History has a habit of repeating itself. The global financial collapse of AD 1345 had many similarities to what is happening now.
How did "Free Enterprise Finance" with no government able to control it, collapse all the economies of the Eurasian continent? How could banks concentrated in one part of Europe, tiny on the scale of modern banks, work such a global catastrophe?
Following the collapse and de-population of the Roman Empire from AD 300 - 600, the eleventh, twelfth and into the thirteenth century saw an acceleration in the growth and development of population in Europe and particularly in China.
From 700 AD rural technologies - using the plough, seed, animal power, wind power, etc. - leapt forward. Classical education of youth in monastery schools increased. These advances were spread particularly rapidly owing to the impetus of Charlemagne and English and Italian allies from 760 to 900 and then again from 1100 to 1250, the period of the Hohenstaufsen Holy Roman Emperors in Germany, Italy and Sicily.
From 1150 onwards the Venetian and Florentine bankers began to intervene with large amounts of credit and bank vouchers and with luxury goods from the east in the famous Champagne Fairs which had been the hub of trading for all Europe.
In the late 1330s, the beginning of the Hundred Years War between England and France led to the clothing industry of Flanders, the main clothing production region of Europe, being boycotted and completely shut off from wool.
The production of wool in England began to decline from 1310, the Bardi and Peruzzi banks of Florence having acquired a monopoly of the procuring and export of wool.
By the late 1340s this industry was in complete decline and moved out of towns and cities into tiny cottage industries.
From the 1320s onwards there was a massive flight of silver to Venice's maritime empire in the Middle East and Byzantium, which upset the equilibrium of Europe in the mid-fourteenth century.
Venetian exports of silver from Europe from 1325 to 1350 equalled perhaps 25% of all the silver mined in Europe at that time. Standard silver coin had been the stable currency of the Holy Roman Empire in EUrope, since Charlemagne's time. This massive export from Venice to the east created chronic balance of payment problems as far away as England and Flanders.
Thus production of the most vital commodities in Europe were severely reduced and the trade and circulation of its money completely disrupted over the decades before the 1340s crash by Italian banks which appeared to be making usurious rates of profits. The Florentine super Companies ressembled very closely in their operations the huge international grain companies of to-day such as Cargill and Archer Daniels Midland. They used loans to monarchs to dominate and control trade in certain vital commodities especially grain and later wool and cloth whilst their dominance and speculation progressively reduced the production of these commodities.
Like the International Monetary Fund to-day the bankers of Florence did not simply loan money to monarchs and expect repayment with interest. In fact interest was "officially" not charged on the loans since usury was considered a sin and a crime amongst Christians. In the same way as the IMF today, the banks imposed "conditionalities" on the loans. The primary conditionality was the pledging of royal revenues to the bankers and as with the curious arithmetic of the IMF to Third World debtors today, the original debt became a small fraction of what they eventually owed.
In l4th century Europe, important commodities like food, wool, clothing, salt, iron etc., were produced only under royal licence and taxation, banks' control of royal revenue led to the first private monopolisation of these commodities and the banks' "privatisation" and control of the royal government itself.
However the story of the Florentine bankers, the fourteenth century crash and the Black Death that followed is itself a cover-up. The Florentine bankers were operating on an international scale limited to western Europe and some Mediterranean islands. It was the maritime financial empire of Venice which was speculating on the scale of all the Eurasian land mass and on this evidence alone it had to be the merchants of Venice who rigged the devastation and depopulation of the majority of the human race in the fourteenth century.
Frederic C. Lane's book "Money and Banking in Mediaevel and Renaissance Venice" shows that it was Venetian finance which, by dominating and controlling a huge international "bubble" of currency speculation from 1275 to 1350, rigged the great collapse of the 1340s. Rather than sharing with their "allies", the bankers of Florence, the merchants of Venice bankrupted them and the economies of Europe and the Mediterranean with them.
In the 1950s one historian, Fernand Braudel, showed that Venice leading the Italian bankers of Florence, Genoa, Siena, etc., wilfully intervened from the beginning of the thirteenth century to destroy the potential emergence of national governments foreshadowed by the achievements of Frederick II Hohenstauffen, the Holy Roman Emperor in the first half of the thirteenth century, and a successor of Charlemagne's earlier achievements in spreading education, agricultural progress, population growth and strong government. The great Dante Aligheri wrote "De Monarchia" in a vain attempt to revive the potential of imperial government based on Divine and natural law.
"Venice had deliberately ensnared all the surrounding subject economies, including the German economies, for her own profit... The fourteenth century saw the creation of such a powerful monopoly to the advantage of city states of Italy that the embryo territorial states like England, France and Spain necessarily suffered the consequences."
In addition Braudel shows Venice intervened to stop the accession of Spain's Alphonso the Wise as successor to Emperor Frederick II. This triumph of "Free Trade" over the potential for national government rigged the fourteenth century global human catastrophe, the worst onslaught of death and de-population in history.
Venice was manipulating Florentine bankers, kings and emperors alike by a tightknit financial conspiracy and complete dominance of the markets by which money was minted and created.
Charlemagne, five hundred years earlier, had already recognised Venice as a threat equal to the marauding Vikings and had organised a boycott to try to bring Venice to terms with his empire.
The Venetians however seemed to enjoy an effective exemption from the Pope's injunctions against usury and also from the ban on trading with the Infidel, i.e. the Mamluk regimes of Egypt and Syria.
