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166-502: Portinari was an employee in the Bruges branch for a very long time, more than 25 years, but never rose higher than assistant manager and factor , apparently at the insistence of Cosimo de' Medici , who did not trust him. After Cosimo's death, he became general manager and shareholder in the branch at the age of 40, aided by the influence of his brothers, longtime managers of the bank's Milan branch. When Francesco Sassetti 's influence removed

332-634: A limited liability partnership with that son, Bernardo di Giovanni d'Adoardo Portinari (1407– c. 1457), assuming both the position of manager and the majority of the liability. When Angelo Tani (1415–1492) became junior partner in 1455, the branch was finally created as a full and equal partnership in the Medici bank. A legally similar situation was obtained for an "accomandita" established in Ancona , apparently to finance Francesco Sforza , an ally of Cosimo's. As mentioned previously, Cosimo's uncle had begun

498-1009: A Medici branch. If the bank could not establish a branch somewhere, then they would usually contract with some Italian banker (preferably one of the Florentine banks) to honor drafts and accept bills of exchange: So the Medici were represented by the firm of Filippo Strozzi and Co. in Naples , by Piero del Fede and Co. in Valencia , by Nicolaio d'Ameleto and Antonio Bonafè in Bologna , by Filippo and Federigo Centurioni in Genoa , by Gherardo Bueri —a close relative of Cosimo—in Lübeck , and so forth. Of course, if an Italian agent could not be procured, any trustworthy banker would do; in Cologne , their representative

664-516: A bank with his third of the ownership stake in Vieri's bank, and it closed in 1443 with the death of the grandson of Averardo, taking with it the Medici branch in Pisa. Formerly, any business that the Medici needed to transact in Pisa (such as Cosimo forwarding Donatello money to buy marble ) had been done through them. On December 26, 1442, a limited liability partnership was formed with two outsiders. Over time,

830-561: A cost to the state of 1,000 crowns per week. The electress donated much of her fortune to charity: £4,000 a month. On 19 February 1743, she died, and the grand ducal line of the House of Medici died with her. The Florentines grieved her, and she was interred in the crypt that she helped to complete, San Lorenzo. The extinction of the main Medici dynasty and the accession in 1737 of Francis Stephen , Duke of Lorraine and husband of Maria Theresa of Austria , led to Tuscany's temporary inclusion in

996-524: A favored councilor to Charles the Bold. On the latter's death in battle, the loan went essentially into default. Further good money was thrown after bad when he lent to Archduke Maximilian of Austria , Charles's successor. A small portion of this loan was eventually repaid. He was the defendant in Ruffini v. Portinari in 1455, one of the first legal cases to deal with separation of partnerships and legal liability: he

1162-572: A frenzied mob. Nevertheless, the sources are sufficiently numerous (exceeded only by the Datini 's bank's archives, in Tuscany /Prato) that the Medici bank is well understood, especially as the remains of the Medici records were given to the city of Florence by a descendant of the Medici. Banks in Renaissance Florence were generally divided into three or four kinds: Because of communication delays,

1328-619: A good deal of their output to Milan and the Sforzas . Medici family The House of Medici ( English: / ˈ m ɛ d ɪ tʃ i / MED -itch-ee , UK also / m ə ˈ d iː tʃ i / mə- DEE -chee ; Italian: [ˈmɛːditʃi] ) was an Italian banking family and political dynasty that first consolidated power in the Republic of Florence under Cosimo de' Medici and his grandson Lorenzo "the Magnificent" during

1494-477: A high proportion of the major Florentine works of art created during their period of rule. Their support was critical, since artists generally began work on their projects only after they had received commissions. Giovanni di Bicci de' Medici, the first patron of the arts in the family, aided Masaccio and commissioned Filippo Brunelleschi for the reconstruction of the Basilica of San Lorenzo, Florence in 1419. Cosimo

1660-399: A long rivalry themselves, but the pope gave no official sanction to the plan. Despite his refusal of official approval, the pope nonetheless allowed the plot to proceed without interfering, and, after the failed assassination of Lorenzo, also gave dispensation for crimes done in the service of the church. After this, Lorenzo adopted his brother's illegitimate son Giulio de' Medici (1478–1535),

1826-423: A more contemporary viewpoint in his Istorie fiorentine , asserting that the fall of the Medici was due to their loose rein on their bank's managers who began to act like princes and not sensible businessmen and merchants. When the crisis loomed, one way to try to avert it was to simply start reducing the interest paid on discretionary and demand deposits . But such a move would have hurt the Medici name, and so it

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1992-420: A particular Medici branch a certain sum of money, as verified by the general or assistant manager of that branch (who were the only ones allowed to make out such bills). The bill instructed the recipient Medici branch to pay back that sum in local currency, but not at whatever the local exchange rate for the two currencies concerned happened to be at the moment the bill was presented to be cashed in, but rather at

2158-694: A partner. They raised 10,000 gold florins and began operating in Florence, though Gentile soon left the firm. This move had certain advantages for a bank, inasmuch as the predominant large banks of the 14th century which were based in Florence—;the Bardi, Acciaioli, Peruzzi—had met with problems, and saw their places usurped by the Alberti , who were just large enough to capture the Catholic Church 's business. But

2324-466: A portion of his debt, but these reductions were soon rendered less helpful (but not negated outright) by fresh loans and sales of silk. By the spring of 1469, Tani had finished repairing the London branch's operations to his own satisfaction, and returned to Italy. His work would be undone by the unhelpfulness of the other branch managers and the fecklessness of the London branch manager Canigiani. The fatal blow

2490-463: A profit when a bill was issued in one of the Italian branches because they could demand a premium of sorts for being asked to deliver money in a far away place at however far in the future usance set the maturation date. De Roover offers this real example: Around July 15, 1441, the Medici of Venice bought a bill on Bruges at the rate of 54 1 ⁄ 2 groats per Venetian ducat . Two months later, when

2656-403: A proxy for general economic conditions, as the problem could be that "by this time, in fact, Florentine guilds had long lost much of an economic function in the areas of their formally defined activity, with the result that the quality of their internal administration deteriorated; but this institutional history cannot be taken as an indicator of the vitality of the respective sectors of the economy

2822-472: A reckoning of profits would be made. Indeed, the structure of the Medici Bank resembles nothing so much as the modern holding company . The branch manager (the governatore , or "governor", would have put up a portion of his own money at the start of the partnership) and the investing partners could take out their profits at this point, since salaries or dividends were not paid when the partnership agreement

2988-556: A result of good relations between brothers, but because one of the two heirs died before inheriting. In theory, Lorenzo's son Pierfrancesco could have insisted on his share of the estate, but Pierfrancesco was raised by Cosimo and "his emotional ties to his uncle were sufficiently strong to preclude his withdrawal from the company." Pierfrancesco seems to have grown increasingly disaffected, but his death in 1476 prevented any separation. In retrospect, given how Lorenzo would steal from Pierfrancesco's estate while raising his two sons to finance

3154-455: A salary for their service. So the nine original outsiders could slowly leverage their 21 1 ⁄ 4 shares to overwhelm the Peruzzi's collective 36 3 ⁄ 4 shares. The lack of clear leadership, though, when the leading partner died has been suggested as another factor in the failure of the Bardi and Peruzzi banks. Such a takeover was impossible in the Medici Bank. The essential structure

3320-522: A supply of English wool to weave, it could not sell its textile wares, and more importantly, could not employ the Florentine lower classes who specialized in textiles. Flemish wool had once served in English wool's place, but after the 1350s, it no longer had a market in Italy and was essentially not imported after 1400. Unemployment generated considerable political unrest and revolts, which would be aimed at Piero and

3486-471: A thorough accounting is unknown. Machiavelli can probably be trusted here since there was a rash of bankruptcies and bank failures in Florence shortly after Cosimo's death which led to a small recession. De Roover mentions, however, the war between Venice and the Ottoman Empire and the relevant firms' connections to that area as a possible factor as well. It is certain, however, that Piero tried to wind up

