Bank (Italian: Banco dei Medici [ˈbanko dei ˈmɛdiʧi])
was a financial institution created by the
Medici family in Italy
during the 15th century (1397–1494). It was the largest and most
respected bank in
Europe during its prime. There are some estimates
Medici family was, for a period of time, the wealthiest
family in Europe. Estimating their wealth in today's money is
difficult and imprecise, considering that they owned art, land, and
gold. With this monetary wealth, the family acquired political power
initially in Florence, and later in the wider spheres of
A notable contribution to the professions of banking and accounting
pioneered by the Medici
Bank was the improvement of the general ledger
system through the development of the double entry system of tracking
debits and credits or deposits and withdrawals.
Giovanni di Bicci
Giovanni di Bicci de' Medici was the first Medici to enter banking on
his own, and while he became influential in the Florentine government,
it was not until his son Cosimo the Elder took over in 1434 as gran
maestro that the Medici became the unofficial head of state of the
1.4.1 Failure in Lyons and London
1.4.2 Failure in Bruges
4 Organization and type
4.1.1 Branch legal structure
4.1.2 Bills of exchange
4.4 Roman branch
5 See also
7 Further reading
8 External links
Medici family had long been involved in banking at a high level,
maintaining their status as a respectably upper-class and notably
wealthy family who derived their money from land holdings in the
Mugello region towards the Apennines, north of Florence. The Medicis
were not only bankers but innovators in financial accounting. At one
point, the Medicis managed most of the great fortunes in the European
world, from members of royalty to merchants. There was even a time
when the currency issued by the Medicis, the florin, was accepted and
Europe as the preferred currency to conduct business,
commerce and trade.
Giovanni's father Averardo (?–1363; known as "Bicci") was not a very
successful businessman or banker. A distant cousin, Vieri di Cambio
(1323–1396), however, was one of Florence's more prominent bankers
(the first of the various modestly upper-class Medici lineages,
numbering around 20 in 1364). His banking house trained and
employed Giovanni and his elder brother Francesco (c.1350–1412), who
eventually became partners in the firm. Francesco became a junior
partner in 1382, while Giovanni rose to become general manager of the
Rome branch in 1385, which was incorporated as a partnership, though
it was not necessary to capitalize that branch (because the Church was
usually depositing funds and not borrowing). Vieri was long-lived,
but his bank split into three separate banks sometime between 1391 and
1392. One bank failed quickly. The second, managed by Francesco and
later his son, survived until 1443, a little less than a decade after
Averardo's death. The third bank was controlled by Giovanni in
partnership with Benedetto di Lippaccio de' Bardi (1373–1420).
Giovanni di Bicci
Giovanni di Bicci de' Medici
The Medici bank's founding is usually dated to 1397, since it was this
Giovanni di Bicci
Giovanni di Bicci de' Medici separated his bank from his
nephew Averardo's bank (which had effectively been acting as a branch
in Rome), and moved his small bank from
Rome to Florence. The branch
Rome was entrusted to Benedetto, and Giovanni took on Gentile di
Baldassare Buoni (1371–1427) as a partner. They raised 10,000 gold
florins and began operating in Florence, though Gentile soon left the
firm. This move had certain advantages for a bank, inasmuch as the
predominant large banks of the 14th century which were based in
Florence—the Bardi, Acciaioli, Peruzzi—had met with problems, and
saw their places usurped by the Alberti, who were just large enough to
capture the Catholic Church's business. But the Alberti firm split
over internecine quarrels, and the clan was banished from
1382 (though they would be allowed to return in 1434), creating yet
another void. Giovanni's choice proved to be prescient, especially
Florence was lacking was a good port on the
Mediterranean—which it would obtain in 1406 with the conquest of
Pisa and its Porto Pisano. A further advantage was that it was much
easier to invest a bank's capital in
Florence than in Rome, and
because of the Holy See's deposits (obtained through Giovanni's long
contacts with them), the bank had a fair amount of capital to invest
in other ventures.
A factor was dispatched to
Venice to seek out investment
opportunities. He did well and on March 25, 1402, the third branch of
the Medici bank was opened. It suffered from some initial
mismanagement (by the factor who had previously done so well—he made
the fatal mistake of violating the partnership agreement and loaning
money to Germans; on a more humane note, he would eventually become a
pauper and be sent 20 florins by Giovanni, who felt that a past
partner deserved some charity), but soon was prospering. It was this
branch that established the practice of having a general manager's
remuneration be paid through shares in the branch that he purchased
with his investment. Also in 1402, the first Medici factory was
established for the production of woolen cloth, and then another in
1408. By this point, the
Rome branch had established a branch in
Naples (closed in 1425 and was replaced with one in Geneva) and
Gaeta. It may seem that the Medici bank was flourishing and rapidly
expanding its assets across Italy, but nevertheless there were perhaps
only 17 employees in total of the bank in 1402, with only five at the
central bank in Florence, although they were reasonably well-paid and
promotions seem to have been rapid when warranted (such as in the case
of Giuliano di Giovanni di ser Matteo, who went from being a clerk in
1401 to a junior partner in 1408).
In 1420, Benedetto di' Bardi (the ministro, or general manager, of all
the branches) died, and was succeeded by his younger brother Ilarione
di' Bardi, who was the manager of the
Rome branch. He dissolved one of
the wool factories, along with other reorganizations occasioned by
partnerships coming to their designated end. This date is interesting
because Ilarione's contract with his principal was done in the name of
Cosimo and Lorenzo, and not their father Giovanni; this perhaps marks
the beginnings of a transfer of responsibility and power in the Medici
bank from one generation to the next. Two Portinaris were put in
charge of the
Cosimo de' Medici
Giovanni died in 1429. According to Lorenzo, his fortune upon his
death was worth around 180,000 gold florins. His death did not greatly
affect the bank's operations, and the transition to Cosimo went
smoothly, aided by Ilarione, who was retained as ministro.
Fortunately for the bank, Lorenzo di
Giovanni di Bicci
Giovanni di Bicci de Medici was
on excellent terms with Cosimo, and did not insist on dissolving the
partnerships so he could receive his share of the patrimony
(primogeniture not being operative here); many Florentine banks and
mercantile businesses lasted only a generation or two because some of
the inheriting sons usually wished to strike out on their own. At
this time, the Medici bank was flourishing: besides the branches in
Rome and Florence, the Venetian and Genevan branches had been
founded. Ilarione would not last long in his position, and is
mentioned as dead in a letter written in February 1433. The timing was
unfortunate because the
Albizzi government of
Florence was moving
against the young Medici-led resistance (galvanized by the Albizzi
government's failure in a war against
Lucca and Milan), culminating in
Cosimo's exile to Venice. Despite the unfavorable politics in this
period of the bank's history, its Italian branches turned in bumper
profits, with as much as 62% of the total coming from
Rome (in 1427,
the Roman branch of the Medici bank had approximately 100,000 florins
on deposit from the Papal Curia; in comparison, the total
capitalization of the entire Medici bank was only about 25,000 gold
florins) and 13% from
Venice between 1420 and 1435 (with the later
Medici branches opened in Bruges, London, Pisa, Avignon, Milan, and
Lyon contributing nothing as they had not been founded yet). At
this time, there seems to have been some sort of Medici office in
Basel, and it seems to have lasted until 1443. De Roover speculates
that it was a sub-branch of the Medici bank's
Geneva branch serving
the General Council of the Church, and was closed when the Council no
longer made it worth their while to maintain it.
On March 24, 1439, the Medici branch at
Bruges was officially founded.
While the Medicis had done business in
Flanders through correspondents
and agents since 1416, it was only when the son of the
manager (from 1417–1435) was sent to investigate in 1438 and
favorably reported back that it was incorporated as a limited
liability partnership with that son, Bernardo di Giovanni d'Adoardo
Portinari (1407–c.1457), assuming both the position of manager and
the majority of the liability. When Angelo Tani (1415–1492) became
junior partner in 1455, the branch was finally created as a full and
equal partnership in the Medici bank. A legally similar situation
was obtained for an "accomandita" established in Ancona, apparently to
finance Francesco Sforza, an ally of Cosimo's.
