Bell, Adrian R. Brooks, Chris and Moore, Tony K. 2014. The credit relationship between Henry III and merchants of Douai and Ypres, 1247-70. The Economic History Review, Vol. 67, Issue. 1, p. 123.
Bell, Adrian R. Brooks, Chris and Dryburgh, Paul 2007. Interest rates and efficiency in medieval wool forward contracts. Journal of Banking & Finance, Vol. 31, Issue. 2, p. 361.
The Bardi and Peruzzi of Florence became in the early fourteenth century the largest merchant-bankers ever seen in medieval Europe. Their collapse in the 1340s has been attributed by most historians to huge losses on loans to Edward III of England. This article explores some flaws in the conventional explanation and shows that the firms lacked the resources to have made loans on the generally accepted scale. It also suggests means by which the companies could have recovered at least part of their advances to the king without the results appearing in government ledgers.
1 Villani Giovanni, Storia de Giovanni Villani (Florence, 1587), book 12, chap. 54, pp. 862–63. In addition to the English losses of 1.5 million florins for the two companies, Villani cites repudiations by the king of Sicily of 200,000 forms and severe property damage in Florence stemming from the uprising of September 1343.
2 It should be noted that Edward III, unlike Philip of Spain in the sixteenth century, never specifically repudiated his debts to the Italian companies. His commissioners disputed the amounts and scaled them back sharply after a series of audits, but the final acknowledged debts were simply never paid. For a detailed account of these proceedings, see Russell Ephraim, “The Societies of the Bardi and Peruzzi and Their Dealings with Edward III, 1327–45,” in Unwin G., ed., Finance and Trade under Edward III (London, 1918), pp. 93–135.
3 Sapori A., La crisi delle compagnie mercantile dei Bardi e dei Peruzzi (Florence, 1926). Sapori's calculations and conclusions from them appear on pp. 74–77, where he actually shows a total of 535,000 forms. Later he adjusted the figure to 594,000 tlorins after reconsidering the sterling-form exchange rate (see fn. 6).
4 Fryde E. B., “Public Credit, with Special Reference to North-Western Europe,” The Cambridge Economic History of Europe (Cambridge, 1963), vol. 3, p. 460.
5 Fryde E. B., William de Ia Pole (London, 1988), p. 88.
6 For the sake of simplicity, the data will be presented in only two currencies, the Florentine form and the English pound. The commercial relationship between the form and the English pound varied, but there was an “official” rate fixed at one form equals three shillings, that is, £1 equals 6.67 forms, which was used in transactions between the companies and Edward 111 during the late 1330s and early 1340s. Some scholars have argued that the fixed rate created advantages for the companies while others contend that Edward benefited. Because the fixed rate applied to transactions in both directions, the net effect on any of the parties was probably small; in any case, because of its consistent use in the period under review, the fixed rate is appropriate for this study. See Prestwich Michael, “Early Fourteenth-Century Exchange Rates,” The Economic History Review, 2nd series, 32 (Summer 1979), pp. 470–82.
7 Fryde E. B., “Deposits of Hugh Despenser the Younger with Italian Bankers,” in his Studies in Medieval Trade and Finance (London, 1983), Item III, p. 347.
8 Lopez R. S. and Raymond I. W., Medieval Trade in the Mediterranean World (New York, 1955), pp. 370–71; Sapori, La Crisi, p. 218.
9 Power E., The Wool Trade in Medieval English History (Oxford, 1941), p. 43.
10 Bischoff J. P., “Pegolotti: an Honest Merchant?” The Journal of European Economic History, 6 (Spring 1977), pp. 103–8.
11 Sapori, La crisi, p. 216.
12 Reynolds R. L., “Origins of Modern Business Enterprise: Medieval Italy,” this JOURNAL, 12 (Fall 1952), p. 365.
13 Fryde E. B., “Loans to the English Crown, 1328–31,” English Historical Review, 70 (Spring 1955), p. 208, reprinted in Studies in Medieval Trade. Here Fryde cites many kinds of royal revenue used to pay the Bardi—sale of surplus royal victuals, land revenues, fines, fees, and a share of the indemnity paid by the king of Scotland under the peace treaty terms, as well as cash from the treasury.
14 Fryde E. B., “Parliament and the French War, 1336–40,” in Studies in Medieval Trade, Item V, p. 265.
15 Fryde, “Loans to the English Crown,” p. 204.
16 Fryde, “Public Credit,” p. 436.
17 Yver G., Le Commerce er les marchands dans l'Italie méridionale au xiiie et au xive siècle (Paris, 1903); see especially chap. 6, “Les opérations des compagnies fiorentines.”
18 Fryde E. B., “The Financial Resources of Edward III in the Netherlands, 1337–40,” Revue Belge de Philologie et d'Histoire, 45 (1967), pp. 1146, 1153, 1159; reprinted in Studies in Medieval Trade.
