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RENAISSANCE BANKING LESSON 21
ACTIVITY 21.1
Venice to London Cards
480 Ducats
20 Ducats
98 Pounds Sterling
TO: Bank Branch in London
Please pay _________________________ the equivalent of 480
(Payee’s Name Goes Here)
Ducats (98 Pounds Sterling) from _________________.
(Payer’s Name Goes Here)
Signed: _____________________________
(Venice Banker Signs Here)
Branch Manager in Venice
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LESSON 21 RENAISSANCE BANKING
ACTIVITY 21.2
Banking in the Italian City-States
Throughout the Middle Ages and the Renaissance, the Italian city-states
of Florence, Genoa, Pisa, and Venice were the strongest economic powers in
Europe. Italy had not yet become one country. Instead, the area was made up of
a number of separate countries centered around important cities. Many traders
from these cities were important traders of spices, cloth, and other goods.
During this time, bankers in these city-states (in particular, Florence and
Venice) were also very powerful. The bankers’ biggest customer was the Roman
Catholic Church. Banks also provided services to kings, nobles, and business
people throughout Europe. The bankers made it possible for money to get from
one place to another because they had branch banks located in countries as far
as way as England and Cyprus.
In the early 1300s, a number of powerful companies developed in Florence.
These partnerships centered on families with names like Bardi, Peruzzi, and
Acciaiuoli and participated both in trading and in banking. They had many
branches located throughout Europe. These companies went out of business
just before the plague struck Europe. These companies were driven out of
business primarily because they had made too many loans to kings, such as
Edward III of England and Robert, King of Naples, that weren’t repaid in full.
THE MEDICI BANK
In 1397, Giovanni di Bacci de’Medici moved to Florence and founded the
Medici Bank. The Medici Bank became the largest and most powerful bank of
the 1400s, and members of the Medici family became some of the most wealthy
and influential people in Florence and throughout Europe. Members of the
Medici family were important politicians and huge supporters of the arts. They
paid artists, writers, and builders to create some of the world’s greatest art, literature, and buildings.
The Medici bank conducted money changing, took in deposits, dealt in bills
of exchange, and carried out foreign banking transactions. Money changers,
such as the Medici Bank, converted foreign money into the local money and
converted gold coins into silver coins for a fee.
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RENAISSANCE BANKING LESSON 21
ACTIVITY 21.2, CONTINUED
The Medici Bank went out of business because of bad management decisions
during a period of bad business conditions in the general economy. In the second half of the 1400s, the Medici Bank struggled to coordinate the operations
of its branches throughout Europe, and during a period of economic decline
in the 1470s, it became increasingly difficult to do business. Throughout this
period, many of its branches, including those in London and Bruges, went out
of business. Back in Florence, members of the Medici family concentrated most
of their attention on politics. Unfortunately, they were not careful enough in
managing the operations of the bank. The bank made a lot of bad loans, which
eventually caused the bank to go out of business in the 1490s.
INTEREST IN THE RENAISSANCE
The Roman Catholic Church forbade anyone from charging interest, which the
church called usury. When people talk about usury today, they are talking about
a very high interest rate. During the Renaissance, though, usury meant charging
any interest at all. Since bankers were not able to charge interest, they had to
find other ways to make a profit from lending. The primary way that Renaissance
bankers such as the Medici got around the rules against charging interest was to
use bills of exchange, like the one used at the beginning of the lesson. Built into
the bill of exchange transaction would be a profit for the banker. These profits on
transactions using bills of exchange were not considered usury.
Bankers such as the Medici were respected citizens, well regarded by the
Roman Catholic Church. The Medici were not considered usurers. In contrast,
pawnbrokers were business people who lent money to individuals in exchange
for holding onto those individuals’ belongings. Pawnbrokers were considered
usurers, and they were not considered respectable citizens. The church banned
pawnbrokers from communion, marrying in a church, and holding church
funerals. Because bankers such as the Medici only made large loans to important and wealthy people such as kings, nobles, and business people, the pawnbrokers played a role in the Renaissance economy by allowing poor people to
borrow money. Without pawnbrokers and some other money lenders that did
business with the poor, the poor would not have been able to borrow money.
SOURCE
DeRoover, Raymond. 1963. The Rise and Decline of the Medici Bank, 1397–1494. Cambridge, MA: Harvard
University Press.
