establishment called the Clearing-house (see p. 328), where
their clerks meet to effect their interchanges.Banking appears to have reached a high state of de velopment among the ancients. The bankers of Greece ([ Greek ]) and Rome (argentarii, mensarii, nummularii) exercised nearly ths same functions as those of the present day, except that they do not appear to have issued notes. They received money on deposit, to be repaid on demands made by cheques or orders, or at some stipulated period, sometimes paying interest for it, and sometimes not. Their profits arose from their lending the balance at their disposal at higher rates of interest than they allowed the depositors. They were also extensively employed in valuing and exchanging foreign moneys for those of Athens, Corinth, Rome, &c., and in negotiating bills of exchange. In general they were highly esteemed, and great confidence was placed in their integrity. The rate of interest charged by the bankers was sometimes very high, but that was not a consequence, as has been alleged, of their rapacity, but of the defective state of the law, which, as it gave every facility to debtors disposed to evade payment of their debts, obliged the bankers to guarantee themselves by charging a proportionally high rate of interest.[1] Banking reappeared in Italy upon the revival of civilization. The bank of Venice is reputed the first in date in the history of modern Europe ; but it did not become a bank, as we understand the term, till long after its foundation. Historians inform us that the republic being hard pressed for money, was obliged, upon three different occasions, in 1156, 1480, and 1510, to levy forced contributions upon the citizens, giving them in return perpetual[2] annuities at certain rates per cent. The annuities due under the forced loan of 1156 were, however, finally extinguished in the 16th century; and the offices for the payment of the annuities due under the other two loans having been consolidated, eventually became the Bank of Venice.[3] This might be effected as follows : The interest on the loan to Government being paid punctually, every claim registered in the books of the office would be considered as a productive capital ; and these claims, or the right of receiving the annuity accru ing thereon, must soon have been transferred, by demise or cession, from one person to another. This practice would naturally suggest to holders of stock the simple and easy method of discharging their mutual debts by transfers on the office books, and as soon as they became sensible of the advantages to be derived from this method of account ing, bank-money was invented. It will, however, be seen that the establishment thus described was at first no more than the transfer office of a National Debt, transfers of which were accepted at par in discharge of private debts, and it is indeed said that the funded debt transferred sometimes commanded an agio or premium above the current money of the republic. This establishment was ruined, after passing through many changes, by the invasion of the French in 1797.
The origin of modern banking may be traced to the money-dealers of Florence, who were in high repute as receivers on deposit and lenders of money in the 14th century ; and banking was indeed practised at Florence in the 13th if not in the 12th century. Mr Macleod writes (Banking, vol. i. 289)—
" The names of the Bardi, Acciajuoli, Penizzi, Pitti, and Medici were famous throughout Europe. In 1345 the Bardi and the Peruzzi, the two greatest mercantile houses in Italy, failed. Edward III. owed the Bardi 900,000 gold florins, which his war with France prevented him paying ; and the king of Sicily owed them 100,000 gold florins. The deposits of citizens and strangers with the Bardi were 550,000 gold florins. The Perum were owed 600,000 gold florins by Edward III., and 100,000 by the king of Sicily, and the deposits they owed their customers were. 350,000 gold ilorins. The fall of these two great pillars of credit involved that of multi tudes of other smaller establishments, and, says Villani (Istor. Fiorcnt., xii. 55), the community of Florence had never been thrown into such ruin and disorder before. And thereupon he breaks out against the folly of his fellow-citizens entrusting their money to the care of others for the love of gain. The city, however, recovered from this terrible disaster, and we find that between 1430 and 1433 seventy-six bankers at Florence lent 4,865,000 gold florins. At one time Florence is said to have had eighty bankers, but not any public bank."
The business of banking was not introduced into England till the 17th century, when it began to be undertaken by goldsmiths in London, who appear to have borrowed it from Holland. It was attacked as innovations commonly are. Mr Gilbart, in his History and Princij^les of Banking, quotes, from a pamphlet pub lished in 1676, entitled The Mystery of the New-Fashioned Goldsmiths or Bankers Discovered, a passage that may be reproduced,—
"Much about the same time the time of the civil commotion the goldsmiths (or new-fashioned bankers) began to receive the rents of gentlemen s estates remitted to town, and to allow them, and others who put cash into their hands, some interest for it if it remained but a single month in their hands, or even a lesser time. This was a great allurement for people to put money into their hands, which would bear interest till the day they wanted it ; and they could also draw it out by one hundred pounds or fifty pounds, &c., at a time as they wanted it, with infinitely less trouble than if they had lent it out on either real or personal security. The con sequence was that it quickly brought a great quantity of cash into their hands, so that the chief or greatest of them was now enabled to supply Cromwell with money in advance, on the revenues, as his occasion required, upon great advantages to themselves."
Sir Josiah Child also attacked " that innovated practice of bankers in London " in his New Discourse of Trade, though he subsequently became himself a banker ; and his house, Messrs Child & Co., of Temple Bar, and the house of Messrs Hoare, in Fleet Street, still survive as the only private banks now in existence in London which were established previous to the Bank of England.
Foundation and Early History of the Bank of England.
The Bank of England, which has long been the principal bank of deposit and circulation in Great Britain, and indeed in Europe, was founded in 1694. Its principal projector, Mr William Paterson, an intelligent Scotch gentleman, was afterwards engaged in the ill-fated Darien enterprise. Government being at the time much distressed for want of money, partly from the defects and abuses in the system of taxation, and partly from the difficulty of borrowing because of the supposed instability of the Revolutionary establishment, the bank grew out of a loan of 1,200,000 for the public service. The subscribers, besides receiving 8 per cent, on the sum advanced as interest, and 4000 a year as the expense of management, in all 100,000 a year, were incorporated into a society denominated the Governor and Company of the Bank of England. The charter is dated the 27th of July 1694, It declares, amongst other things, that they shall " be capable, in law, to purchase, enjoy, and retain to them and their successors, any moneys, lands, rents, tenements, and possessions whatsoever ; and to purchase and acquire all sorts of goods and chattels whatsoever, wherein they are not restrained by Act of Parliament ; and also to grant, demise, and dispose of the same.
- ↑ Boeckh s Political Economy of Athens, . 168, &c. ; Voyage d A nacJiarse, cap. 55, passim; Smith s Dictionary of Greek and Roman Antiquities, s. v. Argentarii, &c.
- ↑ The annuities of the forced loan of 1480 were to be suspended daring periods of war.
- ↑ Cleirac, Du Negate, de Id Ba.nque, &c. (Bordeaux, 1656), pp. 112--117, a scarce and valuable volume.
