medici money

Having holidayed in Florence and seen the Medici palaces and treasures, MLW quickly read Tim Parks’ run down on the history of Medici banking and power in Florence. Then she handed it on to me.

Being a somewhat critical soul, I have some things to say about the book. My main gripes are that Parks adopts an arrogant tone, and that he constantly relates the banking and political history he’s recounting to contemporary homosexual figures. Usually with little relevance, and that’s my gripe. Write a book about Florentine banking, or one about Florentine homosexuality, but don’t force the two together.

Anyway, moving on to the interesting stuff… I wanted to highlight three things I’ve learned from the book so far.

The key thing about operating a bank in Catholic Italy in the 15th century was that usury (charging interest on money lent) was classed as a sin by the Church. So, one of the ways the bank made money was through exchanges across Europe. For example, 1000 florins borrowed in Florence to be paid out in England was lent at 40p to the florin (40 000p). It was then assumed that the period of lending was the accepted standard time it took to travel from Florence to England, three months. The merchant draws the pounds in England and uses them to buy wool. The banker in England then writes the replayment slip, assuming another three months until repayment in Florence, and the florins are now valued at 36p each. So, the merchant repays, in Florence, 40 000p/36 = 1111 florins. That’s 11% profit in six months for the Medici bank, and actually no money has physically moved between banks. Very neat. This system of exchanges was also part of how the bank as holding entity balanced its books between its various branches around Europe without having to physically move coin too often. The imbalance was created by so much money flowing into Rome as tithe, and so many goods flowing out of Italy into Northern Europe and netting cash when sold there.

The next thing I learned (and will give a sketchy recounting of here) is how the government of Florence was consitutited. This is actually quite complicated, and as with the exchange concept, Parks does a good job of leading one through it all and towards some dim light at the end of the tunnel. The most interesting thing to learn, though, I think, is that the governing council of Florence was drawn by lot (chits in leather bags representing the key guilds) every two months! So, every two months, you could be called to govern, which meant leaving your home and business and moving into the Palazzo del Signoria to wield absolute power for a short time. Crazy but brilliant, in its way. Of course, all sorts of machinations went on behind the scenes and the history of the Medici at this time is one of how they used their money made in banking to indirectly gain control of government.

Finally, this morning on the train I reached a point in the story where the second of five Medici’s Parks is interested in has lived his life and dies. He is Cosimo, son of Giovanni de Bicci, brother of Damiano (who died at birth), and father of Piero. He had built on the work of his father and the bank was flourishing, and he ruled Florence unofficially. Parks relates how Cosimo, who suffered from gout, spent most of his life expecting to die quite soon. This gave him great drive to see things completed before he expected to die, and because he kept not dying he completed a lot of things! But as he grew older the gout grew worse until he would weep when he had to be moved. Ruling a pan-European banking network that moved money and goods all over Europe, Cosimo struggled to move between rooms in his palazzo and had to be carried up stairs. He retreated to the windowless and frescoed chapel at the heart of his palazzo (which is like a fortress – we kept bumping into it in Florence), and dealt with the great men of his age in a dim religious light, the backdrop a fresco of the procession of the three Magi, featuring Cosimo and his son as two of them, with wild animals accompanying them. When he died, he was buried under the floor of San Lorenzo, the family church, in the very centre of the nave.