Banking has been around for a very long time. archaeologists have discovered that The History of Banking began with merchants who made grain loans to farmers and traders carrying with the first goods between cities. In ancient Greece and lenders in temples made loans and added two important innovations: the accepting of deposits and the changing of money. The Greeks revolutionized banking and in this article I will discuss the ancient Greeks contributions to banking.
The Greeks revolutionized banking. The Greeks enhanced banking practises that are used. In Greece banking was generally used for security, few banks gave interest to depositors, a deposit gave security against the dangers of life in ancient Greece. People put there money in a bank not to earn interest but to keep it safe.
Athens was the home to the first centralized bank. Although the practice of loaning money was look down upon by many some Greeks made lots of money loaning money. Banks had many other purposes though, Banks were involved with money changing. When a foreigner came into a Greek city state, they tended not to have the local currency. At the bank a foreigner could exchange their currency for locally accepted currency. On top of this banks were involved in credit and public sector financing. If a city states government needed money they could go to a bank and get a loan. This happened a lot with many city states. Many individuals received loans too. Some Greeks got loans to build houses and finance businesses. Business flourished with the adoption of lending money. Lending money gave more people access to credit. This helped grow the economy.
Although no records support this theory many archaeologists believe that Most of the Greek City states had banks. Some city states like Athens had more then one. Banks lent money to whoever needed it. Merchants heading for foreign lands to trade their goods often got loans to afford to maximize there cargo space.These loans usually entailed high interests rates since it was risky to travel by sea.
Delos a Greek city state had a different banking system then the rest of Greece. In Delos instead of making transactions in cash they used credit receipts. People had individual accounts and could make payments on loans with commodities instead of cold hard cash.The Greeks used coins as a form of currency. Gold and silver coins were the most popular and expensive.
The banking industry in ancient Greece had many critics. Aristotle was a popular critic of banking and the lending of money in 350 B.C.E he wrote
"The most hated sort of money-making, and with the greatest reason, is usury, which makes a gain out of money itself and not from the natural use of it-for money was intended merely for exchange, not for increase at interest. And this term interest, which implies the birth of money from money, is applied to the breeding of money, because the offspring resembles the parent. Wherefore of all modes of money-making, this is the most unnatural."
In this exert from Aristotle, we can see that he felt that the use of interest was immoral and unnatural. He argued that making money from money was a foreign concept and should not be used. While this opinion even today is widely disputed the fact that the Greeks changed banking is not. The Greeks helped morph the practise of lending money into what it is today, and we owe much of what we have to the Greeks.