Dec

27

Ralph Dillon of Global Financial Data was kind enough to send me this chart of Sidney Homer's data for the rates for the Venetian prestiti. He also forwarded Dr. Bryan Taylor's notes on this history:

"When Venice imposed large assessments, as in 1311-1314, the price of the prestiti fell, and when Venice made large repayments, as in 1344, the price could exceed 100. The worst decline in the fourteenth century came during the War of Chioggia between 1378 and 1381 with Genoa, during which Venice imposed very large assessments, suspended interest payments, made the prestiti no longer immune from tax levies, and expanded the debt 6 to 9 times its level in 1344. The price sank as low as 19 as a result. After the War of Chioggia ended, the prestiti fought their way back as confidence in the Venetian government returned, causing the price to rise to the 60 level. Unfortunately, the fifteenth century was one of ongoing wars in the Mediterranean. Venetian wars with Hungary in 1412, the Turks in 1416, Milan during the 1420s, and wars with both Florence and Milan in 1450 and the costs associated with these wars reduced confidence in the Venetian government’s ability to fund the prestiti. Emboldened by the fall of Constantinople in 1453, Sultan Mehmet II declared war on Venice, leading to a disastrous and protracted conflict between 1464 and 1479 which drove the price of prestiti back to the 20s. This led to the reissue of new prestiti as monte nuova in 1482. The graph below shows the yield on the prestiti from 1285 to 1502, assuming a 5% coupon (though in reality the prestiti paid a variable rate after 1377 and 4% during part of the 1400s)."

Venetian state IOUs continued to be issued and traded for another 300 years — until the French Revolutionary Armies "liberated" Venice in 1797; but the monte nuova became a local and at most regional vessel for savings and speculation, not the foundation of international financial dealings that the prestiti had been.

My own biased view is that the wars that weakened and then ruined Venice's fortunes came from the shift from a democratic republic to an oligarchy. Some professors even share this odd notion and have done the research to prove it. Here is their chart of the # of commoners who were members of the Colleganza - the Ruling Council.


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