In 1308, the year of Corso Donati’s death, the Florentine merchant elite created an association destined for a long and significant role in the city’s
21 For grain production and prices and communal policies: G. Pinto, 1l libro del biadaiolo: carestie e annona a Firenze dalla meta del ’200 al 1348 (Florence, 1978), pp. 50-1, 63-70, 77-8, 107-30.
Economic and political life. For the protection of their collective interests the international import-export merchants and bankers of the five major commercial guilds (Calimala, Cambio, Lana, Por Santa Maria, and Medici, Speziali, Merciai) formed the universitas mercatorum, or Mercanzia. At least eight leading merchant companies ended in bankruptcy between 1300 and 1310, including the Nerli, Davanzi, Mozzi, Abati-Bacherelli, Ardinghelli, and Franzesi. Bankruptcies meant panicky creditors, especially foreigners who often turned to their governments and petitioned for reprisals. Guild courts, created in the previous century to deal with creditors’ claims against insolvent Florentine merchants, were not equipped to extend their influence and enforce their judgments beyond Tuscany and Italy, and in any case each guild’s jurisdiction was limited to its members. Florence’s international merchants thus needed a stronger and swifter judicial apparatus through which to satisfy foreign creditors and protect Florentine interests abroad. In March 1308 the five major commercial guilds instituted the “office of the universitas of the Mercanzia” with an executive committee of Five Councilors, one from each guild, who in these early years were elected by the same guilds’ consuls. Later that year the commune’s legislative councils accepted a petition submitted “on behalf of the merchants of Florence” for the institution of a foreign judicial official within the Mercanzia. In August 1309 the priors formally recognized this official’s jurisdiction in civil actions by foreigners against Florentine debtors and his power to enforce existing laws against Florentines who defrauded creditors. The Mercanzia’s chief purpose was to prevent reprisals and enhance the security of Florentines “throughout the world” by forcing Florentine merchants to honor their agreements and satisfy creditors. It thus functioned as a civil court, not unlike the guilds, but with the important difference that its jurisdiction extended to any and all Florentines, including residents of the contado and district, “whether or not they are members of guilds,” thus cutting through the complex and contested limitations on the jurisdiction of individual guilds. At a creditor’s request, the official of the Mercanzia could compel Florentine companies to submit account books for investigation.112
The Mercanzia emerged from a prehistory of de facto cooperation and consultation among the consuls of the major commercial guilds on such issues, and the statutes of at least two guilds refer to such collaboration among the responsibilities of their consuls. Indeed, the initiative for the formalization of this cooperation came from the merchant elite itself, and the commune did little more than extend its recognition to an authority created by the international merchants of the five guilds. The new official was hired and monitored by the Mercanzia, not the commune. But the Mercanzia was more than a tribunal. As an universitas, or corporate association, it represented the interests of Florence’s merchant community to the commune and foreign governments and protected those interests by legislating in matters of commercial law. Indeed, from at least 1312 it had its own statutes. The Mercanzia had no formal membership: any merchant of the five guilds who engaged in trade or banking outside the Florentine dominion could be elected to the Five or sit on any of the association’s ad hoc committees that dealt with particular problems. The larger significance of the Mercanzia is that, for the first time, the elite was defining itself with reference to economic interests and responsibilities, representing itself as a community of merchants rather than as a warrior class or as partisans of church or empire. As a product of (a portion of) the guild community, the Mercanzia also signified the elite’s implicit acceptance of the guilds and the customs and procedures by which merchants and guildsmen typically resolved disputes, settled bankruptcies, and managed relations amongst themselves and with the outside world. Participating in the Mercanzia were all the city’s great merchant and banking families, except for the politically significant, but numerically small, contingent of magnate merchant houses (Bardi, Scali, Spini, Mozzi, Frescobaldi, and a few others), but even they were regularly represented on the Mercanzia’s committees by non-magnate business partners. Former Guelfs and Ghibellines, former Blacks and Whites cooperated in the association’s judicial, administrative, electoral, and diplomatic functions. Venerable non-merchant families like the Donati, Cavalcanti, Della Tosa, and Adimari largely disappeared from center stage at this point, not because a new class of merchants suddenly arose, but because an already powerful economic elite finally realized that the worst possible response their class could make to the popolo’s challenge was a continuation of party conflicts. They decided in effect that those older non-mercantile elite families had provided singularly ineffective leadership for their class, especially in the preceding decade, and that they now needed a new collective representation of themselves grounded in the institutionalization of their economic interests and responsibilities. The Mercanzia represented not a new elite but rather a new image of a changing elite.
