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Arado Ar 65

Arado Ar 65


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Arado Ar 65

The Arado Ar 65 was the first front-line fighter to equip the fighter-squadrons of the Luftwaffe after Hitler's rise to power, although it was developed in the last years of the Weimar Republic.

The Arado Ar 65 was developed from the Arado Ar 64, which was itself a development of the Arado SD II and SD III. All four of these designs were single-seat sesquiplanes (with a much smaller lower wing), of conventional construction with a welded steel fuselage, wooden wings and fabric covering.

Most Ar 64s had been powered by the Gnome-Rhône Jupiter radial engine, but the two Ar 64b prototypes used a BMW VI 12-cylinder inline engine. This was the engine adopted for use on the Arado Ar 65.

The first prototype, the Ar 65a, was produced in 1931, and was followed by the Ar 65d (or B in some sources), which had a modified fuselage and extra interplane struts between the wings. Both aircraft were used for comparative trials in November 1932, after which the Ar 65B (D-1898) was selected as the first aircraft to equip the new fighter squadrons then being created as 'publicity formations'.

The first prototype was one of the last German aircraft to be tested at Lipetsk in the Soviet Union, arriving during 1933. This aircraft was armed with two machine guns and could carry six 10kg bombs in a vertical magazine mounted in the fuselage. It isn't clear if this magazine was included in production aircraft.

The Arado Ar 65E was the first production version of the aircraft and was based on the Ar 65d. It was followed into production by the slightly modified Arado Ar 65F which was slightly heavier than the E.

The Arado Ar 65 had a short life as a front-line fighter. From 1935 it was replaced by the Heinkel He 51, which was itself then replaced by the Arado Ar 68. The Arado Ar 65Es and 65Fs went on to serve in the pilot training schools early in the Second World War.

Engine: BMW VI 7.3 inverted V inline engine
Power: 750hp
Crew: 1
Wing span: 36ft 9in
Length: 27ft 6 3/4in
Height: 11ft 2 3/4in
Empty Weight: 3,329lb
Maximum take-off weight: 4,255lb
Max Speed: 186mph at 5,415ft
Cruising Speed: 153mph
Service Ceiling: 24,935ft
Armament: Two 7.92mm machine guns


Príchod nacistov k moci v roku 1933 znamenal nevídaný rozmach armády a tým aj letectva. Tak sa vtedajší letecký odbor RWM (Reichskommissariat für die Luftfahrt) premenoval na RLM (Reichsluftfahrtministerium – ríšske ministerstvo letectva), a jeho šéfom sa stal Hermann Göring, bývalé stíhacie eso z prvej svetovej vojny. Ten na priamy rozkaz Adolfa Hitlera začal budovať nové letecké sily, kvôli Versaillskej zmluve dočasne v tajnosti, ktoré sa začali nazývať Luftwaffe. Mnohé letecké konštrukčné kancelárie získali štedré financovanie, ktoré im umožnilo vývoj nových strojov. Pod kontrolu úradu RLM sa takto dostala aj firma Arado Flugzeugwerke GmbH, ktorej generálnym konštruktérom sa stal Ing. Walther Blume. Jej predošlý šéfkonštruktér Walther Rethel však ešte pred svojim odchodom k Messerschmittovej konštrukčnej kancelárii navrhol nové stíhacie lietadlo s názvom SD-V, neskôr preznačené na Ar 65. Konštrukčne nadväzovala na predošlý typ Ar 64, avšak mal mnohé technické a aerodynamické úpravy, hviezdicový deväťvalec Bristol Jupiter (v licencii Siemensu) s výkonom 360 kW/490 hp bol zamenený za nemecký vidlicový, kvapalinou chladený dvanásťvalec BMW VI 7.3Z, s objemom 46,93 l a vzletovým výkonom 551 kW/750 hp. Nová stíhačka Ar 65 bola zmiešanej konštrukcie: základ trupu tvorila zvarovaná trubková priehrada pokrytá duralovými plechmi a plátnom, nosné a chvostové plochy boli drevené s čiastočne pláteným a preglejkovým poťahom. Prvý prototyp verzie Arado Ar 65A vzlietol na sklonku roka 1931, ktorý zanedlho nasledovali stroje Ar 65B a Ar 65C. Napriek tomu sa do sériovej výroby v roku 1933 dostala až verzia Ar 65D. Táto verzia mala inštalovanú pumovnicu, kde mohlo byť vertikálne umiestnených 6 bômb po 10 kg. Odstránením vnútornej pumovnice vznikla verzia Ar 65E, ktorá už mala zabudovanú rádiostanicu. Zmenená bola aj výzbroj starú dvojicu guľometov LMG 08/15 kalibru 7,92 mm z čias prvej svetovej vojny nahradili nové guľomety MG 17 s kalibrom 7,92 mm a vyššou kadenciou. Po istom čase prestala firma Arado stíhať plniť všetky objednávky, a tak sa do výroby zapojili aj ďalšie firmy: AGO (36 ks Ar 65F) a Erla (24 ks Ar 65G). Výroba tohto typu sa skončila v roku 1937.

K jednotkám Luftwaffe sa Ar 65 dostalo už v roku 1934, kde ich však zanedlho začali vytláčať modernejšie stroje He 51 a Ar 68. Po vyradení z prvej línie sa dostali do leteckých učilíšť, kde sa používali až do leta 1944. V máji 1940 mala Luftwaffe v stave ešte 117 ks Ar 65, v januári 1944 ich počet klesol na 14. Nasadené boli tiež na území protektorátu Čechy a Morava a aj na východnom fronte, kde pôsobili od roku 1943. Ich úlohou bolo ťahanie nákladných klzákov DFS 230, na čo boli upravené pridaním háku pod zadnú časť trupu, osadením nových pneumatík a inštaláciou prídavných palivových nádrží pod horné krídlo.


Arado Ar 65 - History

This cute and chunky baby blue colored Toptone AR-65 was manufactured by Tokyo Optical & Radio MFG Co Ltd circa 1959. Collector Alan Kastner speculates that Tokyo Optical & Radio MFG Co Ltd is the company currently known as TOPCON (トプコン).

TOPCON was established in 1932 and was originally known as Tokyo Optical Co. Ltd. Initially they began manufacturing optical instruments for the Japanese army. In 1960 they became an affiliate of Tokyo Shibaura Electric Co Ltd (Toshiba). Today Toshiba owns 40% of TOPCON'S stock.

If you have a copy of Roger Handy's book 'Made In Japan' you can view a vintage ad for this radio on page 78.

This little Toptone AR-65 features an oddly shaped speaker grill and a tuning dial that reminds me of a pop art rocket blasting through an asteroid belt (look closely!). Its proportions and symmetry are outstanding and check out its tiny dimensions 3.1/4 x 2.1/8 x 1.3/8 inches.

Interestingly the coin slot on these radios is on top instead of on the bottom. Luckily the coin slot on mine has had virtually no use.

These radios can also be found branded as Mascot, Profile or Remington. If you are after one then good luck in your quest, they are somewhat hard to come by.

 

 

 

 


The First ArmaLite Rifles

Shortly after its incorporation, ArmaLite began creating rifles, and its early designs were unique in that they were intended to be broken down into pieces and put back together as necessary. Since the rifles separated this way, they were easy to store in aircrafts, cars and other vehicles, and then assembled when needed in emergencies. In a way, this foreshadowed the AR-15 and how simple it is to take apart and customize.

One reason ArmaLite started designing its firearms this way is because the U.S. Air Force wanted a rifle that it could store in the survival kits of its airplanes. ArmaLite answered the call with its AR-5, a bolt-action rifle that shot a .22 Hornet round. Another benefit was that the rifle floated, which was just what soldiers would need in the event of a water landing.

ArmaLite came out with its AR-5 design in 1954, and the Air Force decided to use it in 1956. Although ArmaLite planned to design civilian weapons, its military success with the AR-5 was huge for the company. This led to its next design, a .22 Long Rifle called the AR-7.

During this time, the U.S. military was transitioning away from its previous rifle of choice, the M1 Garand. Although the gun had been reliable and effective during World War II, its days were numbered. It was over 10.5 pounds and had just an eight-round capacity. That combination of a heavy weight and a low capacity made it a poor choice as warfare evolved.

ArmaLite jumped into the competition to make the military’s next rifle with its Ar-10. Unfortunately, the company was late to the party, and this led to it rushing to hand build two AR-10 models based on the fourth prototype it had created. The AR-10 was going against two Springfield rifles, the T-44 and the T-48.

There was plenty to like about the AR-10, and its features included an aluminum flash suppressor, a gas system, a recoil compensator and a straight stock. The rifle was light, and those who shot it ended up loving it.

That was the good news. The bad news was that the barrel on the AR-10 didn’t hold up to the military’s rigorous testing, and it eventually burst from the pressure. ArmaLite was on it, swapping in a steel barrel that would hold up better, but it didn’t matter. The military selected the T-44 in 1957, which became known as the M-14.


Arado 234 B1 reconnaisance flights over UK

Post by willi_klingel » 28 Jul 2011, 17:07

Re: Arado 234 B1 reconnaisance flights over UK

Post by Larry D. » 28 Jul 2011, 19:13

The book cited below is mainly a developmental history of the aircraft, both authors being engineers and having little interest in operational matters. Accordingly, the book is exceedingly well researched and documented but only mentions a few operational missions in passing:

2 Aug 44: first Ar 234 recce sortie – covered Cherbourg and beachhead area flying from Juvincourt. (p.149)
Aug 44: Oblt./Hptm. Erich Sommer flew the first Ar 234 recce sortie over southern England during the second half of August. (p.150)
10 Sep 44: Sommer flew a high altitude Ar 234 recce over the Thames Estuary and London. (p.151)
Ar 234 recce flights over the U.K. by Kommando Sperling based at Rheine became relatively routine thereafter. Dates mentioned: 5 Oct 44 (East Anglian coast) 6 Oct 44 etc. The photographs they brought back were considered of the highest value by Hitler, Göring, OKW and OKL.

Smith, J. Richard and Eddie J. Creek. Arado 234 Blitz. Sturbridge (MA): Monogram Aviation Publications, 1992. ISBN: 0-914144-51-0. Hb (oversize). Dj. 264p. Profusely illus. (incl. color). Numerous dwgs incl. 3-views and color profiles. Maps. Tables. Charts. Appendices. Index.


Contents

The supreme deity of Tolkien's universe is Eru Ilúvatar. Ilúvatar created spirits named the Ainur from his thoughts, and some were considered brothers or sisters. Ilúvatar made divine music with them. Melkor, then the most powerful of the Ainur, broke the harmony of the music, until Ilúvatar began first a second theme, and then a third theme, which the Ainur could not comprehend since they were not the source of it. The essence of their song symbolized the history of the whole universe and the Children of Ilúvatar that were to dwell in it—Men and Elves. [T 1]

Then Ilúvatar created Eä, which means "to be," the universe itself, and formed within it Arda, the Earth, "globed within the void": the world together with the three airs is set apart from Avakúma, the "void" without. The first 15 of the Ainur that descended to Arda, and the most powerful ones, were called Valar the lesser Ainur were called Maiar. [T 1]

Spring of Arda Edit

When the Valar entered Arda, it was still lifeless and had no distinct geographical features. The initial shape of Arda, chosen by the Valar, was much more symmetrical, including the central continent of Middle-earth. Middle-earth was also originally much larger, and was lit by the misty light that veiled the barren ground. The Valar concentrated this light in two large lamps, called Illuin and Ormal. The Vala Aulë forged two great pillar-like mountains, Helcar in the north and Ringil in the south. Illuin was set upon Helcar and Ormal upon Ringil. In the middle, where the light of the lamps mingled, the Valar dwelt at the island of Almaren upon the Great Lake. [T 2]

This period, known as the Spring of Arda, was a time when the Valar had ordered the World as they wished and rested upon Almaren, and Melkor lurked beyond the Walls of Night. During this time animals first appeared, and forests started to grow. [T 2]

The Spring of Arda was interrupted when Melkor returned to Arda, and ended completely when he assaulted and destroyed the Lamps of the Valar. Arda was again darkened, and the fall of the great Lamps spoiled the symmetry of Arda's surface. New continents were created: Aman in the West, Middle-earth proper in the middle, the uninhabited lands (later called the Land of the Sun) in the East. At the site of the northern lamp was later the inland Sea of Helcar, of which Cuiviénen was a bay. At the site of the southern lamp was later the Sea of Ringil. After the destruction of the Two Lamps the Years of the Lamps ended and the Years of the Trees began. [T 2] [b]

Years of the Trees Edit

Shortly after the destruction of the Two Lamps and the kingdom of Almaren, the Valar abandoned Middle-earth, moving to the continent of Aman. There they built their Second Kingdom, Valinor. Yavanna made the Two Trees, named Telperion (the silver tree) and Laurelin (the golden tree) in the land of Valinor. The Trees illuminated Valinor, leaving Middle-earth in darkness lit only by stars. The Years of the Trees were contemporary with Middle-earth's Sleep of Yavanna (recalled by Treebeard as the Great Darkness). [T 2]

The Years of the Trees were divided into two epochs. The first ten Ages, the Years of Bliss, saw peace and prosperity in Valinor. The Eagles, the Ents and the Dwarves were conceived by Manwë, Yavanna, and Aulë respectively, but placed into slumber until after the awakening of the Elves. The next ten Ages, called the Noontide of the Blessed Realm, saw Varda rekindling the stars above Middle-earth. This was the first time after the Spring of Arda that Middle-earth was illuminated. The first Elves awoke in Cuiviénen in the middle of Middle-earth, marking the start of the First Age of the Children of Ilúvatar, and were soon approached by the Enemy Melkor who hoped to enslave them. Learning of this, the Valar and the Maiar came into Middle-earth and, in the War of the Powers (also called the Battle of the Powers), defeated Melkor and brought him captive to Valinor. This began the period of the Peace of Arda. [T 3]

