Hard times require brave solutions. In times of economic hardship, it is important to look for ethical and moral solutions to address social problems and alleviate material poverty.
One such example is the phenomenon of the montes pietatis, or the mounts of piety, a series of medieval Christian banking institutions that provided an innovative response to difficult times.
Mounts of piety were small credit institutions conceived in late medieval Italy to support the poor in their personal and family difficulties. One of the characteristics of medieval Europe was the scarcity of money, which disproportionately affected the poor. Many were not able to meet even their most primary needs, another defining trait of the turn of medieval and modern eras.
This weakness of purchasing power gave rise to the development of the credit system on the Italian Peninsula. It was later exported by the Italians themselves throughout Europe, creating the basis of the modern banking system. Consumer credit therefore arose from the need for consumer support. This credit system was composed of both Christian and Jewish institutions, the clients of which were the "less poor poor," unlike the poorer ones to whom the practice of almsgiving was reserved.
As already mentioned, the small loan was primarily used to buy small things necessary for everyday existence, including food. In the last centuries of the Middle Ages, the vast majority of citizens of Italian cities were involved in the practice of consumer credit. Although the transactions were small in sum, the total turnover of the whole system was overwhelming.
Together with the development of the practice of credit, a big theological, moral, and economic problem appeared: namely, the usury. The typical interest rate rose to 30%-50%, which created a kind of debt spiral that families could not get rid of. The church was obviously opposed to usury, but this fact did not prevent its development. At most, it made usury more difficult.
With the development of the Franciscan mendicant orders, the problem of usury again became the object of the theological debate. The preachers of the time did not limit themselves only to reproaching the usurers' mistakes, but also proposed and developed a “Christian” credit system. In the mid-fifteenth century, the so-called mounts of piety were created. These were small credit institutions with little or no interest whose purpose was to lift people from poverty without pushing them back into it – that is, to lend small amounts to the needy without the risk of them falling back into debt spirals.
One of the best-known promoters of this idea was Blessed Bernardino da Feltre, a Franciscan priest who dedicated the last years of his life to the concept of the mounts. “This terrible people never sleep, always works, do not celebrate feasts,” wrote Blessed Bernardino, noticing the tireless work of the usurers. “They are similar to the devil who never sleeps but always hurts.”
The mounts of piety were based on the operational model of the Jewish banks, which, in turn, were based on the earlier Christian model.. The idea was to lend only to those who were really in need and who swore to make good use of the borrowed money. It was always small sums for consumption given on loan against pawns. Investment credit was strongly prohibited. The first mount was founded in Perugia in 1463, after which others popped up like mushrooms, especially in the northern part of the Peninsula. The initial idea was to lend money without any interest, but it turned out that it was necessary to make the customer pay the cost of managing the credit. The idea of Blessed Bernardino was to make the service continuous, efficient, and rational. Therefore, the mounts had to hire professional staff and pay them well. The capital of the mounts of piety was not to be used for operational costs. Thus, the mounts began to request a moderate interest (about 5% per annum), but not without opposition. This was still considerably lower than the interests charged by other credit institutions.
Some mounts made a distinction between their customers. For example, in Parma, the poorest (for whom the almsgiving obligation was valid) did not have to pay any interest, while the less poor (a majority) did.
As for the pledge on which the money was lent, an object of double the value or at least 130% of the sum borrowed was requested. From the accounting books, we know that among the pawns were mainly clothing and fabrics, furniture, kitchen tools, footwear, and occasionally books. The poor houses of that time did not have much to offer as a pledge. As it has already been noted, the credit obtained from the mounts was not to be invested. This was guaranteed both by law and by the low amount of the sums borrowed.
Between the years 1462 and 1562, as many as 214 mounts of piety were established mainly in the northern regions of the Peninsula, that is, in Veneto, Lombardy, Tuscany, and Romagna. Among the best known that were founded in that period, we see the Monte dei Paschi di Siena, founded by the General Council of the Republic of Siena in 1472. Monte dei Paschi exists to this day, making it the oldest bank in operation and the most long-lived in the world.
Over time, the mounts expanded their functions to becoming a sort of "common fund of the city welfare system". For example, Monte d’Ogna became the depositary of the archiepiscopal soup kitchen and of the seminary. In Florence, the mount took on several functions, becoming a public deposit bank.
The institution of the mounts of piety became an integral part of the landscape of Italian cities. Their seats, indicated by the affixed signs, decorated with biblical scenes, statues of saints, (above all, the Pietàs), and quotes from the Gospel such as, “Look after him,” from the parable of the Samaritan, made clear what kind of service took place inside and aroused generosity among those who were to deposit their money in the mount. The iconography represented the mount itself by the pile of earth and coins on the hand of a Franciscan friar (the founder of the particular institution).
The phenomenon of the montes pietatis is important for us not only as object of historical studies, but above all, as a tangible example that demonstrates that it is possible to deal concretely and Christianly with the problem of credit and banking, which is particularly important in the addressing the economic and social situation that we are about to face.