Home » Opinion » Book review
How Medici bankers dignified usury
By Ni Tao |
April 17, 2010, Saturday
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I first stumbled upon the Medicis in a previous title reviewed on this page. In his book "The Ascent of Money," historian Niall Ferguson writes at length about the saga of the medieval family, which he credits with establishing something closest to modern banking in an unlikely epoch.
Usury in its old sense comprised all interest, exorbitant or modest, that accrued to moneylenders. The Catholic Church then declared it a mortal sin to charge interest on loans.
In times before the fabled Shylock, usury was rare, and often restricted to non-Catholic moneylenders. Christians who defied the church's tenet by lending money for interest would be eternally damned.
Usury did not lose its "abomination" label until Giovanni di Bicci de' Medici, a merchant in fifteenth-century Florence, evaded the church's ban. He charged commissions from foreign currency conversions and gradually built up his banking empire. At the pinnacle of its power, the Medici clan was as rich as any European monarchy and had a stranglehold on Florentine political and cultural life.
Critics may point out that Ferguson's chronicle of the Medici family's rise is a work of cherry-picking history. Maybe he should have moderated his glowing chapter devoted to the Medicis' achievements -- in view of disturbing stories of murky machinations.
In this sense, "Medici Money" by Tim Parks is an eye-opener for people mesmerized by the dynasty's vast wealth and fame.
Although the church ostensibly abhorred usury, its actions belied its rhetoric. Rome needed loans like everyone else. Tax and tithes collected from pilgrims weren't enough to finance all its causes. The Medici family knew this well. It offered the church loans without demanding "direct" interest. Instead, it sold pricey goods as a form of interest in disguise, the author says.
By the same token, if the pope, a cardinal or a bishop deposited money in a Medici bank, they would receive a "gift" that was valued at 8 to 12 percent of the sums.
It was on the basis of these shady deals that the Medicis evolved into a banking monstrosity.
To be sure, aligning with the powerful was not a strategy unique to the Medicis. Had it been all about them, the family's influence would have stopped at being one mega-financier that the state and Rome cultivated, for quid pro quo. So what makes their achievements resonate to this day?
One answer is the Medicis' strong penchant for parlaying affluence into political power. Before European royalty read "The Prince" by Niccolo Machiavelli and set about raising standing armies of their own, wars between states were fought by mercenaries. And mercenaries' pay constituted a heavy burden on those states, which couldn't be obtained simply through unrestrained taxation lest it infuriate the public, the author notes.
Giovanni di Bicci de' Medici's son Cosimo, rather than the Florentine republic itself or his business rivals, was often the ultimate financier of Florence's wars for territory with Venice, Milan and Naples, even though some of Cosimo's loans had a slim chance of being repaid. For his commitment, the government of Florence showered Cosimo with favors, which later saved him from the guillotine when he was incarcerated by his foes and awaited execution.
Parks' book about the Medici legend reaches its climax when he documents the impact the family had on the birth of a secular society, the separation of church and state. Every scion of the Medici clan, including its founder Giovanni, his son Cosimo and grandson Lorenzo, showed strong affection for art.
Although criticism of lewdness and obscenity often dogged the works the Medicis commissioned, their patronage of Renaissance artists was responsible for the many great artworks that helped emancipate the mind long suppressed in a strictly Stoic age.
Florentines showed a surprising level of tolerance, even admiration, for art patron despots like the Medicis. This is reminiscent of the reign of Roman Emperor Nero, who made it his mission to dot Rome's landscape with imposing sculptures and opera houses.
Perhaps the biggest difference between the Medicis' appetite for art, and that of Nero's, is that the Medicis unwittingly set the stage for far-reaching changes that earned them a place in the historical pantheon, whereas Nero went down in history as a fearsome tyrant who squandered Rome's riches and precipitated its demise.
Usury in its old sense comprised all interest, exorbitant or modest, that accrued to moneylenders. The Catholic Church then declared it a mortal sin to charge interest on loans.
In times before the fabled Shylock, usury was rare, and often restricted to non-Catholic moneylenders. Christians who defied the church's tenet by lending money for interest would be eternally damned.
Usury did not lose its "abomination" label until Giovanni di Bicci de' Medici, a merchant in fifteenth-century Florence, evaded the church's ban. He charged commissions from foreign currency conversions and gradually built up his banking empire. At the pinnacle of its power, the Medici clan was as rich as any European monarchy and had a stranglehold on Florentine political and cultural life.
Critics may point out that Ferguson's chronicle of the Medici family's rise is a work of cherry-picking history. Maybe he should have moderated his glowing chapter devoted to the Medicis' achievements -- in view of disturbing stories of murky machinations.
In this sense, "Medici Money" by Tim Parks is an eye-opener for people mesmerized by the dynasty's vast wealth and fame.
Although the church ostensibly abhorred usury, its actions belied its rhetoric. Rome needed loans like everyone else. Tax and tithes collected from pilgrims weren't enough to finance all its causes. The Medici family knew this well. It offered the church loans without demanding "direct" interest. Instead, it sold pricey goods as a form of interest in disguise, the author says.
By the same token, if the pope, a cardinal or a bishop deposited money in a Medici bank, they would receive a "gift" that was valued at 8 to 12 percent of the sums.
It was on the basis of these shady deals that the Medicis evolved into a banking monstrosity.
To be sure, aligning with the powerful was not a strategy unique to the Medicis. Had it been all about them, the family's influence would have stopped at being one mega-financier that the state and Rome cultivated, for quid pro quo. So what makes their achievements resonate to this day?
One answer is the Medicis' strong penchant for parlaying affluence into political power. Before European royalty read "The Prince" by Niccolo Machiavelli and set about raising standing armies of their own, wars between states were fought by mercenaries. And mercenaries' pay constituted a heavy burden on those states, which couldn't be obtained simply through unrestrained taxation lest it infuriate the public, the author notes.
Giovanni di Bicci de' Medici's son Cosimo, rather than the Florentine republic itself or his business rivals, was often the ultimate financier of Florence's wars for territory with Venice, Milan and Naples, even though some of Cosimo's loans had a slim chance of being repaid. For his commitment, the government of Florence showered Cosimo with favors, which later saved him from the guillotine when he was incarcerated by his foes and awaited execution.
Parks' book about the Medici legend reaches its climax when he documents the impact the family had on the birth of a secular society, the separation of church and state. Every scion of the Medici clan, including its founder Giovanni, his son Cosimo and grandson Lorenzo, showed strong affection for art.
Although criticism of lewdness and obscenity often dogged the works the Medicis commissioned, their patronage of Renaissance artists was responsible for the many great artworks that helped emancipate the mind long suppressed in a strictly Stoic age.
Florentines showed a surprising level of tolerance, even admiration, for art patron despots like the Medicis. This is reminiscent of the reign of Roman Emperor Nero, who made it his mission to dot Rome's landscape with imposing sculptures and opera houses.
Perhaps the biggest difference between the Medicis' appetite for art, and that of Nero's, is that the Medicis unwittingly set the stage for far-reaching changes that earned them a place in the historical pantheon, whereas Nero went down in history as a fearsome tyrant who squandered Rome's riches and precipitated its demise.
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