A History of the "Banco di Napoli" and Its "Fedi di Credito"

The Banco di Napoli's Credit Tokens: A Four-Century History

This article, published in Cronaca Numismatica in 2019, delves into the fascinating history of the Banco di Napoli and its unique credit instruments known as "fedi di credito." It highlights the bank's origins rooted in charity and social responsibility, contrasting with the typical profit-driven motive of modern financial institutions.

Source: https://www.cronacanumismatica.com/dossier-speciale-le-fedi-di-credito-del-banco-di-napoli-e-la-loro-storia/

PODCAST (by Google): https://creators.spotify.com/pod/show/mana-bond-limited/episodes/The-Banco-di-Napolis-Credit-Tokens-A-Four-Century-History-e2rdtmb

Key takeaways:

• Origins in Charity: Unlike many modern banks, the Banco di Napoli's roots lie in the "Monti di Pietà," charitable institutions established in the 15th century by Franciscan friars to combat usury and help the poor. The Sacro Monte di Pietà in Naples, founded in 1539, exemplifies this spirit.
• Evolution of the Bank: The article traces the bank's evolution through mergers and transformations, from the various "Monti" and "Banchi" to the Banco Nazionale di Napoli in 1794, ultimately leading to the official establishment of the Banco di Napoli in 1862.
• Fedi di Credito: These credit instruments, essentially promissory notes or early bank drafts, played a vital role in the Neapolitan economy for centuries. They originated as deposit receipts but evolved into a widely accepted form of currency.
• "In sostanza, era una ricevuta di versamento, che però, oltre a attestare l’esistenza del denaro nelle casse del Monte, ne consentiva anche il rimborso." (Translation: "In essence, it was a deposit receipt, but in addition to attesting to the existence of the money in the Monte's coffers, it also allowed for its reimbursement.")
• Public Trust: The "fedi" gained immense public trust due to strict regulations and the reputation of the issuing institutions.
• "Come afferma il Filangeri: “la circolazione cartacea era pienamente garantita dal ferreo principio, che i banchi napoletani sempre mantennero, che la fede di credito non potesse esistere se non vi fosse il corrispettivo in moneta metallica; principio in base al quale non concepivasi l’emissione di fedi a vuoto se non come delitto”." (Translation: "As Filangeri states: “paper circulation was fully guaranteed by the iron principle, which the Neapolitan banks always maintained, that the fede di credito could not exist if there was no corresponding metal currency; a principle on the basis of which the issuance of empty fedi was not conceived if not as a crime.")
• Banknote Issuance: The Banco di Napoli obtained the right to print banknotes in 1866. Notably, they continued to issue "fedi di credito" alongside official banknotes, catering to the public's familiarity and trust in these instruments.
• Aesthetic Excellence: The article highlights the aesthetic appeal of the "fedi," which were beautifully engraved by Bradbury Wilkinson & Co. of London, surpassing even the banknotes issued by the Banca Nazionale.
• The "Horses" on the Fedi: The recurring image of horses on the "fedi" draws inspiration from the "cavallo" coins featuring a horse, first introduced by King Ferdinand I of Aragon in the late 15th century.
• Consorzio and Incovertibility: The formation of the Consorzio in 1874 led to the issuance of inconvertible banknotes, causing public distrust. However, the Banco di Napoli's "fedi" remained popular due to the bank's established reputation.
• Lasting Legacy: The "fedi di credito" continued to be issued until the adoption of the Euro in 2002, marking the end of a four-century-long tradition.

The article offers a unique perspective on the evolution of banking in Italy, highlighting the interplay of social responsibility, public trust, and financial innovation. It reminds us that financial institutions were not always solely profit-driven and that trust and community welfare played a crucial role in their development.

Timeline of the Banco di Napoli

15th Century: Monti di Pietà, founded by Franciscan friars, begin operating across Italy, offering interest-free loans to combat usury.

1539: Aurelio Paparo and Nardo Di Palma establish the Sacro Monte della Pietà in Naples, providing interest-free loans and challenging the grip of usurers.

1563: A group of lawyers and prelates found the confraternity “Santa Maria Monte de Poveri” to liberate those imprisoned for debt.

