Commission trading and the transformation of Florentine business organization during the sixteenth century
texte publié le 30 juillet 2014
Communication présentée au 18th annual Congress of the European Business History Association (EBHA 2014, Utrecht), Session « The Organization of Business in Early Modern Europe ».
Compared to their predecessors of the 15th century, the Florentine firms active in Europe in the 16th century conducted business on a much broader scale. The volume and the intensity of the activity led by the Capponi, the Martelli and the Corsi firms at that time was far superior to that of earlier firms (Strozzi, Medici), as attested by the content and the size of their account books. Yet, Florentine firms of the 16th century relied on smaller share capital. After the disappearance of the great centralized family conglomerates (Bardi, Peruzzi) in the second half of the 14th century, Florentine businessmen adopted the ‘partnership system’, a more flexible business structure which allowed the different branches of the same enterprise to do business separately, while being held together by the supervision of one or two major investors. The staff of these new firms was reduced, and therefore, their capital share and geographic extension limited.
Under such circumstances, how can we explain the unprecedented rise in turnover of the Florentine firms in the 16th century? The Florentine businessmen active on the international scene of the time are known for their capacity to mobilize huge amounts of money to serve the princes and the popes, and for their omnipresence all over Europe ? not only in the great commercial centres, but also in the most remote places of the continent. How was such a dynamic business managed and financed? The accomandita contract, which enabled outsiders to invest in a partnership and share profits on the same basis as associates while not risking anything beyond their investment, became widespread in Tuscany in the 16th century. However, international Florentine firms did not seem to use it to increase their resources: most investments were directed towards the local industry. The increase of these firms’ financial capacities was due to other reasons.
The emphasis traditionally placed on the evolution of the firms’ inner structure casts a shadow upon an economic process which seems to have played a fundamental role in the evolution of Florentine business organization: the development of trade on commission. The commission agent is a resident merchant abroad who works for firms which are not present on the local scene, in exchange for a fixed percentage on each transaction he makes for his principals. My research in the archives of several Florentine firms, mostly the Salviati, but also the Martelli and the Capponi, documents the extension of this operational mode during the 16th century. Until now, W. Brulez has been the only author to have underlined this. He relates the development of commission trading to the arrival of new men on the European scene, deprived of capital but rich in skills and initiative. Even if the slow opening of international trade to individuals who were not part of the old mercantile aristocracy cannot be questioned, it remains clear, however, that trade on commission not only advantaged the small size businesses but also the most powerful firms. The expansion of commission trading seems mostly due to the intensification of exchanges and the modernization of marketplaces (especially the improvement of the system of information).
The study of the Salviati account books reveals how commission trading allowed the Italians to conduct banking and commercial operations on a large scale without important investments. In the middle of the sixteenth century, the most important branches of the Salviati firm, i. e. the banks located in Florence, Pisa, Lyon and Antwerp, are specialized in commission trading. The amounts of money placed by the Lyons branch on the exchange market in one day often exceeds its own share capital. Its loans to the King of France represent more than the total capital stock of the whole partnership system. The funds don’t come from outside participations in the partnership, but from short, middle and long term investments made by principals (commitenti), who are not necessarily businessmen. Contrary to direct participations, these investments are not remunerated by a share of the profits, but by an interest rate which depends on the fluctuations of the money market.
For the business they conduct on their own account, the Salviati themselves rely on commission agents ? who can sometimes also be their commitenti, both roles often being interchangeable in early modern times. The Salviati are for instance very involved on the Castilian exchange fairs, without ever needing to develop a branch in the area. Analysis of the changing configuration of the Salviati group throughout the century reveals two dominant trends: branches are set up on the basis of political interests (proximity to the source of power) or economic purposes, in regions where the Salviati do not have much of a social and commercial network. In this latter case, the branch is closed once a network has been established, and its previous governors often become the main commission agents in the region.
The growing use of commission trading is never emphasized in the debate concerning Florentine business organization from the Renaissance to the Early Modern age. In our perspective, it was the instrument through which Florentines took advantage of the great commercial expansion of the time. Without necessitating important capital reserves or a specific spatial extension of the firms, commission trade allowed Florentine businessmen to make significant profit by managing other people’s money, and to develop their interests all over Europe.