Economic Crisis in the Middle Ages

A nice piece of original reporting from the 14th century.

A painting by Giotto di Bondone (c. 1267–1337) in the Basilica of Santa Croce, Florence, within the chapel owned by the Peruzzi bankers

(FLORENCE, Italy) - In the year 1345 in the month of January failed the company of the Bardi, who had been the greatest merchants in Italy.

And the reason was that they, like the Peruzzi, had lent their money and that invested with them to king Edward of England and to the king of Sicily; and that the Bardi found they had owing to them from the king of England, what with capital and interest and gifts promised by him, 900,000 florins of gold, and on account of his war with the king of France he was unable to pay; and from the king of Sicily 100,000 florins of gold.

And to the Peruzzi were owing from the king of England 600,000 florins of gold, and from the king of Sicily 100,000 florins of gold, and a debt of 350,000 florins of gold, so they must stop payment to citizens and foreigners, to whom the Bardi alone owed more than 550,000 florins of gold.

[Florins are gold coins. The total weight here is roughly 15,000 pounds. en.wikipedia.org/wiki/Florin_(Italian_coin)

Whereby many other smaller companies and individuals whose money was in the hands of the Bardi or Peruzzi or others who had failed, were ruined and so became bankrupt.

By this failure of the Bardi, Peruzzi, Acciajuoli, and Bonaccorsi — of the company of Uzzano Perandoli, and many other small companies and individual craftsmen, owing to the burdens on the state and the disordered loans to lords, of which I have made mention (though not of all, which were too long to tell), came greater ruin and discomfiture to our city of Florence than any our state had received, if the reader well considered the damage caused by such a loss of treasure and money lost by our citizens, and lent from avarice to lords.

O cursed and greedy usury, full of the vice of avarice reigning in our blind and mad citizens of Florence, who from covetousness to gain from great lords put their wealth and that of others in their power and lordship to lose, and ruin our republic; for there remained no substance of money in our citizens, except in a few craftsmen and lenders who with their usury consumed and gained for themselves the scattered poverty of our citizens and subjects.

But not without cause come to states and citizens the secret judgments of God, to punish the sins which have been committed, as Christ with his own mouth said in the gospel “Ye shall die in your sin.”

The Bardi agreed to give up to their creditors their possessions, which they estimated would come to 9 shillings and 3 pence in the pound, but at a fair price did not come to six shillings in the pound.

[I am not sure what the shillings were worth, but It is safe to assume that it was somewhat less than the citizens of Florence were expecting for the 4,400 pound pile of gold that was owed to them by the Bardi family.]

Special thanks to: elfinspell.com/BenhamVillani.html and to our Business/Economy Reporter Ersun Warncke for pulling this together!

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Giovanni Villani (c. 1276 or 1280–1348, )Bartlett (1992), 35. was an Italian banker, official, diplomat, and chronicler from Florence who wrote the Nuova Cronica (New Chronicles) on the history of Florence.

He was a leading statesman of Florence but later gained an unsavory reputation and served time in prison due to the bankruptcy of a trading and banking company he worked for. His interest and elaboration in economic details, statistical information, and political and psychological insight signifies him as a more modern late medieval chronicler of Europe. Bartlett (1992), 35–36. His Cronica is viewed as the first introduction of statistics as a positive element in history. He likely won't see them spare something along the lines of a seance, but if you feel compelled to write to Giovanni, send your email to newsroom@salem-news.com

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Salem-News.com Business/Economy Reporter Ersun Warncke is a native Oregonian. He has a degree in Economics from Portland State University and studied Law at University of Oregon. At a young age, his career spans a wide variety of fields, from fast food, to union labor, to computer programming. He has published works concerning economics, business, government, and media on blogs for several years. He currently works as an independent software designer specializing in web based applications, open source software, and peer-to-peer (P2P) applications.

Ersun describes his writing as being "in the language of the boardroom from the perspective of the shop floor." He adds that "he has no education in journalism other than reading Hunter S. Thompson." But along with life comes the real experience that indeed creates quality writers. Right now, every detail that can help the general public get ahead in life financially, is of paramount importance.

You can write to Ersun at: warncke@comcast.net