Before the Industrial Revolution by Carlo M. Cipolla

Author:Carlo M. Cipolla
Language: eng
Format: epub
Publisher: W. W. Norton & Company

1 The silver penny of Charlemagne; 2, 3, and 4 the main gold coins of medieval Italy, respectively the genoina of Genoa, the florin of Florence, and the Venetian ducat; 5 the lira Tron of Venice; 6 the “testone” of Galeazzo Maria Sforza of Milan.

A real de a ocho, known in England and in the English colonies in America under the name of piece of eight. This one was minted at Segovia by Philip IV in 1633. The mint is indicated by the aqueduct on the left of the shield, the value by the figure 8 to the right. The real de a ocho was the means of payment par excellence in the international trade and financial transactions of the sixteenth and seventeenth centuries. Photograph kindly supplied by Professor P. Grierson and the Fitzwilliam Museum, Cambridge.

The terms “banks” and “banker” make their first appearance in twelfth-and thirteenth-century notarial cartularies where they refer to money-changers. Given the vast range of coins in circulation at that time, money-changing was an activity of considerable importance in the major markets. Moreover, these bankers and money-changers operated as intermediaries between the public and the mints. By the end of the thirteenth century, money-changers in the main trading markets were no longer willing to confine themselves to the manual exchange of different kinds of metal or to acting as intermediaries between the public and the mints. Instead they began to take deposits and to make payments on behalf of depositors. Deposits thus came to be transferred from one trader to another and these transactions were effected by means of a straightforward entry in the banker’s books, thereby avoiding the transportation and handing-over of actual coins. The transfer operation was not conducted on a written order, but rather in the presence of the parties involved. In other words, if Mr Smith wished to make a payment to Mr Brown, the two men would go together to see Mr Jones, the banker with whom Mr Smith had deposited money. Mr Smith would declare to his banker Mr Jones the quantity of money that he wanted to transfer to Mr Brown. Then, in the presence of both Smith and Brown, Mr Jones the banker would enter the transaction in his book, reducing Mr Smith’s deposit by the amount in question and increasing Mr Brown’s deposit by the same amount. The evidence of the transaction in the banker’s books was legally binding. Transfers carried out on written order (i.e. cheques) made their first appearance in Tuscany during the fifteenth century. In Venice, however, such cheques were never accepted and both parties always had to be present when any transfer was effected.

Sometimes a depositor might ask his banker to repay in cash all or part of the sum deposited, or a payee might demand to receive his payment in cash. To cover any such eventualities, bankers always had to hold a certain amount of cash. Over time, however, bankers found that it was not necessary to keep cash sufficient to cover

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