Trading Empires

Trade made Venice a major maritime power throughout the Middle Ages and Renaissance, and an important centre of commerce, particularly for silk, grain, and spice and bullion. City defences were breached by the Visigoths and later the Huns under Attila, but the city gradually came under the protection of the eastern Roman empire, surviving even the Lombard attacks of 751. Though the Pope and his own son Charlemagne tried to bring Venice under Holy Roman Empire control, they were compelled to recognize Venice as Byzantine territory and grant the city trading rights along the Adriatic coast. From the 9th to 12th centuries, Venice grew to be an important trading centre whose power increased as that of Byzantium waned, particularly after the notorious fourth crusade in 1204, which Venice diverted into an attack on and sack of the ancient capital. The old Byzantine territories of the eastern Mediterranean were partitioned between Venice and the Latin crusaders, the city traded with Christian and Muslim powers, and, after the fall of Byzantium in 1453, carved out an area of influence known as the Duchy of the Archipelago. {1-3}

Enrico Dandalo

Through the connections of the wealthy Dandolo family, Enrico was entrusted with important missions to Constantinople and also served as Venetian ambassador to the King of Sicily in 1174 and to Ferrara in 1191. Though blind and 84 at the time, Enrico was elected Doge of Venice in 1192, when he proved a most capable and energetic administrator. He negotiated treaties with Verona, Treviso, the Byzantine Empire, the Patriarch of Aquileia, the King of Armenia and the Holy Roman Emperor, Philip of Swabia. He led and won a war against the Pisans, and reorganized Venice's currency, issuing a new, large silver coin known as the grosso or matapan that bore his own image.

His most notable achievement was diverting the Fourth Crusade, however, when, although well past the age of 90, he placed himself in the forefront of events, standing armed and armoured in the bow of his galley, and encouraging the attackers as they made their landing at Constantinople. Venice benefited commercially from conquering her trade rival, but she also paved the way to Ottoman control of the eastern Mediterranean: a Pyrrhic victory in the longer term.{1-3}

Medieval Italy

Venice was indeed a world power by the late 13th century, dominating Mediterranean commerce with a commercial fleet of some 3,300 vessels. To trade must be added the conquests of prosperous Mediterranean islands — Crete in 1204, Corfu in 1383 and Cyprus in 1489. Merchant families vied with each other in building palaces along the canals, and became acknowledged patrons of the arts. Unusually for the times, Venice was a republic, though was also known for shrewd politics and sharp commercial practice. The Great Council, comprising the leading nobility, appointed public officials and elected a Senate of 200 to 300 individuals. The chief executive was the Doge, an onerous position theoretically held for life, but often terminated at perceived failure. For efficient administration of the city, the Senate generally operated through the Council of Ten, and kept its political life away from military activities, which were often furthered by large mercenary armies.{1-3}

Venice was also the first state (in 1172) to issue government bonds, which originated in the 'prestiti', a tax raised on all its citizens in their struggle against the Byzantine Empire. The city was divided into six districts, the wealth of their citizens individually assessed, and the collected tax forwarded to the Grand Council, which immediately set about building a vast fleet. This first enterprise ended in failure: Venetian hostages in Constantinople were not rescued, no booty was won and in fact the fleet contracted plague instead. But this prestiti earned a 5% annual interest, making it more of a loan than a tax. A hundred years later, in 1262, the Venetian debt was formalised into a single fund, the Monte Vecchio, a fund that paid a 5% interest on the loan in two annual instalments. The Monte Vecchio was often employed in later centuries when Venice needed loans to fund her incessant wars with Genoa, Milan and Ferrara. Because these prestiti were traded, often at a steep discount reflecting the chances of Venice repaying its debt, the loans in fact approximated to bonds, the last such being issued just before Napoleon closed down the republic in 1797. {6}

Venice declined as successful economies based on long-distance commerce gave way to those based on land revenue and domestic consumption, a pattern embodied in the Atlantic powers (Holland, France and England). {7} Early growth owed much to a fortunate location, of course, plus entrepreneurial spirit, maritime skills, and advanced banking and commercial practices. Western Europe sought spices, silks, dyeing materials and cotton. The Levant sought woollen cloths, slaves and precious metals. Supplying the two earned handsome profits for merchants: commonly 10-20%, even 40% on occasion, but security costs were also high. Venice built navies to ward off piracy and threats by other European nations, spending 45-50 tons/year of silver on such purposes in the 15th century, and perhaps 100 tons/year in the 17th century. To these costs had to be added large expenditures for war against the Ottomans and rival Europeans. Venice made its money through custom duties and taxes, the last gradually shifting from indirect to direct. Nonetheless, merchants were often compelled to loan to the public coffers, though the loans earned 5% p.a. Venice had sophisticated banking facilities, and offered bonds in the 16th and 17th centuries that earned 6-14% interest, and could be traded. There were also losses, however, with the debt sometimes consolidated in the Monte Vecchio, but the state was generally solvent. The annual investment in shipping reached impressive totals, perhaps 125 tons of silver for the Venice-Constantinople route at the end of the 16th century, 50 tons for the Aleppo run, and 25 tons each to the English and French routes. {6}

But as Venice was sidelined by the Atlantic routes, her own manufactures also came under pressure. English cloths undercut on prices, and more so during the Industrial Revolution, when Venetian wages slumped, indeed throughout Italy. Average wages in the 18th century were barely at subsistence level, and actually fell below subsistence in the following century, where Britain's were four times subsistence, and America five to six times subsistence. {6-7}

Precious metals were an important part of Venetian trade. The value of gold with respect to silver in China was around 1:7 in the 15th and 16th centuries, and in Europe around 1:11 — a differential offering handsome profits to anyone facilitating trade between the two: Venetians cargoes were indeed around 60% bullion by value in the 1490s. {9}

History, the industry of its citizens and the geographical location conspired to make Venice the foremost trading nation of the Middle Ages. Business was always open to talent, and the Republic did not ossify into rigid inequalities that brought about the French revolution, or facilitated the industrialization of Britain. But Venetian power had been gradually declining for two hundred years when Napoleon overthrew the Republic in 1797, though music in particular still flourished and there were constant pageants and spectacles, as indeed there are today, in a Venice reinvented as a tourist destination that 12 million visit annually. But working conditions were harsh in Venice until the opening of the Suez Canal in 1869, when Venice became an embarkation point for rich Europeans and Americans travelling east. Trade had by-passed the city, and her workshop products were not competitive against those of industrialized northern Europe. Many of the poor emigrated to America, or joined socialist movements that continued to threaten the post war consensus. {6-16}

South-east Asia Trading Empires

Several medieval trading empires grew up on the rich trade between China and India: Champa, Chola, Srivijaya, Sunda and Sailendras and Majapahit in particular. Chinese goods were generally shipped to Funan (on the Mekong delta) and then to Kra (now Thailand/Malaysia), ported across the isthmus, and then transhipped to India and beyond. Religious and cultural influences travelled in the opposite direction, creating Hindu and Buddhist kingdoms throughout the region, from Myanmar to Indonesia. {17} Coinage remained primitive, however, and little is known of commercial practices. {18}

References and Further Reading

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