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The road to riches


Programme three: Risky business

Peter Jay

Risk-taking - both the burning desire and the gnawing fear - they’re the drug and the terror that drive the true entrepreneur, the woman or the man who hazards it all for the chance to hit the jackpot. That fundamental link between what you put in and what you take out, between risk and profit, first took recognisable shape, not here in Europe, but in the Arab world of Islam. Egypt, whose coasts face both ways, to the west and the east, was at its heart; and that’s where our journey takes us next.

From Cairo we take the road east, over the desert towards the cross roads of the ancient world - between the land-bridge that links Africa to Asia; and the sea routes of the Mediterranean and the Red Sea.

That cross-roads is the reason why so much of human history has been focused around this area - from man’s original exit from Africa to the triumph of Islam.

Today and for more than a century Suez itself has been the gateway to the great canal that bears its name across the land-bridge. But a thousand years ago and for centuries thereafter this was the furthest west that ships from the east could sail before landing their cargoes.

This geography was one reason why Islam came to lead the world in trade. Another was that the prophet Mohammed had himself been a merchant and liked business. And, as we shall see, he preached the value of good know-how.

Egypt and its Arab traders were the central link between the Mediterranean and the East. The Gulf of Suez leading on down to the Red Sea was Egypt’s backdoor to the Indian Ocean and trade with China. China was the most advanced and productive economy in the world, and its luxury goods like silk and porcelains found their way to the West while historic inventions like gunpowder, paper and the compass were also pioneered in China. Europe at that time was a backwater and it was China and Islam that were the vanguard of human progress.

The founder of Islam urged his followers to seek knowledge wherever they could find it, even from China. Thus, it was Islamic scholars who preserved the best ideas of Greece and Rome, just when Europe’s own dark age threatened to lose them. Much of that work was done in this very mosque, which was built using classical remains.

Al Azhar claims to be the world’s first university; and students have used this very classroom for generations.

Free universities like this were funded throughout the Arab world from taxes on trade. That was how the torch of learning - in mathematics, astronomy, architecture and philosophy - was kept alight

And the trade which paid the taxes benefited from a strong tradition of religious tolerance among Arab rulers. Christians and Jews doing business in Islamic countries were under no pressure to convert. Merchants circulated freely, as did goods and knowledge.

The Nile, as well as fertilising Egypt, carried the trade from the east down from Cairo to the Mediterranean. The Walls of old Cairo mark out a historic city within a huge modern metropolis.These gates never had to be closed against Mongol invaders or Christian crusaders..

War is the great obstacle on the road to riches. Cairo’s safety let its spice trade and other business flourish. But trade did more under Islam than just flourish. It developed whole new dimensions of risk-taking and profit-seeking, which we can now see where big steps along mankind’s journey on the road to riches. To understand just how, we must turn to a surprising source.

This is the Ben Ezra synagogue…. By the eleventh or twelfth century this synagogue in the heart of Cairo tells us how those new steps in business entrepreneurship developed. By chance its genizah - a sort of sacred waste-bin - was found to contain perfectly preserved records dating from about 800 AD.

What are these genizah documents actually about?

Prof Stefan Reif

Not only holy documents but ... everyday things. We know the cures for headaches and stomach aches and sexual impotency and so on. ... we have some documents that actually list the various commodities that merchants dealt with ....... and perhaps most interesting is the use of pepper. And we know that two pounds of pepper cost a week’s salary......

Peter Jay

So Stefan, this is actually it - did people literally come along here with sacks of documents for hundreds of years and stuff them through this hole.

Prof Stefan Reif

Well they may well have done that in the C19th. Earlier than that we’re not entirely sure. But certainly this is where the material was deposited.

Peter Jay

And nobody could get in. Nobody could get access to it. Once it had been deposited it just stayed.

Prof Stefan Reif

It did until the middle of the C19th and in the course of the C19th dealers and orientalist scholars began to be aware of the importance of this collection, how it provided a kind of video on the middle ages.

Peter Jay

That video could have been shot right here, centuries before they built Cairo’s world trade centre. Now it’s an ironworks; but back then it would have been buzzing with merchants, honing their new business techniques, as they checked their eastern imports being loaded back onto boats to go down the Nile.

