page_title: History of banking
section_title: Italian bankers
hierarchical_section_title: History of banking / Medieval Europe / Italian bankers
caption_attribution_description: English: The heraldic achievement of the House of de' Medici. [1]
context_page_description: The history of banking began with the first prototype banks which were the merchants of the world, who gave grain loans to farmers and traders who carried goods between cities. This was around 2000 BC in Assyria, India and Sumeria. Later, in ancient Greece and during the Roman Empire, lenders based in temples gave loans, while accepting deposits and performing the change of money. Archaeology from this period in ancient China and India also shows evidence of money lending.
  Many histories position the crucial historical development of a banking system to medieval and Renaissance Italy and particularly the affluent cities of Florence, Venice and Genoa. The Bardi and Peruzzi Families dominated banking in 14th century Florence, establishing branches in many other parts of Europe. The most famous Italian bank was the Medici bank, established by Giovanni Medici in 1397. The oldest bank still in existence is Banca Monte dei Paschi di Siena, headquartered in Siena, Italy, which has been operating continuously since 1472.
  Development of banking spread from northern Italy throughout the Holy Roman Empire, and in the 15th and 16th century to northern Europe.
context_section_description: The first bank was established in Venice with guarantee from the State in 1157. According to Macardy this was due to the commercial agency of the Venetians, acting in the interest of the Crusaders of Pope Urban the Second. The reason is given elsewhere as due to costs of the expansion of the empire under Doge Vitale II Michiel, and to relieve the subsequent financial burden on the republic  "a forced loan" was made necessary. To this end the Chamber of Loans, was created to manage the affairs of the forced loan, as to the loans repayment at four percent interest.
   Changes in the enterprises of the Chamber, firstly by the commencing of use of discounting exchanges and later by the receipt of deposits, there developed the functioning of the organisation into The Bank of Venice, with an initial capital of 5,000,000 ducats. In any case, banking practice proper began in the mid-parts of the 12th century, and continued until the bank was caused to cease to operate during the French invasion of 1797. The bank was the first national bank to have been established within the boundaries of Europe.
  There were banking failures from 1255 to 1262.
  In the middle of the 13th century, groups of Italian Christians, particularly the Cahorsins and Lombards, invented legal fictions to get around the ban on Christian usury; for example, one method of effecting a loan with interest was to offer money without interest, but also require that the loan is insured against possible loss or injury, and/or delays in repayment (see contractum trinius). The Christians effecting these legal fictions became known as the pope's usurers, and reduced the importance of the Jews to European monarchs; later, in the Middle Ages, a distinction evolved between things that were consumable (such as food and fuel) and those that were not, with usury permitted on loans that involved the latter.
  The most powerful banking families came from Florence, including the Acciaiuoli, Mozzi, Bardi and Peruzzi families, which established branches in many other parts of Europe. Probably the most famous Italian bank was the Medici bank, set up by Giovanni di Bicci de' Medici in 1397  and continuing until 1494. (Banca Monte dei Paschi di Siena S.p.A. (BMPS) Italy, is in fact the oldest banking organisation to have surviving banking-operations, or services).
  It was the Italian bankers that would take their place and by 1327, Avignon had 43 branches of Italian banking houses. In 1347, Edward III of England defaulted on loans. Later there was the bankruptcy of the Bardi (1343 ) and Peruzzi (1346 ). The accompanying growth of Italian banking in France was the start of the Lombard moneychangers in Europe, who moved from city to city along the busy pilgrim routes important for trade. Key cities in this period were Cahors, the birthplace of Pope John XXII, and Figeac.
  By the later Middle Ages, Christian Merchants who lent money with interest were without opposition, and the Jews lost their privileged position as money-lenders;
  After 1400, political forces did, in fact, somewhat turn against the methods of the Italian free enterprise bankers, In 1401 King Martin I of Aragon had some of these bankers expelled. In 1403, Henry IV of England prohibited them from taking profits in any way in his kingdom. In 1409, Flanders imprisoned and then expelled Genoese bankers. In 1410, all Italian merchants were expelled from Paris. In 1407, the Bank of Saint George, the first state-bank of deposit, was founded in Genoa and was to dominate business in the Mediterranean.
caption: Coat of arms for the Medici family
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