Twice a year, under heavy protection from the Venetian navy, a fleet of some two dozen or so merchant galleys laden with silver would sail for Egypt or the Levant. Silver was in short supply throughout Asia, and its price against gold was correspondingly high, resulting in huge profits for the Venetian bullion-traders. Moreover, in the early decades of the thirteenth century the Asian need for silver became acute. Marco Polo, during his travels in China, had noticed the use of paper money notes, which were ‘as formal and authoritative as if they were made of pure silver or gold’. This innovation had yet to reach Europe, and even in China the implications of its use were not fully understood. To begin with, it had been backed by silver (as well as precious stones and gold). However, as the emperor’s need for money increased, so (according to Polo) he ‘had as much quantity of this paper money made that with it he could have bought all the treasures in the world’. The result was inevitable inflation and a decline in the value of paper money; at the same time, although the emperor insisted that merchants should trade in this form of currency, many came increasingly to favour the more solid and reliable currency of silver as a form of capital savings. Despite China’s vast empire, it had little access to silver, which soon began pouring in along the silk and spice routes from the Levant. Regular supplies from Venice increased, while the Venetian bullion fleet returned with cheaper gold from India and the mines of Sudan, Ghana, Mali and as far afield as the legendary Great Zimbabwe.
By judicious hoarding of its large gold imports, Venice was thus able to maintain a high rate of exchange for the gold Venetian ducat. However, by the 1330s it was becoming clear that this policy was also favouring the gold Florentine florin. As a result the florin, and the Florentine banks, were now achieving ascendancy on the Italian mainland and throughout Europe. In response to this development, in 1335 Venice surreptitiously began to reverse its policy, releasing larger quantities of its gold, whilst at the same time keeping back its supply of silver, causing the price of gold to fall against the dwindling supplies of silver all over Europe. This policy came to a climax in 1345, when the overstretched Florentine and Sienese banks were caught with large quantities of loans and investments in gold, whose price was now rapidly deteriorating. Even so, the Florentine banks had access to considerable assets, and might well have weathered this storm. But at this point the English king, Edward III, rendered penniless by his persistence in waging the Hundred Years War against France, reneged on his debts to the Florentines. This would contribute to the collapse in 1345 of the two largest Florentine-Sienese banks, run by the Bardi and the Peruzzi families, followed a year later by the third great Florentine bank, that of the Acciaiuoli family. The repercussions of these collapses, combined with widespread harvest failures in 1346 and 1347, left the European economy reeling. Banks throughout the continent found themselves short on funds, and without investment mainland trade slumped – whereas offshore Venice continued to prosper.
With its wealth bolstered by the increasing value of its large silver reserves, Venice could now afford to buy up supplies of grain from the eastern Mediterranean, as well as continuing to finance its other merchant ventures. The Republic’s growing eastern empire, which by this time included the large Greek islands of Negropont (Euboea) and Crete, as well as preferential trading rights with Cyprus, provided for its material needs such as corn supplies at a considerably reduced price, while its bullion trade continued apace. Moreover, Venetian currency manipulations had directly undermined the Genoese, and the slump in transalpine trade had also hit them particularly hard. Since Genoa’s high point after the Battle of Curzola in 1298, its trade had slumped by more than 50 per cent, while during this same period Venetian trade had increased by almost 40 per cent.
It is difficult not to see behind Venice’s policy of financial manipulation the guiding hand of an individual pioneer economist of some brilliance. This was so much more than simply a theoretical idea: it required the constant surreptitious and incremental pursuit of marginal exchange adjustments, whilst at the same time maintaining both balance and confidence in the very financial system being undermined. Yet the identity of this financial genius remains buried for ever amongst the anonymity of the city’s councils and their supporting hierarchy of civil servants.
As Venice was in fact ruled by a number of councils, with the doge a mere figurehead, it had a bureaucracy second to none. Indeed, the Venetian civil service was so efficient, meticulous and far-reaching that everything – from the population to the movement of shipping and the price of flowers – was duly recorded. Not for nothing did the great Swiss Renaissance scholar Jacob Burckhardt state that Venice ‘had a strong claim to be the birthplace of statistics’.