As mentioned previously, Cosimo's uncle had begun a bank with his
third of the ownership stake in Vieri's bank, and it closed in 1443
with the death of the grandson of Averardo, taking with it the Medici
branch in Pisa. Formerly, any business that the Medici needed to
Pisa (such as Cosimo forwarding
Donatello money to buy
marble) had been done through them. On December 26, 1442, a limited
liability partnership was formed with two outsiders. Over time, the
Medici progressively reduced their investment in this partnership, and
it appears that they withdrew completely sometime shortly after 1457,
with only one partner keeping it running until 1476.
1446 saw the start of two Medici branches: the sub-branch that was the
Bruges branch was converted into a full partnership, and a limited
liability partnership in Avignon, the largest center of trade in
southern France (despite the departure of the Papacy). Within 2 years,
Avignon branch was converted into a full partnership. The
Medici branch at Lyons was not actually founded as a separate branch;
it came about as a result of the gradual move of the
due to the reduction in traffic to the fairs at
Geneva and the
establishment of four major fairs in Lyons which attracted around 140
other Florentine businesses). The move was completed in 1466.
The structure and functions of the Medici bank were largely settled
into their final form by this point; a branch would be opened in Milan
in late 1452, or early 1453, at the instigation of the grateful
Sforza. Its first manager Pigello Portinari (1421–October 1468) was
very capable and this branch did well in loaning to the
and, like the Roman branch, selling luxuries such as jewels, until
Pigello died and was replaced by his feckless brother Accerrito
(1427–c.1503) who could not manage the massive amounts lent to the
Milanese court and to Duke
Sforza (who did not repay his debts of
179,000 ducats before his death in 1478). A similar problem would
Bruges branch of the bank when managed by the third
Portinari brother, Tommaso.
Still, this period (1435–1455) under Cosimo and his ministro
Giovanni Benci was the Medici bank's most profitable period. With
Cosimo's death on August 1, 1464, the decline of the bank began.
Lorenzo de' Medici
Failure in Lyons and London
An early sign of the decline was the near-failure of the Lyons branch
because of its manager's venality, saved only by heroic efforts by
Francesco Sassetti (March 9, 1421–April 1490). Its troubles were
followed by the troubled
London branch, which got into trouble for
much the same reason the
Bruges branch would—unwisely loaning large
sums to secular rulers, a group notorious for their delinquencies (in
this case, the
Yorkist usurper Edward IV). In a sense, that branch had
no choice but to make the loans, since it faced domestic opposition
from English merchant and clothier interests in
London and their
representatives in Parliament, which was only granting the
necessary export licenses to foreign-owned enterprises if its members
were well-bribed with loans. The
London branch of the Medici bank had
already been dropped as a full partnership in 1465, and had been
reincorporated as an accomando. In 1467, Angelo Tani was dispatched to
London branch's books. Tani attempted to step up the
collection of outstanding debt—the English king owed 10,500 pounds
sterling, the English nobility 1,000, and another 7,000 pounds were
tied up in goods dispatched on consignment and not soon recoverable.
Operating funds were (like previous failing branches had done)
borrowed from Medici branches at high rates of interest. Edward IV
amortized a portion of his debt, but these reductions were soon
rendered less helpful (but not negated outright) by fresh loans and
sales of silk. By the spring of 1469, Tani had finished repairing the
London branch's operations to his own satisfaction, and returned to
Italy. His work would be undone by the unhelpfulness of the other
branch managers and the fecklessness of the
London branch manager
Canigiani. The fatal blow was the Wars of the Roses, which rendered
Edward IV unable to repay the loans (the best he could do in way of
repayment was to lift all tariffs on the Medici exporting English wool
until such time as the debt was repaid), and the branch had loaned far
too much to the Lancastrian rebels (and not to a number of Yorkist
loyalists), who would never repay their loans after their deaths and
London branch finished its liquidation in 1478, with
total losses of 51,533 gold florins. The succeeding
paid off the outstanding Plantagenet debt.
The poor credit risk, Edward IV
Failure in Bruges
London branch failed, it was turned into a accomando and
placed under the control of the
Bruges branch, managed by the third of
the Portinari brothers, Tommaso Portinari. This branch, too, would
soon fail. Portinari had managed the
Bruges branch for decades, and
had steadily proven himself to be a poor manager—he engaged in
business dealings on the side, ingratiated himself with the Burgundian
court by excessive loans (first to secure the farming of the toll of
Graveline—which was never very profitable—and then to mingle
socially and elevate himself), made poor business deals like
purchasing two galleys (which would be partially sold off at a loss;
the rest would be lost to shipwreck and piracy). The debts from the
London branch were assumed by the
Bruges branch. After Piero's death,
Portinari managed to get articles of partnership so favorable that he
lived in Florence, only visiting the
Low Countries for business. The
end-period of the branch would be marked by chaos and possibly fraud.
Portinari would refuse to return some deposits, claiming that the
monies had really been invested in partnership. He would also claim
Angelo Tani as a full partner (and thus liable in the losses), despite
the fact that Tani never signed the articles or written with his
approval. The magnitude of the financial failures is hard to
state. In a surviving memorandum, Lorenzo the Magnificent gives the
bad debts to Charles the Bold alone as the sum of 16,150 pounds groat.
The articles of partnership, incidentally, strictly forbade Portinari
to lend more than the total of 6,000 pounds groat. In another
memorandum, Lorenzo faults Portinari for the clever ruse of shifting
London branch's business to the
Bruges branch—except for the
profitable wool business. Portinari bought into the separate
partnership to the tune of 45%, whereas his share in the
was only 27.5%. The branch was liquidated in 1478 with staggering
losses. The failure of the
Bruges branch meant that not only the debts
of that branch had to be handled somehow, but also the outstanding
debts of the former
London branch. In total, upwards of 70,000 gold
florins were lost. This figure is optimistic, since it assumes most
book assets were worth the recorded value. As Lorenzo remarked, "These
are the great profits which are accruing to us through the management
of Tommaso Portinari." Lorenzo refused to take this loss lying
down, and dispatched a trusted agent to
Bruges to audit the books and
dissolve the partnership. Portinari ironically found himself hoisted
by his own petard; he could not refuse the dissolution, since the
maggiore Lorenzo had given the proper notice, and he further had to
accept his own cooked books because he claimed that the books were
accurate and the rather doubtful assets listed were indeed worth what
they were worth. The agent Ricasoli was aided in this task by Angelo
Tani, who came all the way from
Florence to settle the matter of his
supposed partnership in the
London branch through the
Upon Cosimo's death, his estate and control of the bank passed to his
Piero di Cosimo
Piero di Cosimo "the Gouty" (Piero il Gottoso). Piero
had been given a humanist education, unlike his younger brother who
was trained in business but had died in 1463. The estate remained
intact, though in this case not as a result of good relations between
brothers, but because one of the two heirs died before inheriting.
In theory, Lorenzo's son Pierfrancesco could have insisted on his
share of the estate, but Pierfrancesco was raised by Cosimo and "his
emotional ties to his uncle were sufficiently strong to preclude his
withdrawal from the company." Pierfrancesco seems to have grown
increasingly disaffected, but his death in 1476 prevented any
separation. In retrospect, given how Lorenzo would steal from
Pierfrancesco's estate while raising his two sons to finance the war
Rome following the Pazzi Conspiracy, Pierfrancesco would have
been wiser to effect such a separation. Specifically, Lorenzo
appropriated about 53,643 gold florins and only repaid part of the
Piero was not Cosimo's equal, but given his training did perhaps
better than one would expect, especially considering how he was
rendered bedridden by severe gout. Piero recognized the approaching
problems, and tried to begin a "policy of retrenchment". This
policy doesn't seem to have been fully carried out. Niccolò
Machiavelli states in his history of
Florence that Piero's policy
involved calling in loans for repayment, which caused a number of
Florentine businesses to collapse, sparking a plot against Piero and
Whether Machiavelli is overstating issues and Piero had merely ordered
a thorough accounting is unknown. Machiavelli can probably be trusted
here since there was a rash of bankruptcies and bank failures in
Florence shortly after Cosimo's death which led to a small recession.
