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Bankers to the Crown
The Riccardi of Lucca and Edward I
By Richard W. Kaeuper
PRINCETON UNIVERSITY PRESSCopyright © 1973 Princeton University Press
All rights reserved.
The Societas Riccardorum
Numerous studies by distinguished scholars have familiarized us with the nature and importance of Italian merchant-bankers in early European history, the evidence and the coverage being especially good from the fourteenth century. Drawing on superior business organization, commanding significant capital resources, often enjoying papal patronage, the Lombards and Tuscans gradually crossed the Alps and penetrated Northwestern Europe in an Italian diaspora of vast importance.
The latter part of the twelfth century marked a critical stage in this movement as the merchants began to frequent the famous fairs of Champagne, which had previously been purely local or regional markets. They were at first "caravan merchants," peregrinators who lacked any permanent bases north of the Alps and accompanied their goods across streams and mountain passes. Working under adverse conditions in fairs designed with northern merchants in mind, the Italians made the most of a tough challenge and developed the economic techniques needed to succeed: partnerships, procuration, and agency agreements; advanced communication and transportation; sophisticated credit instruments.
But an even more significant stage in the Italian penetration of Oltremonte came in the second half of the thirteenth century when the old traveling trade was replaced by a new and more efficient type of organization. In broad terms the "caravan merchant" gave way to the "sedentary merchant" who conducted his business from some fixed center while relying on partners or agents throughout a network extending across Western Europe. The change is so striking that it has been labeled the "commercial revolution" of the late thirteenth century. Yet the merchants who inaugurated the change were simply continuing to devise more efficient methods of doing business. They created the compagnia or societas partnership, which associated for many years a number of partners who supplied both capital and management. This terminal partnership grew in place of the old commenda, which was a single venture partnership bringing together for a short term a resident partner who supplied capital and a traveling partner who supplied only management. The Italians also began to develop the bill of exchange, which made possible a transfer of purchasing power without costly and troublesome shipment of vast quantities of coins. Equally important was the increasing sophistication of bookkeeping in which great strides were made even before the invention of double-entry notation. With these business advances it was possible for a company based in Florence or Siena or Lucca to conduct its operations through correspondence with branches in Paris or Bruges or London as well as the Champagne fairs which were at this time shifting from a commercial to a more strictly financial character. The famous Italian companies begin to appear.
The attractions which brought the Italians north and stimulated their advanced techniques were numerous. Crusade finance was a factor of some importance; more than one merchant found that he had to travel to the court of a king or baron to recover money loaned for an expedition to the Holy Land. The stimulus of papal finance was even greater. Large sums of money were owed the papal camera by princes ecclesiastical or lay, in all parts of Europe; taxes for future crusades also had to be collected and transferred to Rome. What better means could be used than the great Italian companies with their networks of branches in major cities, their facilities for transfers without the carting of specie? For the merchant-bankers a commission as mercatores domini papae meant the opportunity of utilizing large sums of money before the tithes, taxes, etc., would be transferred to Rome. Finally, one of the most significant attractions was the flourishing trade involving the fine wool produced by English flocks and the beautiful cloths woven from this wool on Flemish looms. Through the twelfth century the Italian involvement in this trade increased and the northern industry came to depend in large measure upon the distant Mediterranean markets, both for some raw materials such as dyestuffs and for outlets in which the finished product could be sold. By the close of the following century the Italians were second to none in wool commerce. They were beginning, moreover, to develop a woolen industry at home, finishing cloths shipped from Flanders and even weaving the cloths themselves from raw English wool.
The Riccardi must be seen in the framework of this "commercial revolution" of the thirteenth century if we are to understand their role in English government finance. The expertise and the capital they could place at the service of Edward I stem from the vast business opportunities available to men active in the wool trade and papal finance across northwestern Europe. Yet with few exceptions the sources from which their story can be constructed are English government documents. Unfortunately the accounts drawn up by exchequer or wardrobe clerks and the writs penned in chancery only infrequently yield information on the private business and structure of the company. We can learn enough, though, to allow us to examine the Riccardi as an early example of the merchant-banking companies that were becoming prominent in the economic life of Northwestern Europe. Moreover, we can supplement the official records with a series of business letters written by the Riccardi in Lucca to their London partners between 1295 and 1303.
