Danish trade monopoly in Iceland
[2][3] From 1602 until 1619, the trading monopoly was tied to the Danish cities of Copenhagen, Malmö (now in Sweden) and Helsingør.
[5] The crown attempted to enforce licences upon English fishermen operating in Iceland, it prevented English vessels from passing through the Danish straights to trade in the Baltic Sea, and finally offered for Henry VIII to take Iceland as collateral for a loan.
Although these efforts failed, the Crown successfully pitted a group of German traders against the English.
The Danish crown increasingly sought to undermine their control and reap the benefits of trade directly.
The cost of trade rights to a particular port was tied to the volume of fish products it produced, as they were Iceland's most valuable export.
Unlike most European colonial companies, it was owned by its operating merchants who conducted business relatively independently.
The shareholders of the company were exclusively Danish and were primarily smaller merchants with connections to trade in Iceland.
[3] By 1787, the restrictions of the monopoly were reduced and all independent Danish and Norwegian merchants were allowed to trade within Iceland.
[3][8][9] The Icelandic public was reliant on foreign imports for household goods, fishing equipment, and food.
Under the trading monopoly, Icelanders became reliant on a small number of merchants who could not supply their needs, and the period was marked by scarcity.
Smugglers and foreign merchants, who were typically from the Netherlands, are recorded to have violated the Danish monopoly and supplemented the limited supply.
[10] The monopoly stagnated economic potential in Iceland, causing demographic crises and maintaining inequality.
It also prevented external investment, even from Danish merchants, meaning that all profit derived from trade with Iceland was funnelled back to Denmark.
[11] Although the monopoly officially ended in 1787, demands for free trade with countries outside of the Kingdom of Denmark were not met until 1855.