De Roover mentions, however, the war between
Venice and the Ottoman
Empire and the relevant firms' connections to that area as a possible
factor as well. It is certain, however, that Piero tried to wind
London branch and recover as much of the loans made to Edward
IV as possible, ordered the
Milan branch to loan less, instructed
Tommaso Portinari of the
Bruges branch to get rid of the galleys and
not make any loans to secular rulers, and attempted to shut down the
Venice branch which was no longer profitable. From the perspective
of carrying out his policies, Piero faced a number of obstacles—it
was always politically costly to demand that loans be repaid,
particularly when made to monarchs and powerful nobles and such
demands could cost Piero dearly close to home. The King of
him over a barrel as the king could block any attempts to export
English wool by the Medici, which was desperately needed by the bank
for two reasons. English wool was the finest in the world; if
Florence's artisans did not have a supply of English wool to weave, it
could not sell its textile wares, and more importantly, could not
employ the Florentine lower classes who specialized in textiles.
Flemish wool had once served in English wool's place, but after the
1350s, it no longer had a market in
Italy and was essentially not
imported after 1400. Unemployment generated considerable political
unrest and revolts, which would be aimed at Piero and the Medici since
he and his family were seen as the true rulers of Florence. The second
reason was that there was a systemic specie problem in the Medici bank
in which hard currency flowed south to
Italy from the northern
countries, and the import of English wool was necessary to provide a
conduit for currency to flow north and balance the books. So when King
Edward IV demanded loans, the
London branch had little choice but to
oblige him if it wanted to continue to export English wool to
By 1494, the
Milan branch of the Medici bank also ceased to exist. The
branches that did not die off on their own generally met their end
with the collapse of the Medicis' political power in
Florence in 1494,
Savonarola and the
Pope struck against them. The central
Florentine banco was burned by a mob, the Lyons branch was taken over
by a rival firm, and the Roman branch struck off on its own despite
the branch being bankrupt in general (ironically, they would suffer
still more debts when a Medici cardinal became
Pope Leo X) and
inquired after the 11,243 gold florins he had deposited with the
branch back when it was with the Medici bank). Even at the time of its
downfall, the Medici bank was the biggest bank in Europe, with at
least seven branches and over fifty factors.
De Roover attributes the beginning of the bank's decline to Cosimo de'
Medici. He spent the vast majority of his time wrapped up in politics,
and when he was not preoccupied with the intricate plotting and other
characteristics of Florentine politics, he was patronizing the many
Renaissance scholars and artists who were present there, or
engaged in composing his own renowned poetry. This left minimal time
for the careful selection of branch managers and the maintenance of an
alert watch against fraud within the bank, which was greatly needed.
Most of the financial duties handed over to Francesco Sassetti, who
had risen from being a mere factor in the
Avignon branch to its
general manager, and then a post in
Geneva eventually to end up in
Florence proper at Cosimo's side. Sassetti was left to
handle much of the business himself. In the end, it turned out badly.
Whether simply due to bad luck, old age, increasing laziness, or
diversion of his time to studying humanism like Cosimo, Sassetti
failed to discover the fraud at the Lyons branch until it was too late
for it to hope to remain solvent. The branch manager Lionetto de'
Rossi had attempted to cover up his incompetence by being far too
optimistic as to the number of bad loans the branch would have to
cover, and by borrowing funds from other banks, thus artificially
inflating his profits.
That, however, is not the only factor that caused the fall. A long
term trend in the devaluation of gold against silver (which held
steady) between 1475 and 1485—possibly thanks to increased
output by German and Bohemian silver mines—meant that as creditors,
the Medici bank was on the wrong side of the trend. Their deposits
were held in gold, and interest was paid in gold. This trend was in
part attributable to Florence's reluctance to debase the gold florin,
which was internationally esteemed for its stable value, prestige, and
reliability. But Florence's dual coinage system only aggravated the
problem. This shift in the monetary system perhaps reflected a
systemic slowdown or recession in Late Medieval
Europe in general: the
Arte del Cambio's records of member banks record a drastic decline in
membership such that the guild fell from 71 banks in 1399, to 33 in
1460, and then the guild itself into disuse, the outside chronicler
Giovanni Cambi noting that of the 9 large banks left in
1516, one failed on December 25. This banking decline does not appear
to have been specific to Florence; similar declines were seen in
Venice (although apparently not in Spain). Similarly,
the northern branches of all European banks were squeezed by a general
decline in the supply of English wool.
Agreement on these aggravating factors does not seem to be universal;
Richard A. Goldthwaite writes in 1987 that "these economic conditions
have never been adequately explained. It appears more likely that the
contraction and decline of the Medici bank under Lorenzo—it was
reduced to branches in only Florence,
Rome and Lyons by the time he
died in 1492—were due simply to bad management." He also claims
that banking guild memberships cannot be used as a proxy for general
economic conditions, as the problem could be that "by this time, in
fact, Florentine guilds had long lost much of an economic function in
the areas of their formally defined activity, with the result that the
quality of their internal administration deteriorated; but this
institutional history cannot be taken as an indicator of the vitality
of the respective sectors of the economy the guilds nominally
Piero died on December 2, 1469. He was succeeded by his two sons,
Lorenzo and Giuliano. Lorenzo's interest in politics and art (which
led to his appellation "the Magnificent") forced him to rely on his
Francesco Sassetti to handle most affairs of the bank.
Sassetti can be faulted and inculpated in the decline of the bank for
failing to prevent the disasters of
Lyon and Bruges, and Lorenzo for
relying too much on Sassetti and not listening to him when Sassetti
did notice problems or tried to fix things. Indeed, Lorenzo once said
when Angelo Tani (who had tried to prevent the failure of the Bruges
branch) appealed to him to overrule Sassetti and restrict the lending
London branch, that "he [Lorenzo] did not understand such
matters." He would later admit that his lack of knowledge and
understanding was the reason he approved Tommaso Portinari's
disastrous schemes. Goldthwaite faults Lorenzo in no uncertain
Lorenzo il Magnifico, for whom politics always took priority over
business. Service to the court and the aristocracy was probably the
chief reason for establishing branches in both
Milan in 1452 or 1453
Naples in 1471, and over-extension of credit through personal
loans created severe and ultimately insurmountable problems for both
Poliziano with Giuliano as a child
With Lorenzo's death on April 8, 1492, the succession passed to his
20-year-old son Piero di Lorenzo (1472–1521). Piero had no talent
for running the bank and depended on his secretary and his great-uncle
Giovanni Tornabuoni to handle everything. The two mismanaged the bank
and balked the new ministro's, Giovambattista Bracci, efforts
(Sassetti having died of a stroke in March 1490). If the Medici family
and its bank had not been politically overthrown in 1494, it would
probably have failed shortly thereafter in a long-delayed bankruptcy.
Another factor in the decline of the Medici bank were the spending
habits of the Medici. According to Lorenzo, between 1434 and 1471, the
family spent an average of 17,467 gold florins a year.
Another misjudgement or failure by Sassetti was placing his trust in
Tommaso Portinari instead of in more trustworthy managers like Angelo
Tani; Portinari would eventually cause the collapse of the bank's
Niccolò Machiavelli gave a more contemporary viewpoint in his Istorie
fiorentine, asserting that the fall of the Medici was due to their
loose rein on their bank's managers who began to act like princes and
not sensible businessmen and merchants.
When the crisis loomed, one way to try to avert it was to simply start
reducing the interest paid on discretionary and demand deposits. But
such a move would have hurt the Medici name, and so it was undertaken
too late. The bank's heavy leverage of their deposits meant that
setbacks could be quite sudden. The fact that it seems to have
been a common practice for Florentine banks to operate with as little
as 5% of their deposits held in reserve lends further support to the
idea that collapses could happen abruptly when bad loans were
discovered. In addition to all of that, Lorenzo the Magnificent
was not at all concerned about the bank. Instead, he chose to
concentrate his time and his family's resources on patronizing artists
and pursuing his own poetic and political interests.
Eventually, the Medici family's fiscal problems grew severe enough to
force Lorenzo to begin raiding Florence's state treasuries, at one
point defrauding the Monte delle Dote, a charitable fund for paying
for dowries. Shortly thereafter, the political pressure of
King Charles VIII of France's 1494 invasion of
Italy caused Piero di
Lorenzo de' Medici
Lorenzo de' Medici to concede to the dual forces of Charles and the
impending insolvency of the Medici bank. The Medici bank's remaining
assets and records were seized and distributed to creditors and
others. All the branches were declared dissolved.
