Meanwhile, changes in the character of the economy in town and country profoundly affected the development of both the republics and the signorie. Although scholars today often contend that in this period an “urban economy” drove northern and central Italy, in contrast to the rest of Europe, most Italians still lived on the land, and the prosperity of any town depended greatly on its contado, or the rural territory that it governed. Here, despite differences in agriculture due to different climates and types of soil, certain patterns of development occurred within the peninsula. By the end of the 13th century, tenurial serfdom had virtually died away, and other forms of landholding were evolving to take its place. Sometimes peasants worked the land as freeholders (as in fact many peasants had always done, even at the very height of the manorial system). Sometimes (and this was particularly true of large ecclesiastical estates in northern Italy) lands were let out on perpetual hereditary lease for low rents—a procedure that, in effect, often led to the virtual dispossession of church proprietors in favour of secular tenants. But the most common new tenancy from the 13th century was that in which landlords offered short-term leases in return for heavy rents either in money or, more often, in kind. Among such leases the one that came to figure most prominently, especially in well-cultivated land in central and northern Italy, was sharecropping, particularly mezzadria. In contracts of mezzadria, the landlord provided half the seed sown and in return received half of the tenant’s fruits. Frequently the contract was renewable every year—a provision that held considerable insecurity for the lessee, who was obligated to leave the land at term. Often, in order to make sure that the landlord received a full return from his lease, detailed conditions were attached on rotation of crops, plowing, digging, and harrowing. In all, this form of tenure, which was to remain a central feature of northern Italian rural life up to the mid-20th century, can be seen less as an agreement to let land than one to hire labour.

At the same time, a system of more intensive farming was developing. Before the mid-13th century, large homogeneous estates were a rarity, and it was very unusual for one proprietor to own half or more of a parish. From that time on, however, scattered portions were increasingly consolidated into united farms such as the poderi of modern Tuscany. Profits from commerce were used to build drainage, plant trees, erect homesteads, and acquire livestock, manure, and agricultural instruments. In these areas the common-field system began to disappear, common pasture declined, and a growing number of individual properties were hedged in. Labourers came to live on the farm, leaving the village to house a reserve of casual workers. Thus, by the end of the 14th century, the old landscape of dispersed strips of land and fortified villages had frequently given way to broad estates dominated by country houses, the leisure seats of urban landowners. Yet these developments were in no way uniform, even in the Emilian plain and in Tuscany, where they were most common. In the south the latifundia, the large estates that only a few major landowners owned, continued to exist, but they were now farmed with hired labour.

Evidence of bonifiche (drainage works) and the clearing of wasteland suggests a continual expansion in agricultural production up to the 1340s. So, too, trade, manufacture, and banking also prospered in that period. Within the peninsula, communes had to engage in large-scale marketing of food simply to provision the cities. For a town such as Florence, which at the beginning of the 14th century could gain from its own territories just enough food to feed its population for five months of the year, this commerce was literally a matter of survival. But, at the same time, trade in food and other bulk goods was matched by long-distance commerce in luxuries. With the decline of Pisa in the 13th century, Venice and Genoa remained the principal centres of this traffic. Venetians and Genoese had their own quarters and consulates in Syria and Palestine and at Constantinople and Alexandria. Sailing from their ports or traveling inland to Damascus and Aleppo (heads of the Asian caravan routes), they held a virtual monopoly of East-West trade, exchanging wood, steel, and arms for “spices” (the generic name for all precious goods from the East, including pepper, ginger, cinnamon, nutmeg, silk, dyes such as cochineal and indigo, cotton, drugs, and sugar).

To the northeast, traders from Italy penetrated the Black Sea to draw grain, fish, salt, and slaves from the Crimean Peninsula. Farther east still, they traveled to Azerbaijan, the Caspian Sea, and China. “The road from Tana [on the Sea of Azov] to Cathay,” a Tuscan merchant’s handbook told its readers, “is quite safe by day and by night according to the merchants who report having followed it.” Indeed, in the first half of the 14th century there were Italian merchant colonies (with husbands taking their wives along) and seven Italian missionary bishops in China.

In the West too, Italian commerce expanded its empire. The introduction of the compass to the Mediterranean, leading to new marine charts (the portolani, the earliest survivors of which date back to the 1290s), gave new wings to maritime daring. From at least 1277 the Genoese and from 1314 the Venetians sent annual galley convoys through the Strait of Gibraltar and thence, on a compass setting, across the Bay of Biscay to English and Flemish ports. Out into the Atlantic, Genoese navigators visited the Canary Islands. At the same time, shipbuilding technology advanced during the 14th century. Trireme galleys expanded from 50 to sometimes 150 tons, and Italian ports began to employ the cog, a square-sailed vessel capable of carrying 150 slaves and ideal for bulk cargoes. Meanwhile in banking, the most prominent of financial houses to extend their operations beyond the Alps were the Bonsignori company of Siena and the Florentine houses of the Acciaiuoli (with 53 branches throughout Europe), the Peruzzi (83 branches), and the Bardi (even larger than the Peruzzi). Within Tuscany again, beginning in the 14th century, the manufacture of textiles became a major industry.

Growth accompanied changes in the character of commerce. Resident capitalists emerged who held a tight grip on far-flung agents through a network of correspondence, and new mercantile techniques developed in which Italians could boast primacy—account books with Arabic numerals, double-entry bookkeeping, marine insurance, bills of lading, bills of exchange, and a mature law of the sea and law of commerce. The expansion of commerce was uneven; it was rudimentary in the south, and even in central and northern Italy most towns were no more than small market centres for the surrounding countryside. Nevertheless, the major commercial centres in the opening decades of the 14th century sustained an economy that was never again to expand so fast and be, in relation to the rest of Europe, so powerful.