# Imperial politics, open markets and private legal ordering: The global grain trade (1875–1914)

Jérôme Sgard

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Jérôme Sgard. Imperial politics, open markets and private legal ordering: The global grain trade (1875–1914). Journal of Global History, 2025, 19 p. 10.1017/S1740022824000214. hal-05232841

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ARTICLE

# Imperial politics, open markets and private legal ordering: The global grain trade (1875–1914)

Jérôme Sgard*

SciencesPo, Paris, France

Email: jerome.sgard@sciencespo.fr

## Abstract

The archives of the London Corn Trade Association shed light on how open competitive commodity markets expanded during the First Global Era in spite of hard, non-cooperative geopolitics. This private body, fully controlled by elite merchants, standardised supply, turning grains into fungible commodities; it arbitrated disputes; and it offered to traders standard contracts that integrated the international value chains. Enforcement rested on market power: few merchant houses in the world dared being expelled from the London market. Private rules and contracts thus applied extra-territorially, without being much affected by the political regimes on the ground. But they were also upheld by the London courts and the Bank of England, so that they were both local and global, therefore imperial. Market power, private ordering, and legal pluralism should be seen as a defining feature of Britain's global economic governance.

**Keywords:** First Global Era; commodity markets; standardisation; arbitration; private ordering; market power

## Introduction

The literature on the First Global Era is marked by the difficulty of reconciling the hard international politics of those years with the worldwide integration of markets. While not always at war, core states waged an often-brutal competition for supremacy, they did not cooperate well, and they exercised massive imperialist pressures on the peripheries. At the same time, and in spite of these unpromising conditions, markets for goods and capital reached levels of integration that had never been seen before, both among Western countries and with other countries or regions.<fnref n="1" />

What held together the international value chains that criss-crossed this fractured world? How did these thousands of merchants, shipowners, insurers, and financiers contract in this environment? And, as important, which transactions and understandings, formal and informal, backed up the critical relationship with sovereign powers, in particular the strongest among them, the British state? If no robust answers had been found, then goods and commodities would not have been moved at all. Or perhaps, something more akin to the rude practice of the old East India Company would have been preserved, with all commercial, fiscal,

<footnote n="1">¹See for example Kevin O'Rourke and Jeffrey Williamson, *Globalization and History: The Evolution of a Nineteenth-century Atlantic Economy* (MIT Press, 1999); G. Federico and K. G. Persson, ‘Market Integration and Convergence in the World Wheat Market, 1800–2000’, in *The New Comparative Economic History: Essays in Honor of Jeffrey G. Williamson*, eds. J. T. Hatton, K. O’Rourke, and A. M. Taylor (MIT Press, 2007), 87–115; Marc Flandreau and Frédéric Zumer, *The Making of Global Finance* (OECD Development Center, 2009).</footnote>
and military operations in the same hands.<fnref n="2" /> In economic terms, there is a Coasean dimension to this discussion.<fnref n="3" />

As it analyses how these challenges were addressed, this article does not look at the usual ‘big men’ of the international game, like ministers, diplomats, or gunboat captains. Neither does it look at market dynamics as such, with their price movements and volume flows. The focus here is on the discrete, micro-level intermediaries, or ‘transaction cost engineers’, who built and operated these global markets in a very hands-on manner.<fnref n="4" /> This approach reveals in particular the outstanding, yet unaccounted role of vertically integrated, non-regulated trade associations, like the London Corn Trade Association (LCTA, ‘the Association’), whose experience is at the core of this article.

While most commodity markets, especially agricultural ones, were organised along similar, silo-based vertical lines, the case of the grain trade stands out for at least two reasons.<fnref n="5" /> One is its huge size and geographical range, which only compared in those days with the cotton trade. All sorts of cereals (excluding rice) were exported from Argentina, the United States, Persia, or Russia and typically sold to English millers, though also to Belgian, French, or German importers. Buying Argentine wheat for delivery in Hamburg by a Norwegian ship insured by Lloyds was not in the least an uncommon transaction in London. This market was local and global at the same time. It thus fully belongs to the history of the First Global Era, in particular the history of the many strategies and devices developed by market operators in order to tie together and connect highly distant regions and countries, hence millions of producers and consumers.

The second reason for looking at the grain market is the remarkably rich and well-kept archives which the LCTA has left behind.<fnref n="6" /> From its creation in 1878, thousands of pages of hand-written minutes, reports, and correspondence give a remarkable sense of the ‘pulse of the market’, as of the many tensions and frictions that regularly surfaced. Who should bear the consequences of a strike in Buenos Aires or an early freezing of the Baltic Sea? What can be done if middlemen, here or there, add sand or chaff to the grain? How should insurance policies be amended when sailing ships give way to steamers?

Beyond these endless series of accidents and incidents, these archives also reveal how the LCTA (or its principals) drafted, issued, and continuously amended a largely self-contained set of private rules which actually governed the international value chains. We can thus read down to the smallest details how the Association standardised altogether the grain and the string of contracts that tied together the successive intermediaries, from shipping to insurance and trade finance. Fungibility of products, contracts, and debt then supported the aggregation of supply and demand in a de facto, integrated, cross-border market. Enforcement was based on in-house arbitration and on the threat of being excluded from what was arguably the largest grain market in the world. Wherever it was based, a medium-sized merchant house could hardly afford to be shut out of the Baltic Exchange, in London, where grains of all origins and qualities were traded in huge volumes.

Let us underline this point: the LCTA emerged as both the market's lawmaker and its enforcement agent *because* it was a self-standing gatekeeper which held the keys to the dominant market of the day. This unique position was not built on some delegated power it had received from the government, possibly with strings attached. In practice, state powers, both executive and

<footnote n="2">²Philip J. Stern, *The Company-State* (Oxford University Press, 2011). The economic intuition draws here from Ronald Coase's classic paper.</footnote>

<footnote n="3">³Ronald Coase, 'The Nature of the Firm', *Economica* 4, no. 16 (1937): 386–405.</footnote>

<footnote n="4">⁴Ronald Gilson, 'Value Creation by Business Lawyers: Legal Skills and Asset Pricing', *The Yale Law Journal* 98, no. 2 (December 1984): 239–313.</footnote>

<footnote n="5">⁵Ross Cranston, *Making Commercial Law through Practice, 1830–1970* (Cambridge University Press, 2021), particularly ch. 5; John George Smith, *Organised Produce Markets* (Longmans & Green, 1922); R. B. Forrester, 'Commodity Exchanges in England', *Annals of the American Academy of Political and Social Science* 155, no. 1 (1931): 196–207; S. W. Dowling, *The Exchanges of London* (Butterworth & Co., 1929). Achille Dauphin-Meunier, *La Cité de Londres* (Gallimard, 1940).</footnote>

<footnote n="6">⁶*The London Archives*, References CLC/B/103-08. Available at https://lma.gov.uk, accessed 2 March 2024.</footnote>
judicial, were not instrumental in enforcing contractual discipline at the micro-level. In the Association's archives, you hardly ever come across officials, whether from the governments of exporting countries or from the British Foreign Office, the Board of Trade, the Courts, or the Navy.

Indeed, once it had set up its sentry box at the entrance to the market, the Association had to decide on its own who would be allowed in, and thus it had to set norms of behaviour and to sanction delinquent traders. Moreover, it had every incentive to make its trading platform as efficient as possible. The more attractive it was, the greater would be the market, hence the power and the resilience of the rule-maker; and vice-versa.<fnref n="7" /> This is how market power works: the LCTA leveraged the sheer size of its own market in order to regulate transactions and discipline wayward merchants in a law-based manner: the LCTA continuously discussed and amended its rules and contracts, following exact procedures; and while relatively light in practice, judicial oversight by the London courts was binding. Hence, the legal argument ‘opens the door’ to the LCTA’s engine room and to the engineers themselves who endlessly monitored and repaired the contractual roads they had built over this fractured yet global world.

This article draws, therefore, on the literature on private market orders following the classic contributions by Avner Greif and Lisa Bernstein on community-based markets.<fnref n="8" /> Like them, it argues that, ultimately, market discipline rested on the grain merchants’ trade-off between the long-term costs of losing access to exchanges and the short-term benefits of opportunistically breaking a rule (like cheating on the quality of the grain or failing to pay an arbitration award). A salient difference, however, is that the pre-1914 grain market was considerably larger than in these two prior case-studies. Access was also widely open, competition intense, and exchange impersonal. Local, tightly knit communities, as in Greif and Bernstein’s studies, could not have backed up a market of that scale. Hence the ‘third way’ argument over market power, as opposed to both community-based power and state power.

