Chapter Four
Elimination of Abuses: Formation of New Institutions

Although the law of July 1834 was subject to severe criticism, it nevertheless marked an important transition in the merchant community's response to the commercial situation of the city. Theretofore, merchants (and the chamber of commerce) had concentrated their efforts on pushing the government to revise or abolish the traditional charges on merchandise entering the free port. Following the promulgation of the law, however, the merchant community considered that the government had done all that it could be expected to do directly to improve Livorno's commercial position. In future, the prosperity of the port would depend on the general economic situation and on the ability of the merchant community to undertake its own reforms to strengthen the city's commerce.^[1]

The impetus for internal reform, however, did receive an initial boost from the central government. A notification in August 1836 announced the suppression of what for many was the most "embarrassing" provision of the city's fundamental charter, the Livornina , the section that had conceded personal and proprietary immunity to debtors who elected to settle in Livorno.^[2] The desire for instant respectability was so great that it appeared to blind commentators to the value of the Livornina in promoting the initial economic development

of the city. Typical was the attitude of Giuliano Ricci, who remarked that "the Livornina had done nothing but draw to Livorno men despicable in their habits and morals and without capital resources." "Such men," he added, "live at the expense of the society like small fish on the vast members of a cetacean, who remains unaware of their presence. Rarely, if ever, do they render any effective succour to the society that they are disfiguring." The conclusion was predictable: "The abolition of the Livornina served to save one of the great Italian cities from the blight of being an asylum for the bankrupt of Europe."^[3]

A more sweeping measure to improve the city's reputation and facilitate its commerce was effected the same year. The prevailing system of weights and measures in Livorno had long been considered a scandal. The heterogeneous nature of the merchant community seemed to be reflected in the wide variety of moneys—both real and hypothetical—and measures used to express the value and weight of merchandise bought and sold in the free port. Transactions might be made with pezzi, ducati, scudi, franchi, lire, zecchini, or a host of other currencies. A merchant could take advantage of fluctuations in the exchange rates by buying his goods with one currency and selling them for another. Transactions could be expressed in pounds, sacks, bundles, or barrels, each with varying unit measures. If this were not complicated enough, every commercial operation was encrusted with a variety of tares and supertares, discounts, and "courtesies" granted in the most capricious and arbitrary fashion possible.

The whole system—if indeed it could be dignified with that title—made it virtually impossible for anyone without long experience in the city's commercial operations to calculate the price of a given cargo much less the probable net profit on a given transaction. The foreigner who hazarded to send his goods to Livorno was forced to rely totally on the judgment of his local correspondent, a situation that often generated resentment and recrimination.^[4]

The chamber of commerce had endeavored for years to simplify and rationalize this system, which it considered to be one of the principal causes of Livorno's commercial de-

cline.^[5] In 1822 the chamber proposed that in future all prices be expressed in lire florentine, that the weight of bulky items be represented solely in multiples of 100 Tuscan pounds, and that tares reflect only an honest computation of the weight of the container. In addition, it proposed the abolition of discounts and courtesies of every sort.^[6]

The impetus for reform at that time, however, was blunted by the inertia of the government and the opposition of a large section of the merchant community. The old system of weights and measures, after all, had been in operation for centuries, and many merchants found it comfortable and—more to the point—profitable. This was particularly true in the case of small retail merchants. To them, Livorno's reputation in foreign commercial centers was of little concern. Far more preoccupying was the fear that a rationalization of the current system of weights and measures and the ending of discounts and other courtesies would hamper their freedom of manipulation, thus cutting them off from important sources of profit.^[7] Their response to the feared reforms consisted of playing down the abuses of the current system, stressing the magnitude and uncertainty of the proposed changes, and calling for the necessity of further study, thus stalling for time.^[8]

A similar strategy, it seems, was being followed by the government. In 1823 the governor of the city remarked that since the proposed reforms were so sweeping and had sparked such opposition, they should be subjected to the most serious examination before any decision on the matter could be made.^[9] Two years later the issue was just as unsettled. Opinion in the merchant community, the governor remarked, was still so divided that it was impossible to foresee which decision would win the general approval of the community or would prove more advantageous to the city.^[10] The governor was clearly beginning to find the whole issue most embarrassing, and in hopes of burying it once and for all he cynically suggested that before proceeding further those advocating reform should be asked to ascertain the sentiment of the entire merchant community. Only if the reforms were

supported by an overwhelming majority, he said, should the government take steps to implement them.^[11]

The cynicism of his proposal stemmed from the government's repeated opposition to any attempt by the chamber of commerce to poll the merchant community or to work out a common proposal with it to submit to the central government. In fact, when the chamber did attempt to solicit the views of the community on the proposed reform of weights and measures, the secretary of finance refused to permit the appeal.^[12]

In the mid-1830s, as the government appeared more amenable to proposals for reform, the chamber of commerce renewed its campaign. In June 1835 the chamber drew up a carefully worded appeal defending the proposed new system.^[13] The request for a simplified system of weights and measures, it argued, did not spring from a blind desire to destroy practices that had the sanction of centuries but simply from the need to adjust Livorno's commercial operations to the requirements of the present. Commerce was now far more diffused and competitive: more goods were in circulation in smaller lots, and profits on any given transaction were lower. Given this situation, merchants demanded that their business be expedited in the quickest, most rational and economic manner possible. No longer were they willing to tolerate the ten or twelve currencies and the tares, supertares, and discounts that plagued commercial operations in Livorno and made doing business there cumbersome and expensive. Rather, they would ship their goods to ports that had one or (at most) two official currencies and that expedited their affairs in a clear, rational fashion. Contrary to fear, the chamber argued, there was no evidence that in these ports small, retail speculation had suffered; nor was there evidence that with the proposed reforms it would suffer in Livorno. The times, the chamber concluded, demanded a sacrifice, one not of material gain but of the set of practices which was hampering efforts to maintain, much less to strengthen, Livorno's competitive position.

Although the chamber of commerce was prohibited from formulating a common proposal for the entire merchant com-

munity, it forwarded to the governor the individual petitions of many important merchant firms in the city in support of the proposed reforms.^[14] They seemed to produce a positive effect on official opinion. In October 1836 the auditor (the chief police official in the city) remarked that "it was not only useful but necessary [to establish] in this city one single weight, one single measure, one single money, not ideal, not abusive, but genuine and real."^[15] Even the governor now placed himself solidly behind the request of "the rich and enlightened section of the merchant community, which was principally concerned with large, foreign commercial transactions."^[16] The section concerned with small, retail commerce, he remarked, would fall into line after the reforms were promulgated.^[17] Shortly thereafter the central government announced the complete vindication of the position of the chamber of commerce: from the first day of 1837, the proposals that it had long advocated would have the force of law.^[18]

While efforts to institute a more simplified and rational system of weights and measures had resulted in total victory for the position of reform, attempts to regulate more strictly the activities of the city's mezzani met with far less success.

Complaints about the mezzani were a standard feature in discussions about Livorno's tarnished commercial reputation.^[19] Abuses cited varied from outright fraud—in which mezzani were said to have intentionally misrepresented the value of a given cargo or to have engineered the sale and consignment of merchandise to a nonexistent merchant (an ingenious form of theft)—to unauthorized (and unethical) dealing in the buying and selling of merchandise on their own behalf. Many criticized the low level of preparation, intelligence, and moral character of those exercising the profession.^[20]

The government had endeavored to eliminate these abuses and to supervise more closely the activities of those exercising the profession.^[21] In 1815 the chamber of commerce was given an important supervisory role in this area.^[22] All petitions for authorization to enter the trade were transmitted first to the chamber for an opinion, and once each year the chamber met with the governor, the auditor, and the director of the cus-

tomhouse to scrutinize the contracts recorded in the books of each mezzano .

These provisions, however, did little to ameliorate the situation. Application and annual review tended to become merely formal procedures, the latter more useful perhaps in eliminating from the rolls those no longer exercising the profession than in detecting the abuses of those who were. Indeed, from the government's standpoint, the most serious abuse was that many were acting as mezzani without any authorization whatsoever, a situation that rendered formal controls virtually meaningless.

