| >"But at this particular fair, gossip was starting to spread about an Italian merchant who was there, and making a fortune. He bought and sold nothing: all he had was a desk and an inkstand. Day after day he sat there, receiving other merchants and signing their pieces of paper, and somehow becoming very rich. The locals were very suspicious. But to a new international elite of Europe's great merchant houses, his activities were perfectly legitimate. He was buying and selling debt, and in doing so he was creating enormous economic value. A merchant from Lyon who wanted to buy - say - Florentine wool could go to this banker and borrow something called a bill of exchange. This was a credit note, an IOU, but it was not denominated in the French livre or Florentine lira. Its value was expressed in the ecu de marc, a private currency used by this international network of bankers. And if the Lyonnaise merchant or his agents travelled to Florence, the bill of exchange from the banker in Lyon would be recognised by bankers in Florence, who would gladly exchange it for local currency. Through this network of bankers, a local merchant could not only exchange currencies but also translate his creditworthiness in Lyon into creditworthiness in Florence, a city where nobody had ever heard of him - a valuable service, worth paying for." PDS: Fascinating! |