Economic Life

This essay on Medieval Genoa is written by Professor Stephen A. Epstein of the History Department of the University of Colorado, Boulder, and Professor George L. Gorse of the Art History Department of Pomona College, Claremont, CA  (Watercolor painted by Jorge Eugenio Banzas, an Argentine artist living in Genoa in the eighties)

Genoa and its region, Liguria, include the 331 kilometers of coast from just west of Ventimiglia to around Portofino. The medieval city also eventually controlled the mountainous region that circumscribes this rocky coast, and part of the hilly land to the north, on the fringe of the Po valley. Genoa’s economy, however, did not thrive on local agriculture because Liguria contains little flat land and few areas of good soil. Blessed with almost no minerals and few natural resources, apart from its beech and chestnut forests, Genoa’s hardy people turned to the sea. No sizeable rivers enter the sea along its stretch of coast, and the fishing was poor because the sea bed dropped quickly, producing deep and relatively barren waters. Genoa’s main natural advantage was its good harbor, the northernmost one along this coast. The harbor, and the shorter but still arduous passes through the mountains, made Genoa the port of the upper Po valley.

The earliest phase of the medieval Genoese economy, only illuminated in the tenth and eleventh centuries, marked its first efforts to establish maritime trade. Local agriculture produced wine, olive oil, and other bulky commodities more easily moved by sea than land, and the local forests yielded a good mix of timbers for building ships. This early trading phase probably involved short trips in coastal-hugging small galleys, which also brought back grain, salt, and cloth to the refounded small town. Genoa also faced rivals–the Muslims, still in the early eleventh century a naval power in the western Mediterranean, and the nearby Pisans, interested in the same markets and commodities as the Genoese. Local merchants probably doubled as pirates, and the origins of Genoese capitalism have often been associated with a combative and lucrative preying upon Muslim shipping. By the mid-eleventh century the Genoese were trading with the Muslims in Sicily, Spain, North Africa, and Egypt, so retaliatory piracy carried risks to Genoese merchants peacefully trading overseas.

By the First Crusade (1100), Genoa was one of the main seapowers in the Mediterranean, and its merchant galleys, always armed and containing crews of about 120 men, was its main economic resource. The burst of information contained in a precious source, the notarial cartulary of Giovanni Scriba and its hundreds of commercial documents from the years 1154 to 1164, reveals, along with legal sources, a sophisticated economy. Overseas trade, Genoa’s economic backbone, relied on three types of contracts, the commenda, societas, and the sea loan. In a commenda contract a traveling partner took an investor’s capital on an overseas trading venture, and upon safe return, the investor received back his or her capital and three-quarters of the profit, the traveling partner one-quarter. A societas, or bilateral commenda, required both partners to contribute capital, typically two-thirds and one-third from the traveling partner who received half the profit for his efforts. In a sea loan a merchant borrowed a sum from a creditor, who received back the capital and a premium upon the safe return of the borrower. These contracts involved various levels of risks and rewards, enabling retired merchants to live by wise investments, and young men with little or no capital a chance to begin a trading career. A sophistciated merchant law and system of arbiters resolved disputes over contracts, and the commune protected its merchants by securing privileged trade through treaties.

Scriba’s cartulary reveals that Genoese trade centered on the eastern Mediterranean. Trade with Egypt and Latin Syria was the most lucrative and involved the fabled eastern luxuries–spices like pepper and cinnamon from distant East Asia, and local products like silk, cotton, sugar, and gold. The Byzantine Empire was a secondary but important supply of similar luxury goods. In the central Mediterranean trade with the islands, mainly Sicily, predominated. In the west Genoa’s trade focussed on north Africa and its gold. The slave trade, already well established, procured slaves everywhere, but in this period especially Muslims. In the late twelfth century the Genoese exported these luxury goods over the mountains to the upper Po valley and the fairs of Champagne. There, in exchange for wool cloth and silver, the Genoese sold these goods at vast profit. Genoa’s advantages in this trade were several. Its fast galleys were ideally suited for transporting light-weight high value products across the seas, and it controlled access to two valuable markets–Lombardy and northeastern France. Its potential rivals in the west, Marseilles and Barcelona, were not yet in a position to challenge Genoa, and its Italian rivals, Pisa and Venice, competed in the east but had their own local markets.

Genoa thrived as a nexus between the eastern Meditrerranean and northwest Europe. It needed commercial privileges in Latin Syria, obtained by aiding the crusades, and treaties with the Byzantines, who still controlled access to the Black Sea. Trade with Egypt was the prize, but there the Genoese found established markets and highly skilled traders who dominated the spice trade. Elsewhere, commerce with Sicily involved the Genoese in disputes between the Norman kings and the German emperors. The city’s artisans supplied good ships, and the sails, oars, barrels, biscuits, armor, rope, and the myriad other products sustaining fleets. Genoa produced no valuable trade goods, except gold thread by its skilled women, and so it depended on things made elsewhere, to be shipped wherever they hielded a profit. Hence Genoa was not a manufacturing town, except for ships and some local services. The galleys employed thousands of free rowers and gave both nobles and self-made men to make or lose a fotune at sea. Women’s property rights, secure in law, allowed them to invest in commerce, and thousands of women labored in the maritime artisan trades.

