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Ancient Banking History
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Date: Tue, 23 Dec 1997 08:45:55 -0500
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From: Robert Hettinga <[email protected]>
Subject: Ancient Banking History
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From: Frank Sudia <[email protected]>
To: Digital Commerce Society of Boston <[email protected]>
cc: Kawika Daguio <[email protected]>, Richard Field <[email protected]>,
Stewart Baker <[email protected]>,
Frank Sudia <[email protected]>,
Bernard Frischer <[email protected]>
Subject: Ancient Banking History
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Reply-To: Frank Sudia <[email protected]>
Dear Friends,
One key problem facing many who seek to reinvent tha banking system is
that they are only dimly acquainted with banking. Indeed many of us who
work for banks also suffer this problem, because banking has become so
encrusted with concepts from different eras that it's difficult to tell
what is fundamental.
So whilst we are attempting reinvent ourselves it might behoove us to get
back to basics, which is what you get from "Athenian Society & Economy: A
Banking Perspective," by Edward E. Cohen, Princeton, 1992. (Amazon)
Drawing on empricial evidence, Cohen presents an intensive study of
Athenian banking practices during the 80 year period between the defeat of
Athens in the Peloponnesian Wars and the death of Alexander the Great in
323 BC. First he debunks the myth that there were no commercial loans, and
then goes on to adduce complex banking transactions carried on with only a
bag of silver coins and a table ("trapeza" in Greek, "banc(h)a" in Italian
and most other languages). According to Demosthenes, a trapeza is "a
business operation producing a risk-laden return from other people's
money." Seeing these transactions arising in their simplest forms is very
instructive, because it shows you what really matters about them.
The trapeza took deposits and made loans, some of the proceeds of which
were redeposited (and reloaned), thus expanding the money supply without
fiat currency. There was zero government regulation! There were no
checks, as payors and payees all showed up in person. There were bills of
exchange to minimize transport of coins. There were 6,000 drachmas in a
talent, and (I think) 20 drachmas in a Cyzicene stater, another popular
big coin. Much of the business was undisclosed, to help clients reduce
taxes, escape judgements, etc. Notions of interest were different: 1% a
month for landed loans, 18-100% (per voyage) for maritime loans. Etc...
I'm only part way thought it, but thought I would share this info, for all
you history buffs out there.
Cheers,
Frank
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Frank W. Sudia, Consultant, BT Strategic Ventures
1 Bankers Trust Plaza, MS 2371, New York, NY 10006
Tel: 212-250-5242 Fax: 212-250-9347 Home: 212-809-5150
[email protected]
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Robert Hettinga ([email protected]), Philodox
e$, 44 Farquhar Street, Boston, MA 02131 USA
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