| Merchant Banks term is very widely used in Europe | | | | The solution was found to be the accepting of these |
| and refers to their origin as mercantile houses | | | | traders' bills by one of the older well-established firms, |
| specializing in the export of British products, | | | | for a consideration in the form of commission. |
| particularly cotton cloth, and the import of any | | | | Gradually the merchant became a banker specializing |
| products of the countries where they were | | | | in the accepting of bills for other merchants. |
| established. This involved remitting money from one | | | | Afterwards, merchant banks (bankers) started issuing |
| country to another, and the bill of exchange on | | | | foreign bonds for overseas governments who lacked |
| London becomes the means of financing the import | | | | capital. The issue of these bonds was only possible if |
| and export trades. The merchants concerned | | | | the names of famous houses appeared in association |
| became well known as absolutely reliable firms whose | | | | with the issue. The merchant banks (bankers) |
| signature on a bill would make it readily discountable | | | | arranged for a quotation on the London Stock |
| on the money market. | | | | Exchange and handled the issues which were |
| The change to banking developed as the number of | | | | subscribed for by British and overseas investors. |
| firms trading with overseas territories increased. Many | | | | Today the issue of "Eurocurrency" and |
| of these new firms found that they respect and | | | | "Petrocurrency" bonds is again becoming an important |
| trust enjoyed by the well-established houses, so that | | | | activity for merchant banks. |
| their bills of exchange were less readily discounted. | | | | |