Students of Finance & Banking may find this article usefulA survey of the pattern of Bank Evolution and the Business of Banking
Introduction:
Modern economic and financial heritage begins with the coming of democratic capitalism, around the time of Adam Smith (1776). Under this system, the state does not interfere in economic affairs unnecessarily, removes barriers to competition, and in general, does not prevent and discourage any one willing to work hard enough –and who also has access to capital—from becoming a capitalist.
Some hundred years after Adam Smith, England was at the peak of its power. Politically, it ruled 25% of the earth’s surface and population, the British economy was by far the strongest and most developed in the world. The rest of Europe was not all that important. There was, however, some competition from America that fancied itself as rising economic power. Otherwise, the horizon was comparatively free of competition. British industry and British Finance were very secure in their respective positions [Smith and Walter, 2003]
English financial markets had made it all possible according to Walter Bagehot. England’s economic glory was based on the supply and accessibility of capital. In poor countries there were no financial resources any way, and in most European countries money stuck to the aristocrats and land owners and was unavailable to the market .But in England, there was a place in the city of London--- called Lombard Street--- where money could be obtained upon good security or upon good prospects of probable gain [Bagehot, 1873].
By the early 1900s, New Work was beginning to emerge as world’s leading financial centre. During this time Wall Street became an important financial centre. After World War 1, American Prosperity continued, While Europe’s did not. Banks Had a busy time, raising money for corporations, foreign governments and investment companies and making large loans to investors buying securities. Banks were then ‘Universal’, i.e, they were free to participate in commercial banking (lending) and investment banking, which at the time meant the underwriting, Distribution and trading of securities in financial markets. Many of the large banks were also involved in substantial amount of investment business. There was trade to finance all over the world, especially in such mineral-rich areas as Latin America and Australia. There were securities new issues (underwritings) to perform for foreign clients which in the years prior to 1929 crashed. The stock market crash 1992 was a global event --- markets crashed everywhere--- all at the same time, and the volume of foreign selling orders was very high. The Great Depression followed. There were three prominent results from these events.
First were Deposit Insurance System and the glass –Stegall Provision of the Act, Which completely separated commercial banking from securities activities. Second was the depression itself which led to a 30-year period of banking being confirmed to basic, slow-growing deposit-taking and loan making with a limited local market only. Third was the Rising Importance of government in deciding financial matters, especially during the post-year recovery period. There was little for banks or securities firms to do until the late 1950s and early 1960s.
By then, international business had resumed its rigorous expansion and US banks also increased their activities abroad. The Euro-dollar market and Euro-bond market followed this expansion process. Also, the banks and investment banks were also re- attracted to international capital market transactions. Most large businesses are now effectively global, especially financial businesses. Banking and capital market services have proliferated, and numerous new competitors have emerged on the scene many of which are not banks at all. New regulations are constantly being introduced and old ones changed. Telecommunications provides an easy of access to information.
Operational Definition of a Bank:
A simple operational definition of a bank is that: A bank is an institution whose current operations consist in granting loans and receiving deposits from the public. This is the definition regulators use when they decide whether a financial intermediary has to submit to the prevailing prudential regulations for banks. This definition has the merit of insisting on the core activities of banks, namely deposits and loans. It may be noted that many words of this definition are important.
--- The word current is important because most industrial or commercial firms occasionally lend money to their customers (or borrow from their suppliers). Even if it is recurrent, this lending activity called “trade credit” is only complementary to the core activity of these firms.
---The fact that both loans and Deposits are offered is important because it is the combination of lending and borrowing that is typical of commercial banks. Banks finance a significant proportion to their loans through the deposits of public. This is the main explanation of the fragility of banking system and the justification of banking regulation.