Demographic expansion and the decline in prices and profit margins exacerbated the problem. The position of mezzano had long been exercised by those who desired to make their fortune in commerce but who lacked capital or experience.^[23] After 1815 the profession was engulfed by many recent immigrants, especially those from the Levant (Greci and Levantini ). To this group must be added the even larger number of clerks (giovani di banco ) in commercial firms who exercised the functions of mezzani without official authorization. The whole situation obviously would not have been possible without the connivance of many merchants. Pressed by more competitive business conditions, many of them, it seems, were employing the services of adventitious mezzani at fees far below the legal tariff. It was estimated that these mezzani handled at least a third of the port's commercial transactions.^[24]

In reading the correspondence that passed between the chamber of commerce, the governor, and the central government on this question, one cannot help but conclude that one of the major reasons—if not the major reason—for the persistence of abuses among the mezzani was that no party felt sufficiently motivated either to push resolutely for the elimination of the abuses or to work for a radical reform of the profession. It was not, certainly, that the chamber of commerce countenanced fraud or unethical behavior or did not want to see the profession in the hands of men who were intelligent and upright, but the chamber made no secret of its belief that it considered the profession already burdened with too many restrictions. Repeatedly, it opposed the policy

of the government to limit the number of mezzani authorized to practice in the port and to define precisely their area of competence.^[25] It considered the tariffs set by the government too high and felt (though here the opinion was not unanimous) that supervision could best be handled not by the government or the chamber of commerce but by a disciplinary body set up by the mezzani themselves.^[26]

A group of merchants and bankers in the city empowered to study the whole problem remarked in 1850 that what was clearly needed was not a stricter set of regulations but the opening up of the profession to the beneficial effects of free competition. The law would be observed only if it were in harmony with the needs and practices of the city's commerce. Should a conflict exist between law (the principio tecnico ) and practice (the principio popolare ), the latter would invariably prevail.^[27]

The concerns of the government were different but perhaps tended to the same end. The government's interest in the mezzani was linked to its perception of a 5 percent tax on the declared earnings of those authorized to practice the profession. The progressive decline of this tax (from approximately 71,000 lire in 1816 to 24,000 lire in 1822) stimulated an investigation by the customhouse in 1823, which sought to isolate the causes of the decline and to make proposals for its reparation.^[28] It was perhaps only natural that the interest of government officials in a radical reform of the profession would wane after the tax on mezzani was incorporated into the new tassa di commercio in 1834 (and perception of it passed from the customhouse to the chamber of commerce). Discussion of proposed new regulations for the mezzani were protracted into the 1850s. The issue, however, had clearly lost the sense of urgency that, as we shall see, was so necessary for bringing any proposed reform to fruition.^[29]

In another area, however, the stimulus for reform was greater, for many members of the merchant community seriously believed that Livorno needed a discount bank to insure a ready source of capital for the city's commerce at a modest rate of interest. The scarcity of currency in the city appeared serious and served to hamper commercial operations and to

generate tensions within the merchant community. In 1815, on learning that a large quantity of gold francesconi had been sent to Genoa, the governor expressed his displeasure to the chamber of commerce along with his fear that such operations could have grave effects on the city's commerce.^[30] In 1818 he informed the secretary of finance that the supply of liquid capital in the city was virtually exhausted. As a result, merchants were unable to pay freight and other charges on cargoes arriving in the port, and captains were forced to carry their goods elsewhere.^[31]

The lack of currency in Livorno also reinforced a situation of imbalance in the Tuscan economy. In general, payments made in gold in Tuscany received a maximum discount of from 4 to 5 percent. However, due to the pressure on available supplies of currency, the discount in Livorno climbed to 7 percent. This, the governor complained, tended to encourage currency speculation and often harmed those who brought their goods from the hinterland for sale in the port city (who, with the inequality of the discount, would in effect receive less for their merchandise).^[32] The scarcity of liquid capital tended to reinforce the prudence of the city's moneylenders. Generally, only modest sums of money were advanced, and as a rule goods in storage were not considered as possible sources of collateral but as liabilities.^[33] The latter situation was particularly damaging in a city such as Livorno, whose prosperity was based primarily on a commerce of deposit. If a merchant needed cash, he was often forced to look for it elsewhere (in Genoa, Milan, or Rome, if not further afield), where he often found himself at the mercy of local speculators and liable to heavy transportation and insurance charges to get the specie back to Livorno.^[34]

Perhaps the most serious drawback connected to the shortage of currency in the city was that it made the commerce of Livorno excessively liable to the whims of the individual—particularly foreign—capitalists. This became especially apparent in 1829, when two of the largest firms in Livorno, S. C. Bacri and Isaih Arbib, suspended their payments. The event, given ample coverage in the Gazzetta di Firenze^{[ 35]} and in foreign journals, threatened to unleash a wave of panic in

the merchant community. An article in a local newspaper, the Indicatore livornese ,^[36] attempted to reassure the public and to prevent capitalists from suspending their operations. But the task, the writer noted, was exceedingly difficult, because at the first sign of trouble moneylenders tended to close their safes and to refuse credit even to the most worthy. The whole problem lay in the individualistic character of commercial speculation.

An individual who is determined to make a profit on his capital by lending it to commercial speculators tends with the first rhymer or minimal clouding of the atmosphere (which he sees or thinks he sees) without taking the trouble to examine or verify the situation to place himself brusquely on his guard and refuses to listen to anybody. . . . The prosperity of commerce, of the city, of an entire nation are nothing to him. He is not and cannot be other than portfolio and strongbox.^[37]

The situation was quite different, the writer argued, in places where the development of a "spirit of association" had favored the establishment of such institutions as discount banks. Here, capital resources were not under the control of single individuals but were spread out among a large number of small and middling investors. As a result, a continuous supply of capital could be channeled into commercial operations, for the risk and responsibility were collective, and administrators could thus take a longer perspective and avoid being overwhelmed with panic at the first sign of difficulty. "Everyone knows," the writer concluded, "that agencies with a moral purpose [i corpi morali ] are much less subject to whims than are men."^[38]

The establishment of a discount bank promised also to resolve a related problem, the high rates of interest charged by moneylenders in the city. While the rates of interest were not higher than in the past, the general decline in prices and profit margins made the traditional rates of 5 or 6 percent (not to mention the 1.5 percent monthly rates charged by some moneylenders) no longer practical.

No longer does one realize from 10 to 15 percent profit on every single sale. Now the profit on the exchange of merchandise is very moderate, and therefore the subvention of the capitalist must be paid at a lower rate. . . . All is relative.^[39]

Responding realistically to the needs of the city's commerce, a discount bank would grant credit at lower rates of interest, thus enabling merchants to extend their operations into areas that promised only slender profits and permitting them to increase the volume of their transactions to compensate in part for the lower margin of profit. The bank would also help to insure that a maximum amount of capital would be employed directly in commercial operations—that is, in the production and exchange of goods and services—and would not be drained off by parasitic interest rates. Existing money-lenders would be compelled either to lower their interest rates or to employ their capital directly in commercial enterprises, both obviously advantageous for the city's economy.^[40]

While proposals for the establishment of a discount bank in Livorno had been advanced in the eighteenth century,^[41] the first serious appeal to the merchant community of the city to support the project appears to have been made in 1815. The merchant-banking firm of Senn, Guebhard and Company requested the chamber of commerce to support a proposal for the establishment of a corporation with a capitalization of 500,000 pezze di otto reali—200,000 in cash advanced by the shareholders, and 300,000 in paper notes emitted by the bank and having the force of legal tender.^[42]

A formal reading of the project met with the general approval of the chamber. However, since the provision in the project calling for the issuing of paper money had aroused heated discussion, the president of the chamber, Panajotti Palli, decided to postpone final resolution of the issue and to invite a group of leading merchants in the city to present their opinions and to participate in the vote.^[43] After prolonged discussion, these men decided to modify the resolution: the notes emitted by the bank would not have the force of legal tender, and everyone would have the option of accepting or

rejecting them as he saw fit. Even with the modification of this controversial aspect, however, the proposal was narrowly defeated, eleven votes to ten.^[44]

Given the summary nature of the records, it is not possible to discern which merchants opposed the proposal and for what reasons. Commentators close to the discussion later emphasized the egoism of a few large capitalists, who pushed their private interests at the expense of the interests of the community as a whole, and the shortsightedness of others, who were inert and suspicious of innovation.^[45] From the general summary of the discussion, it appears that many were shaken by the specter of paper money. Others no doubt felt that given the current commercial situation—resulting from the prosperity that had followed the return of peace in Europe—such a radical innovation in Livorno's business practices was not warranted and that existing facilities were more than adequate to meet the demand for liquid capital in the city.