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LESSON 21 RENAISSANCE BANKING
ACTIVITY 21.3
Deposits and Loans Worksheet
Deposits
CARD DRAWN (circle one)
CALCULATE CARD VALUE
#1
2 3 4 5 6 7 8 9 10 J Q K A
_____ × 10 = _____ ducats
#2
2 3 4 5 6 7 8 9 10 J Q K A
_____ × 10 = _____ ducats
#3
2 3 4 5 6 7 8 9 10 J Q K A
_____ × 10 = _____ ducats
#4
2 3 4 5 6 7 8 9 10 J Q K A
_____ × 10 = _____ ducats
#5
2 3 4 5 6 7 8 9 10 J Q K A
_____ × 10 = _____ ducats
TOTAL DEPOSITS =
_________ ducats
Loans
Loans have different risks. The loans will pay according to the following table:
Risk Level
Loan pays
NOTHING if
card drawn is
ONLY the
loan amount
is repaid if
card drawn is
Loan amount
plus interest
is repaid if
card drawn is
Very Low
2
3
4 to A
Low
2, 3
4
5 to A
High
2, 3, 4
5
6 to A
Very High
2, 3, 4, 5
6
7 to A
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RENAISSANCE BANKING LESSON 21
ACTIVITY 21.3, CONTINUED
Loan #
Chosen
RISK
LEVEL
LOAN
AMOUNT
RESULT CARD
DRAWN (circle
one)
OUTCOME
_____ ducats
2 3 4 5 6 7 8 9 10 J
QKA
_____ ducats
_____ ducats
2 3 4 5 6 7 8 9 10 J
QKA
_____ ducats
_____ ducats
2 3 4 5 6 7 8 9 10 J
QKA
_____ ducats
_____ ducats
2 3 4 5 6 7 8 9 10 J
QKA
_____ ducats
1. Total amount of deposits: _________ ducats
2. Total amount of loans made: ________ ducats
3. Total amount of loans repaid plus interest: ________ ducats
4. Did you gain or lose as a result of making these loans? (circle one)
Gain Lose
5. By how much did you gain or lose? ________ ducats
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LESSON 21 RENAISSANCE BANKING
ACTIVITY 21.4
Loan Specifics
LOAN
AMOUNT PLUS
INTEREST
LOAN
#
BORROWER AND LOAN
DESCRIPTION
LOAN
AMOUNT
RISK OF
DEFAULT
1
A Venetian merchant, to expand his
very profitable textile business
140 ducats
Very Low
Risk (VL)
182 ducats
2
A French bishop, to improve his
cathedral’s chapter house
190 ducats
Very Low
Risk (VL)
247 ducats
3
The Pope, to finance a small mission
to the eastern Mediterranean
270 ducats
Very Low
Risk (VL)
351 ducats
4
The doge, for repairs to the wall coverings in the library of his palace
70 ducats
Very Low
Risk (VL)
91 ducats
5
A French Duke, for the expansion of
his manor house
300 ducats
Low Risk (L)
450 ducats
6
The Duke of Milan, for the equipping of new soldiers
220 ducats
Low Risk (L)
330 ducats
7
A Benedictine abbot, to expand his
monastery’s school in Sicily
110 ducats
Low Risk (L)
165 ducats
8
A successful Venetian printer, to
purchase a new set of moveable type
94 ducats
Low Risk (L)
141 ducats
9
A Florentine shopkeeper, to double
the size of his shop
125 ducats
High Risk (H)
225 ducats
An English earl interested in throwing an extravagant wedding for his
son
275 ducats
High Risk (H)
495 ducats
10
A Hungarian feudal lord, to purchase farming tools for use in wheat
production on his estate
60 ducats
High Risk (H)
108 ducats
11
Continued on next page.
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RENAISSANCE BANKING LESSON 21
ACTIVITY 21.4, CONTINUED
LOAN
#
BORROWER AND LOAN
DESCRIPTION
LOAN
AMOUNT
RISK OF
DEFAULT
LOAN
AMOUNT PLUS
INTEREST
155 ducats
High Risk (H)
279 ducats
12
A Venetian spice merchant, to purchase a shipment of peppercorns
and cinnamon from the Spice
Islands
A Venetian merchant, to improve
the decoration of the chapel in his
palace
283 ducats
Very High
Risk (VH)
622 ducats
13
58 ducats
Very High
Risk (VH)
60 ducats
14
A Sicilian sculptor, to create a new
public statue in honor of a church
martyr
A Dutch sea captain, for personal
supplies for a voyage to the Spice
Islands
137 ducats
Very High
Risk (VH)
301 ducats
15
119 ducats
Very High
Risk (VH)
262 ducats
16
A small-scale grape grower in
Tuscany for the purchase of an
adjoining plot of land
GLOSSARY
abbot: The leader of a monastery.
chapter house: A building attached to or near a church where priests meet.
doge: The title given to the leaders of Venice and Genoa. Doges were elected for life by the citystates’ aristocracies.
martyr: A person who chooses to die rather than go against his or her religious principles.
Spice Islands: A group of islands in modern eastern Indonesia rich in spices, such as peppercorns and cinnamon, and controlled by the Dutch from the 17th century onward.
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