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| Topic: |
Business
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| Number of pages / Number of words: |
7 / 1697 |
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The goldsmiths learned that they could lend gold and collect a fee, or interest from the borrower (Schenk). If this is done the amount lent to someone is now circulating as new money. The promises to pay depositors were still there but now gold that has been in the vault "backing up" the paper was also circulating (Schenk)...
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Another way of borrowing began to take place. Instead of taking the loan in the form, of gold, the borrower accepted the paper IOU's or statements from the goldsmiths. This transaction also increases he amount of money in circulation. When the goldsmiths began to create money, their careers as bankers began (Schenk)...
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