In any event, the setback in 1815 did not check the pressure for the establishment of the bank for long. In 1818, with the reversal of the economic situation now apparent, Governor Spannocchi urged government support for the proposal as a way of remedying the scarcity of currency in the city and combating usurious interest rates.^[46] The secretary of finance, Frullani, supported the request (though not the idea of issuing notes) as a way of helping merchants pay their customs charges without giving in to pressure for an extension of the terms of credit.^[47]

Only in 1829, however, did the proposal once again take the form of a concrete project. Three leading merchant-bankers in the city, Pietro Senn (whose father had made the proposal for a bank in 1815), Giovanni Olderigo Walser, and Moise Cohen Bacry, advanced a project calling for the formation of a corporation with 1,000 shares, each bearing a face value of 6,000 lire. The capital of the society would consist of two million lire in cash and four million in circulating notes (obbligazioni girabili ). The maximum interest rate on discounted bills would be set either at 5 percent or at the rate deemed by the government to be most suitable. The sponsors

cautioned that every effort should be made to keep the rate as low as possible so that the commerce of the city would obtain the greatest possible advantage from the new institution. The statutes governing the bank would be geared to render the bank secure and profitable both to those who utilized it and to those who advanced the capital for its establishment.^[48]

By 1831 the project appeared to have won not only the support of the government and of important merchant-bankers in the city but that of the chamber of commerce as well. In its meeting of 15 March 1831, the chamber unanimously agreed to press for the establishment of a discount bank in the city, arguing that the advantage of such an institution was no longer in doubt and that Livorno, especially at present, was feeling the sad effects of being deprived of it.^[49] It was not much use to the commerce of the city, the chamber argued, that in tranquil periods money was offered at modest discount rates of 4.5 or 5 percent if at the first sign of trouble this money was no longer available to the middling merchant (alla classe secondaria ) and lent to principal merchant houses only on onerous terms.

Commerce in general [the chamber concluded] requires a solid foundation on which, regardless of the circumstances, every accredited merchant can count. Where such facility is wanting, commercial operations decline and die. Such a danger, however, is not met where there exists a public discount bank that can assure the negotiability of all solid paper.^[50]

Over the years the establishment of a discount bank had clearly assumed an important place in the efforts of the chamber of commerce to strengthen Livorno's commercial operations.

Despite the chamber's enthusiastic recommendation, final government approval for the project was not obtained until five years later, in a decree of 29 September 1836. In all probability, this delay is not attributable to residual opposition to the reform. The period after 1831, as we have seen, witnessed intense efforts at reform in various areas of the

city's economy. Within this context, the abolition of commercial duties and the expansion of the free port would naturally take precedence over the establishment of a discount bank. Also, I do not think that the overwhelming sentiment of approval for the projected bank expressed in the chamber of commerce in 1836 can be attributed, as Mario Baruchello seems to suggest, to an almost complete change in the makeup of Livorno's merchant community.^[51] True, of the twenty-one merchants who voted on the project in 1815, only three—Panajotti Palli, Giovanni Ulrich, and Michele Rodocanacchi, all of whom were favorable to the bank—were still active in the chamber at the time of the bank's final approval. But the twenty-five merchants who expressed support for the project in 1836 were not, as Baruchello implies, new arrivals in the merchant community. Seventeen of them had been active in the chamber on other occasions—six in the period from 1814 to 1819 and four others in the years from 1820 to 1829. Five had served as deputies on other occasions in the 1830s, and two held the office after 1840.

The reforms, then, were not sudden, reflecting a sharp change in the composition of the merchant community, but instead resulted from pressure exerted over a period of roughly twenty years. As such, they reflected a gradual maturation of opinion in the merchant community consonant with the increasing clarity of its perception of the city's true economic condition.

Once established, how successfully did the bank live up to the expectations of its backers? The ability of the discount bank in Livorno to facilitate the port's commercial operations was, it seems, severely limited from the beginning. In his early reports, Antonio Mochi, appointed by the government to supervise the bank, noted the disappointing level of activity of the new institution and attempted to explain it. Cholera epidemics in the Mediterranean and the collapse of large commercial firms in England and America had paralyzed economic activity, he said, leaving large supplies of capital dormant in the business houses of the city. As a result, few merchants were discounting notes, and their business was severely contested. When necessary, private bankers would

lower their rates to 3 percent to undercut the position of the new bank. Many merchants felt that there was a stigma attached to discounting notes, and they preferred to do business with the private firms, where they considered the confidentiality of their affairs to be more assured. In addition, mezzani tended to channel their business to private discounters, who paid high commissions. Finally, Livorno's growing role as a supplier of grain for the Tuscan hinterland did not encourage discount activity in the city but impeded such activity. Virtually all grain sales in Tuscany were made on a cash basis, and during the three or four months of the year when this trade was especially active, more than 1 million lire a month in cash would flood into Livorno, augmenting the supply of specie in the city's coffers.^[52]

In spite of the initial difficulties, by 1840, the discount bank seemed to be winning a degree of public acceptance. The market value of the bank's shares had risen from a base of 100 to 112, and the activity of controbaratto (the exchange of specie for bills issued by the bank) had grown enormously, indicating increasing confidence in the institution and in its notes. In addition, merchants from all classes had begun to present their bills to the bank for discount, surpassing even the bankers, who previously had been the institution's chief customers.^[53]

The general economic situation, however, appeared unfavorable to the bank's expansion. Commerce remained sluggish, capital abundant, and competition with private discounters intense. Commissioner Mochi reported that in May 1842 the administrators of the bank met to discuss the difficult economic situation. More than 2.5 million lire were lying dormant in the bank and almost no notes were being presented for discount. The situation, he said, was worse than that experienced during the cholera epidemic in the 1830s. The only recourse of the bank's administrators was to lower the discount rate first to 4.5 and then to 4 percent in a feeble attempt to attract business.^[54]

The problem of an overabundance of idle capital, Mochi indicated, was not peculiar to Livorno. A similar situation prevailed throughout Europe. In 1842, for example, more

than nine million sterling were lying dormant in the Bank of London, and notes were being discounted on the London market at 2 percent.^[55] The prevalence of the situation perhaps provoked Mochi's restrained appraisal of the discount bank's utility a year later:

It is in times of restricted currency—which occur every so often in the course of commercial affairs—that the public utility of the establishment of the bank in Livorno will be evident. In prosperous times it is useful only to regulate the discount rate and perhaps to check abuses and the activity of monopolists. In the ordinary movement of commerce, and as long as the city possesses large capitalists, the individuals with shares in the bank cannot hope (lusingarsi ) for a large return.^[56]

Ironically, the most prosperous period of the bank's history occurred during the years of political and social disorder in the city in the late 1840s. Needless to say, the success of the bank in this period did not spring from the vitality of the commercial situation. On the contrary, it was the decline in commercial activity and the large supply of capital lying dormant in the bank that spurred the administrators of the institution in 1848 to consider other sources of investment. To avoid a radical change in the bank's activity, which would have required the unanimous consent of the shareholders, the administrators decided simply to admit for discount the notes of the six principal cities of Tuscany. The cities that were granted the facility of discounting their notes were Florence and Livorno (for a total of 200,000 lire each), Pisa, Lucca, and Siena (for 100,000 each), and Arezzo (for 80,000). The move was justified as a way of working in the public interest without altering the bank's statutes. At the same time, however, the administration stressed that the bank's primary function remained that of supporting commercial operations—"The assembled agree that it will be up to the executive council to refuse in whole or in part the notes emitted [recapiti emessi ] by the aforesaid communities whenever it is necessary to hold in reserve the resources of the bank for [its] current needs or for those of the commerce of Livorno."^[57]

Other factors of an extraordinary nature contributed to the bank's success in this period. The uncertain political situation tended to force liquid capital off the market, stimulating the discount activity of the bank. The government's agreement to suspend the baratto (the exchange of bank notes for specie) on notes having a face value superior to 200 lire was received without panic in the city and enabled the bank to cut its cash reserve and to employ more of its resources in revenue-producing operations.^[58] Finally, the decision of the government early in 1849 to issue interest-bearing treasury notes having the force of legal tender, while opposed by the majority of the merchant community, did permit the bank to earn interest on a portion of its cash reserve.^[59] This happy combination of circumstances enabled the bank in 1849 to pay its highest annual dividend—7 3/8 percent. The situation, however, was exceptional and was little predicated on the bank's primary function in support of commerce.^[60]

