A medieval millionaire

In the main square of Prato, west of Florence, there is a statue of a 14th century millionaire, Francesco di Marco Datini. From his house in Prato, this man created a multinational business, with branches in France, Italy and Spain, and correspondents in England and the Low Countries, and across the Mediterranean and the Black Sea. He bought and sold wool from England and Spain, spices from the Far East, alum from Eastern Europe, slaves from North Africa, and grain from the Crimea. You and I would not have cared much for Datini.

His letters show him to have been a hard-headed misanthrope who lived only for business. But he took it for granted that a lifetime of trading and money-making was pleasing to Man and God alike. The ledgers in which he recorded his affairs opened with the motto: "In the name of God and profit."

Peter Spufford, who is best known as the author of a famous book on medieval money, is one of a handful of scholars who knows how to make economic history interesting. In Power and Profit, he has recreated the age in which men like Datini made their fortunes. It was an age in which Europe was a world of its own, a relatively small part of the world economy, but hardly conscious of the existence of continents beyond.

The spices may have come from the Far East, but they were bought from middlemen in the eastern Mediterranean or the Black Sea without a thought of the lands where they had been grown. Marco Polo, who wrote of central Asia and China, was dismissed as a fantasist. Men wondered whether life was possible south of the tropics, and the existence of America was unknown.

Once, this enclosed world had been fragmented into thousands of small communities, each living on its own resources or starving for lack of them. But by the 13th century, the countries of Europe were becoming interdependent as they had never been before. The great cloth industry of Flanders depended on English wool and Italian capital. Spanish wool supplied Italian looms. Baltic grain fed much of northern Europe. Italy manufactured the armour in which English and French noblemen fought, the silk which they wore at dinner, and the glass from which they drank their (French and German) wine. Most silver came from central Europe.

These trades spawned an international network of banks, mostly Italian, to handle credit and exchange, and generated crashes whose impact, then as now, could not be kept within the borders of a single state. The bankruptcy of Edward III of England brought down the Bardi bank in Florence, just as the fall of Charles the Bold, ruler of Burgundy and the Low Countries, would later bring down the Medici bank. The financial consequences of these events were felt throughout Europe.

As Peter Spufford shows, the real force behind the rapid expansion of trade was the growing power and wealth of governments and the appearance of mega-cities such as Paris and Milan, London, Avignon and Seville. The staples of medieval trade were luxuries for princes, and grain and cloth for the urban masses. Governments spent their subjects' money on conspicuous consumption and war, both of them activities which created a great demand for specialised manufactured goods. Cities needed a regular stream of basic supplies on a scale which could never be satisfied from the regions around their walls.

The daily arrival of these goods, often from great distances by pitted, thief-infested roads, was a minor commercial miracle.

All this was eloquent testimony to the creative power of anarchy and the profit motive. It brought into being a new class of risk-takers and entrepreneurs who courted ruin in the hope of fortunes. It called for great sums in liquid capital and new forms of business organisation.

It generated new business methods: cheques and bills of exchange, insurance, transferable shares and bonds, are all creations of the late Middle Ages.