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3652-579: A time. From this base, they acquired political power initially in Florence and later in wider Italy and Europe. They were among the earliest businesses to use the general ledger system of accounting through the development of the double-entry bookkeeping system for tracking credits and debits. The Medici family financed the construction of Saint Peter's Basilica and Florence Cathedral , and were patrons of Donatello , Brunelleschi , Botticelli , Leonardo da Vinci , Michelangelo , Raphael , Machiavelli , Galileo , and Francesco Redi , among many others in

3818-420: A whole pound, he takes a loss: instead of the 10 pounds he could have gotten had he not bought the bill of exchange, he will instead receive only 5. Similarly, if the florin weakens greatly, he could well reap a windfall at the expense of the London branch. Clearly the branches would want to try to maximize sales of bills of exchange in the former situation, where the rate of the issuing currency increases between

3984-477: Is most remembered as the patron of astronomer Galileo Galilei , whose 1610 treatise, Sidereus Nuncius , was dedicated to him. Cosimo died of consumption ( tuberculosis ) in 1621. Cosimo's elder son, Ferdinando, was not yet of legal maturity to succeed him, thus Maria Maddalena and his grandmother, Christina of Lorraine, acted as regents. Their collective regency is known as the Turtici . Maria Maddelana's temperament

4150-598: The Albizzi or the Strozzi . One Salvestro de' Medici was speaker of the woolmakers' guild during the Ciompi revolt of 1378–82, and one Antonio de' Medici was exiled from Florence in 1396. Involvement in another plot in 1400 caused all branches of the family to be banned from Florentine politics for twenty years, with the exception of two. Giovanni di Bicci de' Medici (c. 1360–1429), son of Averardo de' Medici (1320–1363), increased

4316-517: The Bardi , Altoviti , Ridolfi, Cavalcanti and the Tornabuoni. This has been suggested as a reason for the rise of the Medici family. Members of the family rose to some prominence in the early 14th century in the wool trade, especially with France and Spain . Despite the presence of some Medici in the city's government institutions , they were still far less notable than other outstanding families such as

4482-771: The Congress of Vienna . Tuscany became a province of the United Kingdom of Italy in 1861. However, several extant branches of the House of Medici survive, including the Princes of Ottajano , the Medici Tornaquinci, and the Verona Medici Counts of Caprara and Gavardo . (see Medici family tree ) The greatest accomplishments of the Medici were in the sponsorship of art and architecture , mainly early and High Renaissance art and architecture. The Medici were responsible for

4648-564: The Dutch Republic gave any credence to it, and the plan ultimately died with Cosimo III in 1723. On 4 April 1718, Great Britain, France and the Dutch Republic (also later, Austria) selected Don Carlos of Spain , the elder child of Elisabeth Farnese and Philip V of Spain , as the Tuscan heir. By 1722, the electress was not even acknowledged as heiress, and Cosimo was reduced to spectator at

4814-553: The Mugello region towards the Apennines , north of Florence. The Medicis were not only bankers but innovators in financial accounting. At one point, the Medicis managed many of the great fortunes in Italy, from royalty to merchants. Giovanni's father Averardo (?–1363; known as "Bicci") was not a very successful businessman or banker. A distant cousin, Vieri di Cambio (1323–1396), however,

4980-557: The Napoleons ) were descended from Francesco. Ferdinando eagerly assumed the government of Tuscany. He commanded the draining of the Tuscan marshlands, built a road network in southern Tuscany and cultivated trade in Livorno . To augment the Tuscan silk industry, he oversaw the planting of mulberry trees along the major roads (silk worms feed on mulberry leaves). In foreign affairs, he shifted Tuscany away from Habsburg hegemony by marrying

5146-574: The Vatican , including Martin Luther 's Protestant Reformation and the infamous sack of Rome in 1527 . Leo X's fun-loving pontificate bankrupted Vatican coffers and accrued massive debts. From Leo's election as pope in 1513 to his death in 1521, Florence was overseen, in turn, by Giuliano de' Medici, Duke of Nemours , Lorenzo de' Medici, Duke of Urbino , and Giulio de' Medici, the latter of whom became Pope Clement VII . Clement VII's tumultuous pontificate

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5312-498: The "senior" branch of the family—those descended from Cosimo the Elder—were able to rule until the assassination of Alessandro de' Medici , first Duke of Florence , in 1537. This century-long rule was interrupted only on two occasions (between 1494–1512 and 1527–1530), when anti-Medici factions took control of Florence. Following the assassination of Duke Alessandro, power passed to the "junior" Medici branch—those descended from Lorenzo

5478-471: The 17th century, the population of Florence declined by 50%, and the population of the grand duchy as a whole declined by an estimated 40%. Cosimo desperately tried to reach a settlement with the European powers, but Tuscany's legal status was very complicated: the area of the grand duchy formerly comprising the Republic of Siena was technically a Spanish fief, while the territory of the old Republic of Florence

5644-512: The Alberti firm split over internecine quarrels, and the clan was banished from Florence in 1382 (though they would be allowed to return in 1434), creating yet another void. Giovanni's choice proved to be prescient, especially since what Florence was lacking was a good port on the Mediterranean —which it would obtain in 1406 with the conquest of Pisa and its Porto Pisano . A further advantage

5810-558: The Bold, caused the Medici to finally give up on Bruges in 1478, when they unilaterally dissolved the partnership . Portinari was essentially fired and he fell on hard times. He eventually made a comeback of sorts as a diplomat (involved in, among other things, the Intercursus Magnus ). Ironically, the most useful part of his being a diplomat was being able to return home to Florence without being thrown into debtor's prison . His attempts to start his own bank failed, his past services to

5976-614: The Bruges branch would—unwisely loaning large sums to secular rulers, a group notorious for their delinquencies (in this case, the Yorkist Edward IV ). In a sense, that branch had no choice but to make the loans, since it faced domestic opposition from English merchant and clothier interests in London and their representatives in Parliament, which was only granting the necessary export licenses to foreign-owned enterprises if its members were well-bribed with loans. The London branch of

6142-488: The Bruges branch. After Piero's death, Portinari managed to get articles of partnership so favorable that he lived in Florence, only visiting the Low Countries for business. The end-period of the branch would be marked by chaos and possibly fraud. Portinari would refuse to return some deposits, claiming that the monies had really been invested in partnership. He would also claim Angelo Tani as a full partner (and thus liable in

6308-472: The Castro mercenaries were paid for, the state could no longer afford to pay interest on government bonds, with the result that the interest rate was lowered by 0.75%. At that time, the economy was so decrepit that barter trade became prevalent in rural market places. Ferdinando died on 23 May 1670 afflicted by apoplexy and dropsy . He was interred in the Basilica of San Lorenzo , the Medici's necropolis. At

6474-550: The Council no longer made it worth their while to maintain it. On March 24, 1439, the Medici branch at Bruges was officially founded. While the Medicis had done business in Flanders through correspondents and agents since 1416, it was only when the son of the Venice branch's manager (from 1417–1435) was sent to investigate in 1438 and favorably reported back that it was incorporated as

6640-527: The Duchies of Rovere and Montefeltro , passed to her younger son. Cosimo III married Marguerite Louise d'Orléans , a granddaughter of Henry IV of France and Marie de' Medici. An exceedingly discontented pairing, this union produced three children, notably Anna Maria Luisa de' Medici, Electress Palatine , and the last Medicean Grand Duke of Tuscany, Gian Gastone de' Medici . Johann Wilhelm, Elector Palatine , Anna Maria Luisa's spouse, successfully requisitioned

6806-616: The Elder , the youngest son of Giovanni di Bicci, starting with his great-great-grandson Cosimo I "the Great" . Cosimo the Elder and his father started the Medici foundations in banking and manufacturing—including a form of franchises . The family's influence grew with its patronage of wealth, art, and culture. Ultimately, it reached its zenith in the papacy and continued to flourish for centuries afterward as Dukes of Florence and Tuscany. At least half, probably more, of Florence's people were employed by