Giovanni di Bicci
Giovanni di Bicci de' Medici, c. 1397–1429
Cosimo de' Medici, 1428–1464
Piero di Cosimo
Piero di Cosimo de' Medici, 1464–1469
Lorenzo de' Medici
Lorenzo de' Medici (the Magnificent), 1469–1492
Piero di Lorenzo de' Medici, 1492–1494
Not much remains of the Medici Bank's records; mentions of it and its
activities are rife in the writings of outsiders, but outsiders
necessarily had little access to the balance books which could truly
tell the story of the bank's rise and fall, and certainly not to the
confidential business correspondence and the secret books. Some of the
most copious documentation, derived from archived tax records such as
the [catasto] records, are largely useless since the various
principals of the bank were not above flagrantly lying to the
taxman. The once voluminous internal documentation has been
grievously reduced by the passage of time:
This study is based mainly on the business records of the Medici Bank:
partnership agreements, correspondence, and account books. The extant
material is unfortunately fragmentary; for example, no balance sheets
have survived. Only a few pages of some of the account books have
escaped destruction by a frenzied mob.
Nevertheless, the sources are sufficiently numerous (exceeded only by
the Datini's bank's archives, in Tuscany/Prato) that the Medici
bank is well understood, especially as the remains of the Medici
records were given to the city of
Florence by a descendant of the
Organization and type
Florence were generally divided into three or
banchi di pegno: pawn shops, which catered to the lower classes, were
excluded from the banking or more literally, the "money-changing"
guild (Arte del Cambio), and were allowed to charge up to 20% annually
on loans they made which were secured by the borrower property. The
pawnbrokers (a mix of Christians and Jews; exclusively Jewish after
1437) were socially ostracized since they openly violated the
Catholic Church's ban on usury; as a consequence, they were actually
illegal in Florence, but survived since the official penalty was a
collective fine of 2000 florins each year, which when paid
disallowed the imposition of any further punishments on them for
the sin of usury; this law is generally characterized as really being
a license in disguise.
banchi a minuto ("small" or retail "bank"): the most obscure of the
three, they were sort of combinations of lenders and pawnbrokers. They
dealt in, among other things, bullion, installment sales of jewels and
loans secured by jewels, and currency exchange. None of the surviving
records mention anything but time deposits (for the purposes of
raising capital), so they generally did not offer demand accounts and
maintain the interest by lending out a portion of the deposits. Such
banks did lend without security, though; one example of a banco a
minuto (run by Bindaccio de' Cerchi) invested heavily in purchasing
future interest payments from the Monte (Monte delle doti, a "seven
percent dowry fund" founded in the 1340s by the state of
Florence), loans to the Monte Comune, maritime insurance, and
speculation in horse races. The Medici bank was not a banco a
minuto, although between 1476 and 1491, Francesco di Giuliano de'
Medici (1450–1528) was involved in two that dealt heavily in
jewelry (one of whose partnership contracts explicitly state that as a
goal, though the more successful one dealt in all sorts of luxuries
like Spanish tuna). Such banks were members of the Arte del Cambio as
they were not "manifest usurers".
banchi in mercato or banchi aperti: transfer and deposit banks, who
did their business out in the open of a public square, recording all
their transactions in a single journal visible on their table (tavola,
hence their collective name as tavoli), which they were required by
law to only transfer between accounts when the customers were
observing. Similarly, transfers between banchi aperti were done
outside, and verbally. Theirs was an extremely risky business; by
1520, bank failures had reduced the number of Florentine banchi aperti
to only two. Regardless, they were members of the Arte del Cambio.
banchi grossi ("great banks"): the largest financial institutions in
Florence, though not the most numerous (only 33 in 1469 according to
Benedetto Dei). They were the major movers and shakers in the European
economy. They had vast accumulations of capital, multi-generational
projects, and were a mainstay of the Florentine economy, because not
only did they deal in time deposits, demand deposits, and
discretionary deposits (deposits a discrezione), they expended most of
their efforts in funneling their capital into commerce and bills of
exchange. Such bills could be a hidden and legal method to create
loans bearing interest. The Medici
Bank was such a bank. One
Medici branch manager (Tommaso Portinari) said: "The foundation of the
[Medici bank] business rests on trade in which most of the capital is
employed." Similarly, the articles of association frequently said
something along the lines of the purpose for the partnership being "to
deal in exchange and in merchandise with the help of God and good
fortune." Under Cosimo, the
Bank had interests in wool, silk, alum
and merchant vessels—entirely separate from the many financial
instruments and relations it managed. Despite their membership in the
Arte del Cambio (assuming they bothered to run a local bank in
Florence itself), these merchant banks' focus were determinedly
international in scope, where profits could be found, local markets
being very competitive.
Sometimes these banks were referred to as gran tavoli ("big table") or
variants thereof, due to their origins as banchi in mercato; the
difference between them and banchi grossi was more one of degree than
Because of communication delays, the Medici
Bank was forced to
establish two groups of relatively independent subsidiary units in
important cities which communicated with the head bank via mail.
Venice in 1402,
Geneva (moved to Lyons in 1466),
London and an itinerant branch that followed the Pope
around to tend to his needs—not for nothing have they been called
"God's Bankers"—all hosted a Medici branch. If the bank
could not establish a branch somewhere, then they would usually
contract with some Italian banker (preferably one of the Florentine
banks) to honor drafts and accept bills of exchange:
So the Medici were represented by the firm of Filippo Strozzi and Co.
in Naples, by Piero del Fede and Co. in Valencia, by Nicolaio
d'Ameleto and Antonio Bonafe in Bologna, by Filippo and Federigo
Centurioni in Genoa, by Gherardo Bueri—a close relative of
Cosimo—in Lübeck, and so forth.
Of course, if an Italian agent could not be procured, any trustworthy
banker would do; in Cologne, their representative was the German Abel
A crucial distinction between the Medici
Bank and its older rivals
(the Peruzzi, the Bardi, the Acciaioli, etc.) was that its
"decentralization" was not merely geographic: it was legal and
Peruzzi bank was taken over by outsiders in 1331
because there was but one partnership, based in
Florence and held
Peruzzi family members, which owned everything. The
employees were only paid a salary for their service. So the nine
original outsiders could slowly leverage their 211⁄4 shares to
overwhelm the Peruzzi's collective 363⁄4 shares. The lack of
clear leadership, though, when the leading partner died has been
suggested as another factor in the failure of the Bardi and Peruzzi
Branch legal structure
Such a takeover was impossible in the Medici Bank. The essential
structure was that of a single partnership based in Florence, which
immutably held the lion's share of shares in each branch (and the
three textile factories in Florence), which were themselves
incorporated as independent partnerships. At the end of the year on
March 24 (by the then used calendar), each partnership would be
dissolved, although the Medici could dissolve a partnership at any
time with six months' notice. The books were thoroughly gone
through and checked, and a reckoning of profits would be made. Indeed,
the structure of the Medici
Bank resembles nothing so much as the
modern holding company.
The branch manager (the governatore, or "governor", would have put up
a portion of his own money at the start of the partnership) and the
investing partners could take out their profits at this point, since
salaries or dividends were not paid when the partnership agreement was
in effect, but usually the Florentine partners (maggiori, "seniors")
and the branch manager would then incorporate a fresh partnership if
the manager's performance had been satisfactory. Managers were not
paid salaries, but were considered to have invested in the partnership
a sum greater than they actually had (for example, in 1455, the Venice
branch's partnership agreement was renewed and the manager Alessandro
Martelli invested 2,000 of the 14,000 ducats. He would be paid of the
total profits not his fair 1⁄7th, but rather 1⁄5th).
The manager could, if he wished, attempt to start a rival bank, but he
could not legally claim to be part of the Medici Bank, since a right
to use that trademarked name came with the partnership. This measure
would turn out to be effective against ambitious dissident juniors
like Tommaso Portinari. However, even before the shares' profits were
paid out, any sums invested in the branch outside of an ownership of
shares were repaid at a set interest rate, sometimes leading to one
branch paying another for the latter's investment in the former.