What had been achieved during this skilful financial manipulation had been no less than shifts in the foundations on which the entire edifice of commercial value had been built: one false move, and the whole pan-European system of money – tied to belief in the value of the precious metals that supported it – could have collapsed. Unlike Polo’s real ‘millions’, which had been dismissed as nothing, here were real millions that had been conjured up out of nothing. And as a result La Serenissima now reigned supreme.* Adventure, daring and chance – such were the characteristics of this early Venetian period, and such too were the characteristics of its guiding spirits, in both the fields of exploration and of finance. Yet this success could only have been built upon the solid base of the city’s stable and reliable institutions, which normally sought to efface such individuality. Here we see the creative tension that drove La Serenissima.
* A small city north of Venice.
† It has recently been claimed that the Great Wall was not yet built at this time, and it is true that the final version we know today was only completed during the Ming Dynasty, which lasted from the mid-fourteenth to the mid-seventeenth century. However, previous similar constructions, sections of which were incorporated into the present structure, date from as far back as the Qm Dynasty in the third century BC. As some of these early walls were more than 1,000 miles long, they would have proved a spectacular sight, which Polo would surely have remembered, or at least heard about.
* Many scholars now dispute this story about the Zeno brothers. Yet there is no denying that as early as 1291 a Venetian translation was made of the legendary voyage by the sixth-century Irish monk St Brendan the Navigator, who was said to have sailed west from Ireland until he reached the ‘Isle of Promise and Saints’. This was almost certainly a legend. Even so, it is known that Columbus read of St Brendan with great interest, as well as possessing a well-annotated copy of Polo’s Travels. Before setting out he is said to have declared that he was going in search of the ‘Island of St Brendan’.
† Sanuto’s maps, if not their intention, were for the most part grounded in reality and contained a revolutionary innovation. His detailed map of Palestine was the first to use a network of straight lines similar to longitude and latitude, intended to delineate relative distances and territorial area with greater accuracy than hitherto. It has been argued that had he extended this technique to a map of China, his geography of the world might have persuaded Columbus that his landfall in 1492 could not have been China, as he believed. However, this is unlikely, as Columbus ignored the correct Ancient Greek calculations of the circumference of the Earth, convinced by the writings of the thirteenth-century English Franciscan monk and pioneer scientist Roger Bacon that the distance west from Spain to China was much less than had previously been supposed.
* Though as with Columbus in America, here too the Genoese had been preceded some 500 years earlier by the Vikings, whose far-flung expeditions had by this time passed into the mists of myth and oblivion.
* An indication of the primitive state into which trade had lapsed since the classical era can be seen in the fact that this was the first gold com minted in Europe since Roman times.
* There was then, just as there is now, no necessary and indissoluble link between the value of all-but-usel
ess precious metals and the value of the functional commodities they purchase. Economists define such a contingent link as fiduciary – that is, dependent entirely upon confidence. The accelerating fluctuations caused by Venice in the value of coinage and precious metals (against each other, as well as against commodities) could easily, in inexperienced hands, have caused such inflation that faith in gold and silver prices simply collapsed. This would have precipitated a flight from precious metals and coinage into more tangible and evidently useful land and commodities. These valuables may have been unwieldy, and thus may have destroyed the efficiency of international trading, but their very unwieldiness and solidity were what inspired confidence. Such loss of faith in investable currency would occasionally be precipitated, in one form or another, with catastrophic effects over the coming centuries. Indeed, more ‘experienced’ hands than those of that unknown fourteenth-century Venetian financial genius continue to this day more or less deftly to undermine the very system they seek to exploit.
2
Survivors and Losers
THE VENETIANS DID not have long to enjoy the fruits of their financial chicanery. It was as if the wrath of God himself had been incurred, prompting Him to awesome retribution. All who witnessed the events of the ensuing years would come to see them in such biblical terms. In the beginning came the first rumblings. Just a year or so after the collapse of banks across Europe in the middle of the fourteenth century, Venice would suffer a serious earthquake, which caused the bells of St Mark’s to toll and clang in discordant fashion, while chunks of masonry fell from other chiming church towers into the canals. This was followed by another earthquake the following year, when there were such low tides that the Grand Canal was barely navigable and the citizens watched fearfully as the mainland mudflats crept closer and closer to their naked, wall-less defenceless city.
