Avignon Exchange - Background

Background

Unlike most medieval rulers who levied funds from sources of taxation relatively nearby, the papacy's primary source of income was constituted from taxes and tributes collected across Europe; moreover, the papacy had a gross geographic mismatch of its assets and liabilities: money collected in France and Poland, for example might be spent for military reconquest in the Papal States. The papacy soon discovered that the direct transfer or shipment of physical specie over long distances was not only risky but extremely expensive, and was thus forced to procure the services of international merchant-bankers who dealt in foreign exchange from their branches throughout the important commercial centers of Western Europe not only in large centers but at the sites of the Champagne fairs.

However, the Italian merchant-bankers could be of no assistance for funds collected in Eastern Europe (mainly Poland, Hungary, and Bohemia), Scandinavia, and Northern Germany where there was no organized money market at this time, and thus the direct transfer of funds was still required. The preferred alternative to shipping specie was to entrust small amounts to ecclesiastics who happened to be traveling to visit the pope or (more often) traveling merchants on their way to Bruges or Venice (however, to transfer funds from Krakow to Bruges to Avignon took over a year). Even in Western Europe, direct transfer of funds was required when the foreign exchange market could not provide the necessary liquidity; for example, in 1327, 100,000 florins were sent from Avignon to Bologna in a caravan of fifteen pack animals guarded by an armed escort of forty-six.

The Apostolic Camera, the papal treasury, was established in the 13th century, with close ties to Italian merchant bankers, who were given the title mercatores camerae apostolicae ("mercatores" of the Apostolic Camera). The papal residences of Rome, Viterbo, and Rieti were close to the two main banking centers in Italy: Florence and Siena; however, these connections were severed during the reign of Pope Clement V (1305–1315) as he wandered through Languedoc and Provence.

Only when Pope John XXII (1316–1334) began the construction of a permanent papal residence in Avignon, the Palais des Papes, did the major Italian banks open branches in the Curia and resume their dealings with the Camera. However, the closeness of this relationship never equaled the "intimate" management of the Gran Tavola of Orlando Bonsignori in the 13th century; instead of entrusting idle funds to merchant bankers for investment, the papal Chamberlain, Treasurer, and Vice-treasurer (all high-ranking ecclesiastics, assisted by a "throng" of clerics, notaries, and laymen) managed these funds more physically, keeping them in a "strong room" built specifically for this purpose.