You Can Bank on It

by Eliezer Segal

News Item: 1998: Several major commercial banks in Canada proposed mergers, arguing that only if they increase their size can they compete in the global market. This aroused a public outcry of citizens who feared that reduced competition in the local market would make the banks even less responsive to customer needs. The banks launched an intensive advertising campaign to convince the public of the advantages of their policy.

It seems that scarcely a week goes by without hearing new reports of proposed mergers of Canada’s mega-banks. 

Proponents of these amalgamations insist that this development is a necessity if our financial institutions hope to compete in the emerging global economy. Meanwhile, the banks’ humble clients remain skeptical how much of the new efficiency will filter down to us in the form of savings or improved service.

The economic mood of sixteenth-century Italy bore some interesting similarities to our contemporary situation. At that time Europe was breaking loose of the constricting commercial policies of the Middle Ages, and launching into a flourishing capitalistic system.

For the most part, Jews did not regard this as a welcome development. The toleration of their own presence in medieval Europe had derived largely from their usefulness as suppliers of credit, since church law had not permitted Christians to lend money at interest. As the ecclesiastical hegemony weakened, and a local Christian middle class aspired to take its place in the sun, the existing Jewish banking establishment was quickly pushed aside. This process was often accompanied by vicious anti-Semitic preaching, and brought about the expulsion of entire Jewish communities.

While the easy-going attitudes of Italy generally led to a diminished degree of hostility towards its Jews, the hard economic and political realities did express themselves nonetheless in the removal of Jews from several Italian states in order to clear the way for the rise of a native middle class. 

The Republic of Tuscany, which included such important commercial centres as Florence and Pisa, initially subscribed to this policy, until the return to power of the Medici princes, especially Cosimo (1537-74) who enunciated more tolerant policies towards Jewish bankers. Thus, in 1547 we hear of the establishment of the first Jewish bank in Pisa in twenty years, under the leadership of an aggressive financier named Ishmael Da Rieti.

This event did not come without a hefty measure of controversy. There was a rival firm that claimed the exclusive privilege of maintaining a bank in Pisa. At the head of the firm was Dona Benvenida Abravanel, heir to a distinguished financial empire centered in Naples. After negotiating from the government the right to set up branches of her bank through most of the region, she entrenched her position by forming an alliance with Abraham Da Pisa. 

The Da Pisa family had operated the Jewish loan bank in Pisa prior to its closure in 1527. According to the prevailing business practices of Italian Jews, an existing bank was granted monopolistic protection against any aspiring competitors; and the combined muscle of Abravanel and Da Pisa joined together in arguing that they still possessed that right even though the Da Pisa bank had not operated for two decades.

The dispute between the two financial firms has some striking similarities to our public debate over the expansion of the Canadian banking cartels– including the conviction of both parties that unrestricted competition would be to the detriment of the profession.

Though the real decisions were ultimately determined by political and financial pragmatism, and the parties involved were careful not to reveal publicly their expansion plans, the rivals were nevertheless concerned about obtaining public support for their respective causes. For Jewish firms, this involved the solicitation of statements of support form leading rabbis, though that support did not really wield much practical weight in the financial and political marketplaces. Normally, Jewish law did not encourage the creation of new economic monopolies, though it reluctantly supported were already in existence. 

In order to insure a favourable hearing of their position, Rieti acquired the services of an influential lobbyist, Rabbi Joseph De-Arli, who was successful in obtaining endorsements from some respected rabbis. De-Arli was a controversial figure whose tactics were challenged on ethical grounds, and led to a call to revoke his rabbinic ordination. 

In terms that will be familiar to many Canadians, the bankers professed that their desire to expand was not rooted in mere avarice, but was intended primarily to benefit the public. 

One partisan responsum describes fancifully how the Pisan citizens had once begged desperately for a Jewish banker to open an office in their city, and when the altruistic Ishmael Da Rieti acquiesced, they carried him before the Duke to insist that he be granted the charter.

Initially one faction was accusing the other of collusion with politically powerful elites. In the end, the matter was resolved by civil authorities, when they guaranteed each of the competitors a secure monopoly within a defined territory. 

Those monopolies were defended zealously and ruthlessly. In later years we observe that Abravanel and Da Rieti were not above joining forces in order to fend off lesser rivals.

Once their monopolies had been consolidated we do not hear much about either bank’s professed efforts at ameliorating the conditions of the common people.

But of course, things are different in Canada.

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• First Publication:
  • Jewish Free Press, Sept 3 1998, p. 14.
• For further reading: 
  • Bonfil, Roberto. 1990. Rabbis and Jewish communities in Renaissance Italy, Littman library of Jewish civilization. Ox-ford [Oxfordshire] ; New York: Published for the Littman Library by Oxford University Press.
  • Cooperman, Bernard D. 1984. “A Rivalry of Bankers: Responsa Concerning Banking Rights in Pisa in 1547”. In Studies in Medieval Jewish History and Literature, edited by I. Twersky. Cambridge Mass and London England: Harvard University Press.

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My email address is: [email protected]

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