Kai Rivers
The 17th century saw the emergence of a paper currency and the development of banking, with the Bank of England being established in 1694. During this time, people deposited their coins with goldsmiths, who acted as keepers of running cash, issuing paper receipts and accepting written instructions for payments. In 17th-century London, most houses were built under a leasehold land tenure system, where landowners leased plots to builders, with the house becoming the property of the landlord at the end of the lease. In Colonial New York, property law was based on manorialism, with legal and economic power vested in a Lord of the Manor, supported by obligatory contributions from tenant labourers. By the late 17th century, goods typically restricted to the upper classes were being consumed by a wider range of people, indicating a growing consumer society.
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What You'll Learn
The emergence of banking and paper currency
The 17th century saw the development of banking and the emergence of paper currency. The first surviving cheques date from the 1670s, but records of the Court of Chancery indicate that they were in use by 1665. During the Civil War and Commonwealth period, landowners and merchants shifted their liquid cash from the care of stewards and scriveners to goldsmiths, who offered interest on deposits. Depositors might receive a receipt or several receipts for smaller, more convenient amounts, but these would be equal to the total sum deposited. An account would be opened in the depositor's name, with an agreement on the interest rate and the length of notice required before withdrawal.
Goldsmiths also issued promissory notes, which were used to make payments. In 1672, financial pressure led to a decision to suspend payments on these notes for twelve months, diverting funds to the war effort. This demonstrated the inherent instability of a bank under a monarchy, and when the central bank was formed, it was placed in private hands. The Bank of England was established in 1694 and issued the first bank notes the same year.
Colonial governments also issued paper money, known as "bills of credit", to facilitate economic activities and pay debts. These could not be exchanged for a fixed amount of gold or silver coins on demand but were redeemable at a specified future date. When issued in excess, inflation resulted, and the bills became worthless. The British Parliament passed several currency acts to regulate colonial paper money, including the Currency Act of 1751, which restricted the issue of paper money in New England.
In the colonies, foreign coins like the Spanish dollar were widely circulated, as few coins were minted in the Thirteen Colonies. The Massachusetts legislature authorized John Hull to mint the earliest coinage of the colony in 1652, including the willow, oak, and pine tree shilling. The pine tree shilling featured the inscription "NEW ENGLAND AN DOM" on its reverse, with the date 1652 and "XII" (representing twelve pence or one shilling) in Roman numerals.
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The role of goldsmiths as 'keepers of running cash'
During the 17th century, the concept of renting luxury items was not unheard of. While there is no specific mention of people playing rent in 17th-century New England, we can infer that the practice of renting land or property may have existed, given that there were social hierarchies and class distinctions.
Now, let's delve into the role of goldsmiths as keepers of "running cash" during this period:
The 17th century witnessed the evolution of banking, with goldsmiths playing a pivotal role as financial intermediaries. They became the preferred custodians of liquid cash for landowners and merchants, offering interest on deposited funds. This marked a shift from the traditional practice of entrusting stewards and scriveners with monetary assets. The goldsmiths' system of accepting deposits and issuing receipts evolved into a precursor to modern banking.
Goldsmiths, as keepers of "running cash," would take in gold and provide receipts or promissory notes to the depositors. These receipts could be for the full amount or divided into smaller, more convenient sums, all adding up to the total deposited. An account was opened in the depositor's name, and an agreement was made regarding the interest rate and withdrawal procedures. This practice was akin to opening a savings account in a modern bank.
The goldsmiths' role extended beyond safekeeping. They began paying interest on deposits, marking the advent of fractional reserve banking. They issued loans to borrowers, knowing that only a fraction of the deposited gold would likely be demanded on any given day. This practice allowed them to create credit and increase the money supply in the economy, fostering economic growth.
The emergence of goldsmiths as bankers addressed the anxiety surrounding the safe storage of valuables, especially during tumultuous periods like the English Civil War. The goldsmith bankers developed accountancy practices to meticulously track deposits and loans, enhancing the overall security and transparency of the financial system.
In conclusion, the 17th century witnessed the transformation of goldsmiths from mere craftsmen to financial powerhouses. They became the linchpins of the monetary system, offering secure storage, interest-bearing accounts, and credit creation through fractional reserve banking. This evolution laid the foundation for the establishment of formal banking institutions, such as the Bank of England in 1694, and shaped the future of global banking practices.
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Manorialism and the power of the Lord of the Manor
Manorialism, also known as seigneurialism, was the method of land ownership in parts of Europe, notably France and later England, during the Middle Ages. It was part of the feudal system and was widely practised in medieval western Europe and parts of central Europe.
The word "manorialism" derives from traditional inherited divisions of the countryside, reassigned as local jurisdictions known as manors or seigneuries. Each manor was subject to a lord, who usually held his position in return for undertakings offered to a higher lord. The lord lived in a large, sometimes fortified manor house, where he and his dependents administered a rural estate. The manor house was surrounded by grassland and woodlands called the "demesne lands", which were for the personal use of the lord and his dependents.
