**3. Multiple resources of credit for investment**

"Let's be frank: banks always help you if you have an umbrella and it isn't raining" (Mr. Lucio Lanieri, entrepreneur). In the irony of Mr. Lanieri's statement we find condensed a collective concern about the contradictory financial role of the local banking system. As the main financial intermediaries in the region, local banks put people's surplus of capital at risk in order to grant money to those with a shortage of capital. The 'side-effect' of this very simple mechanism is that borrowing money may become extremely difficult when banks regard this operation too risky, that is, when a loan has no guaranteed return. Since risk is always present in this kind of transaction, it follows that the request for collateral becomes necessary to protect the investment. Moreover, to reduce risk, the transaction is limited in place and time, that is, by limiting the loans to a specific span of time and to applicants residing locally.

A worker who quits his/her job and wishes to set up a workshop is inevitably caught into the contradiction of that mechanism. Without personal property as collateral, a request for investment capital is unlikely to be granted. The *Artigiancassa* and the *confidi* through all their financial products may assist the small entrepreneur, but the application for funds has its own rules and limitations. First, it might not be accepted; second, the value of the loan while varying according to the financial product requested - may not entirely fulfil the business owner's individual necessities. This is particularly evident in the case of the replacement or expansion of the pool of machinery. For one thing, normally the loan is barely enough to purchase one single machine; for another, once the loan is granted, the business owner cannot submit a second loan application until s/he has repaid the first or until a specified time has elapsed from the date of his/her prior loan.

Small-Scale Entrepreneurship in Modern Italy –

variations by several other entrepreneurs.

he knows that we are willing to work hard".

damage and late delivery of products and components.

An Ethnographic Analysis of Social Embeddedness in the Access to Capital and Credit 245

According to his children, Gervaso was quite used to selling on credit. He did not have a choice but to do so, because few artisans could afford to pay for machinery in cash or through bank loans. It was an accepted social practice that new entrepreneurs would start paying for equipment out of their severance pay and a small family loan, and the rest of the sum through deferred payments. Fabio, though, Gervaso's elder son, nostalgically notices that "in those times things were different from now. It was all based on *fiducia* (trust), basically because people knew each other personally, and because there was a lot of work for everybody. Now things have changed". Yet, it is hard to assess to what extent this practice has declined at present; in fact, at another moment of our conversation, Fabio admitted that he still sells on credit to artisans he knows personally, "artisans that are hard workers". I had heard the same adagio before, and it was later repeated to me with few

Weeks later after this interview, I came to know personally three young former workers (two siblings and their brother-in-law), who run a metalworking workshop. They described to me the purchase of five second-hand machines from the Rizzi's in a way that reminded me of the 'old-fashioned' credit arrangement Fabio had talked about. In order to set up their workshop, they began to pool their minimal severance pay and family loans, and bought machinery by making an initial payment in cash. Then Fabio agreed to give them a one-year deferred payment, before they would pay back the rest of the sum by monthly instalments. All this was stipulated through a verbal agreement, because, as one of the three young partners said to me, rehearsing the aforementioned adagio: "He knows who our family is;

As one walks into this tiny and chock-full workshop, it is hard not to stumble on a metal component or brush against a machine such as the one which is squeezed in the centre of the shop. This numerically controlled machine was purchased directly from the maker, through its leasing agency. Machines are increasingly acquired in the following way: the leasing agency purchases the machine which is then leased to the artisan; once the artisan has finished making payments on the machine it becomes his/her property. Economically the leasing agency controlled by the machine-tool producer is advantageous for its competitive rates of interest, sometimes lower than those offered by the Artisan Fund. However, the payback period offered is shorter and therefore the artisan is compelled to

work intensively in order to meet the repayment schedule stipulated in the contract.

