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There is known to have been  a church at Thaxted in 981,  and there is some excavation evidence that it lies underneath the fourteenth-fifteenth century church.  The Domesday Book records Thaxted as a well-established and prosperous community by the end of the Saxon period.  It certainly was a very large village in Essex terms, and may well have been a proto-urban  settlement.

It is however as a medieval town that Thaxted is renowned.  The area of the town was owned by a number of manors, the largest being Thaxted Manor which was based within the town itself.  Thaxted was granted a market in 1205, but it probably had already had a market function before that date.

In the fourteenth century the documents record rapid expansion in the town, when it became the centre of a thriving cutlery industry.  In the Poll Tax returns of 1393 there were 79 cutlers, 11 smiths, 4 sheathers and 2 goldsmiths, which means that over a third of the adult male population were employed in the cutlery and associated trades.  There is no obvious reason why the cutlers chose Thaxted, although it is known that the manor of Thaxted encouraged the industry by introducing cheaper rents.  The earliest references to the industry in Thaxted are late thirteenth century.  The evidence of the fourteenth century surveys is that the industry attracted a large number of immigrants to the town. The fourteenth century and later expansion, contrary to national economic trends, was due to the cutlers alone.  The industry appears to have died out by the sixteenth century.

The earlier church was replaced by an ambitious rebuilding programme in the fourteenth and fifteenth centuries, probably financed by the cutlery industry.  Town Street runs downslope from the church in a south-western direction. The Manor House stood on the west side of Town Street.  A survey made in 1348 describes a structure with two courtyards surrounded by ranges of buildings and gardens.  By 1393 some of the manor buildings were ruinous, and the list of ‘new rents’ describes the building of dwellings along the western side of Town Street.  The main dwelling house itself appears to have survived until the mid-eighteenth century.

The location of the Thaxted market-place is of interest.  The evidence from the surviving buildings indicates that  Town Street was originally considerably wider and that it extended northwards as far as the south side of the church and Mill Row.  It is suggested that originally much of this area served as the market-place.  At some point (possibly the fifteenth century) the area immediately to the south of the church door was incorporated into the churchyard.  The guild-hall at the head of Town Street was built in 1450, and the area between it and the church infilled by the building of Stoney Lane in the fourteenth to fifteenth century. Middle Row, between Mill End and Orange Street, at the lower end of Town Street also appears to be market-place infill, and was almost totally developed by 1393.

As well as the Town Street Guild Hall,  there was also a second Guild Hall built by the Fraternity of St John the Baptist in Newbiggen Street.  Both Guild Halls had open ground floors, presumably as cover for shops.

Settlement spread out from the core along Bolford Street, Newbiggin Street, Park Street and Weaverhead Lane. Fieldwalking and metal-detecting in the Park Farm fields around the Church Mill have produced a number of  medieval coins and tokens, including three from France, suggesting active cross-channel trade with the town.  It is possible that the quantity of money and tokens found in this field indicates that it had an occasional use as a fair green.

The cutlery industry needed sites close to water.  The cutlers therefore congregated by the stream that ran through the centre of the town.  Middle Row was built at the Mill End  of Town Street and appears to have largely consisted of cutlers premises. Some excavation evidence, in the form of bone-working debris, has been recovered from sites on Town Street and Weaverhead Lane.

The cutlery industry appears to have died out by the sixteenth century. The charter of 1556 refers to ‘greate ruine and decay by reason of greate povertie and necessyti’, and granted Thaxted the status of a full borough in an attempt to halt the decline.  In the sixteenth century weaving made an appearance, and an attempt was made to establish a Guild of Clothiers in 1583.  They appear to have congregated on Newbiggin Street.

After the completion of the building of Newbiggin Street, the size and plan of Thaxted remained relatively unchanged  until recent times.  The market at Mill Row had been abandoned as a trading-place by the sixteenth century and was instead used as the ‘town bombey’ or midden.  In the mid-nineteenth century the present row of cottages was built there.  The Manor House continued in use until the mid-eighteenth century, but the remainder of the buildings had disappeared by then, and no trace of the house itself can be found now.

Thaxted became a stronghold of Nonconformism in the seventeenth and eighteenth centuries, as reflected in the number of chapels built in the town.