C H A P T E R
28
Venetian Finance, 1400–1797
L. Pezzolo
Università Ca’ Foscari Venezia, Venezia, Italy
O U T L I N E
Revenues
Taxation
Taxpayers
Financial Needs
REVENUES
Like other early modern states, Venice drew most of
her resources from taxation. Until the formation of the ter-
ritorial state in the early fifteenth century, the Venetian
state relied mostly on duties on trade and consumption.
The change from the budget of a city to the budget of a
great power is evident in Table 28.1. The conquest of
the Italian mainland proved costly but allowed Venice
to control the key land routes that linked the lagoon to
her markets in central Europe. Thus, the territorial needs
of the new state, encompassing a wide area from Crete to
east Lombardy, brought about a remarkable growth of
income that quadrupled, in terms of silver, in little more
than a century.
Between the mid-fifteenth and the early sixteenth cen-
tury, the level of ordinary revenues was, surprisingly,
somewhat stable, despite two wars against the Ottomans
(in 1464–79 and 1499–1502), the war of Ferrara (1480–82),
and the early phase of the Italian Wars (1494–1530). It is
likely that the scanty budgets we have do not register ex-
traordinary taxes being levied for urgent needs. Further-
more, from the mid-sixteenth until the early seventeenth
century the rate of increase was not significant, even
though those decades were characterized by a marked
rise in prices. The 1% rate of growth annually between
1550 and 1609 is fairly limited, considering that the silver
price of grain witnessed an average growth rate of 1.5%
per year. It seems rather that the response to price
Handbook of Key Global Financial Markets, Institutions, and Infrastructure
http://dx.doi.org/10.1016/B978-0-12-397873-8.00006-2
301 Public Debt 305
302 The Floating Debt 308
Glossary 309
303
Further Reading 310
303
movement occurred with some delay in the early de-
cades of the seventeenth century, as revenues increased
substantially (2.7% annually). It is, however, hazardous
to correlate fiscal data with the general economic trend,
because just a slight rise of a tariff or the expansion of a
taxable product can bias the relationship between tax
revenues and real trends.
The great pestilence of 1630 reduced tax revenue and
was followed by a slow recovery. It is interesting to note
that the plague of 1630 proved to be much more serious
than that of 1576. The general economic situation had
been changing and the resources that had been exploited
in the 1570s to encourage the quick recovery of tax levels
were not wholly available 50 years later. The long war of
Crete (1645–69) contributed considerably to the worsen-
ing conditions of the republic. The early years of the
war were not as dire for taxpayers as one would have
expected, for the tax burden in real terms (considering
grain prices) did not increase significantly, but the
1650s exerted a high pressure on Venetian subjects.
After the war, the growth rate of central revenues
remained fairly constant, due to the fact that the extraor-
dinary taxes levied during wartime were made partially
permanent later. The two wars of Morea (1684–99 and
1714–18) caused a further increase in income, which
reached a level that remained constant for several de-
cades, until the last years of the Republic marked a fur-
ther revenue growth, which was quite noteworthy.
Overall, changes in revenue display a close correlation
301 # 2013 Elsevier Inc. All rights reserved.
302 28. VENETIAN FINANCE, 1400–1797

TABLE 28.1 Budget of the Republic of Venice, 1343–1790 political relations of society of the Old Regime have
Income Income
been interpreted using the concept of collaboration –
Years ducats Expenditure kg of silver Expenditure and sometimes even collusion – between the center
and provincial elites. Thus, higher revenues could
1343 250 000 257 000 10 256 10 543
be interpreted as the product of improved political
1469 1 120 000 46 150 bargaining between local ruling groups and state
1500 1 150 000 44 063 authorities.
1550 1 601 000 1 735 000 51 130 55 409