--- Finally, the term “public” emphasizes that banks provide unique services( liquidity ansd means of payment) to the general public. However, the public is not, in contrast with professional investors, armed to assess the safety and soundness of financial institutions, to assess whether individuals’ interests are well preserved by banks. Moreover, in the current situation a public good (access to a safe and efficient payment system) is provided by private institutions (commercial banks). These two reasons: protection of depositors and the safety and efficiency of the payment system have traditionally justified public intervention in banking activities [Freixas and Rocket,1999]
The existence of banks is justified by the role they play in the process of resource allocation, and more especially in the allocation of capital. As Merton (1993) states “A well developed smoothly functioning financial system facilitates the efficient life-cycle allocation of household consumption and the efficient allocation of physical capital to its most productive use in the business performed by banks alone. These functions are sufficiently stable to apply generically, from Italy’s Renaissance to today’s world sufficiently stable to apply generically, form Italy’s Renaissance to today’s world [freixas and Rochet, 1999]. Nevertheless, financial market has evolved and financial innovations have emerged at a spectacular rate in the last two decades. In addition, the development of security markets has led to a functional differentiation, with financial markets providing some of the services financial intermediaries used to offer exclusively. Thus, for example, it is as simple today for a firm involved in international trade to hedge exchange rate risk through a future market as through a bank contract. prior to the development of futures markets, one would have tended to think that this was a functional characteristic of bank’s activity.
Today, some economists and bankers draw attention to developmental role of commercial banks. But the “developmental role” might not, prima facie, be seen as a characteristic of purely commercial banks which are historically involved in collection of deposits and provision of working capital. Nevertheless, it is felt that even in the case of such traditional commercial banks the attitude and philosophy of bank management has changed to great extent. The commercial banks are considered an essential instrument of national endeavor. The nature of their lending practices and the channelization of working funds would in themselves influence the pattern of national development. In many developing countries, there is a talk of social obligations of commercial banks.
Commercial banking is changing rapidly. Both the nature of business and the structure of the industry have changed dramatically in the last quarter century. While the economic role of commercial banks have varied little over time, the nature of commercial banks and competing financial institutions is constantly changing. Savings and loans and credit unions, brokerage firms, insurance companies and general stores now offer products and services traditionally associated with commercial banks. Commercial banks, in turn offer a variety of insurance, real estate and investment banking services they were once denied. The term bank today refers as much to the range of services traditionally offered by depository institutions as to the specific type of institution. However, although commercial banks remain the single most important intermediary in most countries, the business they do and the structure of industry is not the same in all countries.
Business of Banking:
According to Paget’s Law of Banking, There is no exhaustive definition of ‘ Bank’ as par common Law. However, the usual characteristics are:
A. The conduct of current accounts;
B. The payment of cheques drawn on banks;
C. The Collection of cheques for customer.
These characteristics, however, are not equivalent to a definition, and these are also not the only characteristics. A ‘bank’ may be better described with reference to its permitted business. Although, traditionally, the main business of banks is acceptance of deposits and lending, the banks have now spread their wings far and wide in to
Many allied and even unrelated activities. These are summarized below: [IIBF, 2005]
A
• Borrowing, raising or taking up of money;
• Drawing, making, accepting, discounting, buying, selling, controlling and dealing in bills of exchange, Hundis, promissory notes, coupons, draft, bills of lading, railway receipts, warrants debentures, certificates, scripts and other instruments and securities whether transferable or negotiable or not;
• Granting and issuing of letters of credit, ‘Traveler’s cheques and circular notes;
• Buying and selling dealing in bullion and specie;
• Buying and selling of foreign exchange;
• Acquiring, holding, issuing on commission, underwriting and dealing in stocks, funds, shares, debentures, debenture stocks bonds and securities and investment of all kinds;
• Purchasing and selling of bonds, scrip’s and other forms of securities on behalf of constituents or others;
• Negotiation on loans or advances;
• Receiving of all kinds of bonds, scrip’s or valuables on deposits or for safe custody or otherwise;
• Providing of safe deposit vaults;
• Collecting and Transmitting of money and securities.
B
1. Acting as agent of government, local authority or any other person and carry on agency business;
2. Contracting for public or private loans and monitoring and issuing the same;
3. Insure, guarantee, underwrite, participating in managing and carrying out of any issue of state, municipal or other loans or of shares, Stock, debentures or debenture stock of companies and lending money for any such purpose of any such issue;
4. Carry out and transact every kind of guarantee and indemnity business;
5. Manage sell and realize any property which may come in its possession in satisfaction of any of its claims;
6. Acquire, hold and deal with any property or any right, title or interest in any such property which may form the security for any loan or advance;
7. Undertake and execute trusts, undertake the administration of estates as executor, trustee or otherwise;
8. Establish, support and aid associations, institutions etc for the benefit of its present employees and may grant money for charitable purpose;
9. Acquire, construct and maintain any building for its own purpose;
10 Do all such things which are incidental or conducive to the promotion or advancement of its business.
11. Do any such business specified by the government as the lawful business of a banking company.
The pattern of Bank Evolution: The Origin of Development of Banking
The evolution of banking exhibits exhibits some fairly clean patterns. Commercial banks, combining payments functions and financial intermediation, have developed from five main types of institution—payment processors (Examples, Medieval money changers English goldsmiths, public banks of deposits); merchant banks ( examples, Florentine banks, English country banks, U.S. private banks); Securities firms (examples Scriveners, industrial and universal banks); near Banks ( examples, Saving banks, Credit unions; and chartered banks.
