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Many scholars trace the historical roots of the modern banking system to medieval and Renaissance Italy, particularly the affluent cities of Florence, Venice and Genoa. The Bardi and Peruzzi families dominated banking in 14th century Florence, establishing branches in many other parts of Europe. [1]
- Banking Is Born
- Banking in The Roman Empire
- European Monarchs Discover Easy Money
- Adam Smith Gives Rise to Free-Market Banking
- Merchant Banks Come Into Power
- J.P. Morgan Rescues The Banking Industry
- The End of An Era, The Birth of The Fed
- World War II and The Rise of Modern Banking
- Banking Goes Digital
- The Bottom Line
The barter system of exchanging goods for goods worked reasonably well for the earliest communities. It prove problematic as soon as people started traveling from town to town in search of new markets for their goods and new products to take home. Over time, coins of various sizes and metals began to be minted to provide a store of value for trade....
The Romans, who were expert builders and administrators, extricated banking from the temples and formalized it within distinct buildings. During this time, moneylenders still profited, as loan sharksdo today, but most legitimate commerce—and almost all government spending—involved the use of an institutional bank. According to the World History Enc...
Eventually, the monarchs who reigned over Europe noted the value of banking institutions. As banks existed by the grace—and occasionally, the explicit charters and contracts—of the ruling sovereignty, the royal powers began to take loans, often on the king’s terms, to make up for hard times at the royal treasury. This easy access to financing led k...
Banking was already well-established in the British Empire when economist Adam Smith introduced his invisible hand theory in 1776. Empowered by his views of a self-regulating economy, moneylenders and bankers managed to limit the state’s involvement in the banking sector and the economy as a whole. This free-market capitalismand competitive banking...
Most of the economic duties that would have been handled by the national banking system, in addition to regular banking business like loans and corporate finance, soon fell into the hands of large merchant banks. During this period, which lasted into the 1920s, the merchant banks parlayed their international connections into enormous political and ...
J.P. Morgan & Co. emerged at the head of the merchant banks during the late 1800s. It was connected directly to London, then the world’s financial center, and had considerable political clout in the United States. Morgan & Co. created U.S. Steel, AT&T, and International Harvester, as well as duopolies and near-monopolies in the railroad and shippin...
Ironically, Morgan’s move ensured that no private banker would ever again wield that much power. In 1913, the U.S. government formed the Federal Reserve Bank (the Fed). Although the merchant banks influenced the structure of the Fed, they were also pushed into the background by its creation. Even with the establishment of the Fed, enormous financia...
World War II may have saved the banking industry from complete destruction. For the banks and the Fed, the war required financial maneuvers involving billions of dollars. This massive financing operation created companies with huge credit needs that, in turn, spurred banks into mergersto meet the demand. These huge banks spanned global markets. Mor...
The most significant development in the world of banking in the late 20th and early 21st centuries has been the advent of online banking, which in its earliest forms dates back to the 1980s but really began to take off with the rise of the internet in the mid-1990s. The growing adoption of smartphones and mobile banking apps further accelerated the...
Banks have come a long way from the temples of the ancient world, but their basic business practices have not changed much. Although history has altered the finer points of the business model, a bank’s purposes are still to make loans and to protect depositors’ money. Even today, where digital banking and financing are replacing traditional brick-a...
Nov 18, 2022 · Early bankers would literally set up benches and tables at city squares, or shops if they were more consolidated, during market days or at fairs, and promote their financial services. The knowledge of early banking lay in the understanding of exchange rates, which could fluctuate based on a plethora of factors.
Jun 21, 2023 · Middle Ages and the Rise of Modern Banking. As we transition into the Middle Ages, we witness the emergence of a more structured banking system. The Templars, a medieval Christian military order, played a crucial role in developing early forms of ‘checks’. Concurrently, Italy was gaining prominence for its banking institutions.
The charter of the Second Bank of the United States (B.U.S.) was for 20 years and therefore up for renewal in 1836. Its role as the depository of the federal government's revenues made it a political target of banks chartered by the individual states who objected/envied the B.U.S.'s relationship with the central government.
Nov 3, 2011 · Banks have been around since the first currencies were minted, perhaps even before that, in some form or another. Currency, particularly the use of coins, grew out of taxation. In the early days ...
According to their paper—”The Evolution of Banking in the 21 st Century: Evidence and Regulatory Implications ” —total deposits in the fourth quarter of 1995 were 49% of GDP, with 20% of ...
