th bows and pikes, made the governments of Europe
need money more than ever before. They made great loans at home and
abroad, and it was the interest on these that expanded the banking
business until it became an international power. Well before the
sixteenth century men had made a fine art of receiving deposits,
loaning capital and performing other financial operations, but it was
not until the late fifteenth century that the bankers reaped the full
reward of their skill and of the new opportunities. The three balls in
the arms of the Medici testify to the heights to which a profession,
once humble, might raise its experts. In Italy the science of
accounting, [Sidenote: Science of accounting] or of double-entry
bookkeeping, originated; it was slowly adopted in other lands. The
first English work on the subject is that by John Gouge in 1543,
entitled: "A Profitable Treatyce called the Instrument or Boke to learn
to know the good order of the keeping of the famouse reconnynge, called
in Latin, Dare et Habere, and, in Englyshe, Debitor and Creditor." It
was in Italy that modern technique of clearing bills was developed; the
simple system by which balances are settled not by full payment of each
debt in money, but by comparing {520} the paper certificates of
indebtedness. This immense saving, as developed by the Genoese, was
soon extended from their own city to the whole of Northern Italy, so
that the bankers would meet several times a year in the first
international clearing-house. From Genoa the same system was then
applied to distant cities, with great profit, even more in security
than in saving of capital. If bills payable at Antwerp were bought at
Genoa, they were paid at Antwerp by selling bills on Lisbon, perhaps,
and these in turn by selling exchange on Genoa. These processes seem
simple and are now universal, but how vastly they facilitated the
development of banking and business when first discovered can hardly be
over-estimated.

From the improvement of exchange the Genoese soon proceeded to
arbitrage, a transaction more profitable and more socially useful at
that time when poor communications made the differences in prices
between bills of exchange, bullion, coins, stocks and bonds in distant
markets more considerable than they are now. The Genoese bankers also
invented the first substitutes for money in the form of circulating
notes. In all this, and in other ways, they made enormous profits that