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Prospector's Blog

17 Feb 2018

How the first bankers (goldsmiths) created money

Exonumia | Prospector

The goldsmiths as early bankers provided safekeeping services for the gold bars and coins that was held in their vaults and made a profit by charging vault storage fees. In return the goldsmiths issued "deposit receipts" for the gold placed in storage. People would take these deposit receipts back to the goldsmith whenever they needed gold to buy something. So the buyer paid the seller in gold then the seller placed his gold in the vault at the goldsmiths office for safe keeping. Eventually everyone soon found out that it was easier to use the "deposit receipts" to buy something. Thus the "deposit receipts" became the first notes.

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