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Banking from the Templars and the Medici to central banks and the crashes: who held the money, and what happened when they fell.
Banking from the Templars and the Medici to central banks and the crashes: who held the money, and what happened when they fell.
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The Knights Templar, a military order founded to protect pilgrims, builds Europe's first international banking network. Pilgrims deposit funds at one Templar house and withdraw them at another using letters of credit, an early form of long-distance banking.
also in Freemasonry: the craft and its history, Money and finance, Secret societies and influential orders
Pope Clement V dissolves the Templar order under pressure from King Philip IV of France, who owed the order large sums and had arrested its members in 1307. The suppression destroys medieval Europe's leading financial institution.
The Peruzzi company, one of Florence's great banking houses, declares bankruptcy after huge loans to King Edward III of England go unpaid and Florence's economy sours. Its fall opens a wave of Florentine bank failures.
The Compagnia dei Bardi, the largest of the Florentine super-companies, goes bankrupt after Edward III of England defaults on massive war loans and Florence suffers internal crisis. Together with the Peruzzi failure it is often called the first international banking collapse.
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Hans Fugger, a weaver, settles in Augsburg in 1367 and builds a textile trading firm. Under Jakob Fugger the Rich it becomes Europe's dominant banking house, financing Habsburg emperors and controlling copper and silver mining.
also in Money and finance, The wandering center of money
Giovanni di Bicci de' Medici moves his bank's headquarters to Florence, founding the Medici Bank. It becomes the largest and most respected bank in fifteenth-century Europe and bankrolls the family's rise to power.
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Genoa creates the Banco di San Giorgio to consolidate the republic's public debt, issuing tradable shares to its creditors. It is often called the world's first modern public bank and operated until 1805.
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Siena founds a monte di pieta, a charitable lender meant to offer credit to the poor as an alternative to moneylenders. Reorganized in 1624, it survives as Banca Monte dei Paschi di Siena, the world's oldest bank still in operation.
Weakened by bad loans, poor management, and branch failures, the Medici Bank is dissolved when the Medici are expelled from Florence during the French invasion of Italy. The century-long dominance of Florence's greatest bank ends.
Brothers Hans and Paul Berenberg, cloth merchants who fled the Spanish-held Netherlands, establish a trading house in Hamburg. It evolves into Berenberg Bank, the world's oldest merchant bank still operating.
also in Money and finance, The British Empire, The wandering center of money
The city of Amsterdam establishes the Wisselbank to give merchants a stable unit of account amid a chaos of coinages. Its book-transfer payments make it a forerunner of modern central banking.
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Johan Palmstruch founds Stockholms Banco, which in 1661 issues the first banknotes in Europe. Overissue of notes ruins the bank by 1664 and its failure leads directly to the creation of the Riksbank.
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The Swedish parliament establishes Riksens Standers Bank from the wreckage of the failed Stockholms Banco. Renamed Sveriges Riksbank, it is the world's oldest surviving central bank.
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Quaker goldsmith bankers John Freame and Thomas Gould begin trading on Lombard Street in London. The firm takes the Barclay name in the 18th century and grows into one of the world's largest banks.
also in Money and finance, The British Empire, The central bankers and the road to war, The wandering center of money
In 1694 a consortium of English bankers loaned 1,200,000 pounds to the king. In return they gained a royal monopoly on issuing banknotes, monetizing the royal debt.
In 1694, a consortium of English bankers made a loan of £1,200,000 to the king. In return they received a royal monopoly on the issuance of banknotes.Debt: The First 5,000 Years
also in The British Empire, The central bankers and the road to war, The wandering center of money
The Bank of England receives its royal charter to fund war against France. It anchors British public credit and becomes the model for central banks worldwide.
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The Scottish Parliament charters the Bank of Scotland one year after the Bank of England. Unlike its southern neighbor it is founded to support business rather than government, and it is among the first European banks to issue paper currency successfully.
John Law's Banque Royale, France's first experiment with paper money, collapses when the Mississippi Company share bubble bursts and holders rush to redeem notes. The disaster sets back French banking and paper currency for decades.
Mayer Amschel Rothschild builds a coin and banking business in Frankfurt's Jewish quarter and sends his five sons to establish houses in London, Paris, Vienna, and Naples. The family network dominates European government finance in the 19th century.
Francis Baring and his brother John found a merchant house in London that becomes Britain's oldest merchant bank. Barings finances the Louisiana Purchase and grows so powerful it is called the sixth great power of Europe.