Thus, the main research fields which this article engages are: the history of global nineteenth-century capitalism, with its complex link to the international political order of those days; then, the history of British imperialism and its distinct conjunction of private initiative and hard domination, if not direct oppression; lastly, the socio-legal literature on the construction of markets and their underlying power relationships. More incidentally, historians of international commercial law and specialists of modern urban economics may hopefully find here one or two worthy developments.

The rest of this article develops as follows. The next section discusses how this article fits into the broad literature on British imperialism and nineteenth-century global economic governance. It insists in particular on how the legal and contractual dimension of this article stands out in this regard. The third section then presents how the LCTA was governed, how it developed grain standards and how it arbitrated disputes over the quality of grains. The fourth section analyses the integration of the value chains by way of standard contracts, from the sale contract, in the export harbour, to trade finance, the money market, and the last-resort regulatory powers of the London courts and the Bank of England. The fifth section discusses more briefly the fault-lines of this model of market governance and the possible causes of its eventual decline.

<footnote n="7">⁷On market power as a force beyond market ordering, see Marc Flandreau, 'Sovereign States, Bondholders Committees, and the London Stock Exchange in the Nineteenth Century (1827-68): New Facts and Old Fictions', *Oxford Review of Economic Policy* 29, no. 4 (2013): 668-96; Jérôme Sgard, 'Global Economic Governance in the Middle-Ages: The Jurisdiction of the Champagne Fairs', *International Review of Law and Economics* 45 (2015): 174-84.</footnote>

<footnote n="8">⁸See Avner Greif, *Institutions and the Path to the Modern Economy. Lessons from Medieval Trade* (Cambridge University Press, 2006); and Lisa Bernstein, 'Opting out of the Legal System: Extra-legal Contractual Relations in the Diamond Industry', *Journal of Legal Studies* 21 (January 1992): 115-57. These authors also insist on gate-keeping and the threat of blacklisting; here the threat of exclusion extends to membership to a rather small, tightly-knit, traditional Jewish community which has a de facto monopoly on the said exchanges and backs up market discipline.</footnote>
Market power and private governance: The legal argument

By and large, the history literature has missed the unique legal and contractual dimension of market governance during the First Global Era. This bias is particularly strong among economic historians working in a ‘materialist’ vein, which prioritises production factors, technological change, or transport costs as the key ‘forces’ behind market integration. Allen<fnref n="9" /> or Finlay and O’Rourke<fnref n="10" /> are very good examples, but the same applies to the many contributions on the post-1870 European ‘grain invasion’, which was very much in the background of the creation of the LCTA in 1878.<fnref n="11" /> These authors recognise, of course, the impact of inter-state politics, in particular tariffs and wars; but, significantly, none of them mention the trade associations, or ask, for example, whether English-law contracts worked across borders and to what effect.

Still, the same a-legal bias is observed among authors with an explicit interest in the political economy or the economic sociology of British imperialism. In *Empire of Cotton*, for example, Beckert’s discussion of nineteenth-century trade is entirely set in the language of personal networking, interconnectedness, and ‘trust’.<fnref n="12" /> Law is here only state law and of secondary interest, while the very possibility that private organisations may adopt and enforce formal rules is absent. But take three highly influential books on this period: Cain and Hopkins’s *British Imperialism, 1688–2015*,<fnref n="13" /> Darwin’s *Unfinished Empire*,<fnref n="14" /> and Kynaston’s history of the City of London.<fnref n="15" /> None of them discusses the action of trade associations or even mentions market power, contract standardisation, or the role of the law and the courts. What ultimately mattered for all three of them was finance and the availability of cheap and abundant credit.

This article does not challenge these remarkable books as such, but rather asks what ultimately explained this unique supply of trade credit. Finance is never available on tap, as if the only remaining question would be the width of the pipes. Like trade, finance is essentially relational, hence dependent upon a given, typically complex, market environment. Rich insights may be drawn here from the dynamic field of urban economics, which tries to explain the relative economic dynamism of cities by looking at the more or less developed ‘network externalities’ which they offer.<fnref n="16" /> Beyond production factors and material infrastructures, one should thus look

<footnote n="9">⁹Robert Allen, *The British Industrial Revolution in Global Perspective* (Cambridge University Press, 2009).</footnote>

<footnote n="10">¹⁰Ronald Finlay and Kevin O'Rourke, *Power and Plenty, Trade, War, and the World Economy in the Second Millennium* (Princeton University Press, 2007).</footnote>

<footnote n="11">¹¹A. J. H. Latham and Larry Neal, 'The International Market in Rice and Wheat, 1868–1914', *The Economic History Review* 36, no. 2, new series (1983): 260–80; Kevin O'Rourke, 'The European Grain Invasion, 1870–1913', *Journal of Economic History* 57, no. 4 (December 1997): 276–302; Federico and Persson, 'Market Integration and Convergence'; Mette Ejrnaes, Karl Persson, and Sören Rich, 'Feeding the British: Convergence and Market Efficiency in Nineteenth-Century Grain Trade', *The Economic History Review*, new series 61 (2008): 140–71; Fredrik Andersson and Jonas Ljungberg, 'Grain Market Integration in the Baltic Sea Region in the Nineteenth Century', *Journal of Economic History* 75, no. 3 (2015): 749–90; also Gema Aparicio and Vicente Pinilla, 'International Trade in Wheat and Other Cereals and the Collapse of the First Wave of Globalization, 1900–38', *Journal of Global History* 14, no. 1 (2019): 44–67. But read also Paul Sharp and Jacob Weisdorf, 'Globalization Revisited: Market Integration and the Wheat Trade between North America and Britain from the Eighteenth Century', *Explorations in Economic History*, 50, no. 1 (2013): 88–98.</footnote>

<footnote n="12">¹²Sven Beckert, *Empire of Cotton: A New History of Global Capitalism* (Allen Lane, 2014), ch. 8; also Sven Beckert, Ulbe Bosma, Mindi Schneider, and Eric Vanhaute, 'Commodity Frontiers and the Transformation of the Global Countryside: A Research Agenda', *Journal of Global Economy* 16, no. 3 (2021): 435–60. In a similar vein, Gary Gereffi and Miguel Korzeniewicz, eds., *Commodity Chains and Global Capitalism* (Praeger, 1994); Peter Gibbon, 'Upgrading Primary Production: A Global Commodity Chain Approach', *World Development* 9, no. 2 (2001): 345–63.</footnote>

<footnote n="13">¹³P. J. Cain and A. G Hopkins, *British Imperialism: 1688–2015*, 3rd edn. (Routledge, 2016), 173.</footnote>

<footnote n="14">¹⁴John Darwin, *Unfinished Empire: The Global Expansion of Britain* (Bloomsbury, 2012), 155.</footnote>

<footnote n="15">¹⁵David Kynaston, *The City of London: A World of Its Own, 1815–1890* (Chatto & Windus, 1994), 309.</footnote>

<footnote n="16">¹⁶On the 'benefits of agglomeration' which modern trade and urban economics have explored at length, read for instance Michael Porter, 'Location, Competition, and Economic Development: Local Clusters in a Global Economy', *Economic Development Quarterly* 14, no. 1 (2000): 15–34; Paul Krugman, 'The Role of Geography in Development', *International*</footnote>
at the joint effect, for instance, of organised exchanges, information channels, private cooperative arrangements, dispute-resolution fora, or education. On this basis, competitive, growing markets may develop altogether for goods and services, for skilled and unskilled labour and obviously for capital, therefore trade finance.

The London grain market is a case in point.<fnref n="17" /> It was located at the Baltic Exchange, together with the largest market in the world for ship chartering, so that once they had bought the stuff, merchants could move to the next room and negotiate a freight contract.<fnref n="18" /> But the Baltic was also 400 metres away from Lloyd's, hence the insurance market, which was also close to the great merchant banks which financed international trade. And just around the corner were the offices of the *Beerbohm's Evening Corn Trade List*, whose daily edition offered an enormous amount of market information on production and traded volumes in various countries, prices for sub-categories of grains, ship arrivals in European ports, size of existing stocks, etc.

