London, economic development and the growth of banking and insurance Flashcards
Reasons for London growth
- if son of wealthy landowner wanted to gain favour at the royal court
- Training in law
- inns court
- poor wanting work
In order to respond to risk merchants>….
insure ships and goods= boom in the industry insuranc
Why was the growth of banking and insurance necessary?
development of brit economy and international trade (existed befre stuarts)
Businessmen and commerce needed a credit system that was flexible.
when was bills of exchange deelpoed in?
Middle ages = form of credit.
Why was the frowth of lending made possible due to lowering interests.
legal limit 1624 = 10% —> 1651 6%
== more attractive = demand increased in 1688 it was between 4-6% below the legal limit = shows proft and amount of merchant and gentry wanting this shit
Define MOney Scriveners
Someone who lends money or arranges the ledning of money on behalf of others, usually those wanting to raise money.
Development of Goldsmiths
Flourished after Charles I seized gold deposited in the Royal Mint (1640) for war with Scotland; people saw giving valuables to Goldsmiths as safer.
Goldsmiths bankers increased from 32 in 1670 to 44 in 1677.
Bankers borrowed at an interest rate of 4-6% and made short-term loans at a much higher rate but people accepted as they wanted money.
How did charles II lead to a boom for private financers?
Charles was heavily indebted to goldsmiths bakners - borrowing 6% and lending to the crown at 10% lollllll
SOo Charles reformed bankning in 1672 so that loans to the crown levied.
== confidence in the crown to keep investments safe lost = boom for private financers.
confidence restored when WII rerstored the status of Goldsmith-bankers by repaying originla loans
Marine insurance instrumental for successful trade in…
expanding empire and trading in general
Did the Dutch mrchants understand the value of marine insurance? what did in lead to lonodn merchants to do?
yes in the late 16thC - VISITED LONDON TO MEET Financers.
London merchants began to replicate the Dutch in seeing the calulation of risks -
evidence of the rise marine insurance
17th Century pries fell by 75% = BUSINESS MORE EST = london became the leading insurance arket in the world.
Great fire of London (1666)
Following the fire, 1667 the act to rebuild the city referenced settling insurance claims at the Royal Exchange.
Two specialist companies later set up offering fire insurance: the Fire Office (1681) and the Friendly Society (1683).
But impact should not be exaggerated as not all people insured their homes.
Marine insurance prices dropped by up to 75% as the industry became more established, and consequently, London became…
the leading insurance market in the world.
When was the Fire Office set up?
1681
In the 17th century the insurance industry was still… , but was an…
in its infancy
essential ingredient in the growth of the economy.
