Banking has been so much in the news in recent years, and is seen as so much a part of the fabric of our society, that it’s easy to forget that it had to start somewhere.
Primitive banks were known in the ancient world: the Greeks, the Romans, the Chinese and the Indians, amongst others, were known to lend, accept and change money.
But banking practice as we know it today began to be developed in the 17th century. Wealthy merchants would lodge their gold with London’s goldsmiths, utilising their private vaults for security purposes and paying a fee for the service.
Eventually the goldsmiths began to lend the money out to others on behalf of their clients; promissory notes, which later became banknotes as we know them now, were issued for money deposited as a loan to the goldsmith.
The first bank to begin the permanent issue of banknotes, the Bank of England, started in the late 17th century to issue handwritten notes which promised to pay the bearer on demand the value written on the note – a form of wording we’re still familiar with today.
This period also saw the emergence of private banks set up by local businessmen. The Scarborough Bank was launched in 1792 – also the year of a major financial crisis in America known as the ‘Panic of 1792’.
This is a one-pound note issued by the Scarborough Bank on 10 September 1821, for local businessmen Lister, Moorson & Co. The bank went bust in 1822 with liabilities of £70,000, leaving all their banknotes worthless.