The Louisiana populist. [volume] (Natchitoches, Natchitoches Parish, La.) 1894-1898, 1895-08-30
THE BANK OF VENICE.
IRREDEEMABLE PAPER A PRE-
MUM FOR 400 YEARS.


he gave a death blow to the first and
best bank the world ever knew.
Founded in the year 1l71 the bank
OF Venice lived and furnished for 623
years.
An institution which thus came so
near living to the age OF Mcthusaleh
deserves considerable notice.
In 1171 there was war between
Venice and the Roman empire of the
east.
Venice, being hard up for cash.
borrowed 2,000,0 900 ducats from her
rich citizens.
In return for this loan the govern
ment simply gave the lenders credit
on the government books for the
amount loaned.
In other words, il a citizen loaned
100 ducats to the government he was
entered upon the government books
as creditor to that amount. He
held a receipt or certificate to that
amount against the government.
Now the Venetian republic sue
ceeded in its war with Constantine
pie. captured the city and became
very rich and powerful
Hence, a claim against the govern
ment was perfectly good, and the
people doing business with each other
preferred these claims against the
government to either gold or silver.
For instance, suppose merchant
OF Venice held a claim of 100 ducats
against the government; he wishes to
buy goods from merchant in Con-
stantinople to the amount OF 100
ducats; To send the gold or silver was
dangerous and costly; to send trans
fer of his claim against the govern
ment was safe and cheap; the mer-
. chant in Constantinople preferred the
claim against the government to gold
or silver, because it was equally valu-
able and more easily kept; hence the
transaction between the two mer-
chants was closed, to their mutual
satisfaction and benefit, by the trans
fer of the debt which one of them
held against the government.
These government credits were pre-
ferred by the Venetian traders for
many of the reasons which at this
day create such a ravenous hunger
for the bonds.
Bonds are mere government cred
its, yet we have just seen how eager
ly gold is exchanged for them.
Inc bank OF Venice, founded upon
this loan of 2,000,000 ducats, was a
government bank. At the beginning |
it was merely u "chamer Of loans.n
The credits we have spoken of sup
piled the circulating medium. The |
transfers of these credits upon the |
books of the bank was equivalent to |
so much money changing hands.
In 1923 a cash Office was added and |.
the bank of Venice received and re-
turned cash deposits.
In 1857 discount Office was added. /
Thus we see the great republic of /
the Venetian cities running, for hun
dreds of years, a bank which had the |
three departments of the modern
bank circulation, deposit and dis
count
But the two latter departments
never interfered with the original sys-
tenn of transferable credits used In
the payment of debts.
AT first the government allowed 4
per cent. interest on the loans. In
1853 the interest was abolished and
thereafter none was paid.
At first the loan was made on the
promise of repayment Soon the
transfer system became so much more
convenient and desirable, as a circu-
lating medium, that no one wished
for repaym All preferred to hold
claims against the government. Con-
sequently, in 1923. all promise OF re-
imbursement was abolished.
After 1928 whenever a citizen gave
his gold in exchange for government
credit he could never demand the
gold again.
No coin was kept as specie basis
OF credit. No ..gold reserve" maniac
had then been discovered aud wor-
shipped as a statesman.
The bank lived 400 years after it
had ceased to promise to return gold
for gold. 1t lived on the strength of
the government, and on the demand
for cheaper and more convenient
way OF making settlements than with
gold and silver coins.
The credit money OF the Bank OF
Venice was not only as good as gold
all over the republic and throughout
the territory its commerce invaded.
but 1t commanded a premium of 20
per cent over gold.
The amount OF this credit money
which was worth fifth more than
gold amounted to SIG. 900, 900.
The population of Venice proper
was 100000. but she ruled over an
extent of territory both land and sea,
which was equal 10 nearly one-half OF
what the Roman empire had been in
its best days.
At the time Napoleon conquered
Venice. It's merchants were the