See AUSTIN CANONS;
BENEDICTINE ORDERS;
CAPUCHINS;
CARMELITE FRIARS;
CARTHUSIAN;
CISTERCIAN;
CLAIRVAUX;
CLUGNY;
MENDICANT ORDERS;
RECOLLECTS;
SERVITES;
THEATINES;
TRAPPISTS.
MONÇON,
MONZON, Treaty of (1626).
See FRANCE: A. D. 1624-1626.
MONCONTOUR, Battle of (1569).
See FRANCE: A. D. 1563-1570.
----------MONEY AND BANKING: Start--------
MONEY AND BANKING:
Nature and Origin of Money.
"When the division of labour has been once thoroughly
established, it is but a very small part of a man's wants
which the produce of his own labour can supply. He supplies
the far greater part of them by exchanging that surplus part
of the produce of his own labour, which is over and above his
own consumption, for such parts of the produce of other men's
labour us he has occasion for. Every man thus lives by
exchanging, or becomes in some measure a merchant, and the
society itself grows to be what is properly a commercial
society. But when the division of labour first began to take
place, this power of exchanging must frequently have been very
much clogged and embarrassed in its operations. One man, we
shall suppose, has more of a certain commodity than he himself
has occasion for, while another has less. The former
consequently would be glad to dispose of, and the latter to
purchase, a part of this superfluity. But if this latter
should chance to have nothing that the former stands in need
of, no exchange can be made between them. The butcher has more
meat in his shop than he himself can consume, and the brewer
and the baker would each of them be willing to purchase a part
of it. But they have nothing to offer in exchange, except the
different productions of their respective trades, and the
butcher is already provided with all the bread and beer which
he has immediate occasion for. No exchange can, in this case,
be made between them. … In order to avoid the inconveniency
of such situations, every prudent man in every period of
society, after the first establishment of the division of
labour, must naturally have endeavoured to manage his affairs
in such a manner, as to have at all times by him, besides the
peculiar produce of his own industry, a certain quantity of
some one commodity or other, such as he imagined few people
would be likely to refuse in exchange for the produce of their
industry. Many different commodities, it is probable, were
successively both thought of and employed for this purpose. In
the rude ages of society, cattle are said to have been the
common instrument of commerce; and, though they must have been
a most inconvenient one, yet in old times we find things were
frequently valued according to the number of cattle which had
been given in exchange for them. The armour of Diomede, says
Homer, cost only nine oxen; but that of Glaucus cost an
hundred oxen. Salt is said to be the common instrument of
commerce and exchange in Abyssinia; a species of shells in
some parts of the coasts of India; dried cod at Newfoundland;
tobacco in Virginia; sugar in some of our West India colonies;
hides or dressed leather in some other countries; and there is
at this day [1775] a village in Scotland where it is not
uncommon, I am told, for a workman to carry nails instead of
money to the baker's shop or the alehouse. In all countries,
however, men seem at last to have been determined by
irresistible reasons to give the preference, for this
employment, to metals above every other commodity."
_Adam Smith,
Wealth of Nations,
chapter 4, book 1 (volume 1)._
"There is … no machine which has saved as much labor as
money. … The invention of money has been rightly compared to
the invention of writing with letters. We may, however, call
the introduction of money as the universal medium of exchange
… one of the greatest and most beneficent of advances ever
made by the race. … Very different kinds of commodities
have, according to circumstances, been used as money; but
uniformly only such as possess a universally recognized
economic value. On the whole, people in a low stage of
civilization are wont to employ, mainly, only ordinary
commodities, such as are calculated to satisfy a vulgar and
urgent want, as an instrument of exchange. As they advance in
civilization, they, at each step, choose a more and more
costly object, for this purpose, and one which ministers to
the more elevated wants. Races of hunters, at least in
non-tropical countries, usually use skins as money; that is
the almost exclusive product of their labor, one which can be
preserved for a long period of time, which constitutes their
principal article of clothing and their principal export in
the more highly developed regions. Nomadic races and the lower
agricultural races, pass, by a natural gradation, to the use of
cattle as money; which supposes rich pasturages at the
disposal of all.
{2199}
If it were otherwise, there would be a great many to whom
payments of this kind had been made, who would not know what
to do with the cattle given them, on account of the charges
for their maintenance. … That metals were used for the
purpose of money much later than the commodities above
mentioned, and the precious metals in turn later than the
non-precious metals, cannot by any means be shown to be
universally true. Rather is gold in some countries to be
obtained by the exercise of so little skill, and both gold and
silver satisfy a want so live and general, and one so early
felt, that they are to be met with as an instrument of
exchange in very early times. In the case of isolated races,
much depends on the nature of the metals with which the
geologic constitution of the country has furnished them. In
general, however, the above law is found to prevail here. The
higher the development of a people becomes, the more frequent
is the occurrence of large payments; and to effect these, the
more costly a metal is, the better, of course, it is adapted
to effect such payments. Besides, only rich nations are able
to possess the costly metals in a quantity absolutely great.
Among the Jews, gold as money dates only from the time of
David. King Pheidon, of Argos, it is said, introduced silver
money into Greece, about the middle of the eighth century
before Christ. Gold came into use at a much later period. The
Romans struck silver money, for the first time, in 209 before
Christ, and, in 207, the first gold coins. Among modern
nations, Venice (1285) and Florence seem to have been the
first to have coined gold in any quantity."
_W. Roscher,
Principles of Political Economy,
book 2, chapter 3, sections 117-119 (volume 1)._
MONEY AND BANKING:
Ancient Egypt and Babylonia.
"Money seems to us now so obvious a convenience, and so much a
necessity of commerce, that it appears almost inconceivable
that a people who created the Sphinx and the Pyramids, the
temples of Ipsamboul and Karnac, should have been entirely
ignorant of coins. Yet it appears from the statements of
Herodotus, and the evidence of the monuments themselves, that
this was really the case. As regards the commercial and
banking systems of ancient Egypt, we are almost entirely
without information. Their standard of value seems to have
been the 'outen' or 'ten' of copper (94-96 grammes), which
circulated like the æs rude of the Romans by weight, and in
the form of bricks, being measured by the balance. It was
obtained from the mines of Mount Sinai, which were worked as
early as the fourth dynasty. Gold and silver appear to have
been also used, though less frequently. Like copper, they were
sometimes in the form of bricks, but generally in rings,
resembling the ring money of the ancient Celts, which is said
to have been employed in Ireland down to the 12th century, and
still holds its own in the interior of Africa. This
approximated very nearly to the possession of money, but it
wanted what the Roman lawyers called 'the law' and 'the form.'
Neither the weight nor the pureness was guaranteed by any
public authority. Such a state of things seems to us very
inconvenient, but after all It is not very different from that
which prevails in China even at the present day. The first
money struck in Egypt, and that for the use rather of the
Greek and Phœnician merchants than of the natives, was by the
Satrap Aryandes. In ancient Babylonia and Assyria, as in
Egypt, the precious metals, and especially silver, circulated
as uncoined ingots. They were readily taken indeed, but taken
by weight and verified by the balance like any other
merchandise. The excavations in Assyria and Babylon, which
have thrown so much light upon ancient history, have afforded
us some interesting information as to the commercial
arrangements of these countries, and we now possess a
considerable number of receipts, contracts, and other records
relating to loans of silver on personal securities at fixed
rates of interest; loans on landed or house property; sales of
land, in one case with a plan; sales of slaves, &c. These were
engraved on tablets of clay, which were then burnt. M.
Lenormant divides these most interesting documents into five
principal types:
1. Simple obligations.
2. Obligations with a penal clause in case of non-fulfilment.
One he gives which had 79 days to run.
3. Obligations with the guarantee of a third party.
4. Obligations payable to a third person.
5. Drafts drawn upon one place, payable in another. …
These Assyrian drafts were negotiable, but from the nature of
things could not pass by endorsement, because, when the clay
was once baked, nothing new could be added, and under these
circumstances the name of the payee was frequently omitted. It
seems to follow that they must have been regularly advised. It
is certainly remarkable that such instruments, and especially
letters of credit, should have preceded the use of coins. The
earliest banking firm of which we have any account is said to
be that of Egibi and Company, for our knowledge of whom we are
indebted to Mr. Boscawen, Mr. Pinches, and Mr. Hilton Price.
Several documents and records belonging to this family are in
the British Museum. They are on clay tablets, and were
discovered in an earthenware jar found in the neighbourhood of
Hillah, a few miles from Babylon. The house is said to have
acted as a sort of national bank of Babylon: the founder of
the house, Egibi, probably lived in the reign of Sennacherib,
about 700 B. C. This family has been traced during a century
and a half, and through five generations, down to the reign of
Darius. At the same time, the tablets hitherto translated
scarcely seem to me to prove that the firm acted as bankers,
in our sense of the word."
