Of Guelphs and Ghibellines

INSIDE INVESTMENT January 2013

Of Guelphs and Ghibellines

The Guelphs have papal blessing, but to preserve your wealth you are better off sticking with the Ghibelline camp, writes Lincoln Rathnam

On the 7^th of December, Mario Monti, smarting from political reverses, returned from Rome to his home city Milan to attend the opening of the 2013 opera season. The production was Wagner's Lohengrin and not the usual tour de force by native son Giuseppe Verdi. This has ignited a national anti-German furore. Italian president Giorgio Napolitano cancelled his reservation, although he attributed this to the press of business. (Perhaps he had to accept the credentials of some new ambassador?) The spectacular occurred even as former prime minister Silvio Berlusconi, a fellow Milanese, denounced Monti as being a tool of German interests.

It appears that the centuries-old northern Italian conflict between the Guelphs and the Ghibellines still lives. The Guelphs are traditionally anti-German, like Berlusconi, while the Ghibellines are pro-German, like Monti. For centuries northern Italy has been split between Guelphs and Ghibellines, but they both derive from a rivalry that started five hundred kilometers to the north.

It all began in the 12^th century when Henry the Proud, Duke of Bavaria and Saxony and Margrave of Tuscany, son of Henry the Black, opposed the ascension of Konrad III of the Staufer family (the Hohenstaufen) to the crown of the Holy Roman Empire, which then included much of Italy. When Konrad prevailed, he punished Henry by transferring the Duchy of Saxony to Henry's enemy Albert the Bear of Brandenburg.

Upon the death of Henry the Proud, his son Henry the Lion eventually succeeded to the Duchy of Bavaria. During a brief interregnum, Henry's partisans revolted against the loss of the duchy of Saxony and in 1140 confronted the forces of Emperor Korad III at Weinsberg, using Henry's dynastic name “Welf” as their battle cry. The imperial forces, in turn, called out “Waiblingen,” the name of their nearby fastness which dates from days of Charles the Fat. From these cries sprang the terms “Guelph” and “Ghibelline.”

Konrad III's successor Emperor Frederick Barbarossa returned Saxony to the Welf dynasty, and Henry in turn supported Frederick in his various wars, notably in maintaining Frederick's power in Italy. The rivalry entered Italian politics when Henry the Lion declined to support what he viewed as Frederick's foolish attempt to crush the revolt of the Lombard League, based in Milan, which resulted in Frederick's defeat at the Battle of Legnano in 1176. In fury, Frederick managed to strip Henry of many of his lands. Ever since then the Guelphs and the Ghibellines have, understandably, been implacable foes, although many of them cannot remember why.

Mario Monti may have been thinking about this as he watched and listened to Lohengrin, in which the yclept knight's marriage with Elsa is thwarted when she fails to keep her word. She drops dead as he rides away on a boat in the form of a dove to the Castle of the Holy Grail. “Is this an analogy for the European Union?” he may have asked himself. Of course, the Guelphs like Berlusconi were never really in favour of a union with Germany; they looked south to Rome for their alliances and would happily sail away from the union in a swan or dove boat or any other available conveyance.

Even as Mr Monti was peering through his lorgnette, the Trends in International Math and Science Study was released. It measures the proficiency of students in sixty-three countries. Sitting in suburban Boston, I was gratified to read that my home state of Massachusetts, if considered a separate country, would rank second only to Singapore in the knowledge of science among eighth-graders. This contrasts with the poor showing of the United States overall, which, trailing even Britain, ranked eleventh among nations.

Sadly, one must admit that there are two kinds of countries in the world: guelphs and ghibellines. Massachusetts definitely falls into the ghibelline camp, whilst the poor showing of places like California exhibit clear signs of guelphism.

Back in Italy, the ghibelline north has an income level 125% of the European Union average, while that in the guelphish south is 70%. This is disappointing. In the 1950's, Italy established the Fund for the South (Casa per il Mezzogiorno) which devoted a large part of Italian GDP to developing the region by establishing modern industrial clusters around which development would coalesce.

When I was an undergraduate in the 1960's, I remember my excitement when Prof. Lyons explained that Italy had solved the problem of development, and that this could be applied to the rest of the world, but when I told my father about it he just laughed in an irritating manner. Of course, all this noble effort did was to create a culture of dependency and greater poverty. The fund was disbanded in 1984.

My professional specialty has long been investing in emerging markets. They boom and then go bust over and over again, and most investors end up ruined. One thing I have learned is to stick with the Ghibellines.