Payment Processors and merchant banks began with payments functions. But economies of scope led into intermediation. Customers naturally held their liquid reserves with their payments processors and merchant banks as deposits.
The Second evolutionary path began with intermediation and added payment functions. This was the case with securities firms and near banks. Part of business of securities fund is to find investment for the customers. Customers keep funds with them waiting to be invested. Offering Payment Services out of these deposits is a natural extension of their business. Merril Lynch’s CMA is a classic example of this process. Customers keep Funds with them in non- transaction deposits; it is natural to offer these customers transaction services. Recent deregulation, in the United States and elsewhere, has removed the regulatory obstacles to their doing so.
In contrast to these stories of evolution, chartered banks were set up from the very beginning as full fledged fractional reserve banks. Government set them up initially as an instrument of public finance. They used them both to finance direct government expenditure…..often on wars….and to finance government projects and programs. Commercial banks remain to this day important purchasers of government debt.
Referring to historical development of depository institutions we notice that banking institutions existed since the days of the earliest human civilization. Consequently, there evolution has spanned the time that organized societies have inhabited the earth. We are making a very brief reference to this development.
Historical Development of commercial Banks: Goldsmith Bankers
Inconveniences associated with barter ultimately led people to use commodities, particularly gold and silver, as money. Both metals were relatively scarce and highly valued. Both were easy to divide in to units of various sizes so that people could make change.
In the earliest times, people used un-coined gold and silver, known as bullion, to make transactions. But by using bullion people exposed themselves to asymmetric information problems. Such problems arose when one party to a transaction processes information that the other party does not have. On the other hand an adverse selection problem was associated with using gold and silver bullion as money: the individual with the greatest incentive to offer bullion in exchange for goods and services were hazard problem also existed when people used billion in exchange for goods and services were those whose bullion contained the least pure gold or silver. On the other hand moral hazards problem also existed when people used bullion as money. Once two parties to an exchange had reached an agreement on how much bullion will be paid for a good or service, the trader offering the bullion had an incentive to reduce the level of purity of the gold or silver before the exchange took place.
Goldsmiths specialized in reducing the extant of these asymmetric information problems. Parties to a transaction would pay a goldsmith to weigh bullion and to assess its purity. Many goldsmiths would issue the holder of bullion a certificate attesting to the bullion’s weight and gold or silver content. Other goldsmiths went a step further. To provide the the holder of a bullion with ready proof of the bullion’s weight and purity, tjey produced standardized weights of gold or silver that they imprinted with a scale of authenticity. These standardized unites were the earliest coins.
Bullion Deposits and Fractional-Reserve Banking:
Eventually, some goldsmiths simplified the process further by issuing paper notes indicating that the bearer held gold or silver of given weights and purities on deposits with goldsmiths. Then the bearers of these notes could transfer the notes to others in exchange for goods and services. These notes were the first paper money. The gold and silver held on deposits with goldsmiths became the first bank deposit.
Once goldsmiths became depository institutions, it was only a matter of time before they took the final step towards modern banking by becoming lenders. Goldsmiths began to notice that withdrawal of bullions relative to new bullion deposit where fairly predictable. Therefore as long as the goldsmiths held reserves of gold and silver to cover unexpected bullion withdrawal, they could lend paper notes in excess the of the amounts of bullions that they kept at hand .They could charge interest on the loans by requiring repayment in bullion excess the of value of notes that they issued.
By lending funds in excess of the reserves the reserves money (gold and silver bullion) that they actually possessed, these goldsmith banks developed the earliest form of fractional reserve banking. As long as the economic conditions were stable and the goldsmiths managed their accounts wisely, those who held the goldsmith’s notes would be satisfied with this arrangement. But in bad times or in instances when a few goldsmiths overextended themselves, many note holders might show up at the same time demanding the gold or silver bullion leading to bank-runs. These were the earliest bank-runs.
