Ex. 2. Fill in the gaps with the words and expressions from the text
1. Before the introduction of a …… there were many instances of ….. in primitive communities.
2. Usury laws ….. by the Church ….. on lending.
3. The Italian merchants arrived at a time when England was changing from a ….. , with virtually all its ….. in land, to a commercial society in which ….. needed to be ….. .
4. The Church disallowed ….. .
5. The goldsmiths had also become ….. and ….. keepers of money and values for people without ….. .
6. Englishmen of business ….. of the Italian merchants.
7. The ….. given by goldsmiths for ….. have been compared to ….. .
8. In the history of British banking the goldsmiths development of ….. and ….. , ….. deposits and ….. provided the primitive but nevertheless ….. of a modern banking system.
Ex. 3. Find in the text the English equivalents for the following:
сделки с элементами кредита; средство для записи долгов; банковские услуги; широкая международная торговля; упадок банковского дела; законы о ростовщичестве; использоваться для получения прибыли; эра открытий; расширение торговли; дача взаймы под процент; надёжные хранители; эффективная система частных банков; выплата кредитору суммы задолженности; долговые обязательства и чеки; срочные депозиты; депозиты до востребования; основные элементы.
Ex. 4. Match each term with the appropriate explanation.
deposit, interest, lending, debt, depositor, promissory note, debtor
1. A person who places money with a bank or who has a bank account.
2. Money placed in a bank account.
3. A sum paid or taken for use of money or for borrowing money.
4. A person who has borrowed funds with the promise to return them or an equivalent (usually plus interest).
5. A sum of money borrowed on condition of being returned.
6. An activity of giving money on condition that it is returned and that interest is paid for its temporary use.
7. A formal document, in writing, containing a promise to pay a certain sum of money to, or to the order of, a named person, or to the leader of the document.
Ex 5. Answer the questions and the assignments.
1. How did the need for banking facilities show itself even before the introduction of a monetary system? Give examples.
2. What is usury? Why do you think the Church put restraints on lending?
3. How did banking start in Great Britain? Expand on the role of goldsmiths.
4. What valuable documents were in circulation among merchants and goldsmiths? What functions did they perform?
5. Speak of the initial banking services developed in Great Britain/
Ex 6. Find in the text the words and phrases that refer to the following notions and comment on them:
1) transactions involving credit
2) restraints on lending
3) receipts given by goldsmiths
4) the lending of money with interest
Ex 7. Comment on the statements.
1. “In Greece, Babylon and the Roman Empire an extensive international trade demanded banking facilities.”
2. “…England was changing from a feudal community … to a commercial society.”
3. “the new men were bankers but they were still goldsmiths.”
Text B
The Bank of England
The Bank of England was established privately in 1694 and chartered by the government in return for a loan. The bank was also allowed to issue its own notes. Although started as a private bank, it gradually evolved into a Central Bank.
The Bank of England was the first central bank. It serves as the banker to the government to the United Kingdom, with sole authority to issue notes in England and Wales, and also as the banker to the country’s commercial banks. Until 1946 the bank was privately owned, but it had long governed its operations in the national interest.
From its founding in 1694 it acted as the government's banker, lending it money to fund the national debt. It soon acquired a practical monopoly of the note issue; eventually other banks began keeping deposits with the Bank of England and using it as a clearinghouse for their transactions with one another. By the 19th century, the Bank of England had become a "banker's bank." It had also acquired another function associated with central banking—that of being the "lender of last resort," to which other banks could turn for aid when they were hard pressed.
During the 19th century the Bank of England developed techniques for regulating interest rates and the amount of credit issued by itself and by the banking system generally. As the leading bank in the world's leading financial center, its actions were considered critical in maintaining the international gold standard. By adjusting its discount rate—that is, the interest it charged on loans to commercial borrowers—it was able to affect the international flow of short-term capital. The Bank of England was nationalized in 1946.
Today the bank conducts monetary policy by affecting the country’s supply of money through the purchase and sale of securities (open market securities). It also controls interest rates and sets limits on the amount of bank credit (reserve requirements).