1599: “Santa Maria Monte de Poveri” merges with the “Sacro Monte de Poveri del nome de Dio,” expanding charitable activities like freeing slaves and providing dowries for impoverished women.

1613: Earliest known credit note (fede di credito) issued by the Sacro Monte de Poveri del nome de Dio, predating previously known examples.

1620: Fire engulfs Palazzo Ricca, housing the Monte dei Poveri, destroying records predating this year.

1632: The “Sacro Monte de Poveri del nome de Dio” officially becomes the “Banco e Monte dei Poveri” with royal assent.

1572: Monti in Naples are authorized to accept deposits, issuing “fedi di deposito” as receipts. These evolve into "fedi di credito," handwritten documents recording deposits, withdrawals, and transfers, becoming a precursor to modern savings books.

1580: Emission of fedi di credito restricted to four trustworthy public banks in Naples, bolstering public trust in the instrument.

1584: Viceroy Don Pietro Giron officially recognizes fedi di credito as legal tender, solidifying their role as a substitute for metal currency in the Neapolitan region.

1751: Abbot Galiani estimates three million gold ducats in fedi di credito circulating in Naples, highlighting their immense economic significance.

1794: King Ferdinand IV of Bourbon consolidates seven prominent credit institutions into the Banco Nazionale di Napoli for administrative control.

1806: Joseph Bonaparte reorganizes Neapolitan banks, merging several into the Banco dei Privati and establishing the Banco di Corte.

1808: Joachim Murat further consolidates banking, creating the Banco delle Due Sicilie.

1862: The Kingdom of Italy officially establishes the Banco di Napoli in January, building upon the legacy of its predecessors.

1866: Banco di Napoli receives the right to print currency, opting to issue "fedi di credito" banknotes to capitalize on public trust in the familiar instrument.

1870s: Banco di Napoli combats a shortage of silver coinage by issuing fedi di credito banknotes in small denominations, stabilizing the economy in southern Italy.

1874: Banco di Napoli joins the Consorzio delle banche di emissione, authorized to issue banknotes that, while technically convertible, were essentially fiat currency. Public preference for traditional fedi di credito leads the bank to continue issuing them alongside the new banknotes.

1926: Banco di Napoli loses the right to issue banknotes but retains permission to issue fedi di credito, which remain popular in Naples.

2002: Banco di Napoli merges with Istituto Sanpaolo-Imi, ending its long history as an independent institution.

2003: Final fedi di credito issued by the Banco di Napoli branch in Caserta as souvenirs for employees.

Cast of Characters

• Aurelio Paparo and Nardo Di Palma: Neapolitan entrepreneurs and founders of the Sacro Monte della Pietà in 1539. Pioneered interest-free lending and challenged usurious practices prevalent at the time.
• Don Pietro Giron: Viceroy of Naples in 1584. Instrumental in officially recognizing the fedi di credito as legal tender, paving the way for their widespread adoption in the region.
• Abbot Ferdinando Galiani: Prominent economist of the 18th century. In his 1751 treatise "Della Moneta," he estimated a vast circulation of fedi di credito, signifying their significance to the Neapolitan economy.
• King Ferdinand IV of Bourbon: Ruler of Naples in 1794. He consolidated seven major credit institutions into the Banco Nazionale di Napoli to centralize administrative control over the banking sector.
• Joseph Bonaparte: King of Naples from 1806-1808 during the Napoleonic era. Reorganized Neapolitan banks, leading to the creation of the Banco dei Privati and the Banco di Corte.
• Joachim Murat: King of Naples from 1808-1815. Continued consolidating banking institutions, ultimately merging them into the Banco delle Due Sicilie, a direct predecessor to the Banco di Napoli.
• Bradbury Wilkinson & Co.: A prominent London-based printing firm specializing in banknotes. The Banco di Napoli commissioned them to produce their fedi di credito banknotes, resulting in high-quality, aesthetically pleasing currency.