The Roots of Modern Banking:
The first goldsmith-bankers cannot be traced with certainty to any specific time or place. There is evidence that such activities took place in Mesopotamia sometime during the first millennium B.C. In Ancient Greece goldsmith operations existed in Delphi, Didyma. And Olympia at least as early as the seventh century B.C. By the sixth century B.C., banking was well developed feature of the economy of Athens [Miller and Vanhoose, 2001]
Banking operations also started in the Mediterranean world, in cities such, Jerusalem and further east in Persia. Banking facilitated trade because merchant who shipped goods to far away locations typically need loans to fund their operations. After receiving payment from the purchasers of their goods, the merchants would then repay those who had provided loan financing. These lenders then became known as merchant banks. Merchant banking ultimately became a linchpin of the trade linking the principalities of the Roman Empire.
The Italian Merchant Bankers
The modern term ‘bank’ drivers from the merchant’s bench, or banco, on which money changed hands in the market places of medieval Italy. The Term bankruptcy refers to the “breaking of the bench” that occurred when an Italian merchant banker overextended, then experienced a run on his notes, and failed. During the medieval periods of twelfth and thirteenth centuries AD, merchant banks flourished throughout Italy.
By the time of Italian renaissanance during the fifteenth and sixteenth centuries, merchant bankers such as the medice family of Florence had accumulated enormous wealth and political power. Although these Italian merchant bankers directed some of their wealth to financing the fabulous art of masters such as Michelangelo and Leonardo da vinci, Ultimately, they squandered much of it by building armies and conducting wars over territories and riches.
Others in Europe eventually copied the banking practices of Italian merchant bankers. Merchant banks from the Lombardy region of Italy continued to maintain their merchant banking operations in other European cities like London and Berlin. In London, The Italian merchant banks became such an important institution that the city’s financial dealings were centered around the Lombard Street which even today remains the financial heart of the city. The German central bank, Deutsche Bundesbank, called one interest rate at which it lent funds to private banks the ‘Lombard Rate’. Even after the Italian city states fell in to political disarray, Italian merchant bankers hailing from Genoa financed the activities of the rising Hapsburg Empire of seventeenth and eighteenth century Europe.
Others in Europe eventually copied the banking practices of the Italian merchant bankers. The banking business took on three key features. First, as in the days of earliest gold smiths, banks took deposits from customers. First, as in days of the earliest goldsmiths, banks took deposits from customers and maintained accounts on their behalf. Second banks managed payments on behalf of customers by collecting and paying checks, notes and other “banking currency”. Finally, like the old merchant banks, these loans and the fees that the banks charged for accounting and deposit services was the banks’ sources of revenue, ultimately, profits.
The Evoluation of bank activities:
We noted earlier that banking evolved as a combination of financial intermediation and payments. It did so because there were economies of scope between these two activities. Economies of scope have also led banks into various related businesses as indicated below.
Economies of scope related to payments
While economics of scale result from doing more of the same thing, economics of scope result from doing different, but related, things. A firm can sometimes benefit from branching out in to new lines of business that are closely related to what it is doing already. It may already possess the necessary tools and know-how, making entry in to new lines of business less costly than it would be for a firm starting from scratch. A great deal of innovation is the result of such branching out, and it can be important source of profit. Different lines of business can offer a bank such economies of scope.
One possibility is to offer to process firm’s incoming cheques and to ensure that they clear as quickly as possible. A bank will receive fee for such a service. Since the banks may have much of the needed technology and trained personnel, providing the service will be relatively very expensive.
Banks provide payments service not only to household and business, but also to the financial markets. An efficient and reliable system of settling transactions is essential to the proper functioning of the securities markets. In addition to payments proper, banks provide a variety of related service. They offer cash management services that enable corporations to speed the payments they receive and delay the payments they make.
Banks also provide their customers with foreign exchange to enable them to make payments to other countries. And they also provide credit cards and process credit card accounts for small bank and non bank issuers. The payment system is of great importance to the economy. Payments are an inseparable part of trade in goods and services. The lower the transaction costs of making payments, the more trade there will be and the greater will be the gains from trade. How well the payment system does its job has tremendous effect on the overall efficiency of the economy. Today, with the introduction of payments with credit card, electronic payments and payment of the internet etc., the merchant is guaranteed payment the moment you place the order, the goods can be shipped immediately.