After the War of the Powers, Oromë of the Valar summoned the Elves to Aman. Many of the Elves went with Oromë on the Great Journey westwards towards Aman. Along the journey several groups of Elves tarried, notably the Nandor and the Sindar. The three clans that arrived at Aman were the Vanyar, Noldor and the Teleri. They made their home in Eldamar. [T 4] After Melkor appeared to repent and was released after his servitude of three Ages, he stirred up rivalry between the Noldorin King Finwë's two sons Fëanor and Fingolfin. With the help of Ungoliant, he killed Finwë and stole the Silmarils, three gems crafted by Fëanor that contained light of the Two Trees, from his vault, and destroyed the Trees of the Valar. The world was again dark, save for the faint starlight. [T 5] [T 6]

Bitter at the Valar's inactivity, Fëanor and his house left to pursue Melkor, cursing him with the name "Morgoth". [T 7] While his brother Finarfin chose to stay in Valinor, a larger host led by Fingolfin followed Fëanor. They reached Alqualondë, the port-city of the Teleri, who forbade them from taking their ships for the journey to Middle-earth. The first Kinslaying thus ensued, and a curse was put on the house of the Noldor forever. Fëanor's host sailed on the boats, leaving Fingolfin's host behind—who crossed over to Middle-earth on the Helcaraxë or Grinding Ice in the far north, losing many. The War of the Great Jewels followed, and lasted until the end of the First Age. Meanwhile, the Valar took the last living fruit of Laurelin and the last living flower of Telperion and used them to create the Moon and Sun, which remained a part of Arda, but were separate from Ambar (the world). The first rising of the sun over Ambar heralded the end of the Years of the Trees, and the start of the Years of the Sun, which last to the present day. [T 8]

Years of the Sun Edit

The Years of the Sun were the last of the three great time-periods of Arda. They began with the first sunrise in conjunction with the return of the Noldor to Middle-earth, and last until the present day. [T 9] The Years of the Sun began towards the end of the First Age of the Children of Ilúvatar and continued through the Second, Third, and part of the Fourth in Tolkien's stories. Tolkien estimated that modern times would correspond to the sixth or seventh age. [T 10]

Tolkien situated the History of Arda as Earth's prehistory. [T 10]
Age
Duration
years
Began
years ago
End event
Years of the Lamps 33,573 60,962 End of the Spring of Arda:
Melkor destroys the Two Lamps
Arda's symmetry broken
Aman and Middle-earth created
The Valar move to Aman
Years of the Trees 14,373 27,425 Melkor steals the Silmarils
Ungoliant kills the Two Trees of Valinor
Years of the Sun
First Age 590 13,052 War of Wrath:
Morgoth's defeat in Beleriand
Thangorodrim broken
Most of Beleriand drowned
Second Age 3,441 12,462 Akallabêth:
Sauron's first downfall
World made round
Númenor drowned
Valinor removed from Arda
Third Age 3,021 9,021 War of the Ring:
Final defeat of Sauron
Destruction of the One Ring
Elves depart from Middle-earth
Fourth Age . 6,000 Middle-earth breaks up
Continents rearrange
To present day, modern life

Fifth Age
Sixth Age?
Seventh Age? [T 10]
.

The First Age of the Children of Ilúvatar, or Eruhíni, began during the Years of the Trees when the Elves awoke in Cuiviénen in the middle-east of Middle-earth. This marked the start of the years when the Children of Ilúvatar were active in Middle-earth. [T 11] Later in the First Age the second kindred, humans, also awoke.

In some texts Tolkien referred to the 'First Age of Middle-earth' or the 'First Age of the World' rather than the 'First Age of the Children of Ilúvatar'. These variations had earlier starting points, extending the First Age back to the creation of Arda, but consistently ended with Morgoth's defeat in Beleriand. Each Age ended following a major event in the history of the Children of Ilúvatar.

First Age Edit

The First Age of the Children of Ilúvatar, also referred to as the Elder Days in The Lord of the Rings, began during the Years of the Trees when the Elves awoke at Cuiviénen, and hence the events mentioned above under Years of the Trees overlap with the beginning of the First Age. [T 11]

Having crossed into Middle-earth, Fëanor was soon lost in an attack on Morgoth's Balrogs—but his sons survived and founded realms, as did the followers of his half-brother Fingolfin, who reached Beleriand after Fëanor's death. The Noldor for a time maintained the Siege of Angband, Morgoth's stronghold, resulting in the Long Peace. This Peace lasted hundreds of years, during which time Men arrived over the Blue Mountains. [T 12] Morgoth broke the siege in the Dagor Bragollach, or the Battle of Sudden Flame. [T 13] The Eldar, Edain and the Dwarves were defeated in the Nírnaeth Arnoediad or Battle of Unnumbered Tears, [T 14] and one by one, the kingdoms fell, even the hidden ones of Doriath [T 15] and Gondolin. [T 16]

At the end of the age, all that remained of free Elves and Men in Beleriand was a settlement at the mouth of the River Sirion and another on the Isle of Balar. Eärendil possessed the Silmaril which his wife Elwing's grandparents, Beren and Lúthien, had taken from Morgoth. But Fëanor's sons still maintained that all the Silmarils belonged to them, and so there were two more Kinslayings. [T 15] [T 17] Eärendil and Elwing crossed the Great Sea to beg the Valar for aid against Morgoth. They responded, sending forth a great host. In the War of Wrath, Melkor was utterly defeated. He was expelled into the Void and most of his works were destroyed, bringing the First Age to an end. This came at a terrible cost, however, as most of Beleriand itself was sunk. [T 17]

Second Age Edit

The Second Age is characterized by the establishment and flourishing of Númenor, the rise of Sauron in Middle-earth, the creation of the Rings of Power and the Ringwraiths, and the early wars of the Rings between Sauron and the Elves. It ended with Sauron's defeat by the Last Alliance of Elves and Men. [T 18]

"The Tale of Years" in Appendix B of The Lord of the Rings outlines the major events of the Second Age, especially as they relate to the Rings of Power and the events and characters of The Lord of the Rings. [T 18] Appendix A contains genealogies of the royal house of Númenor. Appendix D gives details of the Númenórean calendar, including special intercalation in the years 1000, 2000 and 3000, and notes on how this system of intercalation was disrupted by the designation of S.A. 3442 the first year of the Third Age. [T 19] In addition, several sections of Unfinished Tales deal extensively with Númenor and several of its kings. [T 20] Also, at the end of The Silmarillion, "Akallabêth" recounts the fall of Númenor and its kings, and also the rise of Gondor and Arnor. [T 21]

The Men who had remained faithful were given the island of Númenor, in the middle of the Great Sea, and there they established a powerful kingdom. The White Tree of Númenor was planted in the King's city of Armenelos and it was said that while that tree stood in the King's courtyard, the reign of Númenor would endure. The Elves were granted pardon for the sins of Fëanor, and were allowed to return home to the Undying Lands. [T 18]

The Númenóreans became great seafarers, and were learned, wise, and had a lifespan beyond other men. At first, they honored the Ban of the Valar, never sailing into the Undying Lands. They went east to Middle-earth and taught the men living there valuable skills. After a time, they became jealous of the Elves for their immortality. Sauron, Morgoth's chief servant, was still active. As Annatar, in disguise he taught the Elves of Eregion the craft of creating Rings of Power. Seven Rings were made for the Dwarves, while Nine were made for Men who later became known as the Ringwraiths. However, he built a stronghold called Barad-dûr and secretly forged the One Ring in the fires of Mount Doom to control the other rings and their bearers. Celebrimbor, a grandson of Fëanor, forged three mighty rings on his own: Vilya, possessed first by the Elven king Gil-galad, then by Elrond Nenya, wielded by Galadriel and Narya, given by Celebrimbor to Círdan, who gave it to Gandalf. [T 18]

As soon as Sauron put on the One Ring, the Elves realized that they had been betrayed and removed the Three. (Sauron eventually obtained the Seven and the Nine. While he was unable to suborn the Dwarf ringbearers, he had more success with the Men who bore the Nine they became the Nazgûl or Ringwraiths.) Sauron then made war on the elves and nearly destroyed them utterly during the Dark Years, but when it seemed defeat was imminent, the Númenóreans joined the battle and completely crushed the forces of Sauron. Sauron never forgot the ruin brought on his armies by the Númenóreans, and made it his goal to destroy them. [T 18]

Towards the end of the age, the Númenóreans became increasingly haughty. Now they sought to dominate other men and to establish kingdoms. Centuries after Tar-Minastir's engagement, when Sauron had largely recovered, Ar-Pharazôn, the last and most powerful of the Kings of Númenor, humbled Sauron – his armies deserting in the face of Númenor's might – and brought him to Númenor as a hostage, although this was Sauron's goal. At this time still beautiful in appearance, Sauron gained Ar-Pharazôn's trust and became high priest in the cult of Melkor. At this time, the Faithful (who still worshipped the one god, Eru Ilúvatar), were persecuted openly by those called the King's Men, and were sacrificed in the name of Melkor. Eventually, Sauron convinced Ar-Pharazôn to invade Aman, promising him that he would thus obtain immortality. [T 18]

Amandil, chief of the Faithful, sailed westward to warn the Valar. His son Elendil and grandsons Isildur and Anárion prepared to flee eastwards, taking with them a seedling of the White Tree of Númenor before Sauron destroyed it, and the palantíri, gifts of the elves. When the King's forces set foot on Aman, the Valar laid down their guardianship of the world and called on Ilúvatar to intervene. [T 18]

The world was changed into a sphere and the continent of Aman was removed, although a sailing route from Middle-earth to Aman, accessible to the Elves but not to mortals, persisted. Númenor was utterly destroyed, as was the fair body of Sauron however, his spirit returned to Mordor, where he again took up the One Ring, and gathered his strength once more. Elendil, his sons and the remainder of the Faithful sailed to Middle-earth, where they founded the realms in exile of Gondor and Arnor. [T 18]

Sauron arose again and challenged them. The Elves allied with Men to form the Last Alliance of Elves and Men. For seven years, the Alliance laid siege to Barad-dûr, until at last Sauron himself entered the field. He slew Elendil, High King of Gondor and Arnor, and Gil-galad, the last High King of the Noldor in Middle-earth. However, Isildur took up the hilt of Narsil, his father's shattered sword, and cut the One Ring from Sauron's hand. Sauron was defeated, but not utterly destroyed. Afterward, Isildur ignored the counsel of Elrond, and rather than destroy the One Ring in the fires of Mount Doom, he kept it as weregild for his dead father. But the Ring betrayed him and slipped from his finger as he was escaping from an Orc ambush at the Gladden Fields. Isildur was killed by an orc arrow, and the Ring was lost in the Anduin River. [T 18]

Third Age Edit

The Third Age lasted for 3021 years, beginning with the first downfall of Sauron, when he was defeated by the Last Alliance of Elves and Men following the downfall of Númenor and ending with the War of the Ring and final defeat of Sauron, the events narrated in The Lord of the Rings. Virtually the entire history of the Third Age takes place in Middle-earth. [T 22]

The Third Age saw the rise in power of the realms of Arnor and Gondor, and their fall. Arnor was divided into three petty Kingdoms, which fell one by one in the wars with Sauron's vassal kingdom of Angmar, whilst Gondor fell victim to Kin-strife, plague, Wainriders, and Corsairs. In this time, the line of the Kings of Gondor ends, with the House of the Stewards ruling in their stead. Meanwhile, the heirs of Isildur from the fallen kingdom of Arnor wander Middle-earth, aided only by Elrond in Rivendell but the line of rightful heirs remains unbroken throughout the age. [T 22]

This age was characterized by the waning of the Elves. In the beginning of the Third Age, many Elves left for Valinor because they were disturbed by the recent war. However, Elven kingdoms still survived in Lindon, Lothlórien, and Mirkwood. Rivendell also became a prominent haven for the Elves and other races. Throughout the Age, they chose not to mingle much in the matters of other lands, and only came to the aid of other races in time of war. The Elves devoted themselves to artistic pleasures, and tended to the lands which they occupied. The gradual decline of Elven populations occurred throughout the Age as the rise of Sauron came to dominate Middle-earth. By the end of the Third Age, only fragments of the once-grand Elven civilization survived in Middle-earth. [T 22]

The Wizards arrive around a thousand years [T 22] after the start of this period to aid the Free Peoples, most importantly Gandalf and Saruman. The One Ring was found by Sméagol but, under the power of the Ring and ignorant of its true nature, he retreated with the Ring to a secret life under the Misty Mountains. [T 22]

Middle-earth's devastating Great Plague originated in its vast eastern region, Rhûn, where it caused considerable suffering. [T 23] By the winter of late T.A. 1635 the Plague spread from Rhûn into Wilderland, on the east of Middle-earth's western lands in Wilderland it killed more than half the population. [T 24] In the following year the Great Plague spread into Gondor and then Eriador. In Gondor the Plague caused many deaths, including king Telemnar, his children, and the White Tree the population of the capital city Osgiliath was decimated, and government of the kingdom was transferred to Minas Tirith. In Eriador, the nascent Hobbit-realm of the Shire suffered "great loss" in what they called the Dark Plague. [T 22]

The so-called Watchful Peace began in T.A. 2063, when Gandalf went to Dol Guldur and the evil dwelling there (later known to be Sauron) fled to the far east. It lasted until 2460 T.A., when Sauron returned with new strength. During this period Gondor strengthened its borders, keeping a watchful eye on the east, as Minas Morgul was still a threat on their flank and Mordor was still occupied with Orcs. There were minor skirmishes with Umbar. In the north, Arnor was long gone, but the Hobbits of the Shire prospered, getting their first Took Thain, and colonizing Buckland. The Dwarves of Durin's folk under Thorin I abandoned Erebor, and left for the Grey Mountains, where most of their kin now gathered. Meanwhile, Sauron created a strong alliance between the tribes of Easterlings, so that when he returned he had many Men in his service. [T 22]

The main events of The Hobbit occur in T.A. 2941. [T 22]

By the time of The Lord of the Rings, Sauron had recovered, and was seeking the One Ring. The events of the ensuing War of the Ring leading to the end of the Third Age is the subject of The Lord of the Rings, and summarized in Of the Rings of Power and the Third Age. After the defeat of Sauron, Aragorn takes his place as King of the Reunited Kingdom of Arnor and Gondor, restoring the line of Kings from the Stewards of Gondor. Aragorn marries the daughter of Elrond, Arwen, thus for the last time adding Elvish blood to the royal line. As the age ends, Gandalf, Frodo Baggins and many of the remaining Elves of Middle-earth sail from the Grey Havens to Aman. [T 22]

Fourth Age Edit

With the end of the Third Age began the Dominion of Men. Elves were no longer involved in Human affairs, and most Elves leave for Valinor those that remain behind "fade" and diminish. A similar fate meets the Dwarves: although Erebor becomes an ally of the Reunited Kingdom and there are indications Khazad-dûm is refounded, [T 25] and a colony is established by Gimli in the White Mountains, they disappear from human history. Morgoth's creatures never recover.