1580 2 000 000 2 070 000 53 220 55 083

1602 2 563 000 2 477 000 68 201 65 913 TAXATION
1621 3 862 000 3 950 000 101 432 103 743
It was critical that taxation be supported as a recog-
1637 3 020 000 2 870 000 60 702 57 687 nized, legitimate necessity, otherwise the taxpayers
1641 2 960 000 2 770 000 59 496 55 677 could easily challenge the government. The rulers
had a clear idea of their limits and tried – not always
1665 3 740 000 5 250 000 72 276 101 456
successfully – not to go beyond them. It should be noted
1679 4 285 000 3 962 000 82 808 76 566 that, unlike in France and England, in the Venetian re-
1710 5 807 000 6 206 000 98 040 104 776 public the notion that the king should ‘live on his
own’ did not exist. A tax was first justified for security,
1736 5 341 000 5 691 000 80 003 85 245
that is, in defense of the state and its Catholic faith. Ven-
1740 5 343 000 5 428 000 80 033 81 306 ice was considered the outpost of Christianity in the east-
1750 5 559 000 5 254 000 83 268 78 700 ern Mediterranean and embraced the common ideology
of the crusade. Thus, the financial effort required to
1760 5 559 000 5 336 000 83 268 79 928
mount certain endeavors took on the characteristics of
1770 6 596 000 5 613 000 98 801 84 077 a sacred duty in the defense of religion. This allowed
1780 6 082 000 5 651 000 91 102 84 646 the passage of the tax obligation from the religious
sphere to the secular one; the subject was required to
1790 7 043 000 7 747 000 105 497 116 042
pay taxes to the state as the secular arm of the divine will.
Source: Pezzolo, L., 2006. Una finanza d’ancien régime. La Repubblica veneta tra The Venetian exchequer relied primarily on indirect
XV e XVIII secolo. Edizioni scientifiche italiane, Napoli, pp. 38–40. taxation, namely duties on trade, consumption, and
economic activities in general. Income from domain
(rental of land and property rights, mint, coinage and
with political events that involved the Republic of Venice; so on) was rather small. In peacetime, the ordinary
military needs – as much in Venice as elsewhere – in fact, budget met usual expenses such as salaries of officers,
were the driving force in state finance. soldiers, and sailors of the fleet, the costs for maintain-
Observing Table 28.1, we see that throughout the ing the arsenal, and the payment of interest on loans.
early modern age the revenue available to the Venetian However, peace was a condition that late medieval
state increased. How should one interpret this trend, Venice rarely enjoyed. Not only conflicts with other
which is indeed common to the rest of the European powers but also with pirates, short but intense cam-
states of the time? Do the data reflect a growing degree paigns against rebels in overseas territories, tensions
of absolutism, or do they instead reveal a pattern of on the border with the neighboring powers, protection
compromises and negotiations? In the historiography from raids, and escorts of the merchant ships – all of
of the Old Regime state, two theories collide: on the these required Venice to maintain an almost constant
one hand the classic approach emphasizes the central- state of emergency and mobilization. It is no coinci-
izing policies of state authorities, intended eventually dence that Venice was the first Mediterranean power
to become ‘modern’; and on the other hand some to rely on a stable fleet, which patrolled the Adriatic
scholars stress the fiscal limits of the state. Until re- since the fourteenth century.
cently, growth of revenue was considered the clear It is worth noting that the structure of state income
manifestation of the coercive capacity of the political changed significantly through the seventeenth century
center, which drew its strength from taxes to develop because of the relative decline of the commercial role
its means of control which, in turn, allowed increasing of Venice in the international market. As taxation on in-
tax collection from the subjects. Recently, following ternational trade decreased, the government relied on
profound revisions about the concept of state and both duties on domestic consumption and the Italian
the crisis in the history of the modern state, the mainland (Figure 28.1).

