23 Facts About Medici Bank

Medici Bank was a financial institution created by the Medici family in Italy during the 15th century .

Notable contribution to the professions of banking and accounting pioneered by the Medici Bank was the improvement of the general ledger system through the development of the double entry system of tracking debits and credits or deposits and withdrawals.

Giovanni di Bicci de' Medici was the first Medici to enter banking on his own, and while he became influential in the Florentine government, it was not until his son Cosimo the Elder took over in 1434 as gran maestro that the Medici became the unofficial head of state of the Florentine republic.

Medici bank's founding is usually dated to 1397, since it was this year that Giovanni di Bicci de' Medici separated his bank from his nephew Averardo's bank, and moved his small bank from Rome to Florence.

Also in 1402, the first Medici Bank factory was established for the production of woolen cloth, and then another in 1408.

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Medici Bank dissolved one of the wool factories, along with other reorganizations occasioned by partnerships coming to their designated end.

Medici Bank's death did not greatly affect the bank's operations, and the transition to Cosimo went smoothly, aided by Ilarione, who was retained as ministro.

Fortunately for the bank, Lorenzo di Giovanni di Bicci de' Medici was on excellent terms with Cosimo, and did not insist on dissolving the partnerships so he could receive his share of the patrimony ; many Florentine banks and mercantile businesses lasted only a generation or two because some of the inheriting sons usually wished to strike out on their own.

The timing was unfortunate because the Albizzi government of Florence was moving against the young Medici Bank-led resistance, culminating in Cosimo's exile to Venice.

Formerly, any business that the Medici Bank needed to transact in Pisa had been done through them.

Over time, the Medici Bank progressively reduced their investment in this partnership, and it appears that they withdrew completely sometime shortly after 1457, with only one partner keeping it running until 1476.

Structure and functions of the Medici bank were largely settled into their final form by this point; a branch would be opened in Milan in late 1452, or early 1453, at the instigation of the grateful Sforza.

The London branch of the Medici bank had already been dropped as a full partnership in 1465, and had been reincorporated as an accomando.

Medici Bank spent the vast majority of his time wrapped up in politics, and when he was not preoccupied with the intricate plotting and other characteristics of Florentine politics, he was patronizing the many fine Renaissance scholars and artists who were present there, or engaged in composing his own renowned poetry.

Medici Bank was succeeded by his two sons, Lorenzo and Giuliano.

Niccolo Machiavelli gave a more contemporary viewpoint in his Istorie fiorentine, asserting that the fall of the Medici was due to their loose rein on their bank's managers who began to act like princes and not sensible businessmen and merchants.

The Medici bank's remaining assets and records were seized and distributed to creditors and others.

Nevertheless, the sources are sufficiently numerous that the Medici bank is well understood, especially as the remains of the Medici records were given to the city of Florence by a descendant of the Medici.

Indeed, the structure of the Medici Bank resembles nothing so much as the modern holding company.

Medici Bank buys a bill of exchange for 10 florins, with the understanding that the London branch will cash that bill at half a pound to the florin, for a total of 5 pounds.

Rome branch of the Medici bank was a fully incorporated partnership which technically did not reside in Rome.

Accounts with the Medici Bank were kept secret and generally free from prying, ecclesiastical eyes, especially in the case of discretionary deposits.

The Pazzi's interlocked businesses and banks had captured the alum business after the Medici were removed from it, and were supplying the depositary-general from their ranks, indicating that they were trying to follow the Medici route of initially building up their empire through papal custom.