Thursday, March 22, 2018

"The forgotten history of free trade: the Medici dynasty and Livorno"

From the Oxford University Press blog, March 20:
The Medici had everything, almost. They got immensely rich as bankers during the fifteenth century. As patrons of the arts they assembled some of the finest collections in Italy. They placed two scions on the papal throne as Leo X and Clement VII. They won political control over the city of Florence—first as informal rulers and, after 1530, as hereditary dukes. The Medici lacked only one thing to render their earthly felicity complete: they lacked a port city.

The Medici dynasty had big ambitions for their little state, and they turned to the malaria-ridden village of Livorno to realize them. The alchemically-inclined Francesco I (r. 1574-87) began the process of planning a new port in Livorno. His brother Ferdinando I (r. 1587-1609) put aside his cardinal’s cap to take up the grand duchy when Francesco died, perhaps by poison. It was Ferdinando who turned Livorno into “one of the most famous places for trade in all Christendom,” as one English merchant put it.

But, what did a Mediterranean port city mean during the long seventeenth century?

In an earlier age, commercial powers such as Venice had tried to control trade, with violence if necessary; they sought to capture commerce for their own ports and deny their rivals access to the richest routes. But such designs were increasingly out of place by the sixteenth century. The expansion of global trade and the entrée of new powers such as the Dutch and the English made the pursuit of monopoly in the Mediterranean a fruitless endeavor. A program of hospitality toward people and goods was a more profitable avenue for commercial expansion.

In 1591, Grand Duke Ferdinando invited foreign merchants of any religion or nationality to settle in his port of Livorno. There they would enjoy security of person, property, and conscience—unlike elsewhere in Europe, where rulers enforced religious orthodoxy throughout their territories, and happily seized the assets of merchants when it suited their interests. Such policies earned Livorno a reputation as “a continuous fair of foreigners,” recalling the freewheeling fairs of the Middle Ages.
The Medici grand dukes also relaxed rules governing goods. In most cities during the Middle Ages, wares were subject to high taxes and a welter of bureaucratic controls—international trade occurred under strict supervision. By contrast, merchants in Livorno enjoyed a package of incentives for the warehousing, transit, and exchange of their wares. These measures culminated in a decree in 1676 that eliminated import/export dues entirely. The 1676 reform instantiated the principle that trade was to be taxed only for the provision of commercial services; that is, only to defray the cost of infrastructure such as harbor and warehouse facilities. “You know exactly what you have to pay, you pay it, and you’re done,” wrote one admirer,” without those annoying inspections that one so often finds in other places.”...MUCH MORE