Eligibility for the Mercanzia’s committees was restricted to members of the five guilds who “from Florence export goods beyond the city and its district or who import goods to the city of Florence from any part of the world beyond the city and district, or who engage or invest in money-changing and lending in any part of the world.” This criterion cut through the memberships of the major guilds. Retailers, providers of services, producers, artisans and lenders whose activities were confined within the Florentine dominion had no part in the Mercanzia. This was as close as the economic elite could come to an institutionalized distinction between themselves and the rest of the guild community. By this definition, the Mercanzia’s constituency included some guildsmen who bought and sold within Tuscany and central Italy and did not engage in truly international trade, but the great companies found it much easier to assert their leadership within this group than they did in the more heterogeneous full membership of the five guilds, let alone the broader community of twenty-one guilds. Merchants who traded beyond the borders of the Florentine dominion, whether internationally or regionally, had significant interests in common: from the security of trade routes and negotiated reductions of customs duties to protection against reprisals. Regional traders did not lack incentives for cooperation with international merchant-bankers, and from such shared interests and frequent contacts the elite was able to forge a degree of consensus within the Mercanzia that was unattainable in their separate guilds. The Mercanzia thus embraced those merchants, who, even if not from great families, depended on the success of the economic elite for their prosperity. Most importantly, the Mercanzia could ignore the popular pressures to which individual guilds and the full guild federation were subject.
The size of the Mercanzia’s constituency (what I will call the Mercanzia elite) varied according to economic trends and investment patterns. Only when it needed to raise funds did the association compile comprehensive lists of all the companies that fell under its criterion of international trade or banking. The earliest such list, from 1322, names 264 companies, sometimes with investing partners identified but often without their names or precise number.23 Thirty-four of them (with a total of between forty-five and fifty investing partners) came from the other sixteen guilds (the Mercanzia felt no need to restrict fiscal assessments to only the five guilds). The remaining 230 companies had approximately 500-600 investing partners, and it was from this group, whose size and composition fluctuated from year to year, that the Mercanzia recruited its governing cadres. Most of the merchant companies of elite families are in this list, which is organized by sesti: in Oltrarno, the Bardi, Capponi, Amadori, Antinori, Del Bene, Corsini, Pitti, Biliotti, Da Panzano, Guadagni and Ridolfi; in Borgo, the Acciaiuoli, Altoviti, Davanzati, and Gianfigliazzi; in San Pancrazio, the Rucellai, Da Sommaia, and Minerbetti; in Porta Duomo, the Aldobrandini, Rondinelli, and Medici; in San Pier Maggiore, the Albizzi, Portinari, Rittafede, Covoni, Ricci, and Falconieri; and in San Piero Scheraggio, the Scali, Dell’Antella, Sacchetti, Soldani, Peruzzi, Alberti, Ammanati, Orlandini, Macci, and Pulci. The 500-600 investing partners of all 230 major guild firms were Florence’s early fourteenth-century economic oligarchy, and these family companies were its inner core.
In the century of their greatest prosperity, roughly 1250-1340, Florence’s international trading and banking companies created an economic empire ASF, Mercanzia 136, September 24 and October 13, 1322, n. p.
