r. Emigrated to Florence from the rural, fertile valley of the river Sieve in Mugello in the 12th century, the Medicis started as merchants in Florence's Old Market, in few decades became bankers and then rose to lords of Florence. It was the riches they acquired through banking that enabled them to be patrons of the most splendid art movement the world has ever seen.
The city of Siena, where the Chigi family emerged among the most important bankers, had great commercial and financial traditions. It is home to the world's oldest bank still in existence, the Monte dei Paschi di Siena, which has been operating continuously since 1472.
Major banking families in Genoa were the Doria, Spinola, Grimaldi, Giustiniani, Centuriani. The backbone of the Republic of Genoa turned from commerce into banking, and the Republic became lender to all European countries and monarchs. The Banco di San Giorgio (named after Genoa's patron saint, St George) was established in the city in 1406 and closed down in October 2012. It was the first bank to get involved in managing public debt and was described by Niccolo' Machiavelli as a state within the state.
In all these great commercial cities, families of private bankers became rich and powerful, to the point of lending money to Europe's great feudal lords, monasteries, high church dignitaries, and sovereigns. The latter made abundant use of credit to finance their wars. This activity was pivotal in the economic and political development of nation states. And wealth produced "by means of money" became an engine of social mobility, as in the case of the Medicis.
The merchant-banker was often the lord of his city. With the political decadence of many merchant-bankers, their power became indirect: they financed kings and princes, and their economic fortunes became tied with the political fortunes of monarchs.
Sovereigns and counts, often unable to pay back their loans, granted to the financiers rights of monopoly in trade, in exploiting natural resources or in services like ports, customs, tax collection. Other times they offered noble titles to the bankers. That's how, for example, Cosimo de' Medici, progenitor of a glorious dynasty, was entrusted with the lordship of Florence.
The development of banking later spread from northern Italy to the rest of Europe.
Photo by Elena Gatti (Creative Commons CC BY 2.0).