Una Fiera Senza Luogo: Was Bisenzone an Offshore Capital Market in Sixteenth-Century Italy?

Abstract

This paper discusses how Genoese bankers collected money at exchange fairs. This money was then lent to the King of Spain-through the asientos-from the mid-sixteenth to the early seventeenth centuries. Genoese bankers raised capital at the exchange fairs , which were typical short-term credit mechanism, where foreign bills of exchange were discounted over a three-month period. The Genoese funded long-term obligations by means of short term loans which meant they were able to enforce payment to the King and at the same time successfully manage the supply of finance from a large number of easily substitutable markets, located in different states. The Bisenzone fair of exchange was the forerunner to an efficient, widely integrated international capital market where Genoese preeminence was firmly established and which the Genoese kept firmly under their control. The success of the Bisenzone fairs of exchange directly challenges the theory which suggests that the laws against usury restrained the development of capital markets in early modern Italy.

Sticky Power

“…Offshore banking, in the special jurisdictions of the exchange fairs, and shadow banking, via bills of exchange, thus developed in a symbiotic relationship with one another. Notably, like the modern offshore Eurocurrency markets (see Pezzolo and Tattara 2006 for a direct comparison), the exchange fairs served mostly as hubs for abstract paper operations booked in various currencies, with contemporary observers remarking that "nothing was rarer than money at these clearing fairs" (Boerner and Hatfield 2017).…”

“…"1⁶ Playing the central role in mediating this exchange of "protection and justice for revenue" (North 1993, 5) between states and merchants were, from the outset, two quintessentially "offshore" jurisdictional institutions: namely the free city, and the fair. The fairs were basically the forerunners of the modern offshore facility (see Pezzolo and Tattara 2006), and were special jurisdictional zones that were set up by public authorities, at various levels, to allow for longdistance commercial and financial activity to be conducted under special sets of rules. In practice, these rules centered on some version of the Law Merchant, administered by a fair court, and where necessary enforced in fair matters by the broader court systems of the authorities hosting and sponsoring the fairs (Boyer-Xambeau et al 1994;Edwards and Ogilvie 2012;Kadens 2004;Pirenne 2014).…”