I. GLOBALIZATION OF FINANCE: AN HISTORICAL VIEW

 FINANCIAL NEEDS
The structure of income of the Republic of Venice, 1587–1670
60
50
40
%
30
20
10
0
1587 1602 1621
FIGURE 28.1 The structure of income of the Republic of Venice, 1587–1670. Reproduced from Rapp, R.T., 1976. Industry and Economic Decline in
Seventeenth-Century Venice. Harvard University Press, Cambridge, MA, p. 141.
TAXPAYERS
In principle, all the subjects of the Venetian republic
were called to fiscal duty: lay people and ecclesiastics,
women household heads, citizens and peasants, nobles,
merchants, and landowners. The Doge himself had to
pay taxes. Within this mass of taxpayers, however, there
were significant differences that mirrored the structure
of society and the constitution of the state. These divi-
sions distinguished the capital city, the Italian mainland,
and the overseas colonies by different legal traditions
and economic, social, and political structures. Taxpayers
of the city capital and taxpayers of the mainland (the
so-called stato da terra) were registered in different tax
lists. The latter, furthermore, were subdivided into city
dwellers and peasants. Venetian landowners enjoyed
particular privileges; they were exempted, for example,
from the obligation to provide services for the mainte-
nance of the army in peacetime. Such differences be-
tween taxpayers, however, diminished during the last
two centuries of the Republic.
Ecclesiastical taxpayers in the republic of Venice, as
elsewhere, were considered a privileged body. Nonethe-
less, they were subject to taxation, both direct and
indirect. Venice’s role as a power in the defense of Chris-
tendom entitled the republic to tax the ecclesiastics. The
tenth (decima), for example, fell on church property as
well, and was one of the few taxes levied throughout
all the territories of the state. While taxing the church’s
land was an achievable goal, determining the extent of
its land was not so easy. In fact, only two assessments
of ecclesiastical property were ever made in Venice’s
long history (in 1564 and 1773) and the impression these
give is that the taxpayers of the clergy bore a lesser
I. GLOBALIZATION OF FINANCE: AN HISTORICAL VIEW
303
Trade
Consumption
Mainland
Other
1637 1641 1670
burden than that borne by lay subjects. This naturally
led to protests and tensions between different groups
of subjects: if the Venetian clergy could not escape the
loan requirements and tithes, the Church could still en-
gage in bitter battles with town councils and representa-
tives of taxpayer peasants to defend their own positions
and privilege. Long and wearisome processes dot the fis-
cal relations between the laity and clergy: the former
emphasized their shouldering of the greater financial
burden, while the latter reminded their adversaries of
the customs and status that distinguished them from
the rest of the population.
Fiscal policy was aimed at the mobilization of as much
money as possible given the limitations, economic and
political, that the system imposed. Despite these limita-
tions, however, the government was able to spend large
amounts primarily to maintain a military structure that
supported the economic needs of the capital, needs that,
until the sixteenth century, were translated into the con-
trol of economic areas – both within Italy as well as in
the eastern Mediterranean – and ways to protect trade
routes.
FINANCIAL NEEDS
The structure of the Venetian state expenditure did
not represent an exception within the financial pano-
rama of the old regime. Most of expenses were absorbed
from the military apparatus and debt servicing, which in
its turn was related to war needs. Thus, the trend of pub-
lic expenditure (Table 28.1) was closely linked to the
political and military vicissitudes of the republic.
304 28. VENETIAN FINANCE, 1400–1797
Some comparisons with other state budgets highlight
the change that the Venetian power had been undergo-
ing from the late middle ages to the fall of the Republic
in 1797. The 10 tons of silver Venice could spend by the
mid-fourteenth century demonstrates her great power.
This rank was maintained until the late fifteenth century,
as the Venetian level of expenditure (about 45 tons) was
slightly lower than the French and higher than the
English revenues. Throughout the sixteenth century the
great monarchies broadened the gap. France attained
the peak of 440 tons in the 1580s and Castile over
500 tons; the republic of St Mark, however, was still
substantial with her 66 tons. Over the next century, the
growth of European budgets was even more evident;
while Spain attained its zenith by the middle of the cen-
tury, France and England imitated it in the following
decades. Along with these powers one can put also
Holland, which with its 250 tons of expenditure in
1641 could be considered an important player on the
international stage.
It is worth noting that just as the young Dutch repub-
lic was showing a striking financial capacity, the Most
Serene Republic, hit severely by the plague in 1630,
was unable to reach even 60 tons. Only the war of Crete
(1645–69) provoked a dramatic rise of expenditure. One
hundred tons of silver, which Venice presumably spent
annually for military and administrative needs, repre-
sented a considerable effort, although it cannot be com-
pared to those made by more powerful governments.
Post-war expenditure remained at a reasonably high
level, higher than the entire expenditure of the rising
Savoyard state (slightly more than 47 tons in 1684).
The years of the second war of Morea (1714–18) brought
about a severe emergency in public expenditure (over
100 tons). The eighteenth century was characterized by
100
90
80
70
60
%
50
40
30
20
10
0
1555 1575 1579 1587 1594 1602 1609 1633 1637 1641 1679 1710 1736 1740 1750 1760 1770 1780
FIGURE 28.2 Expenditure of the Republic of Venice 1555–1780. Reproduced from Pezzolo, L., 2006. Una finanza d’ancien régime. La Repubblica
veneta tra XV e XVIII secolo. Edizioni scientifiche italiane, Napoli.
I. GLOBALIZATION OF FINANCE: AN HISTORICAL VIEW
a long period of stability during which expenditure
floated around 80–90 tons; and only in the last years of
the republic did it attain 100 tons.
War and debt service were the most important entries
of expenditure; these accounted for over half the entire
government expenditure (Figure 28.2). The effects of
military expenses changed over time with regard to both
the players in the conflict and the war zone. Over the late
Middle Ages, Venice had invested heavily in her navy to
conquer strategic places in the eastern Mediterranean,
the crucial area for her trade. In the early fifteenth cen-
tury, she had one of the most effective military forces
on the Italian peninsula, critical to the expansion of her
control over the Po valley. The military tool proved to
be an extraordinary means to build an economic and po-
litical empire. The Venetian government took up the task
both to support militarily the commercial expansion,
and to cope with the huge protection costs necessary
for its own merchants. As early as the twelfth century,
the Venetian state proved successful in using force to
increase national wealth.
From the sixteenth century, however, everything
was to change. Venice had to face the initiative of the
Ottoman empire and lost important positions in the
Levant. In Italy, furthermore, her expansionist policy
underwent a hard setback in 1509 due to the defeat
by the armies of the League of Cambrai. After Cambrai
the Venetian state borders shifted little until the fall of
the Republic. The fierce competition of the ‘Northeners’
(English, Dutch, and French) in the Mediterranean Sea
increased transaction costs for Venetians; the navy
proved inadequate to deal with piracy and foreign
ships. Large amounts of money had to be spent on
ships, crews, and weapons to protect an area that was
increasingly shrinking.
Debt
Defence
 PUBLIC DEBT 305