The last form of financial help that I am going to illustrate refers to the diverse forms of aid that artisans may receive from client-firms to start a business or, more precisely, to acquire machinery. This practice is favoured by the artisan firm's statutory nature, *Società in nome collettivo* or *società individuale*, which can be translated in English as 'collective capital' and 'individual capital', respectively. In fact, unlike industrial factories, which are generally limited-liability companies or public share companies with limited financial obligations, artisan firms bear unlimited liability for their losses. In other words, should the company become insolvent, the business partners are personally liable. This applies not only in relation to credit insolvency, but also in relation to the stiff penalties acquired for the

Unquestionably such help is not disinterested: it varies according to the degree of control that the client-firm is determined to exercise on the workshop. The case of Mr. Colciago may

In a nutshell, these are the contradictions and the structural constraints of the credit systems. In the next section I will elaborate more on this subject by pointing out the elusiveness of informal practices embedded in the credit system at the local level. Here, rather, I would like to stress the fact that when it comes to considering the start-up phase of small enterprises, the importance of financial resources provided nationally and locally - by the Artisan Fund and by the local banks respectively - is overrated. These are, indeed, institutions of paramount importance to sustain the growth of firms that *already* operate in the market. Yet, as unanimously reported by my informant-entrepreneurs, this same institutional credit system is not equally eager to grant loans to workers who are going to quit their jobs and embark on a new and uncertain career as business owners. This occurs not only because, in general, workers lack collateral security – with the exception of their own house - but also because a great number of workshops often start out as semi-informal enterprises, and for this reason are not eligible for any kind of financial support stemming from either public funds or bank loans.

Yet, there are other viable resources. One of these is severance pay6, which invariably becomes the very first source of capital investment for workers. Normally this is not *per se* sufficient for starting up a business, but, if combined with other monetary resources, it may be enough to purchase machinery and set a workshop in motion. Mr. Cedretti could do so by combining his severance pay with a family loan; Mr. Colciago added his severance pay to a bank loan in order to buy a new and expensive machine; Mr. Faloni bought some second hand machines using his severance pay, and purchased others on credit from a second generation commercial enterprise run by three siblings (the Rizzi's). This twelve-employee company, which sells (second-hand and new) machinery and equipment for industrial enterprises, has been an important source of credit since its creation in the late 1960 for several generations of small entrepreneurs. Several spoke about the Rizzi's in fond terms, for the help they provide. In addition, other than providing credit and technical advice about the purchase of machinery, Rizzi's enterprise is being used as a market information centre by its customers. By virtue of their daily contacts with sales agents, entrepreneurs, artisans, technicians, and workers, the Rizzi's have acquired a special familiarity in the local industrial district. In a way, they have turned into monitoring sensors of the local metalworking sector. They may come to know who is left stranded by a sudden machine failure, who is overloaded with work orders, who is facing financial problems and so forth. Both small workshop owners and client-firms rely on them to identify and assess the reliability of potential transaction partners with whom the Rizzi's may have direct or close contact. Others would call in or show up to get the telephone numbers of subcontractors for an urgent delivery or to get hold of client-firms that may contract out some work. The firm was founded by Mr. Gervaso Rizzi (1913-1997), a former worker of a large manufacturing factory who quit his job when the factory was relocated during the Second World War, in order to escape bombings. After working a few years as an electric engines sales agent, he and his brother Adelmo set up a commercial enterprise in their home town. They only worked as business partners for a couple of years. In 1967 Adelmo left to set up a similar commercial enterprise in a nearby town. At the beginning, Gervaso marketed both metalworking and woodworking machinery, but later, the increasing mechanical specialization of the area induced him to trade and sell only the former.

<sup>6</sup> Severance pay is the indemnity paid by a company to a worker who is laid off or resigns. It is calculated on the basis of his/her wages and seniority.

In a nutshell, these are the contradictions and the structural constraints of the credit systems. In the next section I will elaborate more on this subject by pointing out the elusiveness of informal practices embedded in the credit system at the local level. Here, rather, I would like to stress the fact that when it comes to considering the start-up phase of small enterprises, the importance of financial resources provided nationally and locally - by the Artisan Fund and by the local banks respectively - is overrated. These are, indeed, institutions of paramount importance to sustain the growth of firms that *already* operate in the market. Yet, as unanimously reported by my informant-entrepreneurs, this same institutional credit system is not equally eager to grant loans to workers who are going to quit their jobs and embark on a new and uncertain career as business owners. This occurs not only because, in general, workers lack collateral security – with the exception of their own house - but also because a great number of workshops often start out as semi-informal enterprises, and for this reason are not eligible for any kind of financial support stemming from either public

