Money and Promises: Seven Deals That Changed the World

by Paolo Zannoni

In the twelfth-century, Pisa was a powerhouse of global trade, a city that stood at the centre of Medieval Europe. But Pisa had a problem. It was running out of coins. In the face of a looming financial crisis, the city's rulers and its moneylenders forged a deal that laid the foundations of the modern state and of present-day banking.In Money and Promises, the distinguished banker and scholar Paolo Zannoni examines the extraordinary relationship between states and banks. He draws upon seven case the republic of twelfth-century Pisa, seventeenth-century Venice, the early years of the Bank of England, Imperial Spain, the Kingdom of Naples, the nascent USA during the American Revolution, and Bolshevik Russia in 1917–21. Spanning a multitude of countries, political systems and historical eras, Zannoni shows that at the heart of our institutions lies an intricate exchange of debt and promises that has shaped the modern world.Featuring pioneering research and original insights, this authoritative yet accessible book explores the vital relationship upon which our financial and political systems still depend.

Genres: Economics, History, Nonfiction, Finance, Money

320 pages, Hardcover

Published June 11, 2024

Reviews

[Brian Hanson · Rating 4 out of 5]

Money is one of those things I have long struggled to understand. Zannoni's book (based on a half century of experience in finance) lifts the veil somewhat - at least in the area of the interdependence of states and banks. He provides 7 case studies - ranging over Italian republics, England, America and Soviet Russia, amongst others - to illuminate how banks have played a part in building states. His fluency in English and Italian gives him access to an impressive range of primary sources. Throughout the lesson is hammered home (in an entertaining way) that "the debts of banks are the currency of nations". Much food for thought here. Mutual societies are referred to in passing as one of the things which Daniel Defoe championed, but the role of such societies within the networks he describes are not returned to, though it is highly instructive to visit the Franciscans' early forays into microfinancing, through the Monte di Pietà. A valuable read.

[Tobi ﾄﾋﾞ · Rating 5 out of 5]

Review incomplete

This work offers a captivating exploration of the symbiotic relationship between states and banks, tracing its origins through seven illuminating case studies spanning centuries and continents. From twelfth-century Pisa to Bolshevik Russia, Zannoni unveils the intricate dynamics of finance and governance that have shaped the modern world.

At the heart of Zannoni's narrative lies the twelfth-century Pisa, a bustling hub of global trade grappling with a dire shortage of coins. In a pivotal moment of crisis, the city's rulers and moneylenders forged a landmark agreement that laid the groundwork for modern banking and statecraft. Through meticulous research and scholarly analysis, Zannoni unveils the genesis of this transformative pact, shedding light on its enduring legacy.

Spanning epochs and geographies, Money & Promises delves into seven distinct case studies, from seventeenth-century Venice to the nascent USA during the American Revolution. Each case study offers a nuanced examination of the interplay between debt, promises, and political power, illuminating the evolution of financial institutions and governance structures across diverse contexts.

Zannoni's prose is both academic and accessible, guiding readers through centuries of financial history with clarity and precision.

One of the book's most compelling aspects is its relevance to contemporary debates surrounding finance, governance, and statecraft. Money & Promises stands as a seminal work in the field of financial history, offering a panoramic view of the forces that have shaped the modern world. Zannoni's authoritative yet accessible approach makes this book essential reading for anyone seeking to understand the origins and evolution of banking and statecraft. Rich in scholarship and insight, it is sure to leave a lasting impression on readers interested in the intersection of finance, politics, and society.

[Frank Stein · Rating 3 out of 5]

This book relates some fascinating moments in banking history but fails to translate them into a greater whole.

The book starts with deposit banking in Pisa, where it notes that "corporate banking" originated around the 12th century (the first banking regulations date from 1162, and mainly concerned transparency of the all-important bank "ledger" to the public). But it actually doesn't define what was new here, the evidence that Pisa was first, or even what sort of banks began. It notes that Pisan Fibonacci's famous "Liber Abaci," although now mainly known for its mathematical innovations, was mainly a handbook for traders that dealt with money exchange and practical affairs. The famous Leaning Tower was actually built thanks to a "Cathedral Foundry" a kind of bank that avoided usury restrictions by lending out land and buying it back. The book notes recent research in 14th century bankers' ledgers but fails to point out anything surprising in them.