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6972-504: The Elder's notable artistic associates were Donatello and Fra Angelico . In later years the most significant protégé of the Medici family was Michelangelo Buonarroti (1475–1564), who produced work for a number of family members, beginning with Lorenzo the Magnificent, who was said to be extremely fond of the young Michelangelo and invited him to study the family collection of antique sculpture. Lorenzo also served as patron to Leonardo da Vinci (1452–1519) for seven years. Indeed, Lorenzo

7138-635: The Florentine Republic). The Medici additionally benefited from the discovery of vast deposits of alum in Tolfa in 1461. Alum is essential as a mordant in the dyeing of certain cloths and was used extensively in Florence, where the main industry was textile manufacturing. Before the Medici, the Turks were the only exporters of alum, so Europe was forced to buy from them until the discovery in Tolfa. Pius II granted

7304-578: The Grand Duchy of Tuscany. Cosimo purchased a portion of the island of Elba from the Republic of Genoa and based the Tuscan navy there. He died in 1574, succeeded by his eldest surviving son Francesco , whose death without male heirs led to the succession of his younger brother, Ferdinando , in 1587. Francesco married Johanna of Austria , and with his consort produced Eleonora de' Medici , Duchess of Mantua, and Marie de' Medici , Queen of France and Navarre. Through Marie, all succeeding French monarchs (bar

7470-459: The Grand Duchy, a law later overturned, but resurrected by Maria Maddalena's grandson, Cosimo III . Harold Acton , an Anglo-Italian historian, ascribed the decline of Tuscany to the Turtici regency. Grand Duke Ferdinado was obsessed with new technology, and had a variety of hygrometers, barometers, thermometers, and telescopes installed in the Palazzo Pitti . In 1657, Leopoldo de' Medici ,

7636-566: The Grand Duke's youngest brother, established the Accademia del Cimento , organized to attract scientists to Florence from all over Tuscany for mutual study. Tuscany participated in the Wars of Castro (the last time Medicean Tuscany proper was involved in a conflict) and inflicted a defeat on the forces of Pope Urban VIII in 1643. The war effort was costly and the treasury so empty because of it that when

7802-668: The Holy Roman Church), Alessandro de' Medici (future duke of Florence), and their guardians. In 1530, after allying himself with Charles V, Pope Clement VII succeeded in securing the engagement of Charles V's daughter Margeret of Austria to his illegitimate nephew (reputedly his son) Alessandro de' Medici . Clement also convinced Charles V to name Alessandro as Duke of Florence. Thus began the reign of Medici monarchs in Florence, which lasted two centuries. After securing Alessandro de' Medici's dukedom, Pope Clement VII married off his first cousin, twice removed, Catherine de' Medici , to

7968-460: The London branch and recover as much of the loans made to Edward IV as possible, ordered the Milan branch to loan less, instructed Tommaso Portinari of the Bruges branch to get rid of the galleys and not make any loans to secular rulers, and attempted to shut down the Venice branch which was no longer profitable. From the perspective of carrying out his policies, Piero faced a number of obstacles—it

8134-467: The Medici Bank was forced to establish two groups of relatively independent subsidiary units in important cities which communicated with the head bank via mail. Pisa , Milan , Venice in 1402, Geneva (moved to Lyons in 1466), Avignon , Bruges , London and an itinerant branch that followed the Pope around to tend to his needs—not for nothing have they been called "God's Bankers" —all hosted

8300-632: The Medici and the Duchy of Burgundy were forgotten, and he died a pauper in the Hospital of Santa Maria Nuova , which his ancestor Folco di Ricovero Portinari had founded in 1288. His estate was so meager and his business dealings so dubious that his inheriting son refused to inherit the estate, so as to avoid any possible overdue debts. Medici bank#Failure in Bruges The Medici Bank (Italian: Banco dei Medici [ˈbaŋko dei ˈmɛːditʃi] )

8466-570: The Medici and their foundational branches in business. The Medici briefly became leaders of Western Christendom through their two famous 16th century popes, Leo X and Clement VII . Both also served as de facto political rulers of Rome, Florence, and large swaths of Italy known as the Papal States . They were generous patrons of the arts who commissioned masterpieces such as Raphael 's Transfiguration and Michelangelo 's The Last Judgment ; however, their reigns coincided with troubles for

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8632-572: The Medici bank had already been dropped as a full partnership in 1465, and had been reincorporated as an accomando . In 1467, Angelo Tani was dispatched to audit the London branch's books. Tani attempted to step up the collection of outstanding debt—the English king owed 10,500 pounds sterling , the English nobility 1,000, and another 7,000 pounds were tied up in goods dispatched on consignment and not soon recoverable. Operating funds were (like previous failing branches had done) borrowed from Medici branches at high rates of interest. Edward IV amortized

8798-504: The Medici family a monopoly on the mining there, making them the primary producers of alum in Europe. Three successive generations of the Medici—Cosimo, Piero, and Lorenzo—ruled over Florence through the greater part of the 15th century. They clearly dominated Florentine representative government without abolishing it altogether. These three members of the Medici family had great skills in

8964-478: The Medici progressively reduced their investment in this partnership, and it appears that they withdrew completely sometime shortly after 1457, with only one partner keeping it running until 1476. 1446 saw the start of two Medici branches: the sub-branch that was the Bruges branch was converted into a full partnership, and a limited liability partnership in Avignon, the largest center of trade in southern France (despite

9130-514: The Medici since he and his family were seen as the true rulers of Florence. The second reason was that there was a systemic specie problem in the Medici bank in which hard currency flowed south to Italy from the northern countries, and the import of English wool was necessary to provide a conduit for currency to flow north and balance the books. So when King Edward IV demanded loans, the London branch had little choice but to oblige him if it wanted to continue to export English wool to Florence. By 1494,

9296-459: The Medici to the Tuscan state, provided that nothing was ever removed from Florence. The "Lorrainers", as the occupying forces were called, were popularly loathed, but the regent, the Prince de Craon, allowed the electress to live unperturbed in the Palazzo Pitti . She occupied herself with financing and overseeing the construction of the Basilica of San Lorenzo , started in 1604 by Ferdinando I , at

9462-566: The Medici, first under Giovanni di Bicci de' Medici , later under his son Cosimo di Giovanni de' Medici and great-grandson, Lorenzo de' Medici . The Medici controlled the Medici Bank—then Europe's largest bank—and an array of other enterprises in Florence and elsewhere. In 1433, the Albizzi managed to have Cosimo exiled. The next year, however, a pro-Medici Signoria (civic government) led by Tommaso Soderini, Oddo Altoviti and Lucca Pitti

9628-554: The Medici-rented employee housing (although the managers had little say in their selection, which was done by the Florence bank), but policy was set by the seniors, and often firmly. The Bruges branch was, when first incorporated, strictly forbidden by the terms of the partnership to lend money to temporal lords and kings. Policy would generally be communicated to the branch managers during their biennial or triennial trips to Florence to report in person and discuss important issues, or in

9794-546: The Milan branch of the Medici bank also ceased to exist. The branches that did not die off on their own generally met their end with the collapse of the Medicis' political power in Florence in 1494, when Savonarola and the Pope struck against them. The central Florentine banco was burned by a mob, the Lyons branch was taken over by a rival firm, and the Roman branch struck off on its own despite

9960-586: The Passion of Christ , now held by the Galleria Sabauda in Turin, and Memling also painted their portraits for a triptych c.1470: Portrait of Tommaso Portinari , Portrait of Maria Portinari . Financial problems with the sale of alum from the joint Papal-Medici alum cartel and bad investments like two galleys that either sank or were captured by privateers , along with the still outstanding bad loans to Charles