Meanwhile, far away in the northern Black Sea, the Golden Horde of the advancing Mongol army that had swept into Russia began laying siege to the Genoan trading outpost of Kaffa (modern Feodosiya) on the coast of the Crimea. By now many of the Golden Horde had begun to suffer from a mysterious and hideous disease, which according to information gathered from merchants by the contemporary Arab writer Ibn al-Wardi had originated in the ‘Land of Darkness’ (now thought to have been central Asia). The contemporary Italian chronicler Gabriele de Mussis, piecing together first-hand reports, recorded how in 1347:
the Tartars, worn out by this pestilential disease, and falling on all sides as if thunderstruck, and seeing that they were perishing hopelessly, ordered the corpses to be placed on their engines and thrown into the city of Kaffa.
Some historians have seen this as the first recorded instance of germ warfare. The disease was soon so rampant within the city walls of Kaffa that the inhabitants:
were not able to hide or protect themselves from this danger, although they carried away as many dead as possible and threw them into the sea. But soon the whole air became infected, and the water poisoned, and such a pestilence grew up that scarcely one out of a thousand was able to escape.
Those lucky enough to escape set sail for home. Yet by the time they had crossed the Black Sea and reached Constantinople symptoms of the illness had begun to appear. These were recorded by the Byzantine emperor himself, John VI Cantacuzenus:
Sputum suffused with blood was brought up, and disgusting and stinking breath from within. The throat and tongue, parched from the heat, were black and congested with blood. It made no difference if they drank much or little. Sleeplessness and weakness were established forever.
Abscesses formed on the upper and lower arms, a few also in the maxillae [upper jawbone], and in other parts of the body. In some they were large and in others small. Black blisters appeared. Some people broke out with black spots all over their bodies.
Little wonder this pandemic would later be christened the Black Death. Cantacuzenus recognised it as the Athenian plague that had been described by Thucydides in 300 BC, and most medical historians now agree that this medieval outbreak was a virulent and extremely contagious strain of the bubonic plague (so called because it gave rise to buboes or boils). All Cantacuzenus could do was describe its symptoms, and the course it took: ‘some died the same day, a few even within the hour. Those who could resist for two or three days had a very violent fever’; those who survived ‘were no longer possessed by the same evil, but were safe. The disease did not attack twice in order to kill them.’ Yet despite the emperor’s meticulous attention to detail, no physician could discover a cure: ‘There was no help from anywhere.’ Only now do we know that this pandemic almost certainly arose from a bacillus passed on by the bite of a flea (Xenopsylla cheopis) carried by the black rat (Rattus rattus). And as the Venetian merchants fled Constantinople in the ensuing panic, their galleys carried with them some of these black rats. On their voyage home during the latter months of 1347 these galleys called at various Venetian trading ports on the way, spreading the plague to Negropont (Euboea), Crete, Corfu and up the Adriatic islands, to Trieste.
The first recorded death from plague in Venice occurred on 25 January 1348. The putrid waterways provided an ideal breeding ground for the black rats, which quickly spread. By the coming of the heat and stink of spring, officially designated barges had begun plying the canals crying out for ‘Corpi morti’ (dead bodies). Corpses were transported to be buried on remote islands of the lagoon. Soon there were so many that they were simply tossed ashore to rot. By the height of summer it has been estimated that there were 600 people dying each day. The streets were littered with suppurating bodies, the canals bobbed with bloated corpses; the stench was almost unendurable. Commercial activity, and even the city’s renowned bureaucracy, had come to a virtual standstill. The prisons were thrown open in an attempt to replace municipal manpower, but as many as could simply fled to the mainland. This belatedly included most of the city’s physicians, who had suffered disproportionate losses whilst vainly attempting to treat the disease.