In the long run the success of the bank as a source of investment reflected closely both its ability to attract customers and the discount rate that it was required to pay. Only rarely, it seems, did bankruptcies or suspensions of payments cut significantly into the bank's net profits.^[61] The administrators of the bank hoped to provide the shareholders a net annual return of 7 percent on their investment.^[62] However, given the general commercial situation, the abundance of specie in the city, and the competition of private capitalists (all of which compelled the bank repeatedly to reduce its discount rate from 5 percent to 4 or even 3.5 percent), however, this aim proved impossible to realize. Indeed, in 1842 the return dropped to about 3.3 percent, and although it climbed to 6.5 percent in 1844, it soon dropped back to little over 4.5 percent.^[63]

In 1847, Commissioner Mochi was forced to conclude that notwithstanding its invaluable contribution to the stability of commercial operations in the city over the past decade, the discount bank had not proved to have been an exceptionally lucrative investment.^[64] As if to corroborate Mochi's opinion, the dividend for 1847 fell to 2.22 percent, the lowest in the bank's history. This was the first time that it had fallen below

the level set by the bank's statutes to indicate sufficient public interest in the institution.^[65]

Despite the bank's modest economic condition, however, its very establishment testified to the progressive character of the Livornese merchant community. True, a discount bank had been operating in Florence since 1816. However, the institution in the capital was under the close control and supervision of the central government: the government itself was the largest shareholder and provided an absolute guarantee for the convertibility of its bills. The bank in Livorno enjoyed no such guarantee, obtained its support solely from private capitalists, and yet showed far more willingness to run the risks necessary to serve the needs of the city's commerce.^[66] In Milan—long reputed to be the most prosperous and progressive center of business activity in the peninsula—attempts by merchant firms to repair the inelasticity of short-term credit through the institution of a discount bank met the repeated opposition of the chamber of commerce of that city. The inveterate conservatism of the business community and its distrust of credit not secured by property in land, it seems, made reforms of the type being instituted in Livorno impossible.^[67]

In an age of periodic and often colossal bank failures, the discount bank in Livorno appeared surprisingly stable and well administered. For twenty years it provided a secure source of credit and exercised a stabilizing influence on interest charges for the merchant community. A prearranged credit system helped to insure the reliability of merchants presenting their notes to the bank for discount and guaranteed a source of credit even to retail businesses and tradesmen.^[68] Great care was taken to maintain an adequate cash reserve for the circulating notes of the bank. As an investment the returns may have been modest, but they were considered secure.^[69] The cash value of the bank's shares remained high, although those held in Livorno were rarely sold.^[70]

Most important, the discount bank represented a common endeavor for the city's merchant community. When the shares of the bank had originally been distributed, care was taken to insure maximum personal participation in the in-

stitution. The number of shares granted to each individual was limited, and preference was given to local residents who could participate actively in the bank's governance.^[71] Prominent merchants in the city (such as C. A. Dalgas, Carlo Grabau, Agostino Kotzian, and Emanuele Rodocanacchi) regularly held important offices in the bank's administration. A close tie existed between the bank and the chamber of commerce. After some initial hesitation, it was the chamber of commerce that organized pressure for government approval of the bank project, and it was to the chamber to whom the administrators of the bank turned when they wanted some concession from the central government. In short, the discount bank represented another successful example of the widely extolled principle of the "spirit of association," of individuals pooling their capital and talent in an enterprise designed to further the public good.^[72]

The reform efforts of the merchant community, however, were not limited to currency and banking but also extended into the area of transportation. They led to serious efforts to foster the growth of the Tuscan merchant marine, to improve the physical facilities of Livorno's port, and to provide the state with a rail network.

Traditionally, the Tuscan government had not expected merchants in Livorno to support the development of an indigenous merchant marine. The decision to establish the marine and to build a navy to protect it was made in 1748 without even consulting the merchant community, and the government vowed at the time that it in no way expected the community to help defray the expenses of the project. All agreed that merchants in Livorno stood to gain little from the development of an indigenous marine. It would certainly not facilitate ties with the more developed commercial nations, for the mercantilist policies of these states discouraged the employment of foreign shipping. The marine could not even enjoy a similar privileged position in the commerce of the Tuscan state, because the traditional freedoms of the port of Livorno guaranteed that ships of any flag would receive equal treatment in port charges and tariff duties. This freedom had permitted merchants in the city to utilize the flag that at any

given moment, depending on the business at hand, offered them the greatest benefit. Since it had enabled the city to flourish at a time when an indigenous marine did not even exist, merchants could not now be expected to willingly support the trouble and expense necessary to maintain it.^[73]

Scattered evidence indicates that the situation changed after 1815 and that the merchant community was now favorably disposed to the development of the Tuscan merchant marine. This is strikingly evident in the pressure exerted by merchants and the chamber of commerce to secure the right of passage for Tuscan ships into the Black Sea. In July 1823 a small group of Tuscan merchant-shipowners petitioned the governor to attempt to remedy the situation, which was working "to the great prejudice of their commerce."^[74] The governor agreed and forwarded the petition to Florence, along with a personal letter emphasizing the steady growth of the marine and its contribution to the commerce of the city and the well-being of its population.^[75]

Resolution of the affair, however, proved long and difficult. In November 1823, the secretary of state apologized for his delay in responding to the original petition of the merchant-shipowners, remarking that only recently, with the conclusion of negotiations between the Ottoman government and several of the great powers, had there existed the possibility of a resolution of the existing difficulties.^[76] But by March 1825, still no progress had been made. Moise Fernandez, one of the signers of the original petition, was forced to request permission to withdraw his ship from the Tuscan marine, "remonstrating that with large stocks of cereals of his property in the ports of the Black Sea—where Tuscan ships could not navigate—it would be extremely damaging to him not to be able to reach them with his own ship."^[77]

In view of the circumstances, the governor supported the request but urged the central government to continue efforts toward working out an agreement with the Turks, "of supreme interest to the Tuscan merchant marine and to the commerce of this city."^[78] The chamber of commerce also actively supported a favorable resolution of the issue. In January 1828 the president of the chamber, Francesco Janer, on the

urging of the deputies, emphasized once again the great stimulus that an agreement with the Turks for right of passage into the Black Sea would give to the development of the merchant marine and consequently to "its utility to the state, to commerce, and to all our maritime population."^[79]

Despite pressure from all sides, five more years of uncertainty were to pass before the issue was finally resolved in a direct treaty between the grand duke of Tuscany and the emperor of the Ottomans, signed in Constantinople on 12 February 1833.^[80]

The interest of the merchant community in the development of the Tuscan merchant marine was also reflected in the support given by the chamber of commerce to more indirect measures thought to favor its welfare. In October 1833 the chamber, "in accordance with the requests repeatedly advanced to it by many merchants and by the proprietors and captains of Tuscan ships," urged the appointment of Tuscan consuls in various ports of the Mediterranean and the Black Sea, "and especially in Odessa, Cyprus, Gibraltar, and Marseilles, with which we have extensive commercial contacts." At that time the Tuscan interests in these ports were being handled by the resident Austrian consul, and "this [the chamber argued] was certainly not very favorable for Tuscan commerce and the Tuscan marine, which could not possibly hope to obtain all the efficacious assistance and protection needed, which certainly would be given them by their own consul."^[81] At the same time the chamber urged the preparation and publication of a naval code to inform the public at home and abroad of the regulations governing the merchant marine and so to enhance its reputation.^[82]

Evidence scattered through the papers of the governor indicates that the favorable attitude of the merchant community to the development of the Tuscan merchant marine was based, in part, on personal economic considerations. Important merchants in the city owned ships flying the Tuscan flag. In 1823, Janer, a seven-year member of the chamber of commerce and a staunch defender of the interests of the merchant marine, had requested a Tuscan passport for his 136-ton brigantino, Il Veloce .^[83] In the same year Domenico Castelli ob-

tained a passport for his brigantino, L'Aristide , and was granted the renewal of a passport for another of his ships, the brigantino L'Irene .^[84] In May 1824, Pietro Senn requested a Tuscan flag for a 91-ton brigantino, Il Pacchetto di Livorno ,^[85] and in June of the same year he requested Tuscan status for a ship that he had recently purchased, the 83-ton goletta Santa Maria .^[86] The papers of the Tuscan consul in Algiers indicate that in 1838, Senn and another important merchant in Livorno, Niccola Manteri, were proprietors of two ships arriving in the port that year with grain.^[87]

