In: Categories » Legal and finance » Historical facts » What were The Lombard Banks
|
Lombard banks were banks that accepted deposits of goods and issued credits on account. These credits could pass from one person’s account to another’s as a medium of exchange. The term Lombard probably came from the importance of Italian bankers in the early history of the London financial market, sometimes referred to as Lombard Street, just as Wall Street signifies the financial center of New York. In early English history, Lombard was another name for “Italian.” According to Webster’s dictionary Lombard, broadly speaking, can refer to a banker, moneylender, bank, or pawnshop. In 1661 Francis Cradocke published a pamphlet, Wealth Rediscovered, in which he proposed the establishment of banks secured by things other than precious metals or financial assets. Among the commodities he advanced as possible securities were jewels, “rich pictures or hangings,” silks, iron, sugar, wines, tobacco, and land. He recommended dividing the kingdom into a hundred districts, and each district would have a “standing and constant Bank or Registry” that registered all lands, houses, and rents, and granted credit upon the basis of land, goods, or pawns. In 1676 Robert Murray published a proposal for a Lombard banking scheme, entitled A Proposal for the Advancement of Trade, in which he argued for the establishment of a “Bank and Lombard united.” Under his plan people would deposit their “dead stock” in magazines, and receive credit on account that could be exchanged as money. He recommended awarding credit on account up to “two-thirds or three-fourths of their value according to the quality thereof.” In explaining the credit on account, Murray explained that:
The most famous economist of the era, William Petty, put in a good word for Lombard banks in his Treatise of Taxes and Contributions (1662). He wrote, “If public Loan Banks, Lombards, or Banks of Credit upon deposited Plate, Jewel, Cloth, Wooll, Silke, Leather, Linnen, Mettals, and other durable Commodities were erected, I cannot apprehend how there could be above one-tenth part of the Law-suits and Writings as now there are” (Richards, 1929). Lombard banks were sometime called Banks of Credit. In 1682 the city of London established the Bank of the City of London, which acted primarily as a Lombard bank. Despite the noble mission of the bank, which was to pay down the city’s debt to the Orphans’ Fund, the experiment collapsed suddenly. Lombard banks were a hybrid of pawnshops and deposit banks. Unlike pawnshops of today, Lombard banks issued credits that could circulate as money, adding to the money supply. Although pawnshops, called Lombards, had a long history, it is not clear that Lombard banks of the sort proposed in the seventeenth century ever developed far beyond the theory stage. Nevertheless, the Bank of England, created by an act of Parliament in 1694, was authorized to conduct a pawnbroker’s business, reflecting the influence of Lombard banking schemes at the time.
|
legal disclaimer
1) Our website is not responsible for the information contained by this article as well for any and all copyright infringements by authors and writers. E-articles is a free information resource. If you suspect this article for any copyright infringements, please read the Terms of service and contact us to investigate the problem.
2) The E-articles directory team is not responsible for inaccuracies, falsehoods, or any other types of misinformation this tutorial may contain and will not be liable for any loss or damage suffered by a user through the user's reliance on the information gained here. Please read the Terms of service
Useful tools and features
If you like this article (tutorial), please link to it from your web page using the information above. Linking to this page, this is the only way to help us improve our service, the same time providing your visitors with a way to improve their online experience.
related articles
Around a.d. 755 the Carolingian Reform established the European monetary system, which can be expressed as: 1 pound = 20 shillings = 240 pennies Originally the pound was a weight of silver rather than a coin, and from a pound of pure silver 240 pennies were struck. The Carolingian Reform restored the silver content of a penny that was already in circulation and was the direct descendant of the Roman denarius. The shilling was a reference to the solidi, the money of a...
2. Historical perspectives of accounting
With the establishment of the first English colonies in America, accounting or bookkeeping, as the discipline was referred to then, quickly assumed an important role in the development of American commerce. Two hundred years, however, would pass before accounting would separate from bookkeeping, and nearly three hundred years would pass before the profession of accounting, as it is now practiced, would emerge. For individuals and businesses, accounting records in Colonial America often were very eleme...
3. Discussion about The Federal Reserve System
The Federal Reserve System is the central banking system for the United States, established by the Federal Reserve Act of 1913. Most countries have only one central bank, such as the Bank of England, or Germany’s Bundesbank. The Federal Reserve System makes up a system of 12 regional central banks. Central banks are bankers’ banks, holding deposits of commercial banks, making loans to commercial banks, and serving as lenders of last resort to commercial banks in an economic downturn. The Federal Reserve System also ac...
4. Suffolk System
The Suffolk System was the first effort to regulate private banking in the United States. Although banking regulation later became a government activity, the Suffolk System was born of a private initiative that saw a need to regulate country banks. The Suffolk Bank of Boston first established the Suffolk System in 1819 and in 1824 six other Boston banks joined the system. The Suffolk System required country banks around Boston to deposit reserve balances totaling $5,000 in one or more of the seven Boston banks participati...
Treasury notes were interest-bearing treasury bonds that circulated as money in the pre–Civil War era in the United States. The notes were not legal tender but were accepted for payments owed the federal government, including tax obligations. For the first two decades of its existence the new government of the United States steered clear of the issuance of government notes that circulated as money. The hyperinflation of the American Revolution remained a thought-provoking memory of the dangers of paper money, and Al...
6. Augustan Monetary System
Augustus, Roman emperor from 30 b.c. to a.d. 14—the first emperor after the fall of the Roman Republic, established a monetary system that provided a degree of monetary order to the Romans for two centuries. The system gradually gave ground to currency debasement and inflation, which grew to unbearable proportions during the third century a.d., when the emperors Aurelian, Diocletian, and Constantine instituted major reforms of the Roman currency. The early Roman Republic adopted a bronze monetary standard, but wars ...
7. Gold Standard
Under a gold standard, the value of a unit of currency, such as a dollar, is defined in terms of a fixed weight of gold and bank notes or other paper money are convertible into gold accordingly. Although the monetary systems of individual countries have been based on the gold standard at times, all the economically advanced countries of the world were on the gold standard for a relatively brief time—roughly from 1870 to 1914, sometimes called the period of the classic gold standard. The coinage of gold dates back to 7...
8. Postage Stamps
Postage stamps have served as money in areas as diverse as America, Europe, and the Far East. During the American Civil War merchants, struggling with a shortage of small coins, began the practice of making small change with postage stamps. Daily purchases of stamps increased fivefold in New York City alone, and individual stamps circulated until they became too dirty and tattered for recognition. John Gault, a Boston sewing-machine salesman, proposed the encasement of stamps in circular metal discs with transparent mica on one...