By the beginning of the fifteenth century Florence had become the wealthiest city in Italy, and probably Europe. Italian merchants had dominated the boom in European commerce of the twelfth and thirteenth centuries, and Florentines gained control in the cloth industries and the banking sector. Florentine wool and silk textiles were of the highest quality; Florentine bankers were so ubiquitous that their currency, the gold florin, became the standard in Europe.

From the eleventh century onward Florence was a self-governing republic, which at the time really meant a form of oligarchy. Authority rested with nine Priori, collectively known as the Signoria, whose names were drawn by lot from a selected group of guild members and who served for terms of two months, during which they lived in the Palazzo della Signoria and conducted the business of the republic. The Priori were advised by two collegiate bodies (also selected by lot from a restricted group): the twelve Buonuomini (good men) held office for three months, and the sixteen Gonfalonieri (standard-bearers) held office for four months. The constantly revolving nature of the governing bodies was designed to prevent any one faction or individual from gaining excessive power. It did not provide for continuity in day-to-day activities, which was left to a highly skilled group of professional civil servants. Florence was able to resist the ambitions of various strong men vying to become its monarchical prince until 1434 when one of its own, Cosimo de' Medici (1389-1464), became de facto ruler of the city while maintaining the formal trappings of the proud Florentine republic.

Florentine economic life centered on its twenty-one trade guilds, formed at the beginning of the thirteenth century. The political system was so interwoven with the guilds that, starting in 1282, guild membership was a prerequisite for public office. This rule excluded the landed aristocracy from political life in favor of the merchants and bankers, who achieved unprecedented riches. The seven major guilds included cloth merchants (Calimala), bankers (Cambio), wool producers (Lana), and silk producers (Seta). The fourteen minor guilds encompassed various artisan groups, such as the stonemasons and woodcarvers (Maestri di Pietra e di Legname). Guild membership was strictly limited to the owners and managers of the wool shops, banks, or artisans' shops, to the exclusion of laborers -- especially numerous in the textile industry -- who formed the majority of the Florentine population.

The ruling elite was not unmindful of the need to protect the labor force's welfare; one of the most important functions of the many lay confraternities that arose in Florence (and for which guild membership was also required) was to provide large-scale charity in times of economic crisis, plague, or famine.