Money and Promises

June 10, 2024
Zannoni, the executive vice-chairman of Prada’s board of directors, debuts with an edifying examination of how debt has shaped banking throughout history. Arguing that “the true nature of modern money... is debt,” Zannoni traces the origins of modern banking to 12th-century Pisa, where a coin shortage prompted merchants to compensate business partners with ownership rights to debts in transactions brokered by banks. Tracing how debt “became the currency of the state,” Zannoni explains how the Britain Exchequer’s centuries-long practice of recording financial transactions on sticks known as “tallies” had by the early 18th century transformed the pieces of wood from financial ledgers into promissory notes that represented the state’s financial obligations to its lenders. Elsewhere, Zannoni discusses how Spain partially funded its American empire by exploiting regional variations in the exchange rate for the international ecu de marc (an “ancestor of the Euro”) and how founding father Robert Morris established the Bank of North America in the early 1780s to create a national currency tied to bank debts rather than coins. Zannoni does his best to elucidate the complicated financial maneuvers, the nuances of which sometimes remain hazy even as the author succeeds in explaining their historical significance. Admirers of David Graeber’s Debt will find this a worthy complement. Photos.