Mesopotamia, Egypt and Greece
Money and Credit
International warfare faced Sparta with new demands which its primitive
monetary system could not meet unaided. By contrast, other states in Greece, in
particular Athens, used coins and money in a more developed way, such as through
banks. Athenian banks are first attested towards the end of the fifth century BC,
but most of our evidence comes from the fourth. We should not think of these
as sophisticated financial institutions like modern banks, but as a cross between
a bureau de change and a pawnbroker. Bankers operated in a private capacity and
were not subject to any state regulation. Their most visible activity was
money changing, primarily for foreigners who arrived at Athens with non-Athenian
currency. We hear of moneychangers doing business from behind tables set up
in the Agora (market-place); even now the modern Greek word trapeza means
both 'table' and 'bank'. Bankers also accepted money on deposit, but appear to
have paid no interest. What they offered was effectively a safe-deposit box -a
service of particular use to foreign merchants who had nowhere else to store
their valuables while at Athens. But we also hear of Athenians who kept money
with a banker, possibly for security but perhaps in order to conceal the extent
of their wealth from the prying eyes of the taxman. Finally, bankers lent money
-both their own and that of depositors -to private individuals, typically at an
interest rate of 12 per cent a year. People naturally preferred to borrow from
friends or relatives, and most credit transactions were of this kind. Bankers
therefore tended to be used only as lenders of last resort.
In the Greek world there was no equivalent of a state bank. The surplus
wealth of Athens was stored under the protection of Athena on the Acropolis
and was regarded in some sense as belonging to the goddess, so that thieves
would be deterred by fear of committing an act of sacrilege. Hence, when
the Athenians needed extra money to finance military operations, they
'borrowed' it from Athena with a promise to repay it when they
could. When their finances were in crisis, they even melted down
the gold cult-statues of the goddess. We also know that
some temples lent their money to individuals. Inscribed
accounts of the fifth century from a temple in the Athenian
countryside show loans being made in units of 200 and 300 drachmae.
In the Greek world financial transactions were conducted solely in coined money; there were no cheques or
exchangeable bills. Therefore the smooth running of the economy
required there to be sufficient coins in circulation. In Athens we
find that coins were minted on an increasingly regular basis and in
large quantities. Evidence for the widespread use of coinage in
day-to-day transactions in the late fifth century is found in the
plays of Aristophanes, where characters talk of buying fish
and sickles in the marketplace, and of storing small coins in their mouths! And the vignettes of the
fourth century satirist Theophrastus contain numerous references to coins
-buying, selling or lending money. By this stage the Athenians had started to
mint low-denomination bronze coins for everyday use: excavations in the Athenian Agora have brought
to light over 16,000 coins, mostly of bronze, which had presumably been
dropped. The sheer number of these finds vividly illustrates the extent to which
coined money had become the norm by this time. Similarly, most hoards
dating from the end of the Classical period consist of coins rather than, as had
earlier been the case, of bullion. Monetised societies depended upon coinage for
most financial transactions, and as a consequence states were required to
maintain the reputation and value of their coins in various ways. At Athens the
passing of fake coins was strictly forbidden, and a law of 375 BC instituted the checking of coins by public slaves.
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