The ancient spice trade was learning new tricks. That ancient video would have shown the drama as well as the profits of trade in those days. Professor Reif showed me a letter home. It records an attack by pirates - and, of course, the heroic conduct of its author. His name was Ibrahim ben Farqim Iskanderani and he ran a mail agency from Alexandria. His ships were at anchor when they were attacked by a pirate fleet.

Actors voice

They cut loose the ship of the Damascene, but the strong wind was against them so they turned back and looted it. The firebrands thrown into other ships did not catch. And Peace! I threw firebrands into the sea with my own hands.

Peter Jay

The sea is always risky; and that demands a handsome profit. A man called Hijazzi proved the point. He lost 10 of his 11 ships crossing the Indian Ocean. But his profit on the 11th, which was carrying porcelain from China, covered all his losses. Amazing to think of such businesslike risk management so early in our story !

Peter Jay

With all that trade going on they must have had some reasonably sophisticated way of setting their accounts and making payments one merchant to another. How did that work?

Prof Stefan Reif

Well of course it worked by cheques. Here we have an instruction from the holder of an account to his banker saying that he has to pay 2½ dinars giving the name the name of the recipient and dating it very precisely in July/August 1140 and only one thing is different from our cheques and that is that at the top there is a verse from Psalms 85 verse 12 saying ‘The truth will always out’ and therefore don’t try to cheat.

Peter Jay

So if he had a banker he must have had a bank account.

Prof Stefan Reif

Yes, of course, we have such statements same banker, same holder of an account, and here you have two columns, one with all the credits one with all the debits and presumably they would compare notes the bank kept the statements and so did the customer, bank being the person who held the funds, and a very clear indication of a degree of sophisticated activity.

Peter Jay

Just like mine, with the payments out far longer than the payments in

Prof Stefan Reif

But no computer print out.

Peter Jay

From Cairo main railway station I now follow the trade route the other way, to Egypt’s second city, Alexandria, on the edge of the Mediterranean. It’s a name that wreaks of ancient Greece and Rome, of its founder Alexander the Great, of its ruler Cleopatra and of visiting Roman generals.

But it was Islam that made Egypt a thousand years later the pivot of a yet wider empire, a commercial empire which depended on business skills that were as formidable in their own way as the military prowess of Alexander and the Caesars.

Today sprat fishermen and small boats occupy the harbour where great mediaeval merchants once held sway. Alexandria is now a modern city. Only its castle remains from that hey-day. A thousand years ago this port was the front-door of one of the world’s two most advanced civilisations.

At the end of the first millennium, a hard headed merchant here in Alexandria would have expected that Islam would remain dominant, at least on the west side of the Indian ocean with China, perhaps, as the only other economic super power, in the east. If he had bet his hard earned gold that the next great leap forward for mankind would happen in Europe he would have been laughed out of the market place. But over there to the north and west across the Mediterranean something extraordinary was beginning to stir. In the cooler, wetter climate beyond the Alps Europe’s Dark Age was lifting.

Farmers were laying foundations from which Islam’s commercial leadership might be challenged. Those foundations can best be seen from the air. For, they rest on the fertility of the rich heavy soil of north-west Europe, as here in Northamptonshire.

Professor Christopher Dyer is a mediaeval historian who likes modern methods. The view from the air reveals data that can’t be seen from the ground, especially old earthworks and the foundation of buildings. Here he can see the outline of an old village, now deserted and beneath the sod. Here, just behind the church, is a mott and bailey castle, probably dating from about 1000 AD, and here are deep furrows.

Prof Christopher Dyer

The medieval fields are so deeply incised because they deliberately created the ridges because it was useful for drainage purposes, and medieval farmers discovered that the best way of maintaining a good crop was to cultivate a large area but to rest half the land each year. A two field system, and that means that half the land is fallow and half the land is under crop each year.

This rotation of crops kept the soil healthy. In some places the richer soils only needed resting 0ne year in three; and that could increase harvests by another third. To take full advantage the mediaeval farmer needed to discover how to use cart-horses , which could plough deeper and faster than the traditional ox. But first there were three snags.

One had been that any harness fitted round a horse’s neck tended to pull on its windpipe and choke the beast. By the ninth century AD some unknown hero invented the breast-strap and the padded horse-collar, so unleashing a revolution in farm economics which lasted until the tractor a thousand years later. On this farm it lingers still

A second problem was that the damp soil rotted the horses’ hooves. Abundant charcoal and iron ore supplied iron horse-shoes to fix that. Pause for actuality of ploughman controlling horses. The last snag was that a horse eats - like a horse !


