Credole and Tratte

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Credole were warehouse warrants for grain that circulated as money in sixteenth-century Sicily. At that time Sicily was a major exporter of grain and home to a major Mediterranean grain market. The ports of Sicily were the sites of vast grain elevators called caricatori. Landowners brought their grain to the caricatori and either sold it immediately or received warehouse warrants, or credole, if they wished to sell it later. Moneylenders accepted credole as security from landowners who needed advanced payment for grain.

The credola system came unraveled toward the end of the sixteenth century. Grain speculators purchased credole from landowners at heavy discounts, and some landowners felt swindled when the market for grain improved. Many preferred to let their grain rot rather than fall into the hands of speculators. Forgeries of credole entered into circulation, sometimes with the complicity of the magazinieri (the owners of the caricatori) and government officials. Nonexistent grain was sold and some magazinieri wound up in bankruptcy. The government tried to stem the tide of scandal by threatening to send offenders to the galleys, demanding declarations of sincerity, and forbidding futures trading. The government also banned contracts that involved wagers on the future price of grain.

During the same period Naples also issued a paper money instrument related to export trade. The viceroy of Naples sold tratte, which were licenses to export cereals and vegetables. The tratte were sold in advance and in much greater numbers than were needed, precipitating a depreciation in value. Venetian merchants claimed to have saved up to 32 percent in customs duties by making payment in depreciated tratte.

The Sicilian and Neapolitan experiences with credole and tratte show how natural it is for paper money to come into existence and that, while paper money comes in many forms, it always entails the same risk—overissuance.

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