Partly because of this, by 1500 Genoa, had already given up her security and sovereignty (because she couldn't do it herself) to numerous mercenary captains. In recent memory, there were the dukes of Milan in the fifteen-hundreds, twice to two French kings, and once even to representatives chosen from people in the street. No stability could be found in any of these either. Neither for security or protection of any state, from without or within. But despite these trends, the failing armada, the continual decrease in expenditures in state-guaranteed or subsidized trade, even the inability to pay the interest to her own debt, Genoa seems to have out foxed everyone in the long run. In economics. But is that just a part of a certain cycle?
It was in Genoa that the practice of funding collective debt became used to fund a government. It worked so well, and Genoa managed to keep it going for so long, that by the mid 1560's, Spain under Philip II incorporated such schemes and by extension brought them to the Americas and even Holland as well as Spain. All of them looked into it for their own and 'in the name of' the other's' finances. New England Puritans would use them, to a degree in their sense of a 'commonweal' too, not just in common stock for unpaid or possible debt. Overseas ventures were very risky and very expensive as the Spanish could heartily testify. But what was it? How did it work?
Statements of debt were collected as a list of IOU's, together into one place. Then cash money was accepted from newly made shareholders who would then be purchasers with the new ability to fund that debt. At least sixty were kept more or less all the time who, having paid into the kitty funding the debt, were guaranteed returns of certain rates over time.
"The establishment of the Casa responded to the perennial problem of the debt and interest payments, as well as the current spate of tax revolts.... The protectors of the rules of the compere [the old banking network] floated the idea of consolidating the debt, and four new officials, the procurators of San Giorgio, began to work on their plans, in 1405. By April 1407 the officials were able to begin the immensely complex process of taking over the shares of the old debt and exchanging them for shares at a nominal value of L100 (100 lire), share for share, in the new compera of San Giorgio. [Next] A document from 7 May 1407 shows how the government in this case ordered the end of the New San Paolo compera [established to fund one of the Venetian wars, c 1378] and its shares to be bought up at L100 in 7% shares." p. 260; -- from Stephen A Epstein in Genoa and the Genoese: 957-1528 University of North Carolina Press, Chapel Hill, 1996
In other words, they had consolidated or collectivized debt and then sold that to shareholders who were paid a return percentage on what they had funded. Got it? The next year, 1408, The Casa started a banking business to serve the shareholders and the tax collectors. By 1418, the government had renounced all control over the bank or the Casa. Soon after it started asking the bank for loans and credit. In 1444 that bank collapsed no longer able to service its debt but the government and the Casa of course survived. It was their model that Charles V in the 1500's would try to copy and arguably his son Phillip II would succeed in duplicating in bringing Spain's finances within grips with the external power of American silver of course, but with this different managing system and hierarchy in place for doing so than had been used outside Genoa or Venice and nowhere else on such a massive scale.
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Really? It does seem that way. Venice did something similar but they had a much more closed system. Investors could only be drawn from certain sectors or from certain families in town. If Venice learned anything in her war as our Editor's of Sanudo point out, defending herself against the League of Cambrai 1508-17.... maybe those lessons had been put up on placards during procession while enduring the later Cognac war in 1526, against Charles V...
Editor's note: "'All things obey money"; "If riches abound, fear not"; "Whoever has the wealth may sail with fair wind and govern fortune as he wills" (July 8, 1526...". p. 265.
in Venice, Cita Excellentissima, Selection from the Renaissance Diaries of Marin Sanudo translated by Linda L Carroll, editors: Patricia H LaBalme and Laura Sanguineti White, published by Johns Hopkins University Press, 2008
nedits: But to do this, to earn, to gain, to learn the fruits of wealth, you had to spend it. And to spend it, you had to have it.
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