10126-567: The Venetian and Genevan branches had been founded. Ilarione would not last long in his position, and is mentioned as dead in a letter written in February 1433. The timing was unfortunate because the Albizzi government of Florence was moving against the young Medici-led resistance (galvanized by the Albizzi government's failure in a war against Lucca and Milan), culminating in Cosimo's exile to Venice. Despite

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10292-427: The approaching problems, and tried to begin a "policy of retrenchment". This policy doesn't seem to have been fully carried out. Niccolò Machiavelli states in his history of Florence that Piero's policy involved calling in loans for repayment, which caused a number of Florentine businesses to collapse, sparking a plot against Piero and Medici rule. Whether Machiavelli is overstating issues and Piero had merely ordered

10458-414: The arts and sciences. They funded the invention of the piano , and arguably that of opera , They were also protagonists of the Counter-Reformation , from the beginning of the Reformation through the Council of Trent and the French Wars of Religion . The Medici family came from the agricultural Mugello region north of Florence, and they are first mentioned in a document of 1230. The origin of

10624-421: The bank and depended on his secretary and his great-uncle Giovanni Tornabuoni to handle everything. The two mismanaged the bank and balked the new ministro's, Giovambattista Bracci, efforts (Sassetti having died of a stroke in March 1490). If the Medici family and its bank had not been politically overthrown in 1494, it would probably have failed shortly thereafter in a long-delayed bankruptcy. Another factor in

10790-446: The bank in 1402, with only five at the central bank in Florence, although they were reasonably well-paid and promotions seem to have been rapid when warranted (such as in the case of Giuliano di Giovanni di ser Matteo, who went from being a clerk in 1401 to a junior partner in 1408). In 1420, Benedetto de' Bardi (the ministro , or general manager, of all the branches) died, and was succeeded by his younger brother Ilarione de' Bardi, who

10956-456: The bank in Florence, and while he and his family were influential in the Florentine government, it was not until his son Cosimo the Elder took over in 1434 as gran maestro that the Medici became the unofficial head of state of the Florentine Republic. The Medici family had long been involved in banking at a high level, maintaining their status as a respectably upper-class and notably wealthy family who derived their money from land holdings in

11122-441: The beginning of the bank's decline to Cosimo de' Medici. He spent the vast majority of his time wrapped up in politics, and when he was not preoccupied with the intricate plotting and other characteristics of Florentine politics, he was patronizing the many fine Renaissance scholars and artists who were present there, or engaged in composing his own renowned poetry. This left minimal time for the careful selection of branch managers and

11288-477: The bill matured, they received in Bruges 54 1 ⁄ 2 groats for each ducat. With the proceeds of this bill the Bruges branch, acting as [an] agent for the Venice branch, bought a bill on Venice, payable at the end of two months, at the rate of 51 1 ⁄ 2 groats per ducat. The Medici of Venice thus made a profit of 3 groats on each ducat over a period of four months, since they received 54 1 ⁄ 2 groats and paid 51 1 ⁄ 2 groats. If

11454-420: The blood of my brother and of myself, should be ended by any means. My desire is that by my life or my death, my misfortune or my prosperity, I may contribute to the welfare of our city... I go full of hope, praying to God to give me grace to perform what every citizen should at all times be ready to perform for his country. — Lorenzo de' Medici, 1479 The exile of the Medici lasted until 1512, after which

11620-443: The books and dissolve the partnership. Portinari ironically found himself hoisted by his own petard; he could not refuse the dissolution, since the maggiore Lorenzo had given the proper notice, and he further had to accept his own cooked books because he claimed that the books were accurate and the rather doubtful assets listed were indeed worth what they were worth. The agent Ricasoli was aided in this task by Angelo Tani, who came all

11786-402: The branch being bankrupt in general (ironically, they would suffer still more debts when a Medici cardinal became Pope Leo X and inquired after the 11,243 gold florins he had deposited with the branch back when it was with the Medici bank). Even at the time of its downfall, the Medici bank was the biggest bank in Europe, with at least seven branches and over fifty factors. De Roover attributes

11952-560: The branch that he purchased with his investment. Also in 1402, the first Medici factory was established for the production of woolen cloth, and then another in 1408. By this point, the Rome branch had established a branch in Naples (closed in 1425 and was replaced with one in Geneva) and Gaeta . It may seem that the Medici bank was flourishing and rapidly expanding its assets across Italy, but nevertheless there were perhaps only 17 employees in total of

12118-422: The clever ruse of shifting all the London branch's business to the Bruges branch—except for the profitable wool business. Portinari bought into the separate partnership to the tune of 45%, whereas his share in the Bruges branch was only 27.5%. The branch was liquidated in 1478 with staggering losses. The failure of the Bruges branch meant that not only the debts of that branch had to be handled somehow, but also

12284-439: The conferences for Tuscany's future. On 25 October 1723, six days before his death, Grand Duke Cosimo disseminated a final proclamation commanding that Tuscany stay independent: Anna Maria Luisa would succeed uninhibited to Tuscany after Gian Gastone, and the grand duke reserved the right to choose his successor. However, these portions of his proclamation were completely ignored, and he died a few days later. Gian Gastone despised

12450-416: The court and the aristocracy was probably the chief reason for establishing branches in both Milan in 1452 or 1453 and Naples in 1471, and over-extension of credit through personal loans created severe and ultimately insurmountable problems for both operations. With Lorenzo's death on April 8, 1492, the succession passed to his 20-year-old son Piero di Lorenzo (1472–1521). Piero had no talent for running

12616-501: The death of Giuliano and an injured Lorenzo. The conspiracy involved the Pazzi and Salviati families, both rival banking families seeking to end the influence of the Medici, as well as the priest presiding over the church services, the Archbishop of Pisa , and even Pope Sixtus IV to a degree. The conspirators approached Sixtus IV in the hopes of gaining his approval, as he and the Medici had

12782-483: The decline of the Medici bank were the spending habits of the Medici. According to Lorenzo, between 1434 and 1471, the family spent an average of 17,467 gold florins a year. Another misjudgement or failure by Sassetti was placing his trust in Tommaso Portinari instead of in more trustworthy managers like Angelo Tani; Portinari would eventually cause the collapse of the bank's Bruges branch. Niccolò Machiavelli gave

12948-517: The departure of the Papacy). Within 2 years, the Avignon branch was converted into a full partnership. The Medici branch at Lyons was not actually founded as a separate branch; it came about as a result of the gradual move of the Geneva branch, due to the reduction in traffic to the fairs at Geneva and the establishment of four major fairs in Lyons which attracted around 140 other Florentine businesses ). The move

13114-401: The devaluation of gold against silver (which held steady) between 1475 and 1485 —possibly thanks to increased output by German and Bohemian silver mines—meant that as creditors, the Medici Bank was on the wrong side of the trend. Their deposits were held in gold, and interest was paid in gold. This trend was in part attributable to Florence's reluctance to debase the gold florin, which

13280-510: The dignity Royal Highness for the Grand Duke and his family in 1691, despite the fact that they had no claim to any kingdom. Cosimo frequently paid the Holy Roman Emperor, his nominal feudal overlord, exorbitant dues, and he sent munitions to the emperor during the Battle of Vienna . The Medici lacked male heirs, and by 1705, the grand ducal treasury was virtually bankrupt. In comparison to

13446-532: The early grand dukes, but was bankrupt by the time of Cosimo III de' Medici (r. 1670–1723). The Medicis' wealth and influence was initially derived from the textile trade guided by the wool guild of Florence, the Arte della Lana . Like other families ruling in Italian signorie , the Medici dominated their city's government, were able to bring Florence under their family's power, and created an environment in which art and humanism flourished. The Italian Renaissance

13612-548: The electress for engineering his catastrophic marriage to Anna Maria Franziska of Saxe-Lauenburg ; while she abhorred her brother's liberal policies, he repealed all of his father's anti-Semitic statutes. Gian Gastone revelled in upsetting her. On 25 October 1731, a Spanish detachment occupied Florence on behalf of Don Carlos, who disembarked in Tuscany in December of the same year. The Ruspanti , Gian Gastone's decrepit entourage, loathed

