Goldsmith to Banker

In the early days the goldsmith had exchanged foreign currency, keeping some in hand to supply travelers abroad and melting down the rest in the course of their basic trade. They had also become recognizable and reliable keepers of money and values for people without their own safe custody facilities.
The new men were bankers but they were still goldsmiths.

Goldsmith bankers, as they were known, had developed into an efficient system of private banking in London and were to develop into the famous banking firms, of which some still exist today. Coutts & Company, now affiliated to the National Westminster Bank, dates from 1692.

The receipts given by goldsmiths for deposits have been compared to modern day cheques. However, it would seem that their similarities, as with Bills of Exchange, were their negotiable nature. Drawn notes only became known as cheques a century later.

The cheque could be compared with a drawn note, by which a depositor addressed a letter to his goldsmith authorizing the payment to his creditor of the sum owed. The creditor would then take this 'note' to the depositor's goldsmith and there receive the sum in cash.

The earliest known cheque dates 1659

Mr Morris and Mr Clayton

Mr Morris pray pay until Mr Oliver Cromwell (a goldsmith in Townstreet) the sum of sixtie [sic] value received of Mr Thomas Colebrook and place to the account of - Yrs Nicholas Vanacher

Amberley December
the 13ths - 1665 -
At Flying Horse in Cornehill, London

In the history of British banking the goldsmiths development of the promissory note and cheque, demand and time deposits, balance sheets and cash reserves provided the primitive but nevertheless essential elements of a modern banking system.