The books also notes how Venice in 1607 created a Grain Office bank and then a "Banco Giro" to allow coins to be turned into ledger entries to finance its wars. It notes how post-Civil War the English "Tally sticks" became a handy medium of trade since they could be given to, say, shipbuilders and the tax that they represented could be sold off to someone to use as currency until they returned to the "Lower Exchequer" (which collected taxes, as opposed to the "Upper Exchequer" for audits) as a tax payment. My favorite part was about the Bolshevik Gosbank. Lenin was a reader of Rudolf Hilfering's "Finance Capital" book, which declared that banking was to be the basis of the new socialist state. He thus took over the big banks first and in his "Can the Bolsheviks Retain State Power?" in 1917 claimed that socializing banking, due to its control over all trade, would be "nine-tenths" of the socialization of the whole economy.

Despite these interesting tales, the book rarely explains how the stories fit together, or what is truly distinct about them, or how they fit into a wider narrative. A little more editing and clarification would have gone a long way here.

[Seriesbooklover · Rating 5 out of 5]

I received a copy of this book for a free and unbiased opinion.
The writing in this non-fiction book is accessible to anyone who doesn’t have specialist knowledge of money or finances. The book is easy to read although it isn’t a book you can whizz through.
Each chapter covers a different and important event in the history of money and banking- and is a great history lesson in how our modern banking system came to be. I never quite understood why debt seemed to be so lightly considered by financial institutions just before the crash in 2008 but this book describes how debt and the promises to pay debt formed the basis of banking.
Starting in Pisa in the twelfth century where traders needed a way to manage their money and ending in Soviet Russia where traders needed to also manage their money in an innovative way - the book covers the developing banking system around the world.
I loved how banking in England involved making notches on sticks, sometimes very long sticks and how churches pragmatically came up with a system of loaning money without breaching Rome’s edict on interest.
But the best parts were when the author uses his own experiences in these complicated systems and his fascination and passion for money.
The illustrations and photos are lovely to touch and adds a lovely visual feel to the book.
Perfect for Fans of
Non-fiction books on money and the history of banking.

[Brad Eastman · Rating 5 out of 5]

I loved this book! Mr. Zannoni explains money creation and banking by looking at 7 different times when the state needed to create a credible currency without one-to-one backing of precious metal. Mr. Zannoni is an accomplished banker and business man. He also has a talent for history, diving deep into the archives of early banks and making their ledgers tell a story. Because he is a banker, he understands what these ledgers are telling him. Because he is a fan of history, but not an academic historian, he knows how to weave a coherent narrative looking at accounting registers across time. He clearly explains the idea of fractional banking and money supply without the jargon of economics or academia. By focusing on actual bank transactions, Mr. Zannoni links the idea of money supply to everyday life. My only criticism is that Mr. Zannoni does not update the story for the later 20th Century when money became completely de-linked from metal. I would have liked him to advance the story of money supply, government debt and commerce to the current monetary regime.

[Bob Finch · Rating 4 out of 5]

An extensively researched in-depth exposition about the role of debt and banking (in a variety of forms) in shaping European (& US) finance & economics over the last 3/4 millennium. The author weaves a common, albeit convoluted, financial thread from 12th century Pisa through medieval Venice, England, Spain, revolutionary-era USA, and the early Soviet Union—that common thread being the need for currency and how various forms of debt filled that need. By no means a light read, and at times a bit tedious, the book nevertheless provides a level of detail through enlightening case studies generously peppered with revealing and often entertaining descriptions of many key players.

[Baron Linder · Rating 5 out of 5]

I really enjoyed learning about the different banking systems in different times. The history of banking is surprisingly intriguing, and it still seems as if banking is constantly improving. As long as you know something about banking, then this book will be exhilarating to read. I learned more about the history of banking in one chapter than I have in my entire life. This book helped me learn so much about banking and its history that I never knew about. I got to learn that most banks are created based off of England’s bank. I learned how banks transferred from coins, to tallies, to coins again and to bills. I got to learn about how taxing was developed, and I even got to learn about the adventure of this author in the world of banking. My knowledge of banking drastically improved, and this book has influenced me to keep learning about banking. I never thought that I would find banking intriguing, but banking’s history is full of interesting innovation. This book deserved five stars. The aspect of banking was understandable, and the whole story was put together well.

[CJ | clarajunereads]

An informative and accessible look at the history of banking, going back to 12th century Pisa. I was initially worried that this would be dry, but it's very engaging and insightful, tracking how banking and the modern state developed in parallel.

[Al Maki]

The seven stories, ranging from 13th century Pisa to the Letinist period of the USSR together illustrate how promises, i.e. debt, is used by banks to create money. For people like me who find money puzzling, it's a useful read.

[Brendon Cearley · Rating 4 out of 5]

This book was very well written and researched. Some sections were pretty detailed and took a while to get through, but I recommend for anyone interested in the history of banking and money.