The motives that induced merchants in Livorno to become shipowners and to endow their ships with the Tuscan flag are a matter of speculation. The absence of a series of freight charges makes it difficult to ascertain the appeal of this activity as an investment.^[88] Convenience and the desire to insure the availability of a carrier when needed might have been just as important as freight income in inducing merchants to own their own ships, with the relative moderation of Tuscan maritime exactions perhaps providing a further inducement to adopt the local flag.^[89]

Besides private economic motives, one should also consider the social justification for the development of the merchant marine, which was repeatedly expressed by members of the merchant community. Niccolo Pezzer, vice president of the chamber of commerce, perhaps summarized this concern best when he remarked in 1833 that "the growth of our merchant marine has become today an object of supreme importance for this city, since for its ever-growing population it is necessary to extend as much as one can the means of subsistence [i.e., employment]."^[90] In 1748 economic and social considerations had underlain state sponsorship of the maritime project. Roughly a century later, these same concerns were the property of the merchant community as a whole.

Under pressure from Livorno, the central government in Florence endeavored to strengthen the merchant marine. The physical aggrandizement of the Tuscan state in the post-Napoleonic period served to reinforce this concern. The port of Piombino was ceded to Tuscany at the time of the restoration of the grand ducal government, the Island of Elba after

the Hundred Days (when Napoleon attempted to recapture power in France), and the state of Lucca (with its port of Viareggio) in 1847. The 900 ships and roughly 8,000 inhabitants who lived off the sea in these territories could not help but induce the Tuscan government to take a more active concern in its marine.^[91] Neither could the government remain insensitive to the concern shown by neighboring states in the development of their marines and the contribution that these were making to the commercial prosperity of their states.^[92]

The Tuscan government endeavored to favor the development of its merchant marine by negotiating with other states to obtain "most favored nation" status for its ships. The treaty signed by Tuscany with the Ottoman government in 1833 is a case in point.^[93] In 1836, in response to a request made by the governor of Livorno through the Tuscan consul in New York, the U.S. government agreed to abolish all special duties and tonnage charges levied on Tuscan ships and their cargoes in U.S. ports.^[94]

But Tuscany's position in these negotiations was fundamentally weak. Almost all states in this period attempted to favor the growth of their merchant marines by imposing high differential tariffs and port charges on foreign shipping. Thus, for example, anchorage duties for a ship of 200 tons in Genoa in 1833 were set at the equivalent of 285.14.2 lire if the ship were Tuscan and only 71.8.8 lire if it were Sard.^[95] Tuscan shippers operating in the kingdom of the Two Sicilies in 1849 found themselves forced to pay a supplementary charge of 10 percent on the value of goods introduced and extracted from that kingdom, a charge that in the important case of oil reached one-third the value.^[96] These duties, of course, could be negotiated, and a state was often willing to modify its own charges in return for a similar concession from the other party. Tuscany, however, whose principal port was already one of the most free in Europe, had little to offer. As Giovanni Baldasseroni, the future secretary of finance, later remarked, "Foreign states took advantage of Tuscan liberality without giving anything in return, and not esteeming something which was conceded to everyone, claimed that Tuscany had nothing to grant in order to obtain a favor."^[97]

The desire to win reciprocal treatment for the Tuscan merchant marine gradually overcame the reluctance of government officials to establish some form of differential charges. The publication in 1846 of a new scale of navigation, sanitary, and port charges provided a fitting occasion for the government not only to standardize these charges in all ports of the Grand Duchy but also to obtain a lever for winning concessions from other states. The increases were modest but were pointedly levied against those states that had not yet worked out reciprocal agreements with the Tuscan government.^[98]

Shortly before the new charges were to take effect (1 March 1847), the government announced that agreements had been concluded with the United States, the kingdoms of Sweden and Norway, and the Russian Empire. The agreements would grant to the ships of these states full parity of treatment with ships flying the Tuscan flag, and vice versa. On the basis of continuing negotiations, Tuscany granted England and the Papal States provisional parity.^[99] Negotiations continued with other states. Finally, in 1853, Tuscany signed agreements with the two outstanding holdouts, France and the kingdom of the Two Sicilies.^[100]

The government provided concrete support for the development of the Tuscan merchant marine. The potential strength of the local shipbuilding industry made the prospects of success in this sector ever more sure. Indeed, Livorno's natural position, coupled with the privileges of its free port, made the area especially propitious for the development of this activity. Raw materials were relatively cheap, of high quality, and available. The hills behind Livorno abounded in timber,^[101] and iron was easily available from the royal mines in Elba. Hemp of high quality (for the manufacture of rope) was brought from Bologna, and pitch, tar, and fir poles (for masts) were imported in quantity from Sweden and Russia.^[102]

Although employing methods that even by contemporary standards were considered archaic, manufacturers producing for the shipbuilding industry in Livorno turned out goods of unrivaled excellence. Indeed, the very "handicraft" nature of these trades, combined with the quality of raw materials employed, seemed to provide the key to the excellence of the

finished products. Rope manufacturers in Livorno used the superior hemp of Bologna.^[103] Even after the development of mechanical apparatuses they continued to spin their rope by hand, thus insuring a more uniform distribution of the fiber along the entire cord and giving the finished product greater strength and durability. So excellent was the product that the majority of it was shipped to Genoa, Ancona, Trieste, and even Greece.^[104] Livorno was also noted for the quality of its canvas sails. Made of linen or hemp and stitched by hand, this product too proved especially favored by foreign buyers, in particular the English.^[105]

Unfortunately, little information exists on the shipbuilding industry in Livorno in the late eighteenth and early nineteenth centuries. Facilities were undoubtedly always available for caulking and repairing ships in the port, and several workshops existed then (as they do today) for the construction of barges and small ships particularly suited to the coastal trade and for fishing. Evidence suggests, however, that in the early nineteenth century a shipbuilding industry oriented toward the construction of larger vessels was still in its infancy: commissions tended to be extraordinary occurrences, and shipbuilding clearly played a role that was subordinate to the port's primary commercial activity. Such, it seems, was also the case with the individual shipbuilders, as is evident from Governor Spannocchi's description of Giovanni Bastiani in 1820.^[106]

Bastiani had originally acquired favor with the Algerian Regency for repairing one of its corvettes. As a result, in 1820 the Algerian government authorized him to construct a merchant ship and to send it to Algiers with a stipulated cargo. That the vessel during construction suspiciously took on the aspect of a warship and prompted a demand for clarification from the Tuscan government, ever vigilant to preserve its reputation for neutrality, need not concern us here. More important is the governor's description of Bastiani as being in close, regular contact with the regency from which he had received numerous commissions. Indeed, said the governor, on several occasions Bastiani had been requested to send wood, iron, pitch, cables, and even grain to Algiers, "which,

it seems to me, must have facilitated the negotiations for construction of the ship."^[107]

The best-known shipbuilder in Livorno in this period was Luigi Mancini. Although he had undoubtedly been operating earlier, Mancini became generally recognized for his talents only in the 1820s, when he was commissioned to build two warships for the viceroy of Egypt. Mancini's role in the commission was restricted to the actual design and construction of the vessels. The delicate negotiations that had resulted in the awarding of the contract to Livorno—severely contested by shipbuilders in other ports—were handled by Dionisio Fernandez, who was in charge of the whole operation.^[108] The job was an important one and had a definite impact on the economy of the city: the gonfaloniere estimated that the construction of the two ships had put more than 700,000 pezze into circulation in Livorno, "to the great advantage of the general population."^[109]

Descriptions of the launching of the larger of the two vessels on 9 November 1826 provide a further sense of the importance of the commission and of the still extraordinary character of the shipbuilding industry in Livorno. The ceremony was attended by the court and by 40,000 spectators. From the grand duke, Mancini received the Royal Cross of Merit and a commission in the royal navy, and Fernandez presented him with a gift of 200 gold zecchini. That evening Mancini was present in Fernandez's box at the theater and received a standing ovation from the assembled company.^[110]

