Turns out I made a slight mistake. I've been getting Merchants of venice from my puppet-states. But apparantly this one time I got a regular venetian great merchant. Which is strange as its the only one I've gotten of its kind, even from my puppets. Perhaps its a bug but if it is, its a minor one. Afterwards I got plenty of Merchants of venice.

ronnet

Do you have the Patronage policy that lets city-states gift you great people? Maybe one gifted you an ordinary Great Merchant (I've heard that non-Venetians have gotten Merchants of Venice from city-states, just like non-Mongols are occasionally gifted Khans, so I'm sure it could work in reverse and give Venice the occassional Great Merchant).

I don't think the problem's with the forge. The forge is just for crafting the bars. Once you have those, you need to use the anvil to make gear, not the forge. Note that you need at least 25 bars to craft anything (unless you have a bunch of torches and arrows, or an enchanted boomerang or handgun).

If you have 25 bars and the anvil, and there's still nothing showing up, I don't know what's going on.  If you have fewer than 25 bars, grab at least 10 wooden arrows (not special arrows) and 5 torches and see if you can craft hellfire arrows.  If so, you're okay and just need more bars.