When we compare the date of this document with that of the establishment of the Banco della Piazza di Rialto at Venice, it is not unlikely that the idea of the establishment of a bank was floating in the minds of people connected with business and had become familiar to Hagenbuck from commerce with Venice. Other state papers in 1621 and 1622 and again in 1662 and 1666 contain somewhat similar proposals which however were never carried into practice.
The little London Directory, 1677, contains a list of goldsmiths mentioned as keeping "running cashes." Of these firms described in 1677, five houses were carrying on business in 1876. Three of these, or firms immediately descended from them, Child & Co. of Temple Bar, Martin & Co. of Lombard Street (as Martin's Bank, Ltd.), and Hoare & Co. of Fleet Street, are still carrying on business. Barnetts, Hoare & Co. and Willis, Percival & Co. have been absorbed since 1876, the first by Lloyds Bank (1884), the second by the Capital and Counties (1878). Many of the goldsmiths carried on a considerable business. Thus the books of Edward Blackwell, who was an eminent goldsmith and banker in the reign of Charles II., show that the king himself, the queen mother, Henrietta Maria, James, duke of York, the prince of Orange, Samuel Pepys, the East India Company, the Goldsmiths' Company and other city companies did business with him. Sir John Houblon, the first governor of the Bank of England, kept an account with Blackwell, who was, however, ruined by the closing of the exchequer in 1672. But his son married into the family of Sir Francis Child, and his grandsons became partners in Child's Bank.
Besides the banks in London already mentioned, one in the provinces claims to have been established before the Bank of England. Smiths' of Nottingham, since amalgamated with the Union of London Bank, is stated to have been founded in 1688. Others also claim considerable antiquity. The old Bank of Bristol (Bailey, Cave & Co.) was founded in 1750; the business amalgamated with Prescott & Co., Ltd., of London. The Hull Old Bank (Pease & Co.) dated from 1754; this business also still continues (amalgamated, 1894, with the York Union Banking Co., Ltd., and since with Barclay & Co., Ltd.). The banks of Gurney & Co., established at the end of the 18th century in the eastern counties, have with numerous other banks of similar standing amalgamated with the firm of Barclay & Co., Ltd., of Lombard Street.
The business of banking had been carried on by the goldsmiths of the city, who took deposits from the time of James I. onwards, and thus established "deposit-banking" as early as that reign. This is described in a pamphlet published in 1676, entitled The Mystery of the New-Fashioned Goldsmiths or Bankers Discovered, quoted by Adam Anderson in his History of the Great Commercial Interests of the British Empire, vol. ii. p. 402. During the Civil War "the goldsmiths or new-fashioned bankers began to receive the rents of gentlemen's estates remitted to town, and to allow them and others who put cash into their hands some interest for it, if it remained but for a single month in their hands, or even a lesser time. This was a great allurement for people to put their money into their hands, which would bear interest till the day they wanted it. And they could also draw it out by £100 or £50, etc., at a time, as they wanted it, with infinitely less trouble than if they had lent it out on either real or personal security.
The consequence was that it quickly brought a great quantity of cash into their hands; so that the chief or greatest of them were now enabled to supply Cromwell with money in advance on the revenues as his occasion required, upon great advantage to themselves."
The Bank of England, as stated before, was incorporated by the act of 1694. The position of the other banks at that time was defined by that act and the act of 1697, which declared that no bank, that is, no joint-stock bank, was "to be established within England during the continuance of the Bank of England," and also by the act of 1708, which provided that "during the continuance of the Bank of England, no company or partnership exceeding six persons in England" should "borrow, owe or take up any sum or sums of money on their bills or notes payable on demand or at any less time than six months from the borrowing thereof." This was confirmed by the act of 1800. No change of importance was made till the act of 1826, which prohibited "bank notes under £5," and the second Banking Act of that year which allowed the establishment of co-partnerships of more than six persons, which necessarily were joint-stock companies, beyond 65 m. from London. The act of 1833 allowed the establishment of joint-stock banks within the 65 m. limit, and took away various restrictions of the amounts of notes for less than £50. But the power of issuing notes was not allowed to joint-stock banks within the 65 m. radius.
In the early days in England, issuing notes formed, as Bagehot says in his Lombard Street, the introduction to the system of deposit-banking - so much so, that a bank which had not the power of issuing notes could scarcely exist out of London.
Bank notes in England originated in goldsmiths' notes. Bank notes. Goldsmiths received deposits of moneys and gave notes or receipts for such moneys payable on demand. The London bankers continued to give their customers notes or deposit-receipts for the sums left by them until about 1781, when in lieu of such notes they gave them books of cheques. Before the invention of cheque-books, the practice of issuing notes was considered so essentially the main feature of banking, that a prohibition of issue was considered an effectual bar against banking. Accordingly the prohibitory clause in the act of 6 Anne, c. 50, 1707 (in Record edition), which was repeated in the Bank of England Act 1708, 7 Anne, c. 30, § 66 (in Record edition), prohibiting more than six persons from issuing promissory notes, was intended to prevent any bank being formed with more than six partners, and was so understood at the time; and it did have the effect of preventing any joint-stock bank being formed.