Italiano
Writings, notes and papers > Genoa and the history of finance: a series of FIRSTS? > Chapter 4
Chapter 4 - The House of St. George: a state within a state
Abstract
The House of St. George in Genoa is an institution without equal, both for its multifaceted nature and for its fundamental role in the world of finance: It started in 1407 as a consortium of public creditors to which the state ceded a large number of tax revenues and almost immediately (1408) started a banking activity, backed by the cash flow from public revenues. In exchange for loans to the state it received sovereign control of near and distant territories, which lasted until 1562. From the late XVI century onwards the House of St George reorganised its banking activities opening more “branches” depending on the currency it was dealing with and at the beginning of the XVII century started issuing nominal fiduciary bills.Definition
In his Istorie fiorentine (liber VIII) N. Machiavelli explains that, in need of cash, the municipality of Genoa turned to the rich and well-administered Bank of St. George for help. The City, in exchange for a loan, granted the Bank the administration of a part of its own territories, as well as had done with the revenue of customs. The House of St. George then looked after the territories through yearly named rulers, without any interference from Genoa.Documentation
In the general ledger of the House of St. George some peculiar expenses are registered for the year 1453, accounting for banners and vestments for masses to be celebrated in Corsica on behalf of the governor sent to the island by the House of St. George:-Vexillum gloriosissimi martiris Sancti Georgii vexiliferi et protectoris comperarum Sancti Georgii factum de zentenili de grana et albo seu taffeta
-Vexilum Sancti Georgii Caffam mittendum 15
-Paramentum, calix, missale, planeta et alia necessaria pro celebratione misse in Bastita Corsice et seu ubi residencia habebit gubernator Corsice empta mandato Officii 16These entries are what would be expected of a sovereign territorial authority but are highly unusual for a financial institution. The aforementioned extract from Machiavelli highlights the peculiar evolution that the House of St. George underwent.
Historical background
Right from the start, thanks to its banking activities, the flow of cash into the coffers of St. George reached considerable sums. These amounted to more than twice the usual income of the municipality of Genoa and moreover they increased in the following years with the absorbing of the “compere” escaped from the consolidation of 1407. Once the process was concluded in 1454, the income of the House of St. George reached the highest level allowed for by the system, nearly equalling the state’s whole fiscal levy. 17
The House of St. George then became the only moneylender from which the municipality of Genoa could obtain loans. Numerous loan agreements were regulated by a solemn contract between the two parties. It usually involved the handover of a public income to the House of St. George in exchange for the opening of a credit line (or “scripta”) to the municipality for the agreed amount. Although these essential features always remained the same, the procedures, the reasons for the loan and the type of guarantees offered to the creditor could change over time.
During the years 1408-1445 and 1531-1797, when the House of St. George ran a deposit and clearing bank, the agreed sum was credited to an account in the municipality’s name from which cash could be freely withdrawn. Between 1445 and 1529 internal banking activities halted, the money lending operations required the use of private bankers who, in exchange for special guarantees given by the House of Saint George, opened credit lines to the municipality.
The guarantees offered by the debtor could change too. The municipality, for example, was not always able to set up new and large enough income streams because of social unrest and tax evasion; at such times it would cede control over state territories to the House of St George together with their tax income, to be regarded as both interest and pledge of the loan. In this way the House of St. George took over the governing role of the republic of Genoa in its overseas colonies (such as Caffa and Famagosta), on the island of Corsica and of quite a few districts on the mainland (Sarzana, Ventimiglia, Pieve di Teco, etc…).Sovereign control over these territories opened up a whole new world to the House of St. George; a world not limited to displaying its own banner but which also extended to legal and fiscal dealings with the local population, to involvement in public works, defence, supplies, etc… All difficult issues to deal with, given the distances involved but, moreover, because of the outgoings being greater than revenue coming into the treasury. In the end the situation became untenable, so much so that in 1562 the House of St. George returned its rights over the territories to the republic of Genoa and instead granted it a large, perpetual subsidy.
Notes:
15 A.S.G., Archivio di San Giorgio, series “Introitus et exitus Officii Sancti Georgii”, n. 17, c. 337. ^
16 A.S.G., Archivio di San Giorgio, series “Introitus et exitus Officii Sancti Georgii”, n. 17, c. 301 ^
17 The few tax incomes still belonging to the Common are barely enough to cover its basic need, and not for long either; soon the Common will be forced to ask from the Bank of St. George a fixed, annual contribution to its expenses. ^
