The First Bank

Image courtesy of Jimmy Haagenson

Back in the Middle Ages, they didn’t have banks. People either carried their money with them or else hid it in their houses. Some people who wanted more security for their personal wealth sought out a safe place to keep it, but the only people who had vaults or safes were goldsmiths because they naturally had a supply of gold and needed to keep it safe from robbers and thieves.

Goldsmiths started storing other people’s gold for a fee. People would pay them a certain amount per month or year for storing their gold in the vault. The goldsmith would issue a paper receipt, stamped with his personal seal, for the specific items or amount of gold on deposit with him. This was the first use of what became known in the bullion business as a “warehouse receipt.”

When people wanted to spend their gold, Continue reading →