PUBLIC DEBT war citizens were requested to lend as much as 41% of

The public debt was the other side of military spend-
ing. The evolution of borrowing went hand in hand with
the vicissitudes of war and it was indeed its extension in
financial terms. The Venetian government usually was a
good debtor. Apart from dire moments, interest on loans
was paid regularly.
The precarious balance between income and expendi-
ture that characterized state budgets was constantly en-
dangered by conflicts, political–military commitments,
and unforeseen events. Because the collection of taxes
took time, it was necessary to raise money through
short-term voluntary loans. From the late twelfth cen-
tury, the government imposed forced loans, which fell
on the Venetian citizens inscribed on the estimo, or the
tax register. Taxpayers had to pay a given amount
according to their assessed wealth and in exchange
would receive 5% interest until the repayment of the
principal. This system proved beneficial for both the
state treasury, which could count on money raised in
a relatively short time, and the lenders, who could
count on a moderate but steady return. Creditors were,
furthermore, allowed to trade their credits, triggering a
dynamic secondary market of securities.
The good health of the Venetian debt until the 1370s is
proven by its high market prices. The War of Chioggia
(1378–81) against the traditional Genoese rivals, how-
ever, provoked the first real financial crisis of the Vene-
tian state. The conflict boosted the level of indebtedness
and, more importantly, started a spiral that exacerbated
the structural conditions of public finance. During the
their taxable income; the government faced severe diffi-
culties in regularly paying interest to creditors, to the
point where they had to suspend payment. The market
price of state bonds dropped as low as 18% of their nom-
inal value (Figure 28.3).
The financial and political turmoil brought about a
large redistribution of wealth within the city, with the
consequent inability of fiscal authorities to discover
new taxable assets. The repercussions of this crisis were
to last for decades to come. The fifteenth-century wars, in
fact, put Venetian finances in difficulty and despite some
brief intervals of peace, the situation gradually wors-
ened. The amount of interest arrears grew along the cen-
tury; during the Turkish war of 1463–79 the delay in
payment to creditors was 20 years and no interest at
all was paid in 1480. Monte credits were priced well be-
low par and in the early 1480s the total size of the debt
valued at market prices could be assessed as one-tenth
of its nominal value.
During the War of Ferrara (1482–84), in order to revive
the confidence of lenders and taxpayers, the government
launched a new series of loans. The series was entitled
Monte Nuovo, to distinguish it from the earlier loans
(Monte Vecchio), which had attained a nominal amount
of 8 269 000 ducats. The Monte Nuovo succeeded in
awakening the interest of the Venetians, but only mo-
mentarily. The difficulties of the war and the heavy tax
burden made Venetians uncertain about their govern-
ment’s solvency. The news of peace was therefore
greeted with widespread relief and, consequently, the
market prices of the new series soared. The vicissitudes

(Monte Vecchio and Monte Nuovo)

120

100

80
% at par

Vecchio
60
Nuovo

40

20

0
60

68

80
86
92
97

11
15

35
39
43
49
53
58
64
69
81
99
03
08
56
66
91
50

64

07

20
26
31
72
13

13
13
13
13
13

13

13
14
14
14
14
14
14
14
14
14
14
14
14
14
14
14
14
15
15
15
15
15
13

FIGURE 28.3 Market prices of government credits (Monte Vecchio and Monte Nuovo). Reproduced from Pezzolo, L., 2003. The Venetian gov-
ernment debt 1350–1650. In: Davids, K., Janssens, P., Boone, M. (Eds.), Urban Public Debts, Urban Governments and the Market for Annuities in Western
Europe, 14th–18th Centuries. Brepols, Leuven, pp. 61–74.

