Great Wave

by Fischer, David Hackett;

  I can get no remedy against this consumption of the purse; borrowing only lingers and lingers it out, but the disease is incurable.

  —Shakespeare’s Sir John Falstaff

  Henry IV, Part 2, 1.2.216 (1597)

  FLORENCE, June 24, 1491, the festival of San Giovanni. On this happy summer day, the citizens of a great and prosperous city honored their patron saint, John the Baptist. Every year the Florentines spent months in preparation for an event which they believed to be “unparalleled in the world.”

  The festival of St. John was a joyous holiday for people of every rank. Servants received new livery, and a day of freedom. Masters and mistresses appeared in extravagant new costumes and jewels. The magnati of the city, who in years past had met in mortal combat at the city’s piazza, now competed for honor in contests of material display. The morning was marked by tournaments, by fights between wild animals, and by demonstrations of martial arts called armeggerie. Great crowds gathered to watch the palio, a wild and dangerous horse race through the streets of the city. There was a lively parade of the gonfalonieri, marching proudly with their billowing flags. The evening of the festival was a traditional time for weddings, which had been postponed for weeks to honor the occasion. The grand climax was a solemn religious procession of colorful floats called trionfi, which celebrated scenes from the life of Christ and St. John.

  Those things had been done for as many years as anyone could remember. But this year a change was made. In place of the religious floats, the first citizen of Florence Lorenzo de’ Medici ordered the construction of fifteen trionfi on a classical rather than a Christian theme. The new floats celebrated the triumph of Roman consul Lucius Aemilius Paulus Macedonicus, whose victories had brought so much treasure to Rome that its citizens were freed from some of their taxes for forty years.1

  These new Florentine trionfi were drawn through the streets by 100 oxen, and escorted by five squadrons of war horses from the Laurentian stables. An historian at the time observed that this display “was considered the worthiest thing ever done on the day of San Giovanni.” A parallel was pointedly drawn between the largesse of Paulus Macedonicus and the generosity of Lorenzo de’ Medici, whose family had spent more than a million florins in acts of philanthropy. In the process, an old religious procession was turned into a secular event that celebrated the prosperity of the city, the stability of its institutions, the generosity of the Medici family, and the glory of their young leader who was called Lorenzo il Magnifico.2

  In 1491, the city of Florence had much to celebrate. “The city enjoyed perfect peace,” its historian Guicciardini wrote, “the citizens in power were united and close, and their regime was so powerful that no one dared oppose it. Every day, the people were treated to shows, feasts, and novelties; provisions abounded in the city, and all the trades prospered. Genius and ability flourished, for all men of arts, letters, and ability were welcomed and honored. At home, the city enjoyed complete order and quiet; and abroad, the highest glory and reputation.”3

  The city was at the very pinnacle of its power. It had enlarged its domain in Tuscany, and had so strengthened its alliances that it appeared to be “the fulcrum of all Italy.“4 Money flowed into its coffers at such a rate that only three days before the Feast of St. John, the commune announced that citizens would be allowed to pay their public obligations at only a fraction of the usual rate. A month before the festival, the mint-masters issued a new Florentine coin that “was thought [to] work miracles with the economy.” Throughout the city, the great Renaissance palaces and especially Brunelleschi’s majestic duomo above the cathedral symbolized an era of prosperity and stability.5

  So it seemed in 1491, when the people of Florence celebrated the day of their patron saint. But beneath the surface, things were not as they appeared. Once again, at the very moment when it was least expected, a deep change was silently stirring in Florence itself and throughout the Western world. After nearly a century of equilibrium, new trends were beginning to develop in Italy and other parts of Europe.

  An early sign was the movement of prices. During the last quarter of the fifteenth century, the cost of living had begun to rise in Italy and Germany. The magnitude of its increase was not very great, but in retrospect we are able to recognize the silent beginning of a new change-regime that was destined to continue for many generations.

