This paper was originally prepared for presentation to the seminar series on social and institutional change at the Robert Wood Johnson Foundation, Princeton, N.J., organized by Paul DiMaggio. I appreciate the insightful comments of Art Stinchcombe on the earlier draft.

ABSTRACT: This paper describes the evolution of financial risk instruments in Europe before 1600. It discusses the evolution of marine insurance and its displacement of the sea loan, as well as early examples of forward transactions, options, and futures contracts. In contrast to business, households had only limited access to financial risk instruments–mainly in the form of life-contingent annuities.

currently in revise & resubmit status at American Journal of Sociology word count = 21,871 without footnotes; 28,371 with footnotes 1 The authors gratefully acknowledge a series of small grants from the Social Science Division of the University of Chicago, which helped in the collection of data, and a substantial grant from the Hewlett Foundation, which funds John Padgett’s and Walter Powell’s “Co-evolution of States and Markets ” program at the Santa Fe Institute. SFI is the intellectual and research home of this project; we deeply appreciate its support over numerous years. David Sallach

The authors gratefully acknowledge a series of small grants from the Social Science Division of the University of Chicago, which helped in the collection of data. The Santa Fe Institute enthusiastically gave intellectual and research support to the first author. SFI is a creative environment in which to work. David Sallach and Nick Collier, of the Social Science Research Computing Center at the University of Chicago, offered the kind gift of their services in helping to organize the data into relational data-base form. We have received helpful comments on an earlier draft of

This paper was originally prepared for presentation to the seminar series on social and institutional change at the Robert Wood Johnson Foundation, Princeton, N.J., organized by Paul DiMaggio. I appreciate the insightful comments of Art Stinchcombe on the earlier draft. ORGANIZATIONAL GENESIS, IDENTITY AND CONTROL:

ABSTRACT: This paper describes the evolution of long-term debt and equity finance in medieval and early modern Europe. The main issuers of long-term debt were landowners and municipalities. The paper discusses the evolution of debt secured by land and the use by municipal borrowers of annuities and ‘funded debt ’ (securitization). The paper then describes the various forms of equity finance and how they addressed the corporate governance problem.

The basic thesis of this article is that the essential origins of the modern ‘financial revolution ’ were the latemedieval responses, civic and mercantile, to financial impediments from both Church and State that reached their harmful fruition in the later thirteenth and early fourteenth century. That ‘financial revolution’, in terms of those national institutions for government borrowing and international finance, involving negotiable securities, in the form of annuities or rentes, and bills of exchange, is generally thought to have originated in eighteenth century England; but as James Tracy has earlier shown it first took place, on a fully national basis, in the sixteenth-century Habsburg Netherlands. The major obstacle from the Church was of course the usury doctrine, and more accurately the final evolution of this doctrine in Scholastic theology and canon law, along with the intensification of the campaign against usury from the early thirteenth century. The major obstacles that the State provided, with the spreading stain of ever more disruptive international warfare from the 1280s, were the nationalistic bullionist philosophies and related monetary-fiscal policies (to finance warfare) that together hindered the international flow of specie in later medieval Europe. For public borrowing, one must begin with the contentious policies of Venice, Florence, and other Italian city states in basing their finances on forced loans, which did pay interest, and thus with the usury controversies that erupted, over not just such loans, but the sale of interest-bearing debt certificates in secondary markets. The

Abstract: We explore the strategic dynamics of the price setting protocol used by the money-changers guild to set the daily domestic exchange rate between gold and silver coins in early Renaissance Florence. We frame our analysis as a repeat, non-constant sum game of indeterminate length characterized by voluntary participation and asymmetric information. A dynamically stable Nash equilibrium obtains and guild profits maximized if only a few informed players participate, suggesting that the Florentine protocol was an effective price setting mechanism. It is not surprising, therefore, that the protocol was in force for at least 100 years and that some of its characteristics are echoed in modern financial markets.