On March 3rd the Early Modern Discussion Group hosted Giorgio Lizzul (KCL) at the Early Modern Forum to present his paper ‘The Utility of Wealth in the Era of the Public Debt 1300-1500’, based on his AHRC-funded PhD research. Dr James Shaw, Senior Lecturer in the Department of History at Sheffield, provided a commentary on Lizzul’s paper and shares his reflections here in the light of his own research.
Giorgio Lizzul’s paper showed how the predominant mode of analysing Florentine history writing as part of the ‘history of political thought’ has led to neglect of the so-called ‘economic’ topics that are heavily present in those texts, particularly the vernacular chronicles and memoirs of the merchant class, but also in humanist history writing. Lizzul described a process of ‘financialization’ of history writing, in which authors paid increasing attention to public debt, government fiscality and quantitative data. The close interweaving of political narrative and ‘economic’ data can be seen for example in the memory book of the merchant Giovanni Rucellai: immediately after describing the struggle of 1401-02 against the Duke of Milan, he noted the price of government bonds at that time.
Indeed, for Renaissance Italians, there was no ‘economic’ sphere as such. Rather, the ‘economy’ was closely integrated with politics – the key business of the state was war, and, equally, how to pay for it – and this was particularly so as a result of the commercialization of military activity in the late medieval period. Authors commonly recognized the role of finance in military activity: that ‘money is the sinews of war’, that ‘war is not waged by limbs but by money’. Machiavelli’s famous assertion that war is made with iron, not with gold, that, ‘contrary to the vulgar opinion, money is not the sinews of war’, did not represent either mainstream Italian opinion or the political realities of his time.
The great humanist historian Leonardo Bruni called the Monte (the Florentine public debt) the ‘great foundation stone’ of the republic. Lizzul’s paper made me reflect upon the way the public debt served a key function in stabilizing the political class, effectively making the citizens into shareholders who had a direct stake in the survival of the republic. Civic patriotism and investment in government bonds were closely related, and this gave Florentine elites material incentives to unite behind their government. Could the foundation of the government debt in the mid-fourteenth century be directly linked to the taming of the factional strife that had so long plagued the city?
Indeed, the art of sound financial management could become a source of civic pride. As Rucellai noted describing the wars of 1452-54, ‘it took skill to manage the money, understanding and genius’. Similarly, the merchant Benedetto Dei noted in 1472 in his encomium to the city, that due to its rich resources and effective financial management – ‘the Florentine government manages to meet all its expenses and give the citizens the interest they have accrued at the Monte’. Civic pride in the Florentine capacity for sound financial management played a key role in constructing investor confidence – believing in the city’s future was after all the key to deciding to invest in it.
Lizzul also addressed the moral tensions associated with the public debt, which particularly focused on the existence of a secondary market in government bonds – that is, the ability to re-sell bonds under par. Such practices played a key role in encouraging investment, since creditors knew that they could at least get some of their money back if necessary. However, the secondary market also raised questions about the morality of those who bought up bonds at a cheap price, motivated not out of patriotism but purely through their desire for higher interest rate payments. Although this was to remain a contested issue, Lizzul showed how it led to the recognition that private vice could generate public benefits. Centuries before Mandeville and Smith, Florentines recognized that the sin of avarice could nevertheless generate civic benefits, positions that were provocatively advanced in Bracciolini’s Latin dialogue On Avarice (1428).