The impact of special commissions on the economy of the city, then, was strikingly apparent. By 1830, however, officials such as the gonfaloniere had decided that it was time to pass from extraordinary commissions to regular production, which could best be assured by developing the Tuscan merchant marine. The moment seemed especially propitious. The recent French conquest of Algeria had virtually eliminated the threat of the Barbary pirates, a major hindrance to the free movement of ships in the Mediterranean. The treaty between the Russians and the Turks at roughly the same time generated hopes for the imminent granting of Black Sea access to Tuscan ships.^[111]

Notwithstanding the efforts of government officials and members of the merchant community, the growth of the Tuscan merchant marine in this period was not spectacular. A prospectus in the state archive in Florence covering the thirty-year period from 1820 to 1850 indicates that after 1829 the number of large sailing ships (bastimenti quadri ) based in Livorno leveled off and remained relatively stationary through midcentury.^[112] The year 1830 marked the first occasion since the restoration in which the total tonnage of the Tuscan merchant marine actually declined.^[113]

Several factors, it seems, served to restrict the growth of Tuscan shipping. One important cause, the policy of differential tariffs and port charges, has already been noted. The Tuscan government, as we have seen, succeeded in negotiating reciprocal agreements with many states. Failure to reach a lasting accord with France and the kingdom of the Two Sicilies before 1853, however, made it virtually impossible for Tuscany to develop its potential for steam navigation, as steamship lines in the Tyrrhenian Sea were expected to touch the ports of Marseilles and Naples. As a result the steamships Leopoldo II, Maria Antonetta, Dante , and Lombardo —all built in Livorno and universally admired for the solidity of their construction—were forced to renounce the Tuscan flag for that of France or Sardinia, states that possessed the requisite agreements for a viable itinerary.^[114] Another holdout was Spain. As a result of the prejudicial duties levied in the ports of that state, the Tuscan merchant marine in 1830 lost nine ships placed on the run between America and Barcelona.^[115]

More fundamental causes served to hamper the growth of the merchant marine in Livorno. State regulations required that the captains and two-thirds of the crew of ships flying the Tuscan flag be Tuscan subjects or at least residents in the Grand Duchy. This requirement often proved difficult to meet. Notwithstanding the existence of a school of navigation in Livorno, competent captains were in short supply.^[116] The recruitment of honest crewmen was just as difficult.^[117] The population of much of the Tuscan littoral was sparse, and young men in the zone were reluctant to take on the fatigue and peril of a life at sea when a city like Livorno offered them

a more enticing source of work and gain.^[118] The problem was simple, remarked Luigi Serristori, with the fatalistic tone natural to one who was a principal practitioner of the prevailing liberal ideology. "The existence of a national marine could not be but the child of necessity. It would make itself felt only when there existed an excess population in Livorno itself or on the Tuscan littoral, a population that could no longer earn its livelihood save through maritime navigation."^[119]

As with other sources of tension in Livorno's economic and social structure, the problem of the merchant marine came to a head during the period of political turbulence in the late 1840s. In 1847 and 1848, fourteen large merchant ships renounced the Tuscan flag for that of Jerusalem, a paper government that was under the protection of France and that sold navigation patents for the benefit of the holy places.^[120] From February 1849 to January 1850, twelve more ships—totaling 1,773.68 tons—did likewise.^[121] The government in Florence received a barrage of memorials discussing the exodus and attempting to pinpoint its causes.^[122] Several causes have already been discussed. Others, such as the weight of the navigation taxes and other charges levied on shipowners by the Tuscan government, were of more recent vintage and perhaps reflected the pressure of new competition. In addition, several cited as a principal cause of the defection the popular disturbances in the city.^[123] The demands advanced by Tuscan sailors in this period calling for work and wage guarantees^[124] may have had an important effect in scaring shipowners away from the Tuscan flag, as the government had feared.

In any event, notwithstanding the outcry, defection to the flag of Jerusalem did not drastically alter the number of large Tuscan merchant ships based in Livorno.^[125] From a broader perspective the situation might even be considered to have improved. While the number of Tuscan merchant ships based in Livorno, Elba, and Orbetello in the period of 1846–1855 dropped by eleven, the total tonnage of the Tuscan ships in these ports rose from 24,147.86 to 46,695.45, and the number of their crewmen rose from 5,142 to 5,598.^[126] These figures illustrate a general diminishment of interest in the coastal

trade and a growing involvement in the hauling of bulky cargoes—especially grain—over long distances, which we have already examined in another context.^[127] Ultimately, then, the impact of the revolutionary turbulence of 1848 may have been positive. Perhaps it served to force government officials to temper their optimism and to aspire not so much for a massive merchant marine as for one that would be well regulated and would be served by competent captains and honest crews.^[128]

The interest of the merchant community in developing the marine led almost naturally to a concern for improving the facilities of the port. The efforts of merchants in this sector are interesting to look at not only because they reinforce the picture of the merchant community as being vitally interested in improving the commercial situation of the city but also because—along with the railway projects, which we shall examine next—these efforts throw into greater relief the capitalistic impulses that provided an important ingredient of the merchants' reform movement.

Laments on the poor state of the port were a recurrent theme in the memorials of the merchant community in this period. This was perhaps natural, because the government had made no major effort to enlarge the port or to better insure the safety of ships awaiting admission to the docks since its construction of a new dock (the Molo Cosimo ) in 1620. In 1821 the governor sent a long dispatch to Florence outlining various projects designed to make the port more secure. In it, he stressed that the adoption of these projects was essential to block the growing defection of ships to Genoa and Marseilles.^[129] The government, however, short of funds and already pledged to a massive project for the reclamation of the city of Livorno itself, was unable at that time to assume responsibility for the port project.

In the 1830s the project was picked up by a small group of local merchant bankers. The origins of their initiative are uncertain. In a letter to the captain of the port, in 1840 a certain A. Mighi (not further identified) remarked that in October 1838 he was requested by a foreign banking firm (Valaken and Company) to suggest a project in Livorno in

which one could profitably employ a large sum of capital. Mighi proposed the construction of a new pier, "which would render the port of this city more spacious and secure and facilitate access to it and would end the necessity of forcing ships arriving in Livorno to spend part of their period of quarantine at the shore [outside the port] where they were always insecure and often lost with their cargoes."^[130] After drawing up a firm project, Mighi argued, he was requested to lend it to Giovanni Ulrich, who instead of returning it submitted the project to the government under other auspices.^[131]

Regardless of the veracity of Mighi's claim (certainly not unusual at the time with projects of this sort, though impossible to substantiate given the lack of documentation), the first official recognition of the port project is contained in a letter from the secretary of finance to the governor of Livorno authorizing three commercial firms in Livorno—Santi Borgheri, Son and Company, Simiani E. Borgheri, and Fortunato Regini—to draw up at their own risk and expense plans for the construction of a new wharf for ships in quarantine (molo di quarantina ). The request of these firms to set up a limited-liability company and to sell shares to the public was not approved pending completion of the preliminary studies.^[132]

The major source of information on the port project is Giuseppe Vivoli, sanitary commissioner and part-time chronicler of Livorno's history.^[133] Vivoli, it seems, acted as secretary for the project and served as a liaison between its backers and the central government. A map in his manuscript "L'Accrescimento progressivo di Livorno" provides a sense of the magnitude of the project and its potential profit.^[134] It involved both an enlargement of the dock area and the construction of a new port. The two sections of wharf nearest the shore would be filled with the debris from the leveled bastions of the Murata and Cappuccini gates and with earth from the hill of the Fortezza Nuova. The area reclaimed by this operation would be ceded to the company, and on it would be constructed a plaza and eleven large blocks of housing. The three major streets of the city would be extended to the new port area, thus facilitating the circulation of fresh air. The leveled

terrain of the Murata gate would be utilized as a deposit area for bulky materials and as a shipyard. The present port would become the new wharf area and would be far larger and deeper than the old. Beyond it would be constructed the new dock, which would in effect enclose a second port equal in size to the first. With the completion of this project, said Vivoli, Livorno could by right call itself the "Emporium of the Two Ports."^[135]

Vivoli worked diligently to win government approval for the project. In May 1840 he wrote to the private secretary of the grand duke, outlining a project being drawn up in Genoa for the construction of a large free-warehouse zone. Completion of the project, he argued, would threaten Livorno's primacy as a port of deposit for grain from the Black Sea. Only the construction of a new port for ships in quarantine—where grain could be unloaded swiftly and inexpensively under all weather conditions—would enable Livorno to keep pace with its rivals.^[136]

Despite Vivoli's efforts, however, the project remained stillborn. Contrary to an injunction on publicity, an article containing detailed information about the project appeared in the Milanese financial newspaper Eco della borsa . The reaction of government officials was especially bitter because the article not only represented a breach of faith but also contained a strain of satire, suggesting that the project was not an original creation but was simply following the traces laid down by previous sovereigns. In a situation in which the royal prerogative still had meaning, the episode, as Vivoli feared, could not help but undermine the whole project.^[137] In any event no further mention was made of it, and efforts to enlarge the port only recommenced with the explosion of commercial activity in the late 1840s.

