Dagnino G. B. (1995) When being the first is not enough

Dagnino, Giovanni Battista (1995) “The Tavola di Palermo: The First Public Bank of Second European XVI century” in Proceedings of the Conference on Business History, October 24 and 25 1994, Rotterdam, eds Mila Davids, Ferry de Goey & Dirk de Witt, 91-111.

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The evolution of Sicilian banks reflects the history of the island during the early modern period, in that they were “economically and financially backward” (p.91). The 16th century in the Western Mediterranean was a time of Spanish Domination dominated by (1) money clipping, (2) high inflation, (3) commercial mismanagement, (4) Gresham Law episodes fuelled by unscrupulous financiers and (5) heavy and altogether negative government interventions (p.93).

Difficult times

In effect these elements combined with heavy-handed taxation drove numerous Sicilian private banks to the ground. From the 11th century onward merchant-bankers from the North had settled in the island. Foreign banks in Palermo were concentrated in the Rua Pisanorum. The Pisans in the 15th century, followed by the Genoans in the 16th enjoyed a quasi-monopoly over financial activities in the city (p.94).

However important providers of funds to the Court and the Senate, their activities were never clearly distinguished from trade their role as channels of credits towards industrial entrepreneurs remained limited. Many went out of business around the middle of the 16th century; faced with their depositors’ growing panic, the Prefect of Palermo, don Cesare Lanza, proposed in 1551 a “public bank of deposit and money in circulation” called Banco Pecuniario or Tavola, copied on those already in existence in Catalonia. By June 3rd, 1553, the new institution was operational.

A promising start, but…

After a short period of good management, the city’s aristocracy took over the bank board and nepotism plagued its functioning. It suspended payments ten times in two centuries: 1613 (p.96), 1624, 1635, 1647-8, 1670, 1682, 1709, 1761, 1799 and 1820. The inadequate training of the accountants was usually blamed by the contemporaries (p.97). The institution was finally dissolved in 1855.

The Tavola was the first Italian institution to accept deposits (however some experiments had already been undertaken in 15th-century Genoa). It was soon imitated by Genoa’s Banco di S. Giorgio (1584), Venice’s Banco del Rialto (1587), Milan’s Banco di S. Ambrogio and later by Amsterdam, Hamburg, Nuremberg and Rotterdam. These latter institutions were designed to unlock “productive credit” and limit the usage of metallic money through the use of a giro system and bills of exchange. On the contrary, the Tavola di Palermo and its counterpart in Messina, instituted in 1587, were primarily intended to remain “the coffers of the city from which one can take money in moment of most urgent need”. To facilitate this task, private deposit banks were de facto forbidden (p.98).

“The Tavola in reality administrated the public debt of the two cities and allowed themselves to be saddled by the government with services only making a loss, for example, the repeated exchange of money”.


Initially (1553-1647), the bank seems to have functioned quite smoothly, benefiting from the prosperity of the island. Later, the situation became noticeably more hectic, before finally entering a long period of decadence, not even able to keep up with foreign innovations. Thus the institution embodies perfectly the “blocked development” pattern of the Sicilian economy after the 1650s. Far from the major European financial centers, the Tavola never managed to benefit from its first-mover advantage and to trigger “a positive feed-back loop” between financial innovation and economic growth (p.99). The bank appears to have been impeded both by the general decadence of the Mediterranean World and by its own structures which prevented it from creating credit (p.100).

Disclaimer: this summary is written by the contributors of the blog and not by the author of the article. Any mistake is Manuel’s fault (and he shall be punished).

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