An Italian archive yields its treasures

Illustration by Daniel Pudles

WHO were civilisation’s first financiers—the moneymen who could transform one man’s deposits into another customer’s credit? Perhaps they were the Egibi family in Babylon as early as the 7th century BC, though a more plausible case can be made for Pasion, an Athenian contemporary of Socrates at the start of the 4th century BC, when bankers were already the butt of music-hall humour (“the most pestilential of all trades”). Egyptians were using cheques 70 years before the birth of Christ, but Eurocentric historians look no further back than medieval Europe.

Even then, there is confusion about where the first European bankers banked. For example, Niall Ferguson, in his entertaining British television series, “The Ascent of Money”, is so dazzled by the magnificence of the Medici in Florence in the 15th century that he gives them more credit, as it were, than they deserve.

If European banking was invented anywhere, it was probably in Genoa in the 12th century, spurred on by the revival of trade in the Mediterranean. That, at least, is the case convincingly put forward at a website devoted to the history of the bank of San Giorgio. The site was formally launched at the end of 2008 at the conclusion of a 25-year study of Genoa’s early economic history in the voluminous and carefully preserved state archive. The prize possessions are documents from the 12th century describing financial instruments that are commonplace today.

The first recorded public bond is dated January 1150 when the municipality raised 400 lire by granting to investors the tax revenue raised from stallholders in the marketplace. The term was 29 years, and the loans were described as compere—or purchases—to evade the church’s usury laws. In the 13th century tradable government bonds were issued in Genoa, paying 7% interest. In the 14th century the first sinking funds were organised in Genoa; and, 100 years later, the first lottery. Giuseppe Felloni, a Genovese historian and numismatist, has written a commentary on this impressive list of historical firsts in a 91-page pamphlet, “Genoa and the History of Finance: A Series of Firsts?” A fuller account and the pamphlet itself can be found on Mr Felloni's website.

By the 15th century Genoa’s finances were in such a parlous state that in 1407 the municipality established a private bank to consolidate its debts and called it the Bank of Saint George. Commercial moneylenders already operated alongside the bond market (they were known as banchieri) but the Bank of Saint George was the first institution in Genoa that could be called a bank. It also operated as a giro bank and it stayed in business for 400 years. It was not the first in Europe; a giro bank in Barcelona beat them to it by six years. The oldest bank still in business is Italian, however. Monte dei Paschi di Siena was founded by the municipality in 1472 to give loans to the poor at better rates than those offered by the moneylenders: a business model that has persisted for half a millennium.