EW JOURNAL

“Item, a house in the parish of San Tommaso, with a garden and a well.”

A line of that kind is what the Florentine catasto returns are made of, page after page, from the year 1427 onwards, when the commune required every household in its territory to declare what it held, what was owed to it, and what it owed to others. Giovanni di Bicci de’ Medici filed his, as everyone did. Property was itemised, debts deducted, and a figure emerged at the bottom against which the household would be taxed. The instrument was, for its century, an administrative marvel. It was also nearly useless as a measure of the thing it was built to measure, and the family that would spend the next hundred years demonstrating why filed the most careful returns of anyone.

Raymond de Roover, who worked through the bank’s own surviving books more thoroughly than anyone before or since, reached a conclusion about those declarations that deserves to be better known: as evidence of Medici wealth they cannot be trusted, because the principals misdeclared. Not crudely. A tax return of this period is not a confession but an argument, and the Medici argued better than most, with lawyers to help them and assessment committees composed of men who had their own returns to file. The commune accepted what was convenient to accept. Everyone involved understood the genre.

Consider what the bank actually was, since the romance around the name tends to obscure a sober and rather beautiful structure. In practice it functioned as a partnership of partnerships, headquartered in Florence from 1397, when Giovanni moved his operation up from Rome, with houses in Rome, Venice, Geneva, Bruges, London and elsewhere, each of them a legally separate company in which the Florentine centre held a controlling share alongside a local manager who put in capital of his own and drew a fixed portion of the profits. A branch that failed could fail alone. The manager, with his own money in the venture, had reason to be careful with everybody else’s, and the surviving correspondence shows a head office issuing instructions about credit limits which the branches did not always trouble to obey.

The most profitable business, year after year, was exchange, a line of work that never touched interest in any form a canon lawyer would have been obliged to notice. A bill drawn in Florence and payable in London in sterling some weeks hence carried its profit inside the rate itself, with no stated charge anywhere for the passage of time, which satisfied the theologians, the notaries and very nearly everybody else. Time was being sold. It was simply not being invoiced.

Cosimo, Giovanni’s son, understood early that the largest single account on the books was the papacy’s, and that keeping it depended on his standing in Rome, which depended on his standing in Florence, which depended in turn on taxes he preferred not to pay and offices he declined to hold. He held no permanent magistracy worth the name. He arranged instead that the men who did hold them should be men who owed him money, or owed him a chapel, or owed him the marriage their daughter had made. The republic’s forms were left entirely intact. Nobody had to be deceived, because nobody had to be told.

At this point the accounting gives out. A bill of exchange is an asset because a named party will honour it and a court will assist if he does not; it can be discounted, pledged, sold to a third house at a price. A chapel endowed in a rival’s parish is an asset because the rival’s son will find it awkward to speak against you in the Signoria, and no court anywhere will assist you if he manages it regardless. The second thing cannot be transferred, cannot be liquidated, yields no income, and requires continuous expenditure that looks on any ledger like waste. What it does is lower the price of everything you subsequently attempt. Modern practice has a shelf for such an item and it fits badly: an intangible of indeterminate useful life, carried at cost, tested for impairment only when something has visibly gone wrong. The cost is knowable. The value is not. And the impairment, when it arrives, arrives everywhere at once, because the whole position was one position.

Cosimo’s obligations were worth what they were worth precisely because they were not for sale. This is a real form of wealth and it behaves nothing like the other kind. It is more durable across a century and far more fragile across a bad six months, and the difference will not appear in any return either man filed.

Lorenzo found out which six months.

What he inherited was the reputation. The ledger was another matter, and his considerable talents lay elsewhere entirely. The papal account went. The northern branches had written large loans to princes who could not be sued and were slow to admit what that meant. Public funds administered by his allies covered private shortfalls, a manoeuvre available only to a man whose obligations were in excellent order and ruinous to a man whose cash was not. The Pazzi came for him in the cathedral in 1478, and his brother Giuliano died on the floor of the Duomo. The conspiracy failed, which mattered less than it appeared to, since the bank went on failing more slowly. By 1494 the family was out of Florence and, by the reconstruction de Roover offers, in debt to its own Rome branch.

Art stayed. Buildings stayed. Two popes and a grand ducal dynasty came afterwards, and the capital that made them possible was by then in no branch’s books at all, which is the part I cannot resolve. Did Cosimo know what he was doing, in the sense of having a view about which of his two fortunes would outlast him, or did the durable one simply turn out to be the residue of a lifetime of expenditure he undertook for reasons of piety and vanity and Florentine habit? The letters show the chapels commissioned and the sums paid. They do not show a man reckoning the exchange rate between liquid claims and illiquid standing, and I doubt such a reckoning was ever written down, because the men who were best at it had no need to write it down at all.

A single detail argues for the intention. The sacristy, the library, the friars’ cells, the chapel walls: the family put its name and its emblems into places where the name could not be painted out without insulting God, and it did so in a city where political exile was routine and property confiscation ordinary. A palace can be seized. A convent cannot easily be un-endowed. Whoever chose those particular vehicles for that particular money was thinking about a horizon longer than a branch’s fiscal year, and the choice looks, at this distance, uncomfortably like a portfolio decision.

Genuine rigour went into the catasto of 1427, measuring the part of a Florentine fortune that consisted of items. It is the only surviving systematic measurement of Medici wealth, and the family’s whole achievement lay in the column it did not have.

One is tempted to say they turned money into culture. They did something narrower and stranger. They converted liquid claims into illiquid obligations at a rate nobody quoted, on a market that ran in one direction only, and the conversion was not reversible on any terms at all, which is why, in the year they needed cash, the wealth was still entirely there and entirely out of reach.