The building is on the site of the orchard (orto) of a Benedictine convent; in the orchard was a small oratory dedicated to Saint Michael. In 1240 the Florentine government appropriated the nuns' orchard to make way for a grain market that became known as Orsanmichele, a contraction of Orto San Michele (the orchard of Saint Michael). To protect grain vendors from the elements, the Signoria decided to build a brick structure with arcades that opened onto the street. An image of the Virgin was frescoed on one of the piers of this first building and was believed miraculous. In 1291 a lay confraternity, the Compagnia della Madonna di Orsanmichele, was formed to sing hymns to the Virgin and administer the considerable charitable donations that the miraculous image attracted. The members of the confraternity shared space with the grain sellers on the ground floor of Orsanmichele. A charming illumination from a manuscript account of the grain activities at Orsanmichele vividly depicts the market's chaotic condition during the famine of 1328-1329, with the image of the Virgin of Orsanmichele serenely presiding over the confusion while a confraternity official stands by. In 1304 a large fire devastated the area around Orsanmichele, severely damaging the grain loggia and the image of the Virgin. A new image was installed and repairs were made on the building, but these proved inadequate and, in 1336, the Signoria ordered the construction of what would amount to a new "grain palace," putting the powerful silk guild (Seta) in charge of the operation, which was financed by grain taxes.
In July 1337 the foundation stone was laid for the new Orsanmichele. Two years later the guilds sponsored legislation that made Orsanmichele something of an official guild center by decreeing that the seven major guilds, plus the five most important minor guilds, should be charged with decorating twelve exterior pilaster faces of the loggia of Orsanmichele with images of their patron saints. A thirteenth pilaster was assigned to the one political party, the Parte Guelfa (Guelph party), and a fourteenth pilaster face was eventually assigned to an additional guild. The pilaster images reflected on the honor of the guilds and were the site of special celebrations on the feast days of the saints.
In 1347 the miraculous image of the Virgin in Orsanmichele's ground floor was updated with a magnificent new painting by Bernardo Daddi, a pupil of Giotto. The new painting copied the design of the old image, seen in the Domenico Lenzi manuscript, but made it more resplendent. The decision to rebuild Orsanmichele probably reflected the concern in the 1330s with adequately feeding a record-size population of about 100,000. All of this changed in 1348 with the Black Death, a particularly virulent outbreak of bubonic plague that decimated the European population, killing about 50,000 Florentines alone. The abrupt and drastic drop in population lessened the importance of the grain market while increasing the wage-earning power of the surviving population, which had much less need of the charity dispensed by the confraternity of Orsanmichele. In turn the confraternity, already the most important organization of its kind in Florence, was further enriched by a flood of bequests from so many deaths. The surplus capital seems to have fueled construction on the building, as well as the commission of a splendid marble tabernacle with gilding and inlaid colored glass and stones, created by Andrea Orcagna in 1352-1359 to enshrine Daddi's Madonna. The building's religious and guild functions gained in importance over the grain market. Thus, starting in the 1360s the open ground floor loggia, where the grain used to be sold, was enclosed, turning the space into a proper oratory church as it still is today.
Since the legislation of 1339, the guilds had been slowly building elaborate niches in the pilasters assigned to them and installing statues there. By the beginning of the fifteenth century, however, only a few of the guilds had fulfilled their obligation, prompting the Signoria to pass a new decree in 1406 requiring each guild to complete its niche within ten years, or lose its spot. Though it would be well over ten years before all the niches were filled, the legislation spurred an exciting boom in sculptural activity, which is the subject of this exhibition