Medici Bank Case Study

Commercial transactions were another form of income for the Medici. They spread out their accounts by dealing in many items, for example: wool, cloth, silk, spices, olive oil, and fruits. The Medici style of banking was sometimes done in the dark. They would use the complicated and confusing banking system to their advantage, when dealing with large sums of money. They would separate their accounts for each business venture they went into, and each account was charged with all the costs, expenses, and the amount if proceeds from the sales. The difference that was recorded and then was deemed either a profit or a loss and was then added to a separate account called “Profit and Loss on Merchandise”. This new system of keeping accounts was called …show more content…
The bank started from the bottom and after a little under 30 years of maturing, it became the strongest, wealthiest, and most spread out bank in all of Europe. It was built using a unique system of organization that ensured that no quarrels over money would ever occur within the bank, and that the bank would stay strong wherever it stood because whoever was in charge of it, cared for it as if it was their very own bank; because money was never an issue. This created an advantage over other banks where individual salary was more important than the actual process of making money and growth for the whole company. New systems of accounting and loaning created new methods of making money, many of which we still use today. Under the leadership of Cosimo, the bank flourished. New branches were built all over Europe, spreading the Medici influence and wealth all throughout Europe. Cosimo built several manufacturing plants that produced wool and silk. This provided jobs for the Florentine people and more income for the bank. Besides his actions in the bank, Cosimo was charitable man who used his vast amount of wealth to help the people of Florence both economically and artistically. Cosimo commissioned paintings from Ghiberti, Brunelleschi, Donatello, Alberti, Fra Angelico, and Ucello. Cosimo was the one who made Florence the cultural center of Europe and the birthplace of Humanism. Unfortunately after a few years of shifting economies, wars, and the death of Cosimo, the bank and its branches started to lose money and soon enough branches were being closed and assets were liquidated. Although the decline of the Medici bank was sudden and horrible, the method Giovanni and Cosimo used to make their way to the top with such grace is what makes the bank stand out from all other banks that existed at the time. Their dedication, enthusiasm, and love of their trade helped propel the bank to the