This is one of the trades longest preserved in Florence and other parts of Italy, and to this day silk is among the most important of our products. With this difference, however, that whereas in past times the weaving of the silk was our chief source of profit, at present we frequently export the raw material, repurchasing at an enormously increased price the fabrics returned to us from foreign looms. In old times we imported woollen and silk yarn, and exported Italian cloth and brocade; in these days, on the contrary, we send no small portion of our raw silk to Lyons, and receive it back in a manufactured state. In the same way other raw materials, which we might easily work up ourselves, are despatched to foreign factories.
III.
There was one branch of industry, however, almost solely the product of human talent and energy, in which the Florentines stood positively first. From the opening of the thirteenth to the end of the fifteenth century the money-changers' craft was an essentially Florentine business. For as soon as the merchants had established commercial relations with all the markets of the East and the West, they naturally put into circulation a large quantity of specie. Therefore it naturally ensued that if any trader of Antwerp or Bruges wished to forward money to Italy or Constantinople, the easiest and safest plan was to apply to some of the Florentine merchants in his own town. The latter bought up the wool and rough cloths, which, after being dressed in Florence, either returned to Northern Europe, or found their way to Constantinople, Caffa, or Tana (Azov), in exchange for silks, dyes, and spices. Accordingly the transmittal of any sum to any part of the then known world cost them little more trouble than the despatch of an ordinary letter, and was always a source of gain. For they received agio on their money, and by sending it in the form of merchandise, reaped a second profit. When, on the contrary, any Florentine wished to send a hundred florins to London, he had only to walk a few steps to find some merchant of the Calimala or Por' Santa Maria, who, by a line to his correspondent in Lombard Street, caused the payment to be made. These so-called letters of exchange (lettere di cambio) proved one of the most useful of inventions for the advancement of modern trade. There has been much discussion as to whom this discovery was originally owed. Some attribute it to the fugitive, persecuted Jews in France and England; while others ascribe it, at a much later date, to the Guelphs banished from Florence in the thirteenth century. But it is very difficult to ascertain who was the first author of what cannot be justly styled a discovery, seeing that it is an arrangement so readily occurring to the mind, that examples of it are even to be found in very remote antiquity. Besides, the real importance of the letter of exchange consists not in its invention, but in its legally authorised value, its extensive use, and the thousand different ways in which it may be turned to account for the speedy transmission and increase of capital. On these points the Florentines of the period were altogether unforestalled and unsurpassed, being superior masters of the art of finance.
When the exiled Guelphs went wandering about the world in the thirteenth century they strengthened the widespreading commercial ties established by Florence, and founding banks in all parts, gave a tremendous impulse to the money-changers' trade. Accordingly they were credited with the invention of the "letters of exchange," which now being widely circulated, gained added importance. In fact, all subtle and ingenious devices for multiplying gold, by despatching it to every market where, being scarce, it consequently commanded the highest price and interest, and almost all the complicated and difficult operations practised by our modern bankers, were already familiar to the Florentines. Whenever the Republic was obliged to borrow money it obtained loans from the bankers of Florence on precisely the same system and method in use at this day, no source of profit being unknown to those financiers. Also, when the total of these loans was formed into the so-called Monte Comune, paying interest on the consolidated capital, the luoghi del Monte, which would nowadays go by the name of "shares of the public debt," were negotiated precisely as at present. We find the Florentine merchants under the Arcades of the New Market, speculating on the rise and fall of stock, like modern men on "'Change" in great capitals.[350] And the profits of similar ventures were far greater at a time when lawful interest varied between 10 and 20 per cent., and few felt any scruples against carrying it up to 40 per cent. by means of fictitious contracts. For instance, the lenders would fix an impossibly early date for the receipt of the lawful interest, and after that date took 40 per cent. with the pretext that the extra amount was the fine agreed upon in case of non-payment.
It should be kept in mind that the Florentines reaped great advantages in all these banking operations from the excellent quality of their coinage, for the Republican Mint always kept the best interests of commerce in view. To this end, in the year 1252, the gold florin of twenty carats was struck, with the figure of St. John on one side and the lily of Florence on the reverse; and, owing to the goodness of the metal and its alloy, soon obtained currency in every Eastern as well as European market. Eight of these florins weighed one ounce, and a single florin was valued at about twelve Italian lire. The Florentines, however, usually made their calculations in lire, soldi, and denari. The silver lira, then the conventional standard, consisted of twenty soldi, and the soldo of twelve denari. The florin seldom altered in value, but the lira, either from the greater variability in the price of silver, or from other causes, was constantly altering its rate with regard to the florin. In 1252 the latter was equivalent to the lira, and therefore similarly divided into twenty soldi; in 1282 it already consisted of thirty-two soldi; in 1331, of sixty soldi, or three lire, and always changing in value, rose to four lire, eight soldi by the year 1464.
The Florentines had discerned how greatly their commerce was benefited by the use of a coin universally prized in all markets supplied with their goods. But in the beginning of the fifteenth century, when their trade penetrated farther into the East, they found themselves forestalled by the Venetians, whose gold ducat, somewhat larger and heavier than the florin, was already current there. Accordingly, in 1422, they decreed the issue of another florin, equivalent to the Venetian ducat in weight, size, and value, and therefore easily exchanged for it. And as this new and larger florin was to be carried to the Levant on board-ship, they named it the "broad florin," or the "galley florin," to distinguish it from the older "sealed florin" (fiorino di suggello). In 1471 the older coin only was re-issued, and kept in circulation down to 1530, when it was held equivalent to seven lire, and was then withdrawn for a time.[351] Thus we see that for a considerable period two different florins were in use, that the lira altered in value from one year to another; and if we likewise remember that economists are still unagreed as to the exact difference between the present value of gold and silver and their value in the days of the Republic, we shall recognise the difficulty of making any calculation sufficiently exact to afford any precise idea of the relative prices of things. It is asserted by some writers that a given quantity of gold was only worth in those days double its present value; while others exaggerated its value to fortyfold. Sismondi believes that in the fourteenth and fifteenth centuries gold must have been worth four times as much as at present. Certainly the florin, or zechin, as it was called later, is worth about twelve Italian lire. But the difference in the value of gold remains involved in uncertainty. Besides, when old writers reckon by lire, it is needful to remember that these coins varied in value; that it is impossible to make even an approximative calculation without knowing the exact date referred to.
