God & Spice: How Venice Got Rich, Why It Matters

A New Atlantis: The Economic Rise of Medieval Venice

Today, Venice is an expensive holiday destination for young, often love-stricken travelers.  It is a place of romance, of beauty, of relaxation.  But it was not always so.

For hundreds of years, from the Medieval to Baroque periods, Venice was the center of a rich and powerful maritime empire.  It was a bustling metropolis, a factory; it was the nexus of European industry and ingenuity—even the land Venice is built upon was made by man.

This is important: understanding how Venice got rich can help us understand some basic principles about economic growth.  In fact, we might just be able to answer the great question of our age: how do countries get rich?

Location, Location, Location!

The story of Venice really begins with its location:

Venice was located on a stretch of boggy islands at the edge of a large lagoon—hardly a place you would expect a medieval town to flourish, since it lacked land and natural resources, was prone to flooding and plague.  But Venice’s location was also a blessing.

The city was situated perfectly to profit from, and eventually dominate, an old Roman trade route that linked Western Europe and the Byzantine Empire.  There was big money to be made in importing spices from the Levant (spice not only tasted good, but it helped preserve food in the days before refrigeration), and eventually in transporting crusaders from France to the Holy Land.

Also, its location, sheltered as it was by the easily defensible lagoon, largely insulated Venice from the Muslim pirates who ravaged Christendom between the eighth and twelfth centuries—Venice was one of the last Christian ports left standing.

While spice helped put Venice on the map, Venice really made its mark by transporting pilgrims and crusaders.

Between 950 and 1150 AD Europe underwent a pervasive religious revival that led to a surge in pilgrimages.

Pilgrims traveled far and wide to pay homage, and pray (especially for healing) to the saints and apostles at holy sites.  Along the way they would see the sights (castles, cathedrals, Roman ruins), and pick up knick-knacks and “holy” relics—favorites included saint’s bones, pieces of the true Cross of the crucifixion, or bits of Christ’s robes.

My favorite pilgrimage site was the tomb of “saint” Guinefort, a dog who saved his master’s baby from a snake, but was killed because of a case of mistaken identity.  The dog-saint allegedly performed healing miracles at his shrine, especially upon children.

While most pilgrims remained in Europe, where it was comparatively safe and cheap, an increasingly significant number began traveling to the Holy Land—Jerusalem was the ultimate pilgrimage site.  How did Venice profit?  They provided the ships.

Shipbuilding in the Arsenal: Venice’s Growing Predicate Industry

In its prime, the Arsenal could build a galley a day: more than far larger countries, like Spain, could manage.

Of course, the industrious Venetians were not content to remain Medieval Europe’s cruise line: they reinvested their profits into shipping, and greatly expanded their merchant fleet and navy.  Before long, Venice was the Mediterranean’s premier naval power.

And their timing could not have been better: when the crusades to the Holy Land began during the eleventh and twelfth centuries, Venice was in a position to transport the massive Frankish armies abroad.

Over the next two centuries, Venice grew in wealth and power by transporting Western soldiers and pilgrims to the Levant, and returning with cargoes laden with eastern spices, silk, and other exotic delicacies.

By 1418, Venice had acquired a complete monopoly on Mediterranean pilgrim transport, and only had one remaining rival in the spice trade (another Italian city state called Genoa).

Venice’s lucrative pilgrim and spice trade supported a host of other ancillary industries.  Chief among them was shipbuilding—and boy did Venice build ships.  Venice amassed such an enormous navy that in 1423 Tommaso Mocenigo, the Doge of Venice, boasted (on his deathbed) that there were over 3,000 small transports, 300 trading cogs, and 45 war galleys—all of which were made in Venice.

This navy employed many people, in fact, Venice had some 36,000 sailors at its command.  This was a massive number of men.  Consider that even today the British Royal Navy only employs some 32,000 active-duty sailors.

In addition to that, Venice’s shipyards, known to history as the Arsenal, employed roughly 40,000 people, who manufactured everything from gunpowder, to sails, to biscuits—anything that they needed, the Arsenal made.

Venice was acclaimed for its economic diversity. One specialty was making pigments for painters. Men like Titian (above) made fortunes creating and dealing art and pigments.

In fact, Venice had a strict “made in Venice policy”; it was, quite literally, illegal to import anything that Venice could hypothetically make.

This is the primary reason Venice’s economy grew so magnificently diverse.  Interestingly, this is primarily what made Britain so rich during the nineteenth century—economic isolation, combined with increasing demand, helped cause the Industrial Revolution.

But as large as the Venetian Arsenal was, what made it truly impressive was its efficiency.  In the mid-fourteenth century the Venetians invented a new galley design that allowed the ship’s frame to be build independently from the hull: this meant that the Venetians could manufacture in an assembly-line fashion, with different gangs of specialists working on different ships simultaneously.

Like Henry Ford’s assembly lines in his Model-T factories, the Arsenal was able to dramatically increase its productivity, and decrease its costs. At its height, the Arsenal could build up to one galley per day, as opposed to one every few weeks (or months), which was typical for the period.

Needless to say, this gave the Venetians an enormous cost advantage over their competitors.  Cheaper ships allowed Venice to bolster its dominance in trade (Venice offered the lowest rates, and also sunk its competitor’s ships with their powerful navy), which further increased the demand for ships.

This created a perpetuating cycle that ensured Venice eventually became Europe’s el Dorado.

Learning from Venice

Unfortunately for Venice, the discovery of a direct route to India by the Portuguese, and of the New World by the Spanish, undermined the viability of Venice’s trade routes—it was much cheaper to buy directly from India than import via the Venetians.

Likewise, Venice’s technological advantage slowly faded, as shipping technology evolved on Europe’s Atlantic littoral.

By the mid-eighteenth century, Venice was just another major European city (although it remained a wealthy one).  But before leaving Venice, it is worth summarizing how it became rich:

1. Venice’s location enabled it to dominate the pilgrim and spice trades;

2. to expand this trade, Venice needed ships, which it build domestically;

3. the Venetians invented a new ship design which greatly improved shipbuilding productivity;

4. and this productivity reinforced the Venetian monopolies, which symbiotically reciprocated.

The magic ingredient here was technology: the new ship design catapulted Venice from a first among equals, to the king of kings (in terms of shipping, anyways).

Technology is key.  It is what what grows the economy in the long run—everything else is ephemeral.  Consider the fact that absent technological innovation, the moment the trade routes died out Venice would have been plunged back into early-medieval squalor.  This didn’t happen: Venice continued to benefit from its technology long after it lost its status as a major port.

Technological gains are permanent, they’re what move mankind forward, what enrich us.

Also note how the pilgrim and spice trade acted as an anchor for the shipping industry, which likewise supported a host of other industries—there would be no rope-makers or gunpowder-chemists without the demand for ships.

Not all industries are created equal: some depend on others for their survival.  Venice was a dense network, a complex economic ecosystem of different, but complimentary industries working in harmony—but once the anchor industry withered, so too did the rest.

About Spencer P Morrison 160 Articles
J.D. B.A. in Ancient & Medieval History. Writer and independent intellectual, with a focus on applied philosophy, empirical history, and practical economics. Author of "Bobbins, Not Gold," Editor-In-Chief of the National Economics Editorial, and contributor to American Greatness. His work has appeared in publications including the Daily Caller, the American Thinker, and the Foundation for Economic Education.