In Assyria and Babylonia the history of banking starts with the prototype banks of merchants who loaned grains to farmers and merchants travelling between cities. Money changers, based in the local temples, loaned money and added two factors: they accepted deposits and changed money. Archaeology also shows that in ancient China and India there was evidence of money lending.
In Ancient Greece and during the Roman Empire, money lenders based in the local temples made some changes to the loans of simply grains: they accepted deposits and changed money. Evidence also suggests that ancient China and India had an active money lending activity. The Bardi and Peruzzi families of Florence dominated the fledgling banking industry establishing banks in Italy and other parts of Europe. This was the beginning of banking as we know it today.
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.
During the War of 1812, army bills - a form of hand-to-hand promissory notes - were issued by the government, but by 1816 the amount outstanding was very small, and in 1820 the office of issue was closed. The elimination of the army bills revived the matter of more currency-the point from which most early banks started; and in 1817 the Bank of Montreal was organized and started under articles of association. A charter was asked for in 1818, but was not finally approved until 1822.
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.
In 1841 the Bank of Montreal charter was amended, and a change was made in the form of the monthly return to the government. This return was greatly amplified and remained practically unchanged until Confederation. Another point in the amended charter limited the circulation of the bank to its paid-up capital. Even at this date the circulation of the banks was approximately half of their total debts to the public, while at the present time it is only about one-twentieth; this shows the importance of this banking function in the early period.
In Ancient Greece and during the Roman Empire, money lenders based in the local temples made some changes to the loans of simply grains: they accepted deposits and changed money. Evidence also suggests that ancient China and India had an active money lending activity. The Bardi and Peruzzi families of Florence dominated the fledgling banking industry establishing banks in Italy and other parts of Europe. This was the beginning of banking as we know it today.
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.
During the War of 1812, army bills - a form of hand-to-hand promissory notes - were issued by the government, but by 1816 the amount outstanding was very small, and in 1820 the office of issue was closed. The elimination of the army bills revived the matter of more currency-the point from which most early banks started; and in 1817 the Bank of Montreal was organized and started under articles of association. A charter was asked for in 1818, but was not finally approved until 1822.
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.
In 1841 the Bank of Montreal charter was amended, and a change was made in the form of the monthly return to the government. This return was greatly amplified and remained practically unchanged until Confederation. Another point in the amended charter limited the circulation of the bank to its paid-up capital. Even at this date the circulation of the banks was approximately half of their total debts to the public, while at the present time it is only about one-twentieth; this shows the importance of this banking function in the early period.
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