Governors were given wide latitude in daily operations and in the
management of their seven or eight assistant managers, clerks,
cashiers, accountants, or couriers who lived and boarded at the
Medici-rented employee housing (although the managers had little
say in their selection, which was done by the
Florence bank), but
policy was set by the seniors, and often firmly. The
was, when first incorporated, strictly forbidden by the terms of the
partnership to lend money to temporal lords and kings. Policy
would generally be communicated to the branch managers during their
biennial or triennial trips to
Florence to report in person and
discuss important issues, or in the private letters and reports their
Bills of exchange
Usury was still banned by the Church in this period, with an
interpretation concisely expressed as Quidquid sorti accedit, usura
est ("Whatever exceeds the principal is usury"). So the Medici Bank
could not openly adopt the modern formula of promising to pay interest
on demand deposits and loaning out a fraction of the deposits at
greater interest to pay for the interest on the deposit, since a
depositor would gain revenue on the principal without any risk to the
principal, which would have made both parties usurers and sinners; nor
could they charge fees or other such devices.
Discretionary deposits were a partial way out, but the bank made most
of its money by selling holographic "bills of exchange". These bills
certified that a particular person or company had paid a particular
Medici branch a certain sum of money, as verified by the general or
assistant manager of that branch (who were the only ones allowed to
make out such bills). The bill instructed the recipient Medici branch
to pay back that sum in local currency, but not at whatever the local
exchange rate for the two currencies concerned happened to be at the
moment the bill was presented to be cashed in, but rather at the
exchange rate set when the presenting (or current owner; bills of
exchange could be sold and traded freely) person bought the bill of
exchange. That there was a difference in time was guaranteed by the
terms of the bill. A specific date could be set, but generally the
time between a bill was issued in one city and could be cashed in at
another was set by long-standing custom, or at usance. The usance
London was 3 months, for example.
A fictional but illustrative example: a merchant is traveling from
Florence to London. He buys a bill of exchange for 10 florins, with
the understanding that the
London branch will cash that bill at half a
pound to the florin, for a total of 5 pounds. If he reaches
discovers that the florin has become stronger against the pound, to
the point where a florin buys a whole pound, he takes a loss: instead
of the 10 pounds he could have gotten had he not bought the bill of
exchange, he will instead receive only 5. Similarly, if the florin
weakens greatly, he could well reap a windfall at the expense of the
Clearly the branches would want to try to maximize sales of bills of
exchange in the former situation, where the rate of the issuing
currency increases between the time of issuance and payment. This they
attempted to do with frequent letters between branches and paying
close attention to exchange rates. While close to loans, the element
of risk meant that this practice did not actually become usury, except
in the case of "dry exchange", where the moving around of money
was fictitious. With appropriate issuances of bills, branches could
move around money and actually make money. Similarly, they could be
fairly certain of a profit when a bill was issued in one of the
Italian branches because they could demand a premium of sorts for
being asked to deliver money in a far away place at however far in the
future usance set the maturation date. De Roover offers this real
Around July 15, 1441, the Medici of
Venice bought a bill on
the rate of 541⁄2 groats per Venetian ducat. Two months later,
when the bill matured, they received in
Bruges 541⁄2 groats for
each ducat. With the proceeds of this bill the
Bruges branch, acting
as [an] agent for the
Venice branch, bought a bill on Venice, payable
at the end of two months, at the rate of 511⁄2 groats per ducat.
The Medici of
Venice thus made a profit of 3 groats on each ducat over
a period of four months, since they received 541⁄2 groats and
paid 511⁄2 groats. If the exchange rate in
Bruges had been
541⁄2 groats instead of 511⁄2 per ducat, the Medici of
Venice would have broken even because they would have paid and
received the same number of groats for each ducat.
A controlling interest in a bottega di sieta (silk shop) and two
botteghe di lana (cloth manufacturing establishment) were further
possessions of the Medici (although run in partnership with men of the
necessary technical expertise). They paid by the piece and ran on the
putting-out system; for the wool especially it was a very complex
system, in which the early steps had to be done in the factories but
then the spinning of the wool was done by women outside the factory,
and the yarn collected to be brought to the weavers, who would then
turn it over to the dyers and finishers in the factory. Legally,
they were incorporated much the same as the branches, although unlike
the branches, the managers apparently had complete latitude in
The silk shop produced some of the finest silk wares, and were usually
sold to Florentine exporters or shipped to the branch in
Bruges as a
consignment to feed the Burgundian court's strong appetite for such
goods, or to the branch in
Milan to sell to the
Sforza court. The
cloth manufacturers similarly produced very high-quality pieces and
sold a good deal of their output to
Milan and the Sforzas.
While lucrative, the revenues realized from the three factories should
not be overemphasized: while the Medici often had invested more than
7,900 gold florins in the three factories in 1458, for example, the
sum invested in banks in 1458 was more than 28,800—and that figure
is low, for it excludes the
Rome branch serving the Pope, the Medici's
interest-bearing deposits in their branches, and also omits any
accounting of several years' profit which were inaccessible (since the
relevant partnerships had not yet been dissolved; this may seem to be
a flaw in the system, but it built up capital in a branch and allowed
it to lend out more than it had been incorporated with). Part of
the reason for maintaining these factories when the funds could have
been more profitably invested in the banks or trade could have been
social: it seems to have a bit of a Florentine tradition to run such
factories to provide employment for the poor—a social obligation, as
The first beginnings of the factories came in 1402. Giovanni di Bicci
began a partnership to run a wool factory with an experienced manager,
Michele di Baldo di ser Michele. This first wool shop was followed by
a second one in 1408, this time with Taddeo di Filippo. The first one
was ended in 1420; de Roover speculates that it was poorly run and so
not very profitable. Eventually another one was opened in 1439; the
original eventually came to an end between 1458 and 1469 for unknown
reasons ("probably because of the manager's death."). The last
shop was apparently being liquidated in 1480 amidst a general decline
in the Florentine textile industry, and does not appear again in the
tax records. The silk shop is known to have not existed before 1430;
the libro segreto ("secret records", the second set of books kept to
record partners' profits, and generally more accurate than the public
books, inasmuch as they state the real profits and losses and which
depositers were real) mention that they entered into a short
partnership with two silk manufacturers. When the partnership ended,
one of the two manufacturers became the manager of the silk factory
until his death in 1446 or 1447. The silk shop endured until 1480,
when the last descendant of that partner died.
Alum was a vital commodity because of its many uses and relatively few
sources. It was used in the wool preparing process to clean the wool
of grease and other substances, as a mordant which fixed the dyes in
the wool, in glassmaking, in tanning, and in a few other areas.
The Roman branch of the bank was not merely charged with the normal
deposit and bill of exchange business of the bank, nor with just the
mechanics of being "fiscal agents of the Holy See" (which entailed
handling and moving the papal revenues, paying out designated
subsidies to countries fighting the Islamic and heathen Turks and fees
etc., but the Medici did not actually collect the monies from sales of
indulgences or taxes due the Papacy), but also with managing a certain
piece of Papal property: the
Tolfa alum mines, an interest they had
acquired in 1473 in exchange for forgiving some of the Pope's long
overdue debts to the Medici, although they had a previous interest in
the "Societas Aluminum" (the company which farmed the mines after
their discovery in 1460 in
Tolfa near Civitavecchia; the agreement
forming this company had three partners, one of whom was the mines'
discover Giovanni da Castro, and was ratified by the pope on September
3, 1462) dating back to 1466, expecting that by breaking the
Turkish monopoly of alum imported from the Middle East (from the mines
in Asia Minor, at
Phocaea near Smyrna) they could reap far more
than their investments in the form of never to be repaid loans. The
Medicis immediately set about trying to eliminate the competition, of
which there were three main sources of large amounts of decent quality
alum—Turkey, the mines in Ischia, and the mines in Volterra.
The Pope's share of the revenue was to be used to finance campaigns
Hussites as well as the Turks, so buying Turkish alum was
declared by him to be utterly immoral in that it helped the infidel
enemy and hurt the faithful. Turkish alum was to be seized where it
They discouraged the alum mining near
Volterra in Italy, apparently
pushing its inhabitants to revolt against Florentine rule. At
Lorenzo's direction, the insurrection was brutally suppressed. The
mines reduced output safely under Florentine (and thus, Medici)
control. The sad outcome of this episode was that the sack was
entirely unnecessary: exploitation of this mine was abandoned in 1483
simply because the mine was so poor that it was unprofitable.
