Chartering Capitalism: Organizing Markets, States, and Publics An Ancient Scheme: The Mississippi Company, Machiavelli, and the Casa di San Giorgio (1407–1720) ☆ ☆This article is part of a broader project. It was presented at seminars at Tulane University (2012), at McGill University (2013), at Duke University (2013), at the University of Utrecht (2014) and at the conference of the Economic History Society in a panel organized by Larry Neal (2014). I wish to thank the colleagues of these institutions for the invitations, the discussions, the criticisms and the support. Carlo Taviani Article information: To cite this document: Carlo Taviani . "An Ancient Scheme: The Mississippi Company, Machiavelli, and the Casa di San Giorgio (1407–1720) # #This article is part of a broader project. It was presented at seminars at Tulane University (2012), at McGill University (2013), at Duke University (2013), at the University of Utrecht (2014) and at the conference of the Economic History Society in a panel organized by Larry Neal (2014). I wish to thank the colleagues of these institutions for the invitations, the discussions, the criticisms and the support. " In Chartering Capitalism: Organizing Markets, States, and Publics. Published online: 11 Aug 2015; 239-256. Permanent link to this document: http://dx.doi.org/10.1108/S0198-871920150000029010 Downloaded on: 02 September 2015, At: 13:27 (PT) References: this document contains references to 0 other documents. 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The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. *Related content and download information correct at time of download. AN ANCIENT SCHEME: THE MISSISSIPPI COMPANY, MACHIAVELLI, AND THE CASA DI SAN GIORGIO (1407À1720)$ Carlo Taviani ABSTRACT German legal historians of nineteenth and twentieth centuries defined the main characteristics of the corporations and believed that one renais- sance institution, the Casa di San Giorgio at Genoa (1407À1805), was similar to the corporations of later centuries. This paper proposes to reverse this perspective: did the founders of early modern corporations know the financial model of the fifteenth century Casa di San Giorgio? $This article is part of a broader project. It was presented at seminars at Tulane University (2012), at McGill University (2013), at Duke University (2013), at the University of Utrecht (2014) and at the conference of the Economic History Society in a panel organized by Larry Neal (2014). I wish to thank the colleagues of these institutions for the invitations, the discussions, the criticisms and the support. Chartering Capitalism: Organizing Markets, States, and Publics Political Power and Social Theory, Volume 29, 239À256 Copyright r 2015 by Emerald Group Publishing Limited All rights of reproduction in any form reserved ISSN: 0198-8719/doi:10.1108/S0198-871920150000029010 239 240 CARLO TAVIANI The research shows the connection between the model of the Casa di San Giorgio and the Mississippi Company of John Law (1720), the famous financial scheme and bubble. The history of the Casa di San Giorgio was mainly transmitted through a passage of Machiavelli’s History of Florence (VIII, 29). The paper offers new biographical evidence that Law had been to Genoa and introduces sources connecting the genesis of Law’s scheme for the Mississippi Company in France with the model of the Casa di San Giorgio. Keywords: Corporation; John Law; Mississippi Company; Casa di San Giorgio; Machiavelli BACK TO THE MEDITERRANEAN: THE ORIGINS OF THE CORPORATIONS There is a long tradition of research into the birth of corporations. At the end of the nineteenth century, a number of German scholars theorized that the very earliest corporations were founded in the area of the Mediterranean during the Middle Ages and Renaissance. Some of these scholars were exponents of the Historische Rechtsschule: Lehmann (1895), Goldschmidt (1891), Gierke (1868À1913), Fick (1861),andSieveking (1898). A similar theory enjoyed popularity at the end of the 1960s (Mantran, 1970). Today the members of the German school are not very well known, with the exception of Max Weber. In fact, it was perhaps Weber’s overwhelming shadow that obscured their fame. Their approach was characterized by an attention to legal aspects and this enabled them to define a joint stock principle, that is, a set of legal characteristics by which an institution is recognized as a joint stock company. These scholars identi- fied this set of features by examining the English East India Company (1600À1874) and the Dutch East India Company (or VOC, 1602À1800). They then compared these characteristics to those found in earlier institu- tions. Lehman, Goldschmidt, Fick, and Gierke focused in particular on the Casa di San Giorgio (1407À1805), which had performed the functions of a central bank and holder of public debt (Gialdroni, 2011). They found a close resemblance between the Casa di San Giorgio and some of the most important financial institutions of the early modern period: the Bank of England (1694) and John Law’s Mississippi Company (1720), as well as the English and Dutch East Indies companies (Fick, 1861, p. 42; Goldschmidt, 1891, p. 291; Lehmann, 1895, pp. 4À22; Sieveking, 1898). But it was The Mississippi Company, Machiavelli, San Giorgio 241 precisely because they had derived their idea of a corporation from the early seventeenth-century examples that they concluded, in spite of these resemblances, that the Casa di San Giorgio was not a joint-stock company in the strict sense of the term. This view was also shared by Heinrich Sieveking who had begun studying the Casa di San Giorgio for his doctoral dissertation under the supervision of Max Weber in 1897. Sieveking’s aim was to determine whether the Casa di San Giorgio qualified as a joint-stock company and the inevitable conclusion he reached, in line with that of his teachers, was that while it resembled later institutions, the Casa di San Giorgio was not, strictly speaking, a corporation (Sieveking, 1898, p. 187). The characteristics we use to define a corporation today have evolved out of legal history, in other words, from a set of laws that were codified over time. Today such characteristics are embodied in terms like entity shielding (Hansmann, Kraakman, & Squire, 2005, 2006), capital lock-in, and tradable shares. The legal process that has formed our contemporary notion of the corporation dates back to the nineteenth century. But what came before that concerns more than just legal history. Several recent studies have warned of the risk of using a purely legal approach. Gelderblom, de Jong, and Jonker (2014) studying the “formative years” of the Dutch East India Company came to the conclusion that the VOC had acquired its legal features only gradually over time and that this process of adaptation took place for economic reasons. VOC’s organization has changed because of economic needs. “Legal form followed economic function, and not the other way around” (Gelderblom et al., 2014, p. 1073). Thus the “driving force” that mutated VOC’s structure was economics not law. The VOC was not a product of a legal model. Compared to studies like this, that prefer a historical approach, the work of German legal historians of late 19th century begins to look rather anachronis- tic. In fact, as early as the twentieth century several scholars had become aware of the inherent anachronism involved in the German legal historians’ searching for the origins of the stock company. Schmitthoff (1939, p. 79) defined the atti- tude of his German colleagues on the origin of corporations as a “post factum conclusion.” Despite their problems, the studies of the German 19th century legal historians! did have the merit of bringing northern and southern Europe close together and linking the Middle Ages and the Renaissance with the high finance of northern Europe in the seventeenth century. This paper is part of a larger project looking at the fortune of the model of the Casa di San Giorgio on early modern corporations, such as the VOC and the Bank of England. It aims to demonstrate the value of the questions posed by the German legal historians of late 19th century, if not their final conclusions. When resemblances are perceived to exist between financial 242 CARLO TAVIANI institutions we are justified in wondering whether knowledge of the older 1 institutions was still circulating at the time the later ones were founded. I demonstrate here that the model of the Casa di San Giorgio was familiar to the founders of several financial institutions. I shall look at a single case study, the connection between the foundation of John Law’s Mississippi Company (1720) and his familiarity with the model of the Casa di San Giorgio. I show that the economist John Law, author of one of the early modern period’s most important plans to transform public debt, was acquainted with the history and functioning of the Casa di San Giorgio and that this information about the Casa di San Giorgio aided Law in the implementation of his own plans.