Institutions, Information, and Markets in Fifteenth-Century Tuscany

The day Connor and I presented the article, Institutions, Information, and Markets in Fifteenth-Century Tuscany, was a travel day. We journeyed from our free weekend in Florence to the smaller cliff town of Orvieto. After a train ride, a funicular (a new word for my vocabulary) ride, and a lot of walking, we made it to our destination, "Instituto San Lodovico," a convent where we will stay for the next few nights.

This article is a summary of a dissertation that studies the impact of institutions on market economies. It begins by discussing the impact of Jewish lending on the local economies in Tuscany. Not only would they lend small consumption loans to poor households, but they would also lend larger loans to wealthier merchants, artisans, and medical doctors. The local governments would allow these Jewish lenders to charge high interest rates, and then they would in turn tax that revenue. Governments themselves would also borrow to finance public projects as well as provide, for example, cheap grain in times of hardship.

Jewish lenders would also provide loans for brides' dowries. When a bride was married off, the parents would give a large amount of money (on average about 9 years wage) to the groom to pay for the brides lifetime consumption. I won't go into too much detail because another group has a lot more information on dowries, but essentially this author looks at dowries from the point of view of an inter-generational transfer of wealth.

The last topic discussed is sharecropping. Rather than these landlords charging a fixed rent , they would actually vary the charge depending on how well the crops did each year. The author mentions the moral hazard hypothesis that says, "... share cropping was an ideal contract for monitoring the tenants' effort, while ensuring they would have not damaged valuable assets such as the perennial crops grown on the estates." This provided an incentive for farmers to keep working the land to the best of their ability.

Other group's articles went into more detail about the topics presented in this dissertation summary, but what the author is trying to emphasis, even in these 3-pages, was that the insertion and movement these large amounts of money definitely shaped the economic structure of this area. The author used information found in unpublished manuscripts kept at the State Archives in Florence to explain, "...the impact of specific institutions and information imperfections on the way credit markets, marriage markets, and agrarian labor markets worked in fifteenth-century Tuscany, one of the most vibrant European economies in the Middle Ages and the Renaissance." During our free weekend in Florence we did not go to see the Archives, but today in Orvieto we had the opportunity to visit the public library and see their collection of old books. Our guide also made reference to the Archives and explained how they contained many contracts from this time in history, which is presumably where the author got his information.

View from Orvieto