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The Economic History of Venice

Venice was created in the fifth century A.D. by refugees from the destruction wrought by wars and invasions in northern Italy. First there was the war between the Ostrogoths and the Byzantines. Later the Huns under Attila, after their defeat in Gaul, marched south passing through the passes to the east of the Alps and destroyed the great cities of Aquileia and Padua. Some of the refugees fled to the mudflats in a lagoon formed by the estuaries of three rivers of northern Italy. A coastal current of the Adriatic Sea piled up mud and sand in long, thin islands that left a protected lagoon. There the refugees constructed houses of wattle and daub on posts driven into the mud. They wove tree branches together and anchored them with stakes to protect the house pilings from the action of the waves. They constructed boats and fished the open sea. For trade with the mainland, the refugees dried sea water to get salt. The economy prospered.

In the year 528 A.D. the secretary to the Ostrogothic king of Italy wrote of Venice,

There lie your houses like seabirds' nests, half on sea and half on land...Your inhabitants have fish in abundance: the same food for all, the houses alike; and so envy, that vice which rules the world, is absent there. All your activity is devoted to the salt works, whence comes your wealth. Upon your industry all other productions depends; for there maybe those who seek not gold, yet there never lived a man who desires not salt. For your gains you repair your boats, which like horses you keep tied at your doors. Fishing is the means of livelihood, salt the industry, democratic equality the social note.

By 548 A.D. Venice was powerful enough that the Emperor Justinian in Constantinople sought the aid of Venice in his war in Italy against the Lombards. From the security of their location the Venetians could shift from being refugees to being aggressors. They began to take control of trade in the Adriatic Sea. They were not without competitors and they had to contend with pirates on the Dalmatian coast across the Adriatic from Italy.

The Venetians suppressed the pirates and established trading stations where the pirates had their bases. They were called colonies but they were in actuality conquered territories inhabited by Slavs that from time to time rebelled against Venetian control.

The rule of the Venetian Republic was unique. While Venice was no democracy there was a concerted attempt to maintain a degree of equality. The city's administrators were selected from a designated elite but any attempt on the part of these administrators to aggrandize power was severely punished. The top leader was called the Doge, a president elected for life by an elaborate set of four stages of selections of electorates. Each electorate selected by vote the electorate to select the next stage until the fourth stage in which an electorate of 41 chose the Doge (duke) of Venice. The business of the government of Venice was business.

James Morris in his The World of Venice(p. 42-43) captures the spirit of the sharp-dealing enterprises of the Venetians:

When the Fourth Crusade was launched in 1202, the Venetians were asked to ship the Frankish armies to Palestine. "We come in the name of the noblest barons of France," said the emissaries to the Doge Enrico Dandolo."No other power on earth can aid us as you can; therefore they implore you,in God's name, to have compassion on the Holy Land, and to join them inavenging the contempt of Jesus Christ by furnishing them with ships and other necessities, so that they may pass the seas." The Doge returned the classic Venetian reply, "On what terms?" he asked.

Nor did he allow any soft Christian scruples to affect the conduct of the campaign. The agreed fee for the job was 85,000 silver marks, payable in four installments, plus a half of all booty: and for this the Venetians were to ship 33,500 men to the Holy Land, with their horses, keep them in provisions for nine months, and contribute their own quota of soldiers and warships to the war. The Frankish army duly arrived in Venice, and was encamped upon the island of the Lido. The ships and supplies were ready as promised. The Venetians, who had some doubts about actually taking part in the holy enterprise, were encouraged in their enthusiasm by a round of liturgy and pageantry. The imperturbable old Dandolo, practically blind and almost ninety, became a crusader and declared his intention of leading the fleet in person. But when it came to the crucial point of setting sail, the Crusaders did not have the money to pay the final installment of 34,000 silver marks.

Old hands at unfulfilled contracts, the Venetians were undismayed. They first set a watch upon all the approaches to the Lido, to ensure that the knights-at-arms did not slip away, and they made a proposition of their own. The Crusaders could still be shipped to the Holy Land, they said, if they would agree to stop on the way and subdue one or two rebellious Venetian colonies on the Dalmatian coast, thus securing the Republic's trade routes through the Adriatic. The Franks accepted these unorthodox terms, the great fleet sailed at last, and the Dalmatian ports were subdued one by one: but the Venetians still had further profits to exact. Dandolo next agreed with the adaptable Crusaders to make another diversion, postpone the humiliation of the infidel, and capture the Greek Orthodox Christian bastion of Constantinople, with whose Emperor the Venetians were, for one reason and another, angrily at odds. Led by the old blind Doge himself, they stormed the 400 towers of the city, deposed the Emperor, loaded their ships with booty, and divided the Empire among themselves. The Crusade never did reach the Holy Land, and the temporary fall of Byzantium only strengthened the cause of Islam. But from a simple breach of contract, brilliantly exploited, the Venetians became 'Lords and Masters of a Quarter and a Half-quarter of the Roman Empire.'

The fall of Constantinople to the Ottoman Turks in 1453 stifled the Venetian commerce in the eastern Mediterranean and the Portuguese voyages to Asia broke the Venetian monopoly. Venice continued to exist as an independent city-state until its conquest by Napoleon in the early nineteenth century. In the latter part of the nineteenth century Venice joined Italy.

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