Eldarion, son of Aragorn II Elessar and Arwen Evenstar, became King of the Reunited Kingdom in F.A. 120. His father gave him the tokens of his rule, and then gave up his life willingly, as his ancestors had done thousands of years before. Arwen left him to rule alone, passing away to the now-empty land of Lórien where she died. [T 26] Upon the death of Aragorn, Legolas departed Middle-earth for Valinor, taking Gimli with him and ending the Fellowship of the Ring in Middle-earth. [T 27]

Tolkien once considered writing a sequel to The Lord of the Rings, called The New Shadow, which would have taken place in Eldarion's reign, and in which Eldarion deals with his people turning to evil practices – in effect, a repetition of the history of Númenor. [T 28] In a 1972 letter concerning this draft, Tolkien mentioned that Eldarion's reign would have lasted for about 100 years after the death of Aragorn. [T 29] It's stated that his realm would be "great and long-enduring", but also that the lifespan of the royal house was not restored and continued to wane until it was like that of ordinary Men. [T 30]

Dagor Dagorath Edit

In a letter, Tolkien wrote that "This legendarium [The Silmarillion] ends with a vision of the end of the world [after all the ages have elapsed], its breaking and remaking, and the recovery of the Silmarilli and the 'light before the Sun' – after a final battle [Dagor Dagorath] which owes, I suppose, more to the Norse vision of Ragnarök than to anything else, though it is not much like it." [T 31] The concept of Dagor Dagorath appears in Tolkien's manuscripts that were published by his son Christopher in The Shaping of Middle-earth but not in the published Silmarillion, where the eventual fate of Arda Marred is left open-ended in the closing lines of the Quenta Silmarillion. [6]

Arda is summed up by the Tolkien scholar Paul H. Kocher as "our own green and solid Earth at some quite remote epoch in the past." [1]

In a letter written in 1958, Tolkien places the beginning of the Fourth Age some 6,000 years in the past: [T 10]

I imagine the gap [since the end of the Third Age] to be about 6000 years that is we are now at the end of the Fifth Age if the Ages were of about the same length as Second Age and Third Age. But they have, I think, quickened and I imagine we are actually at the end of the Sixth Age, or in the Seventh." [T 10]

The Tolkien scholar John D. Rateliff writes that one of the "very final passages" of the internal chronology of Lord of the Rings, The Tale of Aragorn and Arwen, ends not just with Arwen's death, but the statement that her grave will remain on the hill of Cerin Amroth in what was Lothlorien "until the world is changed, and all the days of her life are utterly forgotten by men that come after . and with the passing of [Arwen] Evenstar no more is said in this book of the days of old." [3] Rateliff observes that this points up a "highly unusual" aspect of Tolkien's legendarium among modern fantasy: it is set "in the real world but in an imagined prehistory." [3] As a result, Rateliff explains, Tolkien can build what he likes in that distant past, elves and wizards and hobbits and all the rest, provided that he tears it all down again, so that the modern world can emerge from the wreckage, with nothing but "a word or two, a few vague legends and confused traditions. " to show for it. [3]

Rateliff praises and quotes the scholar of English literature Paul H. Kocher on Tolkien's imagined prehistory and the implied process of fading to lead from fantasy to the modern world: [3]

At the end of his epic Tolkien inserts . some forebodings of [Middle-earth's] future which will make Earth what it is today . he shows the initial steps in a long process of retreat or disappearance by which all other intelligent species, which will leave man effectually alone on earth. Ents may still be there in our forests, but what forests have we left? The process of extermination is already well under way in the Third Age, and . Tolkien bitterly deplores its climax today." [8]

Stuart D. Lee and Elizabeth Solopova make "an attempt at a summary", [7] which runs as follows. The Silmarillion describes events "presented as factual" [7] but taking place before Earth's actual recorded history. What happened is processed through the generations as folk-myths and legends, especially among the (Old) English. Before the Fall of Numenor, the world was flat. In the Fall, it became round further geological events reshaped the continents into the Earth as it now is. All the same, the old tales survive here and there, resulting in mentions of Dwarves and Elves in real Medieval literature. Thus, Tolkien's imagined mythology "is an attempt to reconstruct our pre-history." [7] Lee and Solopova comment that "Only by understanding this can we fully realize the true scale of his project and comprehend how enormous his achievement was." [7]

The poet W. H. Auden wrote in The New York Times that "no previous writer has, to my knowledge, created an imaginary world and a feigned history in such detail. By the time the reader has finished the trilogy, including the appendices to this last volume, he knows as much about Tolkien's Middle Earth, its landscape, its fauna and flora, its peoples, their languages, their history, their cultural habits, as, outside his special field, he knows about the actual world." [c] [9] The scholar Margaret Hiley comments that Auden's "feigned history" echoes Tolkien's own statement in the foreword to the second edition of Lord of the Rings that he much preferred history, true or feigned, to allegory and that Middle-earth's history is told in The Silmarillion. [10]


Contents

YouTube was founded by Chad Hurley, Steve Chen, and Jawed Karim, when they worked for PayPal. [7] Prior to working for PayPal, Hurley studied design at the Indiana University of Pennsylvania Chen and Karim studied computer science together at the University of Illinois at Urbana–Champaign. [8] YouTube's initial headquarters was above a pizzeria and Japanese restaurant in San Mateo, California. [9]

The domain name "YouTube.com" was activated on February 14, 2005 with video upload options being integrated on April 23, 2005 after being named "Tune In, Hook Up" ─ the original idea of Chad Hurley, Steve Chen, and Jawed Karim. The concept was an online dating service that ultimately failed but had an exceptional video and uploading platform. [11] After the infamous Justin Timberlake and Janet Jackson Halftime show incident, the three creators realized they couldn't find any videos of it on the internet, after noticing that this type of platform did not exist they made the changes to become the first major video sharing platform. [12] The idea of the new company was for non-computer experts to be able to use a simple interface that allowed the user to publish, upload and view streaming videos through standard web browsers and modern internet speeds. Ultimately, creating an easy to use video streaming platform that wouldn't stress out the new internet users of the early 2000s. [13] The first YouTube video, titled Me at the zoo, was uploaded on April 23, 2005, and shows co-founder Jawed Karim at the San Diego Zoo and currently has over 120 million views and almost 5 million likes. [14] [15] Hurley was behind more of the looks of the website, he used his art skills to create the logo and designed the look of the website. [16] Chen made sure the page actually worked and that there would be no issues with the uploading and playback process. Karim was a programmer and helped in making sure the initial website got put together properly and helped in both design and programming. [16]

YouTube began as an angel-funded enterprise working from a makeshift office in a garage. In November 2005, venture firm Sequoia Capital invested an initial $3.5 million, [17] and Roelof Botha (a partner of the firm and former CFO of PayPal) joined the YouTube board of directors. In April 2006, Sequoia and Artis Capital Management invested an additional $8 million in the company, which had experienced significant growth in its first few months. [18]

Timeline of events
2005July – Video HTML embedding
July – Top videos page
August – 5-star rating system
October – Playlists
October – Full-screen view
October – Subscriptions
2006January – Groups function
February – Personalized profiles
March – 10-minute video limit
April – Directors function
May – Video responses
May – Cell phone uploading
June – Further personalized profiles
June – Viewing history
2007June – Local language versions
2008March – 480p videos
March – Video analytics tool
December – Audioswap
2009January – Google Videos uploading halted
July – 720p videos
November – 1080p videos
December – Automatic speech recognition
December – Vevo launch
2010March – "Thumbs" rating system
July – 4K video
2011November – YouTube Analytics
November – Feature film rental
2012June – Merger with Google Video
2013March – Transition to the "One" channel layout
2014October – 60 fps videos
2015March – 360° videos
November – YouTube Red launches
2016February – YouTube subscription service
2017February – YouTube TV launches
March – Ability to modify video annotations removed
August – Logo changed and new "polymer" website version defaulted (preselected)
2018
2019January – Removal of annotations and AutoShare feature
2020Removal of option for legacy website version (" disable_polymer ")

After opening on a beta service in May 2005 YouTube.com was trafficking around 30,000 viewers a day in just months of time. After launching six months later they would be hosting well over two million viewers a day on the website. By March 2006 the site had more than 25 million videos uploaded and was generating around 20,000 uploads a day. [19] During the summer of 2006, YouTube was one of the fastest growing sites on the World Wide Web, [20] hosting more than 65,000 new video uploads. The site delivered an average of 100 million video views per day in July. [21] However, this did not come without any problems, the rapid growth in users meant YouTube had to keep up with it technologically speaking, they needed new equipment to match the views and users they were bringing in and they needed more broadband connection to the internet. The increasing copyright infringement problems and lack in commercializing YouTube eventually led to outsourcing to Google who recently had just failed in their own video platform. [19] It was ranked the fifth-most-popular website on Alexa, far out-pacing even MySpace's rate of growth. [22] The website averaged nearly 20 million visitors per month according to Nielsen/NetRatings, [21] with around 44% female and 56% male visitors. The 12- to 17-year-old age group was dominant. [23] YouTube's pre-eminence in the online market was substantial. According to the website Hitwise.com, YouTube commanded up to 64% of the UK online video market. [24]

YouTube entered into a marketing and advertising partnership with NBC in June 2006. [25]

On October 9, 2006, it was announced that the company would be purchased by Google for US$1.65 billion in stock, which was completed on November 13. At that time it was Google's second-largest acquisition. [26] This kickstarted YouTube's rise to becoming a global media dominator, creating a multi-billion-dollar business that has surpassed most television stations and other media markets, sparking success for many YouTubers. [13] Indeed, YouTube as an entity generated more than twice the amount of profit in 2018 than any major TV network (with $15 billion compared to NBC's $7 billion). [27] The agreement between Google and YouTube came after YouTube presented three agreements with media companies in an attempt to avoid copyright-infringement lawsuits. YouTube planned to continue operating independently, with its co-founders and 68 employees working within Google. [28] Viral videos were the main factor for YouTube's growth in the beginning of its early days with Google, for example Evolution of Dance, Charlie Bit My Finger, David After the Dentist, and more viral videos. [29]

Google's February 7, 2007 SEC filing revealed the breakdown of profits for YouTube's investors after the sale to Google. In 2010, Chad Hurley's profit was more than $395 million while Steve Chen's profit was more than $326 million. [30]

In 2006, Time Magazine featured a YouTube screen with a large mirror as its annual 'Time Person Of The Year'. It cited user-created media such as that posted on YouTube and featured the site's originators along with several content creators. The Wall Street Journal and The New York Times also reviewed posted content on YouTube in 2006, with particular regard to its effects on corporate communications and recruitment. PC World Magazine named YouTube the ninth of its Top 10 Best Products of 2006. [31] In 2007, both Sports Illustrated and Dime Magazine featured positive reviews of a basketball highlight video titled, The Ultimate Pistol Pete Maravich MIX. [32]

It is estimated that in 2007, YouTube consumed as much bandwidth as the entire Internet in 2000. [33]

YouTube's early website layout featured a pane of currently watched videos, as well as video listings with detailed information such as full (2006) and later expandable (2007) descriptions, as well as profile pictures (2006), ratings, comment counts, and tags. [34] [35] Channels' pages were equipped with standalone view counters, bulletin boards, and were awarded badges for various rank-based achievements, such as "#15 - Most Subscribed (This Month)", "#89 - Most Subscribed (All Time)", and "#15 - Most Viewed (This Week)". [36]

In March 2007, YouTube launched the YouTube Awards, an annual competition in which users voted on the best user-generated videos of the year. [37] The awards were presented twice, in 2007 and 2008.

