VINNQUITY)

BANKING

ETC.

CHAPTER I.

PART I.

THE ORIGIN AND USES OF BANKS.

THE WORD BANK' is derived from the Italian word 'banco,' a bench, which was erected in the market-place, where it was customary to exchange money. The Lombard Jews were the first to practise this system, the first bench having been established in Italy A.D. 808. Some authorities assert that the Lombard merchants commenced the business of money-dealing-employing bills of exchange as remittances-about the beginning of the thirteenth century; and that such a practice was also known in the south of France about the same period. Other authorities give these benches the name of cambii, informing us that they were

placed before the church doors for the purpose of exchanging the money of foreigners. These money-changers obtained the names of Lombards, or Cahoursini, the latter from a celebrated moneychanger who flourished in the south of France. The Lombards spread themselves far and wide, finding their trade very profitable, and soon became established in every country. The tendency to imposition caused a supervision by the magistrates to be brought about, who obliged the bankers to deposit a certain sum as a guarantee for their good faith. Among other countries, these Jews found their way to England, and carried on their trade in the city of London; the street which they selected for their operations having borne the name of Lombard Street ever since, where some of the principal banks in London still carry on their business. These Lombard merchants were believed in England to have been natives of one of the four republics of Genoa, Lucca, Florence, or Venice,* and were supposed to have been sent to England by Pope Gregory IX. to provide convents and other societies with money; it having been made known that they

* Anderson 'On Commerce.'

were unable to pay the tenths,' which were rigorously enforced that year, 13 Henry III., 1229. The Lombard Jews were notorious for their usurious transactions, and they carried them to such an extent that they were expelled from the country in the reign of Queen Elizabeth.

When these Jews failed in Lombardy, their benches were broken by the populace, and hence our word bankrupt.

6

We find that 'argentaria' was the ancient Latin name for a bank or money-changer's shop, and that the banker or money-changer was called argentarius.' As these Lombard Jews came into such disrepute for their usurious dealings, they subsequently changed their name for cambiator or 'cambitor,' meaning an exchanger. We learn that Philip the Fair formed these money-dealers into a corporation, and security was demanded by James II. of Arragon, previous to their commencing business, according to the statutes of Marseilles. Bills of exchange are said to have originated with these cambitores. Persons about to travel, instead of encumbering themselves with coin, applied to a cambitor and received in exchange for their specie a bill of exchange drawn upon another cambitor, as near as possible to the

place where they were going. These letters were called literæ cambitoria. Accurate information about the mode in which such documents were drawn is impossible to obtain. Some have recorded that these bills were drawn payable to a certain person; others assert that they were payable to bearer, and circulated from one to the other like our bank-notes. It is tolerably certain, however, that the Jews would pursue a system which conduced more to their own advantage than that of the public.

About the middle of the twelfth century it became evident, as the advantage of coined money was gradually acknowledged, that there must be some controlling power, some corporation of men who would undertake to keep the coins- that were to bear the royal stamp-up to a certain standard of value; as, independently of the 'sweating '*—which invention we may place to the credit of the ingenuity of the Lombard merchants-all coins will, by wear or abrasion, become thinner, and consequently less valuable; and it is of the last importance, not only for the credit

* A term given to various processes invented by the Jews for obtaining a small quantity of gold from each sovereign, or other gold coin, without the loss being perceptible.