Trade, Banking & Insurance Flashcards
How significant was the wool trade in England before 1650?
The wool trade was central to economic prosperity, with cloth production ranging from low-quality for personal use to high-quality for national and international markets
How much did textile exports grow between the 1560s and 1660s?
Textile exports rose from £600,000 in the 1560s to £1.5 million by the 1660s. By 1640, cloth accounted for 92% of exports from London
What was the ‘putting-out system’ in the textile industry?
Also known as the domestic system, it involved wool being distributed to workers who processed it in their homes, allowing rural families to supplement their income
How did the putting-out system impact workers?
It allowed families to earn extra income, but conditions were cramped, as most of their small cottages were converted into workshops
Why did the textile industry continue to dominate exports despite other economic developments?
Even as agriculture and trade expanded, cloth still made up 74% of exports in 1660 and 72% in 1700, showing its enduring importance
How did London’s population change between 1650 and 1700?
London grew from 400,000 people in 1650 to 575,000 by 1700, making it the largest city in Western Europe
Why was London central to England’s economic growth?
It was a hub for trade, banking, insurance, and the legal system, with a strong shipping and road network that boosted commerce
How did improved transport benefit London’s economy?
Better roads and increased use of the River Thames made trade faster and more efficient, attracting skilled workers and merchants
How did Sir Thomas Gresham contribute to the success of banking in England?
Gresham developed The Royal Exchange, the first commercial building in Britain, as a hub for brokers to gain investment capital. He needed an alternative source of funding after being unable to secure loans from Antwerp
How did brokers contribute to banking success in the 17th century?
Brokers established extensive networks of contacts that provided financial support, particularly in London, facilitating investment and commerce
What were the market rates for loans in the 17th century?
1640: The market rate for a “good” loan was 8%, which was the legal limit at the time.
1688: The rate had fallen to between 4% and 6%, below the legal limit, making credit more accessible
How did government interest rate policies contribute to banking success?
The government systematically reduced interest rates, making lending more attractive:
1571-1624: The legal limit was 10%.
1624-1651: Reduced to 8%.
1651-1714: Further reduced to 6%, increasing borrowing and economic activity
Who was Robert Abbott, and how did he contribute to the success of money scrivening?
Abbott moved to London in 1636 and helped Royalist landowners secure loans to protect their assets from being confiscated. He founded a money scrivening firm to act as a broker, and between 1652-1655, his accounts handled £1,137,646 in transactions
How did Robert Clayton expand the money scrivening industry?
Clayton took over the business from his uncle and earned £3,515 per year in interest from loans alone, indicating the profitability of money scrivening
What was a major financial innovation introduced by Robert Clayton and John Morris in 1659?
They developed the first cheque, which allowed a payer to promise a specified amount of payment to another party, improving the efficiency of financial transactions
What role did goldsmiths play in money scrivening?
Goldsmiths provided financial services, including safekeeping money, lending at interest, and acting as intermediaries in transactions
Who was Edward Lloyd, and what was his contribution to financial services?
Edward Lloyd established a coffee house in London that became Lloyd’s of London, a world-leading insurance market.
How did goldsmiths contribute to banking success?
They lent money they held in storage and charged interest, acting as early bankers.
They were trusted due to their reputations, allowing them to borrow at 4%-6% and lend short-term loans at rates exceeding 6%
How did the number of goldsmith-bankers change in London?
1670: There were 32 goldsmith-bankers.
1677: The number increased to 44, showing the growing reliance on their services
How did Charles II’s financial struggles influence goldsmith-banking?
Charles II borrowed from goldsmith-bankers at 6% interest but re-lent the money to the Crown at 10%, making goldsmiths more profitable.
In 1672, he reformed banking so the government could levy loans from the general public at lower interest rates, reducing dependency on goldsmith-bankers
How did Dutch merchants influence marine insurance in London?
Dutch merchants recognized the value of marine insurance and met with financiers in London, spreading knowledge and increasing its use
What historical evidence shows early marine insurance in England?
Records from as far back as 1483 show marine insurance for shipments of broadcloth from Essex to Bruges
How did the 17th-century marine insurance market change?
Insurance premiums dropped by 75% as more policies were issued, making coverage more widespread
How did coffee houses contribute to marine insurance?
They served as meeting places for underwriters—financiers who provided marine insurance—helping clients assess risk and secure policies