A century earlier in the 1180s the Doge Ziani of Venice had provoked hostilities between the two leaders of Christendom, the Pope and the Holy Roman Emperor Frederic Barbarossa, the grandfather of Frederick II. The Doge then personally mediated the Peace of Constance, between the Pope and Emperor and got his enemy, the Emperor Frederick, to agree to withdraw his standard silver coinage from Italy and allow the Italian cities to mint their own coins.
Over the century from the 1193, Peace of Constance, to the 1290s, Venice established the extraordinary near total dominance of trading in gold and silver coins and bullion throughout Europe and Asia. Venice broke and replaced the European silver coinage of the Holy Roman Emperors, immediately leading into the 1340s' financial blow-out, which blew-out all the financiers except the Venetians.
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 in her greatest period of success and power.
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 world-wide financial speculation in currencies and gold and silver bullion, similar to the huge speculative cancer of Derivative Contracts today.
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 ruled a maritime empire through small executive committees under the guise of a Republic that centralised and supported its own speculative activities as a whole. The "Republic" built 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 contained several public mints and did everything possible to foster the centralisation of gold and silver trading and coinage in Venice.
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. 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 or thirty ships under heavy naval convoys 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, etc.
The profits of this trade put usury in the shade although the merchants of Venice were also unbridled in that practice.
In one astonishing speech to the Council of Ten Doge Tomasso Mocenigo said: "In peacetime this city puts a capital of ten million ducats into trade throughout the world with ships and galleys so that the profit of export is two million, the profit of import is two million, export and import together four million." 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 Mongol empire or being mined in eastern Sudan and Mali and sold to Venetian merchants in exchange for greatly over-valued European silver.
The silver in 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 12th century, then in the Mongols' domain and finally in Europe in the 14th century.
The so-called "Christian" crusades, the first in 1099, the seventh and last major one in 1291 had had one strategic effect - expanding and strengthening the maritime commercial empire of Venice to the east.
Venice provided the ships to take the crusaders to the Middle East. Venice loaned them money and Venetian Doges even told them what cities to try to capture or sack. Through the Crusades Venice obtained effective control of the cities of Tyre, Sidon and Acre in Lebanon and Lajazzo in Turkey and strengthened its domination of commerce through Constantinople. These were the coastal entry points for the Silk Routes, Black Sea and Caspian Sea regions to China and India.
The strategic alliance between Venice and the Mongol Khan up to and through the final collapse of the 1340s has been treated as an historical curiosity of the adventures of Marco Polo's family. It gave Venice final control of the trade to the east and along with it the trade through Egypt for the gold mined in the Sudan and Mali. It gave them huge amounts of gold with which to dominate world currency trading in the decades leading to the financial disintegration of the 14th century.
The Crusades also consolidated the alliance of Venice and its allied ruled cities and the Norman and Anjou kings against the Holy Roman Empire centered in Germany which Dante and his allies were struggling to restore to its potential.
By the late thirteenth century the Mongols were a conspicuous part of this Venetian-led alliance. Pope John XXII granted Venice the sole licence to trade with the Infidel Mamluk sultans of Egypt in the 1330s.
Thus in the late thirteenth and fourteenth century Venice provided all the coinage and currency exchange for the Mongol empire, the largest empire in history, which was looting and destroying the populations under its rule.
Venice had taken over the currency trading and coining of what remained of the Byzantine Empire and also of Mamluk Sultanate in North Africa. Venice in this period took the east off the gold standard and put it on a silver standard. It was the richer region of the world and being more intensively looted. It took Byzantium and Europe off a 500-year old silver standard and put them on the gold standard.
From 1275 to 1375 the ratio of the average gold price to the average silver price steadily rose. In this period Europe's large production of silver was looted through Venice's command of Mongol and African gold. Venice had the central position as the world's bullion market and attracted to the Rialto - Venice's Wall Street - the buying and selling stimulated by the changing prices of the two precious metals. In this process of quickening speculation Venice ensnared all the surrounding economies, including the German.
Venetian bankers on the Rialto and Venetian bankers alone in the world at this time made cashless bank transfers among merchants' accounts, allowed overdrafts, gave credit on the spot, created bank money and speculated with it. They did this not out of cleverness but out of simple control of currency speculation world wide.
In fact the famous Bills of Exchange of the Florentine bankers were really a crude form of the Derivatives Contracts of the 1990s speculative cancer.
Venice switched Europe to gold by force by looting silver. Florentine bankers with their famous gold florin enjoyed great speculative profits in this process. However from 1335 to 1345 the process was reversed . The ratio of gold price to silver dominated by Venetian manipulation now fell. and the price of silver started rising in the 13th century.
There was an unusually large supply of silver in Venice. The Florentine bankers were caught, having loans and investments all over Europe in gold whose price was falling.
Venetian super-profit in global currency speculation continued right through the bank crash and financial market disintegration of 1345 -7 which they had rigged, and beyond.
In the period 1330 - 50 the Black Death started to spread through from China, probably brought by the Mongol cavalry to towns in the Crimea and thence entered Europe.
After the financial crash and the Plague Europe's population fell for a hundred years from perhaps 90 million to roughly 60 Million.
After 1400 in the years which led to the Renaissance political forces turned against the methods of the Italian "free enterprise" bankers. In 1409 King Martin I of Aragon expelled them. In 1403 King Henry IV prohibited them from taking profits in any way in his kingdom. In 1409 Flanders imprisoned and then expelled Genoese bankers. In 1410 all Italian merchants were expelled from Paris. When Louis XI became King of France in 1461 he organised national forces to make it the first strong sovereign nation-state and insisted upon a single standard national currency created and controlled by the crown.