Saturday, April 28, 2012

Where did Checking Accounts Come From?

The model of the checking bank account didn't surface until the beginning days of the 1500's. It materialized in the Netherlands at a time when Amsterdam was a valuable hub for mercantile activity. Merchants, who were amassing significant hoards of riches, needed a place to store their money.

Cashiers opened up shop to meet this demand. Cashiers would store the money in order to obtain a small fee. You may not be a merchant, however, is this starting to sound recognizable yet?

Before long a significant need was created because of developing competition as even more individuals started becoming cashiers. This made the cost of having your funds held by a cashier to fall like a rock. As a result it forced the cashiers offering accounts to start finding better and more attractive ways to interest customers.

All of these ways of attracting customers ended up being value added services provided to a depositor. Much like modern banks, these cashiers really had to stand out from the crowd to try and compete for new leads. Today's gimmicks are definitely different than those of the early 1500s. Yet, we must take note that these days we tend to forget how much history the checking account has. Centuries ago it was still developing because banking was in effect still in its infancy.

The idea that someone could enter with a writ from a customer that would allow them to take capital from the customer's holdings in that time was a new and novel method of banking. This capability was one of the new services that popped up in order to fill the demand and for the cashiers to remain competitive. Such a note today would be called a Check. In much the same way as a cancelled check is kept as a record, the written note from the client was retained in those days to provide proof of the transfer of capital.

This original improvement really gave a means to the merchants providing for the exchange of capital to take place in a more efficient way. This augmentation in efficiency helped to improve the solvency of trade and of the commercial profession.

As a result of the transience of the merchants, the concept of the ability to write checks before long spread to additional countries outside the Netherlands. These countries included England, the foremost international force, and her network of colonies over whom the sun would never set.' Some of these colonies were those within the boarders of The United States of America.

This revolutionary method extend to the original American colonies by at least 1681. Massachusetts land lords began mortgaging their plots of land to the cashiers who provided accounts that the customers could therefore draw on to write bank notes.

The modernization of the modern checking account didn't come until afterward. In fact, it wasn't until the 1700s that checks in the sense that we conceive of them today appeared. In England, banks started creating checks as a service to their clients. These checks had unique numbers printed on them to help with keeping track of them. In fact, it wasn't until this time that the word check began being utilized to refer to such financial notes.

The 18th century really began the time in which these once novel and fresh services started to be homogeneous and widespread. This is the time when an adequate number of banks started to normalize their checks that there arrived the difficulty of clearing checks. This created the need for the making of the very first clearing houses devoted to streamlining the processing of checks.

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