Ducal fiscal institutions were likewise inherited from the republic. The most important direct tax, the decima, which collected (actually slightly more than)
46 E. Fasano Guarini, Lo stato mediceo di Cosimo I (Florence, 1973).
47 N. Terpstra, “Competing Visions of the State and Social Welfare: The Medici Dukes, the Bigallo Magistrates, and Local Hospitals in Sixteenth-Century Tuscany,” Renaissance Quarterly 54 (2001): 1319-55.
10 percent of annual income from city and contado property, had been instituted by the popular government in 1495. District communities continued to pay direct taxes based on the estimo, which in 1547 was extended to Pisa (previously exempt according to the terms of the 1509 surrender). And the ancient gabelles were still in place. Although Cosimo declared in a 1561 bando annulling the tax on commercial profits (the “arbitrio”) that he was constantly searching for ways to alleviate the tax burden,725 the historian Segni noted that a new indirect tax meant to be collected only in 1551 was never removed, “just like all taxes in our city, which are imposed to meet some particular need but continue in their voraciousness even when that need has passed.”726
Particularly for the war against Siena, Cosimo borrowed heavily: at least 21/2 million scudi. (The scudo was a new gold coin, originally worth 7 lire and later slightly more, first minted by the last republic in 1530 and then by Alessandro and Cosimo, who replaced the florin’s lily and image of John the Baptist with likenesses of themselves.727) He broke with tradition in borrowing almost exclusively from foreigners and only rarely from Florentines,728 perhaps fearing the influence such loans could generate and the sympathies some ottimati still harbored for France and the republic. Moreover, the biggest Florentine fortunes were those of bankers operating outside Tuscany (in Rome, Venice, Genoa, Lyons, and elsewhere) and would have been difficult to control. He borrowed from bankers who also financed the Habsburgs: the Genoese (over
300.000 scudi from Niccolo Grimaldi alone) and the Fugger of Augsburg (over 425,000 scudi, and perhaps much more since he borrowed another
410.000 from a consortium of “merchants of Antwerp,” where the Fugger were also active). He even borrowed from his Habsburg overlords, including a 1555 loan of 100,000 scudi from Philip II. These were private loans contracted by Cosimo, sometimes jointly with his wife Eleonora, and the combination of their private status and foreign origin left Cosimo free to use the funds as he wished (subject of course to the approval of the kings of Spain) without having to consult Florentine councils or creditors. Yet at least a third of this indebtedness was repaid from direct and indirect taxes collected by the Florentine treasury.729 Most Florentines may have been unaware of the siphoning off of public funds to pay for their duke’s territorial ambitions, his court, and even his private investments. For Cosimo was the ultimate merchant-prince: having become duke with very little personal wealth, he died with a total worth estimated at almost 1,200,000 scudi (not including jewels and other princely appurtenances). Indeed, he ran something of a family business from the ducal palace, regularly diverting public funds to personal investments in an artful blurring of the boundary between state finances and private and family interests.730 Most of the increase in his personal patrimony took place following the Sienese war and took two forms: accumulations of real estate and lucrative lending. Having had to borrow money in order to finance the war, Cosimo emerged from it with enough wealth to makes loans of 200,000 scudi to Emperor Maximilian in 1565, 180,000 scudi to Charles IX of France in 1569, and 200,000 to Philip II in 1572.731
Cosimo transformed the Monte di Pieta, the lending institution created in 1496 to make small loans to the poor, into an instrument of ducal patronage and government finance. In the 1530s, to attract capital the Monte began accepting deposits on which it paid 5% interest, and by the 1540s considerable numbers of Florentines from all classes had opened accounts. Because the Dowry Fund was phased out in these same years, some fathers began using the Monte di Pieta as a safe, long-term vehicle for dowry growth, while husbands used it as a secure place to invest their wives’ dowries. The Monte continued its original function of making small loans to the poor, secured against pawns, on which it charged 5% interest. Vastly increased capital from deposits made it possible to increase the scale of this lending, and there was apparently a huge demand for short-term loans among poorer Florentines. Between 1545 and 1548 an astonishing 163,000 pawns were accepted for loans, and in 1567-9 almost 171,000 pawns were accepted against loans totaling 370,000 florins. Approximately 90% of pawn-secured loans were repaid with interest, and the resulting profits expanded resources for both more loans to the poor and interest on deposit accounts. But the Monte di Pieta now became a source of cheap money for Cosimo’s friends and clients, as he ordered it to extend its lending, in much larger amounts but at the same 5% interest rate, to anyone he approved, including himself, for purposes ranging from private favors to charity to military expenses and the immense costs of his son Francesco’s wedding to Joanna of Austria in 1566. Between 1564 and 1574 the Monte made 249 such loans totaling over 427,000 scudi, of which 185,000 went to Cosimo and other Medici, and the rest to persons designated by Cosimo, who thereby brought them into his debt at no cost to himself with money that was not his. The many poor who paid the same rate of interest thus subsidized huge low-interest loans to the duke and his favorites. Only in 1568, after years in which interest payments on deposits exceeded interest collected on loans (because 10% of small loans went uncollected) did Cosimo finally approve an increase in the rate on large loans to 6%. This was still a bargain, and cut-rate loans to the rich continued into the 1570s.732
