This summary is taken from a book titled The Dawn of a New Era 1250-1435 written by Edward P. Cheney, the first book in the 20-volume historical series The Rise of Modern Europe. The original copyright was in 1936; this particular copy is dated 1971, so the monetary figures in “modern value” are not accurate.
Chapter Two: Merchant Princes and Bankers
Merchant Moneylenders:
Capitalism entered into the life of Europe earlier than is commonly realized. Large-scale manufacturing was seen, especially in Italian and Flemish cities. Merchants and manufacturers were also the moneylenders, generating more money for them. In earlier times successful merchants invested their money in landed property in growing towns and became a patrician class living on their rents and on the gains of civil office. Eventually trade and banking became separate.
Tiedermann of Limburg was a German who traded goods with England, where he acquired wool and other products. He had a membership in the Steelyard and house on Thames Street in England, where he stayed from 1346 to 1360 and became wealthy. He and other Germans lent money to English nobles, citizens and even to the crown. He farmed certain of the taxes and took over the administration of the royal tin mines. Tiedermann had a home in Cologne and ran a wholesale wine business. He became the wealthiest property holder in that town and also had land in Andernach.
Nicholas Bartholomew of Lucca was a contemporary of Tiedermann. He also lived in London, exporting wool in exchange for silk and other products. He was fined for smuggling and brought antagonism from native English mercers. He also loaned money to English monarchy.
Successive mayors of London, like Sir John Pultney, the cloth merchant who was mayor four times between 1331 and 1337, advanced money to the king. By way of compensation Pultney was allowed to export wool during an embargo without paying duty. He acquired much landed property in both the city and county and built a magnificent house.
Later in the 14th century Sir John Philpot, an importer of spices, sugar and other items lent to the king the equivalent of half a million dollars and to fit out at his own expense a squadron with 1,000 men to drive a predatory French fleet away from the English shore.
Sir Richard Whittinton was lord mayor in 1398, 1406 and 1419. He was an importer of silk, velvet and damasks for the household of the Earl of Derby (who became Henry IV), and also furnished cloth of gold and other mercery for the bridal outfits of Henry’s daughters. Whittinton loaned money to a few of his English kings, provided for the building of many public buildings and established a hospital and college. He also was given charge of the rebuilding of the nave of Westminster Abbey (though paid for by the king).
Whittinton became the subject of a whole literature of drama, chapbook and ballad. He was the “Dick Whittinton” of nursery stories who sent the cat, which he had bought for a penny to kill the rats in his garret and which was his only possession, as his investment in the cargo of his master’s good ship “Unicorn” on a voyage to Barbary. The sale of the cat to a potentate who was plagued by rats and mice for more than all the rest of the cargo together, the Bow Bells that rang, “turn again, turn again, Whittinton” with their prophecy of his three mayoralties of London; and, when he became rich, his fine gesture of burning the bonds that showed the king’s debts to him, all date from only the 17th century, but have no real connection to Whittinton.
Regnault d’Auriac of early 14th century Montpellier, France had branch offices in Figeac, Paris and Bruges and left to his heirs something akin to three quarters of a million dollars in modern value [that figure probably needs updating].
One of his Paris agents, Pierre Gilles, an importer of sugar and other Mediterranean goods, who with a jeweler, Peter Barres, supported Etienne Marcel, himself the richest merchant of his time in France, in the rising of the bourgeoisie of Paris against the Dauphin in 1358-8. Gilles fell with Marcel and was beheaded.
Another rich merchant was Liutfried Muntprat of Constance, said to be the richest man in south Gemany, left a fortune of 3,000,000 [that figure probably needs updating].
The Bankers:
There was also a class of genuine bankers. Modern banking is a result of four roots: from the excess profits of trade; from the business of money-changers who bartered coin of one country for that of another; from the transfer for a consideration of money from place to place or its safe-keeping; from the needs of kings, popes and others for money.
In England foreign merchants acted as moneychangers under royal license. At every fair and every point of international trade the establishments of moneychangers existed. The Taula di Cambi at Barcelona was the first bank of deposit in Europe. The Gran Tavola was a group of Sienese bankers who lent money to the pope, to cardinals and others throughout Europe. Italy was the prominent location for banking, due to its history, early economic development and the papal court at Rome. The pope had claim to Peter’s Pence, annates and numerous other payments, all secured by bankers.
