Prioritising China Never Saved a Bank from Collapse it Seems

History doesn’t repeat itself but it does rhyme is the Mark Twain inspired motto of this blog. Merrill Lynch, Lehman Brothers – they and others all prioritized China as a place to make money and not a few bankers have pushed out books and business guides to China in recent years. Yet they still at best have seen their global fortunes turn to dust and at worst failed and been wiped out.

And so it seems it was ever thus. In the 1330s the prestigious Florentine banking house of Bardi prioritised the China market. Francesco di Balducci Pegolotti, an agent of the Bardi banking house visited and wrote a manual for merchants travelling to Asia Minor and on to China in 1340 – La Pratica della Mercatura (The Principles of Commerce). Pages of the book are shown opposite – as you can see is much nicer than todays bullet pointed business guides (for MBA students with a poor grasp of history it was not available for the Kindle) . Pegolotti followed the Mongol trading routes to Gansu and on to Kambalik. His book was full of interesting tips for the commercial traveller including an exhaustive list of commodity prices (including spices, metals and, reflecting technological progress, waste paper for recycling) across the East and practical tips for the early businessman such as not shaving, letting your beard grow long, taking silver to exchange for paper money at the Chinese border, learning the Tartar language and not forgetting to pick up a woman to accompany you to China while still in Mongolia as well as (the still useful tip of) how to spot fake silk.

Did all this knowledge and prioritizing help the Bardi banking house to thrive? Sadly no – in 1343 the bank collapsed due to defaulters closer to home including King Edward III of England (left and a very sub-prime kind of monarch). One day the bank was talking up the China market as the next big thing thanks to their new found wealth and the next they were bankrupt as their creditors defaulted. See, history really does rhyme.

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