Yet, there are other viable resources. One of these is severance pay6, which invariably becomes the very first source of capital investment for workers. Normally this is not *per se* sufficient for starting up a business, but, if combined with other monetary resources, it may be enough to purchase machinery and set a workshop in motion. Mr. Cedretti could do so by combining his severance pay with a family loan; Mr. Colciago added his severance pay to a bank loan in order to buy a new and expensive machine; Mr. Faloni bought some second hand machines using his severance pay, and purchased others on credit from a second generation commercial enterprise run by three siblings (the Rizzi's). This twelve-employee company, which sells (second-hand and new) machinery and equipment for industrial enterprises, has been an important source of credit since its creation in the late 1960 for several generations of small entrepreneurs. Several spoke about the Rizzi's in fond terms, for the help they provide. In addition, other than providing credit and technical advice about the purchase of machinery, Rizzi's enterprise is being used as a market information centre by its customers. By virtue of their daily contacts with sales agents, entrepreneurs, artisans, technicians, and workers, the Rizzi's have acquired a special familiarity in the local industrial district. In a way, they have turned into monitoring sensors of the local metalworking sector. They may come to know who is left stranded by a sudden machine failure, who is overloaded with work orders, who is facing financial problems and so forth. Both small workshop owners and client-firms rely on them to identify and assess the reliability of potential transaction partners with whom the Rizzi's may have direct or close contact. Others would call in or show up to get the telephone numbers of subcontractors for an urgent delivery or to get hold of client-firms that may contract out some work. The firm was founded by Mr. Gervaso Rizzi (1913-1997), a former worker of a large manufacturing factory who quit his job when the factory was relocated during the Second World War, in order to escape bombings. After working a few years as an electric engines sales agent, he and his brother Adelmo set up a commercial enterprise in their home town. They only worked as business partners for a couple of years. In 1967 Adelmo left to set up a similar commercial enterprise in a nearby town. At the beginning, Gervaso marketed both metalworking and woodworking machinery, but later, the increasing mechanical

specialization of the area induced him to trade and sell only the former.

calculated on the basis of his/her wages and seniority.

6 Severance pay is the indemnity paid by a company to a worker who is laid off or resigns. It is

funds or bank loans.

According to his children, Gervaso was quite used to selling on credit. He did not have a choice but to do so, because few artisans could afford to pay for machinery in cash or through bank loans. It was an accepted social practice that new entrepreneurs would start paying for equipment out of their severance pay and a small family loan, and the rest of the sum through deferred payments. Fabio, though, Gervaso's elder son, nostalgically notices that "in those times things were different from now. It was all based on *fiducia* (trust), basically because people knew each other personally, and because there was a lot of work for everybody. Now things have changed". Yet, it is hard to assess to what extent this practice has declined at present; in fact, at another moment of our conversation, Fabio admitted that he still sells on credit to artisans he knows personally, "artisans that are hard workers". I had heard the same adagio before, and it was later repeated to me with few variations by several other entrepreneurs.

Weeks later after this interview, I came to know personally three young former workers (two siblings and their brother-in-law), who run a metalworking workshop. They described to me the purchase of five second-hand machines from the Rizzi's in a way that reminded me of the 'old-fashioned' credit arrangement Fabio had talked about. In order to set up their workshop, they began to pool their minimal severance pay and family loans, and bought machinery by making an initial payment in cash. Then Fabio agreed to give them a one-year deferred payment, before they would pay back the rest of the sum by monthly instalments. All this was stipulated through a verbal agreement, because, as one of the three young partners said to me, rehearsing the aforementioned adagio: "He knows who our family is; he knows that we are willing to work hard".

As one walks into this tiny and chock-full workshop, it is hard not to stumble on a metal component or brush against a machine such as the one which is squeezed in the centre of the shop. This numerically controlled machine was purchased directly from the maker, through its leasing agency. Machines are increasingly acquired in the following way: the leasing agency purchases the machine which is then leased to the artisan; once the artisan has finished making payments on the machine it becomes his/her property. Economically the leasing agency controlled by the machine-tool producer is advantageous for its competitive rates of interest, sometimes lower than those offered by the Artisan Fund. However, the payback period offered is shorter and therefore the artisan is compelled to work intensively in order to meet the repayment schedule stipulated in the contract.