Here was the touchstone of the grain market: the benefits of trading in London did not materialise only in a diffuse way, through decentralised relations between individuals who happened to work near each other, in the Square Mile. As economists would say, here was not just a comparative advantage à la David Ricardo, with its strong naturalistic undertone (like the proverbial relationship between climate or soil fertility and trade specialisation). Here was a complex, evolving trading environment that was formed over time, which had to be maintained and even improved. Specifically, our gate-keeper-turned-market-architect (aka the LCTA) offered a one-stop window where the key services on offer in London (grain sale, shipping, insurance, and finance) were integrated in a single, standardised, easy-to-use contractual package.<fnref n="19" /> And as legal ingenuity made trade and access to credit cheaper and safer, international transactions kept growing; in turn, this increased further the LCTA's capacity to police its own market while adding to the gravitational pull of the London trading place.

## A private market order

### The London Corn Trade Association

The LCTA was founded in 1878 in a context marked altogether by the rapid growth of the demand for grains in Europe, the expansion of new producing regions like Argentina, South Russia or India, and a steep fall in transport and information costs, from the steamer ship to the telegraph.<fnref n="20" /> The primary objective of the Association's founders was to answer the demand voiced by bankers and insurers for streamlined arbitration procedures and standard contracts.<fnref n="21" />

<footnote>*Regional Science Review* 22, no. 2 (1999): 143–61; or Edwards Glaeser, Stuart Rosenthal, and William Strange, ‘Urban Economics and Entrepreneurship’, *Journal of Urban Economics* 67, no. 1 (2010): 1–14.</footnote>

<footnote n="17">¹⁷Evidence regarding the dominant position of the London market are compelling, with two caveats. First, the Liverpool market was also very strong, but it was also primarily focused on North American trade; on that basis it developed early on a future market, an equivalent of which was launched in London only in the 1920s, with little success. While not collusive, the respective trade associations were in close, continuous contact. Second, no indication was found of the respective share of the Belgian, French, or German imports that were traded through London. But the dominant (though not monopoly) position of British markets is beyond doubt.</footnote>

<footnote n="18">¹⁸Hugh Barty-King, *Food for Man and Beast* (Hutchinson Benham, 1978); Hugh Barty-King, *The Baltic Story, Baltic Coffee House to Baltic Exchange, 1744–1994* (Quiler Press, 1994).</footnote>

<footnote n="19">¹⁹See here Cranston’s *Making Commercial Law*, particularly ch. 5, which is also largely based on the LCTA’s archives.</footnote>

<footnote n="20">²⁰George Broomhall and John H. Hubback, *Corn Trade Memories, Recent and Remote* (Northern Publishers Co., 1930); O'Rourke, 'European Grain Invasion'.</footnote>

<footnote n="21">²¹C. Chattaway, ‘Arbitration in the Foreign Corn Trade in London’, *The Economic Journal* 17, no. 67 (1907): 428–31; Carl Johannes Fuchs, ‘Der englische Getreidehandel und seine Organisation’, *Jahrbücher für Nationalökonomie und Statistik* new series 20, 54, no. 1 (1890): 1–74; Barty-King, *Baltic Story*.</footnote>
On the whole, the LCTA does not appear to be a high-cost operation. From around £3,000 at the turn of the 1890s, annual receipts reached £5,000 a decade later before hovering between £8,000 and £10,000 until 1914, e.g. about one million pounds at today's value.<fnref n="22" /> Large financial reserves were also accumulated over time, ultimately representing well over twice the annual budget of the Association by 1910. Hence, there does not seem to have been a lot of pressure to release this accumulated wealth. The suspicion of rent-seeking comes rather from arbitration fees, especially for appellate cases: for the representative member of the top-tier Appeal Committee, they grew from £25 per annum before 1900 to £43 afterwards, which was about the annual wage of an adult male worker.<fnref n="23" /> This resulted, however, from an increase in the total number of cases, without a commensurate growth in the number of potential arbitrators and without any upward adjustment in per-case payments. Hence, whether or not it qualifies as rent-seeking, the practice was not allowed to debase the market over time.

The formal governance structure of the Association hinged first on an annual General Assembly that elected an Executive Committee of twenty, later twenty-five, members. This Committee met about every two weeks and was the main governing body of the Association. A Chairman was elected every year and was re-eligible once, at which point he would propose his own successor. In practice this would be the last step in a long career through the LCTA ranks where co-optation was the rule all along. This top tier was entirely made up of dominant London-based shippers (importers), millers and brokers who had often inherited their position from their fathers. Very little suggests, however, that they were seen as associate members of the imperial governing classes, with all their usual attributes, like club membership, intermarriage, and public-school education.<fnref n="24" />

More generally, the Association was a very discrete organisation which rarely boasted its success in running one of largest markets in the world. Most existing books on its rules and practices were written by merchants for their peers (or their sons), with the assumption that they already had some knowledge of business practices.<fnref n="25" /> Tellingly, the rare comprehensive presentations of the LCTA's market were published either in German<fnref n="26" /> or in French.<fnref n="27" /> In other words, they were written by semi-insiders for outsiders who wanted to get in. And in an unexpected twist, this social distance or invisibility fitted remarkably well with the nineteenth-century myth of a quasi-natural, self-regulated market. It was easy indeed to give to the market's invisible hand the credit that belonged in fact to the trade associations' deft handling of international transactions.

<footnote n="22">²²See the LCTA's *Annual Reports*, successive editions.</footnote>

<footnote n="23">²³A. L. Bowley, *Wages in the United Kingdom in the Nineteenth Century* (Cambridge University Press, 1900).</footnote>

<footnote n="24">²⁴Cain and Hopkins, *British Imperialism*; Stanley Chapman, *Merchant Enterprise in Britain*, (Cambridge University Press, 1992), 202–28; Geoffrey Jones, *Merchants to Multinationals, British Trading Companies in the Nineteenth and Twentieth Centuries* (Oxford University Press, 2000), 251–87. For more biographic and sociological insights, see: Broomhall and Hubback, *Corn Trade*; Barty-King, *Food for Man*.</footnote>

<footnote n="25">²⁵John H. Hubback, ‘Some Aspects of International Wheat Trade’, *The Economic Journal* 21, no. 81 (1911): 121–31; Liverpool Corn Trade Association, *The Liverpool Corn Trade Association, 1853–1953* (Liverpool, 1953). S. K. Thorpe, *Grain Trade Documents* (The Northern Publishing Co., 1924); London Corn Trade Association, *Grain Trade Lectures* (The Northern Publishing Co., 1947). With a somewhat more academic perspective, see also Chattaway, ‘Arbitration’; C. R. Fay, ‘The Sale of Corn in the Nineteenth Century’, *The Economic Journal* 34, no. 134 (1924): 211–18; Stanley Dumbell, ‘The Sale of Corn in the Nineteenth Century’, *The Economic Journal* 35, no. 137 (1925): 141–5.</footnote>

<footnote n="26">²⁶Fuchs, ‘Der englische Getreidehandel’; Armin Deutschländer and Wilhelm Kunis, *Der Handel mit Getreide* (Moritz Schäfer, 1906); Otto Jöhlinger, *Die Praxis des Getreidegeschäfts. Ein Hand- und Lehrbuch für den Getreidehandel* (Springer Verlag, 1917).</footnote>

<footnote n="27">²⁷Paul Van Hissenhoven, *Le Commerce International des Grains* (Société d'Editions Géographiques, Maritimes et Coloniales, 1923); Georges Schwob, *Les contrats de la London Corn Trade Association* (Rousseau, 1928).</footnote>
## Making commodities

Beyond the Executive Committee, the work of the Association rested on some ten geographic committees, like the Black Sea & Danube Committee or the East Indian one. Their six-to-eight non-remunerated members were in direct relation with the LCTA institutional correspondents, say in Kherson, Calcutta, or Durban. They directly received a host of market information, for instance on how the growing season progressed in the various regions, which colleagues had encountered problems here or there, or how given export markets worked. The whole Association was in fact a huge information clearing house, backed up by considerable collective expertise. Geographic committees would thus report for instance that:

> the Sample of Uganda Wheat [is] suitable for Continental markets, where it should sell at prices fully equal to American Durum; that the two Wheat Samples from East Africa would command a ready sale in the UK at prices comparing favourably with the finest description imported. It was decided to get an opinion on the Market upon the Barley [from South Sudan] and to reply accordingly.<fnref n="28" />

Still, the main task of these committees was to prepare grain standards. By 1914, there were more than twenty standards for Argentine oats, wheat, or barley of different nutritive qualities, regional origin or maturation date. The grain could then be pooled in deep, competitive markets where quality would be clearly ascertained and pricing exact. The minutes of the geographic committees are full of small notes and reports that attest to how critical this process was, which transformed the highly diverse agricultural products into fungible commodities.