Ischia was under the ownership and protection of the King of Naples,
so the Medici and the company then exploited the
Ischia mines signing
a 25-year cartel agreement to restrict output and boost prices by only
selling at a fixed price. This cartel flagrantly violated the
teachings of the church, which tried to justify it by pointing to the
virtuous military campaigns it would finance. Regardless, the cartel
was not particularly successful. Turkish alum was never satisfactorily
suppressed (the Pazzi bank is known to have smuggled Turkish alum into
the Low Countries, for example), and the cartel was not well organized
with conflict between the Medici branches. The
Bruges branch and its
Tommaso Portinari were convinced that the papal mines were
simply producing far too much alum and glutting the market. They would
not accept more alum on consignment until the alum they then had had
Between this internal dissension, the dissension between cartel
partners, the constant flow of Turkish alum, and the organized
opposition of consumer groups, the alum interest was never as
profitable as expected. Regardless of its success, or lack thereof,
the alum interest ended after the Pazzi Conspiracy, in 1478, after
Pope Sixtus IV confiscated as much Medici property as he was
Rome branch of the Medici bank was a fully incorporated
partnership which technically did not reside in Rome. It was known
internally as "ours who follow the Court of Rome" (i nostri che
seguono la Corte di Roma), and only contingently resided in Rome
at times, as it followed the Papal court. Odd situations could occur,
Martin V resided in the Dominican friary of Santa
Maria Novella from February 1419 to September 1420, and when Pope
Eugene IV stayed there, the
Rome branch set up operations in Florence
itself, even though the
Florence branch was still in operation.
Rome branch was always busy. The Papal court was attended by
hundreds of minor officials, both ecclesiastical and secular, along
with their attendants. The needs of the Papal court were such that
there was a measurable rise in the frequency of money shortages
wherever the court went. This led to a need for banking services that
the Medici could provide. The various bishops, cardinals, and prelates
often held Church or private estates in far-flung states in and beyond
Italy. The revenues from these estates needed to be transferred to
wherever the Court was residing. A more practical reason was that
alternate investments generally took the form of real estate, and any
cardinal or bishop who invested overly much in real estate (which they
were not supposed to) or relied on income from Church lands might see
his investments confiscated under a new
Pope who might not favor him
so much or even turned over to a replacement. Accounts with the Medici
were kept secret and generally free from prying, ecclesiastical
eyes, especially in the case of discretionary deposits.
Persons not already at the court made use of the branch for cashing
letters of credit to make their pilgrimage or journey safer. Tribute
from the many dioceses and institutions the Church controlled needed
to be consolidated (but not collected by the Medici) and then safely
transmitted. That service, too, the Medici could provide to a degree,
though not in all areas. To carry out their services, the papal
bankers were often given considerable power: if a banker could not
collect the rents due the pope, they had but to complain and the
offending cleric would be summarily excommunicated (a threat aired in
1441 against the slow Bishop of Nevers), or they could block
appointments, as they threatened to do to John Kemp, whose nephew had
just been appointed to the bishopric of
London with their aid, if the
proper payments were not soon made.
Officially, the branch could not make its money by lending at a profit
to the Popes (who were lax in repaying the Medici), and taking in
many deposits at interest. The branch did this to some extent, but the
principal means of profit came from commercial transactions. Rather
than charging interest, "the Medici overcharged the pope on the silks
and brocades, the jewels and other commodities they
These payments were entirely one way, and not exchanges.
Italy generally produced little to nothing of value and so the balance
of trade was greatly unequal. It could be alleviated by the production
from northern silver mines, but in general the main commodity Italy
was willing to exchange specie for was English wool. The decline in
availability of English wool to be imported, and the general
concomitant economic problems, have been identified as one of the
contributing causes to the bank's decline.
At this time, the Popes frequently held great councils and
conferences. These meetings of eminent and wealthy individuals gave
rise to a need for advanced banking services, to such a degree that
the Medici were not the only Italian bank to open up temporary
branches wherever such councils were convened.
The close relation between the papacy and the branch declined over the
years, with the decline especially pronounced after 1464, with few to
no branch managers being selected to be the "depositary-general", the
official who was essentially the fiscal agent for the Apostolic
Chamber, or the Church's treasury.
Pope Sixtus IV would repudiate
the Medici's control of the alum trade and also his debts to them, as
well as seizing Medici property in
Rome following the Pazzi Conspiracy
in 1478. The Pazzi's interlocked businesses and banks had captured the
alum business after the Medici were removed from it, and were
supplying the depositary-general from their ranks, indicating that
they were trying to follow the Medici route of initially building up
their empire through papal custom. The papacy would eventually
agree to repay the debts, but did so extremely slowly; so slowly that
the branch manager Giovanni Tornabouni agreed to take stocks of alum
instead, despite the depressed market for alum. Tornabuoni would still
be in charge when 1494 came and the edifice of the Medici came
crashing down. Because the branch had been doing so poorly, it owed
more than it was due, so the Roman government was satisfied to allow
Tornabouni to assume the rest of the partnership's equity and
Diagram of the organization of the Medici bank, circa 1460.
Head of the firm
Sales: exporters and foreign branches
Purchases of raw silk
"Throwing" the silk
Done in a "throwing mill"
Boiling the silk
Done by scourers
Weaving the silk
Dyeing the silk
"Tintori seta"; dyers
Sales: exporters and foreign branches
Purchases of wool from importers and other Medici branches
Beaters (beating or "willeying")
"Fattire di pettine"
"Fattire di cardi"
Dyed in the wool
Dyed in the cloth
International banking and foreign trade
Banking in Florence
Branches beyond the Alps
approximately 6 factors (a term usually used for employees abroad),
approximately 4 factors, 1469
approximately 6 factors (1466) handling the usual factor duties of:
Banking and foreign trade
Letters, books, and errands
Branches in Italy
Alum mines in Tolfa
Handling transfers and management of Papal revenues abroad
Remitting subsidies abroad
Assistant manager (2)
List of banking families
^ The qualifier "during the 15th century" is important, as the Bardi
and Peruzzini banks of the 14th century are considered to have been
considerably larger in their prime; the smaller size of the Medici
bank is attributed to the poor business conditions of the fifteenth
century, which are sometimes one of the proffered causes for the
Medici bank's ultimate decline and failure. The Medici's relative lack
of ambition can be seen in how they never truly challenged the
Hanseatic League, established no branches in the Middle East, and did
not pursue business in and around the Baltic Sea. See de Roover
(1966), pp. 5–6, 8.
^ "A surviving fragment of the ledger of the
Bruges branch shows that
the books were carefully kept and that the double-entry system was in
use." De Roover (1948), p. 24. In an attached footnote, de Roover
identifies the erroneous belief that the Medicis did not use
double-entry as stemming from Otto Meltzing's mistake in Das Bankhaus
der Medici und seine Vorläufer (Jena, 1906) and repeated in Gutkind's
^ Goldthwaite (1987), p. 11.
^ de Roover (1966), pp. 35–36.
^ de Roover (1966), p. 39.
^ de Roover (1966), p. 37.
^ de Roover (1966), p. 3.
^ de Roover (1966), pp. 41–42.
^ de Roover (1966), pp. 48, 50.
^ de Roover (1966), pp. 43–45.
^ de Roover (1966), pp. 48–49.
^ de Roover (1966), pp. 52–53.
^ a b c Goldthwaite (1987), p. 15.
^ de Roover (1966), p. 106.
^ de Roover (1966), pp. 54–56.
^ de Roover (1966), pp. 58–59.
^ de Roover (1966), pp. 59–60.
^ de Roover (1966), p. 62.
^ de Roover (1966), p. 63.
^ "In Lyons, for example, the Medici company was no larger than the
Capponi, and there were almost a hundred and forty other Florentine
firms that operated there at one time or another in the last third of
the fifteenth century." Goldthwaite (1987), pp. 20–21.
^ a b de Roover (1966), p. 74.
^ Goldthwaite (1987), p. 34.
^ de Roover (1943), p. 69.
^ de Roover (1966), p. 328.
^ de Roover (1966), pp. 330–340.
