Factory (trading post)

A factory (from Latin facere, meaning "to do"; Portuguese feitoria, Dutch factorij, French factorerie) was an establishment for factors or merchants carrying on business in foreign lands, initially established in parts of Medieval Europe. Factories eventually spread to other parts of the world in the wake of European trading ventures and, in many cases, were precursor to colonial expansion. Factories could serve simultaneously as market, warehouse, customs, defense and support to navigation or exploration, headquarters or de facto government of local communities. The head of the factory was the chief factor.

In North America, this trading formula was adopted by colonists and later Americans to exchange goods with local non-Western societies, especially in Native American territory. In that context, these establishments were often called trading posts.

Although European colonialism traces its roots from the Classical Era – Phoenicians, Greeks, and Romans established colonies around the Mediterranean – "factories" were a unique institution born in medieval Europe.

Originally, factories were organizations of European merchants from a state, meeting in a foreign place. These organizations sought to defend their common interests, mainly economic (as well as organized insurance and protection), enabling the maintenance of diplomatic and trade relations within the foreign state where they were set.

The factories were established from 1356 onwards in the main trading centers, usually ports or central hubs that have prospered under the influence of the Hanseatic League and its guilds and kontors. The Hanseatic cities had their own law system and furnished their own protection and mutual aid. The Hanseatic League maintained factories, among others, in England (Boston, King's Lynn), Norway (Tønsberg) and Finland (Åbo). Later, cities like Bruges and Antwerp actively tried to take over the monopoly of trade from the Hansa, inviting foreign merchants to join in.

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