Italian city-states and financial evolution

Abstract

The term financial revolution has been abused in the literature. Revolution connotes a sharp and unique break from the past that should stand up to careful historical scrutiny, but in fact it does not. Evolution describes financial history better than revolutions. We compare the classic 'financial revolutions' with the financial innovations of Genoa, Venice and Florence in the Quattrocento and Cinquecento and the upshot is that these Italian city-states -the two maritime cities more than Florence -had developed many of the features that were to be found later on in the Netherlands, England and the United States. The importance of the early financial innovators has been eclipsed by the fact that these city-states did not survive politically. Instead, the innovations were absorbed in the long chain of financial evolution and, in the process, lost the identity of their creators.

Risky Institutions: Political Regimes and the Cost of Public Borrowing in Early Modern Italy

“…54 Typically, in the Middle Ages there were restrictions on foreigners' participation in the secondary market and bonds were mostly traded locally. In the other states, long-term borrowing and secondary markets for their bonds grew from the sixteenth century Pezzolo, , 2005Fratianni and Spinelli, 2006). The use of decadal means ensures that one controls for the greater pressure on the public purse caused by longer wars.…”

What Do We Really Know About the Long-Term Evolution of Central Banking? Evidence from the Past, Insights for the Present

“…There are at least two dimensions along which the latter idea finds In every historical and geographical setting, governments have always been exposed to the risk of facing sudden, unpredictable expenses -mostly related to war. Although markets for long-term government debt have been existing since at least the Middle Ages (Fratianni and Spinelli 2006), in times of emergency only two kinds of strategies have typically been available in order to finance deficits. The first one is monetary debasement -a policy which has widely been implemented in almost any setting, but which suffers from the drawback of systematically creating disarray within the payments system (Sargent and Velde 2002).…”

“…Sometimes, granting convertibility was a way for worsening rather than improving the value of central bank money: this was the case with Genoa's Banco di San Giorgio, which suffered considerable losses in the 15 th century as long as it was required to convert its money into legal-tender one (Fratianni and Spinelli 2006). The general improvement in the state of metallic circulation that took place in the early 19 th century (Redish 2000) removed the rationale for internal inconvertibility as a pro-stability monetary policy.…”

Cambium non est mutuum: exchange and interest rates in medieval Europe

“…Postan, ‘Credit’, pp. 234–8; Fratianni and Spinelli, ‘Italian city‐states’; Bell, Brooks, and Dryburgh, English wool market ; Bell and Sutcliffe, ‘Valuing medieval annuities’; Briggs, Credit and village society .…”