In June 2007, YouTube launched a mobile web front end, where videos are served through RTSP. [38]


On July 23, 2007 and November 28, 2007, CNN and YouTube produced televised presidential debates in which Democratic and Republican US presidential hopefuls fielded questions submitted through YouTube. [39] [40]

Around 2008, "Warp Player" was tested out. It was an experimental interactive interface for browsing videos, where links to videos appeared as thumbnails, visualized in a floating and navigable net. [41]

In November 2008, YouTube reached an agreement with MGM, Lions Gate Entertainment, and CBS, allowing the companies to post full-length films and television episodes on the site, accompanied by advertisements in a section for US viewers called "Shows". The move was intended to create competition with websites such as Hulu, which features material from NBC, Fox, and Disney. [42] [43]

YouTube was awarded a 2008 Peabody Award and cited as being "a 'Speakers' Corner' that both embodies and promotes democracy". [44] [45]

In early 2009, YouTube registered the domain www.youtube-nocookie.com for videos embedded on United States federal government websites. [46] [47] In November of the same year, YouTube launched a version of "Shows" available to UK viewers, offering around 4,000 full-length shows from more than 60 partners. [48]

Throughout 2009, the alphabetical sorting of YouTube's "AudioSwap" feature popularized Alexander Perls' "009 Sound System".

In June 2009, YouTube XL was launched. It was a front-end for viewing and browsing on television sets, and as such, for use on stationary game consoles with web browser, such as the Nintendo Wii. Its appearance varied depending on device. [49] [50]

Entertainment Weekly placed YouTube on its end-of-the-decade "best-of" list In December 2009, describing it as: "Providing a safe home for piano-playing cats, celeb goof-ups, and overzealous lip-synchers since 2005." [51]

In January 2010, the watch page layout was overhauled. Changes include a shortcut labelled with the number of channels' public videos added above the player to allow quickly accessing other videos of a channel without having to navigate to the channel page. [52]

In January 2010, [53] YouTube introduced an online film rentals service which is currently available only to users in the US, Canada and the UK. [54] [55] The service offers over 6,000 films. [56] In March 2010 YouTube began free streaming of certain content, including 60 cricket matches of the Indian Premier League. According to YouTube, this was the first worldwide free online broadcast of a major sporting event. [57]

On March 31, 2010, YouTube launched a new design with the aim of simplifying the interface and increasing the time users spend on the site. Google product manager Shiva Rajaraman commented: "We really felt like we needed to step back and remove the clutter." [58] In May 2010, it was reported that YouTube was serving more than two billion videos a day, which was "nearly double the prime-time audience of all three major US television networks combined". [59] In May 2011, YouTube reported on the company blog that the site was receiving more than three billion views per day. [60] In January 2012, YouTube stated that the figure had increased to four billion videos streamed per day. [61]

According to May 2010 data published by market research company comScore, YouTube was the dominant provider of online video in the United States, with a market share of roughly 43 percent and more than 14 billion videos viewed during May. [62]

Around 2010, an easter egg of the Flash-based video player was discovered, where pressing the arrow key while the dotted loading animation is visible initiates a Snake game formed by the dots. The HTML5-based player, which initially had the same dotted loading animation, did not support it. [63] [64]

In September 2010, a unique full-page interactive TippEx advertising campaign was launched on YouTube, where the entire watch page was simulated in a Flash viewport. A hunter who does not wish to shoot a bear grabs outside of the video's viewport to reach for a Tipp-Ex tape roller, and uses it to cover the word "shoots" in the video titled "A hunter shoots a bear". Users were able to enter words in the gap, which lead to different unlisted videos with a multitude of pre-recorded reactions. [65]

In October 2010, Hurley announced that he would be stepping down as the chief executive officer of YouTube to take an advisory role, with Salar Kamangar taking over as the head of the company. [66]

James Zern, a YouTube software engineer, revealed in April 2011 that 30 percent of videos accounted for 99 percent of views on the site. [67]

In June 2011, YouTube started experimenting with reaction buttons, allowing users to react to videos with a multitude of expressions, similar to Facebook's 2016 reaction buttons, though YouTube removed reaction buttons soon after. [68] [69]

During November 2011, the Google+ social networking site was integrated directly with YouTube and the Chrome web browser, allowing YouTube videos to be viewed from within the Google+ interface. [70] In December 2011, YouTube launched a new version of the site interface, with the video channels displayed in a central column on the home page, similar to the news feeds of social networking sites. [71] At the same time, a new version of the YouTube logo was introduced with a darker shade of red, which was the first change in design since October 2006. [72]

In 2012, YouTube said that roughly 60 hours of new videos are uploaded to the site every minute, and that around three-quarters of the material comes from outside the U.S. [60] [61] [73] The site has eight hundred million unique users a month. [74]

As of 2012, users were able to rate playlists, and videos' view counts and playlists' total duration were indicated on playlist pages. [75]

Starting from 2010 and continuing to the present, Alexa ranked YouTube as the third most visited website on the Internet after Google and Facebook. [76]

In late 2011 and early 2012, YouTube launched over 100 "premium" or "original" channels. It was reported the initiative cost $100 million. [77] Two years later, in November 2013, it was documented that the landing page of the original channels became a 404 error page. [78] [79] Despite this, original channels such as SourceFed and Crash Course were able to become successful. [80] [81]

An algorithm change was made in 2012 that replaced the view-based system for a watch time-based one that is credited for causing a surge in the popularity of gaming channels. [82]

In October 2012, for the first-time ever, YouTube offered a live stream of the U.S. presidential debate and partnered with ABC News to do so. [83]

On October 25, 2012 ( 2012-10-25 ) , The YouTube slogan (Broadcast Yourself) was taken down due to the live stream of the U.S. presidential debate.

YouTube relaunched its design and layout on December 4, 2012 to be very similar to the mobile and tablet app version of the site. [ citation needed ] On December 21, 2012, Gangnam Style became the first YouTube video to surpass one billion views. [84]

As of early 2013, YouTube video recommendations contain both videos and channels. [85]

In early 2013, YouTube transitioned channels to the initially optional "One" channel layout, which added the ability to put playlists into shelves on the channel front page, but removed custom backgrounds. Formerly unified channel pages were separated into multiple sub pages such as "Videos", "Playlists", "Discussion" (channel comments), "Channels" (featured by user), and "About" (channel description, total video view count, join date, outlinks). On the watch page, the title notably is no longer above but below the video's viewport. Coarsely, this layout is still in operation as of 2021. [86]

In March 2013, the number of unique users visiting YouTube every month reached 1 billion. [87] In the same year, YouTube continued to reach out to mainstream media, launching YouTube Comedy Week and the YouTube Music Awards. [88] [89] Both events were met with negative to mixed reception. [90] [91] [92] [93] In November 2013, YouTube's own YouTube channel had surpassed Felix Kjellberg's PewDiePie channel to become the most subscribed channel on the website. This was due to auto-suggesting new users to subscribe to the channel upon registration. [94]

In December 2015 and January 2016, direct uploading through email and webcam recording respectively were removed. The former existed to support cell phones with limited web browsing capabilities. [95] [96]

On April 3, 2018, a shooting took place at YouTube headquarters. [97]

In January 2019, AutoShare was removed. The feature allowed users to opt to automatically broadcast actions such as liking videos, playlist additions, new uploads, and earlier added subscriptions to Google Plus and Twitter, and the channel feed. [98] [99]

In November 2019, YouTube has announced that the service would phase out the classic version of YouTube Studio to all YouTube creators by the spring of 2020. [100] It was available and accessible to some YouTube creators by the end of March 2020. [101]

In that month, a watch queue feature was added, which resembles the intermittently removed "QuickList" feature that was originally introduced in 2006. [102] [103]

Since December 2019, users are no longer able to share the automatically generated playlist of positively rated videos. [104]

In June 2020, YouTube phased out the ability to use categories.

In August 2020, automated Email notifications of newly published videos by user-opted channels have been shut down, citing low numbers of users who open them. Only push notifications (mobile) and internal web notifications (desktop) of new uploads remained. [105]

After introducing the ability to visibly divide the video player's seek bar into chapters in May 2020 using time stamp lists in the video description, the platform started experimenting with automatic estimation of videos' chapters in November 2020 using artificial intelligence that detects in-video chapter titles. [106]

In the early days of YouTube, there was no way to monetize videos on the platform. Much of the site's content was homemade and produced by hobbyists with no plans for making money on the site. [107] [108] The first targeted advertising on the site came in the form of participatory video ads, which were videos in their own right that offered users the opportunity to view exclusive content by clicking on the ad. [109] The first such ad was for the Fox show Prison Break and solely appeared above videos on Paris Hilton's channel. [109] [110] At the time, the channel was operated by Warner Bros. Records and was cited as the first brand channel on the platform. [110] Participatory video ads were designed to link specific promotions to specific channels rather than advertising on the entire platform at once. When the ads were introduced, in August 2006, YouTube CEO Chad Hurley rejected the idea of expanding into areas of advertising seen as less user-friendly at the time, saying, "we think there are better ways for people to engage with brands than forcing them to watch a commercial before seeing content. You could ask anyone on the net if they enjoy that experience and they’d probably say no." [110] However, YouTube began running in-video ads in August 2007, with preroll ads introduced in 2008. [111] In December 2007, YouTube launched the Partner Program, which allows channels that meet certain metrics (currently 1000 subscribers and 4000 public watch hours in the past year) [112] to run ads on their videos and earn money doing so. [111] The ability to monetize their content eventually allowed many creators to turn what had been a hobby into a full-time career.

During the 2010s, the ability for YouTubers to achieve wealth and fame due to success on the platform increased dramatically. In December 2010, Business Insider estimated that the highest earner on YouTube during the previous year was Dane Boedigheimer, creator of the web series Annoying Orange, with an income of around $257,000. [113] Five years later, Forbes released its first list of the highest-earning YouTube personalities, estimating top earner PewDiePie's income during the previous fiscal year at $12 million. [114] Forbes estimated that the tenth-highest earner that year was Rosanna Pansino at $2.5 million. [a] The rapid influx of wealth within the YouTube community has led some to criticize YouTubers for focusing on earnings more than the creativity and connection with their fanbase that some claim was at the heart of the platform before expanded monetization. [116] [117] [118] Although pursuing a full-time career on YouTube was once impossible, it is now far more accessible and intensely sought after. Numerous studies in the late 2010s found that YouTuber was the most desired career by children. [119] [120] [121]

As YouTubers have increased their earnings, they have also been able to increase their influence outside of the platform. Some have ventured into mainstream forms of media, such as Liza Koshy, who, among other pursuits, hosted the revival of the Nickelodeon show Double Dare [122] and starred in the Netflix dance-comedy film Work It. [123] In 2019, Ryan's Mystery Playdate, a show starring Ryan Kaji, the then-seven-year-old host of the toy review and vlog channel Ryan's World, began airing on Nick Jr. [124] later that year, NBC debuted A Little Late with Lilly Singh in its 1:35 AM ET time slot. Singh's digital prominence was cited as a reason for her selection as host by then-NBC Entertainment co-chairman George Cheeks. [125] In addition to expanding into other forms of media, several YouTubers have used their influence to raise money for charity or speak out on social issues. Notable examples include MrBeast and Mark Rober, who helped raise over $20 million with their Team Trees campaign, [126] [127] and Felipe Neto, who publicly criticized Brazilian president Jair Bolsonaro for his response to the coronavirus pandemic. [128] In 2020, Time named Neto and fellow YouTuber JoJo Siwa to its annual list of the world's 100 most influential people. [129] [130]

On June 19, 2007, Google CEO Eric Schmidt was in Paris to launch the new localization system. [131] The interface of the website is available with localized versions in 103 countries, one territory (Hong Kong) and a worldwide version. [132]

