In imitation of the grandfather the grandson gave a commission to a Saxon, in whom he had confidence, to collect artists and artisans in Germany and bring them to Moscow, but he was prevented from carrying out his scheme by the Livonian Order (1547).
After a dilatory war of three years he concluded a peace on the ground of free commercial relations, and then he attacked the Livonian Order, on the pretext that the Livonian town of Dorpat had not paid tribute according to ancient treaties.
The connecting link between the western and the eastern Baltic was the isle of Gotland, where German merchants from Lubeck had established a depot (the later Visby)_ The fur-trade with the Esthonians and Livonians proved so lucrative that a German colony was planted in Livonia itself at what was afterwards Riga, and in 1201 for its better security the colony was converted into a bishopric. A still firmer footing was gained by the Germans on Livonian soil when Abbot Theoderick of Riga founded the order of the Sword (a foundation confirmed by the pope in 1204), whose duty it was to convert the heathen Esths and Livs and appropriate as much of their land in the process as possible.
But the master of the Livonian province and the German master would not obey a Polish vassal, and went their own way; the German master took the grand master's place as a prince of the Empire.
In spite of the treaty of 1710 and the efforts of the Livonian nobles, it was not till 1802 that its restoration was effected under the patronage of Alexander I.