Understanding the History of Banco di Napoli Through its Fedi di Credito

Source: Excerpts from "DOSSIER SPECIALE: le FEDI DI CREDITO del Banco di Napoli e la loro storia" from cronacanumismatica.com

I. Introduction: Origins Rooted in Charity

• This section provides an overview of the origins of Banco di Napoli, highlighting how early credit institutions in Italy were established not for profit, but out of compassion and a desire to help the poor.
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II. The 16th Century: Combating Usury with the Sacro Monte di Pietà

• Explores the establishment of the Sacro Monte della Pietà in 1539 by Aurelio Paparo and Nardo Di Palma to combat usury in Naples by providing interest-free loans.
• Discusses how the Monte's charitable actions inspired other similar institutions and led to significant social change in the region.
• Details the story of the "Santa Maria Monte de Poveri" confraternity, founded to assist those imprisoned for debt, which later merged with "Sacro Monte de Poveri del nome de Dio" to expand its charitable reach.
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III. Evolving into the Banco e Monte dei Poveri

• Explains the merging of the "Sacro Monte de Poveri del nome de Dio" with other charitable organizations, leading to its renaming as the "Banco e Monte dei Poveri" in 1632.
• Emphasizes that the history of the Banco e Monte dei Poveri showcases the historical connection between finance and humanitarian efforts in Italy.
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IV. Uncovering Early Fedi di Credito

• Discusses the discovery of the oldest known fede di credito from the Banco di Napoli, dating back to 1613, and its significance in understanding the bank's early operations.
• Highlights the challenges in finding fedi di credito due to their cancellation and archival practices, compounded by historical events like fires that destroyed many early records.
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V. Fedi di Credito: A Five-Century-Long Payment Method

• Defines fedi di credito and traces their evolution from fedi di deposito (deposit receipts) to becoming a widely accepted form of payment in Southern Italy for nearly five centuries.
• Explains how the fedi di credito functioned as a reliable substitute for metallic currency due to the strict regulations surrounding their issuance and the trust they garnered.
• Describes how the Viceroy of Naples officially recognized the fedi di credito as legal tender in 1584, further solidifying their role in the region's economy.
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VI. From Monti and Banchi to the Banco di Napoli

• Outlines the complex series of mergers and transformations that led to the creation of the Banco di Napoli, starting with the unification of seven major credit institutions under Ferdinando VI of Bourbon in 1794.
• Details the subsequent changes implemented during the Napoleonic era and the eventual establishment of the Banco delle Due Sicilie, the direct predecessor to the Banco di Napoli.
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VII. Gaining the Right to Print Money and Addressing Currency Shortages

• Explains how the Banco di Napoli gained the right to print money in 1866, following the unification of Italy, but chose to issue "fedi di credito" banknotes instead, honoring the region's tradition and familiarity with this form of currency.
• Discusses the Banco di Napoli's crucial role in addressing the shortage of small denomination currency in Southern Italy by issuing large quantities of small-denomination fedi di credito.
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VIII. The Banco di Napoli's Distinctive Banknote Design

• Highlights the Banco di Napoli's commitment to creating aesthetically pleasing banknotes by commissioning the design and engraving from the renowned British firm Bradbury Wilkinson & Co.
• Points out how the banknotes' design surpassed those issued by the Banca Nazionale, showcasing the Banco di Napoli's focus on quality and visual appeal.
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IX. The Iconography of Horses on Fedi di Credito

• Explains the historical significance of horse imagery on Neapolitan currency, tracing it back to the "cavallo" coin introduced by Ferdinando I d'Aragona in the late 15th century.
• Describes how this tradition continued through various rulers and eventually found its way onto the Banco di Napoli's fedi di credito banknotes.
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X. Navigating the "Consorziali" Era and Maintaining Public Trust

• Discusses the formation of the Consorzio delle banche di emissione in 1874, leading to the issuance of technically unconvertible banknotes despite being presented as payable on demand.
• Explains how the Banco di Napoli continued issuing fedi di credito alongside the new banknotes to maintain public trust, recognizing the Southern population's preference for the traditional and more reliable fedi.
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XI. The End of an Era: Fedi di Credito in the 20th Century and Beyond

• Explains how the Banco di Napoli lost its banknote issuing privilege in 1926 but retained the right to issue fedi di credito, reflecting the enduring public demand for this form of payment.
• Concludes by noting the final issuance of fedi di credito as souvenirs in 2003 before the Banco di Napoli's absorption into Sanpaolo-Imi and the arrival of the euro.