In the mid 13th century two brothers, Orlando and Bonifazio Buonsignori, established a money-lending business at Siena. They became regular bankers to the Holy See and six popes. In late 13th century there were rumors of their insolvency, they claimed that all their creditors sought reimbursement at the same time. With frozen assets and unavailable funds they sought help from Pope Boniface VIII, but in 1307 they closed their doors. Philip the Fair of France claimed that the agents of the Buonsignori had fled from France owning him money and, according to the practice of the time, seized the property of all Sienese merchants in France to make up for his losses. For the next forty years papal officials were still trying to close out their accounts, and the grabbing of the money by Philip was a disaster for the city of Siena.
The Buonsignori was one of many banking firms that tended to the pope’s financial affairs. The Tolomei (of Siena), the Ricciardi (Lucca), the Chiarenti and Ammanati (both of Pistoia) and a group of Florentine bankers also worked for the pope. In 1277 Pope Nicholas II borrowed 200,000 gold florins fro Piotoian and Florentine bankers for the expedition of Rudolph II of Hapsburg against Ottokar of Bohemia, which led to victory for Rudolph and the establishment of the House of Hapsburg in the Austrian dominions. During the later 13th century Rome teemed with representatives of financial firms, at least twenty were named in the papal registers. Most were family businesses, although some banks combined the capital of several families and took the name of the most prominent or oldest constituent of the group.
Florence as a Banking City:
Florence excelled all other Italian cites as a money market. First wealthy from wool, banking became its principal avocation. Its banking families were many: the Mozzi, Peruzzi, Bardi, Cerci, Falconieri, Alfani and the Alfani to name a few.
Collection of Papal dues: The house of Spini was in charge of the collections from Germany; the Alfani in Hungary, Poland, Slavonia, Norway and Sweden; the Chiarenti in Spain, and six other companies in England. The Templar Knights were often assigned with the conveyance of the money, whether it be the papal dues, or riches of kings and other wealthy people.
Kings during times of war needed large sums of money immediately, and the bankers made much profit from these situations. In about the year 1290 three brothers, Muschiato, Biccio, and Niccolo Guidi left Florence for France to enter in the service of Philip the Fair. The eldest brother became the receiver of taxes and treasurer and all three acted as financial agents. They provided Philip money for the bribing of the Duke of Brabant and the Count of Holland to end their alliance with England. The were able to seize money deposited in two abbeys by the Bishop of Winchester and hired mercenaries used in the attack on Pope Boniface at Angani. They also assisted in the seizure of the treasures of the Templars.
Not all banking families were successful. By the early 14th century eighteen banking houses either failed or were absorbed by others. The Bardi and Peruzzi remained in England. The Peruzzi had agencies in sixteen cites in five countries. Representing the Bardi family was the father of novelist Giovanni Boccaccio.
In order for Edward III to finance his war against France he needed to borrow money from many sources all at interest and used his crown as a pledge and the queen’s crown as security. The crown jewels were also pawned off.
When the Hundred Years War began the bankers had made loans to both the Kings of France and England and also had deposits in both kingdoms. In 1338 Philip seized the property of the banker’s agents, suspecting them of being impartial towards England. The property was returned after large payments were made.
Since the debts were not always paid some banks failed. The king of Naples could not repay a debt and the Peruzzi failed in 1343. The Bardi followed the next year when Edward was not able to meet his payments, estimated to be about eight million dollars in modern value. Edward was loaned about twenty million dollars total and by 1391 the account was settled. After the Italian bankers failed the monarchs turned to German merchants and lesser Italian banks for loans. They also relied on their own nation’s capitalists for financial aid as well as towns, ecclesiastical bodies, noblemen and the gentry, leading to the increase of nationalism.
Jacques Coeur:
A famous French merchant-banker, Jacques Coeur opened the Oriental trade to the French market. His commercial career began in 1427 with a voyage to the Levant, as far inland as Damascus and establishing trade connections on the islands an in the cities of the eastern Mediterranean and Italy on his return voyage. With Montpellier as his base of operations he sent six ships a year to Alexandria. His business catered to the king and the nobility. He soon was the owner of four large galleys and three smaller vessels and had 300 agents in his service. He also worked silver, copper and lead mines and purchased more than 30 seigneuries in the center and south of France.