The by-default technique was to collect samples of grains in as many incoming ships as possible. The Association would then cautiously mix them before assessing grain humidity, the proportion of broken kernels, their nutritive quality, or the presence of 'admixture'.<fnref n="29" /> Alternately, it could accept the grain standard made by local associations or exchanges in the producing regions, although this raised issues of trust or mutual recognition. For years, Russian market operators sent their own standards of grains, but they were never used in London, to the former's continuing exasperation.

Yet the process of commodification was never perfect. When a grain delivery arrived at destination, divergences were often observed with the standard mentioned in the contract. Local exporters could have cheated or the grain might have been damaged by sea water during travel. It was the job of the LCTA arbitrators to appraise this divergence in quality and correct prices accordingly, downwards or upwards. Thousands of arbitration awards were rendered each year, followed in dozens of cases by a second, appellate, procedure.

Standard-making and arbitration were thus closely tied up together. They were perceived by the Association as key contributions to 'the benefit of the trade', hence as quasi-public goods, which served the market as a whole and should have been seen as unbiased and neutral. The principals were quite jealous of this prerogative, as of the collective expertise and market information they invested in it, which endowed them with a distinct sense of authority and legitimacy.

At the same time, power relationships along the value chain are hard to miss: grain standards were made at the very end of the supply chains by a small group of unaccountable London insiders, with powerful vested interests; the quality of grain deliveries was also assessed by them on the basis of their own standards, without relying on third-party certifiers (like rating agencies for debt issuers, for instance); and in cases of arbitration, the final price might not be decided for

<footnote n="28">²⁸Argentine, American & Australian Committee, 22 July 1909.</footnote>

<footnote n="29">²⁹Executive Committee, 20 January 1887.</footnote>
months. For sure this caused a lot of resentment.<fnref n="30" /> At a point, also, commodification and marketisation could be resisted by more diffuse, societal factors. Think to the social lives of peasantries across the peripheries, their diverse farming technologies, the local ecologies, also the property rights over the land, therefore the local politics. Colonial powers exercised considerable pressures as they tried to move local communities towards more market-oriented property and money relations. But there were limits to their capacity to impose on local communities a full restructuring of their production and marketing practice—say, the supply side.

‘Indian wheats are too dirty!’

Take the case of Indian wheat exports. For decades, both importers and the LCTA unceasingly complained of the large proportion of ‘dirt and admixture’ in grain deliveries, which caused extra costs: girls, apparently, were employed in London and Liverpool ‘to handpick over samples and to remove the pieces of clay and other foreign matter that have found their way in ...’.<fnref n="31" /> This was one of the rare grain issues that was de facto politicised: no less than six reports were submitted to Parliament during the period under review, learned journals repeatedly came back to the issue, two conferences on the poor quality of Indian wheat were organised in 1889 and 1906. A consensus was eventually formed attributing the problem to the traditional economy of ‘the natives’. Small Punjabi farmers grew different cereals in tiny fields, close to each other, so that wheats were often mixed up with oat or barley.<fnref n="32" /> After harvesting, the grain was then kept in pits, covered by straw and cow dung.<fnref n="33" /> Traditional commercial practices made the problem worse: ‘every little lot of wheat has to be carried by the owner to his market, may be more than once; it then passes from dealer to dealer, each time causing expense and loss; and no two quantities being of the same grade’.<fnref n="34" />

No solution was ever found, and grievances kept coming from London. Still in the 1960s, while studying the economics of lemons, George Akerlof noticed that rice in India raised the same problems as wheat had decades before: ‘Indian housewives must carefully glean the rice of the local bazaar to sort out stones of the same color and shape which have been intentionally added to the rice. ... quality variation is a greater problem in the East than in the West’.<fnref n="35" /> The London and the Liverpool Corn Trade Associations ultimately adopted a specific scale of price cuts for Indian exports, depending upon the proportion of ‘foreign matter’ in the deliveries.<fnref n="36" /> And when samples from incoming vessels proved too dirty and too heterogenous, the Association refused to make a standard. The Executive Committee would only be informed that ‘Your East Indian Committee at its meeting to-day refrained from making a July Standard of Choice White Bombay Wheat, owing to the Standard samples being so full of dirt’.<fnref n="37" /> In other words, commodification had failed.

<footnote n="30">³⁰On the political economy of quality standards, read William Cronon, *Nature's Metropolis, Chicago and the Great West* (W. V. Norton, 1991), 109–19; Amy Quark, *Global Rivalries. Standard Wars and the Transnational Cotton Trade* (University of Chicago Press, 2013), ch. 1; Aashish Velkar, *Markets and Measurements in Nineteenth-Century Britain* (Cambridge University Press, 2012), ch. 6; Aashish Velkar, ‘Measurement Standards and Market Governance: The London Corn Trade Association and International Grain Markets (1880–1914)’, *Histoire & Mesure* 38, no. 1 (2023): 65–92.</footnote>

<footnote n="31">³¹Smith, *Organised Produce Markets*.</footnote>

<footnote n="32">³²Houses of Parliament, Papers regarding the impurity of Indian wheat, 1894, London, HMSO.</footnote>

<footnote n="33">³³Noël-Paton, *Indian Wheat and Grain Elevators*, 2nd edn. (Calcutta: Superintendent Government Printing, 1913).</footnote>

<footnote n="34">³⁴John McDougall, ‘Indian Wheats’, *The Journal of the Society of Arts* 37 (14 June 1889): 637–52; *Proceedings of the Conference on Indian Wheat Impurities held at the India Office*, 8 May 1889, London; *Milling*, ‘Dirt in Indian Wheat’, Conference in London, 22 September 1906.</footnote>

<footnote n="35">³⁵George A. Akerlof, ‘The Market for “Lemons”: Quality Uncertainty and the Market Mechanism’, *The Quarterly Journal of Economics* 84, no. 3 (1970): 488–500.</footnote>

<footnote n="36">³⁶Executive Committee, 23 October 1906; *Milling*, ‘Dirt’.</footnote>

<footnote n="37">³⁷Executive Committee, 18 October 1904; see also Executive Committee, 8 July 1886, 10 May 1910; East Indian Committee, 8 September 1904. Similar problems were encountered with South Russian (Ukrainian) wheat exports, see Executive Committee, 15–17 February 1909, ‘Conference between Russian Delegates and British Delegates’.</footnote>
‘The fungibility of the produce leads to that of the contract’<fnref n="38" />

After the standardisation of grains, drafting standard sale contracts was the second step in the process of standardisation that supported global market integration. These contracts formalised the bilateral transaction between seller and buyer, each of them, typically, for a given specie of grain, port, or region of origin and type of shipping (sailing or steam ship). We thus find, for instance, the ‘Baltic Oats contract’ or the ‘La Plata grain contract for sailing cargoes’. By 1896, the Association had issued forty-eight standard contracts, reaching sixty-four before the First World War.

*A small portable commercial code*

Materially, contracts were printed on large, two-sided forms and then sold for a small price to merchants, who would write in by hand the specifics of their transaction, like the standard of grain, the price and volume, the date of shipment, and the ship’s name.<fnref n="39" />

And as they signed these *Voluntary clauses*, traders also endorsed a much greater number of pre-printed *Adhesion clauses* on which they had no say and which stated the rules of the market. Some of these latter clauses were specific to each standard contract, others were common to all contracts that governed the export trade of a given country (e.g. Argentina). But the most important ones were written in the exact same terms on all LCTA standard contracts, such as those governing arbitration or non-payment. This way, the merchant who signed a LCTA contract form accepted that his entire transaction would be governed by the Association’s rules, hence by its small ‘portable code’. This was the condition for accessing the superior market externalities of the LCTA market. Legally, he could still use bespoke contracts, though this would imply considerably higher transactions costs for all parties (legal expertise, paperwork, etc).

