The unknown banking history of the Rialto area in Venice

Nowadays when someone refers to Rialto, most people think about the Rialto bridge or the Rialto market. Historically, the Rialto neighborhood was the economic centre of the city. Not only did merchants from all over the world come to Venice to sell their products, such as silk, grain and spices. Venice was in fact a pioneer in banking and finance in the public and private sectors during the Middle Ages. It was known throughout Europe for perfecting the system of double-entry bookkeeping and conducting business through book entry transactions. In this post, you will discover how some of the things we now consider to be normal (such as paying in cash or a printed overview of exchange rates) were first initiated in Venice.

The small island of Torcello, close to Burano, is the real cradle of Venice. It is said that the inhabitants of the Roman city of Altino settled here in the 5th century, fleeing from the troops of Attila the Hun. This was the start of the habitation in the lagoon, even before Venice. Torcello was then the economic centre of the lagoon, with about 20,000 inhabitants, many palazzos and 16 monasteries. By the end of the 9th century, the economic centre had moved to the area around Rivoalto, now known as Rialto.

There is documentary evidence of the existence of banks in Venice – referred to as ‘tabulae cambii’ or ‘banchi de scripta’ – from the first half of the 13th century. They were located under the porticoes of the Campo San Giacomo di Rialto (‘sub porticu cambii’). There were others, though fewer, at the foot of the Campanile in Piazza San Marco (see also ‘San Marco: 11 surprising facts about the Piazza of Venice’). The Venetian and foreign merchants kept an account at one of these ‘banchi di scripta’ operating in the city. It was enough to give a verbal order to the scribe at the counter, or ‘banco’, and for the other party to the transaction to agree, and the amount would be transferred from one account to the other. The other party also had to hold an account at the same bank so there were no interbank transactions at that time.

Under the arcades of Campo San Giacomo the various stalls were very simple: a folding wooden bench and a roof over it to shelter the banker from the sun and rain. An oriental carpet was spread on the counter and the banker was dressed in a sophisticated way, to give the idea of wealth and solvency. This can be seen on the painting The Vocation of San Matteo, by Vittore Carpaccio, in the Scuola di San Giorgio degli Schiavoni (see also ‘These stunning scuole grandi reveal the social history of Venice’). The patrician merchants gathered on the opposite side of the church of San Giacomo, while the merchants without coat of arms, foreigners and Jews stood in the centre. This was the place where Jews and Gentiles (i.e. non-Jewish people) operated together.

When the nobleman Giovanni Dolfin made a first attempt to create a public bank in 1356, he proposed that officials in the new bank should no longer hold money and deposit ‘super dicto banco’, but rather they should ‘facere scribi’ and operate through written orders and contracts. But his proposal was not accepted. Hence, for almost two centuries the banking system remained in the hands of just a few aristocratic Venetian families.

The first known periodical or journal of exchanges originates from Rialto. An Umbrian stockbroker, Panfilo Brancacci, began to print the exchange rates and the prices of the goods on strips of paper that could be linked to normal correspondence. The first documented date is March 14, 1585, but it is likely that it already existed for some time. On the side where the patrician merchants stood, Calle della Sicurtà was the place where modern insurance was born. Naval insurance is a Genoese creature, but the Florentine brokers took it to Venice, where it found fertile ground to develop. The Venetians transformed it, creating the figure of the third insurer, extraneous to the parties, and the premium system. Insuring a car today is still not that different from a 16th century merchant ship. It had become common to take out insurance policies and therefore pre-printed forms were used where one simply added names and amounts.

In the 16th century, bankruptcies of Venetian private banks became a regular occurrence, amid several unsuccessful attempts at regulation, and the surviving banks’ deposits were valued below the same quantity in coins. At one point in time, the Venetian financial world was saved by Asher Meshullam, known as Anselmo del Banco, because his pawnshop had not gone bankrupt, while the credit banks had all failed. For a number of years, he was the only banker to operate in Rialto.

The Venetian Republic then founded its first formal public bank in 1587, the Banco della Piazza di Rialto. This allowed easy transactions’ settlement without handling of metallic money. This bank was a full-reserve bank guaranteed and inspected by the state that dealt only in deposits and transfers. Cheque service was added in 1593 with a law that required citizens to settle all bills of exchange at the bank. Citizens indeed came to prefer transfers through the bank over cash payments. Another public bank, the Banco del Giro, was established in 1619 and its administration was entrusted to the Senate, which appointed the Depositario from among its members. In 1637, the Banco di Rialto was merged into the Banco del Giro following financial difficulties. The bank ceased its activity in 1800, following the fall of the Republic, and was finally liquidated in 1806 under the Napoleonic Kingdom of Italy.

There isn’t much left of this banking history in Venice today, but I thought it was interesting to share this with you. Thanks to Clive for bringing up this idea! If you are interested in history, I suggest you also read my post ‘A short introduction to the complicated history of Venice’.

Copyright picture in banner: Mister No, CC BY 3.0 <https://creativecommons.org/licenses/by/3.0>, via Wikimedia Commons