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Button maker John Taylor and iron dealer Sampson Lloyd found Taylors and Lloyds, a private bank serving Birmingham's growing industry. It becomes Lloyds Bank, one of Britain's big clearing banks.
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Chartered by the Continental Congress at Robert Morris's urging, the Bank of North America opens in Philadelphia as the first bank in the United States. It helps finance the final stage of the Revolutionary War.
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Congress charters Alexander Hamilton's national bank to manage federal finances and establish American credit, over fierce objections from Jefferson and Madison. Its 20-year charter is not renewed in 1811, failing by a single vote in each chamber.
Brothers Moses Marcus and Gerson Warburg found a banking house in Hamburg. The Warburg family becomes one of the great banking dynasties, with Paul Warburg later helping design the US Federal Reserve.
also in Money and finance, The central bankers and the road to war
Created with Napoleon Bonaparte's blessing to bring order to France's chaotic currency, the Banque de France opened on 18 January 1800. Napoleon himself bought thirty of its shares.
The Banque opened its doors on January 18, 1800, or according to the calendar of the Revolution then in force, on the 28th day of Nivose, the month of snow, in the year VIII.Lords of Finance
also in The central bankers and the road to war
Napoleon Bonaparte, then First Consul, establishes the Banque de France to restore confidence after the paper money crises of the Revolution. It becomes France's central bank and note issuer.
Nathan Mayer Rothschild formalizes his London banking house, the most powerful branch of the Rothschild network. It finances Wellington's armies against Napoleon and becomes the leading force in 19th-century government bond markets.
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The City Bank of New York is chartered days before the War of 1812 begins, serving New York merchants. It grows into Citibank, for much of the 20th century the largest bank in the United States and a pioneer of global banking.
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President Madison signs the charter of a second national bank to stabilize currency chaos after the War of 1812. Under Nicholas Biddle it becomes the young republic's most powerful financial institution and the focus of a bitter political fight.
In 1816, the postwar boom was full onThe Creature from Jekyll Island: A Second Look at the Federal Reserve , p. 360-364
Sons of Baltimore linen merchant Alexander Brown open a Philadelphia house that grows into Brown Brothers & Co., financing Anglo-American trade. Its 1931 merger with Harriman interests creates Brown Brothers Harriman, the oldest large US private bank.
After President Andrew Jackson vetoed its recharter in 1832 and withdrew federal deposits, the bank lost its federal charter in 1836 and continued as a Pennsylvania bank. It fails in 1841, ending America's early experiments with central banking.
Three Lazard brothers, immigrants from France, open a dry goods business in New Orleans. The firm follows the gold rush to San Francisco, moves into banking, and becomes a leading independent financial advisory house with branches in Paris, London, and New York.
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German immigrant brothers Henry, Emanuel, and Mayer Lehman turn their Alabama dry goods store into a cotton trading firm named Lehman Brothers. It moves to New York and evolves into one of Wall Street's major investment banks.
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Henry Wells and William Fargo found a banking and express company in New York to serve gold rush California, opening for business in San Francisco that summer. It becomes one of the largest banks in the United States.
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Politician and businessman Alfred Escher founds Schweizerische Kreditanstalt to finance Switzerland's railway network. It grows into Credit Suisse, one of the world's major banks and a pillar of Swiss finance for 167 years.
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A royal decree authorizes a bank in the port city of Santander to finance trade with Latin America. Through 20th-century expansion and acquisitions it becomes the largest bank in the eurozone by market value.
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The Standard Bank of British South Africa is chartered in London in 1862 and opens its first branch in Port Elizabeth in 1863, financing the Eastern Cape wool trade. It grows into Africa's largest banking group by assets.
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The Bank in Winterthur is founded to serve Swiss trade and industry, the earliest root of the Union Bank of Switzerland. The 1998 merger of Union Bank of Switzerland with Swiss Bank Corporation creates UBS, the world's largest wealth manager.
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Napoleon III authorizes Societe Generale to promote the development of commerce and industry in France. It becomes one of France's three great banks and a major international lender.
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The Hongkong and Shanghai Banking Corporation opens in Hong Kong to finance trade between Asia, Europe, and North America. It becomes one of the world's largest banks and the dominant financial institution of East Asian trade.
London's greatest discount house suspends payments with debts of about 11 million pounds, triggering a panic remembered as Black Friday. The crisis shapes the doctrine, later articulated by Walter Bagehot, that the Bank of England must act as lender of last resort.
