Private Lending in an Alpine Region during the Eighteenth Century: A Family of Merchant-Bankers and Their Credit Network

Abstract

The literature on early modern credit markets emphasizes both the social embeddedness of credit relationships and the role of notaries. To enhance our understanding of how credit markets functioned in a “less-developed” economy, we investigate the local lending activities of a merchant-banker family that operated at the intersection of formal and informal credit. A combination of economic rationality and social motivations in lending decisions emerges. The credit network of this family firm provides a portrait of the social structure of the local community, where the central position of a few trusted notaries and members of the business and political elite highlights the prevalence of relationships of power and favor over impersonal market exchange. The predominance of informal credit reveals a preference for loans made outside of notarial circuits. Nonetheless, notaries were crucial in lending to borrowers of lower social status and with weak ties, thus helping the liquidity of these merchants to “trickle down” into local society.