banks and banking 89The German Hansa,trans. D. S. Ault and S. H. Steinberg
(1964; reprint, London: Macmillan, 1970); Richard
Fletcher, The Barbarian Conversion: From Paganism to
Christianity (New York: Henry Holt, 1997), 483–507;
Alan V. Murray, ed., Crusade and Conversion on the Baltic
Frontier, 1150–1500 (Aldershot: Ashgate, 2001); S. C.
Rowell, “Baltic Europe,” in The New Cambridge Medieval
History,Vol. 6, c. 1300–c. 1415,ed. Michael Jones (Cam-
bridge: Cambridge University Press, 2000), 699–734;
William L. Urban, “Baltic Countries/Balts,” DMA,
2.61–68.
ban (bannum, banalité)Ban,“the power to order and
Rulers and Dynasties of Scandinavia in the Later Middle Ages
command exercised by war leaders. The CAROLINGIANS
made banal lordship a key concept of the political and
financial organization of their state. It was derived
directly from the emperor. The ban was power both to
judge and to punish. It designated the duty to assemble
and lead an army; it also included the management of fis-
cal manners and the collection of taxes. The military
function was the most important and with the possession
of a fortress often the main visual aspect of holding the
power of ban.
By the 11th century, the FEUDAL period, these
fortresses were completely appropriated by their holders
along with the powers they symbolized. By then exercis-
ing the ban meant using these powers over the people of
a district. This entailed the power to dispense justice
and power over roads, bridges, and fords and the col-
lecting of tolls to pay for it all. The ban also included
the procuring of services, military, and labor. This
amounted to all the services, in labor, money, or kind,
required by the lord from his subject people, which
could include forced labor on the lord’s land and any
revenues from the redemption of those liable, but also
included the obligation to use all the time the lord’s
services or facilities such as a mill.
Further reading:Georges Duby, Rural Economy and
Country Life in the Medieval West,trans. Cynthia Postan
(1962; reprint, Columbia: University of South Carolina
Press, 1968); Jean-Pierre Poly and Eric Bournazel, The
Feudal Transformation, 900–1200,trans. Caroline Hissett
(New York: Holmes & Meier, 1991 [1980]).
banks and banking The term bank,meaning “credit
negotiated on a counter at banco,” either in terms of
loans or deposits, was first used in northern and central
ITA LYin the 13th century. It was introduced by the LOM-
BARDS and other Italian merchants in the commercial
centers of western Europe to denote the business of
money. Such activities had been practiced since the
beginning of the Middle Ages, but, until the end of the
10th century, they consisted simply of borrowing money
against a pledge or security. The economic development
of the 11th and 12th centuries, including the growth of a
wider money economy, made credit transactions more
frequent. Early banks also accumulated capital by
accepting deposits with hidden interest but with little
security. USURY, or additional profit or interest for the use
of something over time, was collected for loans and in
sales or exchanges, but was forbidden by ecclesiastical
law. Bankers and businesses justified their usury by
claiming the risk of loss and by disguising it in exchange
rates. The church was uncomfortable with this but at the
same time participated in usurious transactions out of a
necessity to conduct its own affairs. The popes them-
selves greatly contributed to the development of banking
by employing Italian companies to assist in the develop-
ment of their taxation system in the 13th century.
Numerous companies failed when there was a run on a
bank that lacked sufficient resources to cover their obli-
gations. And what they did have could not easily be
turned into cash.USURY, INSTRUMENTS, AND TECHNIQUES
Usury, or the charging of interest, was built on a system
of pledging as security properties or sources of revenue.
The amount eventually repaid included an additional
sum for the use of funds over time. The security
pledged allowed the moneylender to collect the income
until the capital was repaid or take complete possession
of the pledge if it was not. Because the terms of the
loans often made the repayment of the capital almost
impossible, many bonded lands passed to moneylen-
ders. Jewish money lending, known to bear interest, led
to accusations of usury. Canon laws tried to see that
their operations were limited to small amounts and the
rate of interest they charged was controlled.
In the 13th century, in Italy and western Europe,
urban merchants, from their local business profits, began
to invest in lending money, in effecting various financial
transactions or transfers, and in changing the many dif-
ferent forms of money present throughout Europe. Let-
ters of credit were granted by temporary companies and
used by the kings and nobles who participated in the
CRUSADESand by merchants who moved their products
and profits between markets. These letters of credit were
negotiated and passed among bankers internationally,
especially at the FAIRSof Champagne. Companies main-
tained agents or representatives throughout Europe to
facilitate this exchange and used better accounting meth-
ods to keep track of the various markets underpinning
the value of coins and monies of account. Profits were
derived from speculating on the exchange rates of money
in money markets throughout Europe. All this business
produced the largest medieval banks in the 13th century.
After numerous bankruptcies around 1300, these old
firms were replaced by new smaller associations that
tried to spread risk better in more forms of enterprise.
The late 15th century saw a revival of larger banks