This private, contractual construction was instrumental in addressing the tension between open markets and thoroughly fragmented national or territorial jurisdictions. In those times, the only official technique that addressed cross-border commercial relations was the discipline of conflicts of laws. It tells, in essence, whether and how a given national judicial system can receive, interpret and enforce foreign rights, contracts, or judgments.<fnref n="40" /> However, these rules were (and are) cumbersome and costly to mobilise, especially given the low unit-value of cereals. And when their foreign partners lived in a far-away, semi-sovereign Southern country, then the suspicion of lawlessness and corruption in the local courts tended to overwhelm any other concern. Chattaway, a long-time grain merchant, recalled in 1907 how, when caught in a dispute, merchants:

> could have recourse to law, but legal proceedings, especially when they have to be carried in a foreign country, are so expensive and troublesome that in nearly all cases buyers refrained from legal action, and the unsettled grievance, after the interchange of a few letters charged with reproaches, menaces, and explanations, died a natural death.<fnref n="41" />

The Association’s portable, self-enforced codes were critical in controlling these risks thanks to their built-in extra-territoriality. Importantly, the Adhesion clauses stated that any dispute between the parties should be addressed to the Association for arbitration—not to a local court,

<footnote n="38">³⁸Dauphin-Meunier, *La Cité*.</footnote>

<footnote n="39">³⁹The following paragraphs draw on a complete collection of its standard contracts that was published by the LCTA in 1916 under the title *Forms of Contracts in Force*. Similar volumes have probably been printed at regular intervals, though they are very rarely found either in libraries or on the second-hand market.</footnote>

<footnote n="40">⁴⁰Roxana Banu, *Nineteenth-century Perspectives on Private International Law* (Oxford University Press, 2018); Alex Mills, *Party Autonomy in Private International Law* (Cambridge University Press, 2018).</footnote>

<footnote n="41">⁴¹Chattaway, ‘Arbitration’.</footnote>
here or there, depending upon the nationality or domicile of the merchants, the origin of the grain,
or the ship's flag. Ultimately, however, the contract and its on-board code were anchored on
English law and English jurisdictions *exclusively*. A legal fiction written into *all contracts* stated
that foreign merchants were all supposed to be domiciled at the consulate of their country of
origin, in London, whereas Scots were nominally hosted in the offices of the Association. Hence,
disputes over the wording of a contract, a given transaction, or an arbitration award could only be
adjudicated by an English court of law. An Argentine, Russian, or Dutch judgment would have
had no effect here.<fnref n="42" />

Significantly, over the whole period under review, the Association's Executive Committee was never asked to enforce a single foreign judgement or arbitration award. Nor do we see a single discussion about a specific point of Romanian contract law or Canadian arbitration law. Neither did the Association call upon foreign counsels when drafting or amending its contracts. The contracts and the Association's market rules were thus beyond the reach of foreign courts and foreign laws. The LCTA private legal order was anchored in the dominant legal system of the day, though it applied across the world—much more seamlessly in fact than the official English legal and judicial system as such, which was bound by conflicts of law rules. Yet again, extra-territoriality as a route to global market integration rested on private self-organisation, contractual ingenuity, and market power.

From a statutory perspective, this construction followed the landmark 1889 Arbitration Act, which drew a clear line between the last-resort oversight by English courts and the 'province' of private arbitrators, as they said.<fnref n="43" /> Self-regulation by the different 'trades' was a full part of the imperial construct though within the British hierarchy of norms and jurisdictions.<fnref n="44" />

Three contractual plug-ins

However, if they were to be adopted by international merchants, the LCTA contracts had to be
effective, watertight vehicles. The grain had to pass from hand to hand, and from train to ship,
without lapses or holes, hence with no uncertainty as to who held which rights and responsibilities
at which point: the exporter, the ship captain, the port authority, their insurers, etc. A contractual
failure may have raised material threats, but it could have also opened the way for a judge to step in
and make a decision that might have destabilised the whole construction.

The LCTA sale contracts were thus closely tied to three other contracts, respectively for
shipping, insurance, and trade finance. Standardisation and integration resulted from a
decade-long process of experimentation, which eventually made it possible for the Association
to offer them as a package.<fnref n="45" /> More than the 'handshake' transaction of classic liberal lore, we
should see here a complex 'contractual vehicle' which carried altogether the grain, the
property rights over it, and the payment guarantee, from buyer to seller. And critically
hundreds, perhaps thousands, of market intermediaries used these standard vehicles, which
thus directly supported market aggregation, therefore competition and price-making.

<footnote n="42">⁴²This construction thus belongs to an early period in the development of modern international private law, when 'party autonomy' (hence the choice of applicable law and jurisdiction) was still limited: the parties and their contracts had to present a material relation to England (in our case) if its courts were to have jurisdiction over them. See Banu, *Nineteenth-century Perspectives*.</footnote>

<footnote n="43">⁴³Cranston, *Making Commercial Law*, 344–61. Francis C. Boorman and Rhiannon Markless, *Arbitration and Mediation in Nineteenth-century England* (Holo Books, 2024).</footnote>

<footnote n="44">⁴⁴Enforcement rested on the directors of the Baltic Exchange who, in practice, were often also principals of the LCTA. See 'Rules and Regulations', Archives of the Baltic Exchange, 1903, London Metropolitan Archives, MS 39566/001. See also 'Resignations and Withdrawals', covering the years 1903–39, MS/39554/001; also Barty-King, *Baltic Story*, 26, 43. For today's similar practice, see N. P. Kennedy, 'Dispute Resolution at the Baltic Exchange', *The International Journal of Shipping Law* 1 (March 1997): 47–9; Michael J. Mustill and Stewart Boyd, *The Law and Practice of Commercial Arbitration in England* (Butterworth, 1982), 378.</footnote>

<footnote n="45">⁴⁵Cranston, *Making Commercial Law*, 299–303; Fuchs, 'Der englische Getreidehandel', 33.</footnote>
First were the so-called *usances*, which belonged to the local institutional set-up of each export country or export harbour. Which units of measures for weights and volumes apply in Bristol, Cadiz, or Bergen? Which institution is the legitimate authority to announce, by telegram, that the ports of Odessa or Riga have frozen and that traffic (hence, the execution of contracts) is interrupted? Who has the material responsibility if the grain falls into the water when being transferred into ships?<fnref n="46" />

For the value chains not to fall apart, each standard contract had to fit exactly into these local usances, more generally into the local institutional set-up of each ‘bridgehead’. The point was neither to write down entirely the usances in the contracts, nor to impose the rules, for instance, of the Port of London: the Association recognised the local trading customs in export countries and it often conceded when a local authority argued that it had long been accepted practice to take option B rather than A, on a given issue.<fnref n="47" />

When adjusting its contracts to the varied domestic environments, the Association dealt almost exclusively with non-governmental organisations: the Argentine Centro de Cereales, the Odessa Bourse, the Hamburg Börse, the Chambre Syndicale de Marseille, etc. Once it had opted out of inter-state coordination, based on treaties, rules of conflicts of law, and diplomacy, the Association had to build its own proprietary network of norm-setters and norm-enforcers. And all along, the LCTA’s principals avoided at all costs any binding interactions with public authorities, whether governments, courts, or standard setters.

Adjustments to the conditions of each ‘bridgehead’, hence negotiations and ad hockery, are everywhere to be observed in the LCTA archives; but ultimately the structure of contracts and the arbitration procedure were all very similar, and all were subject to English law exclusively. In particular, the political status of exporting regions or countries did not have a massive influence if we compare for instance independent countries, like Argentina, to colonies or dominions, like India or Canada.<fnref n="48" /> In the former case, relations with the London Association seem to have worked in a rather business-like manner, probably because Argentine exports were controlled early on by a few big merchant houses.<fnref n="49" /> But relations with the market operators in the United States and India were much more fraught, with some conflicts extending over months or years. Yet in each case, the LCTA principals insisted on having, symbolically at least, the last word.

The second plug-in tied together the Association’s sale contract and a *Bill of Lading*, which is, altogether, a maritime transport contract, a property title regarding the goods, and a proof that the ship’s captain has received them, hence that they have been loaded onto the ship.<fnref n="50" /> The LCTA was thus regularly in discussion with the UK Chamber of Shipping, which was the main professional organisation of shipowners. This converged on a series of regional Bills of Lading, such as for Australia or Danubian countries, primarily Romania. But they failed, for instance, to reach a similar result in the case of trade with the United States, and each shipowner continued to use its own bespoke Bill of Lading.

