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The Decline of the Medici Bank*

Published online by Cambridge University Press:  03 February 2011

Raymond de Roover
Raymond de Roover
Affiliation:
Wells College
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Extract

The power of the Medici as a banking house, and their weakness also, become clearer when we examine the source of their funds. The main problem is whether the Medici bank operated mainly with the money invested by the partners or whether most of the operating capital was supplied from outside sources. It would be easy to settle this question if some balance sheets of the Medici bank were still available. As none have come down to us, another method of approach has to be used.

Type
Articles
Information
The Journal of Economic History , Volume 7 , Issue 1 , May 1947 , pp. 69 - 82
Copyright
Copyright © The Economic History Association 1947

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References

66 Roover, Florence Edler de, “Francesco Sassetti and the Downfall of the Medici Banking House, ” Bulletin of the Business Historical Society, XVII (1943), 72–75.Google Scholar

67 Sicveking, Heinrich, Aus Genueter Rechnungs- und Steuerbüchern (Sitzungsberichte der Kais. Akademie der Wissenschaften in Wien, Philosophisch-historische Klasse, No. CLXII, Vienna, 1909), p. 97.Google Scholar

68 Sieveking, Handlungsbüder Medici, p. 37.

69 F. E. de Roover, “Francesco Sassetti, ” Bulletin of the Business Historical Society, XVII, 71.

70 Ibid., pp. 69 f.

71 “Piero et Johanni de’ Medici e Compagnia di Milano deoao dare F. cinquemila larghi di Firenze… et tcngonli in diposito a loro discretione, posti a Valsente a c. 2—F. 5, 000 larghi, F. 6, 000 di suggello E. deono dare F. cinquecento larghi per discretione de’ detti danari insino a tutto l'anno 1463 d'accordo con loro posti in questo a c. 20—F. 500 larghi, F. 600 di suggello.”— Florence, Archivio di Stato, Carte Strozziane, Series II, No. 20: Libra segreta di Francesco Sassetti, 1462–1472, fol. 11.

72 Ibid., fol. 21.

73 Grunzweig, Correspondance, pp. xxiii, xxxvi.

74 Molini, Giuseppe, Documenti di storia italiana (Florence, 1836–1837), I, 14.Google Scholar

75 Baron Kcrvyn de Lettenhove, Lettres et negotiations de Philippe de Commines (Brussels, 1867), n, 39, 68.Google Scholar

76 Grunzweig, Correspondance, p. xxxvi.

77 Sometimes the rate is explicitly stated and sometimes not. “E deono dareÑ 480 vecchi per providigione d'uno anno diÑ 6, 000 a 8 per cento l'anno.”—Florence, Archivio di Stato, Carte Strozziane, Series II, No. 20, fol. n, Account of Francesco Sassetti e Compagnia di Ginevra.

78 Molini, Documenti, I, 14.

79 Florence Edler [de Roover] gives a good example of a reduction of the rate of return paid to depositors when operating results were unfavorable, in “Eclaircissemcnts a propos des considerations de R. Davidsohn sur la productivity de l'argent au moyen 5ge, ” Vierteljahrschrijt fur Sozial- und Wirtschaftsgeschichte, XXX (1937), 377–78.Google Scholar

80 MoIini, Documenti, I, 16.

81 It is impossible to compute the rate with accuracy because the leu sans toleil was worth a little less than the £cu au soldi.

82 Kervyn de Lettenhove, Lettret, II, 69 f.

83 Ibid., pp. 70 f.

84 “Le dit appointement est bicn megrc pour moi.”—Ibid., p. 72.

85 Ibid, p. 83.

86 Ibid., pp. 147, 248–49, 255–56, 269–73. The last request is dated August 25, 1511. Commines died the same year.

87 Grunzweig, Armand, “Le Fonds de la Mercanzia aux Archives d'Etat de Florence au point de vue de l'histoire de Belgique, ” Bulletin de I'lnstitut Historique Beige de Rome, XI (1932), 92 fGoogle Scholar; Lastig, Gustav, “Beitrage zur Geschichte des Handelsrechts, ” Zeitschrift fiir das gesamte Handelsrecht, XXIII (1878), 143–47.Google Scholar This passage of the Florentine statute of 1312 has apparently not attracted the attention of the authors who have, discussed the legal character of the deposit or accomandigia contract. Cf. Sapori, Armando, “Le compagnie mercantili toscane del Dugento e dei primi del Trecento: la responsabilita dei compagni verso i terzi, ” reprinted from Studi di storia e diritto in onore di Enrico Besta (Milan, 1938), pp. 8–15.Google Scholar

88 Grunzweig, Correspondancc, p. 131.

89 The heirs of Tommaso Soderini v. Tommaso Portinari, September 11, 1487; Gilliodts, Cartulaire de I'Estaple, II, 260, No. 1240.

90 Bede Jarrett, O.P., San Antonino and Medieval Economics (St. Louis, 1914), p. 69Google Scholar; Fanfani, Spirilo capitalistico, p. 113.

91 R. H. Tawney and Eileen Power, eds., Tudor Economic Documents, III, 161.

92 Reumont, Alfred von, Lorenzo de’ Medici, the Magnificent (London, 1876), II, 334–37.Google Scholar On one day, April 21, 1488, seventeen letters about the difficulties of the Lyons branch were dispatched to foreign creditors, including Ymbert de Batarnay, Seigneur du Bouchage.