Countries with YouTube Localization
Country Language(s) Launch date Notes
USA (and worldwide launch) English February 15, 2005 [131] First location
Brazil Portuguese June 19, 2007 [131] First international location
France French, and Basque June 19, 2007 [131]
Ireland English June 19, 2007 [131]
Italy Italian June 19, 2007 [131]
Japan Japanese June 19, 2007 [131] First Asian location
Netherlands Dutch June 19, 2007 [131]
Poland Polish June 19, 2007 [131]
Spain Spanish, Galician, Catalan, and Basque June 19, 2007 [131]
United Kingdom English June 19, 2007 [131] Expansion continues
Mexico Spanish October 11, 2007 [133]
Hong Kong Chinese, and English October 17, 2007 [134] Blocked in China
Taiwan Chinese October 18, 2007 [135]
Australia English October 22, 2007 [136]
New Zealand English October 22, 2007 [136]
Canada French, and English November 6, 2007 [137]
Germany German November 8, 2007 [138]
Russia Russian November 13, 2007 [139]
South Korea Korean January 23, 2008 [140] First launch in 2008
India Hindi, Bengali, English, Gujarati, Kannada, Malayalam, Marathi, Tamil, Telugu, and Urdu May 7, 2008 [141]
Israel Hebrew September 16, 2008 First Middle East location
Czech Republic Czech October 9, 2008 [142]
Sweden Swedish October 22, 2008 [143] Location never launched in 2009
South Africa Afrikaans, Zulu, and English May 17, 2010 [131] First African location
Argentina Spanish September 8, 2010 [144]
Algeria French, and Arabic March 9, 2011 [145] One of the first Arab World locations
Egypt Arabic March 9, 2011 [145]
Jordan Arabic March 9, 2011 [145]
Morocco French, and Arabic March 9, 2011 [145]
Saudi Arabia Arabic March 9, 2011 [145]
Tunisia French, and Arabic March 9, 2011 [145]
Yemen Arabic March 9, 2011 [145]
Kenya Swahili, and English September 1, 2011 [146]
Philippines Filipino, and English October 13, 2011 [147] First Southeast Asian location
Singapore English, Malay, Chinese, and Tamil October 20, 2011 [148]
Belgium French, Dutch, and German November 16, 2011 [131] Middle location
Colombia Spanish November 30, 2011 [149]
Uganda English December 2, 2011 [150] Needs a Swahili edition for the country
Nigeria English December 7, 2011 [151]
Chile Spanish January 20, 2012 [152] First location in 2012
Hungary Hungarian February 29, 2012 [153]
Malaysia Malay, and English March 22, 2012 [154]
Peru Spanish March 25, 2012 [155]
United Arab Emirates Arabic, and English April 1, 2012 [156]
Greece Greek May 1, 2012
Indonesia Indonesian, and English May 17, 2012 [157]
Ghana English June 5, 2012 [158]
Senegal French, and English July 4, 2012 [159]
Turkey Turkish October 1, 2012 [160]
Ukraine Ukrainian December 13, 2012 [161]
Denmark Danish February 1, 2013 [162]
Finland Finnish, and Swedish February 1, 2013 [163]
Norway Norwegian February 1, 2013 [164]
Switzerland German, French, and Italian March 29, 2013 [165]
Austria German March 29, 2013 [166] Long-waited launch
Romania Romanian April 18, 2013 [167]
Portugal Portuguese April 25, 2013 [168] Long-waited launch
Slovakia Slovak April 25, 2013 [169]
Bahrain Arabic August 16, 2013 [170] Multiple Middle East locations launched
Kuwait Arabic August 16, 2013 [170]
Oman Arabic August 16, 2013 [170]
Qatar Arabic August 16, 2013 [170]
Bosnia and Herzegovina Bosnian, Croatian, and Serbian March 17, 2014
Bulgaria Bulgarian March 17, 2014 [171]
Croatia Croatian March 17, 2014 [172]
Estonia Estonian March 17, 2014 [173]
Latvia Latvian March 17, 2014 [174]
Lithuania Lithuanian March 17, 2014 Baltic area fully locally accessible
Macedonia Macedonian, Serbian, and Turkish March 17, 2014
Montenegro Serbian, and Croatian March 17, 2014
Serbia Serbian March 17, 2014
Slovenia Slovenian March 17, 2014 [175]
Thailand Thai April 1, 2014 [176]
Lebanon Arabic May 1, 2014 [170]
Puerto Rico Spanish, and English August 23, 2014 Use Spain version or USA version before launch.
Iceland Icelandic ?, 2014
Luxembourg French, and German ?, 2014
Vietnam Vietnamese October 1, 2014 First contemporary communist location
Libya Arabic February 1, 2015 Blocked in 2010, but unblocked in 2011.
Tanzania Swahili, and English June 2, 2015
Zimbabwe English June 2, 2015
Azerbaijan Azerbaijani October 12, 2015 [177]
Belarus Russian October 12, 2015 [177]
Georgia Georgian October 12, 2015 [177]
Kazakhstan Kazakh October 12, 2015 [177]
Iraq Arabic November 9, 2015 [ citation needed ]
Nepal Nepali January 12, 2016 [178]
Pakistan Urdu, and English January 12, 2016 [179] Blocked in 2012 but unblocked in 2015
Sri Lanka Sinhala, and Tamil January 12, 2016 [180]
Jamaica English August 4, 2016 [ citation needed ]
Malta English June 24, 2018
Bolivia Spanish January 30, 2019
Costa Rica Spanish January 30, 2019
Ecuador Spanish January 30, 2019
El Salvador Spanish January 30, 2019
Guatemala Spanish January 30, 2019
Honduras Spanish January 30, 2019
Nicaragua Spanish January 30, 2019
Panama Spanish January 30, 2019
Uruguay Spanish January 30, 2019
Paraguay Spanish and Guarani February 21, 2019
Dominican Republic Spanish February 21, 2019
Cyprus Greek and Turkish March 13, 2019 Last European Union location
Liechtenstein German March 13, 2019

Google aims to compete with local video-sharing websites like Dailymotion in France. It also made an agreement with local television stations like M6 and France Télévisions to legally broadcast video content. [ citation needed ]

On October 17, 2007, it was announced that a Hong Kong version had been launched. YouTube's Steve Chen said its next target will be Taiwan. [181] [182]

YouTube was blocked from Mainland China from October 18 due to the censorship of the Taiwanese flag. [183] URLs to YouTube were redirected to China's own search engine, Baidu. It was subsequently unblocked on October 31. [184]


Arado Ar 232

By the autumn of 1938, it was clear that the Luftwaffe needed a new medium transport aircraft to replace its ageing Ju 52/3ms. Both Arado and Henschel received specifications for an aircraft capable of raising and lowering itself to truck-bed height for loading. Henshel's twin-boom machine proved unsuccessful, allowing Arado to go ahead with production of one of the most distinctive transport aircraft of World War II.

No more than 30 Ar 232s seem to have been completed and the type saw only limited service. Both the Ar 232 V1 and V2 prototypes were fitted with two BMW 801 radial engines as demanded by the original specification. It was immediately apparent, however, that Fw 190 production would place huge more urgent demands on the limited supply of this powerplant. Hence, Arado was instructed to complete the V3 and subsequent aircraft with four lower-powered BMW-Bramo 323R engines.

A unique feature of the Ar 323 was its multi-wheel undercarriage arrangement. Normal operations were carried out with the tricycle main gears but for loading and taxiing over rough ground, these units were partially retracted, allowing the aircraft to be loaded directly from a truck-bed and manoeuvred on its 11 pairs of under-fuselage wheels.

Eight pre-series Ar 232B-0 aircraft were completed, the first of them also being known as the Ar 232 V4. Four B-0s joined the surviving Ar 232As in special missions over the Soviet Union, flying from bases in Finland and Norway during 1944. One aircraft crashed near Moscow while on a covert mission.

Ironically, the Allies made extensive use of the one surviving Ar 232 in transporting personnel and captured aircraft to the UK, immediately after the cessation of hostilities.


Contents

More stable economic relations were brought about with a change in socio-economic conditions from a reliance on hunting and gathering of foods to agricultural practice, during periods beginning sometime after 12,000 BC, at approximately 10,000 years ago in the Fertile Crescent, in northern China about 9,500 years ago, about 5,500 years ago in Mexico and approximately 4,500 years ago in the eastern parts of the United States. [4] [5] [6]

Monetary Edit

The history of banking is intertwined with the history of money. Ancient types of money known as grain-money and food cattle-money were used from a time of around at least 9000 BC, as two of the earliest things that could be used for the purposes of barter. [7] [8]

Anatolian obsidian as a raw material for Stone Age tools was being distributed from as early as about 12,500 BCE. The occurrence of an organized trade was current during the 9th millennium (CauvinChataigner 1989). Within Sardinia, which was the location of one of the four main sites for sourcing the material deposits of obsidian within the Mediterranean, trade using obsidian was replaced during the 3rd millennia by trade of copper and silver. [9] [10] [11] [12] [13] [14]

Record-keeping Edit

Objects used for record keeping, "bulla" and tokens, have been recovered from within Near East excavations, dated to a period beginning 8000 BCE and ending 1500 BCE, as records of the counting of agricultural produce. Commencing in the late fourth millennia mnemonic symbols were in use by members of temples and palaces to serve to record stocks of produce. Types of records accounting for trade exchanges of payments were being made firstly about 3200. A very early writing on clay tablet called the Code of Hammurabi, refers to the regulation of a banking activity of sorts within the civilization (Armstrong) of an era which dates to ca. 1700 BCE, banking was well enough developed to justify laws governing banking operations. [nb 1] Later during the Achaemenid Empire (after 646 BCE, [15] further evidence is found of banking practices in the Mesopotamia region. [16] [17] [18] [19] [20] [21] [22] [23]

Structural Edit

By the 5th millennium BCE, the settlements of Sumer, such as Eridu, were formed around a central temple. In the fifth millennium, people began to build and live in the civilization of cities, providing a structure for the construction of institutions and establishments. Tell Brak and Uruk were two early urban settlements. [19] [24] [25] [26] [27]

Asia Edit

Mesopotamia and Persia Edit

Banking as an archaic activity (or quasi-banking [28] [29] ) is thought to have begun at various times, during a period as early as the latter part of the 4th millennium BCE, [30] to within the 4th to 3rd millennia BCE [31] [32]

Prior to the reign of Sargon I of Akkad (2335–2280 BCE [33] ) the occurrence of trade was limited to the internal boundaries of each city-state of Babylon and the temple located at the centre of economic activity therein trade at the time for citizens external to the city was forbidden. [24] [34] [35]

In Babylonia of 2000 BCE, people depositing gold were required to pay amounts as much as one sixtieth of the total deposited. Both the palaces and temple are known to have provided lending and issuing from the wealth they held—the palaces to a lesser extent. Such loans typically involved issuing seed-grain, with re-payment from the harvest. These basic social agreements were documented in clay tablets, with an agreement on interest accrual. The habit of depositing and storing of wealth in temples continued at least until 209 BCE, as evidenced by Antioch having ransacked or pillaged the temple of Aine in Ecbatana (Media) of gold and silver. [36] [37] [38] [39] [40] [41] [42] [43]

In December 1901 and January 1902, at the direction of archaeologist Jacques de Morgan, Father Jean-Vincent Scheil, OP found a 2.25 meter (or 88.5 inch) tall basalt or diorite stele in three pieces inscribed with 4,130 lines of cuneiform law dictated by Hammurabi (c. 1792–1750 BC) of the First Babylonian Empire in the city of Shush, Persia under the Qajar dynasty (the same location of the ancient city Susa of the Achaemenid Empire). [44] [45] [46] Codex Hammurabi Law 100 stipulated that repayment of a loan by a debtor to a creditor on a schedule with a maturity date specified in written contractual terms. [47] [48] [49] Law 122 stipulated that a depositor of gold, silver, or other property must present all articles and a signed contract of bailment to a notary before depositing the articles with a banker, and Law 123 stipulated that a banker was discharged of any liability from a contract of bailment if the notary denied the existence of the contract. Law 124 stipulated that a depositor with a notarized contract of bailment was entitled to redeem the entirety of their deposit, and Law 125 stipulated that a banker was liable for replacement of deposits stolen while in their possession. [50] [51] [49]

Cuneiform records of the house of Egibi of Babylonia describe the family's financial activities dated as having occurred sometime after 1000 BC and ending sometime during the reign of Darius I, show according to one source a "lending house" (Silver 2002), a family engaging in "professional banking. " (Dandamaev et al 2004) and economic activities similar to a degree to modern deposit banking, although another states the family's activities better described as entrepreneurship rather than banking (Wunsch 2007). The provision of credit is apparently also something the Murashu family participated in (Moshenskyi 2008). [52] [53] [54] [55] [56] [57] [58] [59] [60] [61]

Asia Minor Edit

From the fourth millennia previously agricultural settlements began administrative activities. [62] [63] [64] [65]

The temple of Artemis at Ephesus was the largest depository of Asia. A pot-hoard dated to 600 BCE was found in excavations by The British Museum during the year after 1904. During the time at the cessation of the first Mithridatic war the entire debt record at the time being held, was annulled by the council. Mark Anthony is recorded to have stolen from the deposits on an occasion. The temple served as a depository for Aristotle, Caesar, Dio Chrysostomus, Plautus, Plutarch, Strabo and Xenophon. [66] [67] [68] [69] [70] [71] [72]

The temple to Apollo in Didyma was constructed sometime in the 6th century. A large sum of gold was deposited within the treasury at the time by king Croesus. [73] [74]

India Edit

In ancient India there are evidences of loans from the Vedic period (beginning 1750 BC). Later during the Maurya dynasty (321 to 185 BC), an instrument called adesha was in use, which was an order on a banker desiring him to pay the money of the note to a third person, which corresponds to the definition of a bill of exchange as we understand it today. During the Buddhist period, there was considerable use of these instruments. Merchants in large towns gave letters of credit to one another. [75] [76] [77]

China Edit

In ancient China, starting in the Qin Dynasty (221 to 206 BC), Chinese currency developed with the introduction of standardized coins that allowed easier trade across China, and led to development of letters of credit. These letters were issued by merchants who acted in ways that today we would understand as banks. [78]

Ancient Egypt Edit

Some scholars suggest that the Egyptian grain-banking system became so well-developed that it was comparable to major modern banks, both in terms of its number of branches and employees, and in terms of the total volume of transactions. During the rule of the Greek Ptolemies, the granaries were transformed into a network of banks centered in Alexandria, where the main accounts from all of the Egyptian regional grain-banks were recorded. This became the site of one of the earliest known government central banks, and may have reached its peak with the assistance of Greek bankers. [79]

According to Muir (2009) there were two types of banks operating within Egypt: royal and private. [80] Documents made to show the banking of taxes were known as peptoken-records. [81]

Greece Edit

Trapezitica is the first source documenting banking (de Soto – p. 41). The speeches of Demosthenes contain numerous references to the issuing of credit (Millett p. 5). Xenophon is credited to have made the first suggestion of the creation of an organisation known in the modern definition as a joint-stock bank in On Revenues written circa 353 BCE [8] [82] [83] [84]

The city-states of Greece after the Persian Wars produced a government and culture sufficiently organized for the birth of a private citizenship and therefore an embryonic capitalist society, allowing for the separation of wealth from exclusive state ownership to the possibility of ownership by the individual. [85] [86]

According to one source (Dandamaev et al), trapezites were the first to trade using money, during the 5th century BCE, as opposed to earlier trade which occurred using forms of pre-money. [87]

Specific focus of funds Edit

The earliest forms of storage utilized were the rudimentary money-boxes (ΘΗΣΑΥΡΌΣ [88] ) which were made similar in form to the construction of a bee-hive, and were found for example in the Mycenae tombs of 1550–1500 BC. [89] [90] [91] [92] [93] [94] [95]