The famines that began to affect Europe in the fall of 1846 provided the stimulus for this renewed commercial activity. In 1847, 1,043 large ships (di grossa portata ) carrying grain and other comestibles from Russian ports in the Black Sea alone dropped anchor in Livorno.^[138] Toward the end of June so many ships were arriving simultaneously that they could not all be admitted into the port.^[139] In the spring of the following

year the situation appeared even more critical. The dock areas were solidly packed, no free space in which ships could maneuver remained in the port, and the entrance was cluttered with ships directly transferring their cargoes. The captain of the port argued that the government must reconsider enlarging the port, for with the increasing commercial movement and the greater size and carrying capacity of the ships involved, its inadequacy had become glaringly apparent.^[140]

Once again pressure for a definitive resolution of the issue began to mount in the merchant community.^[141] C. A. Dalgas, an important merchant in the city, suggested a plan for dredging the port and building a deposit for bulky merchandise. His proposal won the support of many individual merchants as well as of the chamber of commerce, which invited him to go to Florence with a delegation to present the project to the central government in person.^[142] Dalgas's proposal ultimately proved too modest to provide an adequate response to the city's needs, and a concerted, successful effort to solve the port problem would have to wait until after the hiatus provided by the revolution of 1848.^[143] The proposal itself, however, is important to an understanding of the reform movement in Livorno, for it included a strong plea against entrusting large public works to private corporations.

Too often in recent times [Dalgas remarked], limited-liability societies have fallen into discredit, and not unjustly, considering the paralysis that they injected into the veins of even our merchant community [corpo commerciale ], the abuses of their administration, and the incredible lethargy with which they carried on their work. Today, even a company promoted by upright merchants aiming for the public good and perceiving only an honest gain would have difficulty finding capital, and having raised it would run the risk of seeing the whole enterprise fall . . . into the hands of avid speculators, who would renew the usual scandals and abuses. Far better for the dignity of the government and the public good that such an enterprise be carried out at the order and expense of the state.^[144]

Dalgas's plea provides clear evidence of a reaction against that spirit of association, which had provided the ideological

underpinnings for the association of private capital in large public or semipublic enterprises. Whether this disenchantment was general and would serve ultimately to weaken the efforts toward economic and social reform in the city remains to be seen. At present our task will simply be to indicate possible sources of this disenchantment and to pinpoint it in time. Perhaps the best way of initiating this task is to examine railroad construction projects in the state. It is this sector of the Tuscan economy in which public utility and private gain came together in the most volatile manner.

The distinction between public and private interests in Tuscan railway projects was made explicit early, thanks to the decision of the secretary of finance in February 1836 to obtain the opinion of important merchants in Livorno on whether a projected rail line linking Livorno and Florence would stimulate Tuscany's transit commerce.^[145] The overall response was not encouraging. The merchants who were questioned recognized in theory the importance of the railroad both as a stimulus to entrepreneurial activity and as a relatively inexpensive way to transport raw materials to the producer and finished products to the market. Several commented specifically on the importance of the rail network in Belgium and on the line linking Liverpool and Manchester in Great Britain. Turning their attention to Tuscany, however, they universally agreed that the proposed project offered little commercial promise and, moreover, posed a definite threat to those currently transporting merchandise between the two cities.

None of the merchants questioned considered that the proposed line linking Livorno and Florence would extend transit commerce beyond the narrow sphere to which it was currently restricted. To Antonio Filicchi, the volume of goods in transit between the two cities would remain the same regardless of the means of transportation.^[146] In any case, asserted Ignazio Torricelli, an associate of Ulrich, Florence was not a manufacturing center like Manchester, which required large daily injections of raw materials from its coastal emporium. It made little difference whether goods made the journey in three hours or in twelve. If necessary, a producer could ship merchandise to Livorno in a few hours at a slight

additional expense. Generally, however, speed was unnecessary, as the departure time of a ship was known well in advance.^[147] All merchants questioned took a similar position. Dalgas, who considered this aspect of the question from several perspectives, argued that although the project might stimulate the spirit of entrepreneurship in Tuscany and the movement of passengers between the two principal cities of the state, only if the line were extended beyond Florence to the rich centers of northern and central Italy would commercial considerations justify the trouble and expense.^[148]

Along with doubts about the commercial advantages of the project went fears about its impact on those currently engaged in the transport trades. At present, remarked Torricelli, the gains that this trade brought to a portion of the Tuscan population were enormous and were readily apparent in the bustle of activity and the signs of prosperity along the route, which gave the line between Livorno and Florence the aspect of a continuous suburb.^[149]

The social effects of disturbing this activity were well known. During the drought of 1833–34, when the Arno River was closed to traffic, hundreds of individuals of all ages wandered through the countryside and clustered on the public thoroughfares begging for some succor to meet their most urgent needs. How much greater the misery would be if not just one but all existing means of transport between the two cities were to be suddenly and permanently crippled by a powerful new competitor!^[150]

The proposed rail line, then, appeared impossible to justify on either economic or social grounds. It would not stimulate transit commerce, and it threatened to reduce to the most abject misery the hundreds of families who were engaged in transporting merchandise and passengers between Livorno and the capital. Given these factors and the generally negative assessment of both the merchants and the director of the customhouse, it might appear strange that many merchants and bankers (including some of those questioned) would later rush to invest in the project and that the line itself would ultimately win the approval of the central government.

The reason is not difficult to discover. As merchants, the

future backers of the rail project appeared lukewarm; as investors, however, they were extremely anxious to take advantage of the project's speculative possibilities both for themselves and for their correspondents outside the state. Indeed, the early history of the project witnessed a struggle for control between several contending groups of capitalists. On 24 March 1838, Pietro Senn (head of an important banking firm in Livorno) informed the grand ducal government that he had received more than 7 million lire in pledges from his correspondents, and sent his associate, Agostino Kotzian, to Florence to press the government for concession of the line.

In a personal petition to the grand duke, Kotzian asserted his reliability and loyalty to the Tuscan state (points that were necessary to affirm when a petition was advanced from a merchant in Livorno) and urged that the government approve the project while the enthusiasm of the investors was still high.^[151] The Florentine banking firm of Emmanuele Fenzi had in the meantime advanced a similar request. A protracted struggle between the chief contenders for the project was averted when Fenzi and Senn announced that they had decided to unite "to effect the things previously requested separately."^[152] The union appeared to be a sensible one. Both men had previously been the principal financial intermediaries of an earlier rail project sponsored by Dini-Castelli and Luigi Serristori (and therefore both had some sense of the difficulties of raising the capital),^[153] and they possessed different, though complementary, talents for winning the concession and carrying the project to fruition. Senn contributed the bulk of the capital, while Fenzi provided solid contacts at court, especially with the secretary of finance.^[154]

Ironically, Senn and Fenzi's main competition for the concession came from a group of capitalists in Livorno, several of whom had previously condemned the project.^[155] Like most issues affecting the commerce of the city, the proposal of the local capitalists went first to the chamber of commerce, where it won overwhelming support. In making its recommendation the chamber reversed many of the reservations that had been expressed by the merchants and the director of the customhouse in 1836. The movement of goods between Livorno

and Florence was now described as "vast and continuous," and reservations about the social impact of the line were replaced by fear that if Tuscany did not act quickly its commerce would be harmed by lines projected in other states.^[156]

