[question]The city of Venice, on Italy's coastline, achieved commercial dominance of southern Europe during the Middle Ages largely because of its extensive trade in the valuable commodity of salt. At first, Venice produced its own salt at its Chioggia saltworks. For a time, its principal competitor in the region was the town of Cervia, with Venice having the advantage because Chioggia was more productive. But Chioggia produced a fine-grained salt, so when Venetians wanted coarser salt, they had to import it. Then, in the thirteenth century, after a series of floods and storms destroyed about a third of the salt-producing ponds in Chioggia the Venetians were forced to import even more salt.

[question]That was when the Venetians made an important discovery. More money could be made buying and selling salt than producing it. Beginning in 1281, the government paid merchants a subsidy on salt landed in Venice from other areas. As a result of this assistance, shipping salt to Venice became so profitable that the salt merchants could afford to ship other goods at prices that undersold their competitors. Growing fat on the salt subsidy Venice merchants could afford to send ships to the eastern Mediterranean, where they picked up valuable cargoes of Indian spices and sold them in western Europe at low prices that their non-Venetian competitors could not afford to offer. That meant that Venetians were paying extremely high prices for salt, but they did not mind expensive salt if they could dominate the spice trade and be leaders in the grain trade. When grain harvests failed in Italy, Venice would use its salt income to subsidize grain imports from other parts of the Mediterranean and thereby corner the Italian grain market.

[question][question]Unlike the Chinese salt monopoly, the Venetian government never owned salt but simply took a profit from regulating its trade. Enriched by its share of sales on high-priced salt, the salt administration could offer loans to finance other trade. Between the fourteenth and sixteenth centuries, a period when Venice was a leading port for grains and spices, 30 to 50 percent of the tonnage of imports to Venice was in salt. All salt had to go through government agencies. The salt administration issued licenses that told merchants not only how much salt they could export but also to where and at what price. The salt administration also maintained Venice's palatial public buildings and the complex hydraulic system that prevented the metropolis from washing away. Many of Venice's grand statues and ornamental buildings were financed by the salt administration.

Venice carefully built its reputation as a reliable supplier, and so contracts with the merchant state were desirable. Venice was able to dictate terms for these contracts. In 1250, when Venice agreed to supply Mantua and Ferrara with salt, the contract stipulated that these cities would not buy salt from anyone else.[question] This became the model for Venetian salt contracts. [question]As Venice became the salt supplier to more and more countries, it needed more and more salt producers from which to buy.[question] Merchants financed by the salt administration went farther into the Mediterranean, buying salt from many distant sources.[question] Wherever they went, they tried to dominate the supply, control the saltworks, and even acquire them if they could.

[question]Venice manipulated markets by controlling production. In the late thirteenth century, wishing to raise the world market price, Venice had all saltworks on the Greek island of Crete destroyed, and it banned the local production of salt. The Venetians then brought in all the salt needed for local consumption, built stores to sell the imported salt, and paid damages to the owners of the saltworks. The policy was designed to control prices and at the same time keep the locals happy. Aiding its ability to ruthlessly manipulate commerce and control territory, Venice maintained the ships of the merchant fleet as a naval reserve and called them into combat when needed. The Venetian fleet patrolled the Adriatic Sea, stopped ships, inspected cargo, and demanded licensing documents to make sure all commercial traffic was conforming with its regulations.