You couldn’t use horses for farming to any degree until you got your level of agricultural output up to a certain level. Until you got a surplus of corn to feed the horse you couldn’t really use him for heavy work because unlike the ox the horse must be reasonably well fed to work. poor old ox you can feed him starvation level and he’ll still work reasonably well.

Once you’ve reached that watershed, that surplus that let’s you use horses to work the land, then the whole thing snowballs and gets better and better because you’re able to work faster and get your crops in more timely and do a better job of the cultivation and things like that and it just grows and grows and grows.

Peter Jay

Norwich. Centre of the wealth of the rich Norfolk farmland, but also becoming the base of a new risk-taking merchant class. At the end of the eleventh century, before the cathedral even started to be built, the town, like London, had been growing fast for 200 years.

Prof Christopher Dyer

Towns grow because there is a complex interaction between town and country. The country people have got a surplus to sell, they want to take their grain and their wool to market. The lords, the richest people in the countryside, want to buy luxury goods, they want to buy wine and fine cloth. But the towns ...... can also make and supply the goods that country people need to purchase ... boots and shoes, knives, leather goods, er, cloth. These are things which are increasingly made in towns in the, from the 11th century onwards.

Peter Jay

Norwich’s old guildhall was the headquarters of the prosperous merchants, or burghers, who ruled the town and shared power with the church and with the king and barons. The power of the crown was indeed far from absolute, however impressive the castle.

Prof Christopher Dyer

So here we are on the battlements of Norwich castle, the centre of royal authority in the city and then over there is the cathedral which is where ecclesiastical power, the power of the church is centred and then if we move over to the corner of the battlements you can see over there the guildhall which represents the centre of civic government. It’s there that the merchants of the city met in council to decide matters of common policy, and it’s absolutely characteristic that that guildhall is in the market place, the centre of the commercial life of the city. The important thing about medieval cities is that you have no single authority in charge of them you have civic power, royal power, the power of the church all competing with one another.

Peter Jay

A bird’s eye view of most European cities in the Middle Ages would have seen all these jostling sources of power; and it was in the cracks between them that the individual could get a foothold and find room for his enterprise.

Venice carried business-friendly government much further than most, offering active support at home and at sea. Once a great maritime power, now a fine pantomime parade. Venetian painters, like Carpaccio at the end of the fifteenth century, understood the contribution of new ship designs. Expanding trade mothered invention - rounder hulls carried more cargo.

But to rule the waves ships must be able to fight at sea. For Venice the galley did what the legions did for Rome. Fast under sail and under oar, long and sleek, they were so successful as convoy escorts that Venice soon became the dominant carrier of the east Mediterranean. They were built in Venice’s Arsenale - to this day, even in Italy, that is not a football team, but a shipyard.

Galley-building to protect commercial convoys was one way in which the Venetian state directly supported business. The state-owned yard churned out five new galleys a month; and then the new ships were chartered out to the highest bidder.

The official palace of the ruling Duke and the familiar bell tower of St Mark’s square stand at the political heart of Venice and that heart beat to a business rhythm. On St Mark’s itself unbelieving Arab merchants are honoured as the link to eastern riches. And the same commercial faith looked not upwards from St Mark’s to heaven, but across town to the temples of mammon - on the Rialto.

Venice’s business district was a small island on the banks of the grand canal. Here was concentrated every trade and its camp-followers, from small fruit and veg. stalls to government offices for taxation and for weights and measures.

The Rialto bridge across the grand canal links the Rialto itself, where stands the Venice Treasury, with on the opposite bank the centre for German merchants, who supplied the silver that paid for Venice’s imports from the east.

The American historian Rheinhold Mueller told me how this centre worked.

Prof Mueller

It was built and run by the Venetian government for German merchants

Peter Jay

So it was kind of like a chamber of commerce equivalent of a press club for journalists a nice place where they could work together

Prof Mueller

It was in part that it was run by the government the government had 3 officials at the entrance who taxed everything that came in and went out.

Peter Jay

So it was an instrument of control as well?

Prof Mueller

An instrument of commercial control and there were apartments for the er

Peter Jay

So they could stay here, they had to live here

Prof Mueller

They had to live here.

