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A Reading Life

Rake in the florins, the Medici way!

Email|Print|Single Page| Text size + By Katherine A. Powers
May 4, 2008

I have decided to ignore our crashing economy, exploding debt, and the withering away of the dollar, fascinating though it all is, and have turned my attention to 15th-century Florence and the financial legerdemain of the Medicis. My guide has been Tim Parks's lucid and witty "Medici Money: Banking, Metaphysics, and Art in Fifteenth-Century Florence" (Atlas, $13.95). I had been under the impression that financial matters could not possibly be more mysterious than they are in our own time, when even those who deal in such things as "collateralized debt obligations" and "credit default swaps" can't really explain them, or at least aren't willing to use such clarifying expressions as "pig in a poke" or "Ponzi scheme." But I'm happy to report that Renaissance finance was at least as devious as today's for the simple reason that its practitioners could never acknowledge what was really going on: charging interest.

In that distant day, as no doubt you know, charging interest in any amount was usury, a sin (and a crime) because it was deemed "unnatural," as it creates wealth without work. But Parks sees more than religious scruples behind the church's hostility to usury. Letting money loose to generate itself jeopardized the social hierarchy, and the clergy and popes (of which there was an unfortunate surplus of two for a while) had a horror of that. In fact, money was integral to social class in a way that makes no sense to us today, with our loony notions of universality and equality. In Florence there were two incommensurate currencies, the silver picciolo for the poor, and the golden florin for the rich. Florentine manufacturers sold their goods and garnered profit in florins and paid out wages in piccioli - wisely encouraging the mint to reduce the silver in the latter to lower wages covertly when profits fell.

But let us return to the vexing matter of how to make money out of money without charging interest. Briefly, it amounted to transforming the business of charging interest into that of currency exchange and of substituting distance for time. A merchant accepted florins from a bank to buy goods to ship, say, to London, a trip that, it was officially calculated, took 90 days. He then repaid the amount in pounds sterling in London after that period - which could not be extended or, as Parks puts it, "the whole thing would begin to look rather like a loan." But profit there was because exchange rates favor the currency of the country that issues it. In other words, it took more pounds to replace those florins than if they had been repaid in florins. And I think we'll leave it there, except to say that there was, as Parks notes, "a constant tension between what people said they were doing, what they knew they were really doing, and what they knew they were supposed not to be doing."

The Medicis, bankers from 1397 to 1494, didn't dream up this masterpiece of casuistry, nor did they invent the other essentials of successful 15th-century banking: double-entry bookkeeping, the bill of exchange, the letter of credit, the deposit account. But they were virtuosi of organization and manipulators of men, setting up branch banks (essential to making this work) and getting their popes lined up (for the most part). Parks follows the progress of this family throughout the 15th century, and that narrative amounts to tracking the epochal transformation of the medieval mind into the modern one, from a vision of the world as a vale of tears to an arena of glorious fulfillment.

The Medicis' bank was founded in 1397 by Giovanni di Bicci de' Medici and passed down to his son Cosimo, who had a genius for making money but who also extended the family's political influence in both Florence and the church. Still, both men remained entirely alive to the contradiction between striving for worldly success and aspiring to heaven. By the time Cosimo's son Piero took over, however, the bank had already begun its decline. The Medicis had become deeply involved in nefarious political subterfuges. They also put social connections above economic prudence and became impressed with their own fineness. Educated by humanists, they took the view that life's really troublesome contradiction lay between the elevated, cultivated soul and the grubbiness of the trade that provided the wherewithal to express it.

The change in outlook, incarnate in Piero's son Lorenzo the Magnificent, was more than the consequence of inherited wealth. It is the fruit of neo-Platonism, which, handily enough, dissolves the contradiction between the world and the spirit by consecrating secular art and beautiful living, making aesthetic display a way of realizing the divine spark. But this costs money, and by the time Lorenzo's son Piero ("the Fatuous") took over in 1492, the bank was a mess, and two years later it collapsed. The Medici house was sacked by a mob, its treasures were strewn through the streets, and Piero fled into exile. This is only to touch the spine of this extraordinary history, one that Parks lays out in intricate detail with attention to the transformation of thought as expressed in art and with an infectious relish for contradiction.

In "Murder of a Medici Princess" (Oxford University, $24.95), Caroline P. Murphy catapults us ahead to mid-16th-century Florence to the cadet branch of the erstwhile banking Medici. Her subject, Isabella de Medici, was born in 1542 to a Spanish aristocrat mother and a doting father, the Grand Duke of Tuscany. He provided her with a humanist education, a love of the hunt, a taste for independence, and, alas, a violent boor of a husband. It was an unusually unfortunate combination. Isabella led her own life, infuriating her husband by refusing to play the role of docile helpmeet. She had her own establishment and eventually a lover. The death of her father and the accession of her dour, malicious brother to head of the family led eventually to her murder with his and her husband's connivance. I give nothing away in telling this. The book's strength is in giving a picture of aristocratic life in 16th-century Italy and the refined savagery that lay behind it.

Katherine A. Powers can be reached at pow3@verizon.net.

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