Returning to the Guild of Changers, we must again insist on the point that, in addition to the extended commercial relations, the wise measures enforced by the Republic and the singular activity of the citizens, the rapid prosperity of the Florentine bankers was also greatly enhanced by their nearness to Rome. The revenues of the Holy See and of its prelates in all parts of Christendom were all poured into the Eternal City. There gathered the spiritual lords, bishops, and cardinals, holding rich benefices in the East or the West; thither from all the remotest ends of the known world believers sent sums of "St. Peter's pence," together with the costly offerings suited to a period of religious faith and fanaticism. The keen-witted Florentines quickly recognised the advantage of becoming bankers to the Pope; for thus the largest floating capital in the world would have to pass through their hands. So, from the first, they used the most persistent efforts to obtain that position. If we find them clinging to the Guelph cause through all changes of time and circumstance, and preserving the name of Guelphs, even when the term had lost all meaning, we must attribute no little weight to commercial as well as to political motives. Placed in the centre of Italy, and not far from Rome, they had to struggle chiefly against the Siennese, who were still nearer to the Eternal City. For this reason we soon find them engaged in warfare and jealous strife with Sienna, the which republic was subsequently worsted, not only in fight, but also by the wider-stretching enterprise of Florentine commerce. It is proved by the correspondence of Gregory IX. that even in 1233 the Tuscans were forwarding remittances to the Pope from various parts of the world; and gradually the monopoly of this business became more exclusively concentrated in Florentine hands. When the Pontifical Seat was transferred from Rome to Avignon (1305), and on its restoration later to Rome again, there occurred, twice at least, an enormous displacement of interest, a great movement of capital, and a necessity for large remittances in cash; and, according to the best authorities, this was the favourable moment when the Florentine contractors of the Papal revenues were enabled to become the principal bankers of Rome. From that time their fortune was assured, the greatest banking business in Europe passed through their hands, and they rose to so high a repute, that all sought their help and advice on matters of finance.
We see the Florentines invited to manage the mints, and fix the weights and measures of various European states. In 1278 a convention between the King of France and the Lombard and Tuscan Universitates invites both to find money for the former's government. In 1306 the Modenese people issued a decree, appealing for the same purpose, to the notaries and bankers of Florence. Then in 1302, when the King of France, lacking funds wherewith to make war, decided on repeated debasement of the coinage, this fatal step was attributed to the advice of two Florentines, Bicci and Musciatto Franzesi. These men were severely censured by their fellow-citizens, many of whom had been ruined by the bad French currency. On all occasions when the French sovereigns were on the eve of a great war, they were practically compelled to first secure the aid of some known Florentine banker in bearing the expense. Some of these bankers held the same position in Europe as the Rothschilds of the present day, and accumulated fortunes of apparently fabulous amounts. In 1260 the Salimbeni house lent twenty thousand florins to the Siennese. In 1338 we find the Bardi and Peruzzi creditors of King Edward III. of England for one million three hundred and sixty-five florins, the which, without reckoning the difference in the value of gold, would amount to about sixteen millions of Italian lire; and allowing for that difference, would amount, as Sismondi has calculated, to no less than sixty-four millions. Pagnini adds a list of many other loans, amounting to a positively enormous total. In 1321 the Peruzzi had a credit of 191,000 florins on the Order of Jerusalem alone, and the Bardi another of 133,000 florins. In 1348 the house of Tommaso di Carroccio degli Alberti and his kinsmen had banks at Avignon, Brussells, Paris, Sienna, Perugia, Rome, Naples, Barletta, Constantinople, and Venice.[352] And at the close of the fifteenth century Philippe de Commines declared that Edward IV. of England owed his crown to the help of Florentine bankers.
The Money-changers' Guild was one of the oldest in Florence, its consuls being named on the same footing as the rest in all public records; and a copy of its statutes, dated 1299 (1300 new style), makes reference to an earlier code of 1280, that was not the earliest of all. This craft prospered and waned with the commerce of Florence. It was carried on in the New Market, where it had shops with counters or tavoletti, money-bags, and ledgers. All business had to be performed in the shop, and registered in the account book, and heavy penalties were exacted for any infringement of the rule; nor was any one allowed to exercise the craft without being inscribed on the matriculation list, a privilege only to be obtained by having given proofs of capacity and honesty during matriculation, and sworn to obey the statutes of the guild. In 1338 there were about eighty of these money-changers' stalls, and Florence coined from 350,000 to 400,000 gold florins.[353] In 1422 these stalls numbered seventy-two, while it was calculated that Florence had a capital of two million florins in circulation, without including the value of the merchandise in the city.[354] In 1472, partly because the first signs of the decline of trade were appearing, and partly because trade was becoming restricted to a more and more limited number of firms, the banks were already reduced to thirty-three,[355] although the chronicler Benedetto Dei still remarked with pride that these bankers did business in the East and the West, "as is well known to the Venetians and Genoese, and likewise to the Court of Rome."[356] They were everywhere known by the names of changers, lenders, usurers, Tuscans, and Lombards, and, together with other Italian houses, had a street of their own both in London and Paris.