_Sir J. Lubbock,
The History of Money
(Nineteenth Century, November, 1879)._
"We have an enormous number of the documents of this firm,
beginning with Nebuchadnezzar the Great, and going on for some
five generations or so to the time of Darius. The tablets are
dated month after month and year after year, and thus they
afford us a sure method of fixing the chronology of that very
uncertain period of history. There is a small contract tablet
in the Museum at Zürich, discovered by Dr. Oppert, dated in
the 5th year of Pacorus, king of Persia, who reigned about the
time of Domitian. There is a little doubt about the reading of
one of the characters in the name, but if it is correct, it
will prove that the use of cuneiform did not fall into disuse
until after the Christian Era. … Some have tried to show
that Egibi is the Babylonian form of Jacob, which would lead
one to suspect the family to have been Jews; but this is not
certain at present."
_E. A. W. Budge,
Babylonian Life and History,
page 115._
{2200}
"It is in the development of trade, and especially of banking,
rather than in manufactures, that Babylonia and Chaldæa were
in advance of all the rest of the world. The most cautious
Assyriologists are the least confident in their renderings of
the numerous contract tablets from which, if they were
accurately interpreted, we should certainly be able to
reconstruct the laws and usages of the world's first great
market place. … The following account of Babylonian usages
is derived from the text of M. Revillout's work. … It is
confirmed in essentials by the later work of Meissner, who has
translated over one hundred deeds of the age of Hammurabi and
his successors. In Chaldæa every kind of commodity, from land
to money, circulated with a freedom that is unknown to modern
commerce; every value was negotiable, and there was no limit
to the number and variety of the agreements that might be
entered into. … Brick tablets did not lend themselves
readily to 'bookkeeping,' as no further entry could be made
after baking, while the first entry was not secure unless
baked at once. Each brick recorded one transaction, and was
kept by the party interested till the contract was completed,
and the destruction of the tablet was equivalent to a receipt.
Babylonian law allowed debts to be paid by assigning another
person's debt to the creditor; a debt was property, and could
be assigned without reference to the debtor, so that any
formal acknowledgment of indebtedness could be treated like a
negotiable bill—a fact which speaks volumes for the
commercial honesty of the people. A separate tablet was, of
course, required to record the original debt, or rather to say
that So-and-so's debt to Such-an-one has been by him sold to a
third party. Such third party could again either assign his
claim to a bank for a consideration, or if the last debtor had
a credit at the bank, the creditor could be paid out of that,
a sort of forecast of the modern clearing-house system. The
debtor who pays before the term agreed on has to receive a
formal surrender of the creditor's claim, or a transfer of it
to himself. The Babylonian regarded money and credit as
synonymous, and the phrase, 'Money of Such-an-one upon
So-and-so,' is used as equivalent to A's credit with B. … In
ancient Babylonia, as in modern China, the normal effect of a
loan was supposed to be beneficial to the borrower. In Egypt,
judging from the form of the deeds, the idea was that the
creditor asserted a claim upon the debtor, or the debtor
acknowledged a liability to the man from whom he had borrowed.
In Babylonia the personal question is scarcely considered; one
person owes money to another—that is the commonest thing in
the world—such loans are in a chronic state of being incurred
and paid off; one man's debt is another man's credit, and
credit being the soul of commerce, the loan is considered
rather as a part of the floating negotiable capital of the
country than as a burden on the shoulders of one particular
debtor."
_E. J. Simcox,
Primitive Civilizations,
volume 1, pages 320-322._
MONEY AND BANKING:
China.
"Not only did the Chinese possess coins at a very early
period, but they were also the inventors of bank notes. Some
writers regard bank notes as having originated about 119 B.
C., in the reign of the Emperor Ou-ti. At this time the Court
was in want of money, and to raise it Klaproth tells us that
the prime minister hit upon the following device. When any
princess or courtiers entered the imperial presence, it was
customary to cover the face with a piece of skin. It was first
decreed then, that for this purpose the skin of certain white
deer kept in one of the royal parks should alone be permitted,
and then these pieces of skin were sold for a high price. But
although they appear to have passed from one noble to another,
they do not seem ever to have entered into general
circulation. It was therefore very different from the Russian
skin money. In this case the notes were 'used instead of the
skins from which they were cut, the skins themselves being too
bulky and heavy to be constantly carried backward and forward.
Only a little piece was cut off to figure as a token of
possession of the whole skin. The ownership was proved when
the piece fitted in the hole.' True bank notes are said to
have been invented about 800 A. D., in the reign of
Hiantsoung, of the dynasty of Thang, and were called
'feytsien,' or flying money. It is curious, however, though
not surprising, to find that the temptation to over-issue led
to the same results in China as in the West. The value of the
notes fell, until at length it took 11,000 min, or £3,000, to
buy a cake of rice, and the use of notes appears to have been
abandoned. Subsequently the issue was revived, and Tchang-yang
(960-990 A. D.) seems to have been the first private person
who issued notes. Somewhat later, under the Emperor
'Tching-tsong (997-1022), this invention was largely extended.
Sixteen of the richest firms united to form a bank of issue
which emitted paper money in series, some payable every three
years. The earliest mention, in European literature, of paper,
or rather cotton, money appears to be by Rubruquis, a monk,
who was sent by St. Louis, in the year 1252, to the Court of
the Mongol Prince Mangu-Khan, but he merely mentions the fact
of its existence. Marco Polo, who resided from 1275 to 1284 at
the court of Kublai-Khan, … gives us a longer and
interesting account of the note system, which he greatly
admired, and he concludes by saying, 'Now you have heard the
ways and means whereby the great Khan may have, and, in fact,
has, more treasure than all the kings in the world. You know
all about it, and the reason why.' But this apparent facility
of creating money led, in the East, as it has elsewhere, to
great abuses. Sir John Mandeville, who was in Tartary shortly
afterwards, in 1322, tells us that the 'Emperour may dispenden
als moehe as he wile with outen estymacioum. For he despendeth
not, ne maketh no money, but of lether emprented, or of
papyre. … For there and beyonde hem thei make no money,
nouther of gold nor of sylver. And therefore he may despende
ynow and outrageously.' The great Khan seems to have been
himself of the same opinion. He appears to have 'despent
outrageously,' and the value of the paper money again fell to
a very small fraction of its nominal amount, causing great
discontent and misery, until about the middle of the sixteenth
century, under the Mandchu dynasty, it was abolished, and
appears to have been so completely forgotten, that the Jesuit
father, Gabriel de Magaillans, who resided at Pekin about
1668, observes that there is no recollection of paper money
having ever existed in the manner described by Marco Polo;
though two centuries later it was again in use. It must be
observed, however, that these Chinese bank notes differed from
ours in one essential—namely, they were not payable at sight.
{2201}
Western notes, even when not payable at all, have generally
purported to be exchangeable at the will of the holder, but
this principle the Chinese did not adopt, and their notes were
only payable at certain specified periods."
_Sir J. Lubbock,
The History of Money
(Nineteenth Century, November, 1879)._
ALSO IN:
_W. Vissering,
On Chinese Currency._
MONEY AND BANKING:
Coinage in its Beginnings.
"Many centuries before the invention of the art of coining,
gold and silver in the East, and bronze in the West, in
bullion form, had already supplanted barter, the most
primitive of all methods of buying and selling, when among
pastoral peoples the ox and the sheep were the ordinary
mediums of exchange. The very word 'pecunia' is an evidence of
this practice in Italy at a period which is probably recent in
comparison with the time when values were estimated in cattle
in Greece and the East. 'So far as we have any knowledge,'
says Herodotus, 'the Lydians were the first nation to
introduce the use of gold and silver coin.' This statement of
the father of history must not, however, be accepted as
finally settling the vexed question as to who were the
inventors of coined money, for Strabo, Aelian, and the Parian
Chronicle, all agree in adopting the more commonly received
tradition, that Pheidon, King of Argos, first struck silver
coins in the island of Aegina. These two apparently
contradictory assertions modern research tends to reconcile
with one another. The one embodies the Asiatic, the other the
European tradition; and the truth of the matter is that gold
was first coined by the Lydians in Asia Minor, in the seventh
century before our era; and that silver was first struck in
European Greece about the same time. The earliest coins are
simply bullets of metal, oval or bean-shaped, bearing on one
side the signet of the state or of the community responsible
for the purity of the metal and the exactness of the weight.
