Independent reading

Three parts of the text “Banks and Money” are devoted to the history of European banks. When tested by the teacher on your independent reading you should be prepared to answer what information from TEXT 1 ( parts I, II, III ) is new and interesting to you.

TEXT 1

Read the text quickly for the specific information that will help you to answer the following questions. For better understanding consult the list of terms and expressions below the text.

1. What role did Amsterdam play in the economic life of Europe at the

beginning of the 17^th century?

2. Why did people clip and swear coins?

3. How was the problem of quality solved?

4. How were deposits created?

5. What is spendable money?

Banks and Money (I)

For a full view of banks and money the city to visit is Amsterdam. It is associated with one or two of the great developments in their history.

In 1609, money – hard, coined money – was abundant in Amsterdam.

Everywhere in Europe men were taking coins and sweating and clipping them, thereby getting metal to make more of them. It was to the problem of quality that the merchants of Amsterdam now addressed themselves. They created a bank owned by the city; the bank solved the problem of the coins by going back to the system that antedated the invention of coinage. That was weighing. A merchant brought his good and wretched coins to the bank, the bank weighed them, and the weight of the pure metal was then credited to his account. This deposit was a highly reliable form of money. A merchant could transfer it to the account of another merchant. The recipient knew that he was getting honest weight, nothing funny*. Payments through the bank commanded a premium*.

Then came the second Amsterdam discovery. The deposits so created did not need to be left in the bank. They could be lent. The bank then got interest. The borrower then had a deposit that could be spent. But the original deposit still stood to the credit of the original depositor. That too could be spent. Money, spendable money had been created.

The important thing, obviously, is that the original depositor and the borrower must never come at the same time for their deposits – their money. As will now be evident, every monetary innovation or reform carried the seeds of some new abuse. So it was here. One of the important borrowers from the Bank was the Dutch East India Company. The members of the company were often the same men who ran the Bank. In the eighteen century the East India Company fell in hard times;

There was war with England. Ships did not come back. It was slow pay at first, and then its loans went into default*. Early in the last century suspicion spread, the weakness was affirmed, the depositors started coming, and they couldn’t be paid.

Source: adapted from “The Age of Uncertainty”

by Galbright J.K.

Notes:

* nothing funny – зд. никакого обмана

* Payments through the bank commanded a premium. – Платежи через

банк или за дополнительную плату.

*...its loans went into default - ...платежи по ссудам были просрочены

Words and Expressions

1. hard money - наличные деньги

2. coined money – металлические деньги

3. to be abundant – иметься в изобилии

4. to sweat coins – стирать золото с монет

5. to clip coins – обрезать монеты

6. to antedate - предшествовать

7. coinage – металлические деньги; чеканка монет

8. weighing - взвешивание

9. merchant – купец, торговец

10. good coin – полноценная монета

11. wretched coin – зд. неполноценная монета

12. to credit to one’s account – заносить на чей-либо счёт

13. recipient - получатель

14. abuse - злоупотребление

15. to run the bank – управлять банком

Exercises on the Text