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German immigrant Marcus Goldman begins trading commercial paper in New York; his son-in-law Samuel Sachs later joins the firm. Goldman Sachs becomes one of the world's most powerful investment banks.
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The Prussian government licenses Deutsche Bank in Berlin to finance foreign trade and free German commerce from dependence on British banks. It grows into Germany's largest bank and a global investment banking power.
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Drexel, Morgan and Co. is formed in New York, renamed J.P. Morgan and Co. in 1895. Under Pierpont Morgan it finances railroads and the creation of US Steel and General Electric, and acts as America's de facto central banker before the Federal Reserve exists.
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The newly unified German Empire establishes the Reichsbank as its central bank, unifying note issue across the German states. It presides over the 1923 hyperinflation and is succeeded after World War II by the Bank deutscher Lander and then the Bundesbank.
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The Mitsubishi zaibatsu founds its banking arm in Tokyo, which becomes the financial core of one of Japan's great industrial groups. Through the 2005 merger creating Mitsubishi UFJ Financial Group it anchors Japan's largest bank.
also in Money and finance, The Bank of Japan's window-guidance machine
The Meiji government establishes the Bank of Japan to centralize note issue and stabilize the currency after inflationary war finance. It becomes the model-driven central bank of Asia's first industrial economy.
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Amadeo Giannini opens the Bank of Italy in San Francisco to serve immigrants and working people the big banks ignored. Renamed Bank of America in 1930, it pioneers branch banking and becomes one of the largest banks in the world.
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Switzerland's central bank opens for business, taking over note issue from dozens of cantonal and private banks. It becomes guardian of the Swiss franc, one of the world's key reserve currencies.
A run forces New York's third largest trust company to suspend payments, igniting the Panic of 1907. J.P. Morgan personally organizes a private rescue of the banking system, and the crisis leads directly to the creation of the Federal Reserve.
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After the fall of the Qing dynasty, the imperial Da-Qing Bank is reorganized as the Bank of China under the new republic. It serves at times as central bank and foreign exchange bank, and today is one of China's big four state banks.
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President Wilson signs the Federal Reserve Act, creating a central banking system of twelve regional banks after the Panic of 1907 exposed the need for a lender of last resort. The Fed becomes the most influential central bank in the world.
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Charles Merrill opens a brokerage in New York, joined months later by Edmund Lynch. The firm brings Wall Street to Main Street with retail stockbroking and is sold to Bank of America in September 2008 at the height of the financial crisis.
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The South African Reserve Bank opens in Pretoria as the first central bank in Africa. It takes over note issue from commercial banks and becomes the anchor of the continent's largest financial system.
also in Money and finance, The Bank for International Settlements, The central bankers and the road to war, The world trade and money order
The BIS opens in Basel, created to handle German war reparations under the Young Plan. It survived as the bank for central banks and the oldest international financial institution.
A private New York bank with an official-sounding name and 400,000 depositors closes its doors, at the time the largest bank failure in American history. The collapse deepens public panic in the early Great Depression.
Austria's largest bank, founded by the Rothschilds in 1855, announces it is insolvent. The failure sets off a chain of banking crises across Central Europe and Germany, spreading the Great Depression to Europe and helping force Britain off the gold standard.
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The Reserve Bank of India begins operations in Calcutta as the central bank of British India, later moving to Bombay. Nationalized in 1949, it manages the currency and banking system of what becomes the world's most populous country.
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When the Glass-Steagall Act forces J.P. Morgan to choose between commercial and investment banking, partners Henry Morgan and Harold Stanley spin off a new securities firm. Morgan Stanley becomes one of Wall Street's leading investment banks.
also in The world trade and money order
The International Bank for Reconstruction and Development, designed at Bretton Woods in 1944, formally comes into existence to finance postwar reconstruction and later development lending worldwide.
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The People's Bank of China is formed in Shijiazhuang by merging three communist regional banks, issuing the first renminbi on the same day. It becomes the central bank of the world's second largest economy.
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The Agricultural Cooperation Bank is founded to serve rural China, and after several reorganizations is re-established as the Agricultural Bank of China in 1979. It is one of China's big four banks, with the country's largest branch network.
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The People's Construction Bank of China is founded to channel state funds into construction and infrastructure under the planned economy. It becomes China Construction Bank, one of the world's largest banks.