93 Machiavelli, Niccold, Istorie fiorentine, ed. Carli, Plinio (Florence, 1927), Vol. II, Book VIII, chap, xxxvi, p. 218.Google Scholar

94 Smith, Adam, An Inquiry into the Nature and Causes of the Wealth of Nations (New York: Modern Library, 1937), p. 771.Google Scholar

95 There are other testimonies beside Machiavelli's. For example, Alessandro de’ Pazzi, a nephew of Lorenzo, states that the latter “did not have much aptitude for trade” (“non era alia mercatura molto atto”).—”Discorso di Alessandro de’ Pazzi al cardinale Giulio de’ Medici, anno J522, ” Archivio storico italiano. Series 1, Vol. I (1842), p. 422.

96 F. E. de Roover, “Francesco Sassetti, ” Bulletin of the Business Historical Society, XVII, 80.

97 Alessandro de’ Pazzi lists as causes of the failure of the Medici bank: (1) Lorenzo's lack of business ability, (2) his interest in politics, (3) his high household expenses.—”Discorso, ” Archivio storico italiano, Series I, Vol. I (1842), 422. According to Lorenzo's own statement, from 1434 to 1471, or in the space of thirty-eight years, his family spent the incredible sum of Fl. 663, 755 or an average of Fl. 17, 467 a year on buildings, charities, subsidies, and taxes, not including other expenses.—Roscoe, William, The Life of Lorenzo de’ Medici (9th ed.; Txjndon. 1847), P. 426Google Scholar; Fabroni, Angelo, Laurentii Medicis Magnifici Vita (Pisa, 1784), II, 47.Google Scholar

98 Sieveking, Handlungsbiicher der Medici, p. 50.

99 Grunzweig, Corrcspondancc, pp. xxviii £.

100 Power, Eileen, “The English Wool Trade in the Reign of Edward IV, ” The Cambridge Historical journal, II (1926), 18 f.Google Scholar

101 Scofield, Cora L., The Life and Reign of Edward the Fourth (London, 1923), II, 420–28Google Scholar, a detailed biography of Gherardo Canigiani, unfortunately based exclusively on English sources. Canigiani never was admitted as a partner. After breaking off his connection with the Medici, he married an English wife and obtained letters of denization. In English documents he is called “merchant, citizen and mercer of London, sometime of the fellowship of the Medicis of Florence, and factor and attorney of the same.”

102 Sieveking, Handlungsbikher der Medici, p. 51.

103 “La mia ragione di Vinegia ch'e finita e piu non vi tegniamo trafficho.”—Idem, Aus Genneser Rcchnungs- und Steuerbiichern, p. 101.

104 Grunzweig, Correspondance, p. xxxiv.

105 In an ordinance of Maximilian dated January 6, 1488 (n.s.), it is stated explicitly that Portinari was forced to give up his business because he was deprived of his capital.—L. Gilliodts-van Scvercn, Cartulaire de Vancien grand tonlieu de Bruges (Bruges, 1908), I, 343.

106 Sieveking, Handlungsbiicher der Medici, p. 53; Meltzing, Otto, Das Bankhaus der Medici und siene Vorlaufer (Jena, 1906)Google Scholar, p. no. Although Grunzweig corrects their mistake (Correspondance, p. xxxiv), it is faithfully repeated by Gutkind, Cosimo, p. 186.

107 In Bruges documents, Pierantonio Bandini-Baroncelli is called “Pierre Antoine Banding, marchand de Florence, facteur et compaignon de la compagnie Francisque et Andrea de Pacis.”—Gilliodts, Cartulaire de VEstaple, II, 224, No. 1181. He was related to Tommaso Portinari's wife, Maria Bandini-Baroncelli. Pierantonio apparently continued to reside in Bruges after the Pazzi conspiracy and probably traded for his own account from 1478 onward. He was Florentine consul in 1490.—Ibid., p. 270, No. 1253.

108 Harvard Graduate School of Business Administration, Selfridge Collection of Medici Manuscripts, MS 495, Section C, pp. 53–63, contains a copy of the agreement between the custodians of the Medici property and the new firm of Tornabuoni, Sassetti, and Spinelli.

109 Black stains can still be seen on the few records and fragments which were saved from the flames.

110 Selfridge Collection, MS 495, Section C, pp. 17–37, contains the agreement Between the custodians and the Tornabuoni.

111 This palace was considerably enlarged and embellished by Cosimo. A description of the building is given by Filarete, Antonio Averlino, Tractat iiber die Baukunst nebst teinen Buchern von der Zeichenkunst and den Bautcn der Medici, ed. Oettingen, Wolfgang von (Vienna, 1890), pp. 679–86.Google Scholar Cf. Meyer, Alfred Gotthold, Oberitalienische Friihrenaissance, Bauten und Bildwerke der Lombardei (Berlin, 1897), I, 99–110.Google Scholar

112 Commynes, Philippe de, Memoires, eds. Calmette, Joseph et Durville, G. (Paris, 1925), Vol. Ill, Book VI, chap, vii, p. 41.Google Scholar

113 Gras, Business and Capitalism, p. 166.