The payment system is also of great importance to financial institutions. For many, the provision of payments services is a substantial source of income. An estimate suggests that in the United States for the 25 largest bank holding companies, between 30% to 40% of their operating revenue came from payments related services (Radecki, 1999). You cannot understand banking without an understanding of this aspect of the business.
Payments mechanisms are a key element in the structure of financial markets. You cannot make sense of overnight lending or the government securities market without understanding how payments are executed. Furthermore, the increasing globalization of financial markets has transformed the trading of foreign exchange----one part of the payment system---into a growth industry. Worldwide trading volume in foreign exchange reached $ 1.5 trillion a day in 1999.
Economies of Scope Related to Intermediation
In the process of intermediation, banks assess the creditworthiness of borrowers and back their judgment by guaranteeing a return to lenders. Banks can engage in these two activities---assessing creditworthiness and providing guarantees--- without actually intermediating the loan. That is they can broker and guarantee, explicitly or implicitly, direct lending from lender to borrower.
The Security Business
The reason why the securities business is attractive to banks is again economies of scope. There is a great deal of similarity and complementarily between the work involved in financial intermediation and work involved in underwriting trading in publicly traded securities. In particular both intermediation and securities business require the gathering and processing of information on the creditworthiness of borrowers and monitoring their behavior after credit has been extended. Moreover, if a firm is already borrowing from a bank, the bank will be familiar with its creditworthiness and it will be in a good position to help the firm issue securities or to make a market in its securities.
The securities activities of banks, therefore, include the underwriting of new issues, market-making of new issues, advice to firms in putting together mergers and acquisitions, and monitoring and supervising corporate management on behalf of investors. In addition many banks provide trust and custodial services. They manage portfolios of securities for corporations, institutions, and individuals and they manage mutual funds. They hold securities for their clients. They execute the payment of interest and dividend for issuers of stock and bonds, and they execute purchases and issuance of securities in mergers and acquisitions. They monitor compliance with covenants associated with bond issues.
Loan Origination
In underwriting securities, banks assess creditworthiness, but do not provide the funding themselves. There are additional ways in which banks can originate a loan but not fund it. The lead bank in a syndication or participation does this, and so does a bank that pools its loans and sells them in securitization. In all of these cases, banks receive fees for originating the loan, for servicing it and perhaps for guaranteeing it. However, it does not earn an interest rate margin as it would if it were funding the loan itself.
Guarantees
When it underwrites securities, the bank does not provide those investing in securities with any guarantee. In the syndications and securitizations, guarantees are possible, but unusual. In some circumstances, however, banks do provide guarantees. Such guarantees are important in the market for commercial paper.
Commercial paper has a very short maturity, typically 30 days or less. Issuers commonly roll over their commercial paper: that is, they issue new commercial paper to pay off the old as it matures. Lenders are concerned that the issuer, for whatever reason, may be unable to roll over its commercial paper and will therefore default. To protect lenders from this danger, the bank can provide the issuer with a line of credit. The bank promises, if necessary, to lend the issuers the funds to pay off the old paper in effect converting the commercial paper into a bank loan.
Banker’s acceptance
Banker’s acceptance is a variation of commercial paper that involves the bank even more closely in guaranteeing the credit of the customer. The banker’s acceptance is essentially a guaranteed post dated cheque.
Off-Balance-Sheet-Banking
In the 1980s, competition from financial markets made it necessary for banks to shift to more value-added products, which were better adapted to the needs of customers. To do so banks offered more sophisticated liquidity management technique, such as, loan commitments, credit lines and guarantees. They also developed swaps and hedging transactions, and underwrote securities. From an accounting viewpoint, none of these operations correspond to a genuine liability (or asset) for the bank, but only to a random cash flow. This is why they have been classified as off-balance-sheet operations.
Banks earn fee income through guaranteeing commercial paper and from providing banker’s acceptances---that is from credit substitution. Banks are able to substitute their credit in this way because evaluating the credit risk of their customers and monitoring their loan performance are precisely the activities banks are good at. Indeed, helping a customer issue money market paper allows a bank to perform much of its traditional lending functions without usually putting the loan on its own books. Such off-balance-sheet banking has a number of advantages for a bank.
