History of Banking

In our last class, it was perfectly clear that the deposit is one contract, and the loan is another contract, and that in a deposit of a fungible good in general, and of money in particular, a general legal principle applies, and the depositary who receives the good has the obligation to maintain intact 100 percent of the tantundem, which in banking terms, we referred to as a “100-percent reserve ratio.” Today, we are going to do a historical review and see how, throughout history, private bankers, in collusion with governments, have violated this principle.