This source, "Men of Wealth" by John Flynn has the background to the episode Armstrong describes. I know of no source that gives the specific date of the uprising.
No canvas designed to depict the dawn of capitalism would be
complete without a brief place for what was perhaps the first
authentic strictly capitalist depression in Europe, produced largely
by the operations of these new bankers. The episode is generally
known as the failure of the Bardi and Peruzzi banks in Florence
and it produced consequences not unlike those attending the fail-
ure of Jay Cooke in America or Baring in England or the Credit
Anstalt in Vienna in 1931.
Florence had carried far the organization of her producing
energies. Wool textiles was one of her important products. The
homes of the townspeople and the villagers were turned into sweat-
shops to which the merchants sent the raw wool to be processed in
the homes. While the Church and her doctors thundered against
interest and profit, the village priests read pastoral letters threat-
ening the workers with a denial of the sacraments if they resisted
the exactions of the wealthy usurers of Florence who dominated
the system.
A continuous supply of raw wool on the one hand and wide
markets on the other became essential to the city's economic
safety. This probably led the Florentine banker-traders to Eng-
land, where the best wool was produced. Two of the greatest
Florentine houses, the Bardi and the Peruzzi, began extensive
operations in England in the latter part of the thirteenth and the
beginning of the fourteenth century. They made large loans first
to Henry III and later to Edward II and Edward III, but mainly
to the latter. In return they got the privilege of trading in England,
which was otherwise closed to foreign merchants, and the privilege
of buying wool for the Florentine market.
It is these loans to Edward III which are called by historians
the cause of the failures of the Bardi and Peruzzi. But this is a
very considerable oversimplification. By 1337, when Edward III
launched that bootless century of struggle known as the Hundred
Years' War by invading France, he owed the Bardi 62,000 pounds
and the Peruzzi 35,000 pounds. But he immediately made enor-
mous additional loans to finance his ambitious design to seize the
crown of France from Philip VI. By 1343, when the first phase of
that quixotic adventure came to an end, he is said to have owed
900,000 pounds to the Bardi and 600,000 pounds to the Peruzzi.
Sapori, a recent student of this historic episode, thinks the sums
exaggerated and that they were nearer 500,000 and 400,000 pounds
each.
Edward had promised to pay the principal and interest of these
loans in coin, and his undertaking was guaranteed by the Arch-
bishop of Canterbury and the Bishop of Lincoln. So eager was
the rash Edward for these sums that, upon completing the arrange-
ment, Edward gave to "the merchants of the Bardi society" 30,000
pounds sterling, to the "merchants of the Peruzzi society," 20,000
pounds sterling, and "in consideration of the great help given the
king," 500 marks to a Peruzzi agent in England and, for the same
reason, 500 marks to the wife of another agent and to the wife of
a Bardi agent. Wives of two other agents got 200 pounds each. It
sounds as if two great American banking houses managed an
American loan to the government of Chile on a 20 per cent basis,
while the partners in the two banking houses got a several-hundred-
thousand-dollar bonus from the Chilean president, who also dis-
tributed the largess among the South American agents of the
banking houses and their wives. Thus, commercial bribery had
already made its way into the investment banking business.
But all this time Florence, rushing forward in the first incident
of uncontrolled expansion of the capitalist era, was moving deeper
and deeper into debt. Merchants were making profits and deposit-
ing them with the Bardi, the Peruzzi, the Mozzi, the Frescobaldi,
the Scali, and also investing in various bond issues underwritten
and managed by these houses, but chiefly by the Bardi and
Peruzzi. Competition with their wool industry was growing from
England and the Flemish weavers. But as they produced ever
more they were ceaselessly seeking to expand their markets. Flor-
ence, an economic unit like modern England, imported raw ma-
terials and exported finished products. She enjoyed her expansion
through the strategic activities of her rich bankers, who grew
wealthy milking European monarchs and princes and at the same
time using their loans as weapons to force Florentine products into
those old custom-sealed European countries and cities.
One market, among others, was of great value to Florence — the
city of Lucca. This city was a commercial battleground between
the merchants of Florence and Pisa. And out of this situation it
became the victim of an episode that depicts strikingly the inheri-
tance of violence that deformed the early struggles of primitive
capitalism. A band of German mercenaries seized Lucca and offered
to sell it to the city of Pisa. Pisa agreed to pay 60,000 golden florins
and made a down payment of 13,000 florins, which it was destined
to lose when Florence armed to balk this sale of its valued market
to its chief rival. Later certain Florentine merchants and bankers
— including beyond doubt Bardi and Peruzzi — offered the German
mercenaries 8o,oco florins. They would thus control Lucca as a
market for their products and own its customhouses and its tax
revenues. It was as if a few leading merchants and manufacturers
of Philadelphia were to propose to buy Pittsburgh from a mutinous
regiment of the New York National Guard that had seized the
latter city and was now peddling it around the East. But Florence,
still ruled by the remnant of the old Guelph spirit, protested against
this immoral purchase of a city's population like so many slaves.
Finally the captors of Lucca knocked the city down to a Genoese
merchant-adventurer named Gherardino Spinola for 30,000 florins.
The outcome of this was war between Florence and Pisa.
The first effect of the war was a demand for war loans, which
the banking houses were called upon to float. And this came at a
time when Edward III was marching his armies around Flanders
and making new appeals for larger advances from the Bardi and
Peruzzi.
The competition of the English and Flemish wool weavers had
been undermining the trade of Florence much as the competition
of the Carolinas cut into the business of the New England textile
industry and as the competition of the East cut into the textile
industry of Manchester. Production in Florence fell off. The streets
were filled with the unemployed. Merchants who had large deposits
with the Bardi, the Peruzzi, the Frescobaldi, and others were call-
ing for their funds. Some of the smaller bankers failed. Indignation
against all the bankers was rising. Florence faced a crisis not
unlike that which faced America in 1933 or Germany in 1932.
Nothing could save the great bankers but a moratorium. Disturb-
ing rumors floated in from Flanders, where Edward's generals were
having but small success. In this crisis this old city, where the
popular party had always been strong, with its active popolo
minuto, which hated the Ghibellines not only because they repre-
sented the philosophy of the economic royalist, but of external
interference and domination, submitted to the device of dictator-
ship. In 1342 that fantastic adventurer, Walter of Brienne, a
Frenchman who styled himself the Duke of Athens, was made
dictator through the machinations of the bankers. He proclaimed
a moratorium on private debt for three years, which saved them.
But, having come into power, he plotted immediately for com-
plete mastery. He suspended payment of the interest on the public
debt and planned gradually to extinguish it by progressive repu-
diation, which promptly brought upon his head the wrath of the
bankers. In 1343 the distress of the city was so great, the fortunes
of the war so melancholy, the anger against the dictator so general
that the people poured into the streets in an unrestrained uprising.
They looted the palace of the Bardi, taking it is said, valuables to
the amount of 30,000 florins. The dictator was compelled to resign
and flee from the city. Certain Neapolitan bankers who had loans
outstanding in Florence called them. The news came of Edward's
reverses that brought the Hundred Years' War to its first pause in
1343, and Edward delivered the crowning blow by defaulting upon
his loans. Immediately the Peruzzi bank failed. And within a year
the great Bardi bank crashed. They carried with them most of the
bankers of Florence. The disaster shook all Europe and produced
in those cities where capitalist organization had proceeded to any
length, such as Venice and Genoa, the most depressing conse-
quences. Excessive debt, overexpanded industry, concentration of
money and power and wealth, the extravagance of governments, the
destructive power of war had made for Europe its first great capi-
talist depression in the modern era.