BUT SUCH SUMS were nothing compared to the cost of that greatest irreconcilable of them alclass="underline" How could an international merchant bank function when most European trade was going only one way — from the Mediterranean northward — a situation exacerbated by the fact that Rome was drawing huge sums toward itself in Church tributes without even giving anything in return? Had the pope, the Curia, been based in Paris or Bruges or London, how easy everything would have been! Italy could have sent silk and spices north, then used at least part of the income in situ to pay its dues to the Church. Not too much cash need have been moved. But the opposite was the case. The Italian bank had to recover not only the payment for products sent north but also the papal dues that it was responsible for collecting. This in a world where to move money in coin was extremely dangerous. Much of the territorial expansion of the Medici bank was undertaken to deal with this chronic imbalance. The upheavals that led to the bank’s eventual collapse stemmed in large part from the growing desperation of the measures used.
In 1429 it was decided that the Rome branch would operate without capital. Deposits from clergy, together with what coin did arrive, would be sufficient. Other monies due to the Curia from abroad would provide the capital for other branches. This move freed up perhaps twenty or thirty thousand florins. Not a solution.
Inevitably, the debt of the bank’s northern operations toward its Rome branch grew. They couldn’t find ways to send the monies they owed. This was not too worrying when the operation in question was another Medici branch, but it was dangerous when the organization holding the money was an independent agent operating on the bank’s behalf. In the first decade of the century, the Medici had established relations with such agents in London and Bruges. These were other Italian banks that collected papal dues and sold luxury merchandise for the Medici bank. They were under instructions to seek out quality wool to send back to Italy (and the Medici factories) in order to balance the flow and make the return trip worthwhile for the galleys that had brought Italian products north. The banks thus aimed to create the trade that they had come into being to assist and exploit.
But there was a problem. The English now wanted to work all their wool themselves and imposed severe export restrictions and exorbitant duties. The flow did not balance and never would. In 1427, Ubertino de’ Bardi in London and Gualterotto de’ Bardi in Bruges owed the Medici bank the huge sum of 22,000 florins, most of it due to the Rome branch. Those Bardi! Did their slowness in paying really have to do with problems finding merchandise or letters of credit going south? After all, holding someone else’s cash interest-free is always convenient. Was there some connivance, perhaps, between Ubertino de’ Bardi, a free agent in London, and his brother Bartolomeo de’ Bardi, the Medici director in Rome? Not to mention the Medici’s general manager, Ilarione di Lippaccio de’ Bardi, in Florence. This couldn’t go on. At some point, the Medici bank would have to form its own branches in both Bruges and London, if only to invest the income that couldn’t easily find its way back to Italy.
ON RETURNING TO Florence from exile in 1434, Cosimo cut all the Bardi family out of his extensive operations. A clean sweep. What had they done in his absence? We don’t know. The richest Bardi, related by marriage to Palla Strozzi and working for Cosimo’s cousin Averardo’s bank, was exiled. The man was dangerous. Averardo himself had died in exile. Bringing families together in complex relationships might make for strength, but it could also create the conditions for conspiracy and betrayal. Here was another balance that would have to be struck and restruck, year in and year out. What Cosimo’s Bardi wife thought about it, we do not know.
The Portinari family now took the place of the Bardi. Running the Venice branch, Giovanni Portinari was one of the most important men in the organization. Still nervous about the political situation in Florence, Cosimo had shifted much of the home bank’s capital to Venice. In 1431, Giovanni’s brother, Folco, running the Florence branch, had died, leaving seven children. Cosimo took three boys into his own family: Pigello aged ten, Accerito aged four, and Tommaso aged three. All would eventually hold key positions in the Medici bank.
Was this what Cosimo, who only had two children of his own — two legitimate children — planned? That the Portinari boys, brought up in his home, would be more indebted to him, better servants of the bank than any Bardi could be? If so, it was an error. Nothing is less certain than the gratitude of those who have seen us in the role of father, those who have sensed, perhaps, that the real sons are being preferred. There was some question as to whether the Portinari boys had received all the money they should have when their real father died. Folco had had considerable investments in the Medici bank.
Meantime, it was another Portinari, Bernardo, son of Giovanni in Venice and older cousin of the boys in Cosimo’s care, who set out for Bruges and London in 1436 to look into the ever-present problem of the trade balance. Traveling through the Alps on horseback, Giovanni goes first to the Medici branch that Giovanni Benci has set up in Geneva. With Paris in chaos thanks to the interminable Anglo-French War, Geneva is a big success. Merchants come to its four annual trade fairs from all over Western Europe; the town is thus an important sorting house for much of Europe’s currency. Everybody needs credit; exchange deals abound. Merchandise from the north can be brought at least halfway to Italy, turned into cash, and then sent on by messenger. The city even coined a new currency for all international dealings at the fairs: the golden mark, first hint at the euro perhaps.
After Geneva, Bernardo rode on to Basle, where Cosimo had set up another branch — not to trade, but simply to service the cardinals and bishops meeting there in acrimonious general council since 1431. Papal authority was the matter in dispute. By 1436, the Church was once again on the brink of schism. Pope Eugenius, still living in Florence, had abandoned proceedings. The Holy Father’s banker needed to have a sense of who would gain the upper hand, though of course he would never shrink from taking deposits from both sides.
Traveling on to Bruges and London, Bernardo’s brief is to get the local agents to speed up their sale of goods sent by the bank and, even more important, the return of money to Italy. He has special powers of attorney to have particularly recalcitrant debtors taken to court and imprisoned. The sad truth is that your debtor priest in Basle is a safer bet than your merchant debtor in London. Threatened with excommunication through Cosimo’s papal connections, a bishop must pay up. His livelihood and identity are at stake. But there were merchants who took no more notice of a bull of excommunication than a condottiere would of this or that count’s title to some citadel or town. “If only he was a priest,” comments one Medici accountant, preparing to write off a bad debt, “there might be some chance.”