After what happened, the Goldsmith began increasing the number of people entering their gold to be converted into cash, as good entrepreneurs, the idea of having in his hands the possible creation of money was really impressive.
The villagers just introduced their money to this «savings account» and then withdrew their check or bill which was valid when negotiating.
The business of banks, working with others’ money:
Goldsmith did not leave behind his begins with the loans, thus having much money in their safes, he continuated with the business, exploiting the fact that he created the money for people, which backed him with gold that people also gave him.
As noted by the naked eye, it was all a vicious circle where the banker always came out ahead, and poor villagers work with «fake» money, which helped to support Goldsmith with his gold.
The begining of the banks was like that, working with money backed by gold, where the peasant robbed himself and was not even aware, surely if you’re reading this whole story until here you may be thinking «how fools they are :D», but I tell you that we are even more stupid today.
Continuation: Interest for savers and borrowers