MONOPOLIES, LIKE USURY, were illegal under Church law. Because unnatural. God had given the natural world to all mankind, not to a chosen few. Denying people liberty and keeping prices artificially high, monopolies were obviously a form of stealing and could only lead to perdition. As with usury, the Church insisted that only full restitution of ill-gotten gains could make amends and get you to heaven, though it is difficult to see how, after exercising a monopoly for some years, you could ever calculate the exact amount of what had been stolen, or from whom.
The Church’s concept of the monopoly was not restricted to the situation where a single organization had control over the sale of a particular product. To form a workers’ union, for example, was also a monopoly, and of the most pernicious variety: It restricted freedom of labor and the right of an employer to hire any worker on any terms. A union was unnatural. Any association of wool-workers, for example, in this cloth-manufacturing town of Florence, was immediately condemned and crushed.
Despite this exemplary strictness, in 1466 Pope Paul II declared that the Church, in alliance with the Medici bank, would now operate a monopoly on the sale of alum throughout Europe. After salt and iron, alum was the most important mineral of the time. Without it, the cloth trade could hardly have functioned. But how could the Church justify such a flagrant breach of its own laws? The profits from this ambitious commercial venture, said the Holy Father, would go toward a new crusade against the Turks. This made the monopoly not only legal but virtuous. It was a case of the desirable end justifying the otherwise-sinful means. A dangerous precedent for a religious organization.
Here are the circumstances. The annual European market for alum was worth something in excess of 300,000 florins, almost ten times what the king of England owed the Medici bank. Only a very small amount of the mineral was actually mined in Christendom, on the island of Ischia at the northwest entrance to the Bay of Naples. The quality of this deposit was poor, so poor that in some northern European markets its use was banned, because potentially harmful to the wool it was supposed to treat. Hence most alum had to come from mines in the Gulf of Izmir, on the eastern shores of the Aegean, now under the control of the Turks, and hence Islam. These mines had been developed for the most part by the Genoese, who thus controlled most of the trade in alum, paying taxes and customs duties to the Turks and thus helping to finance the constant Turkish expansion into Christendom, through Eastern Europe.
In 1460, the Italian merchant Giovanni da Castro, whose father had been a close friend of Pope Pius and who had recently escaped from creditors in the Eastern Mediterranean to live under the pontiff’s protection in Rome, discovered a huge deposit of high-quality alum in the mountains of Tolfa, northeast of Rome. Understanding the importance of the discovery, Pius at once declared this barren area of land to be Church property. Castro would mine and refine the alum and the Church would market it, thus gaining a huge income for themselves and taking away a huge income from their enemies, the Turks.
To market the mineral on a wide scale, however, both credit and commercial expertise were necessary. Hence in 1466, Pius’s successor, Paul II, decided to make a contract with the Medici bank that allowed them to use their Europe-wide trade network to sell whatever the Italian mine produced. At the same time, Pope Paul announced that any merchant found to be purchasing Turkish alum would be punished with excommunication, since buying from the Turks what could be bought from the pope amounted to aiding the attack on Christendom. All this came as very bad news for the Venetians, who had recently taken over from the Genoese the concession to work the alum mines in the Gulf of Izmir.
In 1470 the papal monopoly was firmed up by establishing an alum producers’ cartel with the owners of the mine in Ischia and with the king of Naples, to whom those owners paid a duty on whatever they produced. Under this agreement, the entire volume of alum mined and refined for the European market would be controlled by the Church in such a way as to keep the prices as high as possible, a sort of fifteenth-century OPEC. Only a year after signing up to the cartel, however, the Medici and Pope Paul pulled out when it became clear that Ischia would never be a dangerous competitor, and this for the simple reason that wool manufacturers much preferred the better-quality alum from Tolfa.
At first glance, such a coup seems to put the Medici bank in a league of its own. They now have sole rights to sell one of the most important industrial products of their time. Those rights are backed up by the threat of excommunication. In Rome, Giovanni Tornabuoni is absolutely convinced that all the bank’s problems are now solved. This is the dream deal that everybody has been looking for, the deal that will take all the tedium and risk out of banking and allow important people like himself and Tommaso Portinari to spend more of their time building up their libraries, commissioning paintings, attending lavish functions at court, and, in general, behaving more like their Medici masters.
Alas, it was not to be. In England, in Burgundy, in Venice — the main markets for alum — monarchs and merchants were not as impressed as they had once been by the threat of excommunication. It was hard to feel that what you had been doing in good conscience all your life had suddenly become a mortal sin. They employed local theologians to argue the case against the papal monopoly. A sin (like a monopoly) is always a sin, these wise men decided, even if the profits from it, at least as far as the pope was concerned, were indeed being used to pay the Hungarian king to fight the Turks. In Bruges, Tommaso Portinari counseled and counseled rash Duke Charles of Burgundy, begging him to impose the alum monopoly throughout his dukedom and ban sales of the mineral from any source other than the Medici bank. Offered a cut on profits, the duke at first agreed. But however rash he might have been, Charles recognized the signs of rebellion when he saw them. The local merchants, both importers and end users, were furious. The wool trade was at risk, they said. In the end, the duke backed down. Turkish alum continued to arrive in the port of Bruges.
When planning production at the mines in Tolfa and Ischia, the monopolists had imagined they would have the market entirely to themselves. They aimed to meet the entire European demand in just a few years. So when the threat of excommunication failed to stop the Venetians and Genoese from dealing in Turkish alum, the sudden glut caused by supplies from both sources made it hard to maintain old prices, let alone increase them as the monopolists had planned. Bulk buyers of alum in London and Bruges formed associations and lobbies to increase their negotiating power. The papal percentage on incomes from sales had to be halved, which soon meant less money to fund the Hungarian king.
To make matters worse — at least as far as the Medici bank was concerned — this venture into merchandising alum represented another blow to the already-precarious balance of trade and movement of money among the bank’s various branches. Here was yet another product moving north from Italy. Once again cash would have to be collected in London and Bruges and sent south. Why couldn’t the alum have been discovered in the Cotswolds, for heaven’s sake, to replace the wool the English were now so reluctant to sell? That would have been so convenient. Unwisely, in return for its rights of monopoly, the bank had agreed to pay the pope his cut on whatever was mined before the product was shipped and sold.