Coins were at first stamped on one side only, the reverse
showing merely the impress of the square-headed spike or anvil
on which, after being weighed, the bullet of hot metal was
placed with a pair of tongs and there held while a second
workman adjusted upon it the engraved die. This done, a third
man with a heavy hammer would come down upon it with all his
might, and the coin would be produced, bearing on its face or
obverse the seal of the issuer, and on the reverse only the
mark of the anvil spike, an incuse square. This simple process
was after a time improved upon by adding a second engraved die
beneath the metal bullet, so that a single blow of the
sledge-hammer would provide the coin with a type, as it is
called, in relief on both sides. The presence of the
unengraved incuse square may therefore be accepted as an
indication of high antiquity, and nearly all Greek coins which
are later than the age of the Persian wars bear a type on both
sides. … Greek coin-types may be divided into two distinct
classes:
(a) Mythological or religious representations, and
(b) portraits of historical persons.
From the earliest times down to the age of Alexander the Great
the types of Greek coins are almost exclusively religious.
However strange this may seem at first, it is not difficult to
explain. It must be borne in mind that when the enterprising
and commercial Lydians first lighted upon the happy idea of
stamping metal for general circulation, a guarantee of just
weight and purity of metal would be the one condition
required. … What more binding guarantee could be found than
the invocation of one or other of those divinities most
honoured and most dreaded in the district in which the coin
was intended to circulate. There is even good reason to think
that the earliest coins were actually struck within the
precincts of the temples, and under the direct auspices of the
priests; for in times of general insecurity by sea and land,
the temples alone remained sacred and inviolate."
_B. V. Head,
Greek Coins
Coins and Medals, edited by S. Lane-Poole, chapter 2._
MONEY AND BANKING:
Early Banking.
"The banker's calling is both new and old. As a distinct
branch of commerce, and a separate agent in the advancement of
civilisation, its history hardly extends over 300 years; but,
in a rude and undeveloped sort of way, it has existed during
some dozens of centuries. It began almost with the beginning
of society. No sooner had men learnt to adopt a portable and
artificial equivalent for their commodities, and thus to buy
and sell and get gain more easily, than the more careful of
them began to gather up their money in little heaps, or in
great heaps, if they were fortunate enough. These heaps were,
by the Romans, called montes—mounds, or banks,—and
henceforth every money-maker was a primitive banker. The
prudent farmers and shopkeepers in the out-of-the-way
villages, who now lock up their savings in strong boxes, or
conceal them in places where they are least likely to be found
by thieves, show us how the richest and most enterprising men
of far-off times, whether in Anglo-Saxon or mediæval Britain,
ancient Greece and Rome, China or Judæa, made banks for
themselves before the great advantages of joint-stock heaping
up of money were discovered. When and in what precise way that
discovery was made antiquarians have yet to decide. …
Perhaps Jews and Greeks set the example to the modern world.
Every rich Athenian had his treasurer or money-keeper, and
whenever any particular treasurer proved himself a good
accountant and safe banker, it is easy to understand how, from
having one master, he came to have several, until he was able
to change his condition of slavery for the humble rank of a
freedman, and then to use his freedom to such good purpose
that he became an influential member of the community. Having
many people's money, entrusted to his care, he received good
payment for his responsible duty, and he quickly learned to
increase his wealth by lending out his own savings, if not his
employers' capital, at the highest rate of interest that he
could obtain. The Greek bankers were chiefly famous as
money-lenders, and interest at thirty-six per cent. per annum
was not considered unusually exorbitant among them. For their
charges they were often blamed by spendthrifts, satirists, and
others. 'It is said,' complains Plutarch, 'that hares bring
forth and nourish their young at the same time that they
conceive again; but the debts of these scoundrels and savages
bring forth before they conceive, for they give and
immediately demand again; they take away their money at the
same time as they put it out; they place at interest what they
receive as interest. The Messenians have a proverb: "There is
a Pylos before Pylos, and yet another Pylos still."
{2202}
So of the usurers it may be said, "There is a profit before
profit, and yet another profit still;" and then, forsooth,
they laugh at philosophers, who say that nothing can come out
of nothing!' The Greek bankers and money-lenders, those of
Delos and Delphi especially, are reported to have used the
temples as treasure-houses, and to have taken the priests into
partnership in their money-making. Some arrangement of that
sort seems to have existed among the Jews, and to have aroused
the anger of Jesus when he went into the Temple of Jerusalem,
'and overthrew the tables of the money-changers, and said unto
them, It is written, My house shall be called the house of
prayer; but ye have made it a den of thieves.' Bankers' or
money-changers' tables were famous institutions all over the
civilised world of the ancients. Livy tells how, in 308 B. C.,
if not before, they were to be found in the Roman Forum, and
later Latin authors make frequent allusions to banking
transactions of all sorts. They talk of deposits and
securities, bills of exchange and drafts to order, cheques and
bankers' books, as glibly as a modern merchant. But these
things were nearly forgotten during the dark ages, until the
Jews, true to the money-making propensities that characterised
them while they still had a country of their own, set the
fashion of money-making and of banking in all the countries of
Europe through which they were dispersed."
_H. R. Fox Bourne,
Romance of Trade,
chapter 4._
MONEY AND BANKING:
Ancient Greece.
"Oriental contact first stirred the 'auri sacra fames' in the
Greek mind. That this was so the Greek language itself tells
plainly. For 'chrusos,' gold, is a Semitic loan-word, closely
related to the Hebrew 'charuz,' but taken immediately, there
can be no reasonable doubt, from the Phœnician. The restless
treasure-seekers from Tyre were, indeed, as the Græco-Semitic
term metal intimates, the original subterranean explorers of
the Balkan peninsula. As early, probably, as the 15th century
B. C. they 'digged out ribs of gold' on the islands of Thasos
and Siphnos, and on the Thracian mainland at Mount Pangæum;
and the fables of the Golden Fleece, and of Arimaspian wars
with gold-guarding griffins, prove the hold won by the
'precious bane' over the popular imagination. Asia Minor was,
however, the chief source of prehistoric supply, the native
mines lying long neglected after the Phœnicians had been
driven from the scene. Midas was a typical king in a land
where the mountains were gold-granulated, and the rivers ran
over sands of gold. And it was in fact from Phrygia that
Pelops was traditionally reported to have brought the
treasures which made Mycenæ the golden city of the Achæan
world. The Epic affluence in gold was not wholly fictitious.
From the sepulchres of Mycenæ alone about one hundred pounds
Troy weight of the metal have been disinterred; freely at
command even in the lowest stratum of the successive
habitations at Hissarlik, it was lavishly stored, and highly
wrought in the picturesquely-named 'treasure of Priam'; and
has been found, in plates and pearls, beneath twenty metres of
volcanic debris, in the Cyclatic islands Thera and Therapia.
This plentifulness contrasts strangely with the extreme
scarcity of gold in historic Greece. It persisted, however,
mainly owing to the vicinity of the auriferous Ural Mountains,
in the Milesian colony of Panticapæum, near Kertch, where
graves have been opened containing corpses shining 'like
images' in a complete clothing of gold-leaf, and equipped with
ample supplies of golden vessels and ornaments. Silver was, at
the outset, a still rarer substance than gold. Not that there
is really less of it. … But it occurs less obviously, and is
less easy to obtain pure. Accordingly, in some very early
Egyptian inscriptions, silver, by heading the list of metals,
claims a supremacy over them which proved short-lived. It
terminated for ever with the scarcity that had produced it,
when the Phœnicians began to pour the flood of Spanish silver
into the markets and treasure-chambers of the East. Armenia
constituted another tolerably copious source of supply; and it
was in this quarter that Homer located the 'birth-place of
silver.'"
_A. M. Clerke,
Familiar Studies in Homer,
chapter 10._
"Taken as a whole the Greek money is excellent; pure in metal
and exact in weight, its real corresponding to its nominal
value. Nothing better has been done in this way among the most
civilized and best governed nations of modern times. There is,
indeed, always a certain recognized limit, which keeps the
actual weight of the money slightly below its theoretical
weight; and this fact recurs with such regularity that it may
be regarded as a rule. We must conclude, therefore, that it
was under this form that Greek civilization allowed to the
coiner of money the right of seigniorage, or the benefit
legitimately due to him to cover the expenses of the coinage,
and in exchange for the service rendered by him to the public
in providing them with money, by which they were saved the
trouble of perpetual weighing. This allowance, however, is
always kept within very narrow limits, and is never more than
the excess of the natural value of the coined money over that
of the metal in ingots. … Of course, the general and
predominant fact of the excellence of the Greek money in the
time of Hellenic independence is subject, like all human
things, to some exceptions. There were a few cities which
yielded to the delusive bait of an unlawful advantage,
debasing the quality of their coins without foreseeing that
the consequences of this unfair operation would react against
themselves. But these exceptions are very rare."