Private and civic entities within ancient Grecian society, especially Greek temples, performed financial transactions. (Gilbart p. 3) The temples were the places where treasure was deposited for safe-keeping. The three temples thought the most important were the temple to Artemis in Ephesus, and temple of Hera within Samos, and within Delphi, the temple to Apollo. These consisted of deposits, currency exchange, validation of coinage, and loans. [8] [83] [96] [97]

The first treasury to the Apollonian temple was built before the end of the 7th century BC. A treasury of the temple was constructed by the city of Siphnos during the 6th century. [98] [99] [100]

Before the destruction by Persians during the 480 invasion, the Athenian Acropolis temple dedicated to Athena stored money Pericles rebuilt a depository afterward contained within the Parthenon. [101]

During the reign of the Ptolemies, state depositories replaced temples as the location of security-deposits. Records exist to show this having occurred by the end of the reign of Ptolemy I (305–284). [102] [103] [104] [105]

As the need for new buildings to house operations increased, construction of these places within the cities began around the courtyards of the agora (markets). [106]

Geographical focus of banking activities Edit

Athens received the Delian league's treasury during 454. [107]

During the late 3rd and 2nd century BC, the Aegean island of Delos became a prominent banking center. [108] During the 2nd century, there were for certain three banks and one temple depository within the city. [109]

Thirty-five Hellenistic cities had private banks during the 2nd century (Roberts – p. 130). [109]

Of the settlements of the Greco-Roman world of the 1st century AD, three were of pronounced wealth and centres of banking: Athens, Corinth and Patras. [110] [111] [112] [113] [114]

Loans Edit

Many loans are recorded in writings from the classical age, although a very small proportion were provided by banks. Provision of these were likely an occurrence of Athens, with loans known to have been provided at some time at an annual interest of 12%. Within the boundaries of Athens, bankers' loans are recorded as having been issued on eleven occasions altogether (Bogaert 1968). [82] [115] [116]

Banks sometimes made loans available confidentially, which is, they provided funds without being publicly and openly known to have done so In addition, they kept depositors' names confidential as well. This intermediation per se was known as dia tes trapazēs. [96]

A loan was made by a Temple of Athens to the state during 433–427 BCE. [117]

Rome Edit

Roman banking activities were a crucial presence within temples. For instance the minting of coins occurred within temples, most importantly the Juno Moneta temple, though during the time of the Empire, public deposits gradually ceased to be held in temples, and instead were held in private depositories. Still, the Roman Empire inherited the mercantile practices from Greece (Parker). [85] [102] [118]

During 352 BCE a rudimentary public bank (known as dēmosía trápeza [119] ) was formed, with the passing of a consular directive to form a commission of mensarii to deal with debt in the impoverished lower classes. Another source shows banking practices during 325 BCE when, on account of being in debt, the Plebeians were required to borrow money, so newly appointed quinqueviri mensarii were commissioned to provide services to those who had security to provide, in exchange for money from the public treasury. Another source (J. Andreau) has the shops of banking of Ancient Rome firstly opening in the public forums during the period 318 to 310 BCE. [120] [121] [122]

In early Ancient Rome deposit bankers were known as argentarii and at a later time (from the 2nd century AD onward) as nummularii (Andreau 1999 p. 2) or mensarii. The banking-houses were known as Taberae Argentarioe and Mensoe Numularioe. They would set up their stalls in the middle of enclosed courtyards called macella on a long bench called a bancu, [ citation needed ] from which the words banco and bank are derived. [123] As a money changer, the merchant at the bancu did not so much invest money as merely convert the foreign currency into the only legal tender in Rome – that of the Imperial Mint. [83] [121] [122] [124]

Operations of banking within Roman society were known as officium argentarii. Statutes (125/126 CE) of the Empire described "letter from Caesar to Quietus" show rental monies to be collected from persons using land belonging to a temple and given to the temple treasurer, as decreed by Mettius Modestus, governor of Lycia and Pamphylia. A law, receptum argentarii, obliged a bank to pay its clients debts under guarantee. [125] [126] [127] [128]

Cassius Dio advocated the establishment of a state bank, funded by the sale of all the properties owned at the time by the state. [129]

In the 4th century monopolies existed in Byzantium and in the city of Olbia in Sardinia. [130] [131]

The Roman empire at some time formalized the administrative aspect of banking and instituted greater regulation of financial institutions and financial practices. Charging interest on loans and paying interest on deposits became more highly developed and competitive. The development of Roman banks was limited, however, by the Roman preference for cash transactions. During the reign of the Roman emperor Gallienus (260–268 CE), there was a temporary breakdown of the Roman banking system after the banks rejected the flakes of copper produced by his mints. With the ascent of Christianity, banking became subject to additional restrictions, as the charging of interest was seen as immoral. After the fall of Rome, banking temporarily ended in Europe and was not revived until the time of the crusades. [ citation needed ]

Most early religious systems in the ancient Near East, and the secular codes arising from them, did not forbid usury. These societies regarded inanimate matter as alive, like plants, animals and people, and capable of reproducing itself. Hence if you lent 'food money', or monetary tokens of any kind, it was legitimate to charge interest. [132] Food money in the shape of olives, dates, seeds or animals was lent out as early as c. 5000 BCE, if not earlier. Among the Mesopotamians, Hittites, Phoenicians and Egyptians, interest was legal and often fixed by the state. [133]

Judaism Edit

The Torah and later sections of the Hebrew Bible criticize interest-taking, but interpretations of the Biblical prohibition vary. One common understanding is that Jews are forbidden to charge interest upon loans made to other Jews, but obliged to charge interest on transactions with non-Jews. However, the Hebrew Bible itself gives numerous examples where this provision was evaded.

Deuteronomy 23:19 Thou shalt not lend upon interest to thy brother: interest of money, interest of victuals, interest of any thing that is lent upon interest. Deuteronomy 23:20 Unto a foreigner thou mayest lend upon interest but unto thy brother thou shalt not lend upon interest that the LORD thy God may bless thee in all that thou puttest thy hand unto, in the land whither thou goest in to possess it. [134]

In general, it was seen as advantageous to avoid debt at all, to avoid being bound to someone else. Debt was to be avoided and not used to finance consumption, except when in need. However, laws against usury were among many the prophets condemned the people for breaking. [136]

It was the interpretation that interest could be charged to non-Israelites that would be used in the 14th century for Jews living within Christian societies in Europe to justify lending money for profit. As this conveniently side stepped the rules against usury in both Judaism and Christianity, Christians were not involved in the lending but were still free to take the loans.

Christianity Edit

Originally, the charging of interest, known as usury, was banned by Christian churches. This included charging a fee for the use of money, such as at a bureau de change. However over time the charging of interest became acceptable due to the changing nature of money, the term 'usury' came to be used for interest above the rate allowed by law. [ citation needed ] The notion of "Christian finance" refers to banking and financial activities which came into existence several centuries ago. Whether the activities of the Knights Templar (12th century), Mounts of Piety (appeared in 1462) or the Apostolic Chamber attached directly to the Vatican, a number of operations of a banking nature (money loan, guarantee, etc..) or a financial nature (issuance of securities, investments) is proved, despite the prohibition of usury and the Church distrust against exchange activities (opposed to production activities). [137]

The rise of Protestantism in the 16th century weakened Rome's influence, and its dictates against usury became irrelevant in some areas. That would free up the development of banking in Northern Europe. In the late 18th century, Protestant merchant families began to move into banking to an increasing degree, especially in trading countries such as the United Kingdom (Barings), Germany (Schroders, Berenbergs) and the Netherlands (Hope & Co., Gülcher & Mulder) At the same time, new types of financial activities broadened the scope of banking far beyond its origins. One school of thought attributes Calvinism with setting the stage for the later development of capitalism in northern Europe. [138] In this view, elements of Calvinism represented a revolt against the medieval condemnation of usury and, implicitly, of profit in general. Such a connection was advanced in influential works by R. H. Tawney (1880–1962) and by Max Weber (1864–1920). According to Weber Protestant work ethic was a force behind an unplanned and uncoordinated mass action that influenced the development of capitalism.

Rodney Stark propounds the theory that Christian rationality is the primary driver behind the success of capitalism and the Rise of the West. [139]

Islam Edit

The Quran strictly prohibits lending money on Interest. "O you who have believed, do not consume usury, doubled and multiplied, but fear Allah that you may be successful" (3:130) "and Allah has permitted trade and has forbidden interest" (2:275).

The Quran states that taking interest and making money through unethical means is not only prohibited for Muslims, but used to be prohibited in earlier communities as well. Two verses (Al Quran – 4:160–161) clearly states that "Because of the wrongdoing of the Jews We forbade them good things which were (before) made lawful unto them, and because of their much hindering from Allah's way, And of their taking usury when they were forbidden it, and of their devouring people's wealth by false pretenses, We have prepared for those of them who disbelieve a painful doom."

Riba is forbidden in Islamic economic jurisprudence (fiqh). Islamic jurists discuss two types of riba: an increase in capital with no services provided, which the Qur'an prohibits, and commodity exchanges in unequal quantities, which the Sunnah prohibits trade in promissory notes (e.g. fiat money and derivatives) is forbidden. [ citation needed ]

Despite the prohibition of charging interest, during the 20th century a number of developments took place that would lead to an Islamic banking model where no interest is charged but banks would still operate for profit. This would be done through charging for loans in different ways such as through fees and using method of risk sharing and different ownership models such as leasing.

Banking, in the modern sense of the word, is traceable to medieval and early Renaissance Italy, to rich cities in the north such as Florence, Venice, and Genoa.

Emergence of merchant banks Edit

The original banks were "merchant banks" that Italian grain merchants invented in the Middle Ages. As Lombardy merchants and bankers grew in stature based on the strength of the Lombard plains cereal crops, many displaced Jews fleeing Spanish persecution were attracted to the trade. They brought with them ancient practices from the Middle and Far East silk routes. Originally intended to finance long trading journeys, they applied these methods to finance grain production and trading.

Jews could not hold land in Italy, so they entered the great trading piazzas and halls of Lombardy, alongside local traders, and set up their benches to trade in crops. They had one great advantage over the locals: Christians were strictly forbidden the sin of usury, defined as lending at interest (Islam makes similar condemnations of usury). The Jewish newcomers, on the other hand, could lend to farmers against crops in the field, a high-risk loan at what would have been considered usurious rates by the Church but the Jews were not subject to the Church's dictates. [ citation needed ] In this way they could secure the grain-sale rights against the eventual harvest. They then began to advance payment against the future delivery of grain shipped to distant ports. In both cases they made their profit from the present discount against the future price. This two-handed trade was time-consuming and soon there arose a class of merchants who were trading grain debt instead of grain.

The Jewish trader performed both financing (credit) and underwriting (insurance) functions. Financing took the form of a crop loan at the beginning of the growing season, which allowed a farmer to cultivate (through seeding, growing, weeding, and harvesting) his annual crop. Underwriting in the form of a crop, or commodity, insurance guaranteed the delivery of the crop to its buyer, typically a merchant wholesaler. In addition, traders performed the merchant function by making arrangements to supply the buyer with the crop through alternative sources—grain stores or alternate markets, for instance—in the event of crop failure. He could also keep the farmer (or other commodity producer) in business during a drought or other crop failure, through the issuance of a crop (or commodity) insurance against the hazard of failure of his crop.

Merchant banking progressed from financing trade on one's own behalf to settling trades for others and then to holding deposits for settlement of "billette" or notes written by the people who were still brokering the actual grain. And so the merchant's "benches" (bank is derived from the Italian for bench, banca, as in a counter) in the great grain markets became centres for holding money against a bill (billette, a note, a letter of formal exchange, later a bill of exchange and later still a cheque).

These deposited funds were intended to be held for the settlement of grain trades, but often were used for the bench's own trades in the meantime. The term bankrupt is a corruption of the Italian banca rotta, or broken bench, which is what happened when someone lost his traders' deposits. The expression of "being broke" has a similar etymology.

Crusades Edit

In the 12th century, the need to transfer large sums of money to finance the Crusades stimulated the re-emergence of banking in western Europe. In 1162, Henry II of England levied a tax to support the crusades—the first of a series of taxes levied by Henry over the years with the same objective. The Templars and Hospitallers acted as Henry's bankers in the Holy Land. The Templars' far-flung, large land holdings across Europe also emerged in the 1100–1300 time frame as the beginning of Europe-wide banking, as their practice was to take in local currency, for which a demand note would be given that would be good at any of their castles across Europe, allowing movement of money without the usual risk of robbery while traveling.

Discounting of interest Edit

A sensible manner of discounting interest to the depositors against what could be earned by employing their money in the trade of the bench soon developed in short, selling an "interest" to them in a specific trade, thus overcoming the usury objection. Once again this merely developed what was an ancient method of financing long-distance transport of goods.

Medieval trade fairs, such as the one in Hamburg, contributed to the growth of banking [ when? ] in a curious way: moneychangers issued documents redeemable at other fairs, in exchange for hard currency. These documents could be cashed at another fair in a different country or at a future fair in the same location. If redeemable at a future date, they would often be discounted by an amount comparable to a rate of interest. Eventually, [ when? ] these documents evolved into bills of exchange, which could be redeemed at any office of the issuing banker. These bills made it possible to transfer large sums of money without the complications of hauling large chests of gold and hiring armed guards to protect the gold from thieves.

Foreign exchange contracts Edit

In 1156, in Genoa, occurred the earliest known foreign exchange contract. Two brothers borrowed 115 Genoese pounds and agreed to reimburse the bank's agents in Constantinople the sum of 460 bezants one month after their arrival in that city. [ citation needed ] In the following century the use of such contracts grew rapidly, particularly since profits from time differences were seen as not infringing canon laws against usury.