The lord of the manor had certain rights and powers. He enjoyed manorial rights, which included the right to establish and occupy a residence, known as the manor house, and the right to grant or draw benefit from the estate (for example, as a landlord). The lordship title historically had the power to collect fealty (i.e. services) and taxes. The lord also held a manorial court, governed by public law and local custom, which dealt with tenants' rights and duties, changes of occupancy, and disputes between tenants.
The manor system was made up of three types of land: demesne, dependent, and free peasant land. Serfs who occupied land belonging to the lord were required to work the land and, in return, received certain entitlements, such as protection, justice, and the right to exploit certain fields within the manor to maintain their own subsistence. Villeins, the most common type of serf in the Middle Ages, rented small homes with or without land and were expected to spend some time working the land. They could not move away without the lord's consent and the acceptance of the new lord whose manor they were moving to.
Manorialism was slowly replaced by the advent of a money-based market economy and new forms of agrarian contract. In England, the development of banking and the emergence of a paper currency in the 17th century contributed to this shift.
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The growth of consumerism and the retail trade
The 17th century saw the emergence of a consumer society, which intensified in the following century. This development was largely due to trade deals with colonies across four continents. The growth of consumerism was propelled by the burgeoning middle class, who embraced new ideas about luxury consumption and the importance of fashion as a purchasing factor. This shift in consumption patterns led to the construction of vast country estates catering to comfort and the increased availability of luxury goods.
During this period, there was a marked increase in the consumption and variety of luxury goods and products by individuals from diverse economic and social backgrounds. This marked a departure from the traditional mode of life characterised by frugality and scarcity, towards one of mass consumption. The expansion of trade and markets contributed to the consumer revolution, increasing the variety of goods available to consumers.
The development of shops and the retail trade, which had begun in the 16th century, played a significant role in the growth of consumerism. Notable shopkeepers of the late 17th century, such as Roger Lowe of Leigh and William Stout of Lancaster, stocked a wide range of goods from various origins. The emergence of a paper currency and the development of banking also facilitated the growth of consumerism, as people could deposit and withdraw money more conveniently.
The growth of consumerism was also influenced by the increasing demand for goods from Asia and the Mediterranean. European markets struggled to meet the demand for Asian ceramics, leading to the imitation of Chinese porcelain. Middle-class consumers, unable to afford exotic luxury goods, drove the creation of "semi-luxury" goods that imitated the actual luxury items. This "counterfeit culture" allowed the middle class to emulate the wealthy and luxurious lifestyles of the elite.
The consumer revolution also witnessed the growth of industries like glassmaking and silk manufacturing. Pamphleteering of the time justified the consumption of luxury goods for the greater public good, causing controversy with the publication of Bernard Mandeville's "The Fable of the Bees" in 1714. The rising prosperity and social mobility of the 18th century further fuelled consumerism, as more people had disposable income to spend on goods beyond basic necessities.
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The impact of falling food prices on rental incomes
In 17th-century New England, the economy was characterised by hard work and entrepreneurship, with the Puritans and Yankees endorsing the "Protestant Work Ethic". Farming, fishing, lumbering, whaling, and sea trading were all prosperous industries.
Over time, as food prices fell, rental incomes stopped rising as steeply. Tenants found it harder to pay rents, and smaller landowners were forced to sell up, while larger landowners were able to cope better with the shift. This resulted in a marked shift towards larger farms and fewer small farmers.
In 17th-century New England, the specific impact of falling food prices on rental incomes would have been influenced by various factors, including the overall economic climate, the availability of land, and the purchasing power of tenants. While falling food prices may have provided some relief to tenants, it is important to consider other economic factors that could influence rental incomes. For example, if falling food prices were due to increased supply and improved trade, this could have had a positive impact on the overall economy, potentially increasing disposable income and the demand for housing.
Additionally, the impact of falling food prices on rental incomes could be influenced by the type of farming and the crops produced. In New England, farming was predominantly subsistence-based, with farmers producing their own food, clothing, and household items. If falling food prices made it more difficult for small farmers to earn enough income to cover their rents, this could have contributed to the consolidation of land into larger farms, as mentioned earlier.
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Frequently asked questions
Yes, people did pay rent in 17th-century New England. The system of land tenure was based on manorialism, where economic power was vested in a Lord of the Manor, who derived economic benefit from his own direct landholding and obligatory contributions of tenants and labourers.
Rent payments could be made in labour, in kind, or, on rare occasions, in coin. During this time, landowners would let plots to builders, who would then build houses. These houses would become the property of the landlord at the end of the lease period.
Yes, people deposited their money with goldsmiths, who acted as "keepers of running cash". They would issue paper receipts and accept written instructions to pay other parties.
In the 17th century, consumer society began to grow, with more people eating meat and wheat. As a result, the prices of these goods began to fall. However, towards the end of the century, tenants found it harder to pay rents as food prices fell and rental incomes stagnated.
