They say money makes the world go round. But when we tell the story of humankind’s most earthshaking inventions – art, music, technology – we often forget about finance. When were banks and stock markets invented, and why? In this talk, we explored why banks and stock markets evolved the way they did. We discovered how the history of finance runs through the veins of wars, explorations, trade routes, tragedies, and epic scams – and met some colorful characters along the way.
The need to record debts and deals spurred the invention of writing itself in ancient Mesopotamia over five thousand years ago. Banks evolved from safe places to stash valuables to more complex institutions, which lent money, moved it around, and tried to identify people who could be trusted to repay loans.
In the late middle ages and early Renaissance, Europe saw the emergence of crucial financial innovations like joint stock companies, bills of exchange, and the world’s first true stock markets. Together, these inventions helped enable great expansions in global trade and exploration. This financial history is – of course –inextricably woven through other crucial historical phenomena, from financing great artworks and spurring technological innovation to social upheaval triggered by servicing heavy war debts, to investors who financed ships bearing enslaved people. As the financial system grew more complex, timely access to information became ever more important – a fact unlucky investors soon discovered during the world’s first major stock market crash, 1720’s infamous South Sea Bubble.
Banks and stock markets, like any human institutions, are subject to evolutionary pressures and changing cultures. Understanding how they emerged and evolved can shed light on why they are the way they are today.
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Authored by: August Siena Thomas, M.A.Bio: Currently based in Scotland, August Thomas is the author of the spy novel Liar’s Candle. A former Fulbright Scholar to Turkey, she has Master’s degrees from the University of Edinburgh and Bogazici University in Istanbul, where she studied history. She is also a Young Scholar alumna and was a Davidson Fellows Scholarship recipient.
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