1.1 Bancherii and Merchant Banking. Types of Credit and Finance in Medieval Italy
The preeminence of Italian credit and financial operators originated in the Middle Ages with inventions and innovations that laid the groundwork for the progressive development of the figure and role of the bankerāand, more generally, the bankāon the international level. With the establishment of appropriate standards, instruments, and techniques for meeting both demand for credit and the necessities of credit suppliers, these innovations have gone, in part, to inspire and mold practices that are still in use today.1
While money-lending was in its infancy in early-Medieval Europe and remained so into the period of the Crusades, the expansion of trade and contact with the Arab and Byzantine economic cultures triggered a process of evolution. During the late Middle Ages (eleventhāfourteenth century), changes in economic life, dictated by an expanding market supported by innovative technical instruments (such as double-entry bookkeeping), favored the appearance of certain types of credit that placed the Italian peninsula at the forefront of European finances.
These innovations fell into two categories: contracts for pecuniary interest and credit securities. As regards the former, creditor and debtor began using the services of a notary public, who would draw up such a contract in the presence of witnesses in order to prevent any discrepancies of interpretation or other problems intrinsic to two-party agreements. Giuseppe Felloni observes that pecuniary contracts were by far the most pervasive credit vehicle in that period. There were, however, significant variations among them: they differed by nature, amount, and duration, as well as by the interest rate and method of repayment.2 Generally speaking, three types of contract dominated: contratti di censo (credit in exchange for municipal revenue), mortgages, and exchange loans. Other financial arrangements, such as bank deposits, cash advances, and assignment of receivables, existed at the time but were less common.
Other instruments gradually joined pecuniary contracts for certain economic and financial operations and were refined over the centuries. These credit securitiesābills of exchange, bills of lading, insurance policies, and public debt securitiesāwould eventually enter into widespread use. But their development, requiring legislative innovations, was relatively slow before they were widely adopted in the modern age for commercial operations, sea transport, and State finances.
In its discussion of bankers and their practices, this book provides a detailed examination of credit supply in Italy. Creditors within this context may be divided into two categories. On the one hand, we have companies whose business involves profiting from loans, lending their own money or third-party money held on deposit. These are most similar to modern-day banks and bankers. On the other, a creditor could be any party that draws on its own resources to offer credit, with or without interest. This category includes a diverse array of investors ranging from private individuals lending their relatively modest savings to wealthy people reaping significant profits from credit operations.
Generally speaking, there was a broad range of credit practices in Medieval Italy exercised by various different parties, each with their own characteristics. It is not always possible to make a clear distinction between capitalists who invest their own money and bankers dealing exclusively in brokering credit. Religious institutions, confraternities, and charitable institutions (ospedali, originally providing lodging for crusaders) also often extended credit, having accumulated large sums through donations, returns, and member dowries. However, we will not find the origins of the modern banker in this type of credit operations: they trace their lineage instead back to the moneychangers and merchant bankers.
Italy was particularly distinguished by a process of development of tradeāthe maritime republics were engaged in flourishing trade with the Far Eastāthat boosted demand for capital, the accumulation of savings, and new financial practices. Genoa, of course, was a very prominent maritime republic and it is here that we have documented the appearance of new professional figures in the twelfth century known as campsores or cambiatores or bancherii. The latter term derives from the fact that these men worked behind a bancus, i.e., a desk or table set up in the local market square.3
The bancherii represent a professional category that cannot easily be categorized under a single activity. They performed a variety of monetary operations typical of a bustling marketplace like Genoa in the Middle Ages: they were moneychangers, bankers, and merchants dealing in trade by land or sea.
Some of these professionals became specialized, becoming owners of a bancus de scripta (āde scriptaā because they recorded financial transactions in ledgers). Their activities are documented in Genoa, Venice, Siena, and Rome and are akin to those performed by todayās banks: they exchanged currency, negotiated bills of exchange, accepted deposits, performed clearing services on behalf of clients, and provided small loans to small-scale merchants, artisans, and the State while also being involved to some extent in trade.
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