^ de Roover (1948), p. 63.
^ de Roover (1966), p. 346.
^ de Roover (1966), p. 348.
^ de Roover (1966), p. 349.
^ Goldthwaite (1987), p. 9.
^ Goldthwaite (1987), p. 16.
^ de Roover (1966), p. 366.
^ de Roover (1966), p. 358.
^ de Roover (1966), pp. 360–361.
^ The wars between
Venice had brought down the business
of this once high-flying branch of the Medici bank. Part of the
problem were the large loans made to Venetian merchants which worried
Piero and the merely mediocre performance of Alessandro Martelli's
successor, Giovanni Altoviti. Sassetti eventually persuaded Piero to
simply shut down the
Venice branch rather than try to find a better
manager, though in 1471 there was an abortive attempt to restart it,
which only lasted a little over 8 years. See de Roover (1966), pp.
^ de Roover (1966), p. 149.
^ "How to settle Italian claims on the
Low Countries created a real
problem that grew more acute as the century progressed. It eventually
engendered a crisis which not only brought about a shrinkage in the
volume of international trade, but also had an adverse effect upon the
prosperity of the Italian banking houses. It was undoubtedly a potent
factor in causing the downfall of the Medici branches operating in
Bruges and London." de Roover (1966), pp. 317, 360-362.
^ According to
Philippe de Commines
Philippe de Commines in his Mémoires, as mentioned in
de Roover (1948).
^ de Roover (1948), p. 10.
^ de Roover (1943), p. 83.; the studies referenced are Earl Hamilton's
Money, Prices and Wages, in Valencia, Aragon, and Navarre, 1351–1500
(Cambridge, Massachusetts, 1936) and "
Silver Production in Central
Europe, 1450–1680", John U. Nef (volume XLIX of 1941, pages
^ de Roover (1966), p. 16.
^ de Roover (1966), pp. 370–371.
^ Goldthwaite (1987), p. 12.
^ Goldthwaite (1985), p. 26.
^ de Roover (1966), p. 365.
^ Goldthwaite (1987), p. 33.
^ a b de Roover (1966), p. 86.
^ As summarized in de Roover (1948), p. 59.
^ de Roover (1966), p. 371.
^ see de Roover (1966), pp. 228, 292–293. The Florentine tavola
operated with 5% reserves, and the Datini bank apparently did
likewise. In its heyday, the Lyons branch of the Medici bank was even
more extreme: on deposits of approximately 108,000 écus, a reserve
was kept of only approximately 2,000, or not even 2%! While these
reserve figures are drawn from unreliable castato records, Goldthwaite
(1985, p. 24) mentions that one banchi a minuto he studied frequently
held less than 100% reserves and that the Strozzi bank frequently
records less than 50% reserves.
^ de Roover (1948), p. 62.
^ de Roover (1966), pp. 366–367.
^ de Roover (1948), xiii.
^ de Roover (1966), p. 4
^ a b de Roover (1966), p. 15.
^ Specifically, the statues stated that they were "to be free and
absolved from any further censure, penalty, or exaction." de Roover
(1966), p. 14.
^ Goldthwaite (1985), pp. 19–20.
^ a b Goldthwaite (1985), p. 25.
^ "...and since the bill of exchange could be exploited as a major
instrument for the extension of credit—being one of the subterfuges
by which capitalists could evade usury charges—this activity led
merchants into the business of lending money. Banks' profits,
therefore, came primarily from exchange operations, legitimate or
otherwise, real or fictitious." Goldthwaite (1987), p. 10.
^ de Roover (1948), p. 3; Goldthwaite (1987, p. 10) says: "Like the
others, it was not a bank in the modern sense of the term. ... The
company's chief business was foreign exchange, an activity that was
grafted on to international commerce. ... It effected exchange and
transfer of credit for its clients.
^ de Roover (1948), p. 31.
^ Goldthwaite (1987), p. 23.
^ Administratively, they were split between branches beyond the Alps
and branches within
Italy (which did not exist as a discrete political
unit at this time), all under a ministro ("general manager" of the
banking units, but not the factories) who himself reported to the head
of the firm. See de Roover, (1948), p. 12.
^ "Correspondence was the only means by which the senior partners and
the main office of the Medici bank kept in contact with the branches,
since the slowness of transportation prevented frequent consultation
with the branch managers. Only a small fraction has come down to
us...This published material is made up exclusively of letters sent to
Florence by the
London branches. There seem to have been
two kinds of letters: the lettere di compagnia or business letters and
the lettere private or confidential private letters. The lettere di
compagnia were addressed to the firm or banco in Florence. They dealt
chiefly with current business affairs: notices concerning bills drawn
or remitted, information concerning shipments or the safe arrival of
consignments, advices concerning debits and credits, and similar
details...their details did not have to be concealed.....The lettere
private were not addressed to the firm, but personally to Cosimo or
other members of the Medici family. A few lettere private are
congratulatory messages regarding family events or deal with purchase
of tapestries for members of the Medici family...The same is not true
of the other lettere private wherein the writers discuss business
prospects, political events, important problems of management, and the
financial condition of the branches." de Roover (1948), pp. 22–23.
^ Medici: Godfathers of the
Renaissance . Medici . God's Bankers PBS
^ a b de Roover (1948), p. 4.
^ de:Gherardo Bueri
^ de Roover (1948), p. 7.
^ de Roover (1966), p. 251.
^ de Roover (1948), p. 53.
^ But not in their personal lives. Some partnership agreements were
extremely restrictive of the junior partner's life: the standard 1456
partnership agreement for Tani to take over the
Bruges branch forbade
him to leave
Bruges for anywhere except the fairs of
Bergen-op-Zoom, and business trips to London, Calais,
allowed only if they were truly necessary. Tani was not to entertain
any women or boys, accept no gifts above one pound groat, spend no
more than 20 pounds groat a year for living expenses, conduct no
private business, engage in no insuring, trust only certain merchants,
spend only up to 500 pounds groat for wool or cloth a year etc. Even
after the partnership expired, he would have to remain in
full 6 months to tidy up affairs. de Roover (1948), pp. 15–17.
^ de Roover (1966), p. 297.
^ "Giovanni also banned loans to princes and kings, who were
notoriously bad investments." Also, "Under no conditions was the
branch manager allowed to sell foreign exchange on credit to lords
spiritual or temporal." de Roover (1948), p. 16.
^ An example of an 11th-century
Genoa dry exchange is given here:
"Archived copy". Archived from the original on 2006-08-21. Retrieved
2006-08-06. The first party gave the second a certain sum of
gold, and the second promised to return the gold in Constantinople,
with a small penalty if he failed to do so; neither intended to
travel, and the penalty was in effect interest.
^ "Moreover, exchange quotations applied to time bills payable at
Italy and London, usance was three months in either
direction. As a result, the exchange rate was lower in
Florence or Venice. Of course, a
London banker offered fewer
sterlings for having to wait before receiving a ducat in
Venice or a
florin in Florence. For the same reason, the banker in
unwilling to part with a ducat or a florin unless he received in
London a greater quantity of sterlings. In other words, economic
equilibrium required that the exchange rate for usance bills be higher
Florence (or Venice) than in London." de Roover (1966), p. 113.
^ de Roover (1948), p. 36.
^ a b de Roover (1948), pp. 26–28.
^ de Roover (1966), pp. 169–170.
^ de Roover (1948), pp. 29–30.
^ "It was an old tradition among Florentine families, when they owned
extensive landed estates, either to control or to manage a wool or
silkshop in order to provide work for the 'poor'." de Roover (1966),
^ "Like most Florentines of their class, the Medici invested in
partnerships for the production of cloth, but the amount of capital
they put in this sector of the economy was inconsequential."
Goldthwaite (1987), pp. 21–22.
^ de Roover (1966), p. 167.
^ de Roover (1966), pp. 168–169.
^ a b de Roover (1966), p. 152.
^ de Roover (1948), p. 45.
^ de Roover (1966), p. 153.
^ de Roover (1966), p. 157.
^ de Roover (1966), p. 194.
^ "As pointed out, the Medici promised their customers to keep secret
the amount of deposits made with them." de Roover (1966), p. 199.