13778-480: The electress, and she them. Duchess Violante of Bavaria , Gian Gastone's sister-in-law, tried to withdraw the grand duke from the sphere of influence of the Ruspanti by organising banquets. His conduct at the banquets was less than regal; he often vomited repeatedly into his napkin, belched, and regaled those present with socially inappropriate jokes. Following a sprained ankle in 1731, he remained confined to his bed for

13944-434: The exchange rate in Bruges had been 54 1 ⁄ 2 groats instead of 51 1 ⁄ 2 per ducat, the Medici of Venice would have broken even because they would have paid and received the same number of groats for each ducat. A controlling interest in a bottega di seta (silk shop) and two botteghe di lana (cloth manufacturing establishment) were further possessions of the Medici (although run in partnership with men of

14110-439: The exchange rate set when the presenting (or current owner; bills of exchange could be sold and traded freely) person bought the bill of exchange. That there was a difference in time was guaranteed by the terms of the bill. A specific date could be set, but generally the time between a bill was issued in one city and could be cashed in at another was set by long-standing custom, or at usance . The usance between Florence and London

14276-436: The factor who had previously done so well—he made the fatal mistake of violating the partnership agreement and loaning money to Germans; on a more humane note, he would eventually become a pauper and be sent 20 florins by Giovanni, who felt that a past partner deserved some charity), but soon was prospering. It was this branch that established the practice of having a general manager's remuneration be paid through shares in

14442-451: The failure of the Bruges branch) appealed to him to overrule Sassetti and restrict the lending of the London branch, that "he [Lorenzo] did not understand such matters." He would later admit that his lack of knowledge and understanding was the reason he approved Tommaso Portinari's disastrous schemes. Goldthwaite faults Lorenzo in no uncertain terms: Lorenzo il Magnifico, for whom politics always took priority over business. Service to

14608-477: The family acquired political power initially in Florence , and later in the wider spheres of Italy and Europe. A notable contribution to the professions of banking and accounting pioneered by the Medici Bank was the improvement of the general ledger system through the development of the double entry system of tracking debits and credits or deposits and withdrawals. Giovanni di Bicci de' Medici established

14774-462: The first half of the 15th century. The family originated in the Mugello region of Tuscany , and prospered gradually in trade until it was able to fund the Medici Bank . This bank was the largest in Europe in the 1400s and facilitated the Medicis' rise to political power in Florence , although they officially remained citizens rather than monarchs until the 16th century. In 1532, the family acquired

14940-436: The first non-Habsburg marriage candidate since Alessandro, Christina of Lorraine , a granddaughter of Catherine de' Medici. The Spanish reaction was to construct a citadel on their portion of the island of Elba. To strengthen the new Franco-Tuscan alliance, he married his niece, Marie, to Henry IV of France . Henry explicitly stated that he would defend Tuscany from Spanish aggression, but later reneged, after which Ferdinando

15106-533: The following year he was assassinated by a resentful cousin, Lorenzino de' Medici . The deaths of Alessandro and Ippolito enabled the Medici's "junior" branch to lead Florence. Another outstanding figure of the 16th-century Medici family was Cosimo I, who rose from relatively modest beginnings in the Mugello to attain supremacy over the whole of Tuscany . Against the opposition of Catherine de' Medici , Pope Paul III and their allies, he prevailed in various battles to conquer Florence's hated rival Siena and found

15272-423: The fraud at the Lyons branch until it was too late for it to hope to remain solvent. The branch manager Lionetto de' Rossi had attempted to cover up his incompetence by being far too optimistic as to the number of bad loans the branch would have to cover, and by borrowing funds from other banks, thus artificially inflating his profits. That, however, is not the only factor that caused the fall. A long term trend in

15438-459: The future Pope Clement VII . Lorenzo's son Piero II took over as the head of Florence after Lorenzo's death. The Medici were expelled from Florence from 1494 to 1512 after Piero acceded to all of the demands of invader Charles VIII of France . In the dangerous circumstances in which our city is placed, the time for deliberation is past. Action must be taken... I have decided, with your approval, to sail for Naples immediately, believing that as I am

15604-454: The guild itself into disuse, the outside chronicler Giovanni Cambi noting that of the 9 large banks left in Florence by 1516, one failed on December 25. This banking decline does not appear to have been specific to Florence; similar declines were seen in Bruges and Venice (although apparently not in Spain ). Similarly, the northern branches of all European banks were squeezed by a general decline in

15770-625: The guilds nominally represented." Piero died on December 2, 1469. He was succeeded by his two sons, Lorenzo and Giuliano. Lorenzo's interest in politics and art (which led to his appellation "the Magnificent") forced him to rely on his ministro Francesco Sassetti to handle most affairs of the bank. Sassetti can be faulted and inculpated in the decline of the bank for failing to prevent the disasters of Lyon and Bruges, and Lorenzo for relying too much on Sassetti and not listening to him when Sassetti did notice problems or tried to fix things. Indeed, Lorenzo once said when Angelo Tani (who had tried to prevent

15936-723: The hereditary title Duke of Florence . In 1569, the duchy was elevated to the Grand Duchy of Tuscany after territorial expansion. The Medici ruled the Grand Duchy from its inception under the builder Cosimo I until 1737, with the death of Gian Gastone de' Medici . The Medici produced four popes of the Catholic Church— Pope Leo X (1513–1521), Pope Clement VII (1523–1534), Pope Pius IV (1559–1565) and Pope Leo XI (1605)—and two queens of France— Catherine de' Medici (1547–1559) and Marie de' Medici (1600–1610). The Medici's grand duchy witnessed degrees of economic growth under

16102-421: The interest on the deposit, since a depositor would gain revenue on the principal without any risk to the principal, which would have made both parties usurers and sinners; nor could they charge fees or other such devices. Discretionary deposits were a partial way out, but the bank made most of its money by selling holographic "bills of exchange". These bills certified that a particular person or company had paid

16268-574: The late 14th century, the leading family of Florence was the House of Albizzi . In 1293, the Ordinances of Justice were enacted; effectively, they became the constitution of the Republic of Florence throughout the Italian Renaissance. The city's numerous luxurious palazzi were becoming surrounded by townhouses built by the prospering merchant class. The main challengers to the Albizzi family were

16434-556: The later Medici branches opened in Bruges, London, Pisa, Avignon, Milan, and Lyon contributing nothing as they had not been founded yet). At this time, there seems to have been some sort of Medici office in Basel , and it seems to have lasted until 1443. De Roover speculates that it was a sub-branch of the Medici bank's Geneva branch serving the General Council of the Church , and was closed when

16600-430: The long-standing ban on lending to secular officials in 1471, Portinari used his position to make very large and extremely risky unsecured loans to Charles the Bold —loans which were never repaid and cost the bank heavily. He initially loaned 6,000 groat , more than twice that branch's total capital; the loan only grew worse, until it stood at 9500 groat in 1478. Unsurprisingly, for his good services, Portinari became

16766-460: The losses), despite the fact that Tani never signed the articles or written with his approval. The magnitude of the financial failures is hard to state. In a surviving memorandum, Lorenzo the Magnificent gives the bad debts to Charles the Bold alone as the sum of 16,150 pounds groat. The articles of partnership, incidentally, strictly forbade Portinari to lend more than the total of 6,000 pounds groat. In another memorandum, Lorenzo faults Portinari for

16932-574: The maintenance of an alert watch against fraud within the bank, which was greatly needed. Most of the financial duties handed over to Francesco Sassetti, who had risen from being a mere factor in the Avignon branch to its general manager, and then a post in Geneva eventually to end up in 1458 in Florence proper at Cosimo's side. Sassetti was left to handle much of the business himself. In the end, it turned out badly. Whether simply due to bad luck, old age, increasing laziness, or diversion of his time to studying humanism like Cosimo, Sassetti failed to discover