Banco di Napoli and Fedi di Credito Study Guide

Short Answer Questions

1. What were the primary motivations behind the establishment of early credit institutions like the Monti di Pietà in Italy?
2. Describe the role of Aurelio Paparo and Nardo Di Palma in the founding of the Sacro Monte della Pietà in Naples.
3. Explain the historical context that led to the transformation of charitable organizations like the Sacro Monte de Poveri into the Banco e Monte dei Poveri.
4. How did the fedi di credito function as a substitute for metallic currency in Naples?
5. What measures did the Banco di Napoli take to address the shortage of divisional currency in the post-unification period of Italy?
6. Explain the significance of the imagery of horses on the fedi di credito issued by the Banco di Napoli.
7. What challenges did the Banco di Napoli face with the introduction of "consortial" banknotes?
8. How did the public's trust in the Banco di Napoli differ from their trust in the newly formed Kingdom of Italy's banking system?
9. Why did the Banco di Napoli continue to issue fedi di credito even after it was authorized to print banknotes?
10. What ultimately led to the end of the issuance of fedi di credito by the Banco di Napoli?

Short Answer Key

1. Early credit institutions in Italy were primarily established to combat usury and provide financial assistance to the poor, driven by principles of charity and compassion.
2. Aurelio Paparo and Nardo Di Palma were instrumental in founding the Sacro Monte della Pietà in Naples, extending interest-free loans and reclaiming pawned goods from usurers to help those in need.
3. The Sacro Monte de Poveri transformed into the Banco e Monte dei Poveri as it gained financial support and trust from wealthy families, expanding its operations beyond charity to include deposit banking and commercial lending.
4. Fedi di credito served as receipts for deposits and were transferable, enabling their use as a trusted and widely accepted form of payment in place of metal coins.
5. To alleviate the scarcity of small denomination coins, the Banco di Napoli issued a large quantity of low-value fedi di credito to facilitate everyday transactions.
6. The horse imagery on the fedi di credito paid homage to the historical "cavallo" coins introduced by Ferdinand I of Aragon, reinforcing a long-standing numismatic tradition in Naples.
7. "Consortial" banknotes, while technically legal tender, lacked convertibility to gold or silver, leading to public skepticism and a preference for the familiar fedi di credito.
8. Southern Italians placed greater trust in the long-established Banco di Napoli than the new national banking system, reflecting regional loyalty and concerns over the stability of the recently unified Italian government.
9. Public demand for fedi di credito persisted due to their historical reliability and the Banco's commitment to serving the local community, prompting their continued issuance alongside official banknotes.
10. The Banco di Napoli's authority to issue banknotes was revoked in 1926, and while fedi di credito continued to circulate, their issuance finally ceased in 2002 with the bank's merger into Sanpaolo-IMI and the adoption of the euro.
11. 
    

Essay Questions

1. Analyze the evolution of the Banco di Napoli from its origins as a charitable institution to its role as a major banking force in Southern Italy.
2. Discuss the social and economic impact of fedi di credito on the Neapolitan population. How did they shape financial practices and trust within the community?
3. Compare and contrast the fedi di credito system with the modern banking system. What are the key differences in terms of issuance, regulation, and public perception?
4. To what extent did the unique history and characteristics of the Banco di Napoli contribute to the enduring popularity of fedi di credito in the face of national banking reforms?
5. Explore the symbolic significance of the design elements chosen for the fedi di credito issued by the Banco di Napoli. How did they reflect local history, culture, and the bank's identity?
6. 
   

Glossary of Key Terms

• Monti di Pietà: Charitable institutions established by Franciscan friars to combat usury by offering interest-free loans to the poor.
• Sacro Monte della Pietà: The specific Monte di Pietà founded in Naples in 1539 by Aurelio Paparo and Nardo Di Palma.
• Grazioso Impronto: The practice of providing interest-free loans, often secured by pawned goods.
• Sacro Monte de Poveri del nome de Dio: A charitable organization formed through the merger of two confraternities, focused on aiding the poor, prisoners, and slaves.
• Banco e Monte dei Poveri: The evolved form of the Sacro Monte de Poveri, incorporating banking functions along with its charitable activities.
• Fedi di Credito: Paper certificates issued by the Banco di Napoli (and its predecessors) as receipts for deposits, functioning as a substitute for metallic currency and facilitating financial transactions.
• Banco Nazionale di Napoli: The centralized banking institution formed in 1794 by King Ferdinand IV of Bourbon, consolidating seven major credit institutions in Naples.
• Consorzio delle banche di emissione: A consortium of Italian banks formed in 1874, granted the authority to issue banknotes.
• Corso Forzoso: The legal requirement that banknotes be accepted as payment, even if not directly convertible to gold or silver.
• Bradbury Wilkinson & Co.: A renowned London-based engraving firm responsible for producing the intricate designs for the fedi di credito issued by the Banco di Napoli.

