The Rise, Expansion, and Decline of the Italian Wool-Based Cloth Industries, 1100–1730: A Study in International Competition, Transaction Costs, and Comparative Advantage John H. Munro University of Toronto Introduction: Italy and Textiles in the European Economy 1 In the history of the West European economy from the twelfth to the eighteenth centuries, wool-based textiles constituted the single most important manufactured commodity to enter both regional and interna- tional trade. For this reason, such textiles proved to be vitally important for Italian economic development and for Italy’s economic preeminence during many of these centuries, especially up to the sixteenth. Italy was, in fact, one of the three most important regions that supplied good- to high-quality wool-based textiles to much of Christian Europe and to the Islamic world in the Mediterranean basin and the Near East during the I wish to thank the anonymous referees, the editor, and Prof. Samuel Cohen Jr. for their most valuable advice in revising this article. 1 An earlier and much shorter version of this study was published as John Munro, “I panni di lana,” in Il Rinascimento italiano e l’Europa, ed. Luca Ramin, vol. 4: Commercio e cultura mercantile, ed. Franco Franceschi, Richard Goldthwaite, and Reinhold Mueller (Treviso, 2007), 105–41. This version is based on a considerable amount of additional research and an elaboration of my key arguments. Studies in Medieval and Renaissance History, 3rd Series, Vol. 9 (2012) Copyright © 2012 AMS Press, Inc. All rights reserved. 46 Studies in Medieval and Renaissance History medieval and early modern eras. 2 Their chief rivals during these centu- ries were, above all, in the Low Countries (Flanders, Brabant, Holland) and England. 3 This study is not a mere descriptive narrative in European economic history, but an analysis of the role of international competition, transac- tion costs, and comparative advantage in determining how the Italian textile industries fared during these centuries and which Italian towns and regions prospered or declined because of their textile trades. While the Low Countries were clearly the preeminent European leader in wool- based textiles from the twelfth to the fiffteenth century, England in fact proved to be the more important region influencing the development of the Italian textile industries: fifrst, as the producer of the very fifnest wools on which the Italian industry came to be so dependent for the production of luxury woolens, at least until the fiffteenth century; and second, as the region that came to pose the most powerful threat to Italian international commerce in wool-based textiles, from the sixteenth to the eighteenth century. Although this study will demonstrate that, particularly for higher- grade woolen cloths, wool was the primary determinant of textile qual- ity, production costs, and retail prices, the fifnal English threat no longer had anything to do with England’s own wools. By the sixteenth century, England had lost to Spain its former, long-held primacy in producing the world’s fifnest, best wools—to the extent, indeed, that the English cloth 2 Since Italy did not exist as a unififed nation state before 1871, the term Italy in this study will refer to the three principal textile producing regions, all in the north: Tuscany, Lombardy, and “Venetia” (Venice with its Terra Firma possessions). 3 Normandy, Languedoc, and Catalonia were also important woolen cloth producers, but, for reasons of space, their competition will not enter into this study. For Languedoc and other regions of southern France, see Dominique Cardon, La draperie au moyen âge: essor d’une grande industrie européenne (Paris, 1999). For Catalonia, see, in particular, Claude Carrère, “La draperie en Catalogne et en Aragon au XVe siècle,” in Produzione, commercio e consumo dei panni di lana (nei secoli XII–XVIII), ed. Marco Spallanzani, Fondazione Istituto Internazionale di Storia Economica F. Datini, Prato, Serie II: Atti delle Settimane de Studi e Altri Convegni 2 (Florence, 1976), 475–509; idem, Barcelone: centre économique à l’époque des difficultés, 1380–1462 (Paris, 1967), chap. 6, “La draperie barcelonaise,” 423–528; Manuel Riu, “The Woollen Industry in Catalonia in the Later Middle Ages,” in Cloth and Clothing in Medieval Europe: Essays in Memory of Professor E. M. Carus-Wilson, ed. Negley B. Harte and Kenneth G. Ponting, Pasold Studies in Textile History 2 (London, 1983), 205–29. Italian Wool-Based Cloth Industries, 1100–1730 47 industry itself, along with all other European producers of fifne woolen cloths, came to be dependent on imported Spanish wools, for which the Italian industries had closer and cheaper access. Instead, England’s over- whelming comparative advantage in the Mediterranean cloth trade—in the very region in which Florence and then Venice had once been so dominant—was based on its various commercial advantages, which, in combination, are now known as transaction costs. Such costs—includ- ing transportation, marketing, and protection costs—were always his- torically more important considerations than manufacturing costs in determining advantages in international trade. More particularly, they also determined which types of textiles predominated in international markets over these centuries and which textiles often disappeared from international (if not regional and local) trade. 