During the European Renaissance, a number of important trade routes ran through Italy resulting in a web of thriving commercial sectors. Italy’s prominence as a cultural center during the Renaissance contributed to a number of these sectors. In the north of Italy, the lucrative textile industry needed a mechanism to support the import of raw materials and export of finished cloth. Wealthy textile merchants like the Medici family filled the need by investing their already large wealth into merchant banking. The Medici family, among others, began lending money to merchants, textile businesses and trading companies. In accordance with the common themes theory, the growth of the textile industry in Florence gave rise to the invention of a common
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The Medici Family’s solution was to begin loaning money to small business owners with interest. Charging interest prior to the Renaissance was looked down upon by the church “As economic activity expanded, however, the papacy became one of the first to insist that interest should be paid on investments made at a risk” (Zabel, Gary “Banking the Middle Ages”).Rich merchant families became the patrons or sponsors of talented people, businesses with a positive future and those with potential in esteemed fields, such as art, science, literature and philosophy. This really flourished in Florence Italy where most of the Medici lived. They provided loans to the pope, along with Monarchs raising money to finance their armies. Small businesses and artists see these icons borrowing money from the family and decide to get in on the action themselves. With everyone owing them money, the Medici and other banking families became richer and richer from the interest on the loans. Small business owners now having enough money to allow their business to grow, could pay back their loans with the profit, and imitated the medici by becoming patrons themselves to local artists (Detrick, “Toward the Renaissance”).This created a chain reaction, as other small businesses saw the success the early owners were having and began doing the
The Medici Family’s solution was to begin loaning money to small business owners with interest. Charging interest prior to the Renaissance was looked down upon by the church “As economic activity expanded, however, the papacy became one of the first to insist that interest should be paid on investments made at a risk” (Zabel, Gary “Banking the Middle Ages”).Rich merchant families became the patrons or sponsors of talented people, businesses with a positive future and those with potential in esteemed fields, such as art, science, literature and philosophy. This really flourished in Florence Italy where most of the Medici lived. They provided loans to the pope, along with Monarchs raising money to finance their armies. Small businesses and artists see these icons borrowing money from the family and decide to get in on the action themselves. With everyone owing them money, the Medici and other banking families became richer and richer from the interest on the loans. Small business owners now having enough money to allow their business to grow, could pay back their loans with the profit, and imitated the medici by becoming patrons themselves to local artists (Detrick, “Toward the Renaissance”).This created a chain reaction, as other small businesses saw the success the early owners were having and began doing the