A Visit to Venice

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As we began the vaporetto journey across her lagoon, u201CLa Serenissimau201D — the Most Serene Republic — was coyly shrouding her splendours in the thick sea fog she had drawn about her, frustrating the search for the landmarks so familiar from a thousand cheap reproductions of Canaletto’s work on postcards and placemats.

Disembarking directly to the hotel foyer, our first order of business was to pay a brief homage to the gravestone of the father of modern central banking, John Law, who was re-interred in the adjacent Chiesa di San Moise by a descendant who governed the city after its capitulation to Bonaparte’s armies in 1797, a catastrophe which finally extinguished the maritime oligarchy’s 1100 years of sovereignty.

Law — gambler, duellist, womaniser, and monetary theorist — was that very Lucifer of finance who briefly outshone all others when his attempts to rescue France from the Sun King’s ruinous legacy flared into the white heat of speculative excess and chicanery which became known as the Mississippi Bubble.

Fleeing the country in the wake of its implosion — and frustrated in his attempts to persuade his former patron, the dissolute Duc d’Orleans, to recall him when the hue and cry had subsided a little — Law died in Venice in what some claim was relative penury: a necessary coda to this classic tale of hubris and nemesis which is somewhat spoiled by suggestions that he and his common-law spouse actually set up home on the lagoon accompanied by the eighty-odd crates stuffed full of valuable artworks which they had smuggled out before absconding.

In fact, Law’s very modern story was to provide the hook for the brief address which I gave at the private conference my company, Diapason, was hosting in the city: a gathering held in order to celebrate the firm’s three years in business as a leading independent asset manager, dedicated wholly to commodities.

I could do this because Law’s "System" had all the elements of the storm we see around us today — starting with a debt-for-equity swap into an IPO privatisation vehicle with an emerging market theme; proceeding with the building of this enterprise into a "national champion" conglomerate; ensuring its successful launch and paving the way for secondary offerings with a manipulation of the share price through clever financial engineering; and — of course — unleashing a torrent of inflationary paper money and security credit, Shanghai banking-style, with which to pay for it all.

But if today’s ill-recognised inflation is one side of our contemporary investment equation, the splendours of Venice remind us of the other, for these were built upon the proceeds of what for long periods amounted to her dominance of the flow of commodities, both from East to West and from North to South.

Spices, silks and silver, furs and fabrics all came under the influence of the Republic — especially so when, in 1203, having craftily diverted the chain-mailed hooligans of the Fourth Crusade into settling a little private business on his behalf, the blind Doge Enrico Dandolo took part in the Franks’ sack of the city state’s greatest commercial and political rival, mighty Constantinople itself.

Basing her trade on her naval might — and using that trade, in turn, to finance her navy’s construction at what was then the largest industrial complex in the world, the mighty dar-es-sina’ah, or Arsenal — Venice’s three centuries of glory were not entirely a miracle of the free market, just as the US economy today relies more than it likes to admit upon McDonnell-Douglas rather than upon McDonald’s, or upon the Sixth Fleet as well as upon Silicon Valley.

Yet, it has to be granted that however great the role of armed might in exerting her influence, Venice’s unique position was also due in no small part to her aptitude for encouraging entrepreneurs — including those housed in the ex-pat conclave we know as the Ghetto. From this sprang her ability to accumulate capital and to re-employ it fruitfully in order to finance both a further expansion of trade and the acquisition of sources of production themselves.

Perhaps the best example of the latter was the wealth generated by one of her leading families when they married one of their daughters off to James II of Cyprus in the 1470s.

Poor James barely survived his nuptials (portraits of Queen Caterina show he may not have been as unlucky as he seems!), while his posthumously-born son expired shortly after Caterina was confirmed as regent, so it comes as no surprise to discover that the rival Neapolitan faction was soon spreading rumours that the cause of neither death was entirely natural.

Whatever the merits of the charge, as a result of astute diplomatic manoeuvring, the Venetians were soon in undisputed command of the island and Cyprus was transformed from being the last remaining Crusader state (ruled by the heirs of The Kingdom of Heaven’s boo-hiss baddie, Guy de Lusignan) and became instead an economic colony of the Republic, the site of the most important plantations, mills, and refineries it devoted to production of that white gold of the Middle Ages — sugar.

Though some dictionaries provide a more prosaic and much later etymology, Fernand Braudel suggests that the effective sugar monopoly which resulted was so lucrative that the Queen’s relations, the Cornaro, or Cornero, clan, gave rise to our modern expression "to corner the market."

In a setting where every winding alleyway and each of the profusion of footbridges we walked simply oozed a living history, it was hard not to succumb to the obvious metaphor and think of ourselves, at Diapason, as latter-day Merchants of Venice, and to hope that, like Antonio, our "ventures are not in one bottom trusted, nor to one place, nor is [our] whole estate upon the fortune of this present year.u201D

With that, the water taxi arrived to ferry us back to our waiting flight to the mundane world of city streets and traffic jams, leaving Venice floating impassively on her shining sea of memory, gently serenaded by the sublime Adagio emanating from the ghostly strings of Albinoni’s smiling shade.

Sean Corrigan [send him mail] writes from Switzerland.

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