Q.2. Trace out
the origin of banking?
OR
Q.2. Merchants,
money lenders and gold smiths are considered to be the ancestors of banks?. Discuss?
ORIGIN OF
BANKING
It is very difficult to trace out the
exact origin of banks. It is said that the evolution of banking business is as
old as the concept of money. Crothers in his book AN OUTLINE OF MONEY says that
the present day banker has three ancestors merchants, money lenders and gold
smiths. A modern bank is something of these. It is believed that goldsmiths and
grocers of primitive days started keeping deposits of valuables and Jewelleries
people on the basis of their sound financial position in the community. They
charged a certain amount from the depositors for the services rendered in
keeping and preserving the valuables in safe custody. But they soon realized
that only a small portion of metal and valuable deposited were taken bark by
the people even at the expiry of the stipulated period. They therefore began to
make profit by lending a part of these deposits. In case of lending, it was not
always gold or silver, but issued their receipts which would pass among the
people as if they were gold just like cheques in modern banks. The present day
banks are performing the same functions as performed by the money lenders and
goldsmiths of older days. Therefore it is believed that goldsmiths and
moneylenders are the ancestors of banks.
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