Your boss has a task for you. Choose any good and try to advertise it
In order to make the others want to buy it. Create a poster for your ad. Do not forget about “Golden Rules” of advertising.
Unit Seven
Bank
Read and translate:
About the History
People are always used to save money for the so-called “black day”. Earlier they saved it in the ground and their descendants would find it in many years in future. With the help of the treasures people restored the history. But this way of keeping money didn’t bring income.
There is a legend: once upon a time in Ancient Greece a merchant lived. One day he decided to visit other countries and asked his two slaves to save his money. One slave found the place quickly – he buried the money into the ground. Another slave bought the herd, which had grown in twice on arrival of the merchant. The merchant called his slavers and asked about money. One slave fell to his steps and said that the money was o.k., and another one kept silence and just showed the herd. “Well done” – the merchant said, – it is better money to work for you but not you to work for money.
Do you know
the Russian proverb «зарыть
талант
в
землю»?
The word “talent”
meant the currency in Ancient Greece. So, money must bring profit.
You needn’t hide your money in the ground, in socks, in jars.
For this aim there are a great number of banks today.
The word bank is international. There is the word bank in every language:
bank – English, die Bank – German, la banque – French, банк – Russian etc.
Read and translate the text about appearance of the first banks
paying attention to the new words:
a goldsmith |
ювелир |
a merchant |
купец |
seals boxes |
изоляционные коробки |
ownership |
собственность |
gauge |
размер |
promissory note |
долговое обязательство |
The Origin of Modern Banking
The origin of modern banking can be traced to the operations of the goldsmiths of 17-century England. The goldsmiths had strong rooms for the safekeeping of the materials of their trade. Extra space in these rooms was often rented with merchants and others to safekeep valuables, including large sums of money. At first the money was accepted in locked and seals boxes that were returned to their owners in the same condition in which they had been left for safekeeping. Later, it became common for customers to deposit coin in return for a receipt or certificate of deposit. In time the goldsmiths observed that their depositors did not demand the identical coin initially left with them, but only coin equal to the value shown on the certificates of deposit. The goldsmiths assumed ownership of the coin deposited with them and employed the coin as required, being careful that they always held the amount sufficient to convert certificates of deposit into coin on demand. This marked the beginning of deposit taking, a characteristic of commercial banking as distinct from the function of safekeeping.
The goldsmiths also observed that a predictable quantity of coin was always left with them. They could gauge the quantity by observing the activities of the merchants, many of whom deposited their coin with the same goldsmith. When one merchant wished to make payment to another, he would simply write an order to his goldsmith requesting the transfer of coin from his own account to that of his creditor without covering his deposit certificate into coin. This was the beginning of chequing or clearing, another characteristic of commercial banking.
As a rule, the goldsmiths were men of wealth. It had therefore not been uncommon for them to land to customers from their own resources. When it became a common practice for their notes to circulate as a medium of exchange, the goldsmiths began to make loans not by using their own coin or coin deposited with them, but their notes. These notes were the same as the notes given to depositors of coin, with one important exception: they were not issued in return for a deposit of coin, but in return for a promissory note left by the borrower with the goldsmith. The distinction is important. As long as all the notes issued by the goldsmiths were not turned in at one time for conversion into coin, the goldsmiths could issue notes to a greater value than the value of the coin they held. This marked the beginning of fractional reserve banking.
The total quantity of notes that the goldsmiths could issue against a given reserve base of coin depended on the note holders’ propensity to redeem them in coin. The goldsmiths soon learned form experience how much coin would remain with them during any given period and that this amount fluctuated with the temper of the times.
Although fractional reserve banking is usually traced to the operations of the goldsmiths, it was by no means confined to them. Soon after the goldsmiths began the practice, if not simultaneously, merchants began to issue notes that were only fractionally secured by specie and served as a medium of exchange. Moreover, governments started to grant charters incorporating companies authorized to conduct banking operations that included accepting deposits, clearing or transferring money, and issuing notes only fractionally secured by reserves of specie. Among the first charted banks were the Bank of Sweden (1656), the Bank of England (1694), and the John Law’s Bank in France (1716).