Banco di Napoli and its Fedi di Credito: FAQ

1. What were the motivations behind the establishment of early banking institutions like the Banco di Napoli?

The Banco di Napoli, officially established in 1862, traces its roots back to the 16th century. Unlike modern banks often driven by profit, these early institutions were primarily founded on principles of charity and pietas to combat usury and assist the impoverished. Organizations like the Sacro Monte di Pietà, established in 1539, offered interest-free loans and aid to those struggling with debt, reflecting a strong social conscience.

2. How did the Sacro Monte di Pietà evolve into the Banco di Napoli?

The Sacro Monte di Pietà gained significant support from wealthy families and eventually merged with other charitable organizations. By 1632, with royal assent, it evolved into the Banco e Monte dei Poveri, expanding its services beyond pawnbroking and charity to include accepting deposits. This marked a crucial step towards becoming a full-fledged bank. Over the following centuries, further mergers and reorganizations under various rulers led to the creation of the Banco Nazionale di Napoli in 1794 and ultimately, the Banco di Napoli in 1862.

3. What are "fedi di credito" and what role did they play in the Neapolitan economy?

"Fedi di credito" were essentially handwritten deposit receipts issued by the Monti and later, the Banco di Napoli. They served as proof of deposit and allowed for withdrawals and even third-party transactions. Crucially, in the absence of banknotes, they became a trusted substitute for metal currency, facilitating trade and commerce throughout Southern Italy for nearly five centuries.

4. What ensured the reliability and trustworthiness of "fedi di credito"?

Several factors contributed to the high level of trust in "fedi di credito." Firstly, the Monti and Banchi exercised strict control over their issuance, ensuring they were backed by actual deposits. Secondly, they were initially accessible only to reputable individuals, further reinforcing their reliability. This, coupled with the backing of prominent institutions like the Banco di Napoli, made "fedi di credito" a reliable and widely accepted form of payment.

5. How did the Banco di Napoli address the shortage of small denomination currency in post-unification Italy?

Following Italy's unification in 1861, a severe shortage of small denomination coins, particularly silver, hampered economic activity. The Banco di Napoli, leveraging the public's longstanding trust in "fedi di credito," responded by issuing large quantities of small denomination "fedi." This effectively mitigated the crisis in Southern Italy, contrasting with the rampant circulation of often unreliable private notes in the North.

6. Why did the Banco di Napoli continue to issue "fedi di credito" even after gaining the right to print banknotes?

Despite receiving authorization to print banknotes in 1866, the Banco di Napoli continued to issue "fedi di credito" alongside its official banknotes. This was primarily driven by the enduring popularity and trust the public placed in these traditional instruments. People preferred the familiarity and security associated with "fedi," reflecting a deep-rooted cultural preference.

7. What is the significance of the horse imagery frequently found on "fedi di credito"?

The horse imagery on "fedi di credito" has its roots in Neapolitan numismatic history. Dating back to the reign of Ferdinand I of Aragon in the late 15th century, coins featuring a horse motif, known as "cavallo," were widely circulated. This symbol became deeply ingrained in the local monetary culture, eventually finding its way onto the "fedi" as a nod to tradition and a recognizable symbol of value.

8. When did the issuance of "fedi di credito" by the Banco di Napoli finally cease?

Although the Banco di Napoli lost its banknote issuing privileges in 1926, it retained the right to issue "fedi di credito." These continued to circulate, driven by popular demand, until the introduction of the Euro in 2002. Even then, some branches issued symbolic "fedi" as souvenirs. The eventual absorption of the Banco di Napoli into a larger banking group marked the end of this centuries-old financial tradition.