History of Banking: Ancient Babylon to Rome

It was in Ancient Babylon where debt money was traded which was concentrated in the temples and yielded skyrocketing profits for the priests . During the “Babylonian captivity” in the sixth century BC. Jews set up their own banks. We date the beginning of the banking era in Europe to the 4th century BC, when Socrates, in his work Trapesitica, described the case of the defence of the favoured Bosphorus king Satyrus, whose entrusted money had been embezzled by an Athenian banker, a former slave, Pasion. The accused initially pleaded guilty but later covered up traces of the transaction and recanted his testimony. Information about bookkeeping and deposit trading can already be found in the fiery speeches of one of the Ancient Greece’s most famous speakers, Demosthenes. Researchers claim that the banking collapses in Greece were linked to the crises of 377-376 and 371 BC. An important fact in the history of banking was the establishment of a state bank by the Egyptian Ptolemies (3rd – 1st century BC), whose services were also aimed at entrepreneurs, artisans and smaller banks.

In Antiquity, people kept money in temples because priests enjoyed a high degree of public trust. Over time, priests also began to lend money. Records from ancient Greece, Rome and Egypt confirm it. The ancient Romans moved banking out of the temples into separate buildings, providing usury services to the public in return for a profit charged on the amount borrowed. Julius Caesar, in one of his edicts, allowed land to be confiscated in return for non-payment of a loan. 

In Ancient Rome, banking associations, the so-called “societas argentariae”, were introduced and the bankers were called “mensarii” (from mensa ─ counting room, counter). They formed a guild to protect their interests. They were familiar with a concept such as the loan for consumption (mutuum) which allowed banks to trade in entrusted funds and pay interest to depositors. The Romans also distinguished between a loan for use (commodatum) and a deposit. Unfortunately, Rome’s well-functioning financial system collapsed due to inflationary monetary policy and historical events such as the expansion of Christianity, the wanderings of peoples and the onslaught of the Germans. 

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