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Those dishonest goldsmiths1

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  • Selgin, George

Abstract

London's seventeenth-century goldsmiths are routinely said to have pioneered fractional-reserve banking in England by clandestinely lending coin they were supposed to store – that is, by embezzling their clients. I draw upon both contemporary testimony and contemporary English law to show that the goldsmiths were almost certainly innocent of the crime for which they are so often accused. I then go on to speculate that the myth of the embezzling goldsmith may have its roots in confusion of that crime with (1) crimes other than embezzlement of which goldsmiths were accused by their contemporaries and (2) embezzlement of stored coin not by goldsmiths but by the British crown and by some merchants' servants.

Suggested Citation

  • Selgin, George, 2012. "Those dishonest goldsmiths1," Financial History Review, Cambridge University Press, vol. 19(3), pages 269-288, December.
    • Handle: RePEc:cup:fihrev:v:19:y:2012:i:03:p:269-288_00
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    Cited by:

    1. Yaser Taufik Syamlan & Nur Istiana, 2018. "Does Fractional Reserve Banking System Exist In Indonesian Islamic Banking?," Journal of Islamic Monetary Economics and Finance, Bank Indonesia, vol. 4(2), pages 369-400, November.
    2. Malavika Nair, 2015. "Fractional Reserve Banking, Client Collaboration, and Fraud," Journal of Business Ethics, Springer, vol. 130(1), pages 85-92, August.
    3. Martin Hellwig, 2021. "Der Zinssatz ist kein Preis [The Interest Rate Should not be Interpreted as a Price]," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 101(11), pages 862-869, November.
    4. repec:idn:jimfjn:v:4:y:2018:i:2j:p:1-32 is not listed on IDEAS
    5. Donaldson, Jason Roderick & Piacentino, Giorgia & Thakor, Anjan, 2018. "Warehouse banking," Journal of Financial Economics, Elsevier, vol. 129(2), pages 250-267.

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