Trade, Banking & Insurance Flashcards
What impact did the changing cloth trade have on the economy?
- Exports rose from £600,000 in the 1560’s to London, exporting 1.5million of textiles in the 1660’s
- Cloth accounted for 92% of exports out of London in 1640
- The value of textile exports between 1485-1714 multiplied by x15
How did the growth of London impact the economy?
- By 1650, London became the biggest city in western europe, population of 400,000. By 1700, this was 575,000
- Transport had improved therefore improving trade especially London due to roads and use of the thames
- Banking and insurance were based in London - provided employment to maintain merchants and businesses
- London was the centre of markets - prices of livestock, grain & cloth were dictated by London
- Migration of workers to London from both gentry and middle class
- Exports rose from £600,000 in the 1560’s to London, exporting 1.5million of textiles in the 1660’s
What evidence is there that banking was due to the success of invididuals?
Gresham the developed The Royal Exchange (the first commercial building in Britain), a base for brokers to gain money for investment as he could no longer gain loans from Antwerp
Brokers established networks of contacts that could provide money, particularly in London
In 1640 the market rate for a ‘good’ loan was 8%, the legal limit, and in 1688 it was between 4%-6% - below the legal limit.
Evidence to show that the success of banking was due to the state?
Banking developed also due to a fall in interest rates, which made credit (lending) more appealing – the legal limit for interest rates between 1571-1624 was 10%, followed by 8% between 1624-1651 and 6% between 1651-1714 – credit became more attractive.
Evidence to support the belief that money scrivening success was due to the actions of individuals
Robert Abbott moved to London in 1636 and flourished in the 1650s - he helped Royalist landowners secure loans from London for loans to protect their assets from being confiscated.
Abbott set up a money-scrivening firm to act as a broker in these transactions, between 1652-55
£1,137,646 passed through his accounts
Clayton’s firm was taken over by his nephew, Robert Clayton- he received £3,515 per year in interest from loans alone
• Robert Clayton and John Morris
developed the first cheque in 1659 which promised to pay the receiver a specified amount.
Evidence that goldsmith bankers success was due to individuals?
Goldsmiths lent the money they held in storage with interest
• London had 32 goldsmith-bankers in 1670, which rose to 44 in 1677
• With their trustworthy positions goldsmith-bankers borrowed at a rate of between 4-6% and offered short-term loans at a rate above 6%
Evidence that gold smith bankers success was due to the state?
Charles I’s actions of seizing the Royal
Mint meant people turned to
Goldsmiths
• Charles II was in heavy debt to a group of goldsmith-bankers, who were borrowing money at a rate of 6% and lending it to the Crown (Charles II) at a rate of 10% so Charles II reformed banking in 1672 so loans to the Crown were levied from the general public, so he paid a lower rate of interest - led to people turning to private financiers
• 1688 - William III restored the status of goldsmith-bankers by repaying them what Charles II had seized
Evidence to support the belief that marine insurance success was due to the actions of individuals?
Dutch merchants understood the value of marine insurance, often visiting London to meet with financers
• Italian merchants brought the practice to London in the 15th century - insurers Filippo Borromei and Co. had a branch in London - records show that as far back as 1483 they were insuring shipments of broadcloth from Essex to Bruges
• Merchant William Freeman - saw insurance as a safe way to protect goods/trade
• 1657 - it was normal for ships from Holland to be insured through English brokers
• London merchants began to replicate Dutch practices so the use of insurance services increased
• Across the 17th century, marine insurance prices dropped by 75% as more policies were taken out
• Insurers was carried out by bankers and moneylenders, who
‘underwrote their names for a particular sum against a risk
• Coffee houses helped insurers meet clients - first in Oxford in 1650, first in London in 1652 set up by a Turkish merchant
Evidence that success of fire insurance was due to the state
Office set up within the Royal Exchange to deal with insurance of fires
Scheme created by Charles I in 1638 to insure London citizens and business owners against fire, although this ended after the Civil War
• 1667 - Act passed to rebuild London after the Great Fire of London in 1666 the Act made reference to the setting up of insurance claims at the Royal
Exchange
• Specialist company - the Fire Office
1681 set up
• Specialist company - the Friendly
Society 1683 set up