Italian bankers Edit

The first bank was established in Venice with guarantee from the State in 1157. [83] [140] [141] According to Macardy this was due to the commercial agency of the Venetians, acting in the interest of the Crusaders of Pope Urban the Second. [142] [143] The reason is given elsewhere as due to costs of the expansion of the empire under Doge Vitale II Michiel, and to relieve the subsequent financial burden on the republic [83] "a forced loan" was made necessary. To this end the Chamber of Loans was created to manage the affairs of the forced loan and loans' repayment at four percent interest. [144] With changes in the enterprises of the Chamber, firstly by commencing the of use of discounting [145] exchanges and later by the receipt of deposits, [146] the functioning of the organisation developed into The Bank of Venice, with an initial capital of 5,000,000 ducats. [147] In any case, banking practice proper began in the mid-parts of the 12th century, [148] and continued until the bank was caused to cease to operate during the French invasion of 1797. The bank was the first national bank to have been established within the boundaries of Europe. [144]

There were banking failures from 1255 to 1262. [149]

In the middle of the 13th century, groups of Italian Christians, particularly the Cahorsins and Lombards, invented legal fictions to get around the ban on Christian usury [150] for example, one method of effecting a loan with interest was to offer money without interest, but also require that the loan be insured against possible loss or injury, and/or delays in repayment (see contractum trinius). [150] The Christians affecting these legal fictions became known as the pope's usurers, and reduced the importance of the Jews to European monarchs. [150] Later in the Middle Ages, a distinction evolved between things that were consumable (such as food and fuel) and those that were not, with usury permitted on loans that involved the latter. [150]

The most powerful banking families came from Florence, including the Acciaiuoli, Mozzi, [151] Bardi and Peruzzi families, which established branches in many other parts of Europe. [1] Probably the most famous Italian bank was the Medici bank, set up by Giovanni di Bicci de' Medici in 1397 [2] and continuing until 1494. [152] (Banca Monte dei Paschi di Siena S.p.A. (BMPS) Italy, is in fact the oldest banking organisation to have surviving banking-operations, or services).

It was the Italian bankers that would take their place and by 1327, Avignon had 43 branches of Italian banking houses. In 1347, Edward III of England defaulted on loans. Later there was the bankruptcy of the Bardi (1343 [151] ) and Peruzzi (1346 [151] ). The accompanying growth of Italian banking in France was the start of the Lombard moneychangers in Europe, who moved from city to city along the busy pilgrim routes important for trade. Key cities in this period were Cahors, the birthplace of Pope John XXII, and Figeac.

By the later Middle Ages, Christian Merchants who lent money with interest were without opposition, and the Jews lost their privileged position as money-lenders [150]

After 1400, political forces did in fact somewhat turn against the methods of the Italian free enterprise bankers, In 1401 King Martin I of Aragon had some of these bankers expelled. In 1403, Henry IV of England prohibited them from taking profits in any way in his kingdom. In 1409, Flanders imprisoned and then expelled Genoese bankers. In 1410, all Italian merchants were expelled from Paris. In 1407, the Bank of Saint George, [153] the first state-bank of deposit, [108] [154] was founded in Genoa and was to dominate business in the Mediterranean. [108]

Italy Edit

Between 1527 and 1572 a number of important banking family groups arose, such as the Grimaldi, Spinola and Pallavicino families, who were especially influential and wealthy, the Doria, although perhaps less influential, and the Pinelli and the Lomellini. [155] [156]

Spain and the Ottoman Empire Edit

In 1401 the magistrates of Barcelona, then the capital of the Principality of Catalonia, established in the city the first replication of the Venetian model of exchange and deposit, Taula de canvi – the Table of Exchange, considered to be the first public bank of Europe. [147] [157] [158]

Halil Inalcik suggests that, in the 16th century, Marrano Jews (Doña Gracia from House of Mendes) fleeing from Iberia introduced the techniques of European capitalism, banking and even the mercantilist concept of state economy to the Ottoman Empire. [159] In the 16th century, the leading financiers in Istanbul were Greeks and Jews. Many of the Jewish financiers were Marranos who had fled from Iberia during the period leading up to the expulsion of Jews from Spain. Some of these families brought great fortunes with them. [160] The most notable of the Jewish banking families in the 16th-century Ottoman Empire was the Marrano banking house of Mendes, which moved to Istanbul in 1552, under the protection of Sultan Suleyman the Magnificent. When Alvaro Mendes arrived in Istanbul in 1588, he is reported to have brought with him 85,000 gold ducats. [161] The Mendès family soon acquired a dominating position in the state finances of the Ottoman Empire and in commerce with Europe. [162]

They thrived in Baghdad during the 18th and 19th centuries under Ottoman rule, performing critical commercial functions such as moneylending and banking. [163] Like the Armenians, the Jews could engage in necessary commercial activities, such as moneylending and banking, that were proscribed for Muslims under Islamic law.

Court Jew Edit

Court Jews were Jewish bankers or businessmen who lent money and handled the finances of some of the Christian European noble houses, primarily in the 17th and 18th centuries. [164] Court Jews were precursors to the modern financier or Secretary of the Treasury. [164] Their jobs included raising revenues by tax farming, negotiating loans, master of the mint, creating new sources for revenue, floating debentures, devising new taxes. and supplying the military. [164] [165] In addition, the Court Jew acted as personal bankers for nobility: he raised money to cover the noble's personal diplomacy and his extravagances. [165]

Court Jews were skilled administrators and businessmen who received privileges in return for their services. They were most commonly found in Germany, Holland, and Austria, but also in Denmark, England, Hungary, Italy, Poland, Lithuania, Portugal, and Spain. [166] [167] According to Dimont, virtually every duchy, principality, and palatinate in the Holy Roman Empire had a Court Jew. [164]

Germany Edit

In the southern German realm, two great banking families emerged in the 15th century, the Fuggers and the Welsers. They came to control much of the European economy and to dominate international high finance in the 16th century. [168] [169] [170] The Fuggers built the first German social housing area for the poor in Augsburg, the Fuggerei. It still exists, but not the original Fugger Bank which lasted from 1486 to 1647.

Dutch bankers played a central role in establishing banking in the Northern German city states. Berenberg Bank is the oldest bank in Germany and the world's second oldest, established in 1590 by Dutch brothers Hans and Paul Berenberg in Hamburg. The bank is still owned by the Berenberg dynasty. [171]

Holland Edit

In the 16th and 17th century, precious metals from the New World, Gold Coast, Japan and other locales were being imported into Europe, with corresponding price increases. Thanks to the free coinage, [ clarification needed ] the Bank of Amsterdam, and the heightened trade and commerce, the Netherlands attracted even more coin and bullion to be deposited in their banks. The concepts of Fractional-reserve banking and payment systems were further developed and spread to England and elsewhere. [172]

England Edit

In the City of London there were no banking houses operating in a manner recognized as so today until the 17th century, [173] [174] although the London Royal Exchange was established in 1565.

By the end of the 16th century and during the 17th, the traditional banking functions of accepting deposits, moneylending, money changing, and transferring funds were combined with the issuance of bank debt that served as a substitute for gold and silver coins.

New banking practices promoted commercial and industrial growth by providing a safe and convenient means of payment and a money supply more responsive to commercial needs, as well as by "discounting" business debt. By the end of the 17th century, banking was also becoming important for the funding requirements of the combative European states. This would lead on to government regulations and the first central banks. The success of the new banking techniques and practices in Amsterdam and London helped spread the concepts and ideas elsewhere in Europe.

Goldsmiths of London Edit

Modern banking practice, including fractional reserve banking and the issue of banknotes, emerged in the 17th century. At the time, wealthy merchants began to store their gold with the goldsmiths of London, who possessed private vaults and charged a fee for their service. In exchange for each deposit of precious metal, the goldsmiths issued receipts certifying the quantity and purity of the metal they held as a bailee these receipts could not be assigned, only the original depositor could collect the stored goods.

Gradually the goldsmiths began to lend the money out on behalf of the depositor, which led to the development of modern banking practices promissory notes (which evolved into banknotes) were issued for money deposited as a loan to the goldsmith. [175]

These practices created a new kind of "money" that was actually debt, that is, goldsmiths' debt rather than silver or gold coin, a commodity that had been regulated and controlled by the monarchy. This development required the acceptance in trade of the goldsmiths' promissory notes, payable on demand. Acceptance in turn required a general belief that coin would be available and a fractional reserve normally served this purpose. Acceptance also required that the holders of debt be able to legally enforce an unconditional right to payment it required that the notes (as well as drafts) be negotiable instruments. The concept of negotiability had emerged in fits and starts in European money markets, but it was well developed by the 17th century. Nevertheless, an act of Parliament was required in the early 18th century (1704) to overrule court decisions holding that the goldsmiths' notes, despite the "customs of merchants", were not negotiable. [176]

The modern bank Edit

In 1695, the Bank of England became one of the first banks to issue banknotes, the first being the short-lived banknotes issued by Stockholms Banco in 1661. [177] [178] Initially, these were hand-written and issued on deposit or as a loan, and promised to pay the bearer the value of the note on demand in specie. By 1745, standardized printed notes ranging from £20 to £1,000 were being issued. Fully printed notes that didn't require the name of the payee and the cashier's signature first appeared in 1855. [179]

In the 18th century, services offered by banks increased. Clearing facilities, security investments, cheques and overdraft protections were introduced. Cheques had been used since the 1600s in England and banks settled payments by direct courier to the issuing bank. Around 1770, they began meeting in a central location, and by the 1800s a dedicated space was established, known as a bankers' clearing house. The method used by the London clearing house involved each bank paying cash to an inspector and then being paid cash by the inspector at the end of each day. The first overdraft facility was set up in 1728 by the Royal Bank of Scotland. [180]

The number of banks increased during the Industrial Revolution and the growing international trade, especially in London. At the same time, new types of financial activities broadened the scope of banking. The merchant-banking families dealt in everything from underwriting bonds to originating foreign loans. These new "merchant banks" facilitated trade growth, profiting from England's emerging dominance in seaborne shipping. Two immigrant families, Rothschild and Baring, established merchant banking firms in London in the late 18th century and came to dominate world banking in the next century.

A great impetus to country banking came in 1797 when, with England threatened by war, the Bank of England suspended cash payments. A handful of Frenchmen landed in Pembrokeshire, causing a panic. Shortly after this incident, Parliament authorised the Bank of England and country bankers to issue notes of low denomination.

Chinese banking Edit

During the Qing dynasty, the private nationwide financial system in China was first developed by the Shanxi merchants, with the creation of so-called "draft banks". The first draft bank Rishengchang was created around 1823 in Pingyao. Some large draft banks had branches in Russia, Mongolia and Japan to facilitate international trade. Throughout the 19th century, the central Shanxi region became the de facto financial centre of Qing China.

With the fall of the Qing dynasty, the financial centers gradually shifted to Shanghai, with western-style modern banks flourishing. Today, the financial centres in China today are Hong Kong, Beijing, Shanghai and Shenzhen.

Japanese banking Edit

In 1868, the Meiji government attempted to formulate a functioning banking system, which continued until some time during 1881. They emulated French models. The Imperial mint began using imported machines from Britain in the early years of the Meiji period. [181] [182]

Masayoshi Matsukata was a formative figure of a later banking initiative. [181]

Development of central banking Edit

The Bank of Amsterdam became a model for the functioning of a bank in the capacity of monetary exchange and started the development of central banks. [183] An early central bank was the Sveriges Riksbank, established in 1668, although this was short-lived. [184]

In England in the 1690s, public funds were in short supply and were needed to finance the ongoing conflict with France. The credit of William III's government was so low in London that it was impossible for it to borrow the £1,200,000 (at 8 per cent) that the government wanted. In order to induce subscription to the loan, the subscribers were to be incorporated by the name of the Governor and Company of the Bank of England. The bank was given exclusive possession of the government's balances, and was the only limited-liability corporation allowed to issue banknotes. [185] The lenders would give the government cash (bullion) and also issue notes against the government bonds, which can be lent again. The £1.2M was raised in 12 days half of this was used to rebuild the Navy. The establishment of the Bank of England, the model on which most modern central banks have been based on, was devised by Charles Montagu, 1st Earl of Halifax, in 1694, to the plan which had been proposed by William Paterson three years before, but had not been acted upon. [186] He proposed a loan of £1.2M to the government in return the subscribers would be incorporated as The Governor and Company of the Bank of England with long-term banking privileges including the issue of notes. The Royal Charter was granted on 27 July through the passage of the Tonnage Act 1694. [187]

Although the Bank was originally a private institution, by the end of the 18th century it was increasingly being regarded as a public authority with civic responsibility toward the upkeep of a healthy financial system. The currency crisis of 1797, caused by panicked depositors withdrawing from the Bank led to the government suspending convertibility of notes into specie payment. The bank was soon accused by the bullionists of causing the exchange rate to fall from over issuing banknotes, a charge which the Bank denied. Nevertheless, it was clear that the Bank was being treated as an organ of the state.