Unprecedented in its nature and scope, with business and branches extending from London to the Levant. By accumulating and investing capital on a scale never previously attempted, they marshaled and controlled financial resources far in excess of those of their investing families and partners and beyond the local and regional economy. The crucial factor was their ability to attract deposits from a wide variety of investors in Florence, Italy, and throughout Europe and the Mediterranean. Companies were never the common property of families or lineages, and nothing like a majority of a lineage’s members invested in a company. But they were nonetheless identified by the name of the family whose members owned a controlling portion of the shares. The frequency with which members of the same lineage contributed capital to the formation of companies suggests that such cooperation must have been viewed as a natural extension of the pooling of resources for other purposes that characterized elite lineages. Each company was a partnership, or societas, formed by two or more investing partners, and, in the case of large companies, by ten, twelve, fifteen, or more, each of whom supplied a portion of the firm’s capital, or corpo. The family partners typically sought to increase the company’s working capital by accepting partners from outside the family. Companies remained in existence until the partners decided to terminate their legal relationship, close the books, and distribute profits (or losses) proportionally according to their shares. More or less the same group of partners, with occasional substitutions, additions, or deletions, would soon thereafter sign a new contract bringing into existence a new partnership even as the firm’s financial and commercial operations continued without interruption.113 All partners shared in the unlimited liability that was a hallmark of these early companies: in the event of bankruptcy, creditors could demand satisfaction from any and all assets of all the partners.
The best known of the early companies is that of the Peruzzi,114 whose account books survive for seven consecutive partnerships from 1300 to the company’s demise in 1343 and provide the amounts of the partners’ invested capital through 1335. The 1300-8 company had seventeen investing partners: seven Peruzzi, with a total of 74,000 lire a fiorino of capital and ten nonfamily members contributing 49,000 lire a fiorino. (The lira a fiorino, henceforth l. f., was a money of account worth 20/29ths of a florin. Thus, 74,000 l. f.
Were worth about 51,000 gold florins.) The seven Peruzzi included the firm’s head, Filippo di Amideo; his son Geri; Filippo’s three nephews, Giotto, Tommaso, and Arnoldo, the sons of his deceased brother Arnoldo; and two sons, Filippo and Rinieri, of a fourth son, Pacino, of the deceased Arnoldo. The ten non-Peruzzi partners included three from elite families (two Baroncelli brothers and a member of the magnate Infangati) and seven from families in the grey area between elite and popolo, including the young Giovanni Villani. Evidently the elder Filippo died in 1308, because in the reorganized partnership of 1308-10, which was otherwise composed of more or less the same partners and a similar balance among their investments, he is replaced by his sons Guido and Amideo. From 1300 to 1343, twenty-two Peruzzi contributed capital to the formation of one or more of the firm’s successive partnerships; all twenty-two were lineal descendants of Amideo: Filippo, three of his sons, and four of his grandsons; and Arnoldo’s three sons, nine grandsons, and two great-grandsons. Clearly, a strong sense of lineage cohesion dictated the company’s family component.
Total Peruzzi capital climbed from 124,000 l. f. in 1300-8 to 149,000 l. f. in 1310-12, then declined to 118,000 in 1312-24 and 60,000 in 1324-31, and rebounded to 90,000 in 1331-5. Between 1300 and 1331, family members consistently held between 54 and 60 percent of the capital shares, and it was only with the partnership of 1331-5 that non-family shareholders owned more than half. But here too there was notable continuity in the roster of families and individuals who went into business with the Peruzzi. Some, like the brothers Gherardo and Tano Baroncelli (the latter replaced in the last partnership by his two sons) stayed with the Peruzzi over the lifetime of the company. Filippo Villani, who replaced his brother Giovanni among the shareholders in the reorganization of 1308, was still a partner in 1335-43. Catellino Infangati remained a partner from 1300 to 1335; Giovanni di Ricco Raugi from 1300 to 1331; Gherardo di Gentile Bonaccorsi from 1310 to 1335; and Stefano di Uguccione Bencivenni from 1310 to 1343. In fact, the ranks of the non-family partners were so steady that, after the acceptance of two new partners in 1308 and two more in 1310, not a single new partner was included until the reorganization of 1331, when six new partners (including three brothers from the Soderini family) joined the company. Ties between the Peruzzi and their investing partners were indeed durable.
