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The Banks That Bankrolled a King
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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 oldest lesson in sovereign war-finance: lend a king the means to fight and he can always settle in the one currency you can't refuse — default — leaving you and your depositors with the loss.
The risk of financing a war sits with the funder, not the fighter.
The super-companies: Europe's biggest banks, built on kings and wool.
By the early 1300s the Bardi and Peruzzi of Florence were among the largest enterprises in the world — multinational 'super-companies' deep in the wool trade, papal finance, and sovereign lending. Their scale made them indispensable to rulers needing cash faster than taxes allowed; lending to crowns was the most prestigious and most dangerous part of the business.
Financing a king's war: Edward III and the Hundred Years' War.
In the 1330s Edward III borrowed heavily from both houses to buy allies and field armies — the spending that opened the Hundred Years' War. The traditional totals (~900k florins to the Bardi, ~600k to the Peruzzi) come from the chronicler Villani, a Peruzzi partner, and modern scholars think them inflated. The exact figures are disputed; the heavy war-lending is not.
The default: the king pays in the one coin you can't refuse.
In the early 1340s Edward III stopped paying. A medieval king was judge in his own court — no power could compel a sovereign to honor a loan, and stiffing foreign bankers carried little domestic cost. Edward kept his crown, his war, and his conquests; the debt simply evaporated, transferred from the borrower who couldn't be made to pay to the lenders who couldn't make him.
The collapse — a decisive blow, not the only one.
The Peruzzi failed in 1343, the Bardi by 1346, and the royal default was central — agreed. Villani blamed the crown outright, long the textbook account. But later scholarship adds overextension, disrupted wool/grain trades, and a broader mid-century downturn (soon capped by the Black Death). So the default helped destroy the banks (the decisive blow), but 'the king alone killed them' overstates a multi-causal collapse. Even the era's mightiest financiers mistook a sovereign's promise for a safe asset.
How this page is graded.
- FACT: the Bardi and Peruzzi as Europe's leading banks; their heavy lending to Edward III for the opening of the Hundred Years' War; his early-1340s default; the Peruzzi (1343) and Bardi (1346) collapses.
- PROBABLY TRUE / fenced: that the default destroyed them — it was the decisive blow, but overextension and a wider commercial crisis contributed; 'the king alone killed them' overstates it.
- Flagged as likely inflated: the traditional 900,000/600,000-florin loan totals, which trace to the partisan chronicler Villani.
Why it matters.
The Bardi and Peruzzi are the counter-weight in the financing-war file: bankrolling a war is not a one-way racket — the financier carries the risk the sovereign makes. That is why, three centuries later, the men who financed William III's invasion built a new machine (the Bank of England and the National Debt) to convert a king's defaultable personal promise into a permanent public obligation secured on taxes. Modern state finance was, in part, the answer to the lesson Edward III taught the Florentines: make the debt the people's, so the sovereign can never walk away.
Help us fill these lines.
- OpenA settled figure for the banks' true exposure to Edward III, against Villani's inflated totals.
- OpenA full weighting of default versus overextension versus the mid-century trade crisis in the collapse.
- OpenThe depositors' story: who, beyond the partners, lost savings when the houses failed.