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The history of banking began with the first prototype banks, that is, the merchants of the world, who gave grain loans to farmers and traders who carried goods between cities. This was around 2000 BC in Assyria, India and Sumer.
- 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...
Banking has been around in one form or another throughout recorded history, as issuers of currency and as stores of wealth. Even before currency emerged, starting with the first minted coins, and then adding what were known as banknotes, paper currency, banks still were around to manage the accumulation of assets.
- Ken Stephens
Some authorities, relying upon a broad definition of banking that equates it with any sort of intermediation activity, trace banking as far back as ancient Mesopotamia, where temples, royal palaces, and some private houses served as storage facilities for valuable commodities such as grain, the ownership of which could be transferred by means of...
In 1781, an act of the Congress of the Confederation established the Bank of North America in Philadelphia, where it superseded the state-chartered Bank of Pennsylvania founded in 1780 to help fund the war. The Bank of North America was granted a monopoly on the issue of bills of credit as currency at the national level.
Apr 25, 2023 · The concept of banking can be traced back to ancient civilizations, where moneylenders would lend money to farmers and traders. The first banks emerged in ancient Mesopotamia around 2000 BCE, where they provided loans to farmers and traders. Later on, the Greeks and Romans developed similar banking systems, providing loans to merchants and traders.
Oct 27, 2022 · The first bank was born around 2000 BCE in the ancient empires of Egypt, Assyria, India and Sumeria, with the exchanging of goods. The ancient marketplace used various purchasing methods, including grain banks, barter systems and metal weights to measure value. Grain banks: Grain banks allowed harvesters to deposit grain in bulk.