  The people of Tuscany sensed the new trend long before they saw it clearly. Within nine months of the Feast of St. John, the cultural mood began to change in Florence. It started with an omen of a sort that Florentines took very seriously. On the fifth of April, in the year 1492, the sky suddenly turned black above the city. A brilliant bolt of lightning streaked down from the heavens and struck Brunelleschi’s soaring duomo with a mighty crash.6

  As if on cue, a sinister friar named Girolamo Savonarola emerged from his cell at the convent of San Marco and delivered a dark prophecy to the people of Florence. “Tell Lorenzo to do penance for his sins,” Savonarola warned, “for God will punish him.” Before a vast crowd, the friar prophesied the death of il Magnifico himself and an ordeal of suffering for his city.7

  Within months, both prophecies came true. In 1492, the magnificent young Lorenzo died suddenly of a strange illness. The coup de grace may have been administered by his own physicians, who ordered this great sybarite to drink a potion of powdered pearls as a last desperate remedy for his mysterious affliction. He was barely 43 years old.

  After Lorenzo’s death, the peace and prosperity of Florence collapsed. His carefully crafted foreign policy was destroyed by his reckless son and heir, Piero di Lorenzo de’ Medici. As the Italian states resumed their ancient quarrels a French army seized the moment, crossed the Alps and occupied Florence. An angry mob sacked the Medici palace, and Piero di Lorenzo was banished from the city. After a brief revival of republican liberty, Florence passed under the sway of Friar Savonarola, who ruled the city from 1494 to 1498.

  Savonarola tirelessly lectured the people on their sins, and blamed their troubles on spiritual corruption and love of luxury. He persuaded them to do penance for their prosperity. In an orgy of remorse they built a huge bonfire of their beloved Renaissance paintings, books, furniture and musical instruments in the Piazza de Signori. Just before the pile was set alight, an incredulous Venetian merchant offered to remove the offending vanities for 20,000 gold ducats. His reward was to have his own portrait instantly painted, and thrown into the flames.8

  The burning of the vanities in Florence on February 7, 1497, became one of the best remembered scenes of the Italian Renaissance. Not so well known, even to professional historians, was its close conjunction with economic events. Prices surged very high in the 1490s, and the economy began to fail. On February 19, 1497, only twelve days after the burning of the vanities, there was a riot in the old Piazzo del Grano, the site of the city’s public granary. The starving poor, driven to desperation by rising food prices, gathered before the granary in such numbers that some were crushed and others were suffocated. The surging crowd broke down the doors and attacked the granary, crying “Palle, palle,” the nickname of the Medici who had so often helped them in the past.9

  Hungry peasants crowded into the city from the hills of Tuscany. The streets and hospitals were filled with dying people. Famine was followed by epidemic disease, and Florence found itself once again in the grip of the plague. Savonarola wrote his brother, “Every day we see nothing in Florence but crosses and corpses.” The city itself was described as “a living corpse.” What remained of it was consumed by foreign war and domestic disorder until self-government was destroyed.10

  In 1498, the people of Florence began to blame Savonarola himself for their misfortunes, and turned savagely against their spiritual leader. On the eve of Ascension Day they burned him at the stake while the mob jeered, “Prophet, now is the time for a miracle.”11

  These events were a pivot-point in Italian history. After the death of Savonarola, Italy became a bloody cockpit for the g
reat powers. Foreign armies laid waste to Tuscany. Venice was despoiled of her empire by the French in the west and by the Turks to the east. Rome itself was brutally sacked in 1527. In 1530 the proud republic of Florence became a dark and wretched despotism, which called itself the Grand Duchy of Tuscany. These happenings ended the equilibrium of the Renaissance. They marked the beginning of a new material process which economic historians call the price-revolution of the sixteenth century.12

  Figure 2.01 shows the main lines of this price revolution from its beginning in the late fifteenth century to its climax in the mid-seventeenth century. Annual indices of consumable prices in England, and commodity prices in Germany and Spain, are converted to a common base (1521-30=100). The sources are Henry Phelps-Brown and Sheila Hopkins, A Perspective of Wages and Prices (London, 1981), 28–31, 94–98; Moritz J. Elsas, Umriss eine Geschichte der Preise und Lôhne in Deutschland (2 vols., Leiden, 1936–40); Earl J. Hamilton, Money, Prices, and Wages in Valencia, Aragon, and Navarre, 1351–1500 (Cambridge, 1936); idem, American Treasure and the Price Revolution in Spain, 1501–1650 (Cambridge, 1934), 191, 200, 216.