Off-balance-sheet banking effectively increases a bank’s leverage. The bank increases its exposure to credit risk, but because the loan does not appear on its balance sheet, its formal equity-to loan ratio is unaffected. Off-balance-sheet banking also relieves a bank of the liquidity risk involved in funding the loan itself. If the depositors wish to withdraw the fund before the loan is repaid, the bank must somehow find the necessary funds. With off-balance-sheet banking, the bank is no longer responsible for the liquidity of the loan and it no longer bears the associated costs.
The factors that have fostered the growth of off-balance-sheet operations have different natures. Some are related to the bank’s desire to increase their fee income and to decrease their leverage; others are aimed at escaping regulations and taxes. Still the very development of these services shows that firms have a demand for more sophisticated custom-made financial engineering.
Forward Transaction
Banks have extended their activities also into forward transactions. Banks offer forward transactions in foreign exchange. Buying and selling foreign exchange is a natural outgrowth of their foreign exchange business. Banks also offer forward transaction related to interest rates. The most important is the swap. This is an arrangement that allows borrowers to exchange fixed interest payments for payments that fluctuate with current market rates.
Economies of Scope in Marketing
The relationship between a bank and its customers, both depositors and borrowers provides it with an opportunity to sell them other products. Moreover, banks’ branch network may provide service to its customers almost without any additional cost. This is an important part of economies of scope between banking and securities business. When new issues are to be sold to investors, the banks’ branches provide a distribution network and its depositors provide a natural clientele. When depositors-investors hold securities, a bank can help its customers to trade them.
There are opportunities for marketing other products. One that seems natural for marketing to a bank’s customers is insurance. There are no obvious economies of scope between banking and insuring. But a bank need not have to be an insurer in order to sell insurance. It is well placed to sell to its customers insurance policies provided by insurance companies.
Three Key factors in the evolution of banking Industry:
Banks and other financial industries tend to become more profitable as they become larger. Large banks may derive the economies of scale in terms of the following:
Economies of scale
Financial, Operational and reputational Economies
First, there are the financial economies of scale that result from better pooling as the pool becomes larger. The Liquidity cost of a large bank is lower because the larger volume of transactions allows for more netting of deposits and withdrawals. Because larger banks can be more diversified, they can either make loans that are riskier and so higher yielding. Or they can reduce the ratio of capital to assets. In either case, the bank is more profitable. Recent studies have shown that when the financial economies are taken in to account, bigger is always the better [ Hughes,2000].
Second, there are the operational economies of scale that result from the element of indivisibility of fixed costs. Because fixed costs increase less than proportionally with the size of bank, the burden is lower for the large banks . The increasing importance of information technology has increased the operational efficiency of scale. Recent studies have found that the minimum efficient scale of bank in terms of operational economies is in the range of $10 billion to $ 20 billion assets [ Mishikin and Strahan].
Third, there are reputational economies of scale: People tend to trust large banks more. Large banks are indeed inherently safer because of the financial economies and operational economies. But they are also more trustworthy, since they have more to loose if they harm their reputation by taking advantage of their customers.
The competitive Advantage of Large Banks:
Because of these types of economies of scale, large banks should be able to out compete small ones, they should be able to operate at lower cost and to offer their customers better terms---lower lending rates and higher deposit rates. Small banks unable to compete should disappear, either closing down or being taken over by larger banks.
However, there may be limitations to such a process. At some point, economies of scale may be balanced by diseconomies. Large banks become more difficult to control, and the cost of management begins to rise. it is the existence of such diseconomies of scale that guarantee that the whole banking industry will not be taken over by a single gigantic bank. Technology of communications and regulatory barriers were two principal obstacles in the way to geographic expansion and huge growth of a bank.
Technology of Communications:
Early banks had branches in various towns and cities. However, managing these branches was a perennial problem. Poor communications made control and coordination difficult, and the absence of systematic accounting procedures made it hard to monitor performance. Because they could not consult head office on important decisions, branch managers had a great deal of independence. To protect their own reputation, banks felt obliged to stand behind the actions of their bank managers. So a lazy or dishonest branch manager could, and did, ruin the whole firm. Poor communications remain barriers to branching until well into the second half of the nineteenth century.
