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By separating the books and operations of the branches, a failure of one would not effect another. This provided stability, reduced risk, and attracted huge deposits – including the massive deposits of the Vatican. For about 100 years, the Medici banks were stable and extremely well-run. They maintained meticulous deposit records. There was no chance of a deposit being lost or miscalculated at a Medici bank. A Medici bank note was so respected that it was accepted throughout Europe as a form of currency. The Medici banks were the go-to banks for bills of exchange and currency exchange. With its strength and international network, the Medici’s facilitated an enormous expansion of commerce. This helped set the stage for European domination of international commerce and colonialism for years to come . The Medicis made incredible amounts of money. Fortunately for the rest of us, they were very generous with it, investing huge sums in the arts and science. Many of the great works which today we consider treasures of humanity were sponsored by the Medici: the Basilica of San Lorenzo, the Uffizi Gallery, the Pitti Palace, countless priceless works of art including Botticelli’s Birth of Venus, the Boboli Gardens, Michelangelo's David, the Belvedere, and the Palazzo Medici…The Medici’s were also patrons of the astronomer Galileo Galilei. Their financial support enabled him to make many important discoveries in astronomy and physics. The legacy of the Medici is not just that they facilitated financial conditions which enabled the expansion and evolution of commerce, but that their wealth was put to work in ways that enrich our lives even today. The Rothschild Family No study of the history of banking would be complete without mentioning the House of Rothschild. Mayer Rothschild was born into an impoverished Jewish family in a Frankfurt, Germany ghetto in 1744. As an adult he had five sons and had taken over running the family business, a small bank. Around this time, the Industrial Revolution was looming and businesses needed access to a great deal of money. After all, inventing things and funding new ventures are expensive processes. The money was often provided by banks. Rothchild banks, in particular, funded much of the industrial revolution. Mayer Rothschild expanded the family business by setting up bank branches in every major European financial center. By placing his sons in charge of each of the branches, he created a tight-knit business network which could quickly and efficiently operate across borders, a major advantage in the time before modern transportation and communication technology. The Rothschilds developed many of the types of financial instruments that modern banks use today . Their international presence and their new investment tools made them less vulnerable to losing money on borrowers who couldn't pay back their loans, sudden economic crises, and confiscation by governments, all of which were big problems for banks in the 18th and 19th centuries. These advantages allowed the Rothschild family to make a fortune by providing loans to the British government during the Napoleonic Wars. At one point, the Rothschilds had the largest recorded private fortune in history! They funded many famous projects like South Africa's diamond mines and the Suez Canal. They were so powerful that they even provided loans to the Bank of England to stop an economic crisis in the 1820s. The family is not as rich as they used to be, as their great wealth was divided among many descendants, but they still operate a wellknown investment bank in the UK to this day. PRODUCT PREVIEW
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Lesson 6 | Crusaders, Unpleasant Peasants & Mobsters
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