_F. Lenormant,
Money in Ancient Greece and Rome
(Contemporary Review, February; 1879)._
"The quantity, particularly of gold, … was, in the earlier
historical periods, according to unexceptionable testimony,
extremely small. In the time of Crœsus, according to
Theopompus, gold was not to be found for sale in any of the
Greek States. The Spartans, needing some for a votive
offering, wished to purchase a quantity from Crœsus;
manifestly because he was the nearest person from whom it
could be obtained. … Even during the period from the
seventieth to the eightieth Olympiads, (B. C. 500-460,) pure
gold was a rarity. When Hiero of Syracuse wished to send a
tripod and a statue of the Goddess of Victory, made of pure
gold, to the Delphian Apollo, he could not procure the
requisite quantity of metal until his agents applied to the
Corinthian Architiles, who, as was related by the
above-mentioned Theopompus and Phanias of Eresus, had long
been in the practice of purchasing gold in small quantities,
and hoarding it. Greece proper itself did not possess many
mines of precious metals. The most important of the few which
it possessed were the Attic silver mines of Laurion.
{2203}
These were at first very productive. … Asia and Africa
furnished incomparably a larger quantity of the precious
metals than was procured in Greece and the other European
countries. … Colchis, Lydia, and Phrygia, were distinguished
for their abundance of gold. Some derive the tradition of the
golden fleece from the gold washings in Colchis. Who has not
heard of the riches of Midas, and Gyges, and Crœsus, the gold
mines of the mountains Tmolus and Sipylus, the gold-sand of
the Pactolus? … From the very productive gold mines of
India, together with its rivers flowing with gold, among which
in particular the Ganges may be classed, arose the fable of
the gold-digging ants. From these annual revenues the royal
treasure was formed. By this a great quantity of precious
metal was kept from circulation. It was manifestly their
principle to coin only as much gold and silver as was
necessary for the purposes of trade, and for the expenditures
of the State. In Greece, also, great quantities were kept from
circulation, and accumulated in treasuries. There were locked
up in the citadel of Athens 9,700 talents of coined silver,
besides the gold and silver vessels and utensils. The Delphian
god possessed a great number of the most valuable articles.
… The magnificent expenditures of Pericles upon public
edifices and structures, for works of the plastic arts, for
theatrical exhibitions, and in carrying on wars, distributed
what Athens had collected, into many hands. The temple-robbing
Phocians coined from the treasures at Delphi ten thousand
talents in gold and silver; and this large sum was consumed by
war. Philip of Macedonia, in fine, carried on his wars as much
with gold as with arms. Thus a large amount of money came into
circulation in the period between the commencement of the
Persian wars and the age of Demosthenes. The precious metals,
therefore, must of necessity have depreciated in value, as
they did at a later period, when Constantine the Great caused
money to be coined from the precious articles found in the
heathen temples. But what a quantity of gold and silver flowed
through Alexander's conquest of Asia into the western
countries! Allowing that his historians exaggerate, the main
point, however, remains certain. … Alexander's successors
not only collected immense sums, but by their wars again put
them into circulation. … The enormous taxes which were
raised in the Macedonian kingdoms, the revelry and extravagant
liberality of the kings, which passed all bounds, indicate the
existence of an immense amount of ready money."
_A. Boeckh,
The Public Economy of the Athenians,
book 1, chapter 3._
MONEY AND BANKING:
Phœnicia.
"Nearly all the silver in common use for trade throughout the
East was brought into the market by the Phœnicians. The silver
mines were few and distant; the trade was thus a monopoly,
worth keeping so by the most savage treatment of suspected
rivals, and, as a monopoly, so lucrative that, but for the
long and costly voyage between Spain and Syria, the merchant
would have seemed to get his profit for nothing. … The use
of silver money, though it did not originate with the
Phœnicians, was no doubt promoted by their widespread
dealings. The coins were always of known weight, and standing
in a well-known relation to the bars used for large
transactions."
_E. J. Simcox,
Primitive Civilizations,
volume 1, page 400._
"It is a curious fact that coinage in Phoenicia, one of the
most commercial of ancient countries, should have been late in
origin, and apparently not very plentiful. There are, in fact,
no coins of earlier period than the third century which we can
with certainty attribute to the great cities of Tyre and
Sidon. Some modern writers, however, consider that many of the
coins generally classed under Persia—notably those bearing
the types of a chariot, a galley, and an owl respectively—
were issued by those cities in the 5th and 4th centuries B. C.
But it is certain, in any case, that the Phoenicians were far
behind the Greeks in the art of moneying. With the invasion of
Persia by Alexander the Great came a great change; and all the
ancient landmarks of Asiatic government and order were swept
away. During the life of Alexander the Great the coins bearing
his name and his types circulated throughout Asia; and after
his death the same range of currency was attained by the money
of the early Seleucid Kings of Syria—Seleucis I., Antiochus
I., and Antiochus II., who virtually succeeded to the
dominions of the Persian Kings, and tried in many respects to
carry on their policy. Of these monarchs we possess a splendid
series of coins."
_S. Lane-Poole,
Coins and Medals,
chapter 6._
MONEY AND BANKING:
The Jews.
"It would seem that, until the middle of the second century B.
C., the Jews either weighed out gold and silver for the 'Price
of goods, or else used the money usually current in Syria,
that of Persia, Phoenicia, Athens, and the Seleucidae. Simon
the Maccabee was the first to issue the Jewish shekel as a
coin, and we learn from the Book of Maccabees that the
privilege of striking was expressly granted him by King
Antiochus VII. of Syria. We possess shekels of years 1-5 of
the deliverance of Zion; the types are a chalice and a triple
flower. The kings who succeeded Simon, down to Antigonus,
confined themselves to the issue of copper money, with Hebrew
legends and with types calculated not to shock the susceptible
feelings of their people, to whom the representation of a
living thing was abominable—such types as a lily, a palm, a
star, or an anchor. When the Herodian family came in, several
violations of this rule appear."
_S. Lane-Poole,
Coins and Medals,
chapter 6._
ALSO IN:
_G. C. Williamson,
The Money of the Bible._
MONEY AND BANKING:
Rome.
"In Rome the generic terms for money seem to have been
successively, pecunia, As, nummns, and moneta. … Moneta …
is derived from the name of the temple in which, or in a
building to or next to which the money of Rome was coined
after the defeat of Pyrrhus, B. a. 275, more probably after
the capture of Tarentum by the Romans, B. C. 272. It probably
did not come into use until after the era of Scipio, and then
was only used occasionally until the period of the Empire,
when it and its derivatives became more common. Nummus,
nevertheless, continued to hold its ground until towards the
decline of the Empire, when it went entirely out of use, and
moneta and its derivatives usurped its place, which it has
continued to hold ever since. Moneta is therefore
substantially a term of the Dark Ages. … The idea associated
with moneta is coins, whose value was derived mainly from that
of the material of which they were composed; whilst the idea
associated with nummus is a system of symbols whose value was
derived from legal limitation.
{2204}
From the fact that our language sprang from the Dark Ages, we
have no generic word for money other than moneta, which only
relates to one kind of money. For a similar reason, the
comparative newness of the English tongue, we have no word for
a piece of money except coin, which, properly speaking, only
relates to one kind of piece, namely, that which is struck by
the cuneus."
_A. Del Mar,
History of Money in Ancient Countries,
chapter 28._
The extent and energy of the Roman traffic, in the great age
of the Republic, during the third and second centuries before
Christ, "may be traced most distinctly by means of coins and
monetary relations. The Roman denarius kept pace with the
Roman legions. … The Sicilian mints—last of all that of
Syracuse in 542—were closed or at any rate restricted to
small money in consequence of the Roman conquest, and … in
Sicily and Sardinia the denarius obtained legal circulation at
least side by side with the older silver currency and probably
very soon became the exclusive legal tender. With equal if not
greater rapidity the Roman silver coinage penetrated into
Spain, where the great silver-mines existed and there was
virtually no earlier national coinage; at a very early period
the Spanish towns even began to coin after the Roman standard.
On the whole, as Carthage coined only to a very limited
extent, there existed not a single important mint in addition
to that of Rome in the region of the western Mediterranean,
with the exception of the mint of Massilia and perhaps also of
those of the Illyrian Greeks at Apollonia and Epidamnus.