Peter Jay

It was across the bridge “on the Rialto” that new banking services began to develop. These went well beyond the basic functions already familiar in the Arab world.

Prof Mueller

Deposit banking developed in to the very basis of the financial system in Venice - but the real banker begins when he doesn’t work in safety deposits but in current accounts

Peter Jay

Indeed, we get the word “bank” from the benches, or “bancos”, used by early Italian money-changers to lay out their business. The bankers, lawyers and merchants who gathered daily on the Rialto for business also ran Venice.

Prof Mueller

The same people who sat in the Great Council and in the Senate were the people who were investing and were using taxpayers’ money to give them an advantage against competitors and so forth

Peter Jay

That’s what so unique about Venetian capitalism. The state exists in order to help people make money. Venice was extreme; but many Italian cities saw it as their job to create the right conditions for entrepreneurs. Sienna’s city-fathers needed no spin-doctors to get their message across. They painted it on the walls of their magnificent town hall. One huge fresco called “Good government”. It shows a fair ruler, whose people work and prosper, while malefactors are dealt with..“Bad government” oppresses its people; and the place goes to pot.

Peter Jay

These pictures encapsulate for me as we journey along the road to riches what I’ve come to believe is its basic message, its inner truth, and that is that government matters. Bad government comes in two forms - too much and too little, and both are fatal to the wealth and the welfare of the people. Good government comes in only one form, balancing freedom and order giving everyone the opportunity to take his wares to market and no-one the licence to bully or to rob.

Florence, though it never quite filled out to the ambitious walls built by the city fathers, enjoyed a plentiful water supply from the river Arno. This meant that it could support a vigorous textile industry and out-grow neighbouring Sienna.

This silk factory in Florence illustrates how Italy benefited from having so many city-states. Risk-takers, merchants and skilled workers who found conditions hard in one place could move, as for example when silk weavers fled here from the town of Lucca.


There a lot of weavers escaped from Lucca to Florence, just to save themselves and their lives and they brought the secrets of weaving came from Lucca ... and bring especially from silk . We are one of the silk weaveries from the Renaissance time. They were 84, if I am not wrong, and today we are the last and we are the little bit of the heritage of the silk weaving from the renaissance time on.


This machine is a very, very old machine, it is used for the warp for the fabric and it’s the last example of a warp machine done by Leonardo da Vinci and we use it normally as it would be 400 years ago. And it’s working perfectly.

Peter Jay

Is it really necessary in the year 2000 to have a machine driven by a ladies foot.


Yes, it’s necessary you see everything we are doing needs to be worked softly. Also if I put a motor, it doesn’t have, it just gets worse. You need the person, you need the right movement.

Peter Jay

Finance also prospered in the thirteenth and early fourteenth centuries under the benign shadow of Florence’s old palace.

Great families, like the Peruzzi and the Bardi, built the largest business organisations in the world, trading and lending throughout Europe. And, even if some of them went bust lending unwisely to the king of England, useful lessons were learned about spreading risk; Florence’s commercial vigour soon recovered. By the fifteenth century new methods developed by the early Italian bankers were paying off.

The growth of Italian banking helped to spur on the “commercial revolution” that Europe was beginning to enjoy. Merchants, having so many states to choose from in locating their business, could put pressure on rulers, whose tax revenues depended on attracting trade. A trickle of business was becoming a flood. And the story of business is not just a story of banks and factories and shops. It is a story too, told here in Florence’s Riccardiana Library, of ideas and attitudes and values. They too had to change for Europe to emerge from its feudal chrysalis.

All merchants through history take risks and few more than those of medieval Italy. The idea of risk seems to have entered the Italian language at this time and I like to think they adapted it from an Arabic word meaning a windfall - a surprise benefit, a profit beyond the ordinary. Risk didn’t make it into the English language until several centuries later.

Risk isn’t just an attitude of mind, an urge to have a go. In business it needs to be calculated. The Italians were again the pioneers.

It seems crazy praise to accountants; but dry as it sounds, double-entry book-keeping really was a stunning breakthrough. For the first time accurate accounts gave businessmen a true picture of what profits they were making and how they were making them. Without double-entry book-keeping capitalism itself can hardly be imagined.

But suddenly the whole cavalcade of mediaeval Europe’s economic advance was on the brink of total destruction.

