The Banks That Bankrolled a King
Two Florentine banking houses lent a king the money to start a hundred-year war. When he decided not to pay it back, he didn’t go to prison — they went bankrupt.
The Bardi and the Peruzzi were among the largest commercial enterprises in Europe — the “super-companies” of the fourteenth century. In the 1330s they bankrolled Edward III of England as he opened the conflict with France that became the Hundred Years’ War. In the 1340s he defaulted, and both houses collapsed. It is the oldest lesson in sovereign war-finance: when you lend a king the money to fight, the king can always pay his debt in the one currency you can’t refuse — default — and leave you, and your depositors, holding the loss.
What this page is about
In the early fourteenth century, Florence was the banking capital of Europe, and two families towered over it: the Bardi and the Peruzzi. Their networks reached from England to the Levant; they handled papal money, the wool trade, and the debts of kings. In the 1330s, as Edward III of England pressed his claim to the French crown and prepared for war, he borrowed enormous sums from both houses to pay for armies, allies, and subsidies. The traditional figures — some 900,000 florins owed to the Bardi and 600,000 to the Peruzzi — come from the chronicler Giovanni Villani, himself a Peruzzi insider, and modern historians think they are inflated. But that the houses were deeply exposed to the king’s war is not in doubt.
In the early 1340s, Edward defaulted. The Peruzzi failed in 1343; the Bardi followed by 1346. Villani blamed the king’s broken promises directly, and for centuries that was the whole story: the super-companies died because a sovereign stiffed them. Later scholarship complicates it — the houses were overextended, the wool and grain trades were disrupted, and a broader mid-century crisis was closing in — so the royal default was a major blow, not necessarily the single cause. We grade it exactly that way.
Either way, the lesson for the financing-war file is clean. Lending a king the means to make war is not like any other loan, because the borrower writes the law. When the bill came due, Edward kept his crown and his conquests; the bankers who had armed him lost everything. The risk in financing a war does not sit with the one who fights it — it sits with the one who funds it, right up until it lands on ordinary depositors.
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The Banks That Bankrolled a King.
Two Florentine houses lent a king the money to start a hundred-year war. When he decided not to pay it back, he didn't go to prison — they went bankrupt.
The loan, the war, the default, the collapse
The super-companies, the king’s war, the broken debt, and who actually paid.
The super-companies: Europe's biggest banks, built on kings and wool.
FACTBy the early 1300s the Bardi and Peruzzi of Florence were among the largest business enterprises in the world — multinational 'super-companies' with branches across Europe and the Mediterranean, deep in the wool trade, papal finance, and sovereign lending. Their scale made them indispensable to rulers who needed cash faster than taxes could supply it, and lending to crowns was the most prestigious and most dangerous part of the business. Graded FACT.
Financing a king's war: Edward III and the opening of the Hundred Years' War.
FACTIn the 1330s, as Edward III prepared to press his claim to the French throne, he turned to the Florentines for the cash to buy allies and field armies — the spending that opened the Hundred Years' War. Both houses lent heavily. The traditional totals — roughly 900,000 florins to the Bardi, 600,000 to the Peruzzi — come from the chronicler Giovanni Villani, a Peruzzi partner, and modern scholars (notably Edwin Hunt) argue the real exposure was smaller. The precise numbers are disputed; the heavy war-lending is not. Graded FACT, with the figures flagged as likely inflated.
The default: the king pays his debt in the one coin you can't refuse.
FACTIn the early 1340s Edward III stopped paying. A medieval king was effectively judge in his own court: there was no power that could compel a sovereign to honor a loan, and defaulting on foreign bankers carried little domestic cost. Edward kept his crown, his war, and his conquests. The debt simply evaporated — transferred, in effect, from the borrower who could not be made to pay to the lenders who could not make him. Graded FACT.
The collapse — and the fence: a major blow, not the only one.
PROBABLY TRUEThe Peruzzi failed in 1343 and the Bardi by 1346, and the royal default was central to it — that much is agreed. Villani pinned the ruin squarely on the English crown, and for a long time that was the textbook account. But later scholarship complicates the simple morality tale: the super-companies were dangerously overextended, the wool and grain trades were disrupted, and a broader mid-century downturn (soon capped by the Black Death) was tightening. So we grade the headline carefully — the default helped destroy the banks (PROBABLY TRUE as the decisive blow), but 'the king alone killed them' overstates a multi-causal collapse. The caution is the point: even the era's most powerful financiers mistook a sovereign's promise for a safe asset.
The pattern: the financier carries the risk the sovereign makes.
FACTHere is the entry this case adds to the ledger: financing a war is a loan to someone who writes the rules. The upside is immense — kings pay premiums, and war is the biggest borrower of all — but the counterparty can always settle in default, confiscation, or the gallows, and frequently does. (England's own debtor-kings would later be matched by Spain's serial bankruptcies and France's; even the Fuggers were bled by Habsburg defaults.) The money that arms a war rarely controls it, and when the reckoning comes the sovereign survives and the lender does not. Graded FACT on the mechanism.
Who holds the risk when a king goes to war
The Bardi and Peruzzi are the counter-weight in the financing-war file: proof that bankrolling a war is not a one-way racket. For every financier who got rich on a conflict, there is one who was ruined when the sovereign he armed decided the debt was optional. That is exactly why, three centuries later, the men who financed William III’s invasion built an entirely new machine — the Bank of England and the National Debt — to convert a king’s personal, defaultable promise into a permanent public obligation secured on taxes. The whole architecture of modern state finance was, in part, an answer to the lesson Edward III taught the Florentines: make the debt the people’s, so the sovereign can never simply walk away from it. It belongs in Sowing Division because it shows the hinge the whole system turns on — who carries the risk of war, and who gets to hand it off.
Questions worth taking seriously
Didn't the king's default alone destroy the banks?
It was central, but probably not the only cause. The chronicler who blamed the crown was a Peruzzi insider, and his loan figures look inflated. Modern historians add overextension, trade disruption, and a wider mid-century crisis. So we grade the default as the decisive blow, not the single one — which is more defensible and still makes the point: a sovereign’s promise was never the safe asset the bankers treated it as.
Why does a medieval bank failure belong in a series about war profiteering?
Because it shows the other side of the ledger. Financing war looks like a guaranteed racket until you notice how often the sovereign stiffs the financier. That tension is the whole story of modern public debt: the Bank of England and the National Debt were invented to make a crown’s war-debt un-defaultable — by making it the public’s. Edward III is why that machine had to be built.
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