<footnote n="46">⁴⁶Rudolf Sonndorfer, *Usancen und Paritäten des Getreidehandels in Weltverkehre* (Julius Springer, 1882); William F. Spalding, *Foreign Exchange and Foreign Bills in Theory and in Practice* (Sir Isaac Pitman & Sons, 1925); *Universal Commerce, or the commerce of all the mercantile cities and towns or the World* (Boosey and Sons, 1818); also H. Lefèvre, *Traité pratique du commerce des céréales en France et à l'étranger* (Librairie des Halles et Marchés, 1882).</footnote>

<footnote n="47">⁴⁷See for instance, Executive Committee, 1 November 1904; 5 and 19 September 1905.</footnote>

<footnote n="48">⁴⁸John Gallagher and Ronald Robinson, 'The Imperialism of Free Trade', *The Economic History Review* new series 6, no. 1 (1953): 1–15.</footnote>

<footnote n="49">⁴⁹Executive Committee, 17 September 1907; 21 July 1908.</footnote>

<footnote n="50">⁵⁰Thorpe, *Grain Trade*; Norman I. Miller, 'Bills of Lading and Factors in Nineteenth-century English Overseas Trade', *The University of Chicago Law Review* 24 (1957): 256–91.</footnote>
The last of these three articulated contracts, the *insurance policy*, is also an old, well-known contract that accepted large variations in its degree of standardisation.<fnref n="51" /> The main interlocutor of the LCTA here was the Institute of Underwriters, an institution indirectly attached to Lloyd's.<fnref n="52" /> Negotiations could go on for months to settle an ad hoc clause to be included into the Association's sale contracts, which would delineate the respective rights and commitments of the parties.

As a whole, this assemblage of three contracts belonged to what is called the *Cost, Insurance and Freight* (CIF) technique of contracting, which offered considerable advantages: standardisation made transactions considerably easier, all parties were brought under the English legal umbrella, and these documents being accepted as a legally valid representation of the grain, they could be the instrument of secondary exchanges. If the initial buyer (importer) eventually concluded that he did not need the incoming grain delivery, he could resell it to a third party and hand him the said documents against payment.

While the practicality of contract standardisation seems evident, a long line of legal scholars have discussed till today the theoretical implications of this innovation.<fnref n="53" /> Can these arrangements be considered as a variety of contracts? Do they threaten competition? Or do they de facto imply unequal relations between larger and smaller firms, or between London insiders and foreign merchants? Drawing on the experience of CIF contracting and commodity markets, the great American legal scholar Karl N. Llewellyn concluded that:

> to the extent that the available bargains ... become standardized for whole groups and tend to become exclusively available, a regime of 'contract' (bargain) moves a long step towards the regimentation of men into groups and classes, and toward stabilization of social relations.

He then continued: 'It is a form of contract which ... amounts to the exercise of unofficial government of some by others, via private law.'<fnref n="54" /> The LCTA contract drafters actually withdrew from the parties' bargain a mass of clauses that were codified and uploaded in the contracts. They thus became default clauses that applied uniformly across borders, in an environment otherwise fractured by national codes and regulations. The LCTA thus offered a kind of alternative to clear-cut opposition between the market and the firm, hence between negotiability and administration (or codification).

## Trade finance: From grain to gold

After the grain and the contracts, the last step in the standardisation process was about trade finance. Leaving aside the bank-based technique of Documentary Letters of Credit, the usual technique relied on bills of exchange. In the simplest case, after an Argentine exporter had sold and shipped the grain, he would give to his local banker in Buenos Aires original copies of the Bill of Lading, the insurance policy, and an unsigned Bill of Exchange, which materialised the demand for payment. These three 'documents', as they were called, were then sent by fast postal boat to the importer's foreign trade or colonial bank, probably in London, who would ask our importer to come sign the said Bill of Exchange: he thus recognised his payment obligation and committed

<footnote n="51">⁵¹Vaucher, *A guide to marine insurances: containing the policies of the principal commercial towns in the world; with the details of clauses proper to inserted therein, in order to avoid the inconveniences that might result from particular laws and customs* (London: Baily, 1834).</footnote>

<footnote n="52">⁵²Chris Hewer, *A Problem Shared... A History of the Institute of London Underwriters* (Witherby, 1984).</footnote>

<footnote n="53">⁵³Read for instance, Friedrich Kessler, 'Contracts of Adhesion – Some Thoughts about Freedom of Contract', *Columbia Law Review* 43, no. 5 (1943): 629–42; George Gluck, 'Standard Form Contracts: The Contract Theory Reconsidered', *The International and Comparative Law Journal* 28, no. 1 (1979): 72–90; Richard G. Shell, 'Contracts in the Modern Supreme Court', *California Law Review* 81, no. 2 (1993): 431–529.</footnote>

<footnote n="54">⁵⁴Karl N. Llewellyn, 'What Price for Contract? An Essay in Perspective', *The Yale Law Journal* 40, no. 5 (1931): 704–51.</footnote>
himself to pay, at maturity. In exchange, he received the Bill of Lading and the policy, which he would hand over to the ship captain against the grain, upon arrival. The symmetry between payment and grain delivery made the transaction essentially safe to both parties.

Still, the maturity of the Bill of Exchange typically extended well after the ship's expected arrival, allowing the importer to resell the grain before having to pay for it: then as today, most merchants did not have the working capital to finance the whole trading cycle. In turn, rather than keeping these bills till maturity, and hence freezing their own capital, the foreign trade banks often resold them on the secondary market, typically to large deposit banks, which invested their excess liquidity in these short-term bills and kept them till maturity.

The nexus between trade and finance was an operation called 'acceptance' whereby these three- to six-month bills of exchange (also called London Bills) were endorsed, or guaranteed, by a high- reputation London-based bank, typically an elite merchant bank (hence a third category of banks).<fnref n="55" /> The overall effect was thus to transfer the credit risk to this institution while completing the standardisation process at work along the whole value chain: after the grain and the contracts, the specifics of each individual merchant were now being absorbed and his debt transformed into a safe, English-law, fungible, tradable paper.

As the great German-American banker Paul Warburg wrote, 'through the acceptance or indorsement . . . the merchant's note . . . becomes a liquid asset, part and parcel of the system of tokens of exchange which serves as a substitute or as auxiliary currency'.<fnref n="56" /> And just as in the previous stages of this standardisation process, massive information and professional expertise were mobilised in order to further reduce the idiosyncrasies present in each individual transaction.

The long value chain that originated in Bombay or Montreal now led straight into the London money market.<fnref n="57" /> In the absence of a large public debt before 1914, accepted foreign trade bills, particularly from import trade, were the main short-term securities used by financial institutions for liquidity management purposes. Even the Bank of England used them for market interventions and last-resort lending: in case of need, a commercial bank with a package of accepted trade bills could easily obtain hard cash against them.<fnref n="58" /> The most powerful Central Bank in the world thus stood ready to buy the merchants' debt against pounds sterling, the ultimate international currency. After the insolvency risk had been covered by the accepting bank, the liquidity risk was essentially absorbed. Both Britain's money market and its supply of foreign primary goods could not be threatened by the vagaries of capital markets.

Of course, discounting high-quality private bills had been the Bank's stock in trade since foundation. What is striking here is the size of the underlying market, its international character, and how the Bank of England endorsed and backed up the Association's private market order, based on contractual engineering and systematic standardisation (see Figure 1). Any doubts regarding the integrity of the value chain, disruptions by foreign authorities, or breakdowns in the underlying information flows would have immediately impaired the safety of the debt titles, hence their central position in the London money market.

<footnote n="55">⁵⁵William F. Spalding, *The London Money Market, A Practical Guide To What It Is, Where It Is, and the Operations Conducted in It*, 3rd edn. (Isaac Pitman & Sons, 1924); Spalding, *Foreign Exchange*; Stanley Chapman, *The Rise of Merchant Banking* (Allen & Unwin, 1984); Youssef Cassis, *City Bankers* (Cambridge University Press, 1994). See also Cranston, *Making Commercial Law*, 391–4.</footnote>

<footnote n="56">⁵⁶Paul M. Warburg, 'The Discount System on Europe', *Proceedings of the Academy of Science in the City of New York* 4, no. 4 (1914): 129–58.</footnote>

<footnote n="57">⁵⁷R. J. Truptil, *British Banks and the London Money Market* (Jonathan Cape, 1936).</footnote>

<footnote n="58">⁵⁸Olivier Accominoti, Delio Lucena-Piquero, and Stefano Ugolini, 'The Origination and Distribution of Money Markets Instruments: Sterling Bills of Exchange during the First Globalization', *The Economic History Review* 74, no. 4 (2021): 892–921; Peter J. Ferderer, 'Institutional Innovation and the Creation of Liquid Financial Markets: The Case of Bankers' Acceptances, 1914–1934', *The Journal of Economic History* 63, no. 3 (2003): 666–94.</footnote>
<figure><img src="image_2.png" /><figcaption>Figure 1. Standardization and the LCTA value chain.</figcaption></figure>

## Fault-lines: Systemic or contingent?

The coherence of these rules, their observed resilience and also the LCTA's archives themselves may give at this point the sense of a nearly perfect, self-contained construction. On the whole, the market worked in a similar manner in the late 1880s as it did right before the First World War and even during the 1920s. This suggests that the Association's rules and contracts were broadly successful in mediating (rather than resolving or dissolving) the conflicts of interests between the parties, or between trading countries or regions. Standard contracts thus formalised a status quo within the unequal international order of the day and the parties then bargained and fought for their respective interests within their limits. But attempts to shift this status quo, even slightly, are everywhere to be seen in the LCTA's paper track. The elegance and resilience of this self-contained trading platform should not suggest that, somehow, global merchants had carved for themselves a separate global space, where rule-based relations between equals held sway.