It was here in Venice in 1347 that a galley docked from the Black Sea. First ashore were black rats. They carried a plague - the Black Death. In 18 months half the population was dead. It spread from city to city. The population of Florence took 500 years to recover. Sienna still has not recovered the numbers it had 650 years ago.

Death dominated everything, even art. The tortures of the damned are all over the pulpit in Sienna cathedral.

The cathedral itself was building a huge new nave, when the hand of God wiped out the intended worshipers. It was never finished.

In that same year the plague spread to Spain, France and then to the British isles. Walsham le Willows in Norfolk lost half its population. Their remains lie in the graveyard of the village church, as they lay in graveyards and other burial grounds throughout England and throughout Europe. This village’s loss was not extraordinary for the time.

Professor Dyer got out the rent roll kept by the Lord of the manor. More than half his tenants died. For those who survived the devastation, there was eventually to be a silver-lining.

Prof Dyer

The Black Death was a force for liberation. All those people who had been at the bottom of the heap in society suddenly found themselves in a much better position. So take an example, Matthew Gilbert, before the plague he’s a smallholder, just a few acres of land. He is personally touched by the Black Death, his wife dies, his brother dies, he inherits more land, he is able to buy land more cheaply in the village because of the loss of population, his neighbours have died. So when he dies, presumably not of the plague in 1370, he’s got 28 acres which for his village is quite a large holding of land. He’s become a prosperous cultivator compared with the smallholder he had been before the plague.

Peter Jay

The Black Death was unquestionably one of the all time great disasters for humanity. Whole regions of the world lost between a third and half their population. Yet, by making labour scarcer, it transformed its bargaining power and so loosed the shackles of the feudal system and extended opportunity for the individual. [moves to globe] By the fifteenth century Europe began to buzz with economic life; and it seemed worth bigger and bigger risks to push the frontiers of commerce further and further afield. Discovery driven by desire for the riches of the east beckoned the explorers on; and the world never looked quite the same gain.

The thrust came naturally from the edge of the known world, from Spain and Portugal. Henry the Navigator supposedly established his school for explorers in south west Portugal at Cape Sagres, pointing the way out into the Atlantic. The school may be a myth; but his princely encouragement of navigation has placed him the hall of fame.

Instruments in hand, great explorers, like Bartholomew Dias, Vasco da Gama and Ferdinand Magellan, stand behind Prince Henry’s wake. His squire was first to sail beyond Cape Bojador on the African coast, where boiling seas, terrifying monsters, permanent blackness and even Satan himself menaced any mariner so rash.

But it takes more than royal encouragement to start crossing the world’s oceans. After about 1400 two new kinds of fast and flexible ship made that possible, the carrack and the caravel.

This is a replica of the smaller caravel. It was used to pass cape Bojador and its was not until the Clipper ships 400 years later that anyone sailed faster. For their historic voyages Columbus, da Gama and Magellan all used the caravel as well as the bigger boats.

To understand the strategic situation of Europe and particularly of Spain and Portugal at the beginning of the C15th, it helps to look at this map. The economic development of Europe had for centuries been inward looking. They knew, of course, about the East about the Middle East here, controlled by the Muslim world, Islam, about the Indian Ocean and India and indeed about the riches of what they called the Indies stretching right down to the spice islands around here.

And indeed it was to find a route to those Spice Islands and those riches of the Indies that they wanted to look for a new way. The first logical option was to head due west into the Caribbean area finding the islands which Columbus found here and he believed until the end of his life that he had indeed found the Indies. The other option was to push down the African coast looking for a place where you could turn left, turn east, into the Indian Ocean which was finally found in 1488 by Bartholomew Diaz and followed very rapidly by Vasco da Gama who made the first European passage by that route to India.

Going to sea in the wake of the explorers, in a modern replica of the boats they sailed, I can see now that they had the motive, they had the opportunity and they had most of the means to explore the world’s oceans. It remained to find their way. Again new knowledge obliged.

Ship-born compasses made it practical to sail straight. Better astronomy and better instruments gave the ship’s latitude. The riddle of the earth’s winds and currents was read. The oceans, for so long barriers to humanity, became our first super-highway.

For more than a thousand years after the fall of Rome Europe struggled gradually to rebuild its prosperity on the twin pillars of farming and commerce. But then suddenly it learned how to cross oceans; and that great leap made possible a world-wide economy linked by a single global network of sea routes. Ships like this and new navigational skills unlocked that brave new world.

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