Rapp R. T. (1975) The unmaking of the Mediterranean trade hegemony

Rapp Richard T. (1975) “The Unmaking of the Mediterranean Trade Hegemony: International Trade Rivalry and the Commercial Revolution”, The Journal of Economic History, 35/3, 499-525.

“It was the invasion od the Mediterranean, not the exploitation of the Atlantic, that produced the Golden Ages of Amsterdam and London” (p.501).

Introduction
Even if the expression of “commercial revolution” has been somewhat demonetized, but the author maintains that there was a “shift in the locus of European trade from the markets of the Mediterranean to the North Atlantic overthrew a centuries-old pattern of commerce and established the basis for the predominant role of North Atlantic Europe in the era of industrialization.”(p.499) This shift is often credited by scholars to the sole geographic discoveries of the 15th and 16th century, while internal factors are deemed secondary. The author hypothesises that the rise of Antwerp and London may have more to do with the Northerners aggressive competition in the Old World’s marketplaces than with their proximity with those of the New World.. (p.500) In his view, production capacities are what gave the Dutch and English traders an edge on their Mediterranean competitors. Thus, for the Mediterraneans perspective, it was not a decline relative to a competitor’s unmatched growth, but rather an active destruction of their hegemony. (p.501)

The lion’s share
The importance of the Mediterranean trade for the England is show by the fact that in the mid-1660s the exports to the Americas and Indies amounted to less than a tenth of the London port’s overseas outward trade, while the Mediterranean grabbed the lion’s share (48%). (p.502) True, the percentage of the English tonnage heading to the Americas was greater but its value was way also way lower. (p.504)

Venice’s decline
In the early 1600s, Venice lost most of its technical advance to other European nations as many highly skilled workers were lured North by the mercantilists sovereigns offers. Venice lost its monopoly on Murano glass, cloth-of-gold weaving, mirror-making, soap. (p.505) As backward economies, Venice’s northern rivals, as relatively backward economies, had a lower cost of labour and a better return on investment. Two features destabilized Venice further: its emphasis on luxury goods (so its competitors could undercut it with cheaper and lower quality goods) and its traditional role of the Mediterranean Sea’s entrepôt (that made it particularly dependent on customs levered on merchandises which would now bypass it). (p.506) Overly taxed and handicapped by higher labour costs, the Venetian wares were out-competed by their subsidized rivals. (p.508)

Economic warfare
A real economic war was waged in the Mediterranean. The Northern new comers assaulted the Venetian positions with smuggled and counterfeit merchandises. (p.509) Cheap imitations took much of the Serenissima’s market shares. The English’s main weapon in this fight was the new drapery (invented circa 1600), a cheap and low quality cloth, meant to undersell the Venetians’ ware. The other qualifies this strategy as a “marketing revolution”. (p.512) The inexpensive English woollens destroyed the Venetian cloth industry (the number of guildsmen dropped to 800 in 1690 from 3300 a century earlier.

The role of the state
The author uses the theory of firm to analyse the early modern overseas trade (as each nation’s traders having similar products and rationale) thus “the state, not the individual firm, was the relevant unit of competition” (p.514). As such, it was the state that was in charge of defining the strategy (in this case the developing player trying to oust the mature competitor by underselling it). (p.516) The Venetians proved particularly slow to adapt to the English competition as the government prevented guildsmen to use cheaper and lower quality techniques. (p.517) The Venetians’ position was further weakened by their competitors’ imitation of their wares which damaged their image. (p.518)

Conclusion
This commercial rivalry comes to show that the “north European economic growth [was] more clearly related to competitive success in established markets, not merely to changing routes. Both economic logic and historical evidence suggests that the competitive success of the North Atlantic was founded on the abilities of producers to reduce costs in three ways: by capitalizing on factor-cost advantages; by using product variation to reduce the quality-related costs of manufactures; and […] by innovating in shipping to reduce transport costs.” (p.521) A vast array of evidence “suggests that the rise of England as an industrial and commercial centre in the seventeenth century rested upon the conquest of the southern market, and more precisely, upon the elimination of Mediterranean rivals in industry and trade.” (p.522) Venice’s export-oriented industries shrank and its port’s status went “from the foremost international emporium to a regional harbour”. But in absolute terms (population, employment) Venice did not decline, it shifted toward domestic services. (p.523) On the other hand, the rest of the Mediterranean’s economy deteriorated quickly. (p.524)

Comment
This article is a necessary base for whoever in interested in the Serenissima’s economic history (specially when it insists on the Venetian’s state interference with its craftsmen’s entrepreneurship). Rapp’s contribution to the English side of the problem is less clear. In particular the advantage of the Northerners coming from the use of corporate structures and the support of the state diplomacy to the national traders is barely mentioned. Furthermore, the point that the nation was the relevant economic unit is overstated as a strong competition existed even inside corporate structures between the various merchants of the same nationality or between the various cities of the same state.

Bibliography
Davis Ralph (1966), “England’s Foreign Trade 1660-1700” in Carus-Wilson E. M. ed. Essays in Economic History, New York.

One Response to Rapp R. T. (1975) The unmaking of the Mediterranean trade hegemony

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