umm..read what I wrote again, you've misunderstood me. My point is that 100% reserve lending regularly took place up until the 1650's, at which point the advent of the Stockholm Banco effectively signalled the end of 100% reserve banking, and very shortly after it almost entirely ended with the advent of the era of central banking (Bank of England came about in the 1690's). Clearly this transition was a gradual process, there is no black and white, so please for the love of God don't unleash your crazy-ass Google skillz on me.
Don't bother digging stuff up, the fact that you need to dig stuff up at all shows that, as I suspected, you are full of sh*t. You tried to pick an argument with me on the basis of your assertion that fractional reserve banking is a required service, and yet it is now revealed that when you wrote that you didn't have a clue why you even hold that opinion. Before you come out with crap like "idealogues bore me" make sure you can back up what you say, or you end up looking like a fool.
Vulgarity will get you on my ignore list.
As for the rest, one more time: the Medicis ran (I will put this in big letters so you don't miss it this time) THE LARGEST BANK IN EUROPE.
As in the biggest.
The one that made the most loans.
Get the point????
They ran a "fractional reserve" bank: that is, a bank.
Period, the end.
That means that "large-scale fractional reserve banking", as you style it, and which everyone else would just call plain banking, was happening 200 years before the date you give, at minimum.
In Europe, that is. Elsewhere, it was going on throughout the European Dark Ages. Why? Because elsewhere, commerce was in full swing throughout the Dark and Middle Ages of Europe.
NO COMMERCIAL SOCIETY CAN EXIST WITHOUT BANKING.
Or, what you call, "fractional reserve banking". Has never happened, will never happen.
I've had debates with Austrians before, and none took your position, because the historical evidence is so clear. To quote, from
a definition of full reserve banking:
A system in which all currency is backed by another asset and commercial banks are required to maintain a 100% cash reserve ratio has never been implemented in any actual economy.
Let's
quote from an Austrian who actually would agree with you on just about everything else, but who evidently knows his history. I quote the page almost in full:
Raymond de Roover provided a detailed account of the dealings of the Medici Bank and its history. (The Rise and Decline of the Medici Bank: 1397-1494 ). De Roover estimated that at one point the bank’s reserves had fallen by 50 per cent, which means that the bank had used credit expansion to enlarge the money supply by twice the value of its demand deposits. After 1494 and another boom the bank encountered severe difficulties as more and more depositors began withdrawing their cash and a financial crisis emerged. The result was that the Medici Bank failed, as did its competitors who had also come to rely on fractional banking.
Abbot Payson Usher, a Harvard economist, gave an account of the development of fractional reserve banking in the late Middle Ages. According to Usher fractional banking emerged in the thirteenth century. (The Early History of Deposit Banking in Mediterranean Europe, Cambridge, Massachusetts, Harvard University Press, 1943). It’s important to bear this fact in mind because credit expansion can only be produced by a fractional reserve system. And every boom has always been preceded by a rapid monetary expansion*. I do not know of a single exception.
Usher studied of the Barcelona Bank of Deposits. The bank had been founded in 1401 by the city with the aim of funding municipal expenditure and government bonds. It also made loans to members of the local aristocracy. Usher estimated that the bank’s cash reserves were 29 per cent of its deposits. This meant that it could expand credit by nearly 3.5 times its reserves. Thanks to Usher’s work we now know that most of its loans consisted of phony credit. Over the years the reserve ratio of cash reserves to deposits fell. Eventually its dishonesty caught up with it and in 1468 it was unable to meet its depositors’ demand for cash. The response of the city burgers was exactly what one would expect. They granted the bank more privileges.
We now know that irrespective of Shiller’s claims “speculative asset price bubbles” emerged centuries before anyone had thought of newspapers and long before Holland’s tulip mania.
Mike Dash wrote a heavily detailed account of tulip mania in which he made the essential point that the volume of trading around promises to buy and sell during the mania “was not less than 40 million guilders” while the Dutch banking system only contained reserves of 3.5 million guilders. (Tulipomania, Random House, 2001). It ought to be clear that it was credit expansion that fuelled the mania. Without this expansion there was absolutely no way that speculation in the tulip trade could have reached such ridiculous heights. This view is confirmed by the fact that when the Dutch government decreed in 1637 that tulip bulbs were not investments but products and so had to be bought for cash bank loans collapsed and the mania imploded.
I have had some rather abusive Keynesians tell me that this is rubbish because “seventeenth century banking was too primitive for a fractional reserve system to emerge”. Such critics obviously do not even have a passing knowledge of the history of banking. They certainly do not understand the ramifications fractional banking. In any case, These critics stand refuted by historical studies that clearly show the existence of medieval fractional reserve banking.
Even the folks who agree with you know how things evolved, at least the ones who didn't get their education on economic history from the internet.
While the author of that page would certainly not agree with my conclusion that banking (I'm not going to call it "fractional reserve" banking, because that has never existed on anything larger than a trivial scale) is essential to a commercial society, he nevertheless points out,
insists on pointing out, that as soon as commerce revived in the West (the thirteenth century), so too did banking.
The reason I come to that conclusion is ridiculously simple: as soon as people needed to move goods in volume from one place to another, they found it necessary to engage bankers. Hence the re-emergence of banking in Europe in the thirteenth century, in what most of us would still consider the middle of the Middle Ages, a hundred to a hundred and fifty years before the Renaissance would begin. So, to me, banking and commerce are inseparable. Find one, and you will surely turn up the other.
Finally, there's this, which indirectly proves the point, from A History of Europe, by Henri Pirenne, Volume II:
The Sienese company of the Bonsignori was still more important. A document relating to its bankruptcy in 1298 informs us that it was the most celebrated company in the world...That very year it had paid two hundred thousand golden florins to its creditors, and it was given time to pay the rest, part of its capital being engaged in loans made in various parts of the world, which could not be realized immediately.
Obviously, if this most "celebrated company" had engaged in "full reserve" banking - whatever that is - it wouldn't have needed the time to gather back its capital from all those loans.
In 1298.
But that's what I mean by this stuff being hard to dig up: no one thinks banking is anything other than "fractional reserve", so no one bothers to "prove" that banking is fractional reserve. It just is, the way mercury is silver-colored, or grass is green.
And finally, calling it my "crazy-ass Google skillz" is truly insulting. If you think I knew about the Medicis because of the internet, you're mad.
This is where I found out about the Medicis, and all the rest:
A History of Europe, Medieval Cities, Economic and Social History of Medieval Europe, Mohammed and Charlemagne - Henri Pirenne
The Structures of Everyday Life, The Wheels of Commerce, The Perspective of the World - Fernand Braudel
The History of Foreign Exchange, A Dynamic Theory of Forward Exchange, The Destiny of the Dollar, Exchange Control - Paul Einzig
The Ascent of Money - Niall Ferguson
An Inquiry into the Nature and Causes of the Wealth of Nations - Adam Smith
I even looked through the indexes of all these books looking for the word "goldsmith". Not one even mentioned the word.
Not one.
Vulgarity won't cover that up.
