The development of banking helped finance trade
As the Italian economy grew, so did capitalism, and the feudal system began to disappear. Commercial activity and trade increased, which came with a demand for banks to administer transactions and assets.
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The Argument
The development of banks in Italy helped finance the trade networks needed to supply the demand for goods by the European people. Italy dominated most trade and manufacturing for Europe in the early Renaissance. For example, large business organizations originated in Florence, Milan, and Venice. Venice was popular for the manufacturing of woolen cloth and silk. Milan's market was known for its mass production of metal goods. Venice was sought after for its Mediterranean trade of Arab goods, such as spices.[1]
There was no need to carry coins or fear of having money that could be stolen. Banking would enable merchants to conduct business from far away, take out loans, transfer funds to different locations, and exchange different currencies. Banking funded the rebirth of the Renaissance.[2] The banks would loan out money to start businesses, from buying the materials and hiring workers, to transporting the goods.
One of the most popular banks in Italy was run by the Medici family, who originated from Florence. They have been recognized as the "Godfathers of the Renaissance."[3] Other patrons include the bank of the brothers Agnolo, Giovanni, Niccolo, and Galeazzo di Lapo da Uzzano, who had branches in Pisa, Bologna, Genoa, Venice, Rome, and Naples. Their loans were in the thousand florins (Florence currency).[2]
Counter arguments
Several banks in Italy during the Renaissance were not full-service. The narrative of the banks is not straightforward, and therefore it cannot be concluded that they single-handedly funded trade. Most banking functions were private, without the functions of a bank. Collectively, the private exchange of currency could have had more impact on the economy than the banks.[2]
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Rejecting the premises
References
- https://www.encyclopedia.com/humanities/encyclopedias-almanacs-transcripts-and-maps/economy-and-trade#:~:text=During%20the%20Renaissance%20merchants%20made,exchanging%20various%20forms%20of%20money.
- https://books.google.com/books/about/The_Economy_of_Renaissance_Florence.html?id=OM2ckx49QFYC
- https://www.pbs.org/empires/medici/medici/bankers.html