Cosimo took considerable interest in economic matters, supporting the growth of new industries, such as mining and sugar production and, most significantly, favoring silk production, even as woolens were enjoying a last phase of prosperity before their definitive decline in the seventeenth century.733 To promote sericulture gabelles were occasionally reduced or even eliminated, but such actions were inconsistent and lacked an overall plan. In 1545, for example, in order to increase revenue and bring the entire dominion under the same tax regulations the ducal government annulled for three years all exemptions from gabelles that the republic had negotiated with subject towns. For Pescia and the nearby Valdinievole (between Pistoia and Lucca), this overturned a two century-old agreement allowing free trade with Florence. Protests prompted the reinstatement of the exemptions in 1547, but Cosimo nonetheless insisted on his right to impose tariffs and regulate the import or export of goods. Over the next twenty years, Pescia’s officials complained, many “prohibitions and innovations” and various “annoyances, orders, and exactions have been pursued by Your Excellency and the magistrates, with much expense and inconvenience.”734 It was symptomatic of the limits of ducal intervention in the economy and finances: chronic fiscal and provisioning needs regularly derailed any idea (if such there really was) of removing barriers to trade, opening up production and markets, and extending such policies to the entire dominion. In this case, he cancelled customary exemptions, then restored them, but made the restoration precarious by invoking ducal power to impose whatever taxes or restrictions he thought necessary to solve a local problem or raise revenue, thus causing “expense and inconvenience” and presumably confusion, since the Pescians never knew what was coming next and could not count on a stable fiscal or regulatory environment. A second example is Cosimo’s policy toward the Jews. In an effort to revive commerce, between 1545 and 1551 Cosimo invited Portuguese Jews to Pisa and elsewhere in the dominion and granted them freedom to practice their religion and do business without official harassment. But in 1567 he reversed course and required Jews to wear a yellow badge, and in 1570, as part of the deal with Pope Pius V that brought Cosimo his grand ducal title, he forced them to live in specified areas in Florence and Siena. Twenty years later Duke Ferdinand reversed the policy again in a successful attempt to build Livorno into a major port, inviting Jews to settle there with full privileges of internal self-government, religious autonomy, and freedom to pursue commerce. Over the next two centuries Livorno’s Jewish community prospered and grew to almost 5,000.735
Economic policy suffered from excessive and always changing regimentation and over-regulation, prohibitions against exporting raw silk or agricultural products and importing manufactured products, attempts at price and production controls, and much more, all motivated by short-term considerations and enforced by officials ready to track down and punish infractions, confiscate account books, search and seize. Partly this reflected Cosimo’s temperament: minute attention to every detail, locality, document, problem, and complaint. He obviously worked longer days and devoted more effort to the business of governing than any Medici before him and perhaps more than most contemporary European rulers. But if the economic fortunes of the duke and his family were thriving, perhaps as they had not since the days of his great-great-great-grandfather Cosimo, the same cannot be said of the majority of his subjects. Evidence of worsening poverty in the mid-sixteenth century ranges from the Monte di Pieta’s many loans to the poor to a dramatic increase in the numbers of abandoned children. Whereas the Innocenti took in an average of 200 children per year in the second half of the fifteenth century, in the 1530s the annual average jumped to 540. In the famine year of 1539 almost 1,000 children were admitted; and from 1547 to 1552 yearly totals were 417, 518, 654, 635, 884, and 607. In 1579 the Innocenti housed approximately 1,200 children (968 of them females), including many who spent their entire lives there. Demographic trends were partly behind this: after almost two centuries of contraction and stagnation, population was increasing. Censuses in 1552 and 1562 recorded 59,000 city inhabitants, a 40 percent increase since the fifteenth century; 500,000 people now lived within the boundaries of the subject territories of 1427 (when the population was 262,000), and nearly 600,000 in all the territories comprising the “stato vecchio” of Florence, excluding Siena and its territory. Prices rose with population, and, as wages failed to keep pace, famines became more frequent. In addition to the other reasons why parents gave up children, many now did so because they were unable to feed them. But the crisis of the Innocenti, constantly in debt and increasingly unable to support the huge numbers entrusted to its care, was also exacerbated by ducal exploitation of the institution in a manner similar to that of the Monte di Pieta. Cosimo turned the Innocenti into a bank that accepted interest-bearing deposits, and the revenues from its considerable landed holdings had to feed this debt before it fed the children.736 The Marucelli chronicle, regularly noting the high cost of grain and the suffering it entailed, says that in the winter of 1548-9 there was “a grandissima carestia of everything,” “huge numbers of poor people and great cruelty among citizens, and not a single act of charity, so that in the streets nothing but the cries of the poor was heard.” Many people and animals perished, “and it was said that throughout the contado many fathers, seeing their children dying of hunger, hanged themselves, threw themselves into wells or off steep cLiffs, completely overcome by desperation.”737
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