Charles I's Gold Confiscation Shortly before the English Civil War Motivated Private Goldsmiths to start Banks of Deposit in England

In England, there were no banks of deposit until the Civil War in the mid-seventeenth century. Merchants were in the habit of keeping their surplus gold in the king’s mint in the Tower of London—an institution which of course was accustomed to storing gold. The habit proved to be an unfortunate one, for when Charles I needed money in 1638 shortly before the outbreak of the Civil War, he simply confiscated a large sum of gold, amounting to £200,000, calling it a “loan” from the depositors. Although the merchants finally got their money back, they were understandably shaken by the experience, and forsook the mint, instead depositing their gold in the coffers of private goldsmiths, who were also accustomed to the storing and safekeeping of the valuable metal. The goldsmith’s warehouse receipts then came to be used as a surrogate for the gold money itself.

--Murray N. Rothbard, The Mystery of Banking, 2nd ed. (Auburn, AL: Ludwig von Mises Institute, 2008), 88.