A Quick🧵from old Notebook on the Origin of the Word Bank.
Given Lending is what you get your money (when you are in Banking) <Hopefully the world of NeoBanks will learn it soon>. Anyways, let me start with Lending history.
Given Lending is what you get your money (when you are in Banking) <Hopefully the world of NeoBanks will learn it soon>. Anyways, let me start with Lending history.
The Catholic Church deems the business of banking as dirty and unchristian. So, the banking professions are
assigned to the Jewish community. In the early Middle Ages, grain merchants in Italy began lending money to their suppliers to cover the costs of planting & cultivating.
assigned to the Jewish community. In the early Middle Ages, grain merchants in Italy began lending money to their suppliers to cover the costs of planting & cultivating.
They manage to bypass the church’s ban on taking out interest rates by referring to them as “gifts” and rewards as “risks” in their accounting.
As time went by, this business of lending money soon proved more profitable an enterprise than the grain trade itself.
As time went by, this business of lending money soon proved more profitable an enterprise than the grain trade itself.
This led a few merchants to abandon agriculture altogether and establish their own money-lending ventures. While still operating their business from where they always had: sitting behind nothing more than a low wooden table or Banca. This is how the Bank as a word got originated.
Where there’s money to be made, there’s money to be lost. Some of these moneylenders started to offer insurance for traders who were unsure of the success of their crops or reliability of their supply routes, while others expanded their businesses beyond merely financing theirs.
In the meantime, the cash obtained from these deposits and insurances could be loaned out to other merchants and suppliers – but there was never any guarantee that these investments were sound. A moneylender who lost his traders’ cash or deposits in bad investments..
.. would ultimately have to face an understandably angry crowd of ruined customers, who would symbolically smash his table to pieces – and it’s from the Italian banca rotta, or ‘broken bench’, that we eventually became bankrupt.
Nevertheless, all this resulted in a growing number of banks in both Genoa and Florence. Medici, the famous Italian banking family, becomes profitable by starting to offer people money lending services, they indirectly begin to control Florence as the city also.
End.
End.
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