ABSTRACT
Banking is known to have a long history, though little documentation exists prior to the thirteenth century. Many of the early 'banks' were not really banks at all and dealt primarily in coin and bullion, a good deal of their business being concerned with money-changing and supplying lawful foreign and domestic coin of the correct weight and fineness. Another and important early group of banking institutions comprised the merchant bankers; they dealt not only in goods but also in bills of exchange, and thereby provided for the remittance of money and payment of accounts at a distance, but without shipping actual coin. Such business was based on the fact that many of these merchants traded internationally and held assets at different points on the medieval trading routes. For a certain consideration, a merchant stood prepared to accept instructions to pay out money to a named party through one of his agents elsewhere, when the amount of the bill of exchange would be debited by the agent to the account of the merchant banker, who would also hope to make an additional profit from exchanging one currency against another and, because there was a possibility of loss, any profit or gain was not subject to the medieval ban on usury. Likewise there were techniques for concealing a loan by making foreign exchange available at a distance but deferring payment for it to a later date. In this way, the interest charged could be camouflaged by fluctuations in the rate of exchange between the date of ordering goods and the date of payment for them.