Henry Thornton, a merchant banker and monetary theorist has been described as the father of the modern central bank. An opponent of the real bills doctrine, he was a defender of the bullionist position and a significant figure in monetary theory, his process of monetary expansion anticipating the theories of Knut Wicksell regarding the "cumulative process which restates the Quantity Theory in a theoretically coherent form". As a response 1797 currency crisis, Thornton wrote in 1802 An Enquiry into the Nature and Effects of the Paper Credit of Great Britain, in which he argued that the increase in paper credit did not cause the crisis. The book also gives a detailed account of the British monetary system as well as a detailed examination of the ways in which the Bank of England should act to counteract fluctuations in the value of the pound. [188]

Until the mid-nineteenth century, commercial banks were able to issue their own banknotes, and notes issued by provincial banking companies were commonly in circulation. [189] Many consider the origins of the central bank to lie with the passage of the Bank Charter Act of 1844. [190] Under the 1844 Act, bullionism was institutionalized in Britain, [191] creating a ratio between the gold reserves held by the Bank of England and the notes that the Bank could issue. [192] The Act also placed strict curbs on the issuance of notes by the country banks. [192]

The Bank accepted the role of 'lender of last resort' in the 1870s after criticism of its lacklustre response to the Overend-Gurney crisis. The journalist Walter Bagehot wrote an influential work on the subject Lombard Street: A Description of the Money Market, in which he advocated for the Bank to officially become a lender of last resort during a credit crunch (sometimes referred to as "Bagehot's dictum").

Central banks were established in many European countries during the 19th century. The War of the Second Coalition led to the creation of the Banque de France in 1800, in an effort to improve the public financing of the war. The US Federal Reserve was created by the U.S. Congress through the passing of The Federal Reserve Act in 1913. Australia established its first central bank in 1920, Colombia in 1923, Mexico and Chile in 1925 and Canada and New Zealand in the aftermath of the Great Depression in 1934. By 1935, the only significant independent nation that did not possess a central bank was Brazil, which subsequently developed a precursor thereto in 1945 and the present central bank twenty years later. Having gained independence, African and Asian countries also established central banks or monetary union.

Rothschilds Edit

The Rothschild family pioneered international finance in the early 19th century. The family provided loans to the Bank of England and purchased government bonds in the stock markets. [193] Their wealth has been estimated to possibly be the most in modern history. [194] In 1804, Nathan Mayer Rothschild began to deal on the London stock exchange in financial instruments such as foreign bills and government securities. From 1809 Rothschild began to deal in gold bullion, and developed this as a cornerstone of his business. From 1811 on, in negotiation with Commissary-General John Charles Herries, he undertook to transfer money to pay Wellington's troops, on campaign in Portugal and Spain against Napoleon, and later to make subsidy payments to British allies when these organized new troops after Napoleon's disastrous Russian campaign. His four brothers helped co-ordinate activities across the continent, and the family developed a network of agents, shippers and couriers to transport gold—and information—across Europe. This private intelligence service enabled Nathan to receive in London the news of Wellington's victory at the Battle of Waterloo a full day ahead of the government's official messengers. [195]

The Rothschild family were instrumental in supporting railway systems across the world and in complex government financing for projects such as the Suez Canal. The family bought up a large proportion of the property in Mayfair, London. Major businesses directly founded by Rothschild family capital include Alliance Assurance (1824) (now Royal & SunAlliance) Chemin de Fer du Nord (1845) Rio Tinto Group (1873) Société Le Nickel (1880) (now Eramet) and Imétal (1962) (now Imerys). The Rothschilds financed the founding of De Beers, as well as Cecil Rhodes on his expeditions in Africa and the creation of the colony of Rhodesia. [196]

The Japanese government approached the London and Paris families for funding during the Russo-Japanese War. The London consortium's issue of Japanese war bonds would total £11.5 million (at 1907 currency rates). [197]

From 1919 to 2004 the Rothschilds' Bank in London played a role as place of the gold fixing.

Napoleonic wars and Paris Edit

Napoleon III had the goal of overtaking London to make Paris the premier financial center of the world, but the war in 1870 reduced the range of Parisian financial influence. [198] Paris had emerged as an international center of finance in the mid-19th century second only to London. [199] It had a strong national bank and numerous aggressive private banks that financed projects all across Europe and the expanding French Empire.

One key development was setting up one of the main branches of the Rothschild family. In 1812, James Mayer Rothschild arrived in Paris from Frankfurt, and set up the bank "De Rothschild Frères". [200] This bank funded Napoleon's return from Elba and became one of the leading banks in European finance. The Rothschild banking family of France funded France's major wars and colonial expansion. [201] The Banque de France, founded in 1796 helped resolve the financial crisis of 1848 and emerged as a powerful central bank. The Comptoir National d'Escompte de Paris (CNEP) was established during the financial crisis and the republican revolution of 1848. Its innovations included both private and public sources in funding large projects, and the creation of a network of local offices to reach a much larger pool of depositors.

Building societies Edit

Building societies were established as financial institutions owned by its members as a mutual organization. The origins of the building society as an institution lie in late-18th century Birmingham – a town which was undergoing rapid economic and physical expansion driven by a multiplicity of small metalworking firms, whose many highly skilled and prosperous owners readily invested in property. [202]

Many of the early building societies were based in taverns or coffeehouses, which had become the focus for a network of clubs and societies for co-operation and the exchange of ideas among Birmingham's highly active citizenry as part of the movement known as the Midlands Enlightenment. [203] The first building society to be established was Ketley's Building Society, founded by Richard Ketley, the landlord of the Golden Cross inn, in 1775. [204]

Members of Ketley's society paid a monthly subscription to a central pool of funds which was used to finance the building of houses for members, which in turn acted as collateral to attract further funding to the society, enabling further construction. [205] [206] The first outside the English Midlands was established in Leeds in 1785. [207]

Mutual savings bank Edit

Mutual savings banks also emerged at that time, as financial institutions chartered by government, without capital stock, and owned by its members who subscribe to a common fund. The institution most frequently identified as the first modern savings bank was the "Savings and Friendly Society" organized by the Reverend Henry Duncan in 1810, in Ruthwell, Scotland. Rev. Duncan established the small bank in order to encourage his working class congregation to develop thrift.

Another precursor to the modern savings bank originated in Germany, with Franz Hermann Schulze-Delitzsch and Friedrich Wilhelm Raiffeisen who developed cooperative banking models that led on to the credit union movement. The traditional banks had viewed poor and rural communities as unbankable because of very small, seasonal flows of cash and very limited human resources. In the history of credit unions the concepts of cooperative banking spread through northern Europe and onto the US at the turn of the 20th century under a wide range of different names.

Postal savings system Edit

To provide depositors who did not have access to banks a safe, convenient method to save money and to promote saving among the poor, the postal savings system was introduced in Great Britain in 1861. It was vigorously supported by William Ewart Gladstone, then Chancellor of the Exchequer, who saw it as a cheap way to finance the public debt. At the time, banks were mainly in the cities and largely catered to wealthy customers. Rural citizens and the poor had no choice but to keep their funds at home or on their persons. The original Post Office Savings Bank was limited to deposits of £30 a year with a maximum balance of £150. Interest was paid at the rate of two and one-half percent per year on whole pounds in the account.

Similar institutions were created in a number of different countries in Europe and North America. One example was in 1881 the Dutch government created the Rijkspostspaarbank (State post savings bank), a postal savings system to encourage workers to start saving. Four decades later they added the Postcheque and Girodienst services allowing working families to make payments via post offices in the Netherlands.

The first decade of the 20th century saw the Panic of 1907 in the US, which led to numerous runs on banks and became known as the bankers panic.

Great Depression Edit

During the Crash of 1929 preceding the Great Depression, margin requirements were only 10%. [208] Brokerage firms, in other words, would lend $9 for every $1 an investor had deposited. When the market fell, brokers called in these loans, which could not be paid back. Banks began to fail as debtors defaulted on debt and depositors attempted to withdraw their deposits en masse, triggering multiple bank runs. Government guarantees and Federal Reserve banking regulations to prevent such panics were ineffective or not used. Bank failures led to the loss of billions of dollars in assets. [209] Outstanding debts became heavier, because prices and incomes fell by 20–50% but the debts remained at the same dollar amount. After the panic of 1929, and during the first 10 months of 1930, 744 US banks failed. By April 1933, around $7 billion in deposits had been frozen in failed banks or those left unlicensed after the March Bank Holiday. [210]

Bank failures snowballed as desperate bankers called in loans that borrowers did not have time or money to repay. With future profits looking poor, capital investment and construction slowed or completely ceased. In the face of bad loans and worsening future prospects, the surviving banks became even more conservative in their lending. [209] Banks built up their capital reserves and made fewer loans, which intensified deflationary pressures. A vicious cycle developed and the downward spiral accelerated. In all, over 9,000 banks failed during the 1930s.

In response, many countries significantly increased financial regulation. The U.S. established the Securities and Exchange Commission in 1933, and passed the Glass–Steagall Act, which separated investment banking and commercial banking. This was to avoid more risky investment banking activities from ever again causing commercial bank failures.

World Bank and the development of payment technology Edit

During the post second world war period and with the introduction of the Bretton Woods system in 1944, two organizations were created: the International Monetary Fund (IMF) and the World Bank. [211] Encouraged by these institutions, commercial banks started to lend to sovereign states in the third world. This was at the same time as inflation started to rise in the west. The Gold standard was eventually abandoned in 1971 and a number of the banks were caught out and became bankrupt due to third world country debt defaults.

This was also a time of increasing use of technology in retail banking. In 1959, banks agreed on a standard for machine readable characters (MICR) that was patented in the United States for use with cheques, which led to the first automated reader-sorter machines. In the 1960s, the first Automated Teller Machines (ATM) or Cash machines were developed and first machines started to appear by the end of the decade. [212] Banks started to become heavy investors in computer technology to automate much of the manual processing, which began a shift by banks from large clerical staffs to new automated systems. By the 1970s the first payment systems started to develop that would lead to electronic payment systems for both international and domestic payments. The international SWIFT payment network was established in 1973 and domestic payment systems were developed around the world by banks working together with governments. [213]

Deregulation and globalization Edit

Global banking and capital market services proliferated during the 1980s after deregulation of financial markets in a number of countries. The 1986 'Big Bang' in London allowing banks to access capital markets in new ways, which led to significant changes to the way banks operated and accessed capital. It also started a trend where retail banks started to acquire investment banks and stock brokers creating universal banks that offered a wide range of banking services. [214] The trend also spread to the US after much of the Glass–Steagall Act was repealed in 1999 (during the Clinton Administration), this saw US retail banks embark on big rounds of mergers and acquisitions and also engage in investment banking activities. [215]

Financial services continued to grow through the 1980s and 1990s as a result of a great increase in demand from companies, governments, and financial institutions, but also because financial market conditions were buoyant and, on the whole, bullish. Interest rates in the United States declined from about 15% for two-year U.S. Treasury notes to about 5% during the 20-year period, and financial assets grew then at a rate approximately twice the rate of the world economy.

This period saw a significant internationalization of financial markets. The increase of U.S. Foreign investments from Japan not only provided the funds to corporations in the U.S., but also helped finance the federal government.

The dominance of U.S. financial markets was disappearing and there was an increasing interest in foreign stocks. The extraordinary growth of foreign financial markets results from both large increases in the pool of savings in foreign countries, such as Japan, and, especially, the deregulation of foreign financial markets, which enabled them to expand their activities. Thus, American corporations and banks started seeking investment opportunities abroad, prompting the development in the U.S. of mutual funds specializing in trading in foreign stock markets. [ citation needed ]

Such growing internationalization and opportunity in financial services changed the competitive landscape, as now many banks would demonstrate a preference for the "universal banking" model prevalent in Europe. Universal banks are free to engage in all forms of financial services, make investments in client companies, and function as much as possible as a "one-stop" supplier of both retail and wholesale financial services. [216]

The early 2000s were marked by consolidation of existing banks and entrance into the market of other financial intermediaries: non-bank financial institution. Large corporate players were beginning to find their way into the financial service community, offering competition to established banks. The main services offered included insurance, pension, mutual, money market and hedge funds, loans and credits and securities. Indeed, by the end of 2001 the market capitalisation of the world's 15 largest financial services providers included four non-banks. [ citation needed ]

The first decade of the 21st century saw the culmination of the technical innovation in banking over the previous 30 years and saw a major shift away from traditional banking to internet banking. Starting in 2015 developments such as open banking made it easier for third parties to access bank transaction data and introduced standard API and security models.

The process of financial innovation also advanced enormously in the first few decades of the 21st century, increasing the importance and profitability of nonbank finance. Such profitability priorly restricted to the non-banking industry, has prompted the Office of the Comptroller of the Currency (OCC) to encourage banks to explore other financial instruments, diversifying banks' business as well as improving banking economic health. Hence, as the distinct financial instruments are being explored and adopted by both the banking and non-banking industries, the distinction between different financial institutions is gradually vanishing. For example, in 2020, the OCC muddled the distinction between traditional banking and the cryptocurrency ecosystem when it published a number of interpretive letters clarifying national banks' ability to custody cryptocurrency and provide banking services to cryptocurrency companies, [217] as well as use blockchain innovations like stablecoins as settlement infrastructure. [218] In addition, in 2021, the OCC granted its first federal banking charter to a cryptocurrency firm, [219] further blurring the lines between traditional banks and different types of financial institutions.

2007–2008 financial crisis Edit

The financial crisis of 2007–2008 caused significant stress on banks around the world. The failure of a large number of major banks resulted in government bail-outs. The collapse and fire sale of Bear Stearns to JPMorgan Chase in March 2008 and the collapse of Lehman Brothers in September that same year led to a credit crunch and global banking crises. In response governments around the world bailed-out, nationalised or arranged fire sales for a large number of major banks. Starting with the Irish government on 29 September 2008, [220] governments around the world provided wholesale guarantees to underwriting banks to avoid panic of systemic failure to the whole banking system. These events spawned the term 'too big to fail' and resulted in a lot of discussion about the moral hazard of these actions.


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