The Renaissance Economy: The Rise of Banking

Lesson Transcript
Instructor: Jessica Whittemore

Jessica has taught junior high history and college seminar courses. She has an M.A in instructional education.

Due to the increase in commercial activity during the Renaissance, the banking industry began to expand to make it easier for merchants to conduct business away from home. Learn more about the rise of banking in the Renaissance era, the Black Plague's impact, double system entry, and bills of exchange. Updated: 10/26/2021

Introduction to the Rise of Banking

Because of the Black Plague, merchants who were still alive were in higher demand.
Black Death Means More Profit

This is Claude. Claude lives somewhere between the 14th and 15th centuries. Claude peddles wool. Claude doesn't know it, but he's about to come into some money. Claude's going to need a bank. Lucky for Claude, banks are popping up all over Europe. Let's follow Claude to learn a few things about these new banks, their prominent members and their impact on Renaissance society. Before we get to all this, let's see how Claude gets his money.

Claude acquires his money through tragedy - other people's tragedy. He's a member of the Woolmen's Guild, a group of craftsmen who work together to control prices and fair trade practices. At their monthly meeting, Claude notices his fellow members aren't looking so hot. Henry is complaining about swollen joints, Fred has red spots and Sam is acting plain crazy. By the end of the week, everyone but Claude is dead. They all had the Black Plague. Realizing this signals the end of his Woolmen's Guild, Claude decides to branch out on his own. Trusting his former guild members won't mind ('cause they're dead), he takes their tools, their products and their trade routes. Claude now has a huge group of customers looking to him for all their wool needs. He's in such high demand, he can charge way more for his product. Claude begins to make some real money.

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  • 0:05 Introduction to the…
  • 1:45 Rise of the Middle Class
  • 2:54 The Medici Bankers
  • 4:54 Advancements in Banking
  • 6:18 Other European Banks
  • 7:01 Lesson Summary
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Rise of the Middle Class

Soon Claude tires of traveling and looks for a place to set up a permanent shop. This brings him to Florence, Italy, a city made wealthy by the Crusades, overseas trade and Claude's personal favorite, wool. He sets up shop, and business starts booming. Soon he hires an apprentice, or a worker who learns his or her trade from a skilled employer. Before long, Claude's quite the merchant. With his thriving business, he joins a new breed of other merchants who become known as the middle class. Claude and his new middle-class friends soon come up with ways to diversify, or enlarge the range of products sold. Claude decides to add ladies' garments to his portfolio. His friend the candlemaker adds torches to his. These new additions will require funding, and Claude and his friends just don't have enough gold florins - gold coins made in Florence that were the standard money for most of Europe - the first coins to be mass-produced for trade across countries.

The Medici Bankers

Lucky for Claude, another citizen of Florence, Giovanni di Bicci de' Medici, has just started a banking business across town. Giovanni and his family used the rise of trade and industry as a catalyst to grow their banks. This has made them one of the wealthiest families of Italy, if not all of Europe. Claude and his candle-making friend go see Giovanni, who tells them he's going to charge interest on their loans. This surprises Claude, since his priest always told him it was against the rules to charge usury, or interest.

The Medici family became one of the wealthiest families in Italy and all of Europe.
Medici Bankers

Although Claude is a bit annoyed about the usury part, he decides to borrow the money. It can't be too bad an idea, since while he's there he runs into the Pope, who is also borrowing money. He also sees several of the European monarchs trying to take out money. He overhears one of them saying they need money to raise their own armies to protect their lands. He hears another gossiping how King Edward III of England defaulted on his loans from the Hundred Years' War. Goodness! No wonder the Medici can give so much of their money to support artists like Michelangelo, Brunelleschi and da Vinci. It seems everyone, even the Pope, owes them money! As Claude is leaving the bank, Giovanni's son Cosimo de' Medici calls out, 'If you're ever traveling abroad, we've got you covered. We've got branches in Bruges, Barcelona, even Cairo!'

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