Financing the commune : government spending and private capital in Siena (1200-1250)

The connection between public spending and the ambitions of urban elites is a common topic in the historiography of the late Middle Ages. However, it is still unclear how city finances and private capital interacted before the use of sophisticated financial systems of the late 13 th to early 14 th centuries. The case study of Siena provides an analysis of many different archival sources that date back to the first half of the 13 th century. Data show a cycle starting with deficit spending by the city to support the war effort. The deficit was financed by the municipality with large-scale borrowing from wealthy citizens, later repaid with revenues from direct taxes. For the lenders, this was a very low-risk investment that yielded medium-low returns. However, loans to the city were more a political tool to secure a position of power, rather than just an economic opportunity.