This chapter lays out the monetary, financial, and political environment in Amsterdam in the mid-eighteenth century — the high tide of the Bank. The main types of monetary assets within Amsterdam are described, along with the channels by which one monetary asset could be exchanged for another. This chapter also discusses major players in the Amsterdam money markets and their connections to the Bank. The chapter concludes with a discussion of the Bank’s relationship to the City of Amsterdam and fiscal aspects of this relationship.

Banks offered two essential sources of finance to trade and commerce. First, the merchant banks financed trade through the bill of exchange, which banks would discount for exporters so they received payment on shipping the goods. From the middle of the nineteenth century the bill of exchange might be drawn under a letter of credit issued by the importer’s bank and payable on presentation of the shipping documents, notable the bill of lading which gave title to the goods. Second, banks provided working capital to industry – not long-term finance - enabling it to pay wages and the cost of raw materials in anticipation of the sale of finished products in home and export markets. This was done by means of an overdraft on the customer’s account (who could draw up to that amount) or through a short-term loan. Typically, both were repayable on demand. They might be unsecured, or supported by a personal guarantee, but in some cases the customers had to provide collateral. Underpinning the banks’ performance in both areas were sophisticated institutional arrangements such as the bankers’ clearing house and the money markets. All these arrangements operated within a framework of generally supportive law.

The three Vaglianos reached their apogee as an international trading company during the 1860s-1880s. It is during this time that they opened the path of the Greeks to global shipping, and made maritime and commercial transactions on an equal basis with the world’s best; in 1881, in London they had a turnover of about £8 million sterling when Schröders had a turnover of £4 million and Rothschild’s £12 million. This chapter analyzes the functioning of their international trading house in trade, finance, and shipping. During the 1850s-1880s, the Vaglianos became the leading international trading house of the Greek entrepreneurial network. In 1858, following the tremendous profits the House enjoyed after the Crimean War, Panagi Vagliano went to the City of London, a move that proved to be decisive. Their activities in banking and particularly the legal confrontation Vagliano vs. the Bank of England illustrates the importance of the Vagliano Brothers in the City of London and its institutions, and investigates the dynamic interrelationship between the foreign City merchant bankers and the development of financial institutions like the bill of exchange.