
unprofitable state. The costs were fast becaming prohibitive, even to men so 
enterprising and necessitous as the Norwegian freebooters. The situation changed 
in such a way as to leave the trust out.
Some show of corporate existence was still maintained for a short period after 
the trust's great crisis, but there was an end of discipline and authoritative 
control. The minor concerns and private establishments that had once formed part 
of the trust continued in the trade on an independent footing, but with 
decreasing regularity and with [279] diminishing strength. As the equipment wore 
out it was not replaced, and the trade lapsed. The great captains of the 
industry, like Sigvaldi, Thorkel Haraldson, Sigurd Kapa, and Vagn Akason, turned 
their holdings to the service of the dynastic politics which were then engaging 
the attention of the northern countries. Much of this body of enterprise and 
wealth was exhausted in working out the imperialistic schemes of expansion of 
Svend and Knut the Great; and what was left over shared the fortunes of the 
other available forces of the Scandinavian countries, being dissipated in 
political dissensions, extortionate government organizations, and the 
establishment of a church and a nobility.
V.

NOTES:
1) MATTHAEUS MUCH, Die Heimat der Indogermanen.
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