FI 101 - Banking

FI 101 - Banking - History of Banking The history of...

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History of Banking The history of banking has deep routes, not only in the United States but throughout the world. Banking has been around since before the fifth century. In the beginning of the fifth century Medici was Europe's greatest banking culture. The Medici even used interest rates, usually around 12% which is similar to today, the twenty-first century. The sixteenth century enabled the use of safe deposit boxes and also the use of financial transactions without the physical coins. This use was prevalent throughout Greece; the only drawback that was associated with this practice was the risk of high-bankruptcy. Venice, Italy was one of the first places to develop and actively use the check. Venice during the 17 th and 18 th century, issued state checks to its citizens. Paper currency was also introduced in Europe in the 17th century. From here on banking throughout the world developed to where it is today. The first bank in the United States of America started in 1791. It opened under the idea of Alexander Hamilton. It was always his idea that a national bank would help the economy. After the success of the first national bank, a second bank was opened in 1816 and closed in 1832. During this time period, citizens were very cautious about lending out money. As a result, loans were generally short, thirty to sixty days. After the closing of the second national bank in 1832, state governors took over the job of maintaining them. Unfortunately, one problem to this was that bank notes that were issued were not always able to be cashed out. Customers would return to the bank asking to cash out their bank notes and there would be no currency, gold, or silver. This resulted in the use of counterfeit money. By 1860, there were over 10,000 different paper currencies in circulation. Congress passed the National Currency Act in 1863. This law
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FI 101 - Banking - History of Banking The history of...

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