“Factory” (from Latin facere, meaning “to do”; Portuguese: feitoria; Dutch: factorij; French: factorerie, comptoir) was the common name during the medieval and early modern eras for an entrepôt – which was essentially an early form of free-trade zone or transshipment point. At a factory, local inhabitants could interact with foreign merchants, often known as factors. […]
A factory could serve simultaneously as market, warehouse, customs, defense and support to navigation exploration, headquarters or de facto government of local communities.[…]
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. […]
Because foreigners were not allowed to buy land in these cities, merchants joined around factories, like the Portuguese in their Bruges factory: the factor(s) and his officers rented the housing and warehouses, arbitrated trade, and even managed insurance funds, working both as an association and an embassy, even administering justice within the merchant community.