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STEVE INSKEEP, HOST:

If you traced the history of banking, the centuries of financial developments that proceeded this awkward moment, your journey would surely require a stop in Florence. Long ago, the city's merchants got around the Catholic Church's ban on money lending and ended up bankrolling the Renaissance. NPR's Sylvia Poggioli takes us to an exhibit there.

SYLVIA POGGIOLI, BYLINE: With the Bible explicitly condemning usury, throughout medieval Christendom, the lending of money had been relegated to Jews, one of the few professions they were allowed to practice. But in Florence, ingenious merchants turned the city into a laboratory and invented the financial instruments of international trade. The exhibit "Money and Beauty" starts with a small coin - the florin, named after the city. It was first minted in 1252 and by the end of the century it was in use all over Europe. In the audio guide to the show, one of the curators of the exhibit, British writer Tim Parks, says the imagery on the gold coin is important.

TIM PARKS: On one side the lily of Florence, on the other St. John the Baptist - civic identity and religious belief fused in cash.

POGGIOLI: As illustrated in the exhibit, Florentines also invented the letter of exchange, whereby a banker would give a client, say 1,000 florins in one country with a pledge that the loan would be paid back in another within three months in the local currency. The banker made a profit on the exchange rate. Many of today's financial terms derive from 14th century Florence. Rischio, or risk, was the Tuscan word used to denote the costs incurred, or contingencies, of a loan. It was simply a euphemism for interest, a taboo for the Catholic Church. The word bank comes from banco, the bench on which itinerant merchants traded. An insolvent merchant would have his banco broken, hence bankruptcy. One of the many objects exhibited is an account book that illustrates the dangers of sovereign default, as when the English King Edward III reneged on big loans he'd gotten from Florentine bankers. Exhibit curator Tim Parks describes the impact of the new flow of wealth from this new standardized money as it pervaded every sphere of life.

PARKS: Suddenly, everything has a unit value and everything can be compared in numbers. A priest has a fee for a wedding and a funeral. Is that more or less than the cost of a flask of wine, or a prostitute?

POGGIOLI: The Catholic Church didn't like what was happening, considering usury a sin. But art historian Ludovica Sebregondi, who also curated the exhibit, says in the audio guide that some theologians began to make exceptions to the condemnation of money lending.

LUDOVICA SEBREGONDI: (Through translator) Amid this tension between opposing views, many bankers made donations for the salvation of their souls, devoting money to good works or art. It was said great sinners great cathedrals.

POGGIOLI: And in another hedge against burning in hell in eternal damnation, bankers filled those great cathedrals with great paintings and great sculptures. Through penitential patronage - the fear of God - Florence became the foundry of great art works and set the stage for the Renaissance. This exhibit was set up in Florence's majestic 15th century Palazzo Strozzi. James Bradburne, director of the exhibition space, says "Money and Beauty" has a particular resonance in today's financially troubled world.

JAMES BRADBURNE: It asks people to think about bankers' bonuses. It asks people to think about how bankers do make their money. How mysterious was a letter of credit? It was just like short-selling. It was like derivatives.

POGGIOLI: Many of the same questions, Bradburne says, that are being asked today.

BRADBURNE: Are the bankers the devils? Are they making illegitimate profits, or are they just good chaps, or we need the banking system? I mean, the dilemma is the same, and it devolves into a social and a moral dilemma, then as now.

POGGIOLI: What's less clear is whether today's bankers, perhaps less guilt-ridden than their Florentine forerunners, are willing to finance a new renaissance. Sylvia Poggioli, NPR News.

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