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As Italy and much of Europe struggle with their finances, the city of Florence has staged an art exhibition looking at the critical — and controversial — role that financial institutions have played for centuries.
The recent Money and Beauty exhibit, held in the majestic 15th-century Palazzo Strozzi, illustrated how Florentine merchants got around the Catholic Church's ban on money-lending and bankrolled the Renaissance.
With the Bible explicitly condemning usury, the lending of money was relegated to Jews, one of the few professions they were allowed to practice.
Yet in Florence, merchants turned the city into a laboratory and invented the financial instruments of international trade.
The exhibition starts with a small gold coin — the florin, named after the city. It was first minted in 1252, and a half-century later it was being used throughout Europe.
In the audio guide to the show, one of the curators of the exhibition, British writer Tim Parks, says the imagery on the gold coin is important: "On one side, the lily of Florence, on the other St. John the Baptist — civic identity and religious belief fused in cash."
As illustrated in the exhibition, Florentines also invented the letter of exchange, whereby a banker would give a client, say, 1,000 florins in one city with a pledge that the loan would be paid back in another within three months in the local currency.
The banker made a profit on the exchange rate. The trader, meanwhile, did not have to carry heavy metal coins on his trip and risk being robbed.
The Vocabulary Of Finance
Many current financial terms derive from 14th-century Florence. Rischio — or risk — was the Tuscan word used to denote the costs incurred on, or contingencies of, a loan. It was simply a euphemism for interest, a taboo for the Catholic Church.
Many bankers made donations for the salvation of their souls, devoting money to good works or art. It was said, 'great sinners, great cathedrals.'Ludovica Sebregondi, curator of an art exhibition on the history of banking
The word "bank" comes from banco, the bench on which itinerant merchants traded. An insolvent merchant would have his banco broken — hence, bankruptcy.
One of the objects on display is an account book that illustrates the dangers of sovereign default. When the English King Edward III reneged on war loans he had received from Florentine bankers, it contributed to financial problems in the city in the mid-14th century.
Parks, one of the curators, describes how this new way of doing business soon pervaded every sphere of life.
"Suddenly everything has a unit value, and everything can be compared in numbers. A priest has a fee for a wedding and a funeral — is that more or less than the cost of a flask of wine, or a prostitute?" Parks says.
Catholic Church Opposition
The Catholic Church didn't like what was happening. But art historian Ludovica Sebregondi, who also curated the exhibition, says in the audio guide that some theologians began to make exceptions to the condemnation of money-lending.
"Amid this tension between opposing views," she says, "many bankers made donations for the salvation of their souls, devoting money to good works or art. It was said, 'great sinners, great cathedrals.' "
And in another hedge against eternal damnation, bankers filled those great cathedrals with great paintings and great sculpture. Through penitential patronage — the fear of God — Florence became the foundry of great artwork and set the stage for the Renaissance.
James Bradburne, director of the exhibition space, says Money and Beauty has a particular resonance in today's financially troubled world.
"It asks people to think about bankers' bonuses, how bankers make their money. How mysterious was a letter of credit — it was like short-selling, like derivatives," he says. Many of the same questions, Bradburne notes, are being asked today.
"Are the bankers the devils? Are they making illegitimate profits, or are they just good chaps?" Bradburne says. "We need the banking system. The dilemma is the same — and it devolves into a social and moral dilemma — then as now."
What's less clear is whether today's bankers — perhaps less guilt-ridden than their Florentine forerunners — are willing or able to finance a new renaissance.