Within months the disease had swept across the Alps and by the summer of 1348 it had even reached England. An anonymous monk in Austria recorded, ‘And in this year a pestilence struck that was so great and universal that it stretched from sea to sea, causing many cities, towns and other places to become almost totally desolated of human beings.’ At the same time bands of frenzied survivors, maddened with grief and terror, sought out scapegoats. Jews throughout Europe soon became targets, and the Jews of Venice were no exception. They lived on the island of Spinalunga (now known, after its former inhabitants, as Giudecca), which made them easy targets. When news reached Italy from Switzerland that two Jews had been tortured into confessing that they had poisoned the local wells with a plague powder concocted from ‘Christians’ hearts, spiders, frogs, lizards, human flesh and sacred hosts’, the situation became further inflamed. During the course of 1348 Pope Clement VI was forced to issue two papal bulls instructing the clergy to protect the Jews, and condemning those who blamed the Jews for the Black Death as having been ‘seduced by that liar, the Devil’.
In Venice all citizens lived cheek-by-jowl, its population being the most concentrated and urbanised in Europe. As a result, no class of citizens was to be spared the scourge of this pandemic. By October 1348 as many as fifty noble families had been completely wiped out, their centuries-old names vanishing into history. Such losses were reflected several times over amongst the poor. To make up for this depletion, many exiles were encouraged to return, and even debtors who had fled or been imprisoned were absolved on payment of a token amount of their debt. Formerly Venice had guarded its citizenship with jealous pride; rarely were any other than those born in the city permitted to become Venetians. Yet within nine months of the plague arriving, the government was even advertising for citizens, promising that anyone who settled in Venice within the year would be guaranteed citizenship. A crucial aspect of the Republic’s character was now showing itself – the belief in pragmatism rather than ideals, no matter how long these
ideals may have been held.
It is impossible to tell how many died. Most experts concur that the toll across Europe probably amounted to around one-third of the population, with other estimates varying between 20 per cent and 80 per cent mortality. The involvement of Venice and Genoa in the lucrative Black Sea and Levantine trade had made them amongst the richest, and probably the most populous, cities of the Western world – inspiring the contemporary poet Petrarch to refer to them as ‘the twin torches of Europe’. Yet they would pay dreadfully for their involvement with the Orient, suffering much higher mortality rates than other trading cities. According to the historian Christopher Hibbert, writing of Venice, ‘In all there were some seventy-two thousand deaths in a population of about a hundred and sixty thousand.’ Genoa is said to have suffered a 60 per cent loss of population.
If this were not bad enough, Venice would be stricken by lesser outbreaks of the plague at least once a decade throughout the last half of the fourteenth century. Despite this, the city’s trade quickly revived in the wake of the Black Death. The main engine behind this revival was the Arsenale, the city’s ship-building centre. This formidable enterprise had been founded as early as 1104 by the city authorities, its name deriving from the Arabic dar sina’a, meaning ‘place of construction’, strongly suggesting that, like several European innovations of the medieval period (such as negative numbers and double-entry bookkeeping), this was based on an Arab original. The Arsenale was soon producing galleys of the highest standard, which were leased to private merchants for commercial enterprises. It also began producing armed galleys for the city’s defensive fleet and to protect the bullion convoys to the eastern Mediterranean. The industry and efficiency of the Arsenale would soon become legendary. Here, for the first time, assembly-line production was introduced (nearly 600 years before Henry Ford adopted this method for his car-building plants). Once the bare hull was complete, it would be launched, then towed up a canal overlooked by a wall. As the ship passed along the canal, through windows in the wall would be passed in succession equipment, sails, armaments and dry-goods supplies (culminating in barrels of hard tack), until the ship emerged at the other end of the canal, entering the lagoon fully constructed, rigged and stored-up, ready for manning by a crew of sailors and oarsmen. Utilising sail-power, and disciplined rowers at close quarters, meant that these galleys were highly manoeuvrable (prior to the sixteenth century Venetian galley-oars were powered by highly motivated, well-fed young Venetians). Besides rapid production, this assembly-line manufacture would also enable standardised ships’ parts to be transported to Venetian depots throughout the Mediterranean, available for immediate replacement of faulty or damaged equipment as soon as a ship put into port.
Venetians Page 3