^ "Often papal agents would have to rely on causal means such as
traveling merchants, pilgrims, or students who would undertake to
carry money or goods to the nearest banking center. Transfers from
Poland sometimes took six months of more, whereas funds received in
London were made available in
Rome within a month or less by
a simple letter of advice. The bankers provided expeditious and
efficient service." de Roover (1966), p. 195.
^ de Roover (1966), p. 201.
^ "As for the Pope, Martin V, it was hoped he would not ask for more,
as he had already borrowed enough. On the contrary, he was expected to
pay off some of his indebtedness, unless war broke out with the
Kingdom of Naples." de Roover (1966), p. 204.
^ de Roover (1966), p. 199.
^ "The presence among the assets of silver plate for an amount of more
than 4,000 florins reveals at any rate that the
Rome branch dealt more
or less extensively in this product for which there was a demand among
the high churchmen of the Curia who did a great deal of entertaining
and liked to display their magnificence." de Roover (1966), p. 205.
^ a b Goldthwaite (1987), p. 32.
^ de Roover (1966), pp. 223–224.
de Roover, Raymond Adrien (1948), The Medici Bank: its organization,
management, and decline, New York; London: New York University Press;
Oxford University Press
Oxford University Press (respectively) -(Largely a reprint of
three articles de Roover published in The Journal of Economic
de Roover, Raymond Adrien (1966), The rise and decline of the Medici
Bank: 1397–1494, New York City; Toronto: W. W. Norton & Company,
Inc.; George J. McLeod Limited (respectively),
LCCN 63-11417 -(the product of three years research in the
Florentine archives, to improve the author's previous work; it was
previously released in 1963, not by the Norton Library but by Harvard
Goldthwaite, Richard A. (February 1987), "The Medici
Bank and the
World of Florentine Capitalism", Past & Present, Oxford University
Press for the Past and Present Society, 114: 3–31,
doi:10.1093/past/114.1.3, ISSN 0031-2746
Goldthwaite, Richard A. (1985), "Local banking in Renaissance
Florence", The Journal of European economic history, 14: 5–55,
Florence Edler (October 1943), "
Francesco Sassetti and the
Downfall of the Medici
Banking House", Bulletin of the Business
Historical Society, The President and Fellows of Harvard College, 17
(4): 65–80, doi:10.2307/3111278, JSTOR 3111278
Parks, Tim (2005), Medici money: banking, metaphysics, and art in
fifteenth-century Florence, W. W. Norton & Company, Inc.,
Grunzweig, Armand (1931), Correspondance de la filiale de
Medici, Brussels, OCLC: 1973038 - (A compilation of
correspondence between the Medici bank branch at
Bruges and the home
branch in Florence.)
Sieveking, Heinrich Johann (1905), Auswärtige handelspolitik,
Leipzig, LCCN 05-23618
von Reumont, Alfred; Harrison, Robert (1876), Lorenzo de' Medici, the
Magnificent, London, OCLC: 576516
Holmes, George (1968), "How the Medici Became the Pope's Bankers", in
Rubinstein, Nicolai, Florentine Studies: Politics and Society in
Renaissance Florence, 1, London: Northwestern University Press,
pp. 357–380, OCLC: 929397 .
Rubinstein, Nicolai (1982), "The Letters of
Lorenzo de' Medici
Lorenzo de' Medici and of
the Medici Bank: Problems of Authorship", Rinascimento, xxii,
pp. 115–164 .
Brown, Alison (1979), "Pierfrancesco de' Medici, 1430–1476: A
Radical Alternative to Elder Medicean Supremacy?", Jl. Warburg and
Courtauld Insts., xlii, pp. 81–103, doi:10.2307/751086 .
Kohn 2001, "Payments and the Development of Finance in Pre-Industrial
deRoover, Raymond, "The Development of
Accounting Prior to Luca
Pacioli According to the Account-books of Medieval Merchants", in A.
C. Littleton and B. S. Yamey (Eds.), Studies in the History of
Accounting (Richard D. Irwin, 1956), pp. 114-174.
House of Medici
Lords of Florence
Cosimo il Vecchio
Piero "The Gouty"
Lorenzo il Magnifico
Piero il Fatuo
Giovanni (Leo X)
Giulio (Clement VII)
Alessandro "The Moor"
Dukes of Florence
Alessandro "The Moor"
Grand Dukes of Tuscany
male line: Giovanni (Leo X)
Giulio (Clement VII)
Alessandro (Leo XI)
female line: Luigi de' Rossi
Vincenzo II Gonzaga
Bishops and archbishops
Giovanni dalle Bande Nere
Genealogical tables of the House of Medici
Poggio a Caiano
Casino Mediceo di San Marco
Palazzo Medici Riccardi
Palazzo Medici Tornaquinci
Palazzo delle Vedove
Palazzo Medici di Ottaviano
Fountains and gardens
Villa di Pratolino
San Piero a Sieve
The Chapel of Medici di Gragnano
Painters, sculptors and architects
Leonardo da Vinci
Antonio del Pollaiolo
Jacopo della Quercia
Poets and other literary figures
Humanists and philosophers
Pico della Mirandola
Emilio de' Cavalieri
Medici coat of arms
Crown of the Grand Duke of Tuscany
Order of Saint Stephen
Venus de' Medici
Stories set to music: "opera"
Banking in Italy
Bank of Italy
European Central Bank
Cassa Depositi e Prestiti
Banca del Mezzogiorno – MedioCredito Centrale
Istituto per il Credito Sportivo
Banca Mediocredito del Friuli Venezia Giulia
Investitionsbank Trentino Südtirol – Mediocredito Trentino Alto
IRFIS – FinSicilia
(Supervised by ECB)
Banca CR Firenze
Banco di Napoli
Nationwide and multi-regional banks
(Supervised by ECB)
Banca Popolare di Milano
Banca Monte dei Paschi di Siena
MPS Capital Services
Banco di Sardegna
Banca di Sassari
Banca del Monte di Lucca
Banca Popolare di Sondrio
(total assets €30b to €8b)
Banca Popolare di Bari
Cassa di Risparmio di Orvieto
Banca Sella Holding
Banca Patrimoni Sella
Banco di Desio e della Brianza
Banca Popolare di Spoleto
Banca di Asti
Südtiroler Volksbank – Banca Popolare dell'Alto Adige
Südtiroler Sparkasse – Cassa di Risparmio di Bolzano
regional cooperative bank
Banca Agricola Popolare di Ragusa
Banca Popolare di Puglia e Basilicata
Banca Popolare di Cividale
Cassa di Sovvenzioni e Risparmio fra il Personale della Banca d'Italia
Banca Popolare Pugliese
Banca di Piacenza
Banca di Credito Popolare
Banca Popolare del Lazio
Banca Popolare del Cassinate
Banca Popolare Valconca
Banca Popolare Etica
Banca Popolare Sant'Angelo
Sanfelice 1893 Banca Popolare
Banca Popolare di Lajatico
Banca Popolare di Fondi
Banca Popolare del Frusinate
Co-operative banks (BCC)
and central banks
Istituto Centrale delle Casse Rurali ed Artigiane
Raiffeisen Landesbank Südtirol – Cassa Centrale Raiffeisen
Cassa Centrale Banca - Credito Cooperativo del Nord Est
List of member of Federcasse
Fondo di Garanzia dei Depositanti del Credito Cooperativo
Regional retail bank
Cassa di Risparmio di Ravenna
Lucca e del Tirreno
Banca di Imola
Banca di Cambiano
Cassa di Risparmio di Cento
Cassa di Risparmio di Volterra
Cassa di Risparmio di Fossano
Banca del Fucino
Cassa di Risparmio di Fermo
Banca del Piemonte
Banca CR Savigliano
Bank of China
Banca Nazionale del Lavoro
Crédit Agricole Italia
Cassa di Risparmio di Cesena
Cassa di Risparmio di San Miniato
Crédit Agricole Corporate and Investment Bank
Deutsche Bank S.p.A.
Bank of Saint George
Banco di Santo Spirito
Istituto Bancario San Paolo di Torino
Mount of piety
List of banks in Italy
Associazione Bancaria Italiana
Associazione di Fondazioni e di Casse di Risparmio S.p.A.
Associazione Nazionale fra le Banche Popolari
Fondo Interbancario di Tutela dei Depositi
Italian National Res