34 L. Q. Rev. 11 (1918)
Early History of Banking

handle is hein.journals/lqr34 and id is 19 raw text is: 11,

TN four articles published in Volumes XXXI and XXXII of this
X   REVIEW   I have sketched the early history of negotiable in-
struments. In this paper I propose to supplement these articles
by sketching the early history of the closely allied topic of Banking.
It was at one time thought that the earliest bank known to
modern history was the bank of Venice, and that it was founded
about the year 1170 to finance a state debt. But this opinion has
been definitely disproved by the researches of Lattes and Ferrara.'
They show that it was the campsores, or money-changers, who were
the earliest bankers; and that the same set of economic causes
which gave rise to the bill of exchange gave rise also to the
institution of banking.2
We have seen that money' was entrusted to these campsores for
purposes of transmission, and that, by means of the machinery of
the bill of exchange, both the risks of transport3 and the risk of
receiving in payment defective or counterfeit coins were avoided.4
It was not long before their business extended itself in different
directions. On the one hand, merchants who had begun by en-
trusting a particular sum to a money-changer for purposes of
transmission in a particular transaction found it convenient to
keep with him a sum on which he could draw whenever he needed
to transmit money; and others, besides merchants, found it con-
venient to deposit money with such a person for safe custody. On
the other hand, the money-changer was only too glad to get this
money into his hands, and was willing to pay something to get it.
He could lend it at remunerative rates to nebdy princes or to
merchants. Thus the Italian money-changers gradually replaced
the Jews as the financiers of Europe.5 The Oaorsini, for instance,
were the Pope's collectors; and they made large profits by lending
1 For an account of their work see C. F. Dunbar, Economic Essays, 343 seqq.
2 L. Q. R. xxxi. 27-9. .                                  Ibid.
4 'The notion of its being a prime business of a bank to give good coin has
passed out of men's memories; but wherever it is felt there is no want of business
more keen and urgent,' Bagehot, Lombard Street, Si. The establishment of some
state banks, e.g. Venice and Amsterdam, was caused primarily by the fact that
this business was not satisfactorily done by the private bankers, below, 14, Is.
a The Italian Bankers in England and their loans to Edward I and Edward II,
Historical Essays (edited by T. F. Tout and J. Tait), 137-67 ; see e.g. pp. 143-53
for instances of loans to Edward I on the security of the customs.

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