4 Medieval Italy’s Advantages in Cloth Production and International Trade Italy’s importance in both cloth production and the cloth trade, from the thirteenth to the sixteenth century, was symbiotically linked to its over- whelming predominance in medieval and early modern Europe’s trade and fifnance. Indeed, the Italians—led by Venice, Florence, Genoa, and Milan in particular—had created the fundamental mercantile and fifnan- cial institutions of what historians now call the medieval “Commercial Revolution,” a distinct era from the eleventh to early fourteenth century, with a commercial transformation and expansion that certainly proved to be the most powerful force in propelling the rapid growth of Europe’s economy and population—more than doubling the size of both. 5 Cer- 4 See Douglass North, “Government and the Cost of Exchange in History,” Journal of Economic History 44 (1984): 255–64; idem, “Transaction Costs in His- tory,” Journal of European Economic History 14 (1985): 557–76; John Munro, “The ‘New Institutional Economics’ and the Changing Fortunes of Fairs in Medieval and Early Modern Europe: The Textile Trades, Warfare, and Transaction Costs,” Viertel- jahrschrift für Sozial und Wirtschaftsgeschichte 88:1 (2001): 1–47. 5 See Robert Lopez, The Commercial Revolution of the Middle Ages, 950–1350 (Cambridge and New York, 1976); idem, The Birth of Europe (London and New York, 1967); idem, “The Trade of Medieval Europe: The South,” in The Cambridge Eco- nomic History of Europe, vol. 2: Trade and Industry in the Middle Ages, ed. Michael Postan et al. (Cambridge, 1987), 338–412. 48 Studies in Medieval and Renaissance History tainly this was the period in which all the west European textile indus- tries fifrst achieved international prominence, well beyond Europe itself. Richard Goldthwaite, one of the most eminent historians of medieval and Renaissance Florence, has contended that the importance of textiles for its urban economy was clearly evident by the thirteenth century: 6 The production of textiles gave the Florentine economy a solid industrial base that few other Italian cities enjoyed. More than any other activity, it generated the extraordinary growth of the city’s wealth. In particular, he contends that the rapid growth of Florence’s population in the thirteenth century can be explained only by the rapid expansion of the wool-based textile industry, “since no other industry can explain how so many people were employed.” 7 Yet Italy’s true eminence or apogee in both the production of and trade in woolen textiles came only in the ensuing era of economic contraction and population decline, during the fourteenth and fiffteenth centuries, the era of the so-called Great Depres- sion, when Italy’s predominance in international commerce and fifnance became even stronger. Though the Italians achieved renown in other textiles—especially in fustians (linen-cotton hybrids) at the lower price range and silks at the upper price range—this study necessarily focuses on the wool-based export-oriented textile industries. In turn, these industries produced a wide range of fabrics, the nature, qualities, and values of which have to be carefully delineated. Many, indeed most, of the common errors in the current literature arise from a failure to make such distinctions clearly. Those errors in turn stem from a failure to understand the composition of these cloths, in terms of wools and dyestuffs, and the technologi- cal processes for their manufacture. A closely related failure lies in not observing changes in relative prices (the price of one textile relative to 6 Richard Goldthwaite, The Economy of Renaissance Florence (Baltimore, 2009), 265. See, in general, chap. 4, “The Textile Industries,” 265–340, discussing the silk and linen industries as well. For another good survey of the Italian textile industries, see Bruno Dini, “L’industria tessile italiana nel tardo medioevo,” in Le Italie del tardo medioevo, ed. Sergio Gensini, Centro di studio sulla civilità del tardo medioevo San Miniato, Collana di Studi e Ricerche 3 (Pisa, 1990), 321–59. 7 Goldthwaite, Economy of Renaissance Florence, 269. Italian Wool-Based Cloth Industries, 1100–1730 49 prices of other goods) and changes in “real” prices during, and adjusted for, periodic inflations and deflations over these centuries. We must begin by understanding the universal market demand for textiles, which, along with food and shelter, has always supplied one of the basic needs of mankind. As clothing, textiles provide protection from the elements: from the cold, to be sure, but also from excessive heat and inclement weather. They also provide protection from the shame of nakedness, since most societies have prohibited (or restricted) public nudity and still require decorum in various forms of socially acceptable clothing.