In 1440 Coeur entered into the service of the king, becoming argentier, or the steward or paymaster of the household. He then became a member of the council and was given a patent of nobility. He later became the master of the mint of Bourges and Paris and collected taxes for the king. Kings, Queens, princesses, dauphins, counts all borrowed money from Jacques Coeur. In 1445, when France sought to remove the English from their soil, Coeur he was relied on for the financing of the war.
When the king’s mistress died during childbirth Coeur was accused of poisoning her, most likely by his debtors who looking for a way out of repaying their loans. Other offenses were found against him, and he was tortured into a confession of everything but the murder of the mistress. He paid an exorbitant fine, lost all his property and was banished from France and endured a long imprisonment.
The Origin of Modern Banking:
When the principal Florentine companies failed in the mid 14th century the obscure Medici family survived, led by Giovanni de Medici and his sons Lorenzo and Cosimo. In Augsburg, in the year 1409, Jakob Fugger, a merchant’s son, became a banker. When he died fifty years later the business he left to his seven sons was one of the most powerful ever. Although private banking houses continued the modern form of the government-chartered bank began. Along with the merchant bankers were others who loaned money who were known as banchieri.
The Influence of Coined Money:
Aside from the use of instruments of credit, the vast amount of business was based on the use of coined money. The English pound was literally a pound weight of silver, coined into 240 pennies or into a corresponding number of half-pennies and farthings. Around the year 1248 groats, four-penny pieces were coined. In 1242 Henry III had with him on his expedition to Poitou thirty barrels of money, 160,000 silver pennies in each barrel.
Gold and silver were mined throughout Europe: Italy, southern France, Spain, Germany, Silesia, Austria, Hungary, Bohemia and England all had mines. In times of crisis holders of gold and silver plate were required to dispose a certain proportion of it at the mint for converting into coinage. England and other countries without a vast amount of native supply of the precious metals had to import bars. They would sometimes seize and re-coin money from other countries and forbade the export of their own coins. Foreign money was usually paid for by the export of goods, not in coin. In England all mints belonged to the government, though frequently sublet. In France 29 feudal lords had the right to coin money, in addition to the royal mints. Some cities also coined their own money.
Up to the mid 13th century the money of Western Europe had been exclusively of silver. Within a half century gold was adopted for coinage in a dozen different states. In 1252 Florence began the issue of its gold florins. In 1257 Henry III coined a gold penny, twice the weight of and twenty times the value of the silver penny. The Venetian ducat appeared in 1284 and after that Philip the Fair minted gold coins in France. By the mid 14th century the English noble was in common use and various other gold coins were being issued.
The most prominent of these gold coins were the florins; its use was widespread throughout Europe. Soon many sovereigns and cities were minting coins of the same name and of nearly the same value. The English gold pennies were not popular and not long in use. The next generation of gold coins in 1344 were originally called florins, though double the weight of the original. The size increased again and the name was changed to nobles, the English gold coin for the next century. The Florentine minters were so respected that they were in charge of the mints of other countries. The ducat had the same reputation, although its circulation was eastward, in Italy, the Mediterranean, and the Orient, where they were renamed sequins.
Although gold coins were prevalent, merchants still relied on silver, often in small units. And many users of the smaller silver coinage were the “common” people. They may have used the silver penny, but for sure the halfpence and farthings, for things like a loaf of bread or beverage, dues or wages. The end of serfdom and the rise of freedom are in some way connected to the possession of money by the peasantry.
The tables of wages in the statutes of laborers that followed the Black Death and other records show that the wages of artisans were paid in money, even in the country, and the manoral records state that the value of agricultural services in terms of money, pence, halfpence, and farthings, so many times the lords of the manor paid the peasants in actual money wages. A money economy can also be traced to the lowest ranks of 13th century society. Fines and amerciaments were defined in terms of money and rebellious peasants in 1381 demanded among other things that rent of land should never exceed fourpence per acre, and that tolls, which were payable in money, should not be increased. Villains could also pay three pence a week instead of working in the fields.