The last form of financial help that I am going to illustrate refers to the diverse forms of aid that artisans may receive from client-firms to start a business or, more precisely, to acquire machinery. This practice is favoured by the artisan firm's statutory nature, *Società in nome collettivo* or *società individuale*, which can be translated in English as 'collective capital' and 'individual capital', respectively. In fact, unlike industrial factories, which are generally limited-liability companies or public share companies with limited financial obligations, artisan firms bear unlimited liability for their losses. In other words, should the company become insolvent, the business partners are personally liable. This applies not only in relation to credit insolvency, but also in relation to the stiff penalties acquired for the damage and late delivery of products and components.

Unquestionably such help is not disinterested: it varies according to the degree of control that the client-firm is determined to exercise on the workshop. The case of Mr. Colciago may

Small-Scale Entrepreneurship in Modern Italy –

An Ethnographic Analysis of Social Embeddedness in the Access to Capital and Credit 247

In concluding this section I would like to mention the case of Mr. Antonio Bracco, as it presents another form of credit relation disguised under the form of production equipment lending. Antonio is a multi-skilled worker who learned his trade by working in three different factories before starting his own business. He began to work at the age of thirteen as an unsalaried apprentice in a small wood-working workshop. He disliked his job. He would have preferred work in the metal working workshop. Luckily, after a few months he managed to get hired at a metal working firm thanks to his father's friendship with the manager of this factory's mould-making department. After a few years, eager to acquire more skills, he wanted to switch job and work on a different machine. So he was hired as a milling machine operator in a different mould-making factory, recently set up by four former workers who had been workmates of Mr. Tonelli. Soon after, he found a better paying and more interesting job in a Milan-based factory (Valvecom) which had just moved the R&D department to a small town in Brianza. The firm - specialized in mechanical pneumatic valves - employed mainly engineers and technical designers, but at the time it was seeking a few skilled workers, among which one milling machine operator, to hire on the shop floor where the pneumatic valve prototypes were built and tested, before being eventually manufactured in Milan. Antonio was hired by virtue of an affinal relationship with the manager of the R&D department, a woman whose paternal uncle was married to Antonio's paternal aunt. It was through this kin tie that the manager came to know Antonio. In the mid-1970's, Valvecom began a process of work reorganisation which consisted in reducing costs and capacity by subcontracting the production of its non-standardized components to specialized workers. As this production was the outcome of costly research, the firm was seeking workers from whom discretion and loyalty was required. Thus, the manager inquired whether Antonio and another fellow worker would consider the idea of working for Valvecom as independent subcontractors. They were supposed to machine components, such as cylinders of a particular size and other non standardized pieces, according to specific plans produced in the design office of Valvecom. According to Antonio, he and his co-worker were chosen by the manager precisely for being *persone di fiducia*, that is, trustworthy people, as well as "good workers". When they accepted Valvecom's offer and consequently resigned, the factory provided them with the necessary support to set up the workshop, for neither Antonio nor his friend could possibly mobilize sufficient capital to purchase the essential equipment. Yet, in this transaction between Valvecom and its two former workers no direct monetary exchange occurred in relation to the provision of machinery. In fact, workshop equipment – formerly used by the same workers as employees - was formally lent by the factory to Antonio and his partner in exchange for a special price for the machining operations. Valvecom also rented out to Antonio and his partner 350 sqm of free space in its compound to accommodate the

workshop. Rent was paid in cash, but at a lower than average market price.

