“There is in the garden of plant which one ought to leave dry, although most people water it. It is the weed called Envy” – Cosimo Medici
The Medici family was a prominent family who made their prominence through commerce rather than bloodline marriage. The Medici family owned the Medici bank created in the 15th century, the family owned a lot of art works and the power of Florence but it is painful that the family could lose power, affluence and wealth. In the history of Europe, the Medici name cannot be overlooked as they were in power for hundreds of years and were a powerful influence in Europe.
It is believed that the Medici family were into politics in the 13th century but the family grasping power wasn’t known until the 14th and 15th century with the creation of The Medici Bank, woolen cloth companies and other business empire. The family used their wealth to get a seat in all political post including papacy.
The Rise and fall of the Medici Dynasty
The Medici bank, not only being the most profitable bank in Europe, but the richest commercial house that had ever been built during its reign. Giovanni di Bicci de’ Medici was helping his uncle to run his bank in Rome and was doing well. After his uncle retired, he handed over the control of affairs to him. Giovanni (For ease calling) moved the bank headquarters to Florence in 1397 which marked the birth of the Medici bank. The bank had branch beginning from Italy which includes Rome, Vanice and Naples and in 1450, the bank had branches in other parts of Europe which includes London, Basel, Ancona, Avignon and Bruges. At each branch, the executive branch managers were co-owners as they had shares in the profit and loss of the bank. The branch managers were in charge of regulating management contracts in their branches.
Other branches were running on capital but the branch in Rome was different as it was not running on capital since cash flow was going straight to the pope which was deposited to the bank directly by the pope and the member of the Vatican court. The Medici bank loaned 3000 florin gold to the Medici family to finance a textile company that produces woolen cloth. The cloth company was successful and had a branch in the year 1408. The Medici was known to diversify into different businesses and commodity investment like alum, wool, jewelry, silver plate, citrus fruit, brocades, silk, olive oil and spices.
The death of Giovanni lead to a change in management in 1429 were his eldest son took over the reign of affairs. The death of Giovanni didn’t affect the bank at all since Cosimo was a very good successor. The Medici Bank was organized as a partnership that had the Medici family as the largest holders. The Bank was structured in a way that a bankruptcy in a branch doesn’t affect other branches. The affluence of the Medici family made them become the de facto in Florence. When Cosimo died, Medici bank was said to be the bank of Europe. After the death of Cosimo, Piero de’ Medici took over after which Lorenzo de’ Medici his son took over after his death. The taken over of Lorenzo was the beginning of the great fall for the Medici as he had no knowledge about business. He handed over the banks to the managers and went after politics fully. He said in his words “One cannot live in wealth in Florence without the state”. He was able to get the political power he craved for. He died and his son who had no knowledge in both politics and business took over the Medici dynasty but was unable to handle it. The Bank bankrupted and the new owners were not still able to handle it.
It is surprising that such a Dynasty could sink, with such influence, power and wealth. The Medici bank failed but the family name still remains far beyond money. Although they might have lost the bank, they still represents one of the earliest capitalist family that moved from business to social and political power.
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