17098-486: The management of so "restive and independent a city" as Florence. When Lorenzo died in 1492, however, his son Piero proved quite incapable of responding successfully to challenges caused by the French invasion of Italy in 1492 , and within two years, he and his supporters were forced into exile and replaced with a republican government. Piero de' Medici (1416–1469), Cosimo's son, was only in power for five years (1464–1469). He

17264-495: The manager Alessandro Martelli invested 2,000 of the 14,000 ducats. He would be paid of the total profits not his fair 1 ⁄ 7 th, but rather 1 ⁄ 5 th ). The manager could, if he wished, attempt to start a rival bank, but he could not legally claim to be part of the Medici Bank, since a right to use that trademarked name came with the partnership. This measure would turn out to be effective against ambitious dissident juniors like Tommaso Portinari. However, even before

17430-459: The manager of the London branch. While at the height of his career, he had himself memorialized in religious paintings. One, the Portinari Triptych , is visible today in Florence. In commissioning it, he ostentatiously compared himself with his predecessor at the Bruges branch, Angelo Tani . He may also have commissioned The Last Judgment , by Hans Memling , as it has been suggested that

17596-482: The name is uncertain. Medici is the plural of medico , meaning "medical doctor". The dynasty began with the founding of the Medici Bank in Florence in 1397. For most of the 13th century, the leading banking centre in Italy was Siena . But in 1298, one of the leading banking families of Europe, the Bonsignoris , went bankrupt, and the city of Siena lost its status as the banking centre of Italy to Florence. Until

17762-441: The necessary technical expertise). They paid by the piece and ran on the putting-out system ; for the wool especially it was a very complex system, in which the early steps had to be done in the factories but then the spinning of the wool was done by women outside the factory, and the yarn collected to be brought to the weavers, who would then turn it over to the dyers and finishers in the factory. Legally, they were incorporated much

17928-412: The next. Two Portinaris were put in charge of the Florence and Venice branches. Giovanni died in 1429. According to Lorenzo, his fortune upon his death was worth around 180,000 gold florins. His death did not greatly affect the bank's operations, and the transition to Cosimo went smoothly, aided by Ilarione, who was retained as ministro . Fortunately for the bank, Lorenzo di Giovanni di Bicci de' Medici

18094-456: The outstanding Plantagenet debt. After the London branch failed, it was turned into a accomando and placed under the control of the Bruges branch, managed by the third of the Portinari brothers, Tommaso Portinari . This branch, too, would soon fail. Portinari had managed the Bruges branch for decades, and had steadily proven himself to be a poor manager—he engaged in business dealings on

18260-412: The outstanding debts of the former London branch. In total, upwards of 70,000 gold florins were lost. This figure is optimistic, since it assumes most book assets were worth the recorded value. As Lorenzo remarked, "These are the great profits which are accruing to us through the management of Tommaso Portinari." Lorenzo refused to take this loss lying down, and dispatched a trusted agent to Bruges to audit

18426-453: The person against whom the activities of our enemies are chiefly directed, I may, perhaps, by delivering myself into their hands, be the means of restoring peace to our fellow-citizens. As I have had more honour and responsibility among you than any private citizen has had in our day, I am more bound than any other person to serve our country, even at the risk of my life. With this intention I now go. Perhaps God wills that this war, which began in

18592-444: The political pressure of King Charles VIII of France 's 1494 invasion of Italy caused Piero di Lorenzo de' Medici to concede to the dual forces of Charles and the impending insolvency of the Medici bank. The Medici bank's remaining assets and records were seized and distributed to creditors and others. All the branches were declared dissolved. Not much remains of the Medici Bank's records; mentions of it and its activities are rife in

18758-420: The population of Florence at the dawn of the 17th century was a mere 75,000, far smaller than the other capitals of Italy (i.e., Rome, Milan, Venice, Palermo, and Naples). Francesco and Ferdinando, due to lax distinction between Medici and Tuscan state property, are thought to have been wealthier than their ancestor, Cosimo de' Medici, the founder of the dynasty. The Grand Duke alone had the prerogative to exploit

18924-420: The private letters and reports their couriers carried. Usury was still banned by the Church in this period, with an interpretation concisely expressed as Quidquid sorti accedit, usura est ("Whatever exceeds the principal is usury"). So the Medici Bank could not openly adopt the modern formula of promising to pay interest on demand deposits and loaning out a fraction of the deposits at greater interest to pay for

19090-589: The rest of his life. The bed, often smelling of faeces , was occasionally cleaned by Violante. In 1736, following the War of the Polish Succession , Don Carlos was disbarred from Tuscany, and Francis III of Lorraine was made heir in his stead. In January 1737, the Spanish troops withdrew from Tuscany, and were replaced by Austrians. Gian Gastone died on 9 July 1737, surrounded by prelates and his sister. Anna Maria Luisa

19256-578: The same as the branches, although unlike the branches, the managers apparently had complete latitude in managing employees. The silk shop produced some of the finest silk wares, and were usually sold to Florentine exporters or shipped to the branch in Bruges as a consignment to feed the Burgundian court's strong appetite for such goods, or to the branch in Milan to sell to the Sforza court. The cloth manufacturers similarly produced very high-quality pieces and sold

19422-423: The shares' profits were paid out, any sums invested in the branch outside of an ownership of shares were repaid at a set interest rate, sometimes leading to one branch paying another for the latter's investment in the former. Governors were given wide latitude in daily operations and in the management of their seven or eight assistant managers, clerks, cashiers, accountants , or couriers who lived and boarded at

19588-423: The side, ingratiated himself with the Burgundian court by excessive loans (first to secure the farming of the toll of Graveline —which was never very profitable—and then to mingle socially and elevate himself), made poor business deals like purchasing two galleys (which would be partially sold off at a loss; the rest would be lost to shipwreck and piracy). The debts from the London branch were assumed by

19754-575: The son of Emperor Charles V's arch-enemy, King Francis I of France —the future King Henry II . This led to the transfer of Medici blood, through Catherine's daughters, to the royal family of Spain through Elisabeth of Valois , and the House of Lorraine through Claude of Valois . In 1534, following a lengthy illness, Pope Clement VII died—and with him the stability of the Medici's "senior" branch. In 1535, Ippolito Cardinal de' Medici died under mysterious circumstances. In 1536, Alessandro de' Medici married Charles V's daughter, Margaret of Austria; however,

19920-580: The soul of the sinner being weighed on the scales of St. Michael is in fact a donor portrait of Portinari. This painting, also intended for a Florentine church, was hijacked by pirates from the Baltic Sea , leading incidentally to a lengthy lawsuit against the Hanseatic League to force them to return it. He and his wife are portrayed in donor portraits in Hans Memling 's c.1470 painting Scenes from

20086-734: The stake in the Piazza della Signoria, the same location as his bonfire. In addition to commissions for art and architecture, the Medici were prolific collectors and today their acquisitions form the core of the Uffizi museum in Florence. In architecture, the Medici were responsible for some notable features of Florence, including the Uffizi Gallery , the Boboli Gardens , the Belvedere , the Medici Chapel and

20252-461: The state's mineral and salt resources, and the fortunes of the Medici were directly tied to the Tuscan economy. Ferdinando, although no longer a cardinal, exercised much influence at successive conclaves. In 1605, Ferdinando succeeded in getting his candidate, Alessandro de' Medici, elected Pope Leo XI . He died the same month, but his successor, Pope Paul V , was also pro-Medici. Ferdinando's pro-papal foreign policy, however, had drawbacks. Tuscany

20418-498: The supply of English wool. Agreement on these aggravating factors does not seem to be universal; Richard A. Goldthwaite writes in 1987 that "these economic conditions have never been adequately explained. It appears more likely that the contraction and decline of the Medici bank under Lorenzo—it was reduced to branches in only Florence, Rome and Lyons by the time he died in 1492—were due simply to bad management." He also claims that banking guild memberships cannot be used as

