BANKING IN ANTIQUITY Pastoral nations such as the Hebrews, while they maintained money-lenders, had no system of banks that would be considered adequate from the modern point of view. But as early as 2000 B.C., the Babylonians had developed such a system.
It was not the result of private initiative, at that time, but an incidental service performed by the organized and wealthy institu tion of the cult. The temples of Babylon, like those of Egypt were also the banks. "Two shekels of silver," runs a Babylonian document, "have been borrowed by Mas-Schamach, the son of Adadrimeni, from the sun-priestess Amat-Schamach, daughter of Warad-Enlil. He will pay the Sun-God's interest. At the time of the harvest he will pay back the sum and the interest upon it." It is evident enough that the priestess Amat-Schamach was merely the accredited agent of the institution. No doubt the clay tablet with the inscription corresponds to what we call negotiable com mercial paper. Another document of the same period was cer tainly such. It runs: "Warad-Ilisch, the son of Taribum, has received from the sun-priestess Iltani, daughter of Ibbatum, one shekel of silver by the Sun-God's balance. This sum is to be used to buy sesame. At the time of the sesame-harvest he will repay in sesame, at the current price, to the bearer of this docu ment." At a much later period, about 575 B.c., private initiative had taken the lead in Babylonian banking. At that time we hear of an institution that has been compared to the Rothschilds of lath century Europe—the Igibi bank of Babylon. Its last great head died at a time not far distant from the date just given. The records of this bank show that it acted as buying agent for clients; loaned on crops, attaching them in advance to insure reimburse ment; loaned on signatures and on objects deposited, and received deposits on which it paid interest.
In Greece in the 4th century B.C., i.e., at the time of the great 'See A. Andreades, History of the Bank of England; P. S. King and Sons.
commercial prosperity that brought on the Persian wars,--hank ing was well established. As in Babylon, there was no prohibition of interest taking, so that banking was free to develop as cir cumstances might permit. There was, no doubt, some concentra tion of functions in certain large institutions, but the different operations of banking were performed by various kinds of bankers. Thus, the trapezitai—the name is still used by Greek bankers— were those who received deposits on interest to administer as current accounts such as checking; the kermatistai were the equivalent of the mediaeval goldsmiths, their function being the testing of coins and the changing of them ; the daneistai were the money-lenders. A well verified function of the banks of Greece was to prepare letters of credit on correspondents with a view to obviating the actual transport of specie in payment of accounts.
The private bankers, however, had no monopoly on most of these transactions, and indeed it is probable that, as in Babylon, private banks followed the temple banks by a long interval. The temple system seems to have included most of the typical banking operations, except, perhaps, those of changing and of assay. There is small doubt, in any case, that such great temples as those of Ephesus and of Delphi were the most powerful of the Greek bank ing institutions before the time when the progress of irreligion had destroyed the public sense of security in making temple deposits or in allowing priests to act as financial agents.
Yet the Greek private bankers never monopolized the business, for the public, or State, bank was everywhere to be found, as at Abdera, Sinope and Cyzicus, and the surviving records show that, except in times of national emergency, the private bankers had but little chance to get profit from the financial transactions of the State.
The Greek system influenced Rome to the extent that certain Roman temples engaged in financial transactions for individuals. The College of the Flamens is known to have been entrusted with carrying out a will wherein was inserted a clause that turned over to it the ownership of the estate in question unless the heir should comply with a certain stipulation. The document is of particular interest because it shows a sense of absolute confidence in the integrity of the Flamens. But Roman legislation was. inclusive on all such subjects, and fraud in banking was a matter of the greatest difficulty. In 210 B.C. we find the earliest definite regulations as to Roman private bankers—an ordinance which assigned the places in the Forum where the tabernae argentariae, or banking offices, might be located. The Romans did not follow the Greeks in the organization of State banks. But their minute regulations as to the conduct of private banking were calculated to create the utmost confidence in it ; it touched all of the various divisions of the business, which were typically assumed by different individuals, as in Greece.
Hellenistic Egypt, unlike Rome, imported the Greek banking system bodily. On the one hand we find a private bank in Alexan dria operating at night, when vessels could best come to anchor in that port, and displaying, as a sign, a little poem especially ordered from a famous bucolic poet. On the other hand, the State banks were as widely distributed as they were in Greece; their organiza tion, each with a director, a sub-director, and a responsible man ager, whether at Memphis, Thebes or Arsinoe, is well known. Everywhere, it appears, