International

Not Even the Pope Can Maintain a Monopoly

Religiously traumatic and militarily ominous, the fall of Constantinople in 1453 also created a crisis for the European textile industry.

Religiously traumatic and militarily ominous, the fall of Constantinople in 1453 also created a crisis for the European textile industry. The problem, in a word, was alum.

To securely attach to fibers, most dyes need chemical help: a mineral salt known as a mordant, from the Latin word mordere, meaning to bite. Allowed to saturate the material before dyeing, the mordant bonds with the fibers and provides a bridge to bond with and fix the dye.

Alum, a potassium or aluminum sulfate, is the most important mordant. It "is no less necessary to dyers of wool and woolen-cloth than bread is to humankind," wrote Vannoccio Biringuccio in his 1540 book De la Pirotechnia.

By the Middle Ages, alum mining, production, and trade were big businesses—the first international chemical industry. The typical alum operation mined alunite, a mineral found in volcanic areas, then heated the rocks in a kiln and repeatedly poured water over them until they formed a paste. The paste was then boiled and decanted to get rid of insoluble compounds, resulting in a saturated solution that crystallized into purified alum.

In 1453, most of Europe's alum came from rich mines in Anatolia—mines that the Turks suddenly held. "The West could not get along without alum and, in order to get it, was thus forced to finance indirectly the Turkish campaigns," writes economic historian Raymond de Roover. To make matters worse, the Turks kept raising prices.

But just as the price of alum reached unprecedented levels, a seeming miracle occurred. A well-connected Paduan named Giovanni de Castro was walking through the volcanic Tolfa Mountains, west of Rome, when he spotted white minerals with the salty taste of alunite. Maybe it was an accidental discovery. Maybe he was deliberately prospecting. Either way, de Castro hit pay dirt.

"I announce to you a victory over the Turk," he triumphantly informed his godfather, Pope Pius II. "He draws yearly from the Christians above three hundred thousand gold pieces for the alum with which we dye our wool.…I have, however, found seven hills so stocked with alum as to be nigh sufficient for seven worlds. From them you may supply all Europe.…This mineral will give you the sinews of war, which is money, the while it takes them from the Turk."

The alum proved to be of good quality, and the location was ideal, with a nearby port and abundant wood for kilns and caldrons. Best of all, Tolfa was not just in Christian territory but in the pope's own secular domain.

Pius II directed all alum profits to a cherished cause: a new crusade against the Turks. Designating the money for a military effort—even one no European ruler wanted to sign on for—made importing Turkish alum tantamount to aiding the enemy and thus forbidden to Christians. It was the first step in a long campaign to establish an alum monopoly.

The pope controlled a vital resource, but that control was never absolute. Despite the papacy's desirable product, religious authority, and secular influence, the existence of other alum suppliers limited its pricing power.

In 1464, Pius II was succeeded by Pope Paul II, who declared that anyone trading in Turkish alum would be excommunicated and their property confiscated. With this get-tough policy in place, the alum operation's marketing arm—the Medici Bank, with branches throughout Europe—jacked up prices. Textile producers in England and Flanders, the largest alum markets outside Italy, balked. Even under threat of excommunication, they kept right on buying from the Turks.

So the pope turned to diplomacy. He sent envoys to those recalcitrant territories, offering their rulers a cut of the action in exchange for monopoly sales rights.

The English mission failed miserably. King Edward IV refused to sell out the English textile industry, which loathed the alum monopoly.

The envoy to Bruges seemed more successful. In exchange for a share of the profits, Charles the Bold agreed to keep out all nonpapal alum. That meant barring imports from new Spanish mines as well as competing operations in Italy.

The deal fell apart almost immediately. Flemish textile producers were furious at their ruler's collusion against local interests. The duke agreed to a retraction. He issued an ordinance explicitly permitting Flanders merchants to buy and sell alum from any Christian source. "The Roman Curia," observes de Roover, "followed an unrealistic policy and assumed that it could fleece the consumer without inviting resistance."

To maintain high prices, the pope had to eliminate not just Muslim but Christian competition—most importantly from mines in the Kingdom of Naples. So in 1470 the pope signed a treaty with the king, creating a formal cartel.

To keep margins high, the two parties needed to coordinate production quantities and sale prices. Toward that end, each agreed to supply half the alum sold and receive half the revenue. To prevent secret sales, each would station inspectors at the other's operations, have keys to each other's warehouses, and monitor production and shipping. All sales would have to be in cash, not by barter, thereby guarding against disguised price cutting, and customers could receive no more than a year's credit. Violations were subject to a large fine on top of any money owed under the contract.

It was an agreement forged from mutual interest and mutual mistrust. "The terms of the cartel agreement are entirely consistent with the modern analysis of noncooperative collusion," write economists Andrea Günster and Stephen Martin in a 2015 article in the Review of Industrial Organization.


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