Making Money the Medici Way-And Spending It the Modern Way

Medici Money: Banking, Metaphysics and Art in Fifteenth-Century Florence, by Tim Parks. W.W. Norton & Company/Atlas Books, 273 pages, $22.95.

The Medici bank, which was founded in Florence in 1397, was one of the most powerful business enterprises of the Renaissance years in Italy. It operated branches all over Western Europe, financing the cloth and luxury trades and the ambitions and extravagances of princes, mercenary generals, popes and lords.

The model of a modern holding company, the Medici bank was the stronghold from which five generations of the Medici family manipulated the political life of the Florentine Republic and promoted the most brilliant flowering of the arts and literature since classical antiquity.

The monuments of the Medici century in Florence, such as Fra Angelico’s frescoes for the monastery of San Marco or Botticelli’s Birth of Venus, are some of the most precious of all human artifacts. The Palazzo Medici in Florence, with its massive walls and caged windows, looks as if it would survive attack from the air. The ugly, intelligent faces of the Medici men stare out at us from medallions, portraits and frescoes. They are the example to every business family, whether Rockefeller or Gates, that hankers after immortality.

Tim Parks is a British novelist of high critical reputation. He has lived for many years outside Verona in northern Italy. He has written with passion about his local soccer club, Hellas Verona, and now turns his attention to graver matters.

He makes no claims to archival scholarship. His balance sheets come from Raymond de Roover’s great The Rise and Decline of the Medici Bank 1397-1494, published in 1963 and a relic of a now-lost species of American historical diligence and industry. Mr. Parks’ interest is the clash and interplay of money, religion and power in the Renaissance: the “useful exchange between metaphysics and money … in the ambiguous territory of art.” For Mr. Parks, the bankers’ money mobilizes property, demolishes ancient distinctions of class and occupation, undermines liberty, dissolves eternity into the moment. The Madonna becomes more and more beautiful, her breast more rounded, her neck ever longer.

The Medici were already well established in the turbulent Florentine Republic when Giovanni di Bicci de’ Medici capitalized the bank in 1397 with 10,000 florins. A florin was a large gold coin, named for the city, first minted in the 13th century and used only for the largest transactions. In 1410, Giovanni di Bicci became banker to one of the contenders for the papacy in that chaotic period, Giovanni XXIII, collecting his tribute and paying his bills. The Rome branch of the bank, Mr. Parks tells us, in time was so profitable that it operated without capital of its own.

In the Middle Ages in Christendom, interest on money was still a deadly sin, and it remains so in modern Islam. That made sense in a largely non-commercial age, when loans were taken out only in desperate necessity. By the time of the Medici, both businessmen and some church casuists were coming to grips with a form of lending that actually helped families to run or expand their businesses.

In an excellent chapter, Mr. Parks shows how men such as Giovanni could both believe in the ban on usury and get round it, largely by converting an interest payment into a gain on exchange on the different currencies of Europe. Sometimes, it seems, fictional exchange gains were booked on what really were simply loans, a phenomenon criticized by some casuists as “dry exchange” or cambio secco. In truth, the church’s usury doctrine may actually have stimulated such late-medieval innovations as the bill of exchange, joint-stock companies, fractional reserve banking and marine insurance. Even so, it helped for a family to commission an altarpiece or two.

Giovanni di Bicci, who advised his family to “stay out of the public eye,” died in 1429 and was succeeded at the bank by Cosimo di Giovanni de’ Medici, who did the opposite. Under Cosimo the Elder, as he was known, the bank grew to its greatest extension, with branches in Rome, Venice, Ancona, Pisa, Milan, Geneva, Bruges and London, and agents in Luebeck, Barcelona and Antwerp. In Florence itself, the Medici operated factories for silken and woolen cloth. It was Cosimo who financed the completion of the dome of the Florence Cathedral, built the Palazzo Medici and restored the monastery of San Marco. He had a monk’s cell built for his own use, with two rooms instead of one and above the door, engraved in stone, the terms of the Papal bull absolving him from his sins in return for his outlay on the project. “Never shall I be able to give God enough to set him down in my books as a debtor,” he said. God must have been relieved.

The rich Italian city-states had pioneered a new form of warfare, in which mercenary captains offered their swords and contingents to the highest bidder. Their wars in the 15th century were neither glorious nor sanguinary, but they were expensive. It was the Florentine Republic’s incessant need for cash that raised the Medici from being just prominent local businessmen to merchant princes. Cosimo was adept at manipulating the Florentine constitution, and at his death he was named, in imitation of the ancient Roman Emperor Augustus, Pater Patriae or “Father of the Nation.” As his grandson Lorenzo was to put it, “In Florence things can go badly for the rich if they don’t run the state.”

Cosimo’s son, Piero “the Gouty,” ran the banking operation for just five years; he was followed by Lorenzo—a brilliant patron and skillful politician, but no banker. Cosimo loved the business so much, he once said, that “[e]ven if money could be made by waving a wand, I would still be a banker”; Lorenzo, on the other hand, married a Roman princess and was more interested in commissioning artists, writing indecent verses and conducting love affairs. The medieval dilemma—how do you make money and still get to heaven?—becomes that of modernity: How do you make money and still enjoy the applause of the finest society? (Or rather, in the deplorable phrase Mr. Parks must have heard in the stands watching Hellas Verona, how do you “have your wife drunk and the wine keg full”?)

From the 1460’s, the banking business went downhill, a prey to weak central control, branch fiefdoms and aristocratic pretensions. Branch managers, such as Giovanni Tornabuoni and Tommaso Portinari, became famous art patrons in their own right. In 1466, the Medici, in conjunction with the Papacy, attempted to corner the market for alum (the key in those days to fixing color dyes in cloth); their method was a mixture of commercial bullying and the threat of Hell and excommunication. According to Mr. Parks, this was not a success.

The death in 1492 of Lorenzo—“the Magnificent,” as he was known—was followed in short order by a French invasion of the Italian peninsula, the flight of Piero de’ Medici (nicknamed “the Fatuous”) and the collapse of the bank. In fact, the family’s eclipse was temporary: As Cosimo the Elder had told the memoirist Vespasiano da Bisticci, “Before fifty years are up we’ll be expelled, but my buildings will remain.” The Medici were back in Florence within a generation, and were to produce three popes and one Queen of France.

Mr. Parks’ conclusion shows how carefully he has studied the Florentine Republic. What survives the Medici era in Florence is “a new kind of society where public life would always involve a surrender of honesty, if only because the basis of power would always be suspect, always require a constant effort of propaganda to assert its legitimacy.” That, in short, is the modern world, where both salvation and liberty have vanished—but who cares when we have money and pleasure and art? James Buchan is the author of Frozen Desire: The Meaning of Money (Farrar, Straus and Giroux).