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This chapter covers the period starting with the first emergence of commercial banking in the United Kingdom, the United States, and Switzerland leading up to the First World War. The chapter emphasises the role of nineteenth-century banking literature in shaping the ideas of what adequate capital meant in numbers. Moreover, the chapter looks at individual banks in all three countries and how they determined the size of their capital. In Switzerland, simple rules of thumb, such as the 1:3 capital/deposits ratio, were surprisingly persistent, while the English banks abandoned such strict guidelines very early on. In the United States, capital ratios were important from the beginning of banking. The chapter argues that the decentral or central organisation of the banknote issuance was a crucial determinant for the relevance of capital in the respective countries.

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3 - The Nineteenth Century

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3 - The Nineteenth Century

Summary