Accordingly, when the Romans began to establish themselves in
the region of the Po, these mints were about 225 subjected to
the Roman standard in such a way, that, while they retained
the right of coining silver, they uniformly—and the
Massiliots in particular—were led to adjust their drachma to
the weight of the Roman three-quarter denarius, which the
Roman government on its part began to coin, primarily for the
use of upper Italy, under the name of the 'piece of Victory'
(victoriatus). This new system, based on the Roman, prevailed
throughout the Massiliot, Upper Italian, and Illyrian
territories; and these coins even penetrated into the
barbarian lands on the north, those of Massilia, for instance,
into the Alpine districts along the whole basin of the Rhone,
and those of Illyria as far as the modern Transylvania. The
eastern half of the Mediterranean was not yet reached by the
Roman money, as it had not yet fallen under the direct
sovereignty of Rome; but its place was filled by gold, the
true and natural medium for international and transmarine
commerce. It is true that the Roman government, in conformity
with its strictly conservative character, adhered—with the
exception of a temporary coinage of gold occasioned by the
financial embarrassment during the Hannibalic war—steadfastly
to the rule of coining silver only in addition to the
national-Italian copper; but commerce had already assumed such
dimensions, that it was able in the absence of money to
conduct its transactions with gold by weight. Of the sum in
cash, which lay in the Roman treasury in 597, scarcely a sixth
was coined or uncoined silver, five-sixths consisted of gold
in bars, and beyond doubt the precious metals were found in
all the chests of the larger Roman capitalists in
substantially similar proportions. Already therefore gold held
the first place in great transactions; and, as may be inferred
from this fact, the preponderance of traffic was maintained
with foreign lands, and particularly with the East, which
since the times of Philip and Alexander the Great had adopted
a gold currency. The whole gain from these immense
transactions of the Roman capitalists flowed in the long run
to Rome. … The moneyed superiority of Rome as compared with
the rest of the civilized world was, accordingly, quite as
decided as its political and military ascendancy. Rome in this
respect stood towards other countries somewhat as the England
of the present day stands towards the continent."
_T. Mommsen,
History of Rome,
book 3, chapter 12 (volume 2)._
In the later years of the Roman Republic the coinage became
debased and uncertain. "Cæsar restored the public credit by
issuing good money, such as had not been seen in Rome for a
length of time, money of pure metal and exact weight; with
scarcely any admixture of plated pieces, money which could
circulate for its real value, and this measure became one of
the principal sources of his popularity. Augustus followed his
example, but at the same time took away from the Senate the
right of coining gold and silver, reserving this exclusively
to the imperial authority, which was to exercise it absolutely
without control. From this time we find the theory that the
value of money is arbitrary, and depends solely on the will of
the sovereign who issues it, more and more widely and
tenaciously held. … The faith placed in the official impress
fostered the temptation to abuse it. … In less than a
century the change of the money of the State into imperial
money, and the theory that its value arose from its bearing
the effigy of the sovereign, produced a system of adulteration
of specie, which went on growing to the very close of the
Empire, and which the successors of Augustus utilized largely
for the indulgence of their passions and their prodigality."
_F. Lenormant,
Money in Ancient Greece and Rome
(Contemporary Review, February, 1879)._
MONEY AND BANKING:
Mediæval Money and Banking.
As regards the monetary system of the Middle Ages, the
precious metals, when uncoined, were weighed by the pound and
half pound or mark, for which different standards were in use,
the most generally recognised being those of Troyes and
Cologne. Of coined money there existed a perplexing variety,
which made it almost impossible to ascertain the relative
value, not only of different coins, but of the same coin of
different issues. This resulted from the emperor or king
conferring the right of coinage upon various lords spiritual
and temporal, from whom it was ultimately acquired by
individual towns. The management was in most cases entrusted
to a company, temporary or permanent, inspected by an
official, the coin-tester, originally appointed by the
sovereign, but afterwards by the company, and confirmed by the
king or bishop. The house where the process of coining was
performed was called the mint, and the company who held the
rights of coinage in fee was known as the Mint House Company,
or simply the House Company. Very generally the office was
held by the Corporation of Goldsmiths. The want of perfect
supervision led to great debasement of the currency,
especially in Germany and France; but in England and Italy the
standard was tolerably well maintained.
{2205}
Payments in silver were much more common than in gold. Before
the Crusades the only gold coins known in Europe were the
Byzantine solides, the Italian tari, and Moorish maurabotini.
The solidi, which were originally of 23 to 23½ carat gold, but
subsequently very much deteriorated, were reckoned as equal to
twelve silver denars. They passed current in Southern and
Eastern Europe, Hungary, Germany, Poland, and Prussia. …
Solde, sol, and sou are only repeated transformations of the
name of the coin, which have been accompanied by still greater
changes in its value. The tari or tarentini derived its name
from the Italian town where it was originally struck. It was
less generally known than the solides, and was equal to
one-fourth the latter in value. The maurabotini or sarazens
were only of 15 carats gold. The name survives in the Spanish
maravedi, which, however, like the sou, is now made of copper
instead of gold. In the thirteenth century augustals,
florentines, and ducats, or zecchins (sequins), were coined in
Italy. The first-mentioned, the weight of which was half an
ounce, were named in honour of Frederick II., who was Roman
Cæsar and Augustus in 1252. The florentines, also known as
gigliati, or lilies, from the arms of Florence, which they
bore on one side, with the effigy of John the Baptist on the
reverse, were of fine gold and lighter than the solidi, about
64 being reckoned equal to the mark. The ducats or zecchins
were of Venetian origin, receiving their first name from the
Duca or Doge, and the other from the Zecca or Mint House. They
were somewhat less in value than the florentines, 66 or 67
being counted to the fine mark. Nearly equivalent in value to
these Italian coins were the gold guilders coined in the
fourteenth century in Hungary and the Rhine regions. The
Rhenish guilder was of 22½ or 23 carats fine, and in weight
1/66; of a mark of Cologne. The silver guilder was of later
production, and the name is now used as equivalent to florin.
… In silver payments, the metal being usually nearly pure,
it was common to compute by weight, coins and uncoined bullion
being alike put into the scale, as is still the case in some
Eastern countries. Hence the origin of the pound, livre, or
mark. The most widely diffused silver coin was the denarius,
which was, as in ancient Roman times, the 11/240 of a pound.
The name pending or pennig, by which the denarius was known
among the old Teutonic nations, seems to be connected with
pendere, to weigh out or pay; as the other ancient Teutonic
coin, the sceat, was with sceoton, to pay, a word which is
preserved in the modern phrases 'scot free,' 'pay your scot.'
… Half-pennies and farthings were not known in the earliest
times, but the penny was deeply indented by two cross lines,
which enabled it to be broken into quarters or farthings
(feordings or fourthings). From the indented cross the
denarius was known in Germany as the kreutzer. … With such a
diversity of coinage, it was necessary to settle any
mercantile transaction in the currency of the place. Not only
would sellers have refused to accept money whose value was
unknown to them, but in many places they were forbidden to do
so by law. Merchants attending foreign markets therefore
brought with them a quantity of fine silver and gold in bars,
which they exchanged on the spot for the current coin of the
place, to be used in settling their transactions; the balance
remaining on hand they re-exchanged for bullion before
leaving. The business of money-changing, which thus arose, was
a very lucrative one, and was originally mostly in the hands
of Italian merchants, chiefly Lombards and Florentines. In
Italy the money-changers formed a guild, members of which
settled in the Netherlands, England, Cologne, and the
Mediterranean ports. In these different towns and countries
they kept up a close connection with each other and with
Italy, and at an early period (before the thirteenth century)
commenced the practice of assignments, i. e., receiving money
in one place, to be paid by an order upon their correspondents
in another, thus saving the merchant who travelled from
country to country the expense and risk of transporting
specie. In the thirteenth century this branch of business was
in extensive use at Barcelona, and in 1307 the tribute of
'Peter's pence' was sent from England to the Pope through the
Lombard exchangers. From 5 to 6 per cent., or more, was
charged upon the transaction, and the profitable nature of the
business soon led many wealthy and even noble Italian families
to employ their money in this way. They established a member
of their firm in each of the great centres of trade to receive
and pay on their account. In Florence alone (about 1350) there
are said to have been eighty such houses. Among these the
Frescobaldi, Bardi, and Peruzzi are well-known names; but the
chief place was taken by the famous Florentine house of the
Medici, who had banking houses established in sixteen of the
chief cities of Europe and the Levant. In the north of Europe,
before long, similar arrangements were established by the
merchants of the Hanseatic League. … Assignments of this
kind were drawn out in the form of letters, requesting the
person by whom the money was due to pay it over to another
party, named in the bill, on account of the writer, specifying
also the time within which and the form in which the payment
was to be made. They were thus known as letters, billets, or
bills of exchange, and appear in Italy as early as the
thirteenth and fourteenth centuries. Among the earliest
examples in existence are a letter of exchange, dated at Milan
in 1325, payable within five months at Lucca; one dated at
Bruges, 1304, and payable at Barcelona; and another, dated at
Bologna, 1381, payable in Venice. … 'The first writers who
treat of bills are Italians: the Italian language furnishes
the technical terms for drafts, remittances, currency, sight,
usance, and discount, used in most of the languages of
Europe.' … Of other branches of banking the germs also
appeared in the Middle Ages. Venice seems to have been the
first city to possess something answering to a deposit bank.
