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Title:Banking before the bank: London's unregulated goldsmith-bankers, 1660-1694
Author(s):Quinn, Stephen Francis
Doctoral Committee Chair(s):Neal, Larry
Department / Program:Economics
Degree Granting Institution:University of Illinois at Urbana-Champaign
Subject(s):Economics, Finance
Economics, History
Business Administration, Banking
Abstract:Out of shops located primarily on Lombard Street and in the West End, a few of London's goldsmiths specialized in offering banking services during the second half of the seventeenth century. In addition to traditional goldsmith activities such as selling silverware and exchanging coins, goldsmith-bankers supplied sophisticated financial intermediation between customers. Goldsmith-bankers accepted deposits, payable on demand, called "running cash." Goldsmith-bankers also accepted deposits under conditional withdrawal but with greater interest. The same goldsmiths loaned deposits, managed fractional reserves, issued bank notes and offered checkable accounts. Goldsmith-bankers supplied virtually any intermediary service that might define a bank.
This thesis, however, seeks a larger story for London's goldsmith-bankers. The following chapters examine how goldsmith-bankers connected their customers to the various monetary and financial institutions of late seventeenth-century England. The intermediation that an individual banker provided to his depositors and borrowers formed a core of services. Goldsmiths-bankers grew into a network by joining together through a system of inter-banker clearing. The net widened as many goldsmith-bankers branched out into tax collection and funding government debt. Strands of intermediation even reached overseas as goldsmith-bankers orchestrated international credit and bullion movements. Goldsmith-banking wove a web of intermediation that filled the interstices between fellow bankers, specie, the English Treasury, and overseas capital markets.
Connecting these institutional nodes created positive network externalities. The public could deposit bank notes with competing banks, which enhanced the viability of all bank debt as a means of payment. Goldsmith-banking made the use of bank notes and checks common. Moreover, goldsmith-banking made taxes easier to pay and budget deficits easier to fund. The intermediation of goldsmith-bankers contributed to the expanding financial capabilities of the English Treasury and played a critical role in the origins of the Financial Revolution. Goldsmith-banking integrated London's financial and monetary institutions and laid a framework of which later innovations, like the Bank of England, would take full advantage.
Issue Date:1994
Rights Information:Copyright 1994 Quinn, Stephen Francis
Date Available in IDEALS:2011-05-07
Identifier in Online Catalog:AAI9512517
OCLC Identifier:(UMI)AAI9512517

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