The history of banking begins with the first prototype banks of merchants of the ancient world, which made grain loans to farmers and traders who carried goods between cities. This began around 2000 BC in Assyria and Babylonia.
Banking, in the modern sense of the word, can be traced to medieval and early Renaissance Italy, to the rich cities in the north such as Florence, Venice and Genoa. The Bardi and Peruzzi families dominated banking in 14th century Florence, establishing branches in many other parts of Europe.
In New France, playing cards were issued as a method of payment in the 1680s by the Intendant of New France, in addition to the coins introduced in the 1660s. However, the massive drain of wealth from New France to Europe resulting from mercantilist trade policies made it impossible to back card money with gold bullion. Card money was thus essentially worthless. The card system collapsed in the 1690s, causing long-term suspicion of paper money on the part of the French settlers.
In 1817, Montreal bankers were granted a charter by the British government to open the first formal bank in Canada. As the early charters indicate the path on which the Canadian banking system eras starting, their main points may be set out briefly. All the charters were alike and, therefore, the Bank of Montreal charter may be taken as typical.
In 1818, the Quebec Bank was started, as well as an institution called the Bank of Canada, which should not be confused with a later bank of the same name or with the present central bank. These two banks applied for charters and received them about the same time as the Bank of Montreal. Then, as now, each bank required a separate Act of incorporation, but then there was no general banking code, and the charter was the source of the bank's legal capacities.
Through the collapse of the private Bank of Upper Canada at Kingston and the inability of the Bank of Kingston to get going within the period of its charter, the Bank of Upper Canada obtained a monopoly of banking within the province and hoped to keep it. With its control of the Legislative Council it could have thwarted all efforts to obtain new charters, but a financial crisis in 1821-2 made it necessary for the bank to apply to the legislature for a reduction in its capital and for other considerations.
Banking, in the modern sense of the word, can be traced to medieval and early Renaissance Italy, to the rich cities in the north such as Florence, Venice and Genoa. The Bardi and Peruzzi families dominated banking in 14th century Florence, establishing branches in many other parts of Europe.
In New France, playing cards were issued as a method of payment in the 1680s by the Intendant of New France, in addition to the coins introduced in the 1660s. However, the massive drain of wealth from New France to Europe resulting from mercantilist trade policies made it impossible to back card money with gold bullion. Card money was thus essentially worthless. The card system collapsed in the 1690s, causing long-term suspicion of paper money on the part of the French settlers.
In 1817, Montreal bankers were granted a charter by the British government to open the first formal bank in Canada. As the early charters indicate the path on which the Canadian banking system eras starting, their main points may be set out briefly. All the charters were alike and, therefore, the Bank of Montreal charter may be taken as typical.
In 1818, the Quebec Bank was started, as well as an institution called the Bank of Canada, which should not be confused with a later bank of the same name or with the present central bank. These two banks applied for charters and received them about the same time as the Bank of Montreal. Then, as now, each bank required a separate Act of incorporation, but then there was no general banking code, and the charter was the source of the bank's legal capacities.
Through the collapse of the private Bank of Upper Canada at Kingston and the inability of the Bank of Kingston to get going within the period of its charter, the Bank of Upper Canada obtained a monopoly of banking within the province and hoped to keep it. With its control of the Legislative Council it could have thwarted all efforts to obtain new charters, but a financial crisis in 1821-2 made it necessary for the bank to apply to the legislature for a reduction in its capital and for other considerations.
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