The merchants here united in forming a common treasury, where
they deposited sums of money, upon which they gave assignments
or orders for payment to their creditors, and to which similar
assignments due to themselves were paid and added on to the
amount at their credit. The taula di cambi (exchange counter)
of Barcelona was a similar institution, as also the bank of
St. George, at Genoa."
_J. Yeats,
Growth and Vicissitudes of Commerce,
appendix F._
The name "Lombards" was frequently given, during the Middle
Ages, to all the Italian merchants and money-lenders—from
Florence, Venice, Genoa, and elsewhere—who were engaged
throughout Europe in banking and trade.
{2206}
MONEY AND BANKING:
Florentine Banking.
"The business of money-changing seemed thoroughly at home
here, and it is not surprising that the invention of bills of
exchange, which we first meet with in 1199 in the relations
between England and Italy, should be ascribed to Florence. The
money trade seems to have flourished as early as the twelfth
century, towards the end of which a Marquis of Ferrara raised
money on his lands from the Florentines. In 1204 we find the
money-changers as one of the corporations. In 1228, and
probably from the beginning of the century, several
Florentines were settled in London as changers to King Henry
III.; and here, as in France, they conducted the money
transactions of the Papal chair in conjunction with the
Sienese. Their oldest known statute, which established rules
for the whole conduct of trade (Statuto dell' Università della
Mercatanzia) drawn up by a commission consisting of five
members of the great guilds, is dated 1280. Their guild-hall
was in the Via Calimaruzza, opposite that of the Calimala, and
was litter included in the buildings of the post-office, on
the site of which, after the post-office had been removed to
what was formerly the mint, a building was lately erected,
similar in architecture to the Palazzo of the Signoria, which
stands opposite. Their coat of arms displayed gold coins laid
one beside another on a red field. At the end of the
thirteenth century their activity, especially in France and
England, was extraordinarily great. But if wealth surpassing
all previous conception was attained, it not seldom involved
loss of repute, and those who pursued the calling ran the risk
of immense losses from fiscal measures to the carrying out of
which they themselves contributed, as well as those which were
caused by insolvency or dishonesty. … The names of Tuscans
and Lombards, and that of Cahorsiens in France, no longer
indicated the origin, but the trade of the money-changers, who
drew down the ancient hatred upon themselves. … France
possessed at this time the greatest attraction for the
Florentine money-makers, although they were sometimes severely
oppressed, which is sufficient proof that their winnings were
still greater than their occasional losses. … The Florentine
money market suffered the severest blow from England. At the
end of the twelfth century there were already Florentine
houses of exchange in London, and if Pisans, Genoese, and
Venetians managed the trade by sea in the times of the
Crusades, it was the Florentines mostly who looked after
financial affairs in connection with the Papal chair, as we
have seen. Numerous banks appeared about the middle of the
thirteenth century, among which the Frescobaldi, a family of
ancient nobility, and as such attainted by the prosecutions
against it, took the lead, and were referred to the
custom-house of the country for re-imbursement of the loans
made to the kings Edward I. and II. Later, the two great
trading companies of the Bardi and Peruzzi came into notice,
and with their money Edward III. began the French war against
Philip of Valois. But even in the first year of this war,
which began with an unsuccessful attack upon Flanders, the
king suspended the payments to the creditors of the State by a
decree of May 6, 1339. The advances made by the Bardi amounted
to 180,000 marks sterling, those of the Peruzzi to above
135,000, according to Giovanni Villani, who knew only too well
about these things, since he was ruined by them himself to the
extent of 'a sum of more than 1,355,000 gold florins,
equivalent to the value of a kingdom.' Bonifazio Peruzzi, the
head of the house, hastened to London, where he died of grief
in the following year. The blow fell on the whole city. …
Both houses began at once to liquidate, and the prevailing
disturbance contributed not a little to the early success of
the ambitious plans of the Duke of Athens. The real bankruptcy
ensued, however, in January 1346, when new losses had occurred
in Sicily. … The banks of the Acciaiuoli, Bonuccorsi,
Cocchi, Antellesi, Corsini, da Uzzano, Perendoli, and many
smaller ones, as well as numerous private persons, were
involved in the ruin. 'The immense loans to foreign
sovereigns,' adds Villani, 'drew down ruin upon our city, the
like of which it had never known.' There was a complete lack
of cash. Estates in the city found no purchasers at a third of
their former value. … The famine and pestilence of 1347 and
1348, the oppressions of the mercenary bands and the heavy
expenses caused by them, the cost of the war against Pope
Gregory XI., and finally the tumult of the Ciompi, left
Florence no peace for a long time. … At the beginning of the
fifteenth century industry was again flourishing in all its
branches in Florence, financial operations were extended, and
foreign countries filled with Florentine banks and mercantile
houses. … In London the most important firms had their
representatives, Bruges was the chief place for Flanders, and
we shall see how these connections lasted to the time of the
greatest splendour of the Medici. France is frequently
mentioned. The official representatives of the Florentine
nation resided in the capital, while numerous houses
established themselves in Lyons, in Avignon (since the removal
of the Papal chair to this town), in Nismes, Narbonne,
Carcassonne, Marseilles, &c. … The house of the Peruzzi
alone had sixteen counting-houses in the fourteenth century,
from London to Cyprus."
_A. van Reumont,
Lorenzo de' Medici,
book 1, chapter 4 (volume 1)._
"The three principal branches of industry which enriched the
Florentines were—banking, the manufacture of cloth, and the
dyeing of it, and the manufacture of silk. The three most
important guilds of the seven 'arti maggiori' were those which
represented these three industries. Perhaps the most important
in the amount of its gains, as well as that which first rose
to a high degree of importance, was the 'Arte del Cambio,' or
banking. The earliest banking operations seem to have arisen
from the need of the Roman court to find some means of causing
the dues to which it laid claim in distant parts of Europe to
be collected and transmitted to Rome. When the Papal Court was
removed to Avignon, its residence there occasioned a greatly
increased sending backwards and forwards of money between
Italy and that city. And of all this banking business, the
largest and most profitable portion was in the hands of
Florentine citizens, whether resident in Florence or in the
various commercial cities of Europe. We find Florentines
engaged in lending money at interest to sovereign princes as
early as the first quarter of the twelfth century."
_T. A. Trollope,
History of the Commonwealth of Florence,
book 4, chapter 1 (volume 2)._
{2207}
MONEY AND BANKING:
Genoa.
The Bank of St. George.
"The Bank of St. George, its constitution, its building, and
its history, forms one of the most interesting relies of
mediæval commercial activity. Those old grey walls, as seen
still in Genoa, begrimed with dirt and fast falling into
decay, are the cradle of modern commerce, modern banking
schemes, and modern wealth. … This Bank of St. George is
indeed a most singular political phenomenon. Elsewhere than in
Genoa we search in vain for a parallel for the existence of a
body of citizens distinct from the government—with their own
laws, magistrates, and independent authority—a state within a
state, a republic within a republic. All dealings with the
government were voluntary on the part of the bank. … But,
far from working without harmony, we always find the greatest
unanimity of feeling between these two forms of republics
within the same city walls. The government of Genoa always
respected the liberties of the bank, and the bank always did
its best to assist the government when in pecuniary distress.
… To define an exact origin for the bank is difficult; it
owed its existence to the natural development of commercial
enterprise rather than to the genius of anyone man, or the
shrewdness of any particular period in Genoese history. The
Crusades, and the necessary preparation of galleys, brought
into Genoa the idea of advancing capital for a term of years
as a loan to the government on the security of the taxes and
public revenues; but in those cases the profits were quickly
realized, and the debts soon cancelled by the monarchs who
incurred them. However, the expeditions against the Saracens
and the Moors were otherwise, and were undertaken at some risk
to Genoa herself. … Now large sums of money were advanced,
the profits on which were not spontaneous; it was more an
investment of capital for a longer term of years, which was
secured by the public revenues, but the profits of which
depended on the success of the expedition. In 1148 was the
first formal debt incurred by the government, and to meet the
occasion the same system was adopted which continued in vogue,
subject only to regulations and improvements which were found
necessary as time went on, until the days of the French
Revolution. The creditors nominated from amongst themselves a
council of administration to watch over the common interests,
and to them the government conceded a certain number of the
custom duties for a term of years until the debt should be
extinguished. This council of administration elected their own
consuls, after the fashion of the Republic governors. Every
hundred francs was termed a share (luogo) and every creditor a
shareholder (luogatorio). … Each separate loan was termed a
'compera,' and these loans were collectively known as the
'compere of St. George,' which in later years became the
celebrated bank. Each loan generally took the name of the
object for which it was raised, or the name of the saint on
whose day the contract was signed; and when an advance of
money was required, it was done by public auction in the
streets, when the auctioneer sold the investment to the ever
ready merchants, who collected outside the 'loggia,' or other
prominent position chosen for the sale. In a loud voice was
proclaimed the name and object of the loan, and the tax which
was to be handed over to the purchasers to secure its
repayment. So numerous did these loans become by 1252, that it
was found necessary to unite them under one head, with a
chancellor and other minor officials to watch over them. And
as time went on, so great was the credit of Genoa, and so easy
was this system found for raising money, that the people began
to grow alarmed at the extent of the liabilities. So, in 1302,
commissioners were appointed at a great assembly, two hundred
and seventy-one articles and regulations were drown up to give
additional security to investors, and henceforth no future
loan could be effected without the sanction of the consuls and
the confirmation of the greater council of the shareholders.
