Credit is important for nearly all businesses. Even for companies without a need to finance large projects, like small businesses in capital-light sectors like retail, capital is still tied up in inventories and receivables. Banks can be one source of credit but banks are often disinterested in serving small businesses, as was the case in…
One of the most famous American bankers in history, John Pierpont Morgan, got his start not in New York but in London. There, his father was a partner in a firm founded by another American abroad, George Peabody. Peabody was born poor and received very little education; after finding success in business in America, he…
In 1660, the English parliament invited the exiled royal family to return. Charles II was allowed to rule, ending over a decade of republican administration that began with Parliament’s victory in the English Civil War. The restored king Charles II was, like Charles I, strapped for cash. Temporary relief would periodically come from the considerable…
Medieval Italy was home to a burgeoning banking system, even a century before the start of the Medici banking operation. This system was concentrated in the Tuscan cities of Siena, Lucca, and Florence but its reach was international. Tuscan bankers financed merchants conducting international trade before extending their services to kings and popes. These relationships…
The Stock Market Crash of 1929, the panic that led to the Great Depression, was not the best time to be a banker. It was an even worse time to be a trader as strategies that worked in the boom years now produced only losses. Goldman Sachs was both a banking and a trading organization,…
In spite of, if not because of, their importance, banks are not usually popular. They are frequently the target of zealous reformers. Yet, bold policies rushed into enthusiastically should be the most worrisome. Campaigning against any institution in the name of progress should bring into question what exactly will replace it. Left unaddressed or poorly…
The financial system of classical Rome was developed enough that it had long abandoned a barter economy by the time of Caesar or Augustus. Rather, it had an efficient monetary system. This is not to say that it was an economy where people only, or even mostly, transacted in coins. Indeed, credit was also important.…
For a small country, Switzerland punches above its weight in banking. This has largely been attributed to bank secrecy rules that make Swiss banks particularly useful to some. Over the past century, the country’s banking sector has been associated with secrecy, accused of facilitating tax evasion and other crimes. While a professional standard in banking…
While credit may hardly be considered unavailable to the poor in wealthy countries today, it’s easy to think it only became so accessible in recent times. In truth, though there will generally be more eager lenders to the rich than to the poor, and while the forms of credit available to the latter have changed,…
Over the last half century, regulation of banks has generally diminished as governments have shed the controls implemented during the Great Depression. In the United States, as elsewhere, banking used to be a very staid business with its workings dictated more often by regulation than by competitive dynamics. Indeed, for decades, the interest rates paid…
While they had existed for centuries before, it was during the 19th century that access to banks was extended to virtually all classes. In Europe and America, new types of banks were formed, including credit unions, that sought to provide dependable financial services to ordinary people. The first of these credit unions were formed in…
Whether usury laws stunted the growth of finance, especially in early modern Europe, is a question that causes much disagreement. The degree of enforcement of these laws may have had some impact on the level of financial development in different parts of Europe but it would be difficult to argue that usury laws stifled all…