  The Price Revolution Begins, circa 1470–80

  The first signs appeared in the north of Italy and southern Germany. The price of grain in Florence began to rise about the year 1472. In the south German cities of Wurzburg, Munich and Augsburg, the new trend started about the same time. Throughout France and England, the inflection-point came a little later, approximately 1480. In Spain and Portugal, the price-revolution did not appear until after 1490. Parts of eastern Europe were not affected until 1500.13

  Once begun, the new trend continued for a very long time. Historians call it the price-revolution of the sixteenth century—a name that is not precisely accurate. This very long wave began as early as 1470, and continued as late as 1650. Altogether, it had a run of 180 years—the longest price-revolution in modern history.14

  Through that long period, the annual rate of inflation was very moderate by the measure of our own time. From 1490 to 1650, price increases averaged only about 1 percent each year. The speed of their advance seems very slow by modern standards, but it was twice as fast as the medieval wave and it was compounded for a very long time. An historian observes that “the most remarkable feature of the Price Revolution was not the pace at which prices rose, but the fact that a rising trend was sustained for so long.”15

  The underlying rate of change was remarkable for its stability. A striking pattern appears in that respect. When the price of grain in the Italian city of Modena is plotted on a semilog scale (which represents a constant rate of change as astraight line), the central trend was perfectly straight from the late fifteenth century to the seventeenth.

  There was much movement around that central trend. From year to year, the price of grain in Modena fluctuated sharply, mainly because of changes in the size of harvests. But these gyrations also showed stability in their rhythm and scale. Trendlines drawn through the peaks and valleys of annual price-fluctuations make two more straight lines. Here was another set of constants in the paramenters of change, and a classic example of a change-regime that combined dynamism with stability in high degree.

  The experience of Modena was not representative of the price-revolution as a whole. Patterns varied in detail from one city to another. But in general, the price-revolution of the sixteenth century showed a similar tendency in much of the Western world.16

  What set this change-regime in motion? There are many answers in the literature: monetarist, Malthusian, Marxist, and more. As the evidence continues to grow, many historians (including this one) have come to believe that prime mover of the price-revolution was a revival of population growth, which placed heavy pressure on material resources.

  Figure 2.02 examines components of change in this price revolution: increasing magnitudes, expanding amplitudes, and stability in the underlying rate of change. The source is Gian Luigi Basini’s elegant monograph Sui mercato di Modena tra cinque e seicento: Prèzzi e salari (Milan, 1974). Trend lines are fitted with an Excel 5.0 program.

  This demographic tendency began during the late fifteenth century, when parallel tendencies appeared in England, Italy, Spain, Germany, France, the Low Countries, Switzerland, Scandinavia and eastern Europe. Most nations experienced the same sequence of change: catastrophe in the mid-fourteenth century, continuing decline of population to the end of the fourteenth century; stagnation and slow growth in the early and mid-fifteenth century; acceleration after 1460 or 1470.

  England was a case in point. That country had approximately two million inhabitants in 1430, and not many more in 1470. Thereafter, the population of England began to grow more rapidly. It reached 2.8 millions by 1541, and more than four millions by the end of the sixteenth century. Historian Michael Postan found evidence that this demographic trend began circa 1470, and continued through the sixteenth century.17

  Figure 2.03 compares quinquennial estimates of English population with a 25-year moving average of the Phelps-Brown Index of English consumable prices. The source is E. A. Wrigley and R. S. Schofield, The Population History of England, 1541–1871; A Reconstruction (Cambridge, 1981), 403.