I. GLOBALIZATION OF FINANCE: AN HISTORICAL VIEW

306 28. VENETIAN FINANCE, 1400–1797
of the new Monte were closely related to the military
commitments of the republic; political troubles made
Monte prices drop, while rumors of peace sufficed to in-
crease them. So, for example, the Monte Nuovo securi-
ties rose above par in 1505–06. But the euphoria in the
Rialto lasted only for a while, for war reappeared soon.
The war of Cambrai (1509–17) brought about the col-
lapse of the Monte Nuovo, which in 1509 was joined by a
new series of loans in the so-called Monte Nuovissimo.
By the mid-1520s, the government debt did not seem
in good health: interest due was in arrears, Monte
Vecchio credits were priced at as low as 3% of par, those
of the Monte Nuovo at 10, and those of the Monte
Nuovissimo at 25. The system of forced loans, in short,
proved to be inadequate both to finance wars quickly
and for the Venetians, who had been transformed
into taxpayers. However, according to Lane, in the
mid-sixteenth century wealthy Venetians were able to
benefit from state debt, as received through interest
and reimbursements rather than paid as direct taxes.
A new response to the financial difficulties emerged
between the 1520s and 1530s and established itself by
the middle of the century. After the creation in 1526 of
a new fund (Monte del Sussidio), the system of forced
loans, being now worn and overused by continuous
wars, was gradually replaced by borrowing directly
from the open capital market. The government began,
more systematically than it had in the past, to collect
loans from among those Venetians who were willing
to invest in government debt. The series of voluntary
loans was managed by the Mint and entitled Depositi
in zecca (deposits in the mint). It was the most important
and powerful means of financing the Venetian state until
the republic’s end. Proceeds of some taxes were ear-
marked for interest payment. Unlike Monte interest, that
of the Depositi was not taxed. Instead, the terms for
repayment of the principal were not set and bonds were
freely tradable and transferable to heirs. The Venetian
Depositi represented an advanced means of deficit fi-
nancing and, to some extent, anticipated some character-
istics of modernity that are usually attributed to other
forms of government debts.
The type of Depositi issued depended on the duration
and interest rate offered. In 1538, during the Turkish
war, the government issued a series of life annuities at
a rate of 14%, while in that period redeemable loans
returned as high as 8%. It is worth noting that life annu-
ities, although they were well known in the cities of
southern Germany, Switzerland, northern France and
Flanders, represented a novelty in the Venetian market.
After the establishment of the Depositi in Zecca, how-
ever, Venice did not resort to life-term loans. If during
the war in 1537–41 life annuities accounted for 37.5%
of the money raised through Depositi, only 50 000 out
of 3 500 000 ducats were collected in the successive war
I. GLOBALIZATION OF FINANCE: AN HISTORICAL VIEW
in 1570–73. The Depositi proved to be an excellent invest-
ment for the Venetians. With a yield of 7–8% in wartime,
they attracted huge amounts of money thanks to the up-
swing of the economy and the attractive terms offered by
the government.
After the turmoil of the war of Cyprus and the plague
in 1576–77, the government initiated a massive reim-
bursement of its obligations, despite strong resistance
within the aristocracy. The result was that within two de-
cades the burden of the public debt stood at zero. The
Depositi in Zecca first, and subsequently the old Monte
credits, were paid back at market price. It was a gigantic
operation that undoubtedly enhanced the republic’s rep-
utation for debt worthiness. The liquidation was worth
about ten million ducats, about four times as much as
the annual government income. On average each citizen
received slightly more than 66 ducats, which corre-
sponded to the annual wage of a building worker.
Almost unique within Europe, the Venetian economy
for a number of years was nearly free from the burden of
interest payments on debt. Of course, such a situation
could not last for long, and from the second decade of
the seventeenth century the government began to bor-
row. It is important to stress, however, that the leader-
ship chose to terminate a Venetian flow of revenue
that largely benefited the wealthiest families in the city,
who were themselves members of the government.
The events of the first three decades of the seven-
teenth century forced the government to call for loans;
between 1609 and 1641, the annual average capital raised
through Depositi in Zecca was 244 500 ducats, with
peaks during the years of the war of Gradisca (900 000
ducats in 1616). During those years public finance,
however, was not heavily burdened by indebtedness.
In 1619, the Senate, to meet investors’ pressing demand,
launched redeemable loans at 5% and life annuities at
10%. These terms were rather favorable to the Republic,
and show a fair equilibrium between state demand and
private supply. Considering the fact that in Holland, the
most developed financial area in the seventeenth cen-
tury, in the same period, redeemable loans yielded
6.25% and life annuities 11–14%, this meant that confi-
dence in the Venetian state as a debtor was quite high
and, in turn, that the government was able to attract cap-
ital despite the fact that returns were not particularly
high. The yield of 5%, in fact, was just below the prevail-
ing interest rate on private capital markets; in the early
seventeenth century, the average rate in the Venetian
mainland was around 6%.
The contraction of investment opportunities in the tra-
ditional overseas trade probably prompted Venetians to
seek a safe income guaranteed by the State. Between the
1610s and 1620s, Genoese investors broadened the sup-
ply of credit in Venice. The reason for this was that most
financiers were increasingly moving their money from
 PUBLIC DEBT
the traditional commitments to the Habsburg crown to
safer harbors, particularly the Papal and Venetian debts.
It seems that the Genoese appeared as lenders to the
Venetian government in 1617, during the War of Gra-
disca, and from that point until the mid-eighteenth
century they were to play an important role. They pre-
ferred life annuities, as much for their excellent return
