How a well-fortified city was reduced to a smoldering wasteland
“Art is not an essential asset,” proclaimed Derek Donnelly in December 2013, using philistine language befitting his profession as the managing director of Financial Guaranty Insurance Co., a New York-based bond insurer. The specific art Donnelly deemed inessential on that occasion was the collection of the Detroit Institute of Art, which includes masterpieces by Breughel, van Gogh, and Cezanne.
The City of Detroit, which entered bankruptcy in 2013, owns the museum, and Donnelly and the rest of the New York-based bond-holding class want that collection liquidated, if that’s what needs to go down for them to have their bond. So they pursue their bond—they will have their bond.
Just three years earlier, in 2010, a high-profile commercial gave a tour of Detroit’s most exquisite statues, murals, and architectural wonders. Each was paraded out as the essence of the city courtesy of Eminem and Chrysler, the latter fresh off its federal rescue from bankruptcy, to a record-setting 111 million Super Bowl commercial viewers. “When it comes to luxury, it’s as much about where it’s from as who it’s for,” a voice-over intones as Em drives a luxury sedan past the “finer things in life,” parking at the ornate cascading arch-adorned Fox Theater, the marquee of which reads, “Keep Detroit Beautiful.”
The tendency of nihilistic creditors to defile the highest aspirations of a city was already inscribed in the genes of the modern financial system at its very inception over 800 years ago. The value of money at the time was dependent on the proportions of silver or gold bullion contained in coinage. Venice, a major international trading hub and therefore a clearing house for many kinds of currency (and therefore the site of the world’s first modern financial system, including fractional reserve banking, insurance policies, and corporate personhood) dominated the world’s bullion trade.
So Venice could be considered the ultimate ruthless creditor, and in the summer of 1204 it transformed the largest, wealthiest, best-fortified city in the Western world, Constantinople, then the seat of the Byzantine Empire, into a smoldering wasteland. It was abandoned by 90 percent of its population, stripped of its assets, and vanquished as a world power in the pursuit of debt service.
Three years earlier, six Frenchmen of high station and considerable chivalric renown turned up in Venice to draw up a contract. This six Frenchmen had “taken up the Cross” to recover control over Jerusalem from the army of the Muslim infidel Saladin, news of whose conquest of Jerusalem is rumored to have killed a pope. With Saladin in possession of the “True Cross” and highly revered abbots tearfully pleading for nobles to marshal forces and head to the Holy Land, it was incumbent on these Frenchmen to secure much-needed financing.
The crusade would require the largest fleet constructed in Europe since the Roman Empire: 450 major transport vessels and 50 fully manned war galleys, to transport 20,000 foot soldiers, 9,000 squires, 4,500 knights and their horses down the Adriatic and across the Mediterranean to the Holy Land—not to mention many tons of provisions. At the time, the merchant republic was the only city that could possibly provide all this.
But it wouldn’t be easy. For one thing Venice, being a lagoon, had to trade for virtually all its foodstuffs and natural resources (apart from salt, the commodity whereupon Venice’s trading economy first was built) from mainland feudal estates and foreign commercial hubs, chief among them Constantinople. Securing rations for 33,500 men and 4,500 horses required a massive effort. On top of that, Venice’s dozens of shipyards would need to work constantly to be able to present the fleet on time. This would require suspending all overseas trade, the city’s lifeblood, for eighteen months—an economic sacrifice analogous to Detroit shutting down all manufacturing for a year and a half in the early 1950’s. In payment for the city’s unprecedented economic sacrifice, Enrico Dandolo, the Venetian Doge, charged the Frenchmen 85,000 marks, a staggering sum.
In fact, the French knights struck their deal with Dandolo not two years after he minted the grosso, the first silver European coin since the Roman Empire’s fall. The grosso, a virtual copy of the Byzantine hyperion, virtually assured that Venice’s currency would supplant the Byzantine imperial issue as the standard currency for Mideastern-European trade in luxury goods.
The whole thing might have worked out, too—the army supplied, the debt repaid, the Crusade launched, the Holy Land reclaimed for the Roman Catholic Church—if not for one little snafu. Venice had spent a year working to outfit an army of 30,000 warriors, and only 11,000 turned up. Many of those were pious, poor, and unable to pay their share of the burden, perhaps having mortgaged what land holdings they had to the church in order to obtain armor, weaponry, or horses. After weeks of delay, the Crusaders were ordered to give up everything they had. The sum was still short 34,000 marks.
