The credit faith: the origins of the banking system in Naples

by Francesco Forte

With the credit faith, a financial instrument born in Naples in the sixteenth century, the foundations of the banking and monetary system that we all know were laid. In fact, if today the use of banknotes and current accounts belongs to normality, around 1400 the first private banking companies were born recently. At the same time, other institutions were created such as the "Monti", originally created to lend money to the state and which would later become public banks, and the "Monti di Pietà", Which were established to grant loans at advantageous conditions to people in difficulty and thus fight the scourge of usury: from these originated the first banks in history such as Monte dei Paschi di Siena and the same Banco di Napoli. At that time paper money did not exist and money was minted using precious metals such as gold, silver and copper. However, the transformation of this system began with the faith of credit from Naples.

The credit faith, the first "current account"

In the 9th century AD, what may be called banknotes were introduced in China for the first time. Made of deerskin, they were initially designed for those who needed to store and transport their reserves of precious metals. The deposits were made with a “goldsmith-banker” in exchange for the financial security which was then used as a real paper-money.

In 1500, however, such an instrument did not yet exist in Europe and coins made of gold or silver still posed several practical problems. In addition to forgery, the "shearing“, Or the fraudulent act of stealing precious metal from coins, which took on the strangest forms over time. Their production also involved huge costs for the state, also subject to the availability of metals.

The introduction of the credit faith in Naples marked a small revolution. It corresponded to a cash deposit made at one of the Neapolitan banks and the title could be transferred by endorsement, it was not much different in its original function from a modern check. Its diffusion was due to some peculiarities that made it different from other similar instruments existing at the time: it was in fact possible to specify the reason for payment and above all add subsequent deposits and withdrawals through named operations "Policies" or "policies". These movements were noted in faith, which thus became "mother faith“, Giving rise to a real current account.

It was a very advanced tool for the time and required the use of several professionals: from fedista, who materially filled in the title with the assistance of a aid-fedista, to the Pandectary which was responsible for verifying that the clauses relating to the payments made were satisfied.
There was also an employee who, given that the credit certificate could also be collected in banks other than the issuer, went personally to the various banks to carry out the "found"Through which they mutually regularized their relationship. This practice was actually banned by the government but it also helped spread the credit faith.

Credit faith of the Cassa di Corte di Bari
Credit faith issued by the Cassa di Corte di Bari in 1858 (Wikimedia)

The faith of credit, progenitor of the banknote

At a time when the transport of coins was expensive and dangerous, the faith of credit was a particularly useful tool. The practicality and ease of use of the title meant that it was used in the same way as current banknotes, in an era that did not yet know the use of paper money. The first European banknote it was in fact coined in 1666, when the Bank of Stuttgart issued the Daler, while in Naples over a century before, the faith of credit was used for almost any type of payment, from simple purchases to taxes. Over time they were in some way officially equated to money, if in fact following the pragmatic of the vicero dé Zunica of 1580 they had already assumed the value of a public deed, in 1804 a ministerial dispatch read:

[...] the faiths and policies noted as Royal Court faiths, whether from the Treasury, whether from any other Royal administration, will be promptly paid to the supplier, paid with the respective metal that they express. And the aforementioned wedding rings, since those of silver will be formed either with the deposit in actual silver or with silver findings, are either from the same bank account as private individuals, or from the account of the Royal Court in silver, or from other banks, removed any difference between card and cash […]

At the peak of their diffusion, credit rings could also be found beyond the borders of the Kingdom in other Italian cities and some of those preserved in theHistorical Archive of the Banco di Napoli they also circulated abroad before being cashed.
One of those that has come down to us certifies a payment that can certainly be defined as historical.
It is in fact the credit faith used by Raimondo di Sangro, prince of San Severo, to correspond to Giuseppe San Martino the sum of 50 ducats due to the Neapolitan sculptor for the realization of the famous one Veiled Christ.

The legal tender of the credit faith was finally abolished in 1874. Thus ended after more than three hundred years the story of a financial instrument that revolutionized the banking system.

Credit faith of Raimondo di Sangro
The faith of credit used by Raimondo di Sangro for the realization of the Veiled Christ (Wikimedia)

"The Historical Archive of Banco di Napoli" (2005, Banco di Napoli Institute - Foundation)
"Made in Naples" (Angelo Forgione, 2013, Magenes)

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