The banking system has a long history. The expansion of world trade which took place towards the end of the Middle Ages necessitated a professional organization which would regulate the transmission of payment from place to place and country to country. The banking system developed in conjunction with the goods trade. The cradle of our modem banking technique is to be found in the towns of Northern Italy. It was here that the problem of an inter-local and international payment system, by means of bills of exchange and letters of credit, was first posed and solved.
The use of capital to grant loans began at an even earlier date. In the Middle Ages professional money lenders were almost always Jewish. Their concentration into ghettos, and the dictate which forbade Christians to charge interest, more or less compelled Jews to become money dealers and money lenders. Although at the beginning it was tainted with the odium of usury, the credit business proved just as useful and necessary for the development of the economy as the inter-local transmission of payment. Without the transmission of payments by banks to countries everywhere, our modern world economy and our all-embracing world trade would be unthinkable. And without a system whereby credit can be granted to producers, our modem economy could not have come into existence.
As centuries passed by, many banking families achieved not only riches but also great public honors.