EARLY HISTORY OF BANKING

THE WORD “BANK”
 Derives

from two words

– Banque (French) = chest (safekeeping) – Banca (Italian) = Bench (Transactions)  First (non-modern) Bank recorded in town of Ur in Chaldea – a temple where wealth was stored (safekeeping function only)  Before we move further let us see the historical perspective

The Birth of Money Lending
 Firstly

Jews, who traveled around Europe in the Middle Ages, began to specialize in money-lending and other practices which were forbidden in the Christians societies.  They exploited Christian’s community who finally realized that they being loose their blood due to money lenders on interest.

 Finally King Edward expelled Jews from England in 1290.  Oliver Cromwell allowed Jews back when the moral authority of the Church was damaged and the King was beheaded in 1649.

 The Birth of Safe Keeping of Coins and valuable started and
 Secondly, gold coins, jewels and other valuables were deposited with people who held strongboxes

These facilities were usually available with goldsmiths and money-lenders who were in actual goldsmith and custodians who also act as lenders. These goldsmiths secretly and without knowing they charge people for looking after their deposits and then use those deposits to make lending to needy people on interest. With the passage of time they became rich and powerful in the society.

Metal Money
 Gold

coins that were in circulation were heavy and uncomfortable to carry all around.  Money-lenders started issue credit notes to depositors who began to trade these notes between themselves in commercial transactions.  This give birth to Paper money and with the passage of time paper took over on

A

new form of interest developed when money-lenders realized benefits from such lending practice.  It became apparent going one step further by using depositors money for financial gains at no cost to themselves.  They invented money from absolutely nothing.  Started issuing credit notes with nothing to back them up and put them into circulation as interest-bearing debts.

 They calculated if they safely issue notes up to

ten times more than the gold deposits they held, because depositors would never ask for their deposits back all at the same time.  Principle of modern banking was thus established with the invention of money from nothing and put it into circulation as "running cash notes".  These notes become payment as real wealth that is produced from effort.  The money lenders sit back and become unbelievably wealthy and powerful class of the society and regarded as the hidden rulers of nations

 In England this system was officially

sanctioned in 1694.  The William of Orange overthrew legitimate King James II with financial backing and powerful Jewish financiers in Amsterdam.  He gave sovereignty of England to a group of financiers with a Charter allowing them to call themselves the Bank of England, a Charter for issuing nation’s money.

 Within minutes of signing the new Bank

officials were discussing the form of their "running cash notes." The same system was adopted in every country by a process of Masonic revolution and management.  Due to corrupt monetary practices by the group Bank of England nationalize in 1946 and control passed from a group of private individuals to the British Government .  This was the introduction of the Central Bank as the Monitory Control Authority of state.

HOW CENTRAL BANKS WORKED
 Stock in bank was bought with either coin or

“bills of exchequer” (I.e. government bonds)  All proceeds given to State in return for new interest-bearing bonds  Central Bank is given right to issue banknotes up to full extent of its capital – the banknotes could be exchanged for customer promissory notes (banknotes served as a currency)  Note: double-interest on bonds and promissory notes

EARLY HISTORY

   

National Banks less popular by 1820s, number of State Banks increased from 88 to 246 from 1811 to 1816 1837-38 “Free-Banking Acts” passed in Conn, Michigan, New York “Wildcat Banks” appeared in the West By 1861, 1600 State Banks 1860 need to finance Civil War led to a revival of National Banks

EARLY BANKING - EUROPE
    

Banking evolved from the needs of commerce Trade: market of luxury goods “make known” to Europe Italy – great location and accepted the trade merchants Venice – oldest and most important Italian seaport First institution resembling a modern bank appeared in Venice in 1135 A.D. “a Bankhouse”

Banks appeared in inland cities: – Milan: Military armor – Lucca: Silk – Florence: Cloth  By 1250 there were 80 Bankhouse in Florence alone  Banking was safe: (1) land/property used as collateral on loans (2) Pope excommunicated defaulters

 Italians

trade. :

pioneering for 4Paper used in

–Importer –Exporter –Import Bank –Export Bank –(like a Banker’s Acceptance today) –Note: Import Bank provides a service (fee income), export bank provides loan (interest income)

 All in all, Italy became banking center

because: –Location –Accepted merchants –Expertise –innovative

 Italians expanded Banking to Northern

Europe particularly in manufacturing centers (e.g. monasteries in Yorkshire – wool)  By 16th Century trade centered at (1) Bourse in Antwerp and (2) Royal Exchange on Lombard Street in London  Goldsmiths emerged as new bankers in Europe (expertise in coin and “bills of exchange” (personal promissory notes)

EARLY HISTORY
 FIRSTS

(cont.)

First payment of interest on deposits in 1804, Farmers Bank of Maryland First term loan made in 1934 by First National Bank of Boston to American Metals Climax Corporation (AMAX)

THE NEXT STAGE
 The

next stage of development for international finance is to get rid of cash altogether.  Then the token accountability of the bankers will disappear along with the cash.  Their intention is that everyone will have to use credit/debit cards for every type of commercial transaction.

 Electronic

technology, when used this way, and when it is not merely widespread but compulsory gave them complete control of every man, woman and child in the world.  If you cannot buy or sell food, petrol, clothes without a card you are completely at their mercy.  If you lose the card or it doesn’t work for some reason you will suffer until issued with a replacement

Who benefits from such a scheme?
 The

politicians or the bankers?  The Bank of England is in real, a hidden government of UK.  The Government and the politicians are merely puppets controlled by the Bank or more accurately, the international banking families.  No politicians dare to stand against these hidden and unelected rulers of the world.  They are so powerful that they could paralyze the entire financial market of

The Bank

A bank is a place or institution for transacting business in which money is taken from its customers on current accounts repayable to its customers' thorough Cheque and at the same time collects Cheque for its customers' accounts. Banks may also issue bank notes, and lend money to customers on current account (called overdraft), accept term deposits and make term loans and provide other financial services. Banks that issue notes are called Banks of Issue usually the Central Bank of the country is the

Commercial bank
 Commercial

bank is a type of financial intermediary and a type of bank.  It raises funds by collecting deposits from businesses and consumers via checkable deposits, savings deposits, and time (or term) deposits.  It makes loans to businesses and consumers. It also buys corporate bonds and government bonds. Its primary liabilities are deposits and primary assets

This is what people normally call a "bank". The term "commercial" was used to distinguish it from an investment bank. Since the two types of banks no longer have to be separate companies, some have used the term "commercial bank" to refer to banks which focus mainly on companies. In some English-speaking countries outside North America, the term "trading bank" was and is used to denote a commercial bank.

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