The Ugly Renaissance (28 page)

At this time, the economies of the city-states of northern Italy were just beginning to take off. The trade in cloth and grain was beginning to expand, and regular markets were springing up around Europe. Italian merchants were soon trading not only with other cities on the peninsula but also with states far beyond, from England and the Low Countries to Egypt, Cyprus, and even Kievan Rus’. Indeed, as
Francesco Balducci Pegolotti explained in the
Pratica della mercatura
(ca. 1335–43)—perhaps the earliest commercial handbook of its kind—a serious trader could not expect to get anywhere in life without a working knowledge of
at least five or six different languages and a good familiarity with the types of goods that were traded in a score of different ports and markets around the Mediterranean.

But even though trade was starting to boom, commerce was obstructed by one very serious practical difficulty. It was a matter of money. Although today paper money, credit cards, electronic bank transfers, and established rates of exchange make it possible to execute a transaction quickly and easily anywhere in the world, none of these things existed in the thirteenth century. Coin and bullion were the only mediums for monetary exchange, and since each city had its own coinage, a huge variety of currencies was in circulation, the exchange rate between which was a matter of guesswork. Simply going to the market to buy a few odds and ends could be a chore when you had to carry around bundles of heavy coins and argue with the stallholder about the value of the strange collection of foreign coins you had in your purse. High-value business across larger distances could be even more complicated. Obliged to carry cumbersome chests of coins or stacks of bullion on long journeys, a tradesman ran the risk not only of being robbed en route but also of being slowed down by the sheer weight of the money he was carrying. Even if a merchant arrived at his destination in good time and with his capital reserves intact, he was in danger of losing a good deal of money in negotiations that—by their very nature—involved working in a multitude of unfamiliar currencies.
Although Pegolotti’s
Pratica della mercatura
included a careful survey of the relative fineness of some of the more common gold and silver coins in use around the Mediterranean, such tables were simply inadequate to guard against the shifting and uncertain character of the financial world.

Two Medici, Ugo and Galgano, set up shop as small-time moneylenders as early as 1240, but it was the fact that a certain Ardingo and his siblings opened a money-changing business in the Mercato Vecchio a few decades later that showed they knew which side their bread was buttered on.
It was this profession that offered the only real solution to the problems of trade, and it was as
money changers—not as moneylenders—that the great merchant banks started life.

Initially, money changers like the Medici acted simply as agents of financial order in a world of monetary chaos. Usually operating out of a small shop near a city market, they would exchange a confusing mishmash of different currencies for a roughly equivalent value in uniform
coinage. It was a bustling, busy way of life. Although painted some two centuries after the Medici brothers opened their shop in the Mercato Vecchio,
Marinus van Reymerswaele’s
The Moneychanger and His Wife
(1539; Prado, Madrid) gives a good impression of the sorts of practices that made up the money changer’s trade (
Fig. 19
). Surrounded by bags of money and overflowing piles of paperwork, the money changer is shown weighing coins carefully to test their fineness and checking his values against the manual in his wife’s hands. It was a long and laborious process, but people like the Medici were able to console themselves that they could make plenty of money out of transaction charges and the massaging of fluid rates of exchange.

As trade became more brisk and merchants needed to carry larger volumes of cash around with them, these money changers started to allow people to deposit sums of money with them for safekeeping. The primitive current accounts that were thus created could be treated in much the same way as today. Money could be paid in by the account holder or his debtors and paid out according to the holder’s instructions.
This all made trade a good deal easier, but since it was initially founded on face-to-face interactions across a banking table, there was still a little way to go before the serious problems of large-scale international trade could be tackled and before significant profits could be made.