as, perhaps, the fact that, despite the efforts of the Vene-
tian consul in Genoa, a nominee’s death could be hidden
for long from the financial authorities in Venice. In 1641,
the Genoese held 1 008 648 ducats as life annuities out of
2 177 795 ducats. This means that 46.3% of the series at 10,
12, and 14% was supplied by Genoese investors.
Over the seventeenth century, life annuities were
largely used, in Venice as elsewhere in Europe, but with
more prudence than in the previous century. Some gov-
ernments began to classify all subscribers in relation to
their age thereby varying the rate of interest. Thus, in
1625 the Venetian Senate issued annuities that would
yield 10% to creditors under the age of 30 years, 12%
to those between 30 and 50 years and finally 14% over
50 years. The authorities had to verify nominees’ age
by checking parish registers, while foreign investors
had to submit a statement signed by Venetian represen-
tatives abroad. In 1645, soon after the outbreak of the war
of Candia, the government offered investors life annu-
ities at just 6% with a ceiling of 100 ducats for each
subscriber.
The interest rate was fairly low for a life-term loan, but
was justified by the fact that the money saved by nomi-
nees’ deaths would be shared among the survivors. Al-
though still vague in its form, it is likely that Venetian
projects at this time anticipated somewhat similar mech-
anisms (the Tontine) that appeared toward the end of the
seventeenth century in northern Europe, especially
France. In 1669, furthermore, the government launched
a life annuity based on eight age groups with returns
that, apparently, would increase the benefit of the survi-
vors. It has to be stressed that the mechanism for diver-
sifying the return was not a common practice in Europe
at the time. Both the English and the Dutch governments
had long been issuing annuities that did not take into ac-
count the different ages of subscribers. It seems, then,
that in Venice the political and cultural environment
was particularly eager to accept innovations that were
emerging in the actuarial calculations, which reflected
a change in the new system of values and beliefs related
to the concepts of events bringing good or bad luck and
probability forecasting. Although the government real-
ized the heavy administrative burden that these loans
imposed, the practice of issuing age-specific life annu-
ities was followed over the years by many other govern-
ments. At first, the Venetian authorities tried to limit the
nominees only to the inhabitants in the state, but compel-
ling wartime needs forced them to seek investors abroad.
I. GLOBALIZATION OF FINANCE: AN HISTORICAL VIEW
307
In 1641, at least one-seventh of the consolidated debt in
the Mint (7 435 723 ducats) belonged to non-Venetians.
The presence of foreign investors in Venetian debt was
not a novelty. As far back as the fourteenth century, the
authorities had allowed foreign investment, but its share
had been rather small. In the 1610s, the government
signaled its intention to broaden the base of potential sub-
scribers by declaring its willingness to accept money from
both subjects and foreigners. Was this a sign of a lack of
capital at the Rialto? There is some evidence indicating
that money was scarce; and the same Mint tried to attract
through incentives those willing to bring silver. This was
not merely a short-term expedient, for appeals to foreign
investors continued and even intensified during the war
of Candia. Quantifying the contribution of foreign capital
in financing a war is impossible, but it is very likely that
the money coming from Genoa increased significantly.
For example, 81.5% of the government’s short-term loans
in 1654–56 was provided by the Genoese. A few years
after the war it turned out that 30.3% of the funds at 3%
belonged to financiers of Genoa.
The enlargement of the geographical range of in-
vestors warrants some reflection. One might suppose
that the institutionalization of foreign debt was, as
mentioned, a symptom of the difficulties affecting the
domestic credit market, which was no longer able to
support the government’s demand. But evidence that
money was scarce in the lagoon is neither numerous
nor convincing. The inflow of foreign investors’ capital
is undoubtedly proof that the Depositi in Zecca enjoyed
wide approval and merited confidence. Trust had to be
rewarded and not coincidentally the documentation
reflected the concern of the government to meet its finan-
cial commitments, first of all to the creditors from Genoa.
To be sure, the financial dependence on the capital of
Genoa, although not overwhelming, could have induced
Venetian patricians to pay particular attention to the
moods and voices from Genoa. That risk, however,
was apparently never realized, based on the limited suc-
cess of Genoese representatives in defending investors’
interests in Venice.
Pressing financial needs led the government to exploit
the emerging social attitudes that characterized Euro-
pean society in the seventeenth century. In addition to
lifetime loans, the government proposed a series of lot-
teries. The lottery (or lotto) was not unknown in Venice.
In the previous centuries, public lotteries had already
been set up as prizes in buildings and shops in the Rialto
area, while individuals were allowed to sponsor a lot-
tery, usually as a means of satisfying creditors. But it
was in the mid-seventeenth century that the government
used the lottery as a means of revenue. Between the late
1640s and the early 1650s, the government sold lottery
tickets offering money, state securities, and offices. Lot-
teries constituted a kind of government loan, made
308 28. VENETIAN FINANCE, 1400–1797
attractive by the prospect of winning money. The mini-
mum amount involved was quite low (corresponding to
the wage of 3–15 working days of a building laborer) and
allowed the lottery player to aspire for better things.
From the government’s standpoint, lottery did not repre-
sent a heavy burden in the short term, although one
should consider that this system was usually used in
cases of acute necessity. The eighteenth-century budgets
record an average net income of just over 111 000 ducats
a year; this fluctuating revenue, similar to the case of
Naples, is not correlated with the trend of grain prices.
The incentive of players did not stem from their neces-
