Nov 10
27
With regard to many customers, banking can be a pretty mundane affair: they go to complete deposit slips and put money inside their accounts, or withdraw funds, or make adjustments on their accounts – all errands that take very small amount of time. And since the majority of banks now allow most transactions to be made online, eliminating the hassle of filling out deposit slips and standing in long lines, customers no longer need to leave the house. However banking has obviously never been such an effective automated procedure.
Modern day banking, as we understand it today, first showed up in Renaissance Italy in the 14th century, but banking practices, in one form or another, have existed since at least the 4th century BC. A Greek drachm coin from a ancient settlement of Trapezus, minted during this time period, shows a banker’s table piled with coins – proof of organized money holding and lending.
Even though they didn’t have ATMs or deposit slips or a lot of the features we associate with banking today, they functioned as such by holding onto the assets of merchants and business owners. An equivalent institution would have been the state treasuries of various Greek city states, as well as even in Rome.
More modern components of banking came into being during later centuries, in the Middle East which at that time bridged trade between Europe in the west, and the empires from the east. In the 9th century AD, businessmen and merchants in the Middle East used checks that were in appearance and function remarkably like the ones we use today (though there’s no evidence of deposit slips). These were mostly used for traders coming from China to receive payment in Baghdad, as an alternative to having to physically carry their coinage over the vast Mongolian steppe.
By the 1300s, Italy’s various city states run by prominent, influential families were setting up the first modern banks. In cities like Florence, Genoa, and Venice, the affluent Peruzzi and Bardi families controlled most of the banking industry, establishing branches in numerous other cities throughout northern Italy, as well as the rest of western Europe. The most dominant bank of this period however, was operated by the Medici family.
At its apex, the Medici bank managed many of the most prominent accounts in all of Europe. Sometimes, the bank notes from the Medici bank had been valued and preferred as currency over local legal tender. Their establishment of the bank helped solidify their political influence in the region, and was crucial to their becoming one of the most powerful families in all of Europe. The Medici ultimately produced four popes, and became hereditary rulers of Florence, though their influence among numerous political entities gave them a degree of power and control over various other city states as well.
