How banks worked around year 1500 or so?
Been playing Assassin’s Creed recently and had a thought. How actually banks worked back then?
I mean a guy could show up and ask for a loan. Let’s say he wants 1000 for a week. All goes well -> the guy returns money with interest. But the other outcome is – the guy decides to move to another city or simply don’t go to the bank. How the bank would get its money back, considering that there were a lot less documents and such for each person? Probably some of them didn’t have an ID or some kind of an equivalent.
Wife suggested that bank didn’t have out loans to poor people at all because was impossible to know whether the guy returns money or not.
In: Economics
> I mean a guy could show up and ask for a loan. Let’s say he wants 1000 for a week.
They probably simply wouldn’t give a loan to some nobody who could just disappear into another town like you describe. Instead they would only be willing to provide a loan to someone who they trusted, like a person well known and established in the city. Loans might require collateral (something of value left with the bank to ensure their money is returned) or a similarly affluent/well-reputed cosigner. If the borrower skipped town the bank could sell of the collateral or go to the cosigner for payment.
That is one of the reasons that being from a noble house would have been so important. Being part of the House of Auditore would have given Ezio significant legitimacy to borrow if he needed to, as if he failed to pay back his debts then they could in concept collect from any other Auditore who would be seeking to retain their reputation.
Collateral most likely existed back then as it goes now.
I would imagine the bank would want to hold onto something you would want.
Your wife is correct – they weren’t customer banks in the modern sense. As an ordinary person you couldn’t go and get a loan or open an account. Rather, the italian medieval banks were merchant banks that mostly provided credit to merchant expeditions or voyages. If a certain merchant tried to do what you describe they would lose their reputation and possibly standing with organizations like guilds, and basically their livelihood would be ruined. Medieval society ran on support networks of family, patronage, and guilds – without those, you were nothing, and your livelihood and even personal safety could be seriously at risk. So a merchant would definitely not want to risk that
Actually the first form of banks were more closely related to a money exchange than of what we have now, as in, they were made by the crusaders in which the pilgrims would give them money and would receive a tablet for the city that they were going to. Of course it would have a fee and the crusaders would exchange contacts regularly about the logistics of it all… The crusades and merchant expeditions were the first credits and loans performed by the crusaders, but that was much later (1400) and the first form of it was more like in the 700-900 as they wanted to primarily protect the christian pilgrims money
Almost no-one had any ID. People pretended to be emperors, never mind posing as peasants. Basically the bank or someone connected with the bank knows the guy and where he lives, works etc, or they have someone more prominent vouch for them who becomes liable for his loan should he skedaddle. There are no tvs, phones or computers; very little isolation. It woud be very weird for someone to live in the time and have access to a bank without their community of hundreds knowing them very well.
15th century banks absolutely did give loans to poor people. The Banca Monte dei Paschi di Siena, the oldest bank in the world, was set up to do exactly that.
You had to be “someone” in order to get a loan. A noble, a knight, a merchant, royalty, a high level member of the clergy. It should be noted that it was extremely risky to lend to these people, particularly royalty. As a guy with a large army was always able to fight off the bailiffs. It was common for banks to go bankrupt because a king would take a loan and then just not pay it back. It is generally believed that Phillip IV of France ordered the Kinghts Templar to be destroyed to escape his debts to them. The banks that hung around for a while were run by people who were really, really good at assessing risk.
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