Country bankers
The private goldsmith bankers and the Bank of England were confined to London but, running parallel in development, in the eighteenth century a separate system of banking was developing in the provinces.
The London goldsmiths had made no attempt to expand outside London since trade was flourishing and comfortable compared to midland and northern regions, where transport and communications were not developed.
However, outside London the beginnings of the Industrial Revolution were taking place, which created the need for monetary services. Traders in the north and midlands needed capital for expansion and since in the absence of its supply by London private bankers or the Bank of England, it was left to business men to meet their own needs. The bankers of the country were industrialists, traders, and local revenue collectors; men already experienced in financial transactions.
A great impetus for country banking came in 1797, when the Bank of England suspended cash payments, England being threatened by war. Parliament authorized the Bank of England and country bankers to issue notes of low denomination.
The industrialist banker could assist his own industry since he did not only provide a local means of payment but accepted deposits. Here we have a parallel with the early goldsmith banking.
For the country banks to give an efficient service there was a need for direct links with London to effect payment and avoid the transporting of coin. London held great importance for the country bankers as a money market and an investment center for their surplus income. All bills of exchange and bank drafts were drawn on London, so too were the "London Bill", a form of paper credit, effecting payment between the counties and London.
Important country bankers all had their agents in London.
From 1784 to 1890 the number of banks outside London rose from 119 to 800. In the early 1800's Abingdon with only 4,500 people had three banks; Boston with 7,000 people had six banks and Exeter with a population of 18,000 had seven banks.
The aftermath of the Napoleonic wars at the turn of the century caused uncertainty and depression in the industry, leading to the failure of many banks and rationalization of the system, leaving on the large and more prosperous ones in business.
Joint stock banking
Joint-stock was the name given to companies which are owned by several people who each possessed a certain number of shares in the capital. Their liability for the company's debts would be limited to that amount. That is why most of the major banks of London were established after 1826, as they were able to start with more capital.
At the end of 19th century joint-stock banking became permissible throughout the United Kingdom. The rest of the century saw a long struggle for survival; the private bankers with the Bank of England on their side against the new joint-stock bankers. Private bankers enjoyed a comfortable living and saw the new joint-stock banks threatening their own business, for it was these men who had fought against joint-stock banking in the Parliament of the early 1880s. In 1854, the new bankers were admitted to the Clearing House, a bankers institution in London for exchanging bills and cheques and settling balances, which was to give them greater strength.
The first joint-stock bank was opened in Lancaster in 1826. The private banks were absorbed by the joint-stock banks, making larger and larger concerns. This process was to reach its culmination at the end of the first world war, when the Big Five took shape.
1854 saw the entrance of the joint-stock banks to the Clearing House which was to revolutionize the cheque. The achieve this the major banks had to take over London banks. In 1884, Lloyds Bank, previously confined to the midlands, took over two famous London banks whilst the Birmingham Banking Company entered London, by absorbing the Royal Exchange Bank.
The pattern of amalgamation continued and by 1936 had emerged as eleven banks, holding a total of over £2,000,000,000 of which the Big Five accounted for 87%. The twentieth century showed services in foreign exchange, and trustee and executor business were beginning to replace competition in price and size.
Joint-stock banks began to open more branches, a system which seemed likely to provide a more stable structure and one more suited to the needs of the now advanced Industrial Revolution. However, the branches needed to be controlled from Head Office, which was to prove difficult with poor communications and lack of skilled men.
In 1833, an Act of Parliament permitted joint-stock banks in London, and confirmed the legality of cheques drawn on them. The use of cheques made for more rapid commercial transactions. Where cheques were drawn and paid at different branches of the same bank, they could be cleared through Head Office, a system of internal debiting and crediting, which took several days. Access to the London Bankers Clearing House was still denied to joint-stock banks until 1854.
The second half of the nineteenth century was an age of British industrial and commercial supremacy, which called for an expansion of the services provided by the established banks. For example, the London and Manchester Bank had four branches in 1850, and seven by 1865.