Take the many strike movements which emerged in 1905, from Russia to Argentina.<fnref n="59" /> Initially, London importers and millers were strong enough to put off all the costs and constraints of these disruptions onto the other side of the market, hence on the shippers. These London-based merchants rejected in particular the (civil law) principle of *force majeure*, which would have justified a de jure suspension of the contracts. But this situation caused a long, protracted conflict reaching up to the Association's Executive Committee, which some shippers boycotted for several months. Haggling continued till 1914, with different contingent clauses being written in the various regional contract forms and, also, with a continuing conflict with the UK Chamber of Shipping.<fnref n="60" />

<footnote n="59">⁵⁹Eric Hobsbawm, *The Age of Empire, 1875-1914* (First Vintage Books, 1989), ch. 5.</footnote>

<footnote n="60">⁶⁰See Executive Committee, 5 September 1905; also 9 January 1906, on the report of 'the sub-committee on a Strike Clause', which is then repeatedly discussed in the meetings of the Executive Committee in the following months: on 7 and 14 January 1906, 26 May, as well as 7 and 21 March 1911, etc.</footnote>
Carrying the market

A different, more intrinsic fragility of this market order came from the position of individual
merchants as pure rule-takers vis-à-vis the Association: they had little voice in the design and the
operation of this market, while the Associations' principals, who were all dominant merchants,
were in a strong position to defend their vested interests and extract rents. Many on the Continent
actually complained that arbitration in London was biased. For Jöhlinger, a German, it was 'in no
way reliable'.<fnref n="61" /> Van Hissenhoven, from Antwerp, also mentions 'rather unpleasant experiences'
and even 'considerable abuse'.<fnref n="62" /> An aggrieved Austrian merchant, Maximilian Praschkauer,
published a well-argued, critical pamphlet against London arbitration in *The Miller*, the main
journal of the profession in London.<fnref n="63" /> Others underlined that, contrary to the practice in London,
appellate arbitration on the Continent was always anonymous. Even a semi-official English report
on commercial arbitration conceded that London arbitration was not up to the best standards:

Traders abroad very often have a feeling, rightly or wrongly, that they would like their
disputes with parties in London to be settled by an absolutely independent and recognized
tribunal, ... and not left to this spirit of friendly and amicable arrangement where they
naturally suppose ... that the one party who is in London is best off.<fnref n="64" />

At the same time, the underlying long-term risks were not lost on the LCTA principals, as its
Chairman underlined at the 1907 General Assembly:

> ... I think it only wise to point out to our UK friends that if we are going to be too rigidly
> insular, and there is not [a] little give and take ..., I am afraid that a larger share of the grain
> trade will go to [the] Continent .... I have held very strongly that we ought not to be merely
> an Association for making money. We must, of course, protect the interests of the Members,
> but we ought to make the basis of our Association the benefit of the trade as a whole.<fnref n="65" />

The minutes of the Executive and geographic committees are indeed full of letters exchanged with foreign, typically European merchants, whose demands were often constructively received. The large French merchant house, Dreyfus Frères, which had a branch in London, adhered to the Association in 1891 and was soon represented on the Executive Committee. Over time, loose forms of coordination also emerged with other European grain trade associations, when conflicts arose with Russian or American exporters or exchanges.<fnref n="66" />

In practice, however, what the Association absolutely needed was that market participants in
general kept using its trading platform, hence its contracts, so that it ‘carried the market’. The
comparative advantages of the London trading place were certainly at work when a contract was
launched, but the Association did not have an enforceable monopoly. In the early 1900s, for
instance, the Berlin grain association drafted a contract for trade with Russia, which became the
standard for German grain merchants; but when the same association issued a contract for
Argentine grains, it was rejected and the merchants continued to trade with the LCTA forms and
under the Association’s rules.<fnref n="67" />

<footnote n="61">⁶¹Jöhlinger, *Die Praxis*, 124, 340–55. Also Fuchs ‘Der englische Getreidehandel’, 50–1.</footnote>

<footnote n="62">⁶²Van Hissenhoven, *Commerce International*.</footnote>

<footnote n="63">⁶³Maximilian Praschkauer, *On Arbitration* (London: Published by the author, 1889); *The Miller*, ‘On London Arbitration’, 2 December 1889.</footnote>

<footnote n="64">⁶⁴London Chamber of Arbitration, *Inquiry before the Joint Committee of the London Chamber of Arbitration* (1895), 23–4.</footnote>

<footnote n="65">⁶⁵General Annual Meeting, Report, 2 May 1906.</footnote>

<footnote n="66">⁶⁶See Executive Committee, 8 November 1906, Conference on American ‘Certificate final’ terms. Also 8 October 1907, on a ‘European International Committee’; 14 July 1908, 27 June 1911.</footnote>

<footnote n="67">⁶⁷Jöhlinger, *Die Praxis*, ch. 4.</footnote>
On another occasion, in 1908, the Executive Committee initiated a discussion on whether or not—and to what extent—clauses across contracts should be further unified. This proposal could have been seen as a further step in a process of standardisation that was at the core of the Association's initial mandate. But it caused a lot of uncertainty and protestation. The East Indian Committee, for instance, opposed the introduction of changes in contracts 'merely for the sake of a visionary uniformity'.<fnref n="68" /> Quite soon, the whole project was thus rejected and never discussed again. The Association's Chairman could only conclude, somewhat pitifully, that 'to build up new [contract] forms was very dangerous and not desirable'.<fnref n="69" />

This suggests that, once all market participants had signed on the same *Adhesion clauses* and were de facto coordinated by them, parametric changes in these default rules could have a material impact on the distribution of risks and rewards. Even discussing the possibility of such changes could affect how merchants calculated their position and investments.

## The power to standardise

Still, the LCTA market platform did not collapse on itself. As late as 1928, a French author, George Schwob, noted that 'there is not a European house of some size in the grain trade, which is not part of the LCTA, whether in France, in England, in Belgium, in Holland, in Germany, in Italy, in Scandinavian countries'.<fnref n="70" /> The LCTA standard contracts also long remained popular.<fnref n="71" /> Dutch, French, and German merchants had them translated. French commercial courts even addressed many cases based on them, assuming, somewhat curiously, that they were in fact governed by French contract law.<fnref n="72" />

The LCTA market rather experienced a gradual process of attrition in which the relative decline of Britain after the First World War certainly had a role. Market externalities became less powerful in London. The structure of the international grain trade changed as well: open competition between dozens, if not hundreds, of merchant houses, with high turnover, gave way during the interwar, and even more clearly after the Second World War, to a highly concentrated structure entirely dominated by vertically integrated trading multinationals, like Cargill, Bunge, and Dreyfus.<fnref n="73" /> Rather than the main coordinating mechanism, the market eventually became in this new environment an instrument to adjust residual supply and demand at the margin.<fnref n="74" />

Beyond, two factors seem to have played a strong role in this transition. The most striking one is, of course, the collapse of international markets in the early 1930s. Since the 1870s on, the integration of producing regions and countries into global markets had reached considerably farther into the fabric of local economies and societies than during previous centuries. From Latin America to the American Midwest and pre-war Russia, the lives of millions of often vulnerable farmers were now directly dependent upon grain exports. Most often, export-oriented, landed interests also exercised considerable pressure altogether on

<footnote n="68">⁶⁸East Indian Committee, 13 February 1908.</footnote>

<footnote n="69">⁶⁹Executive Committee Minutes, 9 February 1909.</footnote>

<footnote n="70">⁷⁰Schwob, *Les contrats*, 19.</footnote>

<footnote n="71">⁷¹Still today, the Grain and Feed Trade Association, the heir to the LCTA, offers on its website a whole range of contracts not so different from those of over 100 years ago, in particular regarding domicile, arbitration, or the strike clause. See https://www.gafta.com/, accessed 7 March 2023.</footnote>

