Public banks and state finance in Florence and Venice

Between the late Middle Ages and the late 17th century, the Italian economy witnessed a parable that has represented one of the most interesting debates among economic historians. The Peninsula played a central role in the international economy of the Middle Ages, while the early modern age saw the emergence of new protagonists closely linked to the globalization process of the economic system. The Italian GDP trend shows that the second half of the 14th century was characterized by a recovery after the grave Black Death; the first three quarters of the next century maintained a rather high level, while in the 16th and 17th centuries a tendency of stability, albeit lower than in the past, persisted. Of course this sketchy outline conceals many details that would make the picture much more complex and articulated. Specific dynamics of sectorial growth in a context of general (or presumed) difficulties; the production of luxury cloths in the 17th century, for example, developed while the traditional wool industry was experiencing a structural decline. We, however, know a great deal about the Italian economy, its success and difficulties, its protagonists and institutions. Likewise, we also know a lot about the financial mechanisms supporting the real economy. It is no coincidence that credit institutions have long been a central topic for economic historians. The capability to effectively transform saving into productive capital is rightly considered to be a key element of economic development. Financial innovations in the private sector have undoubtedly brought significant benefits to the real economy and have thus contributed to improving the general welfare. It is taken for granted that an efficient capital market offers the preconditions for economic growth. Credit has provided governments with the fuel necessary to transform financial capital into military force. Of course, 'public' and 'private' are not always easily separable, especially in the field of financial history, as well as the different contexts in assessing the effectiveness of financial systems. Scholars have passed from considering a purely economic view to embracing other approaches suggested by economic anthropology and cultural history. Credit has thus been considered not only as a productive factor but as an element that contribute to structuring social values such as trust and honor, in a context of reciprocity and power relations. Lending and borrowing therefore involve complex processes, both economically, socially and culturally. My paper will focus more on the financial aspects than on the social ones, not so much because the latter are not important, as through the prism of the credit market and its performances I will try to find similarities and differences between two different Italian centers (Venice and Florence) and, above all, to determine the influence of institutional structures on their financial systems.