First Colonial American Bankers

The first bankers in the colonies were most likely goldsmiths, and the first paper money, merely receipts for gold deposits. These receipts were easy to handle and carry; nevertheless, they represented real backing (gold, bullion, or coin). As people neglected to collect the real gold, using the receipts instead as a form of tender, some goldsmiths merely extended credit on the basis of the gold deposits. British colonists derived their concept of banking from the English system. In the seventeenth century, after a series of international wars, England turned to a government-sanctioned but privately owned Central Bank, erroneously named the Bank of England. Operated by foreign banks, it loaned money that was supposed to be secured by the direct taxation of the people. For a time, England appeared to prosper as a result of these loans, but in reality, the national debt rose by 1,280 percent from 1694 to 1698. It has been suggested by Andrew McFarland Davis in his two-volume history on colonial currency, first published in 1900, that it may be doubted whether the founders of the Bank of England, in 1694, had before them any other well-defined precedents upon which to base an opinion as to the probable success of paper money, than were to be found in the ordinary mercantile bills of exchange, the goldsmiths’ notes, and the bills of public credit of the Colony of the Massachusetts Bay. Thus, the Bank of England, in spite of its poor beginnings, was stepping into a new era and offering a new definition of banking. Other banks that might have influenced the Bank of England’s design included the Bank of Amsterdam, the Bank of Venice, and the Bank of Genoa. Also, the move by the Colony of Massachusetts Bay several years earlier to extend public credit was apparently an important catalyst in the emerging history of banking. As Davis writes, When the Assembly of the Colony of the Massachusetts Bay first authorized the emission of bills of public credit, they were securing for themselves the right to claim that they were practically the pioneers in a great economic experiment. Indeed, in an act proposed by the magistrates of the Massachusetts Bay Colony as early as May 1654, they wrote: [W]hatever person or persons be they stranngers or Inhabitants that shall directly or Indirectly export out of this Jurisdiccon any of the coine of this countrie after the publication hereof shall forfeite his or their whole estate one halfe to the countrie and the other halfe to such pson or psons as shall sue for the same. They also proposed that there should be a Water Bayly or searcher appointed in every port-towne who would search any suspitious persons or vessells, chests, truncks or any other things. The discovered coin would then be divided, half to the officer who discovered the theft and half to the countrie. By the mid-1700s, however, with British debt skyrocketing, the Crown looked to its American colonies for revenue. At this time, the colonies issued their own paper currency. According to Benjamin Franklin, when asked to explain the colonies’ economic prosperity, We issue it [colonial scrip] in proper proportion to make the goods pass easily from the producers to the consumers. In this manner, creating ourselves our own paper money, we control its purchasing power and we have no interest to pay to any one. On the heels of this, Britain moved to forbid the minting or regulation of colonial currency within the colonies, forcing the colonists to rely on British or European money. This led to incredible hardships, because coin had always been scarce and its value was never standardized. What foreign specie came into the colonies was always quickly spent on imports and foreign goods. From Spanish pieces of eight to British sterling, there was no consistency in money’s exchange rate. Not until 1672 was there a legal rating of Spanish pieces of eight in New England, and it seems probable that this legislation was the result of two circumstances: first, that the piece of eight having a recognized rate in shillings at which it would pass, people could and did avail themselves of it as a medium of trade ; and second that the General Court was desirous of protecting the public against the light weight pieces if possible. The Best Banks to Work For – American Banker Tracing America’s Enslavement To Jewish Bankers Real Jew News Alexander Hamilton, Banking Mercantilist – Alt-M

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