The first truly dramatic innovation was the
bill of exchange. Having emerged in
Genoa toward the end of the twelfth century, this allowed merchants to avoid the dangers of transporting large quantities of coin/bullion and facilitated international currency exchange. If a merchant in Florence (the payer), for example, wished to make a payment to someone in Bruges (the payee), he would hand over the necessary sum of money to the Florentine branch of his chosen bank, plus a certain commission, and would receive a bill of exchange for that value in return. The Florentine payer would then send this bill to the payee in Bruges, who could redeem it for the agreed sum in the local currency from the Bruges branch of the same bank or its factors. Although there were obviously risks involved, the banker made his profit on the basis of the rate of exchange that was agreed. A closely related, and similarly profitable, device was the letter of credit, which functioned much like a modern traveler’s check.

The second important profit-generating development was the interest-bearing loan. This was facilitated by the prior evolution of
deposit accounts (which could be encouraged by banks offering interest on savings) and the fact that bills of exchange also allowed the banker a “window” within which he had access to the sums of money being transferred. With a substantial amount of raw cash on hand, the banker could use this capital to offer substantial loans for a set period of time, for a set rate of interest. Sometimes a loan could be offered against a surety, such as jewelry, but often it was simply agreed on the basis of trust.

There is little doubt that the Medici cottoned on to the potential of these innovations fairly quickly, and with the profits they made from bills of exchange, letters of credit, and interest-bearing loans, they be- gan to invest in property and the wool trade in the first half of the fourteenth century. Before long, being “like a Medici” became a byword for affluence among the shopkeepers of the Mercato Vecchio.

T
HE
A
RT OF
A
TONEMENT

But as the Medici began to make their money, they ran up against a serious challenge. Although there were few—if any—practical obstacles to the profits that could be made from early forms of banking, the practices intrinsic to the industry raised some troubling moral issues.

The Church had long regarded the avaricious pursuit of wealth as one of the most troubling impediments to Christian virtue. Christ had, after all, warned that it was easier for a camel to pass through the eye of a needle than for a rich man to enter the Kingdom of Heaven and had urged all those who wished to follow him to give away all they had. This, indeed, had been the inspiration for
Saint Francis of Assisi’s celebration of poverty as the only true calling for a devout Christian in the early thirteenth century. Facilitated by both the success of the mendicant orders and the growth of trade, such a line of thought struck a ready chord in the commercial centers of early Renaissance Italy. Equipped with a burgeoning commercial sector and a certain suspicion of wealth itself,
Florence provided an ideal setting for the reception of Franciscan ideals into the mercantile consciousness, and it was in this spirit that in the early fifteenth century Poggio
Bracciolini devoted an entire treatise to condemning avarice, and
Cristoforo
Landino penned a savage verse against covetousness.

But if the pursuit of wealth was bad enough in the abstract, banking
itself rapidly came to embody the very essence of avariciousness. If ordinary traders were susceptible to greed, bankers were plainly wedded to it by virtue of the fact that they lent money for a profit.
This practice of “usury”—lending money at interest—had been identified as a mortal sin in the New Testament and had been expressly forbidden by the Church since the Council of Nicaea in 325. The reason for this was that in demanding interest, bankers were guilty of “charging” people for nothing. “
To take interest for money lent is unjust in itself,” claimed
Saint Thomas Aquinas, “because this is to sell what does not exist, and this evidently leads to inequality, which is contrary to justice.” Usury was, in other words, basically the same as theft. And those who made the most money of all out of merchant banking were those whose souls were most heavily stained with sin.
This, indeed, was precisely the line wheeled out in Florence in the sermons of the fiery Franciscan preacher San
Bernardino of Siena (1380–1444).

The awful wrongs that the Church associated with banking were hammered home time and again in the literature of the early Renaissance. Indeed, literary works could be more forceful even than theological treatises in their condemnation of usury.
In the
De avarita
, for example, Bracciolini went out of his way to condemn usury as the archetype of avarice and even attacked the notoriously vicious Bernardino of Siena for not making his listeners fully aware of the “horror of such a crime.” None, however, harbored a more virulent hatred of interest-bearing loans than Dante.
In the
Inferno
, Dante described the fate of usurers in vivid detail. Wearing money sacks bearing heraldic crests around their necks, “dishonest” moneylenders are depicted squatting on the bottommost rim of the seventh circle of Hell, vainly trying to fend off the flames like dogs pawing at fleas. Among their number, Dante spied representatives of two noted Florentine banking families—the Gianfigliazzi and the Obriachi—and paused to speak to the wailing figure of
Reginaldo degli Scrovegni, a Paduan usurer who predicted the imminent arrival of his compatriots
Vitaliano del Dente and
Gianni Buiamonte of Florence.

