A.

History of Banking

Reading in Chunks
Banking has a long tradition. / Bankers in Mesopotamia / kept gold and silver for people / and lent it
to others. / Ancient Rome and Greece / had similar banking systems to the ones we have today./

During the Middle Ages / Italy was the centre of European banking. / Jewish traders / emerged as the
first bankers / and became very successful businessmen./ Florence and Venice / became known as / two
cities in which many people earned their money through banking. / The Medici family / dominated Florence /
for over two centuries / and set up Europe’s largest bank in the 15th century./

The first worldwide banking crisis / emerged during the Great Depression in 1929./ Many citizens /
lost their jobs and their savings / as banks crashed. In 1933 / American president Franklin D. Roosevelt /
signed a bill in which the government guaranteed the savings of depositors / if a bank went bankrupt.

In 2008 a banking crisis / hit America / and spread throughout the world. / Banks gave homeowners
mortgages / without checking their financial backgrounds./ House prices / began to drop / and banks lost a
lot of money./ Governments in many countries / had to give them money / and prevent them from
becoming bankrupt.

Source of Text:
Retrieved from http://www.english-online.at/media/ebooks/ in August 2015

A. History of Banking

Reading in Chunks
Banking has a long tradition. /
Bankers in Mesopotamia / kept gold and silver for people / and lent it to others. /
Ancient Rome and Greece / had similar banking systems to the ones we have today./

During the Middle Ages / Italy was the centre of European banking. /
Jewish traders / emerged as the first bankers / and became very successful businessmen./
Florence and Venice / became known as / two cities in which many people earned their money through banking. /
The Medici family / dominated Florence / for over two centuries / and set up Europe’s largest bank in the 15th century./

The first worldwide banking crisis / emerged during the Great Depression in 1929./
Many citizens / lost their jobs and their savings / as banks crashed.
In 1933 / American president Franklin D. Roosevelt / signed a bill in which the government guaranteed
the savings of depositors / if a bank went bankrupt.

In 2008 a banking crisis / hit America / and spread throughout the world. /
Banks gave homeowners mortgages / without checking their financial backgrounds./
House prices / began to drop / and banks lost a lot of money./
Governments in many countries / had to give them money / and prevent them from becoming bankrupt.

Source of Text:
Retrieved from http://www.english-online.at/media/ebooks/ in August 2015
A = Black
B = Blue
C = Purple

After 1750 / the growth in provincial private banks / was quite substantial, / with 230 provincial banks
operating in 1797, / a number that had increased to 721 by 1810./
By the 1820s, / every town of substance / had its own local bank / with its own local banknote issues. /
The £1 note of the Bristol Bullion Bank of Browne, Cavenagh, Browne & Bailey, issued in 1824, /
was a typical banknote issue of the period. /
This bank failed in 1825 /
and the holder of this note / would have lost / most of their money, /
although the hand stamps on this note / indicate that two ‘dividends’ were paid, / so some money was
recovered. /
 B. An introduction to English banking history
Roger Outing

Reading in Chunks

London goldsmith-bankers
The origins of English banking / can be found / in the activities of the London goldsmith-bankers /
during the period 1650 to 1700. / London goldsmith-bankers / initiated and developed / the basic principles
of accepting deposits on which interest was paid, / made loans from the funds supplied by such deposits, /
issued their own promissory notes (or banknotes) / and allowed depositors to access their accounts / by use of
‘drawn notes’ (or cheques). /

In 1694 / the Bank of England / was established and adopted and carried on / the banking procedures
of the goldsmith-bankers. In 1708 / the Bank of England / was granted / a monopoly of joint stock banking /
when other banks / were effectively prohibited / from having more than six partners. / This provision /
effectively shaped / the development of English banking until 1826, / when the legislation / was repealed /
and joint stock banks / were again permitted.

London private banks

By the 1720s, / banking had become / a distinct specialist business / with numerous banking firms
operating principally within the City of London / but also in the West End area of London./ Printed forms for
cheques / first began to be used / in London in the 1720s / and handwritten examples / were less
frequently seen thereafter./ The use of cheques / continued to expand / to such an extent / that, by the
1770s, specialized cheque clearing procedures / were established / in London / and they achieved /
considerable economy in the use of cheques. / Use of cheques / then constantly expanded/ and by the 1870s /
most business finance/ was conducted by this means. /

Banknotes in London / did not develop / in the same way / and by the 1770s, / most, though not
all, London private banks / had ceased / the issue of banknotes. / This was / because the extensive use
of cheques in London / reduced the demand for banknotes / and also Bank of England notes / circulated in
London / and took preference / whenever banknotes were required. /

After 1750 / the growth in provincial private banks / was quite substantial, / with 230 provincial
banks operating in 1797, / a number that had increased to 721 by 1810./ By the 1820s, / every town of
substance / had its own local bank / with its own local banknote issues. / The £1 note of the Bristol
Bullion Bank of Browne, Cavenagh, Browne & Bailey, issued in 1824, / was a typical banknote issue of
the period. / This bank failed in 1825 / and the holder of this note / would have lost / most of their
money, / although the hand stamps on this note / indicate that two ‘dividends’ were paid, / so some money
was recovered. /

For a local bank to fail / was an absolute calamity / for all concerned / and many people / suffered
financial ruin as a consequence. / Private banks / were restricted / to just six partners / and they often did
not have / the resources to survive a financial crisis. / The solution was / to enable the banks to increase their
size and resources / by allowing the creation of joint stock banks./

Source of Text:
Retrieved from https://www.britishmuseum.org/research/publications/online_research_catalogues/paper_money
/paper_money_of_england__wales/english_banking_history.aspx in October 2018.