Early in 1252 Genoa introduced the first regular gold coinage in the west, narrowly edging out Florence. By then Genoa dominated trade in the Greek lands, rivaled Pisa and Venice in the crusader states, and Egypt remained the heart of the eastern trade. Years of expensive warfare placed Genoa on the winning Guelf side and soon again opened trade with Sicily and southern Italy. In the west the Catalans and Provencals were now trading rivals, and struggles with Pisa over supremacy in Sardinia and Corsica were reaching a climax. By the 1270s regular galley service from Genoa to Bruges began to open up markets in England, northern France, and the Low Countries. Unlike Venice, Genoa’s galleys remained completely private ventures. Vast war debts required the popular regime under Guglielmo Boccanegra to reorganize the commune’s finances, which relied heavily on excise taxes, a modest tariff, and borrowing during war. Revenues had been routinely mortgaged years in advance, and the common people paid most of the taxes. In 1259 Boccanegra restructured public debt into a great compera or fund divided into shares of L100 that paid 8% interest. A precocious market in public securities developed as new laws allowed creditors to seek shares. Public finance, needed for wars to defeat the Pisans and Venetians, increasingly consumed Genoese capital, but these investments were not as lucrative as oversaeas trade, by the 1290s nearly L3 million a year.

The civil wars of the early fourteenth century devastated Genoa’s trade as rival fleets fought and created new debts. The revolution of 1339 destroyed both the records of the public debt and customs house. The new doge honored the old debts, whose interest was paid by excise taxes dedicated to specific debts. In the east Genoa’s largely self-governmeng possessions, principally Pera near Constantinople and Caffa in the Crimea were vital to the eastern trade now that Latin Syria was lost and trade with Mamluk Egypt more problematic. A privately funded fleet in the eastern Mediterranean seized the island of Chios and the alum mines at nearby Phocaea in 1346. The government, too poor to reimburse the participants in this venture, agreed in 1347 to recognize the shipowners as a company, the Mahona of Chios, which received the right to administer and profit from the island for twoenty years, at which time the state had the option to buy out the shares in the Mahona. Genoa never had the money to buy the shares, and a series of deals with the company and its successor represent an early experiment in how colonizing and exploiting an island through a private company benefited some Genoese investors and burdened taxpayers with the island’s defense.

The Genoese economy, weakened by war and debt, suffered in the aftermath of the plague of 1348. The city’s population fell from perhaps 70,000 to 40,000 and its labor-intensive shipping paid the price. A switch from the galleys to the labor-saving great sailing ship, the cog, helped to preserve Genoa’s trade. Cogs carried eastern luxuries to a Europe with more capital per head and an appetite for finer things. The customs records of 1376 reveal that trade recovered to nearly L2 million. Imports from Flanders, mainly cloth, and Egypt still constituted the buld of trade. Genoa’s industrial base remained weak, and its niche in the European economy seemed increasingly fragile and contested.

Disputes with Venice over control of the eastern trade produced defeats, and new debt and taxes. The period of French rule from 1396 to 1409 witnessed the rise of the city’s famous financial institution, the Casa San Giorgio. This compera, another restructuring of the public debt, absorbed nearly L3 million to pay the shareholders 7% instead of the higher amounts promised during wartime. The Casa acquired all the taxes pledged to make the interest payments, thus becoming a separate arm of the state, run by the creditors. The Casa shares became the foundation of the Genoese securities market. In 1408 the Casa began a banking business, loaning money to its shareholders and providing services like bills of exchange. By 1437 the bank also managed the mint. Continued state borrowing and undercapitalization brought down the bank in 1444, but the Casa continued to function until 1807, making it one of the most durable financial institutions in European history. It was worthy of Machiavelli’s respect.

Genoese trade slumped from the 1420s to the 90s as the Venetians dominated Mediterranean commerce. Genoa competed now with Spain, Portugal, England, and France as well. The advance of the Ottomans also hurt Genoa as it lost its eastern possessions, notably Pera (1453) and Caffa (1475); only Chios remained Genoese, until 1566. In this century Genoa became an increasingly industrial town in some old businesses like wool and relatively new ones like silk, cotton, and paper. These new industries, especially silk, employed many people and brought some prosperity to Genoa. Genoa’s small market in Liguria meant that success in manufactures required active overseas commerce just as its fleets dwindled in size.

The Genoese economy rebounded in the 1490s, only to suffer again in the early sixteenth century as wars and the sack of 1522 destroyed resources. In this period the state was a pensioner of the Casa San Giorgio, which collected all its revenues and paid out the lion’s share to the creditors. By 1509 the debt reached L20 million, a considerable sum. Under Andrea Doria’s guidance, Genoa’s status as a loyal junior client state to Spain meant that the city shared in the Spanish prosperity of the early and mid sixteenth century. But Genoa served Spain primarily as a banker, not as a trading center, and much of its new prosperity vanished into the Spanish bankruptcies later in the century.