What distinguished Florentine companies from the long-distance merchants of the maritime republics of Venice and Genoa was the magnitude of their assets, which far exceeded even these already impressive outlays of capital. At the closing of the books in 1335, Peruzzi assets amounted to 742,247 l. f., and in 1318 the Bardi company estimated its assets at 1,266,756 l. f.26 Such
Immense assets and business volume were made possible by the deposits the companies accepted from investors who, unlike the partners, were guaranteed a fixed annual rate of return: in the case of the Peruzzi, initially 8%, and 7% after 1325. Most depositors had no family or marriage connection to the firm; they included nobles, ecclesiastics, merchants, and landowners from all over Europe, including Florentines, who invested their money with the companies expecting, and usually receiving, handsome returns. Deposits accounted for the lion’s share of the companies’ liabilities (debts owed to creditors). In 1335 the Peruzzi company’s far-flung branches reported eighty-eight depositors in the Naples branch, for a total of 120,960 l. f.; eighty-one in Avignon (where the papacy was located after 1309) for a total of 59,568 l. f.; twenty-two in Paris (46,290 l. f.); thirty-nine in Sicily (43,083 l. f.); twenty-four in Barletta (32,997 l. f.); twenty-eight in Pisa (20,768 l. f.); fifty-one in Rhodes (18,802 l. f.); eleven in Venice (11,481 l. f.); and twenty-one in Tunis for a more modest total of 6,039 l. f. Altogether (and data for some branches are missing or incomplete), 370 depositors had 382,421 l. f. on deposit with the company. Even if the number of depositors does not seem high (but missing, of course, are the local Florentine depositors), the amounts invested were enormous. The combination of capital investments and large-scale deposits allowed the companies to engage so massively in the trading and lending that brought them (and their investors) such great wealth.
Cumulatively, foreign depositors in the scores of international companies numbered in the thousands, and their willingness to entrust such large sums to Florentine merchant-bankers bespeaks a remarkable confidence in the companies’ ability to safeguard their investments and generate substantial profits, especially in an age in which governments did not insure or protect deposits. Their confidence was generated by the companies’ record of success: throughout these decades the Peruzzi regularly paid depositors the promised return while also distributing profits to the investing partners that varied from 11 to 18 percent. But trust also required guarantees, or collateral: the demonstration that, in the event of disaster or bankruptcy, the companies possessed assets convertible to cash with which to repay creditors. The collateral that sustained the companies’ good faith was (and could be nothing but) land. In an economic system built on credit and long-distance transactions vulnerable to a variety of risks including bad debts, loss of political favor, bad harvests, piracy, and royal insolvency, land was the only unassailably secure collateral that the companies, or the families behind them, could offer. In the case of the Peruzzi, this is surely the real significance of the formation in 1283 of a separate partnership among the sons of Arnoldo and Filippo for the acquisition of property in the Florentine contado. Of all the motives for the accumulation of land by elite Florentine families, that of providing security for deposits invested in their companies must have been among the most urgent. It has sometimes been supposed that heavy investment in land meant a retreat from the riskier forms of business. While this is perhaps sometimes true, the two forms of investment were not only compatible, but functionally linked. Land was an essential precondition for the companies’ expansion and success, and when, in the crisis of the 1340s, panicked depositors demanded repayment, these accumulations of land were at the center of the ensuing contentious legal and political battles. Simultaneous investment in land, commerce, and banking was always characteristic of the Florentine companies.
