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As we began the vaporetto
journey across her lagoon, “La Serenissima”
– 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.”
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
Sean
Corrigan is Chief Investment Strategist at Diapason Commodities Management,
who have offices in Lausanne and London.
Information
contained herein is obtained from sources believed to be reliable, but its accuracy
cannot be guaranteed. It is not intended to constitute individual investment
advice and is not designed to meet your personal financial situation. The
opinions expressed herein are those of the author
and are subject to change without notice. The information herein may become
outdated and there is no obligation to update any such information. The author, 24hGold, entities in which they have an
interest, family and associates may from time to time have positions in the
securities or commodities discussed. No part of this publication can be
reproduced without the written consent of the author.
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