The Rise, Expansion, and Decline of the Italian Cloth Industries, 1100 - 1730: a study in conjoncture, transaction costs, and comparative advantage

This study of the Italian wool-based textile industries (woollens, worsteds, and serges) seeks to examine its rise, expansion, and ultimate decline, over a period of five centuries (from ca. 1200 to ca. 1730) in the context of both international competition and economic conjoncture, in the context of the major macro-economic and demographic changes that the European economy experienced during these five centuries. The story commences during the so-called 'Commercial Revolution' era of the thirteenth-century when the Franco-Flemish cloth industries of north-west European dominated the international markets in a very wide range of these textiles, even in the Mediterranean basin. From the 1290s, and then into the better know period of the Hundred Years' War (1337-1453) the European economy suffered from the ravages of ever more widespread and debilitating warfare, throughout the Mediterranean basin and western Europe, and then from various factors, including plagues, that led to serious depopulation. The consequences led to a severe rise in transportation and transaction costs that gravely undermined the profitability of long-distance trade in cheaper textiles. That, in turn forced most textile manufacturers dependent on long-distance trade, and especially those who had operated as price-takers, to re-orient their export-based production to far higher priced, indeed luxury textiles, which could better sustain the burden of rising transactions costs, especially in acting as 'price-makers' engaged in monopolistic competition. That industrial-commercial transformation can be seen in the textile industries of northern France, the Low Countries, and England; but also those in Catalonia and above all in Italy: principally Tuscany and Lombardy. In so far as warfare and rising transaction costs limited the importation of even luxury textiles from north-west Europe, the Italian cloth industries thereby gained a far larger share of Mediterranean markets. This study focuses in particular on the ensuring history of the Florentine woollen cloth industry in the later Middle Ages. One price that all of these luxury-oriented cloth industries had to pay was steeply rising tax burdens on exported English wools; for the prime determinant of luxury quality in these textiles was the use of the finer grade English wools, the best in the world, until the development (through breeding and management) of Spanish merino wools, which finally succeeded in rivalling and then surpassing the English by the later sixteenth century. By the sixteenth century, with a reduction in European warfare and with renewed population growth, substantial economic growth, and significant innovations in transportation, transactions costs fell, and fell enough to make long-distance trade in cheaper textiles once more profitable; and that is reflected in product changes in the Florentine textile industry, which increasingly used Spanish merino wools in place of the English. But the most important events in the history of the Italian textile industries was the sudden rise of the Venetian cloth industry from the early to mid-sixteenth century, reaching a peak in the early seventeenth century, and then experiencing an equally rapid decline, in the famous of English textile competition, by the agency of the new Levant Company, which gained major advantages over the Italians in the large Ottoman Empire. The study concludes by examining the nature of those English advantages, which lay far more in the commercial (and transportation sphere) than in the industrial sphere, in terms of both traditional heavy weight woollens (made from Spanish wools) and the lighter, coarser, and cheaper fabrics of the English New Draperies (benefiting from a transformation in English wool production, from the Tudor-Stuart Enclosures). In sum: a study of comparative advantage in five centuries of international trade, in wool-based textiles, in terms of transaction costs, inputs (wools), and commercial organization.