THE exchanging of money; the lending of money; the borrowing of money; the transmitting of money, are the four principal branches of the business of modern banking, and in most countries they seem to have taken their rise in the order in which they are here named.
For several centuries the only coin current in England was made of silver, and the highest denomination was the silver penny. This coin contained about half as much silver as one of our sixpences. There were also silver halfpence and silver farthings, and frequently the silver pennies were cut into halves and quarters to serve the' purpose of half-pence and farthings, until laws were made to prohibit the practice. Copper was not coined in England until the year 1609, and then the small leaden tokens previously issued by private individuals were suppressed.
Gold was first coined in England in 1257, but soon went out of circulation, and did not enter permanently into currency until 1344, when Edward III. issued gold nobles, half nobles, and farthing nobles; the noble to pass for 6s. 8d., the half noble for 3s. 4d., and the farthing noble for Is. 8d. This coinage seems to have given rise to the office of Royal Exchanger.
"It was not so easy a matter in the times we are now considering to exchange gold and silver coins for each other as it is at present, and, therefore, Edward III. and several of his successors took this office into their own hands, to prevent private extortion as well as for their own advantage, and they performed it by appointing certain persons, furnished with a competent quantity of gold and silver coins, in London and other towns, to be the only exchangers of money, at the following rate: - When these royal exchangers gave silver coins for a parcel of gold nobles, for example, they gave one silver penny less for each noble than its current value, and when they gave gold nobles for silver coins they took one penny more, or 6s. 9d. for each noble, by which, in every transaction, they made a profit of l 1/5th per cent. These royal exchangers had also the exclusive privilege of giving the current coins of the kingdom in exchange for foreign coins, to accommodate merchant-strangers, and of purchasing light money for the use of the mint. As several laws were made against exporting English coin, the king's exchangers, at the several seaports, furnished merchants and others who were going beyond seas with the coins of the countries to which they were going, in exchange for English money, according to a table which hung up in their office for public inspection. By these various operations they made considerable profits, of which the king had a certain share. The house in which the royal exchanger of any town kept his office was called the Exchange, from which it is probable the public structures where merchants meet for transacting business derive their name."1
This institution continued until the middle of the reign of Henry VIII., when it fell into disuse. It was re-established in 1627, by Charles I., who then issued the following proclamation: -
1 Henry's History of England, vol. viii. page 347
"Whereas the exchange of all manner of gold and silver current in moneys or otherwise, as the buying, selling, and exchanging of all manner of bullion, in species of foreign coins, billets, ingots, etc, fine, refined, or allayed howsoever, being fit for our mint, hath ever been and ought to be our sole right, as part of our prerogative, royal and ancient revenue, wherein none of our subjects of whatever trade or quality soever, ought at all, without any special licence, to intermeddle, the same being prohibited by divers Acts of Parliament and Proclamations, both ancient and modern. And whereas ourself and divers of our royal predecessors have, for some time past, tolerated a promiscuous kind of liberty to all, but especially to some of the mystery and trade of goldsmiths in London and elsewhere, not only to make the said exchanges, but to buy and sell all manner of bullion, and from thence some of them have grown to that licentiousness, that they have for divers years presumed, for their private gain, to sort and weigh all sorts of money current within our realm, to the end to cull out the old and new moneys, which, either by not wearing or by any other accident, are weightier than the rest, which weightiest moneys have not only been molten down for the making of plate, etc, but even traded in and sold to merchant-strangers, etc, who have exported the same, whereby the consumption of coins has been greatly occasioned, as also the raising of the silver even of our own moneys to a rate above what they are truly current for, by reason whereof no silver can be brought up to our mint but to the loss of the bringers, etc. - For the reforming of all which abuses we have, by the advice of our Privy Council, determined to assume our said right, for our own profit and the good of the realm, and for this end we do now appoint Henry Earl of Holland and his deputies, to have the office of our changes, exchanges, and out-changes whatsoever, in England, Wales, and Ireland. - And we do hereby strictly charge and command that no goldsmith nor other person whatsoever, other than the said Earl of Holland, do presume to change, etc."1
As this measure occasioned some dissatisfaction, the king authorized, in the following year, the publication of a pamphlet, entitled "Cambium Regis, or the Office of his Majesty's Exchanger Royal." In this pamphlet it was attempted to be shown: -
"That the prerogative of exchange of bullion for coin has always been a flower of the Crown, of which instances are quoted from the time of King Henry I. downwards. That King John farmed out that office for no smaller a sum than five thousand marks - that the place or office where the exchange was made in his reign was near St. Paul's Cathedral in London, and gave name to the street still called the Old 'Change - that in succeeding reigns there were several other places for those exchanges besides London - that this method continued to Henry the Eighth's time, who suffered his coin to be so far debased that no regular exchange could be made - that the same confusion made way for the London goldsmiths to leave off their proper trade of gold-smithrie, i.e., the working and selling of new gold and silver plate, and manufacture, the sole intents of all their charters, and to turn exchangers of plate and foreign coins for our English coins, although they had no right to buy any gold or silver for any other purpose than for their manufacture aforesaid, neither had any other person but those substituted by the Crown a right to buy the same. The king, therefore, has now resumed this office, not merely to keep up his right so to do, but likewise to prevent those trafficking goldsmiths from culling and sorting all the heavy coin, and selling the same to the mint of Holland, which gained greatly thereby, or else by melting these heavy coins down for making of plate, witness the pieces of thirteenpence-halfpenny, old shillings of Queen Elizabeth, ninepenny and fourpenny-halfpenny pieces, which, being weighty moneys, none of them were now to be met with, whereby they have raised the price of silver to twopence per ounce above the value of the mint, which thereby has stood still ever since the eleventh of King James - that for above thirty years past it has been the usual practice of those exchanging goldsmiths to make their servants run every morning from shop to shop to buy up all weighty coins for the mints of Holland and the East countries, whereby the king's mint has stood still."
1 Anderson's History of Commerce, vol. ii. page 324.
Not only the Goldsmiths' Company of London, but the lord mayor, court of aldermen, and common council, petitioned against the revival of the office of the Royal Exchanger. They were not, however, successful; and on a second application of the Goldsmiths' Company, the king told them "to trouble him no farther, since his right to the office was undoubtedly clear." After the death of Charles I. this office was not continued, and the business of money-changing fell again into the hands of the goldsmiths. Their shops were situated chiefly on the south row of Cheap-side, and extended from the street called the Old 'Change unto Bucklersbury.1