1. STRUCTURE AND PERSONNEL
The early history of the firm in England is naturally obscure, since its link with the crown was still tenuous. As early as the 1240's merchants from Lucca had begun business operations which brought their names into the royal records, and on many occasions Henry III bought fine cloths and expensive ecclesiastical vestments from them. We first see the merchants supplying these goods in June of 1245 when the king paid "Reyner of Lucca and Peregrine his partner" about £50 for a length of samite and six orphreys. These two partners appear again in 1251, and on three occcasions in 1253 Peregrine is associated with a "Henry of Lucca." In the following year the three merchants are mentioned together. The surnames of these Lucchesi and two additional partners are given in letters obligatory which Henry issued them in July of 1254. The king is held to "Peregrino Sesmundi, Bartholomeo Bendini, Reynero Senaci, Henrico Saraceni, Luco Natali et sociis suis, civibus et mercatoribus de Luca." In 1256 and again in 1262 the king deals with "Luke de Luka and his fellows." Luke and Reyner provide certain necessaries for the wardrobe in 1263, and a few years later Luke appears in the service of Archbishop Giffard of York with a partner named Reyner Magiari.
This thin thread of continuity over twenty-five years is of interest, for in Lucasio Natale ("Luke de Luka") and Reiner Magiari we have an association of two Lucchese merchants who can be unquestionably identified as members of the company that served Edward I. The roots of the Riccardi company thus extend back into the 1240's, and it is possible that the company itself was in existence at that time. Yet as the evidence reveals an increasing number of merchants in association, we cannot know if we are watching the gradual construction of a societas or simply have more information concerning a company already fully established. The first appearances of the name Riccardi in official records do not solve the problem. Papal documents use it in 1276, but English government sources are very slow to describe the company by any formula other than naming a prominent member or two and adding "and their fellows, merchants of Lucca." This changes only in the late 1270's and early 1280's. We have no evidence as to when the merchants themselves adopted the name, but since several members of the home branch are surnamed Riccardi, we can conclude that men of this name formed the original partnership and gave the company its title.
It would probably be safe to assume that by the time Edward came to a basic agreement with Luke and his fellows at the beginning of his reign, these merchants were the English representatives of a flourishing "international" firm which, if not constituted three decades earlier, at least had antecedents with many years' experience in England.
Two difficulties complicate the identification of Riccardi personnel at any period. One is the nature of the contract in which the merchants agreed to act in partnership for a specified term; when this time had elapsed they were free to withdraw and join another firm or strike out on their own. The capital was divided into shares held by the partners, who would divide profits and losses in proportion to their share of the capital each time the partnership expired. A successful partnership would, of course, be continually renewed. The company of the Peruzzi, for example, which existed from 1275 to its bankruptcy in 1345, actually represents successive partnerships formed by new articles of association in 1300, 1308, 1310, 1312, 1324, 1331, and 1335. The problem in the case of the Riccardi is that although we know that the company was constituted as a sworn societas, we do not know how often a new partnership agreement was drawn up, nor what the terms were. It is possible that the accountings with the English government were timed to coincide with the expiration of the successive partnership terms. If so this would set the dates of new articles of association in 1279, 1281, 1282, 1286, 1290, and 1294. But there is no assurance that these accountings were held because of renewals of the Riccardi structure rather than as a matter of simple royal convenience.
A second difficulty is the distinction which must be drawn between the full partners (the socii or "fellows" in government documents who invested their funds and received a proportionate share of profits or sustained a proportionate share of losses) and the "factors," who were salaried agents and who could be hired or dismissed at any time. Again, our specific information on the Riccardi is deficient. Neither in government documents nor in the Riccardi business letters is this important distinction drawn for the personnel of the company in England or on the continent. The important leaders in England certainly could have numbered among the partners; cases of partners going abroad to the branches are known among the Peruzzi in the next century.
The nature of the evidence thus makes positive identification of the names and status of all the Riccardi staff in England difficult. Yet outside the fluctuations which might easily be explained by death or transfer of partners and changes among factors, the basic continuity of the company was broken only once. Sometime after Easter of 1286 Baroncino Gualteri, who had evidently been the leading member of the firm in England, left the company with his two sons, Brunetto and Riccardo, to form an independent group. The loss was a serious one, for Baroncino was described in a later letter as having been the signore et maesstro of the company. With this exception there is a notable continuity in Riccardi personnel across more than two decades.
