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How modern banking originated: The London goldsmith-bankers' institutionalisation of trust

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  • Jongchul Kim

Abstract

London goldsmith-bankers' development of paper credit-money in the seventeenth century ushered in the era of modern banking. This essay argues that this innovation of paper credit-money by goldsmith-bankers was the institutionalisation of the double-ownership scheme known as trust. This trust scheme was at the centre of the custom or morality that underlay the political struggle between the Crown, landowners, and the bourgeoisie in early modern England, the struggle from which goldsmith-banking and, later, joint-stock banking developed. This double ownership remains a central feature of the present banking system. Also during the financial boom of the late twentieth century, which ended in the present world financial crisis, the trust scheme was used extensively by many financial firms, such as mutual funds, pension funds, and asset-securitisation trusts.

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  • Jongchul Kim, 2011. "How modern banking originated: The London goldsmith-bankers' institutionalisation of trust," Business History, Taylor & Francis Journals, vol. 53(6), pages 939-959, October.
    • Handle: RePEc:taf:bushst:v:53:y:2011:i:6:p:939-959
    DOI: 10.1080/00076791.2011.578132
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    1. Geva, Benjamin, 2001. "Bank Collections and Payment Transactions: A Comparative Legal Analysis," OUP Catalogue, Oxford University Press, number 9780198298533.
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    Cited by:

    1. Antonio Bianco & Claudio Sardoni, 2018. "Banking theories and macroeconomics," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 41(2), pages 165-184, April.
    2. Kim, Jongchul, 2018. "Propertization: The process by which financial corporate power has risen and collapsed," Review of Capital as Power, Capital As Power - Toward a New Cosmology of Capitalism, vol. 1(3), pages 58-82.
    3. Mayntz, Renate, 2013. "Erkennen, was die Welt zusammenhält: Die Finanzmarktkrise als Herausforderung für die soziologische Systemtheorie," MPIfG Discussion Paper 13/2, Max Planck Institute for the Study of Societies.
    4. Philipp Bagus & David Howden & Amadeus Gabriel, 2015. "Oil and Water Do Not Mix, or: Aliud Est Credere, Aliud Deponere," Journal of Business Ethics, Springer, vol. 128(1), pages 197-206, April.

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