I've been putting this off.
One of the things about temporizing. It's not exactly delaying, though that can be part of it. There may be much work going on while the temporizing goes along at length. But here, the story is current as well as historical. At least here, unless it's always the case. Somewhere, the temporization. The putting off.
In 1499, one of the oldest banks in Venice, acted like it would default and fail. Actually, it did, eventually. It just took a while. One of the reasons was an attempt to set it right, after long negotiations and back and forth proposals by different parties. Apparently, by temporizing. The Garzoni bank and it's follow up failure (which really did them in), certainly was not the only bank failure in Sanudo's time. But there were several in this close period when Venice was being depended on to fight off the Turk in the Mediterranean and German silver was being diverted to Portugal instead.
This diversion of funds was in part, our Editor's tell us, due to news of de Gama's rounding the tip of Africa. Investors saw the potential of new gold and silver prospects. As a result, "... a serious drop in Venetian imports of gold and silver ... added to the crisis caused by the government's heavy borrowing to pay for its military needs."[p. 240]
They also refer here, to Frederic Chapin Lane's work, Venetian bankers, 1496-1533: 81; In Venice and history: collected papers of F C Lane, Baltimore, Johns Hopkins Press , 1966.
and News On The Rialto, in Studies in Venetian social and economic history, ed. Benjamin G Kohl and Reinhold C Mueller, 1-12. London: Variorum, 1987
Supposedly disciplined about these things, the state just ordered more buillion. They just ordered more money to be made. Meanwhile, different creditors kept coming forward asking for a part of their money. The banks, temporizing, would always be reassuring and say, in effect, 'we'll get to you later, don't worry.' This time it started in January with the Garzoni, the oldest, established seventy years before. The heads of that bank had come to the doge pleading for help from the Signoria as they were in need of several thousand ducats. Yet it all had to be kept quiet so much of the discussion was kept to just a handful of people. As Sanudo says, "... in all secrecy it was decided that the honor of this city was in keeping this bank on its feet...". No money was really available because of the volatility in north Italy which the king of France had just vacated causing turmoil. Which cost money and there was the preparation still, with the coming war against the Turk. Further, rumors had circulated for years that the Garzoni had been speculating by 'buying at a higher price than the Mint's ratio to increase their specie reserves'. They lost much there and in family loans and another huge loan to a Florentine. These things made the Garzoni less than popular. [pp 235-6]
In February, creditors were lining up at the window demanding their money, but even at a late hour, none of the Garzoni showed up to open their window. They said they had the funds but not the cash, that many had not paid them back in time, that when they got it, everyone would be paid in full. "Sanudo surmised that money was tight everywhere because of the wars..., the continual levying of taxes to fund these wars, and withdrawals from banks to purchase Monte Nuovo bonds, which were shares in the public debt." The state agreed to continue to mediate between the bank and the creditors. [p. 237]
By May, the problem had spread to other banks. Some like the Lippomani had loaned a great deal to the Gorzani and was now coming up short. The Pisani came to rescue some with a great deal of specie. Heads of the Council of Ten were chosen by the Signoria to go and annouce that there would be a massive dispersal of funds from the Pisani bank. The crowd trying to withdraw, now that the state said theywould allow such a dispersal, changed their mind and everyone wanted to invest instead in it. Two other banks had failed and people now wanted an assured place to put their money. People were calling for the removal of safe conduct privileges for the Lippomani. Literally, a decree had been sent out that no harm should come to the Lippomani or the Garzoni while moving about the city or to their property. This was done to prevent worse riots. A necessary precaution in this temporizing strategy. In addition, military leaders and galley captains were asking for wages for soldiers and sailors. They were told they would be paid, with a bone parole, a good word. Yes, a promise. [pp. 238-9]
On May 18, on a suggestion from Sanudo, an allowance was made to help keep the Arsenale going, the city's massive ship-building enterprise, and for biscuit as well to feed them. For awhile. (2:732)
On May 20, the Germans came demanding at least some of their investment returns. They had been told to wait until Easter, then wait til Ascension and now, to give another fifteen days for the Garzoni to find their cash. Or instead, they asked a relaxing of the conditions of their own obligations until the Garzoni could pay. (2:736)
Negotiations would continue the rest of the year. [p. 240]
All quotes from 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
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