What Is the History of Commercial Banks?

The history of commercial banking extends to ancient times when money was stored in and lent by religious temples in Babylon, Egypt, Greece and Rome. Modern-day banks, run by private corporations rather than governments, developed in Europe in the 17th century. The first U.S. bank was founded in the 1780s.

The Romans built the first bank that was not associated with a religious institution, and Julius Caesar is credited with enacting laws that allowed banks to seize property if debtors defaulted on their loans. As the Roman Empire faltered, churches again began lending money through papal banks.

The Amsterdam Wisselbank provided the blueprint for the creation of modern banks. The Wisselbank was created in 1609 to lend money to the Dutch government, and began lending to private individuals in 1683.

Europe's commercial banks developed early banking methods that are still in use today. Pre-printed checks were invented in the 18th century and processed by bank clerks who met in person to exchange the checks for cash. The Royal Bank of Scotland instituted the first overdraft system in 1778.

The banking industry in the United States started during the American Revolution. By 1861, America had as many as 1,600 commercial banks, a number that ballooned to 30,000 by the early 1920s. The United States established the Federal Reserve Bank in 1914 to oversee banks and regulate currency.