The history of the growth of English industry and commerce reveals to us a series of causes which have materially contributed in constructing a highly complex machine, which we designate as the product of industry. Capital (or, in other words, wealth) did not exist in very early times, because then the land was cultivated simply for the purpose of supplying mutual wants. In those days the community satisfied their requirements by means of a system of barter or exchange. However, it was soon discovered that a system of barter had many inconveniences. The articles to be exchanged did not always satisfy mutual wants, and there also existed the difficulty of defining the ratios or value of each commodity. A medium of exchange was therefore necessary which would be accepted as payment for goods bought or sold, besides acting as a standard of value.

The precious metals, in consequence of their scarcity and other qualities, became at an early period the medium of exchange and a standard of value. Now as people became possessed of wealth they accumulated the precious metals, because by their means various needs could be satisfied.

A system of hoarding became common. Gold and silver coins were deposited in strong chests, and represented the capital of many individuals in this country.

There was scarcely any outlet for the surplus capital of the country even in the reign of Charles I., and the Church at an earlier period prevented capital from being utilised by declaring it sinful to lend money at usury.

The business of money lending was in the hands of the Jews, who, however, derived their authority for so doing from the ruling sovereign. Whenever the early kings of this country required money they resorted to the Jews for assistance.

It was not until the people accumulated wealth that a system of credit was established. We have therefore first a possession of capital which found its way in course of time into the storehouse of capital or banks, and then followed a development of capital effected by means of credit documents or bills of exchange. Perhaps, therefore, the most important factors connected with the study of capital are banks and bills of exchange. We have already seen how the former have contributed towards promoting the material prosperity of this country.

It seems to us somewhat strange that the early bankers, or, as they were then called, goldsmiths, had no dealings in bills of exchange, those instruments of credit being utilised by the Jews for the purposes of money lending. However, in course of time banking and bills of exchange became indissolubly united.

We can scarcely comprehend how the early bankers transacted business without the medium of bills of exchange, when we consider what is effected in the present day by means of these credit documents. It is worthy of notice that as the method of banking underwent a change, so also the use of bills of exchange became somewhat different in character.

For example, the earlier bankers were goldsmiths, who received money for safe custody, and gave in exchange notes which remained in circulation, and thus through the medium of such notes the goldsmiths became possessed of capital which they lent at interest.

It is also worthy of notice that this system of note issue laid the foundation of the modern system of cash deposits. We can easily see how this occurred. The note holder in course of time would discover that it was advantageous to deposit the notes which he did not immediately require with the banker, not only for the sake of safety, but also for the purpose of receiving interest on his surplus capital.

The goldsmiths became, in the modern sense of the word, bankers, when they could issue notes which would remain in circulation.

In like manner, bills have undergone a change in character. The earlier forms were drawn to facilitate the transmission of money from one country to another, but in course of time they were used for other purposes, such as methods of payment for goods bought or sold, for great financial operations, and also for settling international indebtedness. We shall show that the modern trade of this country has been greatly developed by means of credit documents, and, as a natural sequence to this, we have a corresponding increase in the business of banking.