… During the days of the first doge, Simone Boccanegra,
great changes were to be effected in the working system of the
'compere of St. George.' To this date many have assigned the
origin of the Bank of St. George, but it will be seen only to
be a further consolidation of the same system, which had
already been at work two centuries. … In 1339, … at the
popular revolution, all the old books were burnt, and a new
commission appointed to regulate the 'compere.' … Instead
… of being the origin of the bank, it was only another step
in the growing wish for consolidation, which the expanding
tendency of the 'compere' rendered necessary; which
consolidation took final effect in 1407, when the Bank was
thoroughly organized on the same footing which lasted till the
end. Every year and every event tended towards this system of
blending the loans together, to which fact is due the
extensive power which the directors of the bank eventually
wielded, when all interests and all petty disputes were merged
together in one. … As time went on, and the French governor,
Boucicault, weighed on the treasury the burden of fresh
fortifications, and an expensive war; when Corsican troubles,
and the Turks in the East, caused the advance of money to be
frequent, an assembly of all the shareholders in all the loans
decided that an entire reorganization of the public debts
should take place. Nine men were elected to draw up a new
scheme, in 1407, and by their instrumentality all the shares
were united; the interest for all was to be seven per cent.,
and fresh officials were appointed to superintend the now
thoroughly constituted and re-named 'Bank of St. George.' And
at length we behold this celebrated bank. Its credit never
failed, and no anxiety was ever felt by any shareholder about
his annual income, until the days of the French Revolution.
… This Bank of St. George was essentially one of the times,
and not one which could have existed on modern ideas of
credit; for it was a bank which would only issue paper for the
coin in its actual possession, and would hardly suit the
dictates of modern commerce. It was not a bank for borrowers
but for capitalists, who required enormous security for
immense sums until they could employ them themselves. … One
of the most interesting features in connection with the
dealings of the bank with the Genoese government, and a
conclusive proof of the perfect accord which existed between
them, was the cession from time to time of various colonies
and provinces to the directors of the bank when the government
felt itself too weak and too poor to maintain them. In this
manner were the colonies in the Black Sea made over to the
bank when the Turkish difficulties arose.
{2208}
Corsica and Cyprus, also towns on the Riviera, such as
Sarzana, Ventimiglia, Levanto, found themselves at various
times under the direct sovereignty of the bank. … It is
melancholy to have to draw a veil over the career of this
illustrious bank with the Revolution of 1798. The new order of
things which Genoa had learnt from France deemed it
inconsistent with liberty that the taxes, the property of the
Republic, should remain in the hands of the directors of St.
George; it was voted a tyranny on a small scale, and the
directors were compelled to surrender them; and inasmuch as
the taxes represented the sole source from which their income
was derived, they soon discovered that their bank notes were
useless, and the building was closed shortly afterwards. In
1804 and 1814 attempts were made to resuscitate the fallen
fortunes of St. George, but without avail; and so this bank,
the origin of which was shrouded in the mysteries of bygone
centuries, fell under the sweeping scythe of the French
Revolution."
_J. T. Bent,
Genoa,
chapter 11._
See, also, GENOA: A. D. 1407-1448.
MONEY AND BANKING: 16-17th Centuries.
Monetary effects of the Discovery of America.
"From 1492, the year of the discovery of the New World, to
1500, it is doubtful whether [the mines of Mexico and Peru]
… yielded on an average a prey of more than 1,500,000 francs
(£60,000) a year. From 1500 to 1545, if we add to the treasure
produced from the mines the amount of plunder found in the
capital of the Montezumas, Ténochtitlan (now the city of
Mexico), as well as in the temples and palaces of the kingdom
of the Incas, the gold and silver drawn from America did not
exceed an average of sixteen million francs (£640,000) a year.
From 1545, the scene changes. In one of the gloomiest deserts
on the face of the globe, in the midst of the rugged and
inhospitable mountain scenery of Upper Peru, chance revealed
to a poor Indian, who was guarding a flock of llamas, a mine
of silver of incomparable richness. A crowd of miners was
instantly attracted by the report of the rich deposits of ore
spread over the sides of this mountain of Potocchi—a name
which for euphony the European nations have since changed to
Potosi. The exportation of the precious metals from America to
Europe now rose rapidly to an amount which equalled, weight
for weight, sixty millions of francs (£2,400,000) of our day,
and it afterwards rose even to upwards of eighty millions. At
that time such a mass of gold and silver represented a far
greater amount of riches than at present. Under the influence
of so extraordinary a supply, the value of these precious
metals declined in Europe, in comparison with every other
production of human industry, just as would be the case with
iron or lead, if mines were discovered which yielded those
metals in superabundance, as compared with their present
consumption, and at a much less cost of labour than
previously, just in fact as occurs in the case of manufactures
of every kind, whenever, by improved processes, or from
natural causes of a novel kind, they can be produced in
unusual quantities, and at a great reduction of cost. This
fall in the value of gold and silver, in comparison with all
other productions, revealed itself by the increased quantity
of coined metal which it was necessary to give in exchange for
the generality of other articles. And it was thus that the
working of the mines of America had necessarily for effect a
general rise of prices, in other words, it made all other
commodities dearer. The fall in the value of the precious
metals, or that which means the same thing, the general rise
of prices, does not appear to have been very great, out of
Spain, till after the middle of the 16th century. Shortly
after the commencement of the 17th century, the effects of the
productiveness of the new mines and of the diminished cost of
working them were realised in all parts of Europe. For the
silver, which had been extracted in greater proportion than
the gold, and on more favourable terms, the fall in value had
been in the proportion of 1 to 3. In transactions where
previously one pound of silver, or a coin containing a given
quantity of this metal, had sufficed, henceforth three were
required. … After having been arrested for awhile in this
downward course, and even after having witnessed for a time a
tendency to an upward movement, the fall in the value of the
precious metals, and the corresponding rise in prices, resumed
their course, under the influence of the same causes, until
towards the end of the 18th century, without however
manifesting their influence so widely or intensely as had been
witnessed after the first development of the great American
mines. We find, as the result, that during the first half of
the 19th century, the value of silver fell to about the sixth
of what it was before the discovery of America, when compared
with the price of corn."
_M. Chevalier,
On the Probable Fall in the Value of Gold
(translated by Cobden),
section 1, chapter 1._
MONEY AND BANKING: 17th Century.
The Bank of Amsterdam.
"In 1609, the great Bank of Amsterdam was founded, and its
foundation not only testifies to the wealth of the republic,
but marks an epoch in the commercial history of Northern
Europe. Long before this period, banks had been established in
the Italian cities, but, until late in the history of the Bank
of England, which was not founded until nearly a century
later, nothing was known on such a scale as this. It was
established to meet the inconvenience arising from the
circulation of currency from all quarters of the globe, and to
accommodate merchants in their dealings. Anyone making a
deposit of gold or silver received notes for the amount, less
a small commission, and these notes commanded a premium in all
countries. Before the end of the century its deposits of this
character amounted to one hundred and eighty million dollars,
an amount of treasure which bewildered financiers in every
other part of Europe."
_D. Campbell,
The Puritan in Holland, England, and America,
volume 2, pages 323-324._
MONEY AND BANKING: 17th Century.
Indian Money used in the American Colonies.
Sea shells, strung or embroidered on belts and garments,
formed the "wampum" which was the money of the North American
Indians (see WAMPUM). "Tradition gives to the Narragansetts
the honor of inventing these valued articles, valuable both
for use and exchange. This tribe was one of the most powerful,
and it is asserted that their commercial use of wampum gave
them their best opportunities of wealth. The Long Island
Indians manufactured the beads in large quantities and then
were forced to pay them away in tribute to the Mohawks and the
fiercer tribes of the interior.
{2209}
Furs were readily exchanged for these trinkets, which carried
a permanent value, through the constancy of the Indian desire
for them. The holder of wampum always compelled trade to come
to him. After the use of wampum was established in colonial
life, contracts were made payable at will in wampum, beaver,
or silver. … The use began in New England in 1627. It was a
legal tender until 1661, and for more than three quarters of a
century the wampum was current in small transactions. For more
than a century, indeed; this currency entered into the
intercourse of Indian and colonist. … Labor is a chief
factor in civilized society and the labor of the Indian was
made available through wampum. As Winthrop shows, 10,000
beaver skins annually came to the Dutch from the Great Lake.
