During the late Middle Ages, Northern and Central Italy became far more prosperous than the south of Italy, with the city-states, such as Venice and Genoa, among the wealthiest in Europe. The Crusades had built lasting trade links to the Levant, and the Fourth Crusade had done much to destroy the Byzantine Roman Empire as a commercial rival to the Venetians and Genoese.
The main trade routes from the east passed through the Byzantine Empire or the Arab lands and onwards to the ports of Genoa, Pisa, and Venice. Luxury goods bought in the Levant, such as spices, dyes, and silks, were imported to Italy and then resold throughout Europe. Moreover, the inland city-states profited from the rich agricultural land of the Po valley.
From France, Germany, and the Low Countries, through the medium of the Champagne fairs, land and river trade routes brought goods such as wool, wheat, and precious metals into the region. The extensive trade that stretched from Egypt to the Baltic generated substantial surpluses that allowed significant investment in mining and agriculture.
Thus, while Northern Italy was not richer in resources than many other parts of Europe, the level of development, stimulated by trade, allowed it to prosper. In particular, Florence became one of the wealthiest cities in Northern Italy, due mainly to its woolen textile production, developed under the supervision of its dominant trade guild, the Arte della Lana. Wool was imported from Northern Europe (and in the 16th century from Spain), and together with dyes from the east was used to make high quality textiles.
Revitalizing Trade Routes
In the 13th century, much of Europe experienced strong economic growth. The trade routes of the Italian states linked with those of established Mediterranean ports, and eventually the Hanseatic League of the Baltic and northern regions of Europe, to create a network economy in Europe for the first time since the 4th century. The city-states of Italy expanded greatly during this period, and grew in power to become de facto fully independent of the Holy Roman Empire; apart from the Kingdom of Naples, outside powers kept their armies out of Italy. During this period, the modern commercial infrastructure developed, with double-entry bookkeeping, joint stock companies, an international banking system, a systematized foreign exchange market, insurance, and government debt. Florence became the center of this financial industry, and the gold florin became the main currency of international trade.
While Roman urban republican sensibilities persisted, there were many movements and changes afoot. Italy first felt the changes in Europe from the 11th to the 13th centuries. Typically there was:
A rise in population―the population doubled in this period (the demographic explosion)
An emergence of huge cities (Venice, Florence, and Milan had over 100,000 inhabitants by the 13th century, and many others, such as Genoa, Bologna, and Verona, had over 50,000)
Rebuilding of the great cathedrals
Substantial migration from country to city (in Italy the rate of urbanization reached 20%, making it the most urbanized society in the world at that time)
An agrarian revolution
Development of commerce
The decline of feudalism and the rise of cities influenced each other; for example, the demand for luxury goods led to an increase in trade, which led to greater numbers of tradesmen becoming wealthy, who, in turn, demanded more luxury goods.
