London, economic developement and the growth of banking and insurance

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  • Created on: 08-06-20 09:26
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  • London, economic developement and the growth of banking and insurance
    • The growth of London and its impact on economic developement
      • London's growth was one of the major developements of the early modern period.
        • In 1550, London was still essentially a medieval city with a population of 120,000 people.
          • By 1700, London had developed into a metopolitan centre with nearly 1/2 million population.
      • Due to its huge size, it dominated Britain's economy and culture.
        • The next-largest towns, (Norwich, Bristol and Newcastle) each had about 20,000 in population.
          • These towns also grew, but despire being the 2nd largest city, Norwich only had 30,000 in population by 1688.
      • Reasons for London's growth
        • - Death outnumbered births in London; thus migration was the main reason behind London's population increase.
        • - London attracted a great number of servants and apprentices.
        • - Poverty in the countryside encouraged migrants to head to London from all parts of Britain in the hope of finding employment.
      • Impact on economic development
        • The expanding population and growth of London stimulated agricultural trade.
          • Urban growth created a surge in agricultural productivity.
            • London's food needs were supplied by a large nuber of farms, often many miles from the capital.
            • Other goods were supplied by the river trade and, from the 1660s, the new turnpike roads.
            • The coastal trade allowed for goods to come from farther afield, eg. coal from Newcastle.
        • The developement of a banking and financial system later in the century further secured London's dominant position in the economic, social, cultural and political life in Britain.
          • Goods passed through London's docks for redirection to other parts of the country.
          • London's development also saw a shift in economic power.
            • Until 1660s, most private wealth was accrued through the ownership of land.
              • By 1688, the growth of banking and financial institutions had created a new class of rich entrepreneurs
    • The growth of banking and insurance
      • This period saw the emergence of a more sophisticated system of banking and insurance.
        • Business and commerce needed a credit system thar was flexible.
          • The developement of credit came from the Bills of Exchange that were given instead of direct payment.
            • Over time, with the expansion of London and its trade, Bills of Exchange were used to pay off debts instead of cash.
              • From this, a banking system developed.
                • London merchants accepted the Bills and offered credit to businessmen and others by opening accounts for the deposit or withdrawal of cash.
                  • Other provincial centres soon followed suit, leading to the establishment of a national banking system.
      • There were 2 forms of banking: private, then business and insurance.
        • Private banking
          • Very limited in the early 17th century.
            • There were no private banks outside London, and even in London they were only starting to develope by 1688.
            • Family and friends were the course of finance for most people in need, rather than private banking.
          • Private banking developed as a result of the development of business and insurance banking.
          • Banking services was extreemly valuable in helping to finace wars and conflicts overseas (especially the Anglo-Dutch wars of 1660s and 70s).
        • Business and insurance
          • England's emergance as one of the world's leading trading countries further stimulated the baking and insurance sectors.
            • Developments:
              • English ships that carried goods all around the world were insured by English banks or by specialist companies.
              • Property insurance also developed, especially after the Geeat Dire of London (1666).
              • Other forms of insurance developed after 1660 (notably fire insurance).
              • Increase  in joint stock companies as British overseas trade expanded.
                • Coffee houses became places where financiers could obtain news about, and in detail, shares and government bonds.
            • The insurance business further reinforced the importance of London in the national economy.

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