In a war with Venice during the fourteenth century, the city of Genoa had raised money from citizens in return for promissory notes. At the end of the war, Genoa pledged the customs dues from its port to redeem the notes. In 1407 the creditors organized themselves into a bank, the Casa di San Georgio, or House of St. George, appointed eight directors to watch after their investments, collected taxes, and made loans to the state. The bank’s Renaissance palace can still be seen in the Piazza Caricmento.
The House of St. George was what Adam Smith called a bank of deposit. Coins from all parts of the world were deposited with the bank. The ownership of the deposits, called bank money, changed hands by bookkeeping entries at the bank in the presence of a notary, similar to the Bank of Amsterdam or Bank of Hamburg. Shares of stock in the bank also acted as a medium of exchange and changed hands through bookkeeping entries. The Genoese government paid interest on the public debt in three-year installments, and accounts of accrued interest that were payable also exchanged ownership in the capacity of money.
The House of St. George is credited with being the first bank to issue bank notes, not in specific denominations such as 100 or 1,000, but on an individual basis for large deposits. Each note was written out in hand, and the ownership could be passed on by endorsement. These handwritten notes could represent either a deposit of gold or silver, or shares of stock in the bank.
Genoa’s control of European finances was brief. Repeated bankruptcies of the Spanish crown may have scared the Genoese bankers, or perhaps the Dutch and English demanded more involvement in the shipment and distribution of the precious metals from the New World. By 1647 Dutch ships carried Spanish silver directly to the Low Countries.
