378 TradesiniDi and Merchant — Commercial Population 



an inducemenL of four pence a day interest paid on deposits thev 

 soon acquired large holdings, and set up "running cashes," making 

 loans to merchants and others for weeks and months and trusting 

 "some to come as fast as others was paid away." By discounting 

 merchant's bills of exchange at high interest they made a considerable 

 profit.' They loaned to Cromwell and Charles II; loaned on pawns 

 and bottomry; loaned on "notorious Contracts, or upon personal 

 Securities from Heirs whose Estates" were "in expectancy;"- the 

 rates in these cases were exorbitant.^ The goldsmith bankers were 

 fa\'ored by Cromwell and they grew in number and power. Charles 

 II also borrowed heaxilv from them.' 



The banking business was checked bv the Great Fire and by the 

 Dutch exploit at Chatham.''' The first commercial panic of English 

 history occurred in 1667.*^ It was repeated in much worse form in 

 1672 when Charles closed the Exechequer and refused to pay the 

 principal of the bankers' loans. "The whole nation was panic- 

 struck; the bankers stopped payment; few merchants were able to 

 meet their bills the>' accepted; trade was paralyzed; and the very 

 ships could not be cleared at the custom-house for want of money."'' 

 The business organization had already become extremely dependent 

 upon credit. 



In 1677 the Hst of all the goldsmiths keeping "Running Cashes" 

 numbered forty-four.^ From this time to 1690 there was a progressive 

 differentiation between banking, pawn-broking and goldsmithing. 

 Francis Child, "the Father of the Profession," was the first to devote 

 himself exclusively to banking.^ 



It seems that the fundamental purpose or function of banks was 

 the transfer of ownership of money by the assignation of deposits, 



' "^Myslery," 4. 



2 Ibid'., 5. 



^ Polle.xfen, Discourse, 68. 



^ Burnet, I, 204. Charles paid 8 per cent interest. Pepys' diary from 1662 to 

 1667 contains numerous references to his banker, one Stokes of the "Black Horse.'' 

 1662-3, 1/22; 1665-6, 1/10; 1666, 3/30, 7/6, 7/11, 8/13, 8/17, 11/12; 1667, 9/27, 

 12/16. Edward Backwell was the most eminent goldsmith and banker before 

 1672. at which date he was ruined. He did business with Charles and many prom- 

 inent people and companies. He had accounts with all the goldsmiths and acted 

 as a clearing house. Price, Handbook, 3-5, 29. 



'•' PoUexfen, Discourse, 73. 



^ .\nderson, Origin, II, 483. 



■^ Burnet, I, 205 note. 



** "London Director},', .Vddition. " 



' Price, Handbook, 27. 



