Medici Bank

The history of the Medici Bank and the family’s history are essentially entangled. The rise of the Medici family was mainly due to the rise of their bank, which produced fundamental wealth. The economic riches were the basis of the social ascendency and the growing exercise of political influence in the Florentine Republic’s context. Like most Florentine patricians and members of the elite, the Medici ran some business at a high level. The enrolment in one of the major guilds gave access to political power in Florence. The most important Medici banking enterprise was the Bank of Rome, which was founded in 1397 by Giovanni di Bicci de’ Medici as the main shareholder and head of the company. From that moment onward, the Medici Bank made its way to substantial expansion. A significant step forward was becoming the Depositor of the Apostolic Chamber, the pope’s banking manager, in 1420—an office held for twenty-two years. Then, the banking business of Cosimo de’ Medici the Elder (Giovanni di Bicci’s son) held this important post for almost forty years (1443–1473). During the later fifteenth century, the Medici Bank had to face a much more complex situation with many other potent players. Since it got deeply involved in government finance, the banking business was in charge of high loans to various crowns and had to bear the risk of default. Until the liquidation of the Medici business partnerships in 1494, the bank still was the backbone of the political power of the Medici regime, which dominated the Florentine Republic down to the second Medici exile in that year. In fact, the Medici Bank consisted of a continuous and complex structure of companies whose individual contracts were renewed after a period of about three years. In economic history, the Medici Bank was described as a holding of quite modern appearance. Because of the interlocking directorship of capital investors and main shareholders, Richard A. Goldthwaite calls this Florentine type of organization a “business partnership agglomerate.” With regard to its key function for the ascendency of the Medici family to the core group of the governing regime in the fifteenth century—in the first half of the sixteenth century, two members of the Medici family were elected popes, and in 1537 Cosimo the Younger came to power as the first Duke of Tuscany—the bank became almost legendary. The Medici archives were shaped by various secretaries of the family and by the executors (sequestrators) of 1494; hence many of the traces of the business affairs were intentionally destroyed later, because they served other purposes or they could compromise the family’s dynastic ambitions. The Medici businesses covered commerce, banking, and government finance, like other Florentine firms did. The office of the administration of the Apostolic Chamber as the Pope’s depository was a highly desired objective of all potent banks in the late medieval period and the Renaissance. Especially, Cosimo the Elder tended to employ very aggressive strategies to eliminate rivals. His grandson, Lorenzo the Magnificent, succeeded in transferring the Medici Bank’s assets to Rome and Lyon, conveying them into other companies. When the bank was liquidated in 1494, the executors only found very little financial resources in Florence to be sequestrated. The de facto successors belonged to a group of former managers of the Medici Bank. So the Medici Bank’s interlocking ownership and capital were dispersed to the de’ Rossi, the Pandolfini and Buonvisi, the Lanfredini, the Bracci and Bartolini businesses.