But the backers of the project approved by the chamber of commerce proved unable to overcome the strong position of Senn and Fenzi at court,^[157] and on 24 April 1838 the two bankers announced that they had received government permission to begin amassing capital and preparing studies for the projected line.^[158] In making the announcement, the promoters immediately began trying to sell the project to potential backers by stressing the suitability of the line and its potential for facilitating communications between Livorno and the Adriatic.^[159] The sales talk was not needed to drum up the enthusiasm of local capitalists—three-quarters of the 50,000 shares reserved by the act of incorporation for Tuscans or foreign residents in the state were subscribed four hours after being placed on the market, and those remaining were sold within only a few days, despite the decision to limit individual purchases to 50 shares.^[160]

Foreign investors, however, appeared reluctant to snatch up the approximately 24,000 shares remaining. Many, the promoters reported, found the 10 percent down payment that had to be made at the time of purchase too high for a project that still lacked the secure approval of the government, and they feared—correctly—that the interest paid on this sum would be at the expense of the general society. In addition, the inauguration of a host of similar projects in Europe (especially in France), even though these were less solid and less potentially profitable, tended to dampen the general speculative enthusiasm and to make investors more cautious. Never ones to end on a pessimistic note, Fenzi and Senn stressed that despite these adverse circumstances, three-fourths of the capital had already been collected by June 1839 and that the rest would be immediately forthcoming when the project received the definite approval of the government.^[161]

The estimate on the state of capitalization was probably high, for in December, Kotzian announced that the projected

company had secured only 11 million lire.^[162] Understandably, the promoters became more pessimistic. Government approval of the project would now not simply facilitate the raising of the necessary capital but was absolutely crucial to the effort.

As long as it remains doubtful whether the government will or will not grant the concession, one cannot hope to discover any new shareholder.^[163]

In addition, to assure a sufficiently high rate of return and to attract additional investors, the promoters requested the right to set rates for passenger and freight service without government interference, subject only to the stipulation that they would not exceed current charges on the service between the terminal cities. This was certainly a far cry from the notion that the railroad would produce a significant reduction in transportation costs, a prominent argument in earlier petitions. Most indicative of the growing sense of caution, however, was the demand that the company be permitted to construct the first section of the line (from Livorno to Pisa) and to assess its profitability before continuing the line to Florence.^[164] Finally, the promoters criticized a provision that gave the Tuscan government the right to take over the line at any time simply by reimbursing the society for the expenses of construction. So important did the promoters consider this stipulation in discouraging investment (particularly foreign investment) that they criticized it forcefully even as they announced the successful completion of their campaign to raise the necessary 30 million lire.^[165]

Although cautious, the central government generally supported the efforts of the promoters. Baldasseroni, secretary of finance when the line was completed, noted that two fundamental considerations determined government policy in the area of railroad construction: first, that it was neither proper nor opportune for the state to take on the expense necessary to endow Tuscany with a suitable rail network, and second, that private companies in Tuscany with foreign contacts could best supply the capital lacking within the state.

Such a policy, Baldasseroni argued, was not only financially expedient but was also in harmony with a favorable attitude toward free trade. In these circumstances, the best way to encourage railroad construction would be for the government to leave the largest scope to private enterprise, intervening only when necessary to support and coordinate the effort and to protect the public interest.^[166]

Thus, the government took an active role in examining the details of the line—in approving the route, in supervising the amount of compensation paid to proprietors along the way, and in regulating rates and schedules. To provide the greatest incentive to private enterprise, however, the government's final approval of the project included a 100-year guarantee to the promoters over the profits of the line.^[167]

Although public opinion in Tuscany had been only mildly stirred by the railroad project, the mood soon changed. The first section of the line from Livorno to Pisa proved remarkably successful. From March 1844 to January 1845, approximately half a million people were conveyed between the two cities. The returns were twice the amount estimated and gave rise to expectations of a 6 percent dividend.^[168] A distinct ardor for speculative ventures replaced the previous attitude of suspicion and reserve.^[169] More than twenty projects for rail lines in the state were drafted and presented to the government for approval.^[170] The backers of a proposed line linking Siena and Empoli (the Centrale) were reported to have raised nearly all the capital required for construction in Livorno within twenty-four hours after shares were placed on the market.^[171]

The impetus behind this speculative activity, however, appears to have been less that of a desire to foster the public interest than of a desire for private gain. Indeed, it often appeared more important to project a line than to actually build it, for by glorifying the commercial advantages of a proposal and exaggerating its probable return one could obtain a premium on the sale of shares (or even of share pledges [promesse d'azioni ]) without undergoing the work and risk of actual construction.^[172]

Perhaps the most notable—or notorious—example of rail-

road speculation in Tuscany was the so-called Maremmana project, which proposed the linking of Livorno with the Papal States by way of the Tuscan city of Grosetto. In April 1845 the government awarded the preliminary concession for the line to a group of capitalists from Livorno.^[173] What followed, however, was a great deal of propaganda for the project but little effort at initiating the preliminary studies. Newspaper advertisements reported that the line would pass through fertile plains and, with the line linking Livorno and Florence, would serve to tie the Tuscan capital to Rome and Naples: "It was destined to become the most natural avenue of communications between these three capitals and one of the most useful and beautiful lines of the peninsula."^[174] The words were mellow, but the facts should have aroused the suspicion of the informed reader. Only in a flight of fancy could one characterize the plague-ridden Maremma as "a fertile plain," and the small, miserable population that stayed in the area year-round could scarcely be expected to provide an adequate social and economic base for the line's support.^[175] In addition, the papal government's general attitude of disfavor toward railroads raised some doubt as to whether it would be possible to push the line to Rome, much less to extend it to Naples.^[176]

The promoters not only exaggerated the beauty of the terrain and the probable usefulness of the line but also underestimated its cost and misrepresented the demand for shares. Thus, as one critic noted, a simple consideration of the length of the projected line and the probable cost per kilometer would set the estimated cost of construction at 47,228,300 rather than the 32 million lire indicated by the promoters.^[177] In addition, the Annali universali di statistica (Milan) revealed that the promoters were reporting requests for 140,000 shares, even though only 32,000 were available for sale. All of this, it appears, was done in the interest of stimulating enthusiasm for the project and enhancing the value of its shares.^[178]

Efforts to construct a railroad network in Tuscany, then, gave rise to the full range of speculative practices. As a result, government policy in this area came under increasing criticism. As noted, the primary considerations of the government were to spare the public treasury and encourage the utiliza-

tion of foreign capital.^[179] The grand duke, at least in the beginning, seems not to have entertained high hopes for the future of the railroad in Tuscany or for its beneficent impact on the economy of the state. In line with the dominant economic principles of Tuscan society, the government refused to hinder the efforts of private enterprise, considering simply that those projects that had true and recognized utility would succeed and that those that did not would fail. Only in April 1845 did the government attempt to impose firmer guidelines for the approval of future projects,^[180] and these guidelines appear to have had little effect in improving the situation or checking the abuses.^[181]

Despite the censure, even one of the harshest critics, Corrado De Biase, admitted that notwithstanding the abuses Tuscany had been endowed with one of the best rail networks in the peninsula. He also noted that the state would not have been able to construct this network solely with its own resources.^[182] Nevertheless, the abuses did leave their mark on the spirit of reform in Livorno. They clearly underlay C. A. Dalgas's attempt to block efforts to institute a private corporation to repair the physical inadequacy of Livorno's port.^[183] The same scandals and abuses cited by Dalgas were present in Francesco Domenico Guerrazzi's response to the address from the throne in June 1848.^[184] In reply to the government's assertion of the commercial advantages of railroad construction in Tuscany, Guerrazzi stressed the lack of coordination among the various projects and the pure, speculative intentions of the backers. An opportune moment had been clearly lost and a sincere desire for public utility had been allowed to give way to a thirst for private gain. Coming from Guerrazzi—who was one of the principal members of the reform movement in Livorno (though certainly not the least critical), and who had guided the efforts of the progressive Indicatore livornese during its brief existence^[185] —the criticism is significant. No longer, it seems, could one present the idea of "association" in the same idealistic hues employed in the 1830s. Despite recognized achievements in the economic sphere, the communal spirit of reform had been tar-

nished by blind speculation and the selfish pursuit of profit. Whether this experience would also occur in the evolution of social attitudes and programs will be our next subject of investigation.