Economic history of Venice

Venice, which is situated at the north end of the Adriatic Sea, was for hundreds of years the richest and most powerful centre of Europe, the reason being that it gained large-scale profits from the adjacent middle European markets.

This prompted the Spanish and the Portuguese to embark on the search for the new route to India, leading to the discovery of the Americas and the start of the modern age.

It left production and small business to the strata of its society that were not capable of becoming a member of the council - which was the visible sign of nobility.

But these voyages, similar to the costly convoys to Flanders, Tunisia, Syria and Constantinople, required huge amounts of capital, which normally means credit.

This provided (especially when keeping in mind the Venetian conquest of Crete and other important points) the backbone of free trade and of the convoys of large ships sent to the markets around the Mediterranean sea.

In addition it offered many opportunities to regulate the local balances of power and secured partly the means of living - especially wheat - for the mother town.

So Venice had to develop a highly flexible system of currencies and change rates between coins consisting of silver and gold, if it wanted to preserve and enhance its role as platform and turntable of international trading.

In addition Italian traders were used to means of payment, which could help avoiding transportation of gold and silver which were expensive and dangerous.

Crediting became a way to bridge the ubiquitous lack of noble metals, and at the same time, to accelerate goods turnover, were it with the help of a simple bank transfer, were it with the aid of a bill of exchange.

Cambists played an important role just as well as the later state-controlled banks whose predecessors in Venice was the "wheat chamber" or Camera frumenti.

Close to the end, the Venetian state became a conservative agrarian system, which, despite increasing tourism, met incomprehension.

Chioggia (Clodia) was a Roman military colony and in the Fontego dei Turchi above the Canal Grande a coin from the days of emperor Trajan was found.

The early phase of "feudalization" together with the acquisition of wide real estates, brought huge amounts of capital to certain families.

With the destruction of Comacchio (883) that controlled the mouth of the Po River, Venetians liberated the trade till Pavia and Piacenza – the more as a treaty with Charles "the Fat" had opened his Realm.

Much more difficult was the relation to Istria and even more Dalmatia, where the Narentani, pirates of the Dalmatian coast resisted until 1000, when doge Pietro II Orseolo conquered the northern and central part of the region.

Privileges in the Holy Empire worked well together in combination with supremacy in the Adriatic Sea and a chart of the Byzantine Emperor of 992.

In compensation for military aid against the Arabs of southern Italy, the Byzantine emperor Basil II had reduced the tax for the ships by half.

[10] Venice played an important role in Byzantine trade, as a commercial outlet and a supply center to the empire.

Having conquered Constantinople and built a colonial empire, Venice was the predominant power in the eastern Mediterranean – with Genoa as enemy.

Trade alone was unable to account for such large amounts of capital, necessary to support not only numerous nobles, but also Populari grassi, men who had grown rich very fast, acquired estates on the Terraferma.

Although Venice was completely unable to conquer the three eighths of the old empire that the crusaders had conceded to Enrico Dandolo, it secured strategic points.

Venice so developed a system of regular convoys with strong protective means, but also encouraged private trading.

De Vries attributes this decline to the loss of the spice trade, a declining uncompetitive textile industry, competition in book publishing due to a rejuvenated Catholic Church, the adverse impact of the Thirty Years' War on Venice's key trade partners, and the increasing cost of cotton and silk imports to Venice.

Specialists like silk weavers from Lucca or mill builders and bakers of the Holy Roman Empire migrated in droves.

Consequently, Venice was forced to expand within its narrow territory, so gardens and swamps were largely replaced by dwellings.