Abstract
Starting in the second half of the sixteenth century, the public banks of Naples initiated the pattern of financial innovation, crisis and recovery that characterised their resiliency over the next centuries. Their circulating deposit certificates, fedi di credito, gave rise to the first example of a paper circulation in the Western world. The public banks also created money through loans and introduced the innovative instrument of cash credits. However, their financial innovations contributed to banking crises, particularly the first, cataclysmic, crisis of 1622. Together with governmental authorities, they introduced a package of bail-in, bail-out and temporary “nationalisation” measures that, with further financial innovations, restored their growth in the 1630s. These foundational decades of their life provided a blueprint for the resolution of future banking crises.
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Notes
- 1.
Franca Assante, now a Professor of Economic History, collaborated sometimes. Balletta (2008) presents these balance-sheets data.
- 2.
In 1621, the public banks circulation was exactly D. 5,132,411.00. In 1620–1621, one carlino (the tenth part of a ducat) had a silver content of 2.495 grams (Muto 1992, p. 160). In 1620–1621, the daily wage of an unskilled worker in the building sector was on average the equivalent of 5.75 grams of silver. Wage data for Naples and their conversion in silver equivalents are from Robert Allen’s website, at the following address: https://www.nuffield.ox.ac.uk/People/sites/Allen/SitePages/Biography.aspx.
- 3.
The first fede di deposito we know of was issued by the Annunziata bank on 20 September 1564 in favour of Domitio Caracciolo for D. 30.000, to pay for the purchase of a piece of land in Atripalda (Demarco and Nappi 1985, p. 25).
- 4.
Fedi di credito were issued on depositors’ demand: on depositing money, the depositor only asked for a fede di credito if s/he needed one for making payments. For instance, we found that on 9 February 1615, the Pietà issued fedi for D. 848, equal to 21 per cent of the money received as deposits (ASBN, Apodissario, Pietà, Giornale Copia Polizze di Cassa, matr. 65, f. 72).
- 5.
Fedi di credito were handwritten documents until 1749 when the Spirito Santo introduced a printed form.
- 6.
In addition to these circulating notes, sometimes referred to as free fedi di credito (libere), there were other categories: “conditioned fedi di credito” (fedi conditionate) could only be cashed on the occurrence of some specified conditions or after a certain date; judicial fedi were issued by the bank on receiving sums deposited on judicial order. The banks profited from the long delays before the judges eventually ordered the conversion of these fedi into cash.
- 7.
Polizze were usually written on pieces of paper of uniform quality and size, suggesting that they were issued by the banks and delivered to their customers on their request.
- 8.
Bancali were then extinguished and, together with many others, would form a filza.
- 9.
We refer to domestic bills of exchange. The Neapolitan banks also dealt with bills for long-distance trade, which merchants credited in their bank accounts (De Rosa 1955). On foreign bills of exchange, see De Roover (1953), Neal (1990), Flandreau et al. (2009). Costabile (2015, 2016a) studies early seventeenth-century debates on the effects of foreign bills of exchange on the balance of payments in Naples and in England.
- 10.
On Galiani’s theory of money, see Costabile (2016b).
- 11.
Not surprisingly for a Catholic country, protection by the Church was also important. To mention just some examples: in 1517, the Consiglio Lateranense approved that Charity Lombards could earn interest at 6.5 per cent to cover their costs; in 1552, Julius III approved the statute of the Neapolitan Monte della Pietà (De Rosa 2004, p. 58); in 1586, Sistus V recognised one of the fraternities at the origin of the Bank of the Poor (Banco dei Poveri), etc.
- 12.
- 13.
Vice-royal approval for the Poveri charters arrived after many years, allowing the bank to rely on its self-made charters in the interval.
- 14.
For a detailed study of public finances in Naples during this period, see Calabria 1991.
- 15.
The largest interest-free loan (forty thousand ducats) was granted in 1614 to two rich merchants, Giovan Battista and Francesco de Rinaldo, because they promised to make business with the bank at the Salerno fair next September.
- 16.
On 1 December 1614, the Marquis of Torrecuso (“because he will bring D. 5.000 cash into the bank”), obtained a loan of D. 50 “until Ash Wednesday and it is up to His Lordship to decide about the interest rate”. On 27 October 1615, the Protectors ordered that “Mr. Giovan Battista della Marra, Duke of Macchia, be allowed to spend one thousand ducats” in excess of his credit with the bank. “As for the interest rate, this is left to the good judgment of His Lordship”.
- 17.
Examples: (i) on 4 May 1612, the Protectors ordered that “the polise by Signor Cardinal Acquaviva be made good up to the sum of 300 Ducats”; (ii) on 4 June 1612, they accepted “the fede di credito written in favour of Mr. Giovan Tommaso Mastrillo on 25 May 1610, and transferred by him to Ottavio di Ragone, although the money is not there”; (iii) on 7 July 1615, the Protectors decided to make good a polizza of ducats 5637. tarì 1. grana 2 to the powerful Count of Mola, the Portuguese Michele Vaas, an advisor to the Viceroy, to settle an account with the Prince of Sansivierj (old Italian for Sansevero). This loan was motivated by the advantages that the Count had already brought, and may continue to bring to the bank.
- 18.
Examples: (i) 12 June 1615: “Let Mr Ferrante della Quadra be granted a loan of D. 371 because this is useful and good in the interest of our bank”; (ii) 12 September 1614: “Because Vespasiano d’Amato brings D. 900 into our bank, let he be credited with about D. 1100”; (iii) 8 November 1616 “Let Albertino del Giudice receive a loan of D. 300, because he kept in this bank much idle money for very long time.”
- 19.
For example: (i) “Let Livio Greco be allowed to spend up to D. 300 as he has promised to bring into our bank twelve-thousand ducats every year” (17 February 1615); (ii) “The Member of the Council Mr. Cesare Frezza may use and spend up to the sum of D. 200 whenever the need may arise, because he is a very punctual person, and usually brings useful benefits to this Holy House” (31 December 1614). Cesare Frezza was a member of the Sacro Real Consiglio, the Kingdom’s supreme jurisdictional Court, with wide competence on civil and criminal issues.
- 20.
Checkland 1975, p. 63. See also The Royal Bank of Scotland’s heritage website at: http://heritagearchives.rbs.com/rbs-history-in-100-objects/serving-our-customers/overdraft-authorisation-1728.html.
- 21.
In 1584, the Pietà’s Protectors decided for the first time to keep a “little book” registering all their “accommodations”. But we only found the Book of Accommodations for 1612–1617. Other similar books, if they existed, were possibly destroyed in the fire of 1786.
- 22.
For instance, on 15 September 1615, the Directors decided that: “Because Andrea Turturella keeps in our bank D. 2000 and also enjoys his usual accommodation of. D. 500, a fede di credito for D. 3000 shall be issued in his favour for the Salerno fair, because he promised to bring back the money in few days” (Pietà, Libro degli Accomodi, f. 103). The word “usual”, also used for other customers, shows that some accomodi were standing orders.
- 23.
- 24.
With the edict being re-issued in 1627 and 1658, the tax on wine was still in existence almost half a century later!
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Costabile, L., Nappi, E. (2018). The Public Banks of Naples Between Financial Innovation and Crisis. In: Costabile, L., Neal, L. (eds) Financial Innovation and Resilience. Palgrave Studies in the History of Finance. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-90248-7_2
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