Jan 16 - The Medici become the Pope's Bankers
Updated: May 17, 2021
Today in 1412 the Medici family agreed to become the official bankers of the papacy, which turbocharged their businesses across Europe. The family had an incredible impact on banking and culture, with their innovations and wide web of patronage. We take a little look at their story today ,,,
The Medicis' wealth and influence was linked to the textile trade and the wool guild of Florence. Dominating their city's government, they had created an environment in which art and humanism flourished inspiring the Italian Renaissance. It is claimed that they funded the invention of the piano and opera, and financed the construction of Saint Peter's Basilica as well as being patrons of Botticelli, da Vinci, Michelangelo, Raphael, Machiavelli, and Galileo, who heard about in the podcast of January 7th. The family’s power was to spread wider in Italy and Europe. In the fifteenth and sixteenth centuries, the Medici produced four popes and two queens of France. They were connected to most other elite families of the time through marriages of convenience, partnerships, or employment, so the family had a central position in the social network.
The Medici Bank was one of the most prosperous and respected institutions in Europe until its collapse about 100 years later. Registered in 1397 by Giovanni di Bicci de Medici the bank emerged just a few decades after a terrible plague wiped out two-thirds of the world’s population, so there was space for innovation. The Medici’s they were one of the first institutions to use the general ledger system of accounting they developed the double-entry bookkeeping system for tracking credits and debits. They would develop branches that were essentially partnerships, held under the central holding company in Florence. Allowing them to solidify their presence and trust across Europe. In 1412, Pope Gregory XII was the bishop of Rome, although this was by two other ‘popes’ in Avignon and Pisa. It is a period of the Church known at the Western Schism. With a divided college of cardinals, it was a time of widespread corruption in the Church, and upheaval with eleven different Popes during the fifteenth century. This was also the period that the system of paying tithes to Rome came into force, which assured the extraordinary growth of the Medici’s.
This flow of monies from London, Paris, Madrid and more to Rome needed organisation, and the Medici bank emerged as the leading organisation to manage this monetary flow. Their growth forced them to innovate methods that facilitated the booming merchant class of the time, whilst staying on the right side of God, as usury was still a sin, On the one hand, the Church needed the bankers to collect their donations. On the other, the Church condemned any act of usury and would send the sinners to hell. In Dante’s Inferno, the usurers share a ditch with the sodomites and blasphemers at the seventh circle. They sit perfectly still, as they did at their accounting tables, with only their hand moving rapidly as though counting coins or writing bills that had no currency beyond the grave.