Christian doctrine denounced the use of interest and usury, which served in the Medieval period to deny these techniques for increasing capital out of the hands of ordinary people. The Jews, in turn, were restricted to non-farming activities – they were not permitted own land nor even to act within the manor system. As such, many persons of Jewish origin moved into occupations of trade and commerce. As the Old Testament permitted the Jew to loan at interest to non-Jews (prohibiting him from doing so to his own people), there developed a shift into trading practices along those lines. This was encouraged by Pope Eugenius in 1146, who declared that all interest charged by Christians was void, and by Pope Alexander II in 1179 who publically excommunicated all Christian usurers. In time Christians would move back into the practice of trading money, but in the interim period of the 13th century, the Jews strongly established themselves.
With the Italian Renaissance and the development of Mediterranean trade in the late 13th century, Venice rose as the focal point in European trade. Money changers known as the
camsores sat at their benches in the market places, loaning money and charging interest. They were followed over the next century by the
bancherius de scripta, money traders who accepted deposits in addition to making loans, and who engaged in other banking practices. Banking functions continued to grow, and in 1587 the official State Bank of Venice was established. The Banco del Giro loaned money to the city of Venice itself, to the tune of 600,000 ducats in the year 1618. Banks of this type functioned as places where deposits could be made, and where funds could be received from governmental bodies and from individuals.
Throughout Europe, credit became crucially important to the ability of a state to survive and make war, since money had to be borrowed in order to cover the costs up front and then paid back. Poor credit could be disastrous for an otherwise powerful country, as it meant heavy taxes following even a successful war, resulting in a drop in trade, reduced liquidity and an even more difficult time to be had in raising money for the next war. Thus it happened that the board of governors who managed a national bank became more important to the survival of the state than the highest generals or admirals. Poor money management could be disastrous for a nation’s future security.
The growth of trade and commerce continued to spread, and with the development of colonies throughout the world Holland – which straddled the seagoing trade and the inland trade of continental Europe – became a world trade centre on an even greater level than its older Italian counterparts. The Dutch East India company enriched Amsterdam, leading to developments whereby banks aided trade and exchange, dealt in deposits, foreign and domestic capital and – most important of all – commercial paper.
Venice has since declined as an autonomous banking centre, and has been replaced by Milan and Genoa.
This is the state of banking at the time Alexis’s World takes place.