During the period when the Riccardi were in the service of the English government there could have been as many as a dozen members in England, either socii or factors, whose activities were important enough to place their names in government records, and perhaps another three or four in Ireland. (See Table I.) This indicates that the Societas Riccardorum was a company of considerable size and that its English operations required a significant investment of personnel. In 1336 the Peruzzi, the second largest company of the day, employed ninety factors scattered in fifteen branches. At the beginning of the fourteenth century the Acciaiuoli, third largest in Florence, also had fifteen branches, but employed only forty-one factors outside the home office, two of them residing in London. In 1372 the Guinigi company, largest in Lucca, numbered only nineteen men, including four factors in Bruges, three in Naples, and three in Venice.
A few important families, and especially the da Pogio and Guidiccioni, provided much of the leadership and many of the members of the Riccardi. The reference to Baroncino as "lord and master" may indicate that a definite position and title were provided for one man as head of the company, but it is equally likely that age, experience, and natural ability normally gave to a small inner group of two or three the final direction of affairs.
This question of leadership should be considered in the light of the distinction Raymond de Roover has drawn between two main legal and structural types of banking companies in early European history. The decentralized form is best seen in the fifteenth-century Medici Bank, which had separate partnerships, capital, and books for each of the major enterprises: the home bank in Florence; the branches, managed by junior partners; the three industrial establishments in Florence. In contrast, the earlier centralized form characteristic of the great fourteenth-century companies consisted of a single partnership; one group of men owned and directed the home office and all branches, usually managed by factors. De Roover suggests that the failure of so many companies constructed on this centralized pattern — the Franzesi (failed in 1304), Macci (1312), Frescobaldi (1315), Cerchi Bianchi (1320), Bardi, Peruzzi, and Acciaiuoli (1345) — led to the abandonment of the centralized organization which had grown up in the thirteenth century.
In this classification the Societas Riccardorum predictably belongs to the centralized category and provides an early example of that form. Its failure in 1301 could be placed at the head of de Roover's list. Yet the degree of control exercised by the home branch should not be overestimated, and we cannot be certain that the leaders in England were generally factors rather than partners.
The very fact of slow communications among branches would lead us to expect that the Riccardi establishments in various countries had to have much freedom of action; and the correspondence between Lucca and London confirms the feeling that a rough equality existed between the partners in these cities. "We have the same trust and faith in you," the Lucca partners wrote to London, "as we have in ourselves." If the Riccardi in Lucca had a pre-eminence as the home branch, it was nonetheless not an absolute authority. They usually suggested or rebuked, but did not order. In 1301 they wrote to London that they had been receiving the requests for a replacement from Ghirardo Chimbardi. "And since this grieves us because we do not have any person from Lucca to send there now ... we therefore ask you, among other things, that you send Betto Antolmini who is from here, and that you should send him or anyone else you think is good and appropriate, in the name of God, to live there for our affairs, for to leave that country without any representative from us does not seem good or wise."
Yet although some degree of regional autonomy was necessary, the complicated business of international finance could not function smoothly if the company were merely a loose confederation of branches. An individual or another company would have an account with the Societas Riccardorum, not with the London Riccardi or the Paris Riccardi. In 1295 the Lucca Riccardi sent to London a rough list of the major debts outstanding on loans advanced in England. In each case they stated that the individual owed "us" a certain sum. It was of considerable importance, thus, constantly to exchange the information necessary to keep accounts up to date, and the letters often contain requests of this sort. "We cannot speak clearly concerning ourselves [i.e., our affairs] unless we have your accounts and especially your bills of exchange...."
Thus the Riccardi represent the centralized form, but one in which the leadership of the London branch probably included partners as well as factors and certainly enjoyed even more independence of action than often was the case in the companies of the fourteenth century. The unusual importance of English trade and English government finance to the Riccardi easily explains why the leaders of the London branch enjoyed this degree of autonomy.
Excerpted from Bankers to the Crown by Richard W. Kaeuper. Copyright © 1973 Princeton University Press. Excerpted by permission of PRINCETON UNIVERSITY PRESS.
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