Old Banking Essay

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Medici were more gangsters than bankers: a small-time clan, notable more for low violence than for high finance. Between I 343 and I360 no fewer than five Medici were sentenced to death for capital crimes. 31 Then came Giovanni di Bicci de’ Medici. It was his aim to make the Medici legitimate. And through hard work, sober living and careful calculation, he succeeded. In I385 Giovanni became manager of the Roan branch of the bank run by his relation Vieri di Cambio de’ Medici, a moneylender in Florence. In Rome, Giovanni built up his reputation as a currency trader. The papacy was in many ways the ideal client, given the number of different currencies flowing in and out of the Vatican’s coffers. As we have seen, this was an age of multiple systems of coinage, some gold, some silver, some base metal, so that any long-distance trade or tax payment was complicated by the need to covert from one currency to another. But Giovanni clearly saw even greater opportunities in his native Florence, whence he retuned in I397. By the time he passed on the business to his eldest son Cosimo in I420, he had established a branch of the bank in Venice as well as Rome; branches were later added in Geneva, Pisa, London and Avignon. Giovnni had also acquired interests in two Florence wool factories. Of particular importance in the Medici’s early business were the bills of exchange (cambium per literas) that had developed in the course of the Middle Ages as a way of financing trade. 32 If one merchant owed another a sum that could not be paid in cash until the coclusion of a transaction some months hence, the creditor could draw a bill on the debtor and either use the bill as a means of payment in its own right or obtain cash for it at a discount from a banker willing to act as broker. Whereas the charging of interest was condemned as usury by the Church, there was

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