Formation and development of the banking system in Galicia on the eve of joining the Austrian monarchy in the second half of the 18th century

Abstract

The article analyzes the peculiarities of the formation and development of the banking system in Galicia on the eve of joining Austria in the second half of the 18th century. It is noted that the beginnings of banking in Galicia date back to the Middle Ages, in particular, during its stay as part of the Polish-Lithuanian Commonwealth. The banking system of Galicia as part of the Polish-Lithuanian Commonwealth was formed and functioned in accordance with the general trends in the development of banking in Europe.
 It has been established that the first banks in the current sense of the word began to appear in the Polish-Lithuanian Commonwealth with the development of urban centers and crafts. Banking houses became more and more important every decade. They granted loans to Polish kings and cities (it is known that they granted loans to the city of Lviv), acted as intermediaries in obtaining loans abroad, in in Viennese banks. Banking activity in Poland since the Middle Ages has been carried out by merchant families, the most prominent of which were Schwartz, Boner, Montelupi, Volchek, Jezyfowicz. Gradually, banking business in Galicia as part of the Polish-Lithuanian Commonwealth began to separate from the merchants. People began to appear who were called «bankers» and for whom credit business was the main occupation. The first banker in Poland who gave himself this name was Adam Zimman.
 It is shown that in the 18th century several banks were established in Galicia, which acted as commercial institutions and mostly served trade and industry. In Galicia, loans to private individuals in the XVII-XVIII centuries. provided by owners of large capital. It is known that in the middle of the XVII century. the Lviv burgher brotherhood at the Dormition Church helped its members with interest-free loans. At the same time, benevolent credit institutions began to appear, similar to the European Pious Banks (Montes pietatis). Pious banks were established by ecclesiastical organizations, often Jesuits, to provide loans to the population at comparatively lower interest rates than individual private individuals. These banks were part of the church’s fight against usury. They were usually supported by donations and contributions from church organizations and wealthy people. The money received from these sources was used to provide loans to the public against collateral. In many cases, pious banks refused to charge interest on loans and even forgave debts if the borrower was unable to repay the loan. Pious banks were popular in the Polish-Lithuanian Commonwealth, especially among the poorer population who could not afford the high interest rates charged by private financial institutions or individuals. However, over time, religious banks became less popular due to increased competition from private banks, as well as a decrease in the interest of church organizations in supporting them.
 It is argued that in Galicia as part of the Polish-Lithuanian Commonwealth in the 17th century. banking was born. The first bankers were rich burghers, such as the German Valerian Alembek, the Greek Konstantin Korniakt, or the Campian family. Prototypes of classical banks in the current sense of the word were credit societies or so-called pious banks that performed lending functions. They first specialized in mortgage loans and short-term loans. The Armenian Pious Bank became the first institution of such a plan in Lviv. Simultaneously with the development of trade and industry in the 18th century. banking institutions began to acquire more and more importance. They accepted deposits primarily from larger landowners and provided loans. Banking houses even provided loans to Polish kings and cities, including Lviv. Despite the intensification of banking activity in the 18th century, the banking system in Galicia as part of the Polish-Lithuanian Commonwealth was poorly developed, and legal regulation was mostly related to issues of interest on loans granted.