Dynamic Networks? Credit and Trust in Late Renaissance Florence (1427-1430)

In recent years, a growing number of scholars challenged the general scepticism about pre-bank credit markets. They proved that financial markets flourished well before the introduction and development of banks. In particular, interpersonal networks had a crucial role in fostering and supporting credit transactions. Previous research shows that the interpersonal peer-to-peer lending market functioned in concentric circles. People in need of funds, either to assure the survival of their household or to invest, turned first to their family and their parentela – which included cognatic ties, mostly from women’s marriages –, then to their friends and neighbours and finally to the local elite and foreign lenders. Economic transactions were strongly embedded in the social fabric of local communities, prompting the preservation and reproduction of these ties. This social proximity in tight-knit networks featured strong social norms, which governed credit exchanges. In Renaissance Florence, the majority of credit transactions took place through interpersonal networks. Scholars highlighted the strong personalistic character of social relationships and stressed the importance of credit networks as an indispensable vehicle of elite integration, which contributed to easing commercial trade and fostering economic development. This paper dialogues with this literature and adds a new variable to the study of credit networks: time. The analysis of networks usually provides us with a snapshot at a precise moment, which is then studied to describe an entire system, and explain the roles of nodes and the characteristics of the edges that link them. At the core of this paper lies the idea that networks are highly dynamic and change rather quickly over time. Studying the same network in different moments could be critical to better understanding how they formed and sustained themselves, and shed more light on the moral and economic implications of credit. The main sources of this research are the catasti of 1427 and 1430. The catasto is an incomparable source for retracing the economic conditions of Florentine households at the beginning of the fifteenth century. This tax census listed the wealth, profession, age, and marital status of Florentines, and includes extensive lists of their credit relations. In particular, I compared the tax declarations of 20 households in 1427 with those of the same households in 1430. I included individuals belonging to different social strata, considering both their professions and the gross wealth they declared (1427). This study aims to fill a gap in the current literature. First, it analyses how credit networks evolve focusing on the different actors that take part in them. This proves to be important in order to understand the framework in which credit relations were inserted. In a context in which a moral economy based on kin, friends and neighbours prevails, we should expect stability. The main idea is that the urban economy was based on repeated interactions, accumulation of debts and credits, and transactions that were usually closed by mutual compensations. Even though credit and debt were short-term, relations between individuals were not. Another issue concerns interest rates: was credit granted for free, or do we find traces of an interest rate in the declarations? And finally, how many borrowers defaulted and how did individuals deal with the negative impact of bad debts in their ledgers? The paper starts with a general comparison of the catasto of 1427 and 1430. Once confirmed that there are no major differences between the two tax assessments and that they can be compared, the analysis focuses on the structure of the overall network. The results of this preliminary research seem to confirm that networks were indeed very dynamic. Only 12% of the individuals mentioned as borrowers in 1427 can be found also in 1430 declarations (576 on 4,800). Moreover, the annual accumulation of debt is only a minor phenomenon that concerns a limited part of unpaid debts. The analysis of single cases confirms this general trend, but it also highlights differences particularly linked to the profession and social belonging of each household. My initial hypothesis was that shopkeepers had more stable networks because the credit operations they enlist on their declarations are mainly deferred payments (sales on credit), which usually involved individuals living in the same area. This is only partially true. For instance, 30% of the borrowers mentioned by the apothecary Corso di Lorenzo in 1430 can be also found in 1427, but more than half of them were indicated as bad borrowers. Comparing the declarations of other shopkeepers, we notice that the stability of the credit network is quite low and it ranges between 0.93% and 10%. These results certainly push us to rethink the nature of credit networks, or at least the mechanism at the base of deferred payments. Among the elites, we find similar results. In the declaration of Nicolò di Donato Barbadori, a wealthy and renowned moneychanger and wool merchant, borrowers and lenders changed almost completely in three years. Only the more important and wealthy individuals remain in both periods here considered (such as Averardo de Medici, Neri di Gino Capponi, Giovanni di Niccolò, Guicciardini, etc). This is highly unexpected because previous research shows that credit should theoretically flow within relatively closed groups, especially if we are talking about the urban elites. It confirms that the social and economic laws that regulate credit networks among the elites are different compared to the rest of the population, and this is probably linked to different investment strategies. Finally, we can also observe what happens to an individual’s network after his death. It is the case of Giovanni di Donato Barbadori, brother of the abovementioned Nicolò: the network he built while he was alive completely dissolved after his death, and only a few traces can be found in his heirs’ declarations. The same happened with the money changer Guidetto di Iacopo Guidetti. In less than three years, almost the totality of credit transactions he listed in 1427 seemed to have been settled. The analysis of the evolution of networks proves to be extremely useful to delve deeper into the mechanisms regulating interpersonal credit. It could also be crucial in better contextualizing its moral and economic nature. The results of this preliminary study clearly indicate that further research is needed in this regard. The catasto, despite the many flaws it shares with all fiscal sources, offers a unique starting point for this purpose.