20584-463: The taxman. The once voluminous internal documentation has been grievously reduced by the passage of time: This study is based mainly on the business records of the Medici Bank: partnership agreements, correspondence, and account books. The extant material is unfortunately fragmentary; for example, no balance sheets have survived. Only a few pages of some of the account books have escaped destruction by

20750-476: The territories of the Austrian crown. The line of the Princes of Ottajano , an extant branch of the House of Medici who were eligible to inherit the grand duchy of Tuscany when the last male of the senior branch died in 1737, could have carried on as Medici sovereigns but for the intervention of Europe's major powers, which allocated the sovereignty of Florence elsewhere. As a consequence, the grand duchy expired and

20916-528: The territory became a secundogeniture of the Habsburg-Lorraine dynasty. The first grand duke of the new dynasty, Francis I, was a great-great-great-grandson of Francesco I de' Medici, thus he continued the Medicean Dynasty on the throne of Tuscany through the female line. The Habsburgs were deposed in favor of the House of Bourbon-Parma in 1801 (themselves deposed in 1807), but were later restored at

21082-447: The time of his death, the population of the grand duchy was 730,594; the streets were lined with grass and the buildings on the verge of collapse in Pisa . Ferdinando's marriage to Vittoria della Rovere produced two children: Cosimo III de' Medici, Grand Duke of Tuscany, and Francesco Maria de' Medici, Duke of Rovere and Montefeltro . Upon Vittoria's death in 1694, her allodial possessions,

21248-468: The time of issuance and payment. This they attempted to do with frequent letters between branches and paying close attention to exchange rates. While close to loans, the element of risk meant that this practice did not actually become usury, except in the case of "dry exchange", where the moving around of money was fictitious. With appropriate issuances of bills, branches could move around money and actually make money. Similarly, they could be fairly certain of

21414-477: The unfavorable politics in this period of the bank's history, its Italian branches turned in bumper profits, with as much as 62% of the total coming from Rome (in 1427, the Roman branch of the Medici bank had approximately 100,000 florins on deposit from the Papal Curia; in comparison, the total capitalization of the entire Medici bank was only about 25,000 gold florins ) and 13% from Venice between 1420 and 1435 (with

21580-407: The unquestioned leaders. The Medici family was connected to most other elite families of the time through marriages of convenience , partnerships, or employment, so the family had a central position in the social network : several families had systematic access to the rest of the elite families only through the Medici, perhaps similar to banking relationships. Some examples of these families include

21746-457: The war against Rome following the Pazzi Conspiracy , Pierfrancesco would have been wiser to effect such a separation. Specifically, Lorenzo appropriated about 53,643 gold florins and only repaid part of the sum. Piero was not Cosimo's equal, but given his training did perhaps better than one would expect, especially considering how he was rendered bedridden by severe gout . Piero recognized

21912-480: The way from Florence to settle the matter of his supposed partnership in the London branch through the Bruges branch. Upon Cosimo's death, his estate and control of the bank passed to his eldest son, Piero di Cosimo "the Gouty" ( Piero il Gottoso ). Piero had been given a humanist education, unlike his younger brother who was trained in business but had died in 1463. The estate remained intact, though in this case not as

22078-437: The wealth of the family through his creation of the Medici Bank, and became one of the richest men in the city of Florence. Although he never held any political office, he gained strong popular support for the family through his support for the introduction of a proportional system of taxation . Giovanni's son Cosimo the Elder , Pater Patriae (father of the country), took over in 1434 as gran maestro (the unofficial head of

22244-442: The writings of outsiders, but outsiders necessarily had little access to the balance books which could truly tell the story of the bank's rise and fall, and certainly not to the confidential business correspondence and the secret books. Some of the most copious documentation, derived from archived tax records such as the catasto records, are largely useless since the various principals of the bank were not above flagrantly lying to

22410-403: Was 3 months, for example. A fictional but illustrative example: a merchant is traveling from Florence to London. He buys a bill of exchange for 10 florins, with the understanding that the London branch will cash that bill at half a pound to the florin, for a total of 5 pounds. If he reaches London and discovers that the florin has become stronger against the pound, to the point where a florin buys

22576-477: Was a financial institution created by the Medici family in Italy during the 15th century (1397–1494). It was the largest and most respected bank in Europe during its prime. There are some estimates that the Medici family was, for a period of time, the wealthiest family in Europe. Estimating their wealth in today's money is difficult and imprecise, considering that they owned art, land, and gold. With this monetary wealth,

22742-427: Was always politically costly to demand that loans be repaid, particularly when made to monarchs and powerful nobles and such demands could cost Piero dearly close to home. The king of England had him over a barrel as the king could block any attempts to export English wool by the Medici, which was desperately needed by the bank for two reasons. English wool was the finest in the world; if Florence's artisans did not have

22908-616: Was an artist in his own right and an author of poetry and song; his support of the arts and letters is seen as a high point in Medici patronage. After Lorenzo's death the puritanical Dominican friar Girolamo Savonarola rose to prominence, warning Florentines against excessive luxury. Under Savonarola's fanatical leadership many great works were "voluntarily" destroyed in the Bonfire of the Vanities (February 7, 1497). The following year, on 23 May 1498, Savonarola and two young supporters were burned at

23074-546: Was analogous to Christina's, and together they aligned Tuscany with the papacy , re-doubled the Tuscan clergy, and allowed the heresy trial of Galileo Galilei to occur. Upon the death of the last Duke of Urbino (Francesco Maria II), instead of claiming the duchy for Ferdinando, who was married to the Duke of Urbino's granddaughter and heiress, Vittoria della Rovere , they permitted it to be annexed by Pope Urban VIII . In 1626, they banned any Tuscan subject from being educated outside

23240-447: Was called "Piero the Gouty" because of the gout that pained his foot and led to his death. Unlike his father, Piero had little interest in the arts. Due to his illness, he mostly stayed at home bedridden, and therefore did little to further the Medici control of Florence while in power. As such, Medici rule stagnated until the next generation, when Piero's son Lorenzo took over. Lorenzo de' Medici (1449–1492), called "the Magnificent",

23406-447: Was completed in 1466. The structure and functions of the Medici bank were largely settled into their final form by this point; a branch would be opened in Milan in late 1452, or early 1453, at the instigation of the grateful Sforza. Its first manager Pigello Portinari (1421–1468) was very capable and this branch did well in loaning to the Sforza court and, like the Roman branch, selling luxuries such as jewels, until Pigello died and

23572-533: Was controlled by Giovanni in partnership with Benedetto di Lippaccio de' Bardi (1373–1420 ). The Medici bank's founding is usually dated to 1397, since it was this year that Giovanni di Bicci de' Medici separated his bank from his nephew Averardo's bank (which had effectively been acting as a branch in Rome), and moved his small bank from Rome to Florence. The branch in Rome was entrusted to Benedetto, and Giovanni took on Gentile di Baldassarre Buoni (1371–1427) as

23738-540: Was dominated by a rapid succession of political crises—many long in the making—that resulted in the sack of Rome by the armies of Holy Roman Emperor Charles V in 1527 and rise of the Salviati, Altoviti and Strozzi as the leading bankers of the Roman Curia . From the time of Clement's election as pope in 1523 until the sack of Rome, Florence was governed by the young Ippolito de' Medici (future cardinal and vice-chancellor of

23904-506: Was elected and Cosimo returned. The Medici became the city's leading family, a position they would hold for the next three centuries. Florence remained a republic until 1537, traditionally marking the end of the High Renaissance in Florence, but the instruments of republican government were firmly under the control of the Medici and their allies, save during intervals after 1494 and 1527. Cosimo and Lorenzo rarely held official posts but were

24070-476: Was forced to marry his heir, Cosimo, to Maria Maddalena of Austria to assuage Spain (where Maria Maddalena's sister Margaret was the incumbent Queen consort). Ferdinando also sponsored a Tuscan expedition to the New World with the intention of establishing a Tuscan colony, an enterprise that brought no result for permanent colonial acquisitions. Despite all of these incentives for economic growth and prosperity,

