The 1345 Bardi and Peruzzi banking collapse

The Bardi and Peruzzi families were the original venture capitalists, except their startup was King Edward III’s attempt to hostile takeover France. They treated the English Crown like a blue chip investment, pouring gold into the Hundred Years' War.

Edward III, however, was the ultimate subprime borrower. When the ROI didn't hit fast enough, he simply defaulted on his massive overhead. Since the banks had zero diversification, the entire Florentine economy liquidated overnight.

It turns out sovereign immunity is just medieval corporate speak for I’m not paying you back.

Wait, so there was literally no way to repo a King's crown?

Good luck with that. In the 1340s, the legal system was basically whatever the guy with the biggest army said it was. There was no Chapter 11 for monarchs and definitely no repo man brave enough to knock on the palace doors.

The Bardi and Peruzzi were essentially lending against 'vibes' and future tax receipts from wool exports. When the wool market tanked and the war turned into a money pit, their collateral evaporated. You can't exactly seize a kingdom when the King is the one who signs the warrants.

How exactly does a massive international wool market just 'tank' like that?

Edward III wasn't just a bad borrower; he was a toxic market regulator. He "disrupted" the industry by creating a monopoly called the Staple, forcing all exports through one port just to squeeze every penny in taxes.

It’s like a CEO hiking prices by 50% to cover a failing side-hustle. The Flemish weavers—the primary "end-users"—couldn't afford the raw materials, so they stopped buying. Demand cratered.

The banks were holding "wool-backed securities" in a market where the guy running the exchange was sabotaging the product. It was a total supply chain suicide.

Couldn't the weavers just pivot to a different supplier to avoid Edward's taxes?

England was essentially the OPEC of wool. They had a complete corner on the high-end market. If you wanted the premium stuff for luxury garments, you had to deal with Edward’s state-sponsored cartel.

There were no alternative suppliers with that kind of scale. Switching to lower-quality local wool was like trying to build a smartphone with parts from a toaster. The Flemish were locked into a single-source supply chain that was being held hostage.

Edward knew he had them over a barrel. He was a monopolist who realized his customers had zero leverage—until he accidentally priced his own revenue stream into extinction.

So how did he fund a war with a dead revenue stream?

Edward’s "Plan B" was just a series of desperate payday loans and asset seizures. When the wool tax dried up, he didn't downsize; he just stopped paying bills and started "requisitioning"—royal-speak for stealing—supplies from his own subjects.

He treated England like a distressed asset. He took more loans from anyone still gullible, promising "future growth" from French territories he hadn't even conquered yet.

It was a "fake it 'til you make it" strategy. He kept the war on life support by burning his reputation until the banks realized they were funding a hallucination.