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A New Look at the Dealings of the Bardi and Peruzzi with Edward III

Published online by Cambridge University Press:  03 March 2009

Edwin S. Hunt
Edwin S. Hunt
Affiliation:
The author is a doctoral student in the History Department of the University of Cincinnati, Cincinnati, Ohio 45221.
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Abstract

The Bardi and Peruzzi of Florence became in the early fourteenth century the largest merchant-bankers ever seen in medieval Europe. Their collapse in the 1340s has been attributed by most historians to huge losses on loans to Edward III of England. This article explores some flaws in the conventional explanation and shows that the firms lacked the resources to have made loans on the generally accepted scale. It also suggests means by which the companies could have recovered at least part of their advances to the king without the results appearing in government ledgers.

Type
Articles
Information
The Journal of Economic History , Volume 50 , Issue 1 , March 1990 , pp. 149 - 162
Copyright
Copyright © The Economic History Association 1990

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References

1 Villani, Giovanni, Storia de Giovanni Villani (Florence, 1587), book 12, chap. 54, pp. 862–63. In addition to the English losses of 1.5 million florins for the two companies, Villani cites repudiations by the king of Sicily of 200,000 forms and severe property damage in Florence stemming from the uprising of September 1343.Google Scholar

2 It should be noted that Edward III, unlike Philip of Spain in the sixteenth century, never specifically repudiated his debts to the Italian companies. His commissioners disputed the amounts and scaled them back sharply after a series of audits, but the final acknowledged debts were simply never paid. For a detailed account of these proceedings, see Russell, Ephraim, “The Societies of the Bardi and Peruzzi and Their Dealings with Edward III, 1327–45,” in Unwin, G., ed., Finance and Trade under Edward III (London, 1918), pp. 93–135.Google Scholar

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6 For the sake of simplicity, the data will be presented in only two currencies, the Florentine form and the English pound. The commercial relationship between the form and the English pound varied, but there was an “official” rate fixed at one form equals three shillings, that is, £1 equals 6.67 forms, which was used in transactions between the companies and Edward 111 during the late 1330s and early 1340s. Some scholars have argued that the fixed rate created advantages for the companies while others contend that Edward benefited. Because the fixed rate applied to transactions in both directions, the net effect on any of the parties was probably small; in any case, because of its consistent use in the period under review, the fixed rate is appropriate for this study. See Prestwich, Michael, “Early Fourteenth-Century Exchange Rates,” The Economic History Review, 2nd series, 32 (Summer 1979), pp. 470–82.Google Scholar

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28 Sapori, Libri di commercio. My analysis of the Peruzzi libro segrero sesro shows that 19 of the 21 shareholders reduced their net loans to the company from 14,077 forms in July 1335 to 1,151 forms in July 1343. No opening balance appears for the two remaining shareholders, but their 1343 balances reflect borrowing from the company of 9,129 forms.Google Scholar

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46 Ibid. As early as the 1320s the Bardi held at least 30,000 forms, over 10 percent of the commune's public debt (pp. 78–79), and as late as 1344 were still lending “sizable sums” to the treasury (p. 158).

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