24236-399: Was in effect, but usually the Florentine partners ( maggiori , "seniors") and the branch manager would then incorporate a fresh partnership if the manager's performance had been satisfactory. Managers were not paid salaries, but were considered to have invested in the partnership a sum greater than they actually had (for example, in 1455, the Venice branch's partnership agreement was renewed and

24402-422: Was incorporated as a partnership, though it was not necessary to capitalize that branch (because the Church was usually depositing funds and not borrowing). Vieri was long-lived, but his bank split into three separate banks sometime between 1391 and 1392. One bank failed quickly. The second, managed by Francesco and later his son, survived until 1443, a little less than a decade after Averardo's death. The third bank

24568-800: Was inspired by the Medici along with other families of Italy, such as the Visconti and Sforza in Milan , the Este in Ferrara , the Borgia and Della Rovere in Rome , and the Gonzaga in Mantua . The Medici Bank, from when it was created in 1397 to its fall in 1494, was one of the most prosperous and respected institutions in Europe, and the Medici family was considered the wealthiest in Europe for

24734-466: Was internationally esteemed for its stable value, prestige, and reliability. But Florence's dual coinage system only aggravated the problem. This shift in the monetary system perhaps reflected a systemic slowdown or recession in late medieval Europe in general: the Arte del Cambio's records of member banks record a drastic decline in membership such that the guild fell from 71 banks in 1399, to 33 in 1460, and then

24900-418: Was more capable of leading and ruling a city, but he neglected the family banking business, which led to its ultimate ruin. To ensure the continuance of his family's success, Lorenzo planned his children's future careers for them. He groomed the headstrong Piero II to follow as his successor in civil leadership; Giovanni (future Pope Leo X ) was placed in the church at an early age; and his daughter Maddalena

25066-478: Was not at all concerned about the bank. Instead, he chose to concentrate his time and his family's resources on patronizing artists and pursuing his own poetic and political interests. Eventually, the Medici family's fiscal problems grew severe enough to force Lorenzo to begin raiding Florence's state treasuries, at one point defrauding the Monte delle doti , a charitable fund for paying for dowries . Shortly thereafter,

25232-467: Was offered a nominal regency by the Prince de Craon until the new grand duke could peregrinate to Tuscany, but declined. Upon her brother's death, she received all the House of Medici's allodial possessions. Anna Maria Luisa signed the Patto di Famiglia ("family pact") on 31 October 1737. In collaboration with the Holy Roman Emperor and Grand Duke Francis of Lorraine, she willed all the personal property of

25398-426: Was on excellent terms with Cosimo, and did not insist on dissolving the partnerships so he could receive his share of the patrimony ( primogeniture not being operative here); many Florentine banks and mercantile businesses lasted only a generation or two because some of the inheriting sons usually wished to strike out on their own. At this time, the Medici bank was flourishing: besides the branches in Rome and Florence,

25564-410: Was one of Florence's more prominent bankers (the first of the various modestly upper-class Medici lineages, numbering around 20 in 1364 ). His banking house trained and employed Giovanni and his elder brother Francesco ( c. 1350–1412), who eventually became partners in the firm. Francesco became a junior partner in 1382, while Giovanni rose to become general manager of the Rome branch in 1385, which

25730-665: Was overrun with religious orders, not all of whom were obliged to pay taxes. Ferdinando died in 1609, leaving an affluent realm; his inaction in international affairs, however, would have long-reaching consequences down the line. In France, Marie de' Medici was acting as regent for her son, Louis XIII . Louis repudiated her pro-Habsburg policy in 1617. She lived the rest of her life deprived of any political influence. Ferdinando's successor, Cosimo II , reigned for less than 12 years. He married Maria Maddalena of Austria, with whom he had his eight children, including Margherita de' Medici , Ferdinando II de' Medici , and an Anna de' Medici . He

25896-459: Was provided with a sumptuous dowry to make a politically advantageous marriage to a son of Pope Innocent VIII that cemented the alliance between the Medici and the Roman branches of the Cybo and Altoviti families. The Pazzi conspiracy of 1478 was an attempt to depose the Medici family by killing Lorenzo with his younger brother Giuliano during Easter services; the assassination attempt ended with

26062-482: Was replaced by his feckless brother Accerrito (1427– c. 1503) who could not manage the massive amounts lent to the Milanese court and to Duke Sforza (who did not repay his debts of 179,000 ducats before his death in 1478). A similar problem would plague the Bruges branch of the bank when managed by the third Portinari brother, Tommaso. Still, this period (1435–1455) under Cosimo and his ministro Giovanni Benci

26228-513: Was sued by the Milanese Damiano Ruffini for "defective packing of nine bales of wool bought by the plaintiff from the Medici branch in London. The defendant pointed out that the bales never belonged to the Bruges branch and that the plaintiff should sue the London branch." Portinari testified that the two branches were legally and commercially separate, apparently persuading the judge who denied Ruffini's suit, but upholding his right to sue

26394-500: Was that it was much easier to invest a bank's capital in Florence than in Rome, and because of the Holy See 's deposits (obtained through Giovanni's long contacts with them), the bank had a fair amount of capital to invest in other ventures. A factor was dispatched to Venice to seek out investment opportunities. He did well and on March 25, 1402, the third branch of the Medici bank was opened. It suffered from some initial mismanagement (by

26560-520: Was that of a single partnership based in Florence, which immutably held the lion's share of shares in each branch (and the three textile factories in Florence), which were themselves incorporated as independent partnerships. At the end of the year on March 24 (by the then used calendar), each partnership would be dissolved, although the Medici could dissolve a partnership at any time with six months' notice. The books were thoroughly gone through and checked, and

26726-636: Was the Wars of the Roses , which rendered Edward IV unable to repay the loans (the best he could do in way of repayment was to lift all tariffs on the Medici exporting English wool until such time as the debt was repaid), and the branch had loaned far too much to the Lancastrian rebels (and not to a number of Yorkist loyalists), who would never repay their loans after their deaths and defeats. The London branch finished its liquidation in 1478, with total losses of 51,533 gold florins. The succeeding Tudors never paid off

26892-611: Was the German Abel Kalthoff . A crucial distinction between the Medici Bank and its older rivals (the Peruzzi , the Bardi , the Acciaioli , etc.) was that its "decentralization" was not merely geographic: it was legal and financial. The Peruzzi bank was taken over by outsiders in 1331 because there was but one partnership , based in Florence and held largely by Peruzzi family members, which owned everything. The employees were only paid

27058-447: Was the Medici bank's most profitable period. With Cosimo's death on August 1, 1464, the decline of the bank began. An early sign of the decline was the near-failure of the Lyon branch because of its manager's venality, saved only by heroic efforts by Francesco Sassetti (1421–1490). Its troubles were followed by the troubled London branch, which got into trouble for much the same reason

27224-432: Was the manager of the Rome branch. He dissolved one of the wool factories, along with other reorganizations occasioned by partnerships coming to their designated end. This date is interesting because Ilarione's contract with his principal was done in the name of Cosimo and Lorenzo, and not their father Giovanni; this perhaps marks the beginnings of a transfer of responsibility and power in the Medici bank from one generation to

27390-481: Was thought to be under imperial suzerainty . Upon the death of his first son, Cosimo contemplated restoring the Florentine republic, either upon Anna Maria Luisa's death, or on his own, if he predeceased her. The restoration of the republic would entail resigning Siena to the Holy Roman Empire, but, regardless, it was vehemently endorsed by his government. Europe largely ignored Cosimo's plan. Only Great Britain and

27556-413: Was undertaken too late. The bank's heavy leverage of their deposits meant that setbacks could be quite sudden. The fact that it seems to have been a common practice for Florentine banks to operate with as little as 5% of their deposits held in reserve lends further support to the idea that collapses could happen abruptly when bad loans were discovered. In addition to all of that, Lorenzo the Magnificent

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