<footnote n="72">⁷²Schwob, *Les contrats*, ch. 3.</footnote>

<footnote n="73">⁷³Harry Fornari, *Bread upon the Waters* (Aurora Publications, 1973); Morton Rothstein, 'Multinationals in the Grain Trade, 1850–1914', *Business and Economic History* 12 (1983): 85–93; Aparicio and Pinilla, 'International Trade in Wheat'.</footnote>

<footnote n="74">⁷⁴Coase, 'The Nature of the Firm'.</footnote>
income distribution, on the local political systems, and on trade policies. The crisis of the
1930s then destroyed this old class coalition and empowered farmers unions, protectionist
lobbies, and new nationalist elites.<fnref n="75" />

But well before the 1930s, an industry-specific discrete change in the technology for
marketing grain had gradually debased the old market order. Starting in the United States
already in the 1860s, grain was increasingly transported in bulk, by railways and steam
ships, rather than in jute sacks and then by sailing ships, as had been the case for decades.
In the producing regions, at origin, farmers now delivered their production into silos built
along the railway lines, so that it could be directly loaded on trains. In the export harbours,
'electric elevators' then pumped the grain directly from train carriages into the hulls of
steamers. An LCTA President thus warned in 1901 that this 'monster combinations of
American railways with Atlantic steamship lines ... must, necessarily, be of consequence
to the trade';<fnref n="76" /> a 'kind of Darwinian process of development'<fnref n="77" /> was now at work, he
later added.

Critically, in this new world, grain quality was appraised immediately after harvesting, so
that similar types of grains would end up in the same silo (or internal container). They were
thus graded at the entry point of the value chain, literally when leaving the farm, and not at
destination, in the import country, as was the case under the old trading regime. How this
marketizing technology expanded and who gained from it are questions which belong to a
complex political economy, with deep roots in the social and economic history of each
producing country.<fnref n="78" /> Silos did not easily become fixtures of the rural landscapes of the US
Midwest, the Argentine Pampas, or Ukraine. Railway companies, farmers' cooperatives, large
merchant houses, exchange operators, later multinationals: they all manoeuvred for decades
to impose their standards, their expertise, and their interests, quite often under the strong
oversight of a new, powerful regulatory state.<fnref n="79" />

If anything, the best signal of this trend in the US was the decision by the Department of
Agriculture in 1913 to affirm its own regulatory power: from then on, all grains commercialised in
the country would be assessed and valued on the basis of constant 'gradings' based on the up-to-
date expertise of a whole new corps of state agronomists. In January 1914, the LCTA thus received
a three-line message from one J. W. T. Dunel, 'Crop Technologist in Charge', in Washington. He
had 'the pleasure of sending you herewith copy of the grain grades as finally fixed and
promulgated by the Department of Agriculture to take effect on July 1, 1914'.<fnref n="80" /> The days were over
when a few private gatekeepers in London could bypass interest groups and governments all over
the world and impose their standards and sanctions.<fnref n="81" /> Inevitably, their own proprietary trading
routes, fully governed by small portable codes, also declined. Not much of a place would be left for
this old merchant elite in the new world of progressive governments, developmentalist states, and
big multinationals.

<footnote n="75">⁷⁵Still on the US case, see for instance Cedric B. Cowing, *Populists, Plungers, and Progressives: A Social History of Stock and Commodity Speculators* (Princeton University Press, 1965); Charles Postel, *The Populist Vision* (Oxford University Press, 2007).</footnote>

<footnote n="76">⁷⁶Executive Committee, 30 May 1901.</footnote>

<footnote n="77">⁷⁷Executive Committee Minutes, 13 May 1902.</footnote>

<footnote n="78">⁷⁸See, in the case of the US, Lowell Hill, *Grain Grades and Standards* (University of Illinois Press, 1990); Craig S. Pirrong, 'The Self-Regulation of Commodity Exchanges: The Case of Market Manipulation', *The Journal of Law and Economics* 38, no. 1 (1995): 141–206; Cronon, *Nature's Metropolis*, 131–42.</footnote>

<footnote n="79">⁷⁹In *Nature's Metropolis*, Cronon tells how the emergence of Chicago as the main hub of late-century, Midwestern grain trade came indeed with the ascent of railways-and-silos infrastructure; also with the emergence of new, powerful actors, as well as new political dynamics between city and countryside, as between private initiative and public regulation.</footnote>

<footnote n="80">⁸⁰Executive Committee, 27 January 1914 (letter dated 6 January).</footnote>

<footnote n="81">⁸¹Executive Committee, 27 January 1914 (letter dated 6 January).</footnote>
Conclusion

Between the 1870s and 1914, and up to a point during the 1920s, the global expansion of the London grain market rested altogether on British geopolitical might, oversight by the top London courts, and the guarantees of the Bank of England. But rather than being fully tied up in a kind of hard imperial compact, market governance was in the hands of a private, non-regulated trade association, the LCTA. Its core contribution was to standardise grains, contracts, and debts, then to enforce market discipline by way of in-house arbitration, backed up by the threat of blacklisting, hence market power. Products could thus be moved across the world by a dense network of private trading lines, which the Association policed and maintained on its own.

Remarkably, also, these routes were relatively unaffected by the colonial or non-colonial status of the producing countries, more generally by government institutions on the ground, in particular the legal and judicial regimes. Issues of conflicts of laws and mutual recognition between national judiciaries were thus essentially circumvented: while ultimately anchored on English law and English courts, this private market order was largely extraterritorial.

The LCTA thus had agency, including for instance when trying to open or stabilise new markets. But it was not a geopolitical actor insofar as it would have tried to directly affect or mobilise relations between states or quasi-states of various sorts. The Association worked within the international and imperial order of the times, though in the interstices of state politics and at a distance from its home state.

What this also tells us is that market power, as opposed to both state power and community-based power, should be considered as a specific factor in Britain's nineteenth-century model of global economic governance. It was not just a by-product of (or a synonym for) superior competitiveness, political hegemony, or imperial might. It resulted from a constant effort by the trade association to leverage the comparative advantages of the London trading place by way of formal rules, contracts, and collective procedures. Hence, this legal order did not derive from state-sanctioned law, whether in the form of statutes or precedents. The Common Law in particular did not have a strong influence in the operations of the LCTA: it was more an enabling factor which supported the development of a sophisticated set of private rules, in a constructive relation to courts of law. On a case-by-case basis, judges then confirmed the legality of these rules though, in practice, they largely deferred to the capacity of merchants to establish and regulate their markets.

The grain trade was not unique in the way transactions were governed. With some variations, the markets for most commodities were operated by similar, silo-based, private associations, which typically developed their own set of market rules, standard contracts, and arbitration procedures. A major dimension of legal pluralism was thus observed at the core of the global economy, in the historical home of the Common Law, not just in the colonial peripheries as the existing literature often suggests.<fnref n="82" /> This pattern reflected the ingenuity of these collective market entrepreneurs, as they negotiated their way through the unstable, fractured political geography of the times. Rather than being dysfunctional or parasitic, private ordering and legal pluralism were instrumental in partly insulating trade from the messiness of state politics, not least imperial politics.

**Financial support.** None to declare.

**Competing interests.** The author declares none.

<footnote n="82">⁸²On legal pluralism in a colonial or post-colonial context, read for instance, Lauren Benton and Richard J. Ross, *Legal Pluralism and Empires, 1500–1850* (NYU Press, 2013); Bonny Ibhawoh, ‘Historical Globalization and Colonial Legal Culture: African Assessors, Customary Law and Criminal Justice in British Africa’, *Journal of Global History* 4, no. 3 (2009): 429–51; Fahad Ahmad Bishara, *A Sea of Debt: Law and Economic Life in the Western Indian Ocean, 1780–1950* (Cambridge University Press, 2017).</footnote>
**Jérôme Sgard**, is a Professor of Political Economy at SciencesPo (Paris). He is primarily interested in the legal and political economy of international market governance, particularly commercial arbitration and sovereign debts. He published in 2023, *The Debt Crisis of the 1980s, Law and Political Economy* (Edward Elgar Publishing); he is also the co-editor of *The Oxford Handbook of International Economic Governance*, due in 2025.

<footnote>Cite this article: Sgard J. Imperial politics, open markets and private legal ordering: The global grain trade (1875–1914). *Journal of Global History* (2025). doi:10.1017/S1740022824000214</footnote>