Banks
                                                             By: Andrea

"Happiness is not in the mere possession of money;   it lies in the joy of achievement, in the thrill of creative effort."                                                                                                                                         Franklin Delano Roosevelt
                                                                                                                                                                                    

                         The earliest record of banking is in the year 1587, in Venice Italy.  The word banking comes from the Italian word banco, which means bench.  Early Italian bankers used to do their business on the street at a bench.  Slowly, banking activity began to spread throughout Europe.  In the 1600's in England, goldsmiths made things out of gold and silver and they kept their metals in strong vaults.   People began to bring their money to the goldsmiths to be stored in their vaults for safety.  The goldsmiths gave receipts to the people for their putting their money in the vaults.  These receipts were easier to carry than coins, so the people began to use them as money.  The goldsmiths gradually became bankers. 

     Have you ever wondered what happens to your money once you've put it in the bank?  It's very simple really!   Banks were created to protect our money and put it to use for us.  They use the money they receive to help our communities.  Banks also provide checking and savings accounts, which make it easier for us to pay bills and handle business transactions.  We put money in the bank, so that we can use it in the future.   If Bill is paid each week for his work, he probably won't want to spend it all the first day he receives it.  It probably would not be safe for him to carry it around in his wallet, so he might decide to put some of his money in the bank where it will be safe.    When you put money in a bank you are called a depositor and your money is called a deposit.  When you withdraw, or take money out of the bank, the bank must be prepared to pay you.  The bank keeps a record of the amount of money that you put into or take out of it.  This record is called an account.  There are different types of accounts, but the two that are most used are savings accounts and checking accounts. 

     Once your money is in your account at the bank, it doesn't just sit around doing nothing, it starts goes to work!  Every time you make a deposit,  you are lending your money to the bank.  They will pay you a little bit of interest on your deposit.  Banks combine your money with the money of their other customers so that they can make loans to businesses, governments, individuals and civic organizations.  If the owner of a sporting goods store wants to buy $15,000 dollars worth of sports equipment to sell in his store and he only has $ 7,000 dollars, he can go to the bank and borrow the other $ 8,000.  He will have to fill out an application and the bank will look at it.  If the bank feels that he will repay the loan, they will lend him the money.When he pays back the loan he must pay interest on it.  This is the money the bank charges for giving him the loan.  The bank will spread his payments out for several months or even years to make repayment easier.   Charging money for the use of money is the main way that banks earn income .   Loans are the most important part of banking because they help banks to grow.

                                       
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