Need for Financing and Its Sources

1 ©Meir Kohn 2014 9. FINANCING COMMERCE, PRODUCTION, AND GOVERNMENT All economic activity requires investment. We have seen that this is true in commerce and production, and we will see that it is no less true in predation and government. The necessary investment must be financed either by those undertaking the activity or by others. We will begin by examining the need for financing of the different economic activities and the sources of that financing. We will then look at the problems involved in the provision of financing, and at the different methods found in preindustrial Europe to address those problems. We will conclude with some general observations on the development of financing and on its impact on economic progress and on the evolution of government . The Appendix to the chapter describes the prohibitions on usury that were widespread in preindustrial Europe and considers their effect on the development of financing.