First little about Venice history
Venice, the World’s Mint
“Venice,” was the greatest commercial success of the Middle Ages a city without industry, except for naval-military construction, which came to bestride the Mediterranean world and to control an empire through mere trading enterprise. In the Fourteenth century she was in the ascendant to her greatest periods of success and power.”
And most importantly, Frederick Lane writes, “Venice’s rulers were less concerned with profits from industries than with profits from trade between regions that valued gold and silver differently.”
Between 1250 and 1350, Venetian financiers built up a worldwide financial speculation in currencies and gold and silver bullion, similar to the huge speculative cancer of “derivatives contracts” today. This ultimately dwarfed and controlled the speculation in debt, commodities, and trade of the Bardi, Peruzzi, et al. It took all control of coinage and currency from the monarchs of the time.
The banks of Venice were deceptively smaller and less conspicuous than the Florentine banks, but in fact had much greater resources for speculation at their disposal. The Venetian financial oligarchy as a whole, which ruled a maritime empire through small executive committees under the guise of a republic, centralized and supported its own speculative activities as a whole. The “Republic” built the ships and auctioned them to the merchants; escorted them with large, well-armed naval convoys of their empire, with naval commanders responsible to the ruling “Council of Ten” and the magistrates for the convoys' safety. This same oligarchy maintained several public mints and did everything possible to foster the centralization of gold and silver trading and coinage in Venice.
As Frederick Lane demonstrates, this was the dominant trade of Venice by no later than 1310. Like today’s “mega-speculators” in currencies and derivatives, such as the Morgan- and Rothschild-backed George Soros and Marc Rich, the Venetian banks and bullion-dealers were backed by large pools of capital and protection.
The size of the Venetian bullion trade was huge: twice a year a “bullion fleet” of up to twenty to thirty ships under heavy naval convoy, sailed from Venice to the eastern Mediterranean coast or to Egypt, bearing primarily silver; and sailed back to Venice bearing mainly gold, including all kinds of coinage, bars, leaf, etc.
The profits of this trade put usury in the shade, although the merchants of Venice were also unbridled in that practice. Surviving instructions of Venetian financiers to their trading agents in these fleets, specify that they expected a minimum rate of profit of 8 percent on each six-month voyage from the exchange of gold and silver alone: 16-20 percent annual profit.
One astonishing speech to the Council of Ten by Doge Thomasso Mocenigo, from a time after the 1340’s financial crash, goes further. Compare the magnitude of these figures to those discussed earlier for the Papacy, for England, and for Florence (keeping in mind that the Venetian standard coin, the gold ducat, was roughly comparable to the Florentine gold florin): “In peacetime this city puts a capital of 10 million ducats into trade throughout the world with ships and galleys, so that the profit of export is 2 million, the profit of import is 2 million, export and import together 4 million [from the two annual voyages, 40 percent profit—PBG]. ... You have seen our city mint every year 1,200,000 in gold, 800,000 in silver, of which 5,000 marks (20,000 ducats) go annually to Egypt and Syria, 100,000 to your places on the mainland of Italy, to your places beyond the sea 50,000 ducats, to England and France each 100,000 ducats ... .”
How was this possible?
Not by private enterprise, but by imperial Venetian “state usury.” The gold from the East was being looted out of China (until then the world’s richest economy) and India by the murderous Mongol Empires, or being mined in Sudan and Mali in Africa and sold to Venetian merchants, in exchange for greatly overvalued European silver. The silver from the West was being mined in Germany, Bohemia, and Hungary, and sold more and more exclusively to Venetians with bottomless supplies of gold at their disposal. Coinages not of Venetian origin were disappearing, first in the Byzantine empire in the Twelfth century, then in the Mongol domains, and then in Europe in the Fourteenth century.