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Ghana establishes its central bank in the year of independence, among the first in sub-Saharan Africa after decolonization. It issues the cedi and manages monetary policy for West Africa's second largest economy.
also in Money and finance, The central bankers and the road to war
West Germany creates the Bundesbank in Frankfurt as an independent central bank, shaped by memories of hyperinflation. Its fierce commitment to price stability makes it the model for the later European Central Bank.
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Nigeria's central bank is established by ordinance in 1958 and opens in Lagos in 1959, ahead of independence. It issues the naira and oversees the banking system of Africa's most populous country.
The Treaty of Rome creates the European Investment Bank as the lending arm of the European Economic Community. Based in Luxembourg, it becomes the world's largest multilateral borrower and lender.
Latin American countries and the United States establish the IDB in Washington, the first major regional development bank. It becomes the largest source of development financing for Latin America and the Caribbean.
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Egypt establishes a dedicated central bank in Cairo, separating central banking functions from the National Bank of Egypt founded in 1898. It manages the Egyptian pound and one of Africa's largest banking systems.
Newly independent African states establish their own development bank under the Organisation of African Unity, headquartered in Abidjan. It becomes the continent's premier development finance institution.
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Kenya establishes its central bank after the dissolution of the East African Currency Board, opening in Nairobi in September 1966. It issues the Kenyan shilling and anchors East Africa's largest financial sector.
also in The world trade and money order
The Asian Development Bank is established in Manila to finance economic development across Asia and the Pacific, modeled on the World Bank.
German regulators close Bankhaus Herstatt after huge foreign exchange losses, while counterparties who had already paid Deutsche Marks were left waiting for dollars. The episode gives its name to settlement risk and prompts the creation of the Basel Committee.
Italy's largest private bank collapses with over a billion dollars missing, entangling the Vatican Bank, its main shareholder. Chairman Roberto Calvi, known as God's banker, is found hanged under London's Blackfriars Bridge weeks before the liquidation.
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China spins the commercial banking business of the People's Bank of China into a new institution, completing the creation of the big four state banks. ICBC becomes the largest bank in the world by assets.
A run on America's seventh largest bank, weakened by bad energy loans, forces the FDIC to rescue it with a guarantee of all depositors and creditors. The bailout makes 'too big to fail' a fixture of banking policy debates.
After the fall of the Berlin Wall, western nations establish the EBRD in London to finance the transition of former communist economies to markets. Its mandate later expands to the Middle East and North Africa.
Regulators in seven countries seize the Bank of Credit and Commerce International, exposing massive fraud, money laundering, and hidden losses across its global network. It is the largest bank fraud scandal in history at the time.
Britain's oldest merchant bank fails after Singapore-based trader Nick Leeson hides 827 million pounds of losses on unauthorized derivatives trades. The 233-year-old bank is sold to ING for one pound.
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The ECB is established in Frankfurt to run monetary policy for the coming single currency, launched in 1999. It becomes the central bank for the euro, the money of some twenty European countries.
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Banque Nationale de Paris merges with investment bank Paribas to form the eurozone's largest bank. Its roots reach back to the Comptoir National d'Escompte de Paris, founded in the revolutionary year of 1848.
News that the mortgage lender needs Bank of England support sets off the first run on a British bank in over a century, with depositors queuing outside branches. Northern Rock is nationalized in February 2008.
The 85-year-old investment bank, crippled by mortgage securities losses and a run by its lenders, is sold to JPMorgan Chase in a Federal Reserve-backed rescue for a fraction of its recent value. It is the first major Wall Street casualty of the 2008 crisis.
also in Capitalism, liberalism, and the isms, The wandering center of money
The investment bank Lehman Brothers files the largest bankruptcy in United States history, turning the subprime mortgage crisis into a global financial panic. The crisis reshapes banking regulation worldwide.
Regulators seize the Seattle-based savings bank after depositors withdraw billions in days, and sell its banking operations to JPMorgan Chase. With 307 billion dollars in assets it is the largest bank failure in American history.
also in The world trade and money order
The China-led AIIB opens for business in Beijing with 57 founding members, a new multilateral bank for infrastructure lending in Asia seen as a counterweight to the World Bank and ADB.
The bank of the American startup industry fails in two days when rising interest rates gut its bond portfolio and depositors pull 42 billion dollars in a single day, a bank run at digital speed. It is the largest US bank failure since 2008.
After years of scandals and heavy deposit flight, the 167-year-old bank is sold to rival UBS in an emergency takeover brokered by Swiss authorities over a single weekend. It is the first failure of a bank deemed globally systemic since the 2008 crisis.
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