Medici Money: Banking, metaphysics and art in fifteenth-century Florence

Giovanni di Bicci resolved these difficulties with a simple structural correction, and in doing so revealed at once what was to be the genius of the Medici family: its manipulation of people within organizational structures — first financial, but later social and political too. Each branch was to be a separate company. The shareholders were: the branch director, to the tune of something between 10 and 40 percent, and then the Medici bank for the rest. Not the Medici family personally, and not the Florence branch, which had the same status as the other branches, but rather a separate holding company located in a separate office in Florence. In this way, a large number of capital-bearing partners could be brought in — one or two in each branch and one or two more important figures in the holding — without the Medici themselves ever losing control of either the parts or the whole.

A branch director would receive expenses and a considerably larger percentage of the profits than his own share of the investment would appear to warrant. This to motivate him. In return, he was obliged under contract to live in his branch’s city and to observe the rules enforced by the holding company: Don’t lend more than 300 florins to cardinals; to courtiers no more than 200; don’t give credit to any Roman merchant, unreliable; nor to feudal barons, not even if they give you security (barons are a law unto themselves); and never, never lend money to Germans, since their courts won’t respect your claim if, or rather when, things go wrong.

Between cashiers, letter writers, messenger boys, and managers, there were about four to eight people in each branch — all working, eating, and sleeping in the same building, sharing the same one or two servants, slaves, and horses. The holding company in Florence was responsible for all hirings and firings. And salaries. Otherwise, who knows what complicity might arise between a branch director and his staff in a distant city? In addition to the official ledgers, there was also a “secret book” in which the director wrote down such things as the discretionary deposits of clients who wished to remain anonymous. And salaries. No one must know another’s salary. There must be no opportunity for private gripes and local conspiracies against the head office. The secret book was made of parchment, not paper, to last longer, and kept under lock and key, often in the director’s bedroom. Once a year it would be taken to Florence for discussion. Above all, each branch dealt with the others as with any other company. Each was part of a whole, but simultaneously in competition; each running its own show, but under observation. Thus the Medici learned the techniques they would later apply in the political sphere: Divide, be reasonably generous, and rule.

Yet at once it became clear that however sophisticated the structure you formulated, the choice of staff would always be crucial. To make money, you need astute men and honest. And healthy. No sooner had Castellano di Tommaso Frescobaldi been appointed, in 1400, to run things in Naples than he fell sick and died. Good management can do nothing about the plague. Neri di Cipriano of the once-noble Tornaquinci family became the first director in Venice, in 1402, and immediately broke contract by lending money to Germans. Even Poles! He never recovered it. Faking the books, both manifest and secret, he invented a first-year profit and borrowed at 8 percent to have further capital, which he went on losing. Since the Medici did not routinely send inspectors to their various branches, it was three years before the now-considerable reversal of nearly 14,000 florins was discovered. Dealing in money is so exciting because its liquid nature makes the losses as great and as swift as the profits. The medieval wheel of fortune has speeded up. Everything is levered and intensified. Condemned by the Venice courts, Tornaquinci surrendered his belongings and fled to Cracow, where he recovered some of the Medici cash from the Poles but did not return it to the Medici. Eighteen years later, hearing that Tornaquinci had fallen into poverty in Poland, Giovanni di Bicci sent him 36 florins, enough to live on for a year and more. In the end, we know very little about Giovanni, but it’s hard not to warm to someone who could show charity to an employee who had behaved so badly.