Many countries have state-run banks but few date back two centuries. Today, Germany has several hundred of these loosely affiliated public banks, comprising a major leg of a financial system older than the country itself. They are distinct from the larger banks both in their history and their objectives and, together, these small lenders are…
The 18th century was a formative one in finance, especially in Britain. The innovations of the ‘Financial Revolution’ and the accompanying respect for the importance of sound credit had resulted in an increasing ‘financialization’ of the economy. Though still scarce, credit was becoming more accessible, most of all for the increasingly indebted British state. When…
The French Revolution was the culmination of a century of financial mismanagement. The political disorders only brought about further economic trouble though, and monetary mayhem as well. However, the Revolution did create opportunities in French finance as it eliminated barriers to the establishment of new banking firms. One of those formed in the wake of…
Lloyd’s of London, one of the oldest continuously operating financial institutions around, faced profound troubles just thirty years ago, financial challenges that threatened to discredit or destroy it. The eyes of its regulators, customers, and thousands of member underwriters were on Lloyd’s. In recent years, banking firms in distress have created ‘bad banks’ to separate…
Establishing a corporation used to be a rare feat, not as simple as filing a form. Indeed, incorporation and the legal benefits it provided to financial and non-financial firms were closely guarded rights, the product of charters rarely conferred. So, if a corporation’s business model was on the way out and its value dwindling; it…
In its first century in operation, the Bank of England carried out a wide array of functions, many of which it had a legal or practical monopoly over. One of these was ensuring its banknotes, the most common in the country, were adequately backed by reserves, the most important of which was gold. However, in…
According to the most common accounts, the first stock exchange was established in Amsterdam following the initial public offering of the Dutch East India Company in 1602. However, Amsterdam was not the first city to earn the distinction of being a financial center. It was, after all, hardly the first time traders gathered in a…
Banking as we know it today was hardly in existence before the 17th century. However, there was something of a financial revolution in late medieval Italy and it saw a new type of firm offer financial services, and indeed banking services, taking deposits and lending money, even across national borders. These firms were principally interested…
In 1720, Britain was gripped by the South Sea Bubble. At its center, the South Sea Company, established to consolidate government debt and trade with South America, saw its stock price multiply several times over before crashing to end the year close to where it started. However, several firms saw speculative mania drive their stock…
In the history of Germany, few men are as significant as Otto von Bismarck, who unified the country in the mid-19th century. It is perhaps not because of Bismarck that Germany unified, but Bismarck more than anyone else elected the manner in which it would be done. Through the entire saga, he had a financier…
