Credit: 6,000 Years Old and Still Evolving Vigorously

Article excerpt

Noah's Ark (if it was ever built) was probably floated and provisioned on credit, for by the time of the traditional biblical date of the Great Flood, 2349 B.C., sophisticated forms of credit had long been well established in the Middle East. The ancient Doubting Thomases who may well have been induced to finance Noah were finally liquidated in a double victory for Noah and his extended ecological family.

Be that as it may, there are numerous, fully authenticated facts to prove the common, everyday existence of credit instruments and transactions as old as recorded history itself, that is from roughly around 4000 B.C. "Money," said Keynes in his Treatise, "like certain other essential elements in civilization, is a far more ancient institution than we were taught to believe. Its origins are lost in the mists when the ice was melting, and may well stretch back into the paradisaic intervals in human history of the inter-glacial periods, when the weather was delightful and the mind free to be fertile of new ideas in some Eden of Central Asia." (Keynes. J.M., 1930, A Treatise on Money, I, 13)

Credit and the Invention of Writing

It was from this lost Eden that money, recorded credit and banking, as well as writing and our duodecimal methods of counting time and space - and of financial accounting - originated. If one were to speculate as to how writing first appeared one might dreamily imagine that romantic necessity or poetic inspiration were the causes rather than the prosaic need to record debts and credits - which in reality turns out to have been the actual source. "Writing was invented in Mesopotamia as a method of book-keeping. The earliest known texts are lists of livestock and agricultural equipment. These come from the city of Uruk c. 3100 B.C." (Oates, J., 1979, Babylon, 15) Literally hundreds of thousands of cuneiform blocks have been unearthed by archaeologists in sites along the Tigris and Euphrates, many of which were credit receipts and monetary contracts confirming the existence of banking and credit operations as everyday affairs, common and widespread throughout Babylonia. Categorical evidence regarding credit procedures is still available for our inspection in the Code of Hammurabi, inscribed some 3,750 years ago on a diorite block, over seven foot high, now in the Louvre in Paris.

Credit in Ancient Egypt: Grain and Banking

Credit development in ancient Egypt, although based at first on royal temples and palaces, grew in time into a distinctive form of giro-banking based on deposits of grain. Thus, although some rudimentary elements of a giro system of payment had developed much earlier in Babylon, the honor for the first fully efficient giro system, enabling a nationwide circulation and transfer of credit, belongs to the Egypt of the Ptolemies. The numerous scattered government granaries were transformed by the Ptolemies into a network of corn banks with what amounted to a central bank in Alexandria, where the main accounts from all the state granaries were recorded. Seed corn, the capital base both of the banking system and of the economy in general, was directly under the control of the 'Oeconomus', whose official duty it was to see that the seed corn would not be used for any other purpose. Grain may have been considered a rather primitive form of money - but the world's first giro system transformed it into an efficient method of credit with many of the most desirable elements of modern finance.

An expert on this period shows that these giro-bank accounts "are especially interesting because they show how popular recourse to the banks became with the people of Egypt. The system of paying one's debts through the bank had the additional advantage of officially recording transactions and thus providing important evidence in case of litigation." (Rostovtzeff, M., 1941, The Social and Economic History of the Hellenistic World) At this point it needs to be emphasized that ancient banking emerged a thousand years before the appearance of a viable system of coinage, whereas in the case of the Anglo-Saxon and northern European world, coins preceded banking by a similarly long period of time. …