19 Sapori, La crisi, p. 216.
20 de Roover R., “The Story of the Alberti Company, 1302–1348, as Revealed in its Account Books,” The Business History Review, 32 (Spring 1958), pp. 51–59. Cash on hand was insignificant in seven out of eight statements over a period of 25 years. The exception was a depressed year when cash equaled 10 percent of assets.
21 Sapori A., Studi di storia economica medievale (Florence, 1947), p. 278.
22 Sapori A., I libri di commercio del Peruzzi (Florence, 1934). This book is mainly a transcript of the remnants of the Peruzzi accounts for the period beginning in 1335, but provides balances and allocations of losses from the “old company” of 1331–35. Summaries of assets appear on pp. 1–12 and of liabilities on pp. 190–197, 318.
23 Sapori, La crisi, p. 106.
24 Fryde, “The Financial Resources of Edward Ill.” Italian lenders to Edward III during the period from 1337 to 1340 included, among others, the Portinari and Bonaccorsi of Florence, Bartholomei of Lucca, Pisani of venice, and Leopardi of Asti.
25 Renouard Y., Les Relations des papes d'Avignon er des compagnies commerciales et bancaires de 1316 à 1378 (Paris, 1941).
26 Yver G., Le Commerce dans l'halie méridionale, chap. 6; Sapori, Libri di commercio dei Peruzzi, pp. 8, 193.
27 Vilani, Storia, book 11, chap. 89, p.754.
28 Sapori, Libri di commercio. My analysis of the Peruzzi libro segrero sesro shows that 19 of the 21 shareholders reduced their net loans to the company from 14,077 forms in July 1335 to 1,151 forms in July 1343. No opening balance appears for the two remaining shareholders, but their 1343 balances reflect borrowing from the company of 9,129 forms.
29 Sapori A., Srudi di sroria economica (Florence, 1955), vol 2, pp. 665–78. From the data presented, the annual profit of the Peruzzi between 1300 and 1324 can be calculated at an average of around 13,000 forms, with a peak of 18,000 forms in 1308/10.
30 Sapori, La crisi, p. 78.
31 Villani, Storia, book II, chap. 93, p. 758.
32 Lane F. C. and Mueller R. C., Money and Banking in Medieval and Renaissance Venice (Baltimore, 1985), vol. 1, pp. 62–64, and Goldthwaite R. A., “Local Banking in Renaissance Florence,” Journal of European Economic History, 14 (Spring 1985), pp. 37–38, 48.
33 Renouard Y., Les Relations des papes, pp. 134, 138; Fryde, “The Financial Resources of Edward III,” pp. 1169–70.
34 On at least two occasions the king urged his collectors to repay the Bardi as promptly as possible because they had promised to re-lend the money to him (Calendar of Close Rolls, 1337–39, pp. 294 and 309).
35 Fryde, “The Financial Resources of Edward III,” pp. 1143–44, 1159, 1162. See also Fryde E. B., “Materials for the Study of Edward Ill's Credit Operations, 1327–48,” Bulletin of the Institute of Historical Research, 22 (1949), pp. 105–38.
36 Calendar of Patent Rolls, 1334–38, p. 506, and 1338–40, p. 123. By these orders the king exonerated his sheriff from claims relating to the imprisonment and seizure of valuables of all foreign merchants, except the Bardi and Peruzzi.
37 Fryde E. B., “Italian Maritime Trade with Medieval England (c. 1270–c. 1530),” Studies in Medieval Trade and Finance, Item XIV, p. 301.
38 Fryde E. B., “The Wool Accounts of William de Ia Pole,” Studies in Medieval Trade and Finance, Item IX, p. 14.
39 Hughes D., A Study of Social and Constitutional Tendencies in the Early Years of Edward III (London, 1915).
40 Ibid., p. 94.
41 Fryde, “The Financial Resources of Edward III,” p. 1, 162.
42 Becker M., Florence in Transition (Baltimore, 1989), vol. I, pp. 202–7.
43 Lyon M., Lyon B., and Lucas H., The Wardrobe Book of William de Norwell, 12 July 1338 to 27 May 1340 (Brussels, 1983).
44 Ibid., pp. cix–cx.
45 Becker, Florence, vol. I, pp. 150–72.
46 Ibid. As early as the 1320s the Bardi held at least 30,000 forms, over 10 percent of the commune's public debt (pp. 78–79), and as late as 1344 were still lending “sizable sums” to the treasury (p. 158).
47 Sapori, La crisi, p. 174.
48 Ibid., p. 193.
49 Brucker G., Florentine Politics and Society (Princeton, 1962), p. 18.
50 De Roover, “The Story of the Alberti Company.” p. 29.
51 Russell, “The Societies of the Bardi and Peruzzi,” p. 127.
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