Banks appear in a number of fantasy stories. George Martin’s Iron Bank is probably the best known, but banks and banking families can be found all around the fantasy landscape, especially in modern works. For writers considering including banks and bankers in their own stories, knowing something of the history can help add detail and color.
Europe in the High Middle Ages, say around 1100, had a bewildering variety of coinage (see my article on medieval money), a crazy cobweb of overlapping public authority, and an unreliable network of roads. Banking arose in response to the need of merchants to conduct large-scale business at a distance in that environment.
As you might guess, with so many different coins, knowing how to convert from one currency to another was a fairly technical business. That business was handled by a money changer. In Florence and other north Italian towns, the money changers set up shop at markets and near merchant establishments—any place where there was plenty of commercial traffic. The benches they sat on are called banca in Italian. That’s where we get the term bank.
Money changers knew more than just how to convert currencies. They had scales and could weigh coins to ascertain their real value. Since they tended to have a fair amount of hard cash on hand, they naturally got into the business of making loans. They also had strongboxes and the ability to keep good records, so they became holders of deposits. A visiting merchant might rather leave his cash with a money changer than to keep it in a bag under the bed at the inn!
As with modern currency conversion, money changers charged a percentage of the transaction for their services. It was normally quite modest, only a percent or two, but it was enough to make a nice living. Even after the development of banks, money changers continued to play a role, but they tended to deal mainly with regional commerce and to lend money in small sums.
Since a money changer did most of the things associated with banking, it’s impossible to say precisely when or where “banking” started. In the thirteenth century, certainly. Along the northern shores of the Mediterranean, certainly, particularly in Italy and Catalonia over in modern Spain. When you hear someone say that banking started in Genoa or Barcelona, they’re speaking of a formal institution with a name and a charter. But families were doing banking all through the 1200s, and you should really think more about the family than about the bank. That is, family members and employees might have offices in several cities. In each city was the ability to raise money, keep and track money, and disburse money. The principal function was to serve the family business, but this often entailed providing financial services to partners and clients—short-term loans, for example, or keeping cash for a time until a certain transaction was completed.
We think of a bank as a building with money in it, and there were such places, at least by the 15thc. Mostly, though, were buildings owned by families and somewhere in the building would be a locked room or rooms that held locked strongboxes. If you think about it, even a modern bank is like this. The room with the money is only part of the building’s function. There are also offices for negotiating loans, one or more room for storing valuables, perhaps an investment office, and so on. But to make the modern parallel work, it would be more like each major company had its own bank, for there were very few independent banks. The ones that existed were operated by the city, such as the Bank of St George in Genoa.
The other really noticeable difference is that while banks did store currency and valuables, they didn’t pay interest on those deposits. They simply provided safe storage and good accounting. This was a vital function for long-distance trade. Ordinary folk did not put money in banks, and the bank draft (or signature cheque) had not yet been invented.
For the Fantasy Writer
We most often use banks as a convenience. We reference the thing–“We must store these jewels in a safe place. Memmius here knows a banker.” — and move on. Or, we use the bank as the target for a heist, to show off our characters’ skills, or to get them caught red-handed.
Seriously, is there any more to do than that? How interesting can banking be? George Martin does a good job here, with the Iron Bank. We don’t really learn much about banking, but he makes it a power in itself, with which other powers must deal. That was clever.
This could be done on a more local level. The Bank of Genoa, for example, was a power in the city of Genoa itself–the top families all made sure they had a seat at the Bank, and the government used it as a source of ready credit. There’s plenty of room there for some court intrigue.
Let Us Hear From You
I’m a medieval historian (does it show?), which means I don’t know much about banking outside of Europe. Do you? If so, leave a comment! Our readers would love to know more about other models for banking.
Do banks or money changers play a role in one of your stories? Have you written a fantasy bank epic? Tell us about it! Mythic Scribes is eager to hear how authors make new use of familiar things like banks.
- Lopez, Robert S. The Commercial Revolution of the Middle Ages. Englewood Cliffs, NJ. 1971.
- DeRoover, Raymond. Cambridge Economic History of Europe, Volume 3. Cambridge, 1963.
- Peter Spufford, Handbook of Medieval Exchange (London, 1986).
- Peter Spufford, Money & its Use in Medieval Europe.
E.L. Skip Knox is the creator of the fantasy world called Altearth, a place where magic is real, monsters roam the land, and the Roman Empire never fell.