HISTORICAL SKETCH. The origin of banking is in remote antiquity, but in its nature and scope great changes have been made during the last four centuries. The modern banker is a dealer in credit, while in ancient times the so called banker was a mere custodian of other people's money and a buyer and seller of foreign moneys. The bill of exchange appears to have been the first credit instrument handled by the early bankers. Explorers have discovered evi dence of its use in Assyria several thousand years before Christ. In Athens and in Rome several hundred years before Christ, men who would now be called bankers made a business of receiving money on deposit and of buying foreign money and foreign bills of exchange. In Rome bankers were called arqenfarii, or dealers in money. Although at first their profits came altogether from commissions upon deposits and from the exchange of domestic for foreign money, they finally became dealers in hills of exchange, and even loaned the money which had been in trusted to them, a credit on their books being transferred by an order resembling the modern check. Livy first mentions the argentaril at the year B.C. 350, and they are frequently referred to in Latin literature of a later date. They were not patricians and had no social status, being despised by the nobles and hated by the common people. By the time of .Justinian, the business of banking, involving a comparatively large use of credit, had become firmly estab lished, and a complete body of jurisprudence relating to the subject had been developed.
During the Middle Ages, the insecurity of property and the risks attending commerce prac tically reduced the business of banking once more to that of mere money-changing. In Italy, at tins time, the bankers were known as camp sores, or dealers in foreign money. There was still traffic in bills of exchange; but for several centuries banking in the modern sense of the term, implying the lending of other people's money, the issue of notes as a medium of ex change, and the transfer of accounts by order or cheek, was practically unknown. The rise of modern banking really dates from the establish ment at Venice of the Banco di Rialto, in 1587. For two centuries prior to this date private bankers in Venice had been receiving deposits, making loans, and transferring credits upon order. The Banco di Rialto received deposits subject to call, and permitted its customers to transfer their credits by order. In 1619 this bank was absorbed by the Banco del Giro. This bank loaned 500,000 ducats to the Government of Venice. Depositors were given receipts in pro portion to the weight of the gold or silver coins which they deposited, and these receipts were used as money. As the current coinage in
Venice was in bad condition, it often happened that credits upon the Bank of Venice were at a premimn. On several occasions, however, the paper of the bank was at a discount, on account of excessive issues. The bank survived until 1803, when its affairs were liquidated under a decree of Napoleon.
The Bank of Amsterdam and the Bank of Hamburg, established in the same century as the Banco del Giro in Venice, performed banking functions of a similar character. They did not issue bank-notes, and were not authorized to make loans; but their credits, based upon coins deposited, became a very popular medium of ex change in the settlement of all large transactions. These credits were known as 'bank money,' and are generally regarded as the first step in the evolution of the cheek and deposit system now in common use in Europe and the United States. The Bank of Amsterdam was successfully man aged from I609, the date of its establishment, the middle of the following century, when secret advances to the Dutch East India Com pany resulted in the destruction of its credit. It was liquidated by a royal decree in 1819. The Bank of Hamburg was always conservatively managed, and survived until 1873, when the adoption of an Imperial coinage and bank cur rency rendered its services no longer necessary.
1 t was during Hie Eighteenth Century that the two characteristic features of modern banking the issue of notes not covered by coin, and the granting of deposit accounts upon the mere credit of borrowers—were finally evolved. China appears to have been familiar with bank-notes for at least twelve centuries, hut their use in Europe dates only from 1 661 , when the Bank of Sweden issued notes to avoid the transportation of cop per coin. In England the recognition of the bank-note as a representative of credit rather than as a more warehouse receipt seeured by an equivalent deposit of coin, was not realized until the end of the Seventeenth Century, when the Bank of England was created. The Bank of Scotland, chartered in 1695, received privileges similar to those possessed by the Bank of Eng land.
Consult: Bagehot, Lombard Street (New York, 1874) ; Conant, A. History of Modern Banks of Issue (New York, 1897) ; Dunbar, Theory and History of Banking (New' York, 1891) ; Francis, History of the Bank of England (London, 184S) ; Gilbart, History, Principles, and Practice of Banking (London, 1882) ; White, Money and Bunking (Boston, 1896) ; Breckinridge, The Canadian Banking system. (New York, 1895) ; Report of the Monetary COM mission (Chicago, 1898) ; Reports of the Comptroller of the Cur rency. See also CREDIT; CURRENCY; INTEREST;