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MoneyWhence It Came, Where It Went$
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John Kenneth Galbraith

Print publication date: 2017

Print ISBN-13: 9780691171661

Published to Princeton Scholarship Online: May 2018

DOI: 10.23943/princeton/9780691171661.001.0001

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(p.21) Chapter 3 Banks

John Kenneth Galbraith

James K. Galbraith

Princeton University Press

This chapter discusses the history of banks as one of three progenitors of money, the others being mints and treasury secretaries or finance ministers. Banking had a substantial presence in Roman times, then declined during the Middle Ages as trade became more hazardous and lending came into conflict with the religious objection to usury. The Renaissance saw the revival of money due in part to trade. It is fair to say that the decline and revival of banking took place in Italy. The banking houses of Venice and Genoa are acknowledged as the precursors of modern commercial banks. The chapter also considers how banking that developed from the seventeenth century spawned cycles of euphoria and panics. Finally, it examines the case of John Law, who established a bank in France that was authorized to issue notes in the form of loans, with the state as the principal borrower.

Keywords:   banks, money, Italy, euphoria, panics, John Law, France, bank notes, loans

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