Stuck in a bind, Doge Dandolo proposed an alternative way for the crusaders to pay down their debt: they’d have to do some dirty work. Specifically, the city of Zara (now Zadar, Croatia), across the Adriatic, was being a real thorn in Venice’s side. For one thing, Dalmatian pirates from the city were a continual threat to ships transporting merchandise to and from the lagoon. For another, as long as Zara was not under Venice’s sphere of influence, Venetian access to the rich Dalmatian forests, the city’s main source of timber, was precarious.
So the crusaders had to conquer the city, collect spoils, and pay the debt, and then the Venetian oarsmen would speed the way to the land of Christ. There was only one problem from the crusaders’ view: Zara was under papal protection. In fact, the Pope, getting word of the plan, threatened excommunication to all who participated. But debt is debt: the Crusade’s leadership concealed the Pope’s threats from the ears of the soldiers, and onward they went to Zara, to kill Christians under the cross they had taken up.
But the looting was not all that it might have been, thanks in part to infighting and an eventual intervention from the Vatican. And so the crusaders, no closer to repaying the Venetians and desperate to shake off the Zara catastrophe, welcomed the approach of Alexius, a young, ambitious man of perhaps 20, the exiled son of a deposed Byzantine emperor (and nephew of the usurper). Should the Crusade install him in Constantinople, Alexius offered to assume the crusade’s debt to Venice, remunerate the army with additional vast sums of money and, critically, to subjugate the Eastern Church under papal control.
Byzantines too were Christian, and the warriors hadn’t come to battle Christians, but the Venetians were insistent and appealed to the righteousness of Alexius’s claim and the boon to the Church such a transition in Constantinople would signify—and eventually, the crusaders, without much say in the matter, agreed to the plan. So, the debt transferred hands and the Crusade, already diverted once to conquer a Christian land that extended Venice’s economic regional hegemony, set sail for the Queen of Cities, Constantinople.
The siege of Constantinople was extremely ugly, but triumphant for the Crusade, which demolished 120 acres of the city by fire, leaving 20,000 Byzantines without possessions nor homes in which to store them, all the while celebrating their feats in honor of Christ the king. Alas, that was the easy part. To the crusaders’ surprise, Alexius’s installation as emperor was not exactly the same as retiring his debt, since the fleeing former emperor had raided the treasuries prior to departure, leaving Alexius no choice but to incur God’s wrath by committing perhaps the ultimate sacrilege: melting down precious ecclesiastical ornaments for bullion.
Niketas Choniates, the Byzantine historian, wrote:
“It was a sight to behold: the holy icons of Christ consigned to the flames after being hacked to pieces with axes and cast down, their adornments carelessly and unsparingly removed by force, and the revered and all-hallowed vessels seized from the churches with utter indifference and melted down and given over to the enemy troops as common silver and gold.”
Constantinople’s denizens, whose confidence, support, and fear were critical for Alexius’s ongoing reign, were understandably outraged by this turn of events. The brand-new emperor was promptly murdered and full-on war broke out between the crusaders and Greeks. Defeat came swiftly to Constantinople—thanks, the crusaders asserted, to divine aid—and culminated in the sacking of the city, the soldiers of heaven feverishly seizing money and relics, stripping churches and palaces, befouling the great Hagia Sophia with animal excrement, grabbing women and girls and raping them to the sounds of the nearby shrieks of their loved ones, all the while singing and reveling day and night. The Venetians received the 150,000 marks owed them by Alexius, the French crusaders their 50,000, and they split between them an additional 100,000. Once the crusaders had appointed one of their own emperors, the port of Constantinople was opened for business.
The Fourth Crusade did many things: it killed lots and lots of people, it liquidated priceless collections of Christian art, it destroyed the greatest city in the Western world, and it established Venetian economic and military supremacy over the rest of the West. But it never did what it set out to do: far from re-Christianizing it, the crusaders never even reached the Holy Land. The demands of debt repayment made men who had valiantly taken leave of their loved ones and volunteered for almost unfathomably difficult warfare in defense of their religious faith debase what was most precious and justify it to themselves on ethical and even ecclesiastical grounds. The things that were most essential were reduced to vulgar stores of value in the face of the imperatives of debt repayment.
Bullion is no longer what gives money its value. Today, it’s easy for the federal government to bail out a company, a sector, a city, or any user of dollars. Our subservience to the nihilism of debt, however, remains unchanged. Detroiters—devastated by outsourcing and white flight, their city budget crushed under the weight of a million foreclosures, great portions of their neighboring land abandoned, their public employees’ pensions and their priceless art collection vulnerable under the eager watch of municipal bond market vigilantes—continue to endure the mutated legacy of the Fourth Crusade. Their city, like Constantinople before it, is a victim of an ideology that says that debts which can’t be paid must be paid anyway, and that, in the end, everything is only worth as much money as you can get for it.
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