sity, but by their aspirations to improve their economic
and social situation.
In addition to voluntary loans, the government, albeit
in a manner far less pronounced than in the past, also
resorted to forced loans through direct taxes, and devel-
oped the sale of annuities to be assigned directly to cred-
itors, thus bypassing the mint. These so-called Deposits
outside the mint were a sign of the current difficulties of
the public finances. Although this practice was wide-
spread in other states, the Venetian government had
been very sparing up to this point in alienating portions
of tax income, but the extreme urgency of war forced the
use of this device. In November 1645, for example, 28 000
ducats of the duty on olive oil were sold at an interest
rate of 7% for 20 years, which was the current interest
rate during the war. This type of operation multiplied
in the succeeding years, so that after the war the amount
of deposits outside the Mint exceeded 13 million ducats.
In fact, the method of payment of interest rate was rather
simplified, as creditors were paid directly by tax collec-
tors. Moreover, the quality and importance of duties
alienated (wine, oil, salt . . .) reassured the creditors
about payments, for the collection of indirect taxes,
particularly those on consumption, seemed more secure
than direct taxes. The system worked effectively,
which is why it was so widely applied throughout the
eighteenth century. The war of Candia, therefore,
marked an extremely important moment for the Vene-
tian state exchequer, especially for strategies that were
put in place to address the emergency. As on other occa-
sions, after the end of the war the government took ac-
tion on its debt by examining the amount of interest
not yet paid and starting operations of conversion to a
lower rate.
At the end of the war of Candia, the conversion
brought only temporary relief to state finances, for debt
levels began to rise during the wars of Morea and the
phases of armed neutrality throughout the eighteenth
century. During this period, the government resorted
to another system of state financing, by involving the
guilds in both Venice and the mainland. The government
used the guilds as intermediaries for providing credit,
because of the lack of trust among potential investors.
I. GLOBALIZATION OF FINANCE: AN HISTORICAL VIEW
The guilds were requested to borrow from investors
through a private contract and then to transfer the
money to the government. The mediation of a local insti-
tution, which could boast of prestige relying on its
considerable financial strength, was thus used to find
money that otherwise would not have flowed directly
into the state coffers. Besides the guilds, charitable insti-
tutions and the Jewish communities of the state were
also involved. During the war of Candia, the former
were forced to lend substantial sums, which endangered
their financial health. In some cases, hospitals were
forced to sell a portion of their real assets to collect the
money requested, as well as to borrow from Venetian no-
bles. As for the Jews, they were often asked to pay spe-
cific taxes and loans. During the years of the war and in
the following decades, for example, the Jewish commu-
nity of Venice was obliged to deposit money and silver in
the Mint. Seeking liquidity among the various social
bodies of the capital and of the mainland was a sign of
difficulty in obtaining money from traditional investors,
who were unable or unwilling to provide large amounts
to the government.
The nominal principal held by foreigners dropped
from about 21 million ducats in 1760 to 13.5 million in
1787, but the diminishing foreign investment did not
mean that the Venetian debt was considered risky, for
even in 1797 – the last year of the Republic – 17.9% of
the debt was held by foreign creditors. While, on the
one hand, the gradual reduction of interest rates had
led to disinvestment, on the other hand, the Venetian
finances certainly benefitted from those operations in
the second half of the eighteenth century.
Although the public debt may be seen as a powerful
political tool, the reforms undertaken by the Venetian
rulers suggest that they prized state interests over those
of investors, at least potentially. The conversions of the
century affected creditors, which saw their income
progressively fall; it was a sort of tax on state securities
which brought about a redistribution of financial
resources between taxpayers and lenders. This mecha-
nism, which was implemented on several occasions in
Venetian history, aimed to hurt particularly those who
speculated in the secondary market of state securities.
THE FLOATING DEBT
It is well known that Venice was one of the most im-
portant financial centers of early modern Europe. She
probably reached her heyday in the fifteenth and six-
teenth centuries, as her financial institutions represented
a model for other European centers. The most important
aim of the Venetian financial market was first to provide
merchants, rightly considered as the protagonists of the
economic success of the city, with services. A foreign
 THE FLOATING DEBT
merchant coming into Rialto was immediately struck by
the ease of doing business without cash. From the late
thirteenth century, in fact, some local bankers kept their
customers’ deposits and transferred money by simply
writing the sum from one account to another one. These
banks di scritta facilitated transactions and limited con-
siderably the use of coins. The main features of the Ve-
netian banking system were the generally accepted use
of bank money, a lower stock of money than deposits,
and the fact that bankers had accounts in other banks.
As bankers permitted their customers to overdraw, they
created credit.
From the fifteenth century until the Italian wars, gov-
ernment agencies asked local bankers to provide finan-
cial services (short-term loans and transfers of money
through bills of exchange), but after the Turkish war of
1537–40 their involvement in the mechanisms of state fi-
nance was substantially reduced. It is likely that the
institution of the Depositi in Zecca and the small finan-
cial deficit had limited the resort to bankers. Neverthe-
less, the period between the two Turkish wars saw an
increase of the banks di scritta. While in 1545 there was
just one banker in the Rialto, on the eve of Lepanto five
bankers operated there.
Frequent bank crises, however, forced the government
