-Niccolo Machiavelli
Such the strong suggestion of Machiavelli that
such as a state of Genoa should succumb to the rule of a financial institution
called the Casa di San Giorgio – the Lingurian city’s premier financial
institution that some even called as the first modern bank.
Rise of Casa di San Giorgio
In a politically dysfunctional but economically
prosperous Genoa, the Casa di San Giorgio or the House of St. George took its
roots. Genoa boasted a flourishing trading industry where Genoese merchants
travelled across the Mediterranean and the Black Sea buying goods from one port
and selling to another. Its mercantile activity brought riches to many Genoese
who then reinvested their money on trading ventures through commercial contracts. However, while
the economy boomed, the political scene of Genoa saw nothing but infighting
between influential families like the Grimaldis (rulers of Monaco today),
Dorias, and Spinolas among others. The country experienced different types of
rule, from Communes, to Doges, to Captains of the People, and Podestas or a foreign
city administrators). But the same oligarchy of aristocratic and prominent
mercantile families remained on the top. By the late 13th century, the
political division resulted to Genoa under-performing.
In 1298, when the Genoese fleet triumphed over
their rival Venetians, but domestic dispute in Genoa prevented the victorious
admirals from capitalizing in their victory. The 1298 Battle of Curzola marked
the pinnacle of Genoese power, but back in home war debts soared and pained the
city’s government. To solve the debt to various creditors, mostly wealthy
nobles and merchants of the city, the Genoese government decided to establish
the Casa di San Giorgio or House of St. George.
The Genoese government tasked the early Casa di
San Giorgio to consolidate the city’s debts. It sold government debt by selling
promissory notes that provided its holder an income from revenues on customs
duties and taxes collected on consumption goods such as salt. For the next
hundred years, the Casa operated through the selling of promissory notes to
many merchants.
Banco di San Giorgio
A century later, Genoa faced a financial crisis
brought by its defeat in a war against Venice. The 1380 Battle of Chioggia
marked the Genoa’s decline in its rivalry with Venice. Decades after the
debacle, debts brought by the conflict once again plagued the city’s treasury.
The Casa continued to operate, but overwhelmed. It needed reorganization.
In 1407, Casa di San Giorgio reorganized and
formed the Casa delle Compere e dei
Banchi di San Giorgio or simply as Banca
di San Giorgio. The wealthiest families of Genoa sponsored the
reorganization and the new institution set up its headquarters in a palace in
the Piazza Caricamento.
Bank’s Administration
The 4 different bodies formed the
organizational structure of the Bank: 1) Protettori
(Protectors); 2) Procuratori
(Procurators); 3) Magistrato del Sale
(Salt Magistracy); 4) General Council. Each council served a purpose with the
Protettori in charge of overall administration, the Procuratori tasked with
managing the bank’s tax collection, and Magistrato del Sale responsible for the
salt monopoly – a privilege given to the bank by the Genoese government.
Lastly, the General council served as the bank’s shareholders meeting called by
the protettori and had the power to approve or disapprove proposals of the
protettori. The executive officers of the Banco included 1 sindico or controller and 3 chancellors.
The San Giorgio utilized lotteries in electing
the members of the 3 council, which also cost enormously. First 3 councils
composed of 8 members with each having an annual term with 4 ending their terms
for every 6 months. The requirement in being a member included an age minimum
of 30 and had the capability to deposit in the bank an amount of 16,000 lire,
which amounted to 275,000 Euro today. This requirement later raised to 40,000
in 1634. In addition, a member must name a guarantor who would pay an
additional amount of 90,000. Thus, only the wealthiest and the elite met the
required deposit amounts and the oligarchs dominated the institution.
Operations
San Giorgio’s operation expanded beyond selling
the city’s debts. Off course, it did continue to manage debt repayment through
creation of sinking funds. By this time, the Bank created a sophisticated means
of selling public debt. They divided the debt into sections called monti and each divided further to luoghi that were shares sold to the
Genoese for a collection of portion of tax revenues. The amount of luoghi
dictated the percentage of amount of tax revenue that a holder received.
The Banco borrowed from merchants, similar to
bonds, with a return of 7%. But the Banco di San Giorgio also provided
short-loans and investments to merchants. A great example of this was in the
late 15th century when Chancellor Antonio Gallo helped to find investors for
the 1492 voyage of Christopher Colombus to the New World.
In 1408, the Banco di San Giorgio expanded to
become a deposit bank. But undercapitalization in 1444 forced it to shut down.
The deposit services of the Banco returned in 1530 and sustained it this time
until 1805. Thus, they also began to use the double-entry system to give an
accurate picture of how much money came in and how much came out.
Part of the Banco’s prestige and influence came
to its power to collect taxes and customs which financed the payment of debts
and interest payments to luoghi holders and merchants. The taxes they collected
remained to cover customs, consumption taxes, most especially on salt. Besides
taxes, another main source of income for the Banco came from lotteries.
Moreover, San Giogrio did not just had concession
to collect taxes, they also received the privilege of managing the overseas
lands and cities under Genoa’s dominion. A price to pay in exchange for money
in 1446 when the Genoese government handed over Pietrasanta to the Banco’s
administration. Soon the San Giorgio’s domains covered Corsica, Southern
Crimea, Famagusta, and Caffa. The institution very much commanded the whole of
Genoa’s overseas territories leaving only some like the Chios, managed by a mahona or a private consortium.
With management of territories came the need
for a police or military force. The Genoese government gave the Banco the right
as well to raise an army and hire mercenaries. An ancestor of Napoleon,
Francesco Bonaparte, served as a soldier in the Banco di San Giorgio’s army.
Decline and Defunct
Even
though Genoa fell from grace as a great power, the Banco di San Giorgio
continued to operate further. It enjoyed great prestige during the heydays of Genoa’s
status as Spain’s client state and bank. But as Spain sank, so too Genoa and
its Banco. Finally, in 1805 when Napoleon Bonaparte invaded most of Europe and
centralized banking under his newly established Bank of France, the Banco was
forced to seize its operation in 1805.
Summing Up
The Casa di San Giorgio came a long way and boasted a long history of banking operations. Some scholars even called the first modern bank, predating the Bank of England established on 1695. It also preceded the British East India Company as a private enterprise that administered territory, collected taxes, and raised armies. Indeed, so much the Casa had garnered power, influence, and wealth that Machiavelli praised its administration.
The Casa di San Giorgio came a long way and boasted a long history of banking operations. Some scholars even called the first modern bank, predating the Bank of England established on 1695. It also preceded the British East India Company as a private enterprise that administered territory, collected taxes, and raised armies. Indeed, so much the Casa had garnered power, influence, and wealth that Machiavelli praised its administration.
See also:
Bibliography:
Blockmans, Wim et. al. (eds.). The Routledge Handbook of Maritime Trade Around Europe, 1300-1600. New York, New York: Routledge, 2017.
Kirk, Thomas Allison. Genoa and the Sea: Policy and Power in an Early Modern Maritime Republic, 1559-1684. Baltimore, Maryland: The John Hopkins University Press, 2013.
Snodgrass, Mary Ellen. Coins and Currency: A Historical Encyclopedia. Jefferson, North Carolina: McFarland & Company, Inc., 2003.
Article:
Boland, Vincent. "The World's First Modern, Public Bank." Last modified on April 18, 2009. https://www.ft.com/content/6851f286-288d-11de-8dbf-00144feabdc0
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