The bankers of the early Renaissance were deeply affected by the harsh line their contemporaries took against usury. The possibility of spending an eternity in Hell was a very real fear, but even if their sins were not sufficient to merit perpetual damnation, there was still good reason to be afraid.
Only a little before the explosion of Italian
commerce, theologians had developed a full-fledged conception of Purgatory as the antechamber of the underworld, and it was generally accepted that it was in this place of suffering and torment that any sins that had not been atoned for would be punished. The threat of Purgatory was enough to strike fear into the heart of even the most skeptical of bankers. In later years,
Giovanni di Bicci de’ Medici was to seek guidance on this matter from prelates, and his son Cosimo was sufficiently troubled by the perceived immorality of usury to engage in regular, protracted discussions with friends in holy orders about how best to expunge the banker’s sins.

The sacraments of the Church offered the most obvious solution. Whenever a banker was at death’s door, his family—or the doctor in attendance—would send for the priest. The dying man would then confess his sins, and, provided he was contrite, the priest would then give him extreme unction, wiping his soul clean for its passage into the afterlife. It was simple and—in theological terms—effective. The only problem was, however, cynicism. Although atheism was unthinkable, bankers raised in the Catholic faith were nevertheless apt to sneer at the very idea of making an honest confession.

In the
Decameron
,
Boccaccio gleefully tells of how a Pratese notary named Ser Cepperello is unexpectedly struck down by a fatal illness in Burgundy. A deeply sinful man, given to cheating, stealing, drinking, gambling, and whoring, Cepperello has enough faith to recognize that he needs to give a deathbed confession but is shrewd enough to realize that a truthful confession would give Italian merchants a bad name in the Low Countries. Without hesitation, he summons a friar noted for his holiness and “confesses” to a pack of lies that make it seem that butter wouldn’t melt in his mouth. Much impressed with his “virtues,” the friar duly gives Cepperello extreme unction. So successful are Cepperello’s lies that after his death, the naive friar ensures that he is celebrated as a saint, much to the amusement of Boccaccio’s
lieta brigata
.

But this left bankers with a problem. If the idea of making an honest confession was laughable, how could the sin of usury be expiated? How could they reconcile their appetite for profits with their desire to stay out of Purgatory?

Bankers were nothing if not practical men. If confession and extreme unction were not to be relied upon, they could at least put their faith in cold, hard cash. Although he might not be able to talk his way through
the Pearly Gates, a banker could at least hope to buy his way into Heaven.

At the same time as a priest was called to a banker’s deathbed, a notary would also be summoned. His task was to draw up a final will at the dying man’s bedside, and in the will lay another great hope for last-minute salvation. Most wills—especially those of bankers and merchants—included clauses (known as
mala ablata
) which stipulated that a certain sum of money should be given to the Church in proportion to the sins committed. In return, it was expected that priests, monks, friars, and even ordinary worshippers would offer prayers for the soul of the deceased and thus help to rescue him from the sufferings of
Purgatory.

This practice was later condemned in no uncertain terms by Fra
Giovanni Dominici (d. 1420) and Antonino Pierozzi, the future archbishop of Florence, but the idea of bequeathing money in restitution for the sin of usury proved remarkably popular, and the greater part of bankers took advantage of the option to insure themselves against their wicked ways. A typical example is found in the will of
Michele di Vanni Castellani, which was drawn up in Florence in 1370. Although he claimed he had not obtained any illicit income, Michele added: