The Venetians: A New History: from Marco Polo to Casanova (4 page)

During this period gold was the most valued currency, but there was also a practical need for lesser-valued silver coins. Indeed, much of the Byzantine Empire and the northern-European Holy Roman Empire maintained a currency based on a silver standard. However, the exchange rate between gold and silver varied considerably across Europe and the Levant. By the beginning of the thirteenth century Venice had begun importing ever larger quantities of silver from the main European mines of Hungary, Germany and Bohemia. This soon accounted for around 25 per cent of European-produced silver, which was then exported to the eastern Mediterranean. And it was here that the Venetian administration revealed its banking acumen.

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-useless 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

T
HE
V
ENETIANS 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.