The chase was the primitive form of Indian industry and furs
were the most conspicuous feature of foreign trade, as gold is
to-day, but wampum played a much larger part in the vital
trade of the time. Wampum, or the things it represented,
carried deer meat and Indian corn to the New England men. Corn
and pork went for fish; fish went for West India rum,
molasses, and the silver which Europe coveted. West India
products, or the direct exchange of fish with the Catholic
countries of Europe, brought back the goods needed to
replenish and extend colonial industries and trade. … As
long as the natives were active and furs were plenty, there
appears to have been no difficulty in passing any quantity of
wampum in common with other currencies. The Bay annulled its
statutes, making the beads a legal tender in 1661. Rhode
Island and Connecticut followed this example soon after. …
New York continued the beads in circulation longer than the
regular use prevailed in New England. In 1693 they were
recognized in the definite rates of the Brooklyn ferry. They
continued to be circulated in the more remote districts of New
England through the century, and even into the beginning of
the eighteenth."
_W. B. Weeden,
Indian Money as a Factor in New England Civilization,
pages 5-30._
MONEY AND BANKING: 17th Century.
Colonial Coinage in America.
"The earliest coinage for America is said to have been
executed in 1612, when the Virginia Company was endeavoring to
establish a Colony on the Summer Islands (the Bermudas). This
coin was of the denomination of a shilling, and was struck in
brass." The "pine-tree" money of Massachusetts" was instituted
by the Colonial Assembly in 1652, after the fall of Charles I.
… This coinage was not discontinued until 1686; yet they
appear to have continued the use of the same date, the
shillings, sixpences, and threepences all bearing the date
1652, while the twopenny pieces are all dated 1662. … After
the suppression of their mint, the Colony of Massachusetts
issued no more coins until after the establishment of the
Confederacy. … The silver coins of Lord Baltimore, Lord
Proprietor of Maryland, were the shilling, sixpence, and
fourpence, or groat."
_J. R. Snowden,
Description of Ancient and Modern Coins,
pages 85-87._
See PINE TREE MONEY.
MONEY AND BANKING: 17-18th Centuries.
Banking in Great Britain.
Origin and influence of the Bank of England.
"In the reign of William old men were still living who could
remember the days when there was not a single banking house in
the city of London. So late as the time of the Restoration
every trader had his own strong box in his own house, and,
when an acceptance was presented to him, told down the crowns
and Caroluses on his own counter. But the increase of wealth
had produced its natural effect, the subdivision of labour.
Before the end of the reign of Charles II. a new mode of
paying and receiving money had come into fashion among the
merchants of the capital. A class of agents arose, whose
office was to keep the cash of the commercial houses. This new
branch of business naturally fell into the hands of the
goldsmiths, who were accustomed to traffic largely in the
precious metals, and who had vaults in which great masses of
bullion could lie secure from fire and from robbers. It was at
the shops of the goldsmiths of Lombard Street that all the
payments in coin were made. Other traders gave and received
nothing but paper. This great change did not take place
without much opposition and clamour. … No sooner had banking
become a separate and important trade, than men began to
discuss with earnestness the question whether it would be
expedient to erect a national bank. … Two public banks had
long been renowned throughout Europe, the Bank of Saint George
at Genoa, and the Bank of Amsterdam. … Why should not the
Bank of London be as great and as durable as the Banks of
Genoa and Amsterdam? Before the end of the reign of Charles
II. several plans were proposed, examined, attacked and
defended. Some pamphleteers maintained that a national bank
ought to be under the direction of the King. Others thought
that the management ought to be entrusted to the Lord Mayor,
Alderman and Common Council of the capital. After the
Revolution the subject was discussed with an animation before
unknown. … A crowd of plans, some of which resemble the
fancies of a child or the dreams of a man in a fever, were
pressed on the government. Pre-eminently conspicuous among the
political mountebanks, whose busy faces were seen every day in
the lobby of the House of Commons, were John Briscoe and Hugh
Chamberlayne, two projectors worthy to have been members of
that Academy which Gulliver found at Lagado. These men
affirmed that the one cure for every distemper of the State
was a Land Bank. A Land Bank would work for England miracles
such as had never been wrought for Israel. … These blessed
effects the Land Bank was to produce simply by issuing
enormous quantities of notes on landed security. The doctrine
of the projectors was that every person who had real property
ought to have, besides that property, paper money to the full
value of that property. Thus, if his estate was worth two
thousand pounds, he ought to have his estate and two thousand
pounds in paper money. Both Briscoe and Chamberlayne
treated with the greatest contempt the notion that there could
be an over-issue of paper as long as there was, for every ten
pound note, a piece of land in the country worth ten pounds.
… All the projectors of this busy time, however, were not so
absurd as Chamberlayne. One among them, William Paterson, was
an ingenious, though not always a judicious speculator. Of his
early life little is known except that he was a native of
Scotland, and that he had been in the West Indies. … This
man submitted to the government, in 1691, a plan of a national
bank; and his plan was favourably received both by statesmen
and by merchants.
{2210}
But years passed away; and nothing was done, till, in the
spring of 1694, it became absolutely necessary to find some
new mode of defraying the charges of the war. Then at length
the scheme devised by the poor and obscure Scottish adventurer
was taken up in earnest by Montague [Charles Montague, then
one of the lords of the treasury and subsequently Chancellor
of the Exchequer]. With Montague was closely allied Michael
Godfrey. … Michael was one of the ablest, most upright and
most opulent of the merchant princes of London. … By these
two distinguished men Paterson's scheme was fathered. Montague
undertook to manage the House of Commons, Godfrey to manage
the City. An approving vote was obtained from the Committee of
Ways and Means; and a bill, the title of which gave occasion
to many sarcasms, was laid on the table. It was indeed not
easy to guess that a bill, which purported only to impose a
new duty on tonnage for the benefit of such persons as should
advance money towards carrying on the war, was really a bill
creating the greatest commercial institution that the world
had ever seen. The plan was that £1,200,000 should be borrowed
by the government on what was then considered as the moderate
interest of eight per cent. In order to induce capitalists to
advance the money promptly on terms so favourable to the
public, the subscribers were to be incorporated by the name of
the Governor and Company of the Bank of England. The
corporation was to have no exclusive privilege, and was to be
restricted from trading in any thing but bills of exchange,
bullion and forfeited pledges. As soon as the plan became
generally known, a paper war broke out. … All the goldsmiths
and pawnbrokers set up a howl of rage. Some discontented
Tories predicted ruin to the monarchy. … Some discontented
Whigs, on the other hand, predicted ruin to our liberties. …
The power of the purse, the one great security for all the
rights of Englishmen, will be transferred from the House of
Commons to the Governor and Directors of the new Company. This
last consideration was really of some weight, and was allowed
to be so by the authors of the bill. A clause was therefore
most properly inserted which inhibited the Bank from advancing
money to the Crown without authority from Parliament. Every
infraction of this salutary rule was to be punished by
forfeiture of three times the sum advanced; and it was
provided that the King should not have power to remit any part
of the penalty. The plan, thus amended, received the sanction
of the Commons more easily than might have been expected from
the violence of the adverse clamour. In truth, the Parliament
was under duress. Money must be had, and could in no other way
be had so easily. … The bill, however, was not safe when it
had reached the Upper House," but it was passed, and received
the royal assent. "In the City the success of Montague's plan
was complete. It was then at least as difficult to raise a
million at eight per cent. as it would now be to raise forty
millions at four per cent. It had been supposed that
contributions would drop in very slowly: and a considerable
time had therefore been allowed by the Act. This indulgence
was not needed. So popular was the new investment that on the
day on which the books were opened £300,000 were subscribed;
300,000 more were subscribed during the next 48 hours; and, in
ten days, to the delight of all the friends of the government,
it was announced that the list was full. The whole sum which
the Corporation was bound to lend to the State was paid into
the Exchequer before the first instalment was due. Somers
gladly put the Great Seal to a charter framed in conformity
with the terms prescribed by Parliament; and the Bank of
England commenced its operations in the house of the Company
of Grocers. … It soon appeared that Montague had, by
skilfully availing himself of the financial difficulties of
the country, rendered an inestimable service to his party.
During several generations the Bank of England was
emphatically a Whig body. It was Whig, not accidentally, but
necessarily. It must have instantly stopped payment if it had
ceased to receive the interest on the sum which it had
advanced to the government; and of that, interest James would
not have paid one farthing."
_Lord Macaulay,
History of England,
chapter 20._