Medici Bank: The firm from Firenze
The Renaissance occupied Florence. This is because at the center of Florence sat the Medici family. The Medici family were perhaps the most powerful family of their time. They had significant wealth, consisting of art, gold and land. However, their primary source of wealth came from their influential, widely respected Medici bank.
The Medici family may be recognized by their patronage in the arts and their contribution to the Renaissance movement, however they also played a fundamental role in the development of finance. Their firm, the Medici bank, was incredibly innovative, mobilizing methods that are still in use today in order to rise to the top of Europe.
The Medici bank was founded in 1397 by Giovanni Medici, however collapsed in 1494, ‘a victim of depression, internal strife and French aggression’ (Economist). The power that it had wielded over Europe, the wealth that it had supplied to the Medici– making the wealthiest family in Europe– it was clear that the bank had underwent an illustrious career.
The bank accelerated to power. They expanded from Florence, forming up to nine branches outside Florence, scattered throughout Europe. Prior to the Medici bank, there were many other banks that were major in Europe, such as the Bardi, Acciaioli and Peruzzi, all alternative, Italian banks that had accumulated much power and wealth in their heydays.
The bank had reached its pinnacle under Cosimo de Medici. The Medici handled all papal finances and more than half of the bank’s revenue came from its branch in Rome. This connection with the Vatican presented the Medici with a plethora of other clients, including royalty for whom they would fund lavish lifestyles and military campaigns (Economist).
The Medici bank are credited for embracing innovations such as ‘double-entry book-keeping, bills of exchange and book transfers’ (Economist). Their adoption of such innovations had influenced many other banks who aspired to be as powerful as them to adopt these innovations as well. The Medici bank are also credited for innovations such as making each of its branches partnership under a central holding company.
It is clear that the Medici bank were not only the most powerful, wealthiest firm in Europe, however were pioneers in finance, accounting and banking. Although their downfall began subsequent to Cosimo de Medici’s death, the successes of the bank secured the power of the Medici family for years to come.