The Economy of Renaissance Florence Book

This is a truly outstanding work though, it must be said, it is not for everyone. If you are after an extraordinarily detailed explication and analysis of how the economy of Renaissance Florence developed, worked, created and integrated with the international markets of its day, and how the various groups within Florence worked and fought with each other and how wealth was accumulated and distributed this is the book for you. If you want this done with minimal recourse to exacting detail and some financial jargon, it may not be.

In either case, the book is yet another example of the kind of truism "There is nothing new in the world, only history that you don't know." The Florentine economy developed very much like that of Japan post the Meiji Restoration, and even moreso like postwar Japan. Tuscany, by the time of the Renaissance, had been one of the most urbanized regions in the world for over a thousand years. As a result, most of the natural resources of the region had been depleted. But the Arno river ran swiftly where Florence was, and her people were relatively free and thus industrious. What's more they were fecund, and so from very early on Tuscany had to import food.

Importing food of course required that the Florentines export something in turn and so they put their river and their people to work spinning wool and silk and soon ran out of the raw materials of these as well and had to import them as well. At the same time, Florence was land locked and had no access to the sea, so its relationships were purely commercial, like that of post-war Japan, not imperial, that of post-restoration Japan. It also led to the creation of the extremely sophisticated Florentine banking system.

The world knows the Florentine bankers because of the Medici and the art which they financed but the medici were simply first among equals within the Florentine banking community which broke down into two interlocking but not overlapping groups, domestic banks and international merchant banks. The international merchant banks are the more interesting of the two from the perspective of financial history because they, almost by accident, invented the certificate of deposit. Merchant banks borrowed and lent money and facilitated its transfer abroad. Since the Florentines were constantly importing food and raw materials and exporting finished goods they were constantly creating debits and credits throughout the Mediterranean and Northern Europe, the main areas in which they traded.

The travelers check, which someone in Florence might bring to a branch of a Florentine bank operating in say Bruges the center of the Northern wool trade (until the imposition of tariffs moved the business to Antwerp *hint hint contemporary readers*) a record of a credit balance in Florence and draw on it in Bruges. The travel times between these places were known and the currency of Florence, was known to be solid relative to other currencies so there would be some depreciation added in for the change in currencies over time. Meaning that the note would change in value minutely over time. Well... what if one credited a Florentine bank, and then just never left Florence, and then when the three months were over, turned up at the original branch, and redeemed it? Well, one now has a savings device that is interest bearing and transferrable. The bond has been invented.

The other thing that comes across in the book is how these kinds of financial innovations spread throughout the society and even the simplest tradesmen were often found to be using extremely sophisticated financial instruments for the time. There are also many amusing details from the quotidian lives of the famous. Here is Dante's father buying some goats using a journal entry at a pawnbroker, here is Michaelangelo making a deposit in his account at the local orhpanage which, because charitable institutions had exemptions from usury laws, also functioned as a bank.

All in all, it's amazing to read about real estate enterprises organized like We-works for wool spinners, how some men worked their way up from tradesmen to merchant princes and others squandered themselves in the other direction. The one jarring difference is that, in the absence of a consumer society, people put a lot of premium on their leisure time and very few people finished out their labor contracts, a source of constant consternation to the capitalists of the day, but perhaps a lesson to capitalists and laborers in our own.