The companies’ investments fell into three categories: trade, lending, and manufacturing. For any single firm, the first two were the most significant, although their combined investment in textile manufactures constituted a major portion of the industry. Trading embraced the legendary “spice” trade, which included actual spices, like pepper, sugar, saffron, and cinnamon, and a huge range of luxury and specialty items imported from the eastern Mediterranean, the Black Sea, or points farther east, such as cotton, alum, dyes, perfumes, silks, and even jewelry, purchased for resale throughout Italy and Europe. But bigger profits came from imports of wool from England, Spain, parts of France, and North Africa, cloth from Flemish and French cities, and grain purchased in Sicily and Puglia and resold in northern and central Italy and throughout the European Mediterranean. The grain trade was especially lucrative for the Florentine companies, who enjoyed a virtual monopoly of exports from the South. Profits in commodity trading depended on volume, and the magnitude of grain exports by Florentine companies, although usually on ships leased from Venetians or Genoese, is staggering. Between 1300 and 1309, 70% of grain exports from Sicily went to Tuscany. In one extraordinary year, 1311, the Florentines exported 107,000 moggia of grain from Puglia, twice Florence’s annual consumption, and between 1327 and 1331 the companies exported an annual average of 29,000 moggia.115
To secure the monopolies, privileges, and exemptions from duties in exporting grain from southern Italy and wool from England, the Florentine companies became bankers to the rulers of these kingdoms and extended them long lines of credit. Florentines had long been in the business of lending to governments, at least from the time of the financing of Charles of Anjou’s war against Manfred when the Angevin treasury borrowed huge amounts in return for trading privileges in the South and the right to collect church revenues. By the early fourteenth century, with the papacy under heavy French influence, collecting ecclesiastical revenues in France was no longer as profitable as it had been, and by the 1320s Florentine business shifted to England, as the woolen cloth industry at home began producing more high quality cloths from English wool. Where once the companies bought English wool to sell in Flemish cities, they were now sending huge amounts to Florence itself where it was re-sold to scores of manufacturers in the Wool guild. Special privileges in wool exports inevitably required generous loans to the English crown. The Frescobaldi were the first Florentine company to engage in large-scale lending in England,116 but it was the Bardi and Peruzzi who made the combination of lending and wool exports a huge enterprise whose profits were almost as great as the risks. War erupted between England and France in the late 1330s, increasing Edward III’s thirst for cash, and the already established privileges of the Florentine companies became ever more dependent on their provision of loans to a king who could at any moment have removed the Bardi and the Peruzzi from the lucrative export trade.
It is a mark of the profitability of English wool exports that the Florentine companies continued to provide Edward with the ever larger loans he needed to fight the French. Both in the Angevin South and in England, lending was not a separate business from which the companies necessarily or always expected repayment with interest. Together with the cash receipts they generated, loans were the means by which the companies secured privileges for exports. For three quarters of a century, from the 1260s when they first entered into such agreements with the Angevins until about 1340, the Florentines made steady profits of such magnitude that they were able to funnel constant amounts of cash into the treasuries of these kingdoms. But when the English loans ballooned and began to outrun the profits generated from wool exports, the companies collapsed. Villani, who withdrew his deposit in the Peruzzi company in 1339, estimated (13.55) that the English crown owed a total of a million and a half florins to the Bardi and Peruzzi, five times the annual ordinary income of the Florentine commune. If it sometimes seems that Florence had two different economies - an international economy of traders, bankers, and merchants who were more often than not in London, Avignon, Naples, or the Levant, and a local economy of cloth manufacturers, artisans, shopkeepers, and laborers - they were nonetheless intimately linked. Many Florentines had deposits with the companies and depended on their prosperity. And the domestic textile industry depended on imported wool that would have been far more costly or even unavailable without the companies’ special relationship to the English monarchy and control of the export trade. Without the textile industry Florence would have been a much smaller and economically less potent city.
World History
