Goldsmith to Banker

In the early days the goldsmith had exchanged foreign currency, keeping some in hand to supply travelers abroad and melting down the rest in the course of their basic trade. They had also become recognizable and reliable keepers of money and values for people without their own safe custody facilities. The new men were bankers but they were still goldsmiths.

Goldsmith bankers, as they were known, had developed into an efficient system of private banking in London and were to develop into the famous banking firms, of which some still exist today. Coutts & Company, now affiliated to the National Westminster Bank, dates from 1692.

The receipts given by goldsmiths for deposits have been compared to modern day cheques. However, it would seem that their similarities, as with Bills of Exchange, were their negotiable nature. Drawn notes only became known as cheques a century later.

The cheque could be compared with a drawn note, by which a depositor addressed a letter to his goldsmith authorizing the payment to his creditor of the sum owed. The creditor would then take this 'note' to the depositor's goldsmith and there receive the sum in cash.

The earliest known cheque dates 1659

Mr Morris and Mr Clayton Pray pay the bearer hereof MrDelboe or order four hundred pounds I say £400 - for yours NicoVanacher. London the 16th February 1659. Mr Morris pray pay until Mr Oliver Cromwell (a goldsmith in Townstreet) the sum of sixtie[sic] value received of Mr Thomas Colebrook and place to the account of - Yrs Nicholas Vanacher Amberley December the 13ths - 1665 - At Flying Horse in Cornehill, London

In the history of British banking the goldsmiths development of the promissory note and cheque, demand and time deposits, balance sheets and cash reserves provided the primitive but nevertheless essential elements of a modern banking system.

Vocabulary list

1. lending – выдачаденегвдолг, кредитование v. to lend n. lender syn. creditor

2. toputrestraintson – налагать ограничение (на что-либо)

3. wealth – состояние, благосостояние

4. surplus money – избыточныеденьги, излишки syn. excessive

5. interest – процент, процентныйдоход to lend at (with) interest

interest rate – процентная ставка

6. borrowing - заимствование v. to borrow n. borrower syn. debtor

7. safe custody – безопасноехранение syn. safekeeping

8. facility – услуга, возможность bankingfacilities – банковские услуги

9. goldsmithbankers – ювелиры, занимающиеся хранением и обменом денежных средств

10. receipt - расписка

11. cheque (check) – чек, платежное поручение

12. bill of Exchange – переводной вексель

13. negotiable – обратимый (покупаемый и продающийся)

14. to owe somebody/something – быть должным (кому-либо что-либо) n. debt, debtor

15. to authorize – разрешать, уполномочить n. authorization

16. promissory note – долговоеобязательство syn. debt obligation

17. deposit – депозит; банковскийдепозит v. to deposit n. depositor demand deposit – депозитдовостребования time deposit – срочныйдепозит

18. cash reserve – резерв наличности

Notes

1. usury - ростовщичество

2. to be derived (from) – происходитьот n. derivative

3. in the course of basic trade – зд. занимаясьобычнымремеслом

4. adrawnnote – выписанное платежное поручение

Ex 1. Suggest the Russian equivalents:

transactions involving credit; a means of recording debts; banking facilities; safe keeping of deposits; merchants developed banking; a feudal community; a time of expansion of trade at home and abroad; the usury laws; the foundation was laid; to follow the example; exchanged foreign currency keeping some in hand; to supply travelers abroad; people without their own safe custody facilities; Englishmen of business; to date from 1692; to be compared to modern day cheques; essential elements.

Ex. 2. Fill in the gaps with the words and expressions from the text.

1. Before the introduction of a …… there were many instances of ….. in primitive communities.

2. Usury laws ….. by the Church ….. on lending.

3. The Italian merchants arrived at a time when England was changing from a ….. , with virtually all its ….. in land, to a commercial society in which ….. needed to be ….. .

4. The Church disallowed ….. .

5. The goldsmiths had also become ….. and ….. keepers of money and values for people without ….. .

6. Englishmen of business ….. of the Italian merchants.

7. The ….. given by goldsmiths for ….. have been compared to ….. .

8. In the history of British banking the goldsmiths development of ….. and ….. , ….. deposits and ….. provided the primitive but nevertheless ….. of a modern banking system.

Ex. 3. Find in the text the English equivalents for the following:

сделки с элементами кредита; средство для записи долгов; банковские услуги; широкая международная торговля; упадок банковского дела; законы о ростовщичестве; использоваться для получения прибыли; эра открытий; расширение торговли; дача взаймы под процент; надёжные хранители; эффективная система частных банков; выплата кредитору суммы задолженности; долговые обязательства и чеки; срочные депозиты; депозиты до востребования; основные элементы.

Ex. 4. Match each term with the appropriate explanation.

deposit, interest, lending, debt, depositor, promissory note, debtor

1. A person who places money with a bank or who has a bank account.

2. Money placed in a bank account.

3. A sum paid or taken for use of money or for borrowing money.

4. A person who has borrowed funds with the promise to return them or an equivalent (usually plus interest).

5. A sum of money borrowed on condition of being returned.

6. An activity of giving money on condition that it is returned and that interest is paid for its temporary use.

7. A formal document, in writing, containing a promise to pay a certain sum of money to, or to the order of, a named person, or to the leader of the document.

Ex 5. Answer the questions and the assignments.

1. How did the need for banking facilities show itself even before the introduction of a monetary system? Give examples.

2. What is usury? Why do you think the Church put restraints on lending?

3. How did banking start in Great Britain? Expand on the role of goldsmiths.

4. What valuable documents were in circulation among merchants and goldsmiths? What functions did they perform?

5. Speak of the initial banking services developed in Great Britain/

Ex 6. Find in the text the words and phrases that refer to the following notions and comment on them:

1. transactions involving credit

2. restraints on lending

3. receipts given by goldsmiths

4. the lending of money with interest

Ex 7. Comment on the statements.

1. “In Greece, Babylon and the Roman Empire an extensive international trade demanded banking facilities.”

2. “…England was changing from a feudal community … to a commercial society.”

3. “the new men were bankers but they were still goldsmiths.”