to intervene. In 1568, the Venetian senate forbade the
opening of new banks, and in 1584 the failure of the last
bank, that of the Pisani-Tiepolo, paved the way for the
first public bank. Three years later, in 1587, the Banco
della Piazza di Rialto, which basically took up the same role
of the former private banks, was founded. The novelty,
however, was that the government itself exerted a
close control over the management of the new financial
institution. It received deposits and made giro transac-
tions between current accounts. The customers’
ability to remain in the red for any length of time
disappeared, for the function of the Bank was limited to
controlling the monetary system by providing, at least
up to the end of the sixteenth century, reliable bank
money.
In 1637, the Banco della Piazza di Rialto was suppressed
due to the growing importance of the Banco Giro. Estab-
lished in 1619 as a temporary institution managing the
relations between the mint and its silver suppliers, it
was to last until the fall of the Republic in 1797. The
Banco Giro took up the same role of the Banco della Piazza
di Rialto and also managed the floating debt of the gov-
ernment. Suppliers’ credits were registered at the Banco
Giro, which could be freely transferred. The state did not
resort to the Banco Giro only to meet its suppliers. In 1629,
it was decided that interest on deposits in the Mint could
be paid at the Banco; likewise, some series of state annu-
ities were issued by the new institution, and it proved
opportune to allow Venetians to pay taxes, at least
partially, through the bank.
I. GLOBALIZATION OF FINANCE: AN HISTORICAL VIEW
309
It is worth noting that the authorities kept the size of
the floating debt fairly limited. The sector where
the Bank operated – mostly trade – was particularly del-
icate, and the government chose to borrow mainly
through the deposits in the Mint rather the Banco Giro,
still in those years conceived as a provisional financial
institution. In addition, a disproportionate expansion of
the Bank debt would have caused a deterioration
between currency and bank money at the expense of
the latter, with severe consequences on the Venetian
market.
Venice thus had public financial institutions that facil-
itated transactions by both reducing payments in cash
and providing a relatively stable bank currency. It would
be wrong to argue that customers of these banks were ex-
clusively rich people and professional traders. A wide
array of people were involved with private bankers,
and later, public banks. Nobles, merchants, craftsmen,
women, charitable institutions, trusts, common people,
and foreigners made up the social profile of customers.
Venice, therefore, offered an efficient financial market
at both the international and domestic level, despite
the economic decline over the last two centuries of her
history.
SEE ALSO
Globalization of Finance: An Historical View: Geno-
ese Finance, 1348–1700; Low Countries Finance, 1348–
1700; Milanese Finance, 1348–1700; Papal Finance,
1348–1848; Rentes and the European ‘Financial
Revolution’.
Glossary
Banco della piazza di Rialto First public bank established in Venice in
1587. It was a deposit bank and limited itself to ease money transfer
among customers.
Banco Giro Venetian state bank founded in 1619. It managed the float-
ing debt of the government and facilitated transactions on the finan-
cial market.
Decima (tenth) Direct tax paid by Venetian taxpayers. It was levied on
regular basis from the mid-fifteenth century.
Depositi fuori Zecca (Deposits outside the Mint) Loans issued by the
Venetian government whose interest was paid directly to bond-
holders from tax collectors.
Depositi in Zecca (Deposits in Mint) Bonds sold by the Venetian gov-
ernment from the early sixteenth century.
Estimo Tax register in which real estates of Venetian taxpayers were
inscribed.
Monte In some Italian city-states, it was the fund of the government
debt. In Venice, the first series of loans was gathered in the Monte
Vecchio, other Monti (Nuovo, Nuovissimo, and Sussidio) were
established between the late fifteenth and the early sixteenth
centuries.
310 28. VENETIAN FINANCE, 1400–1797
Further Reading
Borelli, G., Lanaro, P., Vecchiato, F. (Eds.), 1982. Il sistema fiscale ve-
neto. Problemi e aspetti, XV–XVIII secolo. Libreria Universitaria,
Verona.
Del Torre, G., 1986. Venezia e la Terraferma dopo la guerra di
Cambrai. Fiscalità e amministrazione (1515–1530). Franco Angeli,
Milano.
Einaudi, L., 1904. L’economia pubblica veneziana dal 1736 al 1755. La
Riforma Sociale 11, 177–196, 261–282, 429–450, 509–537.
Georgelin, J., 1978. Venise au siècle des lumières. Mouton, Paris-La
Haye.
Hocquet, J.-C., 1979. Guerre et finance dans l’état de la Renaissance: la
Chambre du Sel et la dette publique à Venise. In: Favier, J. (Ed.),
Actes du 102e Congrès national des Sociétés savantes. Etudes sur
la fiscalité au Moyen Age. Comité des travaux historiques et scien-
tifiques, Paris, pp. 109–123.
Lane, F.C., 1973. Public debt and private wealth: particularly in six-
teenth century Venice. In: Mélanges en l’honneur de Fernand
Braudel, vol. 1. Privat, Toulouse, pp. 317–325.
I. GLOBALIZATION OF FINANCE: AN HISTORICAL VIEW
Mueller, R.C., 1997. The Venetian Money Market. Banks, Panics and the
Public Debt, 1200–1500. Johns Hopkins University Press, Baltimore,
London.
Pezzolo, L., 1990. L’oro dello Stato. Società, finanza e fisco nella Repub-
blica veneta del secondo ‘500. Il Cardo, Venezia.
Pezzolo, L., 2003a. The Venetian government debt 1350–1650. In:
Davids, K., Janssens, P., Boone, M. (Eds.), Urban Public Debts,
Urban Governments and the Market for Annuities in Western
Europe, 14th–18th Centuries. Brepols, Leuven, pp. 61–74.
Pezzolo, L., 2003b. Il fisco dei veneziani. Finanza pubblica ed economia
tra XV e XVII secolo. Cierre, Verona.
Pezzolo, L., 2006. Una finanza d’ancien régime. La Repubblica veneta
tra XV e XVIII secolo. Edizioni scientifiche italiane, Napoli.
Rapp, R.T., 1976. Industry and Economic Decline in Seventeenth-
Century Venice. Harvard University Press, Cambridge, MA.
Tucci, U., 1973. Convertibilità e copertura metallica della moneta del
Banco Giro veneziano. Studi Veneziani 15, 349–448.
Zannini, A., 1998. La finanza pubblica: bilanci, fisco, moneta e debito
pubblico. In: Del Negro, P., Preto, P. (Eds.), Storia di Venezia,
vol. 8. Istituto dell’enciclopedia italiana, Roma, pp. 431–477.