The two former workers were years later joined by their spouses, who took care of the sales department and the accounts. For about a year and a half they worked exclusively for Valvecom, but then, as the workshop began to receive work orders from other factories, they hired three apprentices and bought a few second-hand machines on credit from the Rizzi's. In the late early 1990's, though, their main client-firm lost its leading market position as a valve maker and eventually went bankrupt. As a result, collaboration with this factory was put to an end. Mr. Bracco's partner left and found employment in a factory as a worker; as for Antonio and his wife, they decided to stay in the business. They redeemed the former

help to clarify the point. When he was still a worker, he read a want ad in a local newspaper writing that a local firm was looking for a third party grinder. He called up and set up an appointment with the owners. Basically his life changed dramatically after that meeting. He learned that this mid-size factory - run by two brothers - made moulds and punchers for the manufacturing of pharmaceutical tablets. At the time they were trying to phase out the grinding process, which they eventually subcontracted to Mr. Colciago and other small workshops. They would guarantee a constant supply of work all year around, except in August - traditionally the vacation period in the industrial sector. Persuaded by their proposal, he quit his job. In partnership with a worker he used to work with, Mr. Colciago bought the grinding machine that the two brothers had recommended and placed it in his basement. This machine was purchased directly from the manufacturer, an acquaintance of these two brothers and thanks to this connection he got a substantial discount on the market price. The machine was purchased with their severance pays and with a loan they obtained by putting up Mr. Colciago and his wife's house as collateral at a local bank. Thus the help he received from his first client-firm was not properly of a financial type; it took the form of technical advice, but eventually it had positive financial repercussions on him and his workshop. At the same time, though, the client-firm was using its strategic position to dictate Colciago's pace of work, and to keep him away from other client-firms. It took him quite some time to loosen the rope that tied him firmly to the firm.

Mr. Colciago also engaged in a not so unusual form of barter with another client-firm, by means of which he came into possession of a crucial (i.e. high use value ) machine tool in exchange for labour. More precisely, the machine was received as an advance payment for a work order – a kind of transaction adopted by other firms as well. Money did not obviously enter as a medium of exchange, but it did as a measure of value. The two parties bargained until they could reach an agreement on the principle of equivalence between the monetary value of the machine and the quantity of Mr. Colciago's labour that would be exchanged for the machine's agreed upon value. As he had hoped, such a *short-term* transaction in terms of credit, eventually resulted in a *long-term* working relationship.

While Mr. Colciago's case displays a certain elusiveness of credit relationships, and their variable effect on subcontracting relations, the setting up of the workshop of Tonelli, another informant of mine, represents one of the most extreme examples of complete control over the workshop as a result of direct financial help from the client-firm, the Lanieri Brother's Ltd, a well established local factory producing furniture accessories and household fixtures. Mr. Tonelli had decided to quit his job after an altercation with the factory owner's son. He sought another job and for this reason contacted Mr. Lucio Lanieri, whom he knew personally. Instead of hiring him, Mr. Lanieri proposed setting up a mould making workshop together. Which they did in about a month. Tonelli's role was logistical and technical. He helped find the physical space to set up the workshop and he rapidly procured experienced labour force by poaching skilled workers from his former factory. In the meantime, the Lanieri brothers immediately bought the essential machinery to set workshop production in motion. Their good reputation as entrepreneurs and their well known wealth played an important role in getting the machinery up and running in the workshop in such a short time. In addition, they advanced capital to Tonelli in order for him to buy a stake - 30 percent -in the company. The remaining 70 percent was held by the Lanieri brothers making them the majority stakeholders and *de facto* the proprietors of the workshop.

help to clarify the point. When he was still a worker, he read a want ad in a local newspaper writing that a local firm was looking for a third party grinder. He called up and set up an appointment with the owners. Basically his life changed dramatically after that meeting. He learned that this mid-size factory - run by two brothers - made moulds and punchers for the manufacturing of pharmaceutical tablets. At the time they were trying to phase out the grinding process, which they eventually subcontracted to Mr. Colciago and other small workshops. They would guarantee a constant supply of work all year around, except in August - traditionally the vacation period in the industrial sector. Persuaded by their proposal, he quit his job. In partnership with a worker he used to work with, Mr. Colciago bought the grinding machine that the two brothers had recommended and placed it in his basement. This machine was purchased directly from the manufacturer, an acquaintance of these two brothers and thanks to this connection he got a substantial discount on the market price. The machine was purchased with their severance pays and with a loan they obtained by putting up Mr. Colciago and his wife's house as collateral at a local bank. Thus the help he received from his first client-firm was not properly of a financial type; it took the form of technical advice, but eventually it had positive financial repercussions on him and his workshop. At the same time, though, the client-firm was using its strategic position to dictate Colciago's pace of work, and to keep him away from other client-firms. It took him

