8. Economic development + the growth of banking and insurance Flashcards
(4 cards)
Why did London’s population grow?
. Migration due to religious persecution
. Enclosures led to poorer farmers (who couldn’t pay for private fencing) moving to towns like London for employment.
. London attracted many servants and apprentices.
How did insurance grow?
Before marine insurance, investing in ships going overseas was a massive risk, as the ship could sink or be pillaged by pirates. Once it had been introduced, trade was stimulated as more investments were made with people feeling safer. Also in the 1650s and 1660s, insurance costs fell by 75%, boosting the appeal of investing in trade ships. For fire insurance, after the 1666 Great Fire of London, it increased. By 1683, 4000 London houses had fire insurance, shown by the plaques displayed on the houses to mark their insured status.
How did credit and a national banking system develop?
Bills of Exchange were given in lieu of payment, with interest charged depending on time of repayment. As London and its trade expanded, Bills of Exchange were used to pay off debts instead of cash. From this developed a banking system as London merchants and Goldsmiths accepted the Bills and offered credit to businessmen by opening accounts for the deposit or cash withdrawals. This resulted in a national banking system.
Who were the Goldsmiths and why were they significant?
Goldsmiths made items, mainly jewellery, out of precious metals. By the 1660s they were also providing loans and were in charge of keeping people’s money and valuables in their vaults, as storing money in your home would encourage burglaries, and storing money in the Royal Mint meant that you ran the risk of losing some to Charles II (who had a habit of pinching other people’s funds). The Goldsmith-banker Edward Blackwell provided finance to Charles II and the Restoration government, while aiding trade and merchants around the world and handling hundreds of private clients. Goldsmiths were growing - with 32 in London in 1670 and 44 in 1677. They were all incredibly close knit - as they had all trained together as apprentices and these friendships withheld as they became a part of the Worshipful Company of Goldsmiths.