  The cause of population growth after about 1460 is not difficult to discover. The prolonged period of economic equilibrium in the fifteenth century had been a time of increasing real wages, and a revolutionary rise in expectations. Many years after the catastrophe of the fourteenth century, the world at last seemed to be a better place in which to raise a family. This change of attitude was broadly cultural rather than narrowly material. In the period from 1460 to 1510, millions of men and women throughout Europe freely decided for their own purposes to marry earlier and have more children. The general trend emerged from a web of individual choices.18

  The consequences were much the same as in the thirteenth century. German writer Sebastian Franck remarked in his Deutschen Chronik (1538) that “there are so many people everywhere, no one can move.” In Italy, England, and France there were complaints of overcrowding in cities and the countryside. Similar observations were repeated throughout Europe.19

  The effect of population growth was to undercut the cultural expectations that set it in motion. But this was not precisely a Malthusian process. Neither Malthus nor Marx can explain what happened in the sixteenth century. Long before population outstripped the means of its subsistence in a Malthusian manner, complex imbalances of other kinds began to develop.

  As the demand for food increased, people began to bring marginal lands into cultivation, with large labor and small return. French historian Emmanuel Le Roy Ladurie described that process at work in Languedoc. That region had a thin and stony scrubland called the garrigue which had been abandoned since the Black Death. Now it began to be plowed and planted once again. This process began in the mid-sixteenth century. “By 1576,” Le Roy Ladurie writes, “the rape of the garrigue was well underway. . . . Demographic pressure, the rise in demand, and the increase in prices had made their combined effect felt. One had to resign oneself to the working of poor, rocky soils.”20

  Many years before Malthusian “positive checks” came into operation, these more subtle mechanisms came into play. The growth of population caused the price of food to rise, faster and farther than that of other commodities. Industrial products and wages lagged behind. In Spain, economic historian Earl Hamilton found that “throughout the first three-quarters of the sixteenth century, agricultural prices rose faster than non-agricultural.” Similar patterns appeared in England, France, Germany. This pattern of price-relatives was much the same as in the long wave of the thirteenth century.21

  Once food prices began to rise, the cost of energy also started to climb at a rapid rate. In the early years of the price-revolution, energy prices increased slowly, then began to accelerate. In an environment that was rapidly losing its forest cover, the rising price of firewood and charcoal soon outstripped even the cost of food. After 1530 or thereabouts, the price of wood in all its forms (in
cluding charcoal) increased more rapidly than that of grain or meat or any other commodity.22 Wood prices rose sharply in England, France, Germany and Poland. Energy prices were among the most volatile in the long inflation of the sixteenth century.23

  The movement of price-relatives revealed differences not merely of magnitude but also of timing. The secular rise in farm prices began before the increase in the cost of manufactured goods. In England, the price of grain began to rise as early as 1470–89, forty years before most industrial products, which started to climb circa 1510–39. In Poland, the price of Torún rye was rising from about 1495, and Cracow oats from 1505; Polish manufactures began to go up later.24

  Figure 2.04 shows that price relatives of food and raw materials rose most rapidly. Industrial prices and farm wages lagged far behind. This pattern appeared in every price revolution. Sources include D. C. Coleman, The Economy of England, 1450–1750 (Oxford, 1977), 23; and P. Bowden, “Statistical Appendix,” in Joan Thirsk, ed., The Agrarian History of England and Wales (Cambridge, 1967) IV, appendix.

  The price of manufactures also rose at a slower pace than those of food and fuel. Throughout Europe, the slowest rates of increase were for industrial goods which could be produced most easily in larger quantity. In England, the price of food and fuel rose by a factor of six or eight, while industrial prices merely trebled. That pattern of price relatives has appeared in every great wave.

  The timing and magnitude of these changes in price-relatives is an important clue to the cause of the price-revolution. The earliest and most rapid increases appeared in the cost of life’s necessities such as food and fuel and shelter, which were most in demand when population was accelerating, and least elastic in supply. Here was strong evidence of a demand-driven demographic determinant at work. A monetary cause alone should have been more even-handed in its effect.25