Mr. Colciago also engaged in a not so unusual form of barter with another client-firm, by means of which he came into possession of a crucial (i.e. high use value ) machine tool in exchange for labour. More precisely, the machine was received as an advance payment for a work order – a kind of transaction adopted by other firms as well. Money did not obviously enter as a medium of exchange, but it did as a measure of value. The two parties bargained until they could reach an agreement on the principle of equivalence between the monetary value of the machine and the quantity of Mr. Colciago's labour that would be exchanged for the machine's agreed upon value. As he had hoped, such a *short-term* transaction in terms of

While Mr. Colciago's case displays a certain elusiveness of credit relationships, and their variable effect on subcontracting relations, the setting up of the workshop of Tonelli, another informant of mine, represents one of the most extreme examples of complete control over the workshop as a result of direct financial help from the client-firm, the Lanieri Brother's Ltd, a well established local factory producing furniture accessories and household fixtures. Mr. Tonelli had decided to quit his job after an altercation with the factory owner's son. He sought another job and for this reason contacted Mr. Lucio Lanieri, whom he knew personally. Instead of hiring him, Mr. Lanieri proposed setting up a mould making workshop together. Which they did in about a month. Tonelli's role was logistical and technical. He helped find the physical space to set up the workshop and he rapidly procured experienced labour force by poaching skilled workers from his former factory. In the meantime, the Lanieri brothers immediately bought the essential machinery to set workshop production in motion. Their good reputation as entrepreneurs and their well known wealth played an important role in getting the machinery up and running in the workshop in such a short time. In addition, they advanced capital to Tonelli in order for him to buy a stake - 30 percent -in the company. The remaining 70 percent was held by the Lanieri brothers making them the majority stakeholders and *de facto* the proprietors of the

quite some time to loosen the rope that tied him firmly to the firm.

credit, eventually resulted in a *long-term* working relationship.

workshop.

In concluding this section I would like to mention the case of Mr. Antonio Bracco, as it presents another form of credit relation disguised under the form of production equipment lending. Antonio is a multi-skilled worker who learned his trade by working in three different factories before starting his own business. He began to work at the age of thirteen as an unsalaried apprentice in a small wood-working workshop. He disliked his job. He would have preferred work in the metal working workshop. Luckily, after a few months he managed to get hired at a metal working firm thanks to his father's friendship with the manager of this factory's mould-making department. After a few years, eager to acquire more skills, he wanted to switch job and work on a different machine. So he was hired as a milling machine operator in a different mould-making factory, recently set up by four former workers who had been workmates of Mr. Tonelli. Soon after, he found a better paying and more interesting job in a Milan-based factory (Valvecom) which had just moved the R&D department to a small town in Brianza. The firm - specialized in mechanical pneumatic valves - employed mainly engineers and technical designers, but at the time it was seeking a few skilled workers, among which one milling machine operator, to hire on the shop floor where the pneumatic valve prototypes were built and tested, before being eventually manufactured in Milan. Antonio was hired by virtue of an affinal relationship with the manager of the R&D department, a woman whose paternal uncle was married to Antonio's paternal aunt. It was through this kin tie that the manager came to know Antonio. In the mid-1970's, Valvecom began a process of work reorganisation which consisted in reducing costs and capacity by subcontracting the production of its non-standardized components to specialized workers. As this production was the outcome of costly research, the firm was seeking workers from whom discretion and loyalty was required. Thus, the manager inquired whether Antonio and another fellow worker would consider the idea of working for Valvecom as independent subcontractors. They were supposed to machine components, such as cylinders of a particular size and other non standardized pieces, according to specific plans produced in the design office of Valvecom. According to Antonio, he and his co-worker were chosen by the manager precisely for being *persone di fiducia*, that is, trustworthy people, as well as "good workers". When they accepted Valvecom's offer and consequently resigned, the factory provided them with the necessary support to set up the workshop, for neither Antonio nor his friend could possibly mobilize sufficient capital to purchase the essential equipment. Yet, in this transaction between Valvecom and its two former workers no direct monetary exchange occurred in relation to the provision of machinery. In fact, workshop equipment – formerly used by the same workers as employees - was formally lent by the factory to Antonio and his partner in exchange for a special price for the machining operations. Valvecom also rented out to Antonio and his partner 350 sqm of free space in its compound to accommodate the workshop. Rent was paid in cash, but at a lower than average market price.

The two former workers were years later joined by their spouses, who took care of the sales department and the accounts. For about a year and a half they worked exclusively for Valvecom, but then, as the workshop began to receive work orders from other factories, they hired three apprentices and bought a few second-hand machines on credit from the Rizzi's. In the late early 1990's, though, their main client-firm lost its leading market position as a valve maker and eventually went bankrupt. As a result, collaboration with this factory was put to an end. Mr. Bracco's partner left and found employment in a factory as a worker; as for Antonio and his wife, they decided to stay in the business. They redeemed the former

Small-Scale Entrepreneurship in Modern Italy –

An Ethnographic Analysis of Social Embeddedness in the Access to Capital and Credit 249

The first subscribers to the local cooperative bank were 28 male family-heads, all residing in the same town where it still stands today: 15 peasants, 6 wage-workers, 6 artisans (1 mason, 1 carpenter, and 4 weavers), and 1 costermonger. The parish priest and another peasant man acted as legal witnesses to the subscription procedures. In the original text of the deeds (dated 29 April 1903) regarding the constitution of the bank, the hand-written document shows the extent to which Catholicism provided the ideological basis for the drawing up of the contract (indeed carried out under the guidance of the local parish priest), and consequently, it gives us a hint of the role this institution was going to play in the community. The opening article states that "the association has the purpose of improving the religious, moral and economic aspects of the associates. Any political end is excluded". The fourth article sets the cultural and spatial boundaries of the association by stating that only individuals who were honest, moral, and expressly "not against the Catholic Church, and that reside in the town or in the surroundings", could join the *Cassa rurale*. Net profits would go to build up the reserve funds of the cooperative, but should the association make profits exceeding its needs, money would be given away as charity or for public purposes (art. 9). Other than stressing Catholicism, the text of the document addressed the importance of the territory and its community, within which the institution would operate and accomplish its social aims. Thus, the cooperative bank - created to provide some measures of economic protection for land-tenants, workers and artisans, particularly resulting from the widespread problem of indebtedness - did by all means seek to conflate moral and institutional goals. Not only did it promote the economic emancipation of the lower classes within a context of social solidarity to minimize class conflicts; but it also became the main

source of credit for other emerging cooperatives, in need of money for their activities.

aimed to increase and sustain local business and financial speculation is eschewed.

There is another point to consider and that may give us a hint of the level of embeddedness of local credit institutions. Being ideologically well defined, such cooperative institutions were not easily accessible to everybody. Indeed, there were some families, for example, who voluntarily excluded themselves from the cooperative system because of their socialist ideas, while others did not get access to membership for reasons I was unable to find in documents. The exclusion must certainly have caused discontent. An indication of this is given by the embittered account of Mr. Virginio Ratti (entrepreneur and founder of the local artisan association), who disliked the personalistic style adopted by the local cooperative bank that he regarded as an institution run by "a clique of Catholic bigots" only interested in helping the businesses of their own friends. His account refers to the years after the war; however, given that at the time the cooperative was still very small and close to its original type of organization, I gather that his view may well reflect the opinion other people had during the early decades of its creation. Interestingly, similar complaints can be still heard today toward the same bank, despite its large expansion. It is hard to prove the reliability of these remarks, nonetheless I find them interesting. The bank's historically and deeply local roots, its commitment to operate in this territory and the personal connections between the board and the local entrepreneurs may inevitably cause tensions with specific groups and individuals. Such tensions might denote the level of intimacy that got established between the bank and some parts of its community, and might reveal the conflicting interests at stake. Yet these characteristics have kept the bank away from risky transactions on derivatives and other hazardous financial instruments in the global market. Investments are

partner's shares as well as the used machinery and moved their workshop to a nearby town, in a formerly brick-making plant where two large hangars had been divided up and rented out to small workshops.