Many of the old private and small joint-stock banks were unable to meet the demands of the growing industrial nation, so were forced to sell out. The reason for the improvement of the branch system was the removal of legislative obstacles, the growing dominance of the cheque, the completion of the railways and the development of the telegraph.
Two world wars had little effect of the banking structure of the country. The amalgamations at the end of the First World War were the culmination of the long process of structural development. A massive branch banking system had grown out of the piecemeal development of the past.
In 1918 there were five large banks and six smaller survivors, which caused widespread fear that competition would be restricted if the process was carried further. However, this view changed when it was seen that five or six banks in the same High Street could operate at maximum efficiency. In 1967 the National Board for Prices and Incomes put forward the case for further amalgamation and rationalization, Since then a lot of mergers have followed, leaving the Big Four and two smaller banks in England and Wales.
Like their predecessors of hundred years ago, today's bankers seek to extend their business in every possible aspect, developing foreign exchange, finance of foreign trade and trust services. Within their own system a very high degree of mechanization has occurred; all branches now having a computer linked to a vast network for time saving, greater efficiency and speed.
The credit card system, first introduced in 1966 from a well-established American tradition, has now been undertaken by all the major banks and may prove to be an innovation with far reaching effects. Cash dispensers, cheque cards and budget accounts are other recent services offered to aid the convenience of the customer, while the more recent Euro-cheque system enables a traveller in Europe to cash his down British cheque in the currency of the country where he is staying.
The banks are showing no signs of standing still, pushing for fresh ideas of diversification, discussing an all-electronic future and, unlike their predecessors, are willing to inform the public of their intentions through advertising and public relations.
The goldsmiths who set up as bankers three hundred or more years ago would recognize the essentials of today's banking, but they would be surprised by its ramifications.
Vocabulary list
1. to be chartered by the government – получитьпривилегиюотправительства
2. toissuenotes – печататьбумажные деньги
3. tobeprivatelyowned – являтьсячастнойсобственностью
4. clearinghouse – Клиринговая Палата (учреждение, занимающееся взаимными расчетами между своими членами/банками)
5. joint stock – акционерный
6. monetarypolicy – кредитно-денежнаяполитика
7. lenderoflastresort – последнийкредиторв критической ситуации
8. interest rate – процентная ставка
9. to effect payment – производитьоплату
10. branch – отделение, филиал
11. to draw a cheque – выписатьчек
12. tooperateatmaximumefficiency – функционировать, работатьмаксимально эффективно
13. diversification – диверсификация
Notes
1. to govern operations in the national interest – зд. контролироватьоперациивинтересахгосударства
2. to develop techniques – разрабатыватьметоды
3. to discourage borrowers – отпугиватьзаемщиков
4. to be confined to – бытьограниченным
5. flourishing – процветающий
6. revenue collectors – сборщики налогов
7. impetus – импульс, стимул
8. theBigFive – пятьведущих английских банков
9. abankdraft – тратта, переводнойбанк
syn. payment order
10. agents – посредники
11. liability – обязательство; пассив
12. to take over – занять, захватить
13. a system of international debiting and crediting – системамеждународногодебетованияикредитования
14. supremacy – господство
15. legislativeobstacles – препятствияюридическогохарактера
16. amalgamation – объединение
17. piecemeal – частичный, постепенный
18. far-reaching effects – далекоидущиепоследствия
19. discount rate – учетная ставка
20. short-termcapital – краткосрочныйкапитал
21. to suspend cash payments–приостановитналичныеплатежи
Ex 1. Suggest the Russian equivalents:
chartered by the government in return for a loan; gradually evolved into; sole authority; eventually; turn for aid; hard pressed; have the opposite effect; become permissible; enjoy a comfortable living; running parallel in development; experienced in financial transactions; threatened by war; notes of low denomination; avoid the transporting of coin; surplus income; limited to that amount; to reach culmination; the pattern of amalgamation continued; lack of skilled man; time saving, greater efficiency and speed; to cash a cheque; no signs of standing still.