From The Dial, Issue 14, Money:
With every new crisis, the animosity towards financiers grows. History offers sage advice.
In the summer of 1398 Francesco di Marco Datini, then one of the most prominent (and wealthiest) merchants of Europe, informed his closest friends and business associates that he intended to diversify his activities into finance by founding a bank in Florence. When he asked for their frank opinion, worried replies quickly followed. In a letter, re-discovered in a walled-off stairwell in Datini’s palace in the 19th century, his friend Domenico di Cambio wrote:
I have to inform you of what I hear being said. Many people told me: ‘So Francesco di Marco wants to lose his name as the main merchant of Florence, to become a moneychanger: and there is none among the moneychangers who does not make usurious contracts.’ In your defence I replied that you want to be more merchant than ever and that, if you opened a bank you would not do it for usury. And they replied: ‘This is not what everybody will say: they will say instead that he is a usurer!’ And I answered them: ‘he would not do this to be a usurer; as he will leave all that he has to the poor.’ And the other replied: ‘Do not presume that he will ever again be considered the great merchant that he was, nor with such a good reputation.’
By becoming involved in finance, Datini’s friends believed that he risked losing his good business reputation. According to Luca del Sera, another of Datini’s business associates, opening a bank was not a prudent choice; he argued that in their time many “moneychangers” were moving in the opposite direction, abandoning finance to become merchants “because they find more juice [in trade], and also because [trade] is liked better by God.” At the time, the rules around money lending — and the boundaries between licit and illicit or “usurious” practices — were relatively well-defined, regulated and accepted both by governments and by religious authorities. “Making money out of money,” however, was still considered disreputable — and, to some, even sinful.
Centuries later, the sentiments expressed by Datini’s friends resonate with modern concerns. Today, bankers get more scorn than mining executives or major polluters. But history also offers clues as to what bankers and financiers could do to alleviate such resentment: first and foremost, pay their fair share of taxes. Bankers should listen to their medieval forebears: the only way to feel good about money is to part with some of it.
The contempt of finance in Western culture can be traced back to the Middle Ages. Thomas Aquinas, arguably the most influential thinker and theologian of the 13th century, reiterated the admonition of the classical Greek philosopher Aristotle that “money does not generate money” and condemned all forms of lending at interest as intrinsically usurious. For Aquinas and other theologians of his time, these financial practices had to be formally prohibited to Christians due to their sinful, if not downright “evil,” nature. In contrast, Christians could tolerate financial services when Jews carried them out because, well, they needed them.
Theologians were successful in spreading the view that finance was sinful, but they utterly failed in preventing the development and the spread of financial services for the very simple reason that they made countries richer. The quickly expanding long-range trade relied on finance to provide ready capital and to make credit available at all corners of Europe and the Mediterranean. Certain parts of Europe, in Italy, in the Low Countries and elsewhere, became much wealthier than they had been for centuries — and the taxes imposed upon the new economic activities filled in the coffers of city governments. Governments would have been foolish to leave money from banking and financial activities on the table.
Still, bankers often felt an overwhelming sense of religious guilt about accumulating wealth through finance. Some worried that their potentially ill-begotten riches might have condemned them to eternal damnation. To counteract their “sins,” many financiers gave part of their patrimony to charitable institutions or destined it to direct donations to the poor. By Datini’s time, finance was a much more legitimate activity than it had been for centuries, which is why, despite his friends’ advice, he established the Compagnia del banco. But, because he feared for his soul, in his will Datini gave almost his entire fortune to build and endow a hospital for the poor (the Casa del Ceppo dei Poveri, an institution which continues its charitable activities to this day) and the first specialized orphanage for abandoned children in Europe (the Spedale degli Innocenti in Florence).
A few decades later, another great Tuscan financier of the late Middle Ages, Cosimo de’ Medici, had similar spiritual worries. In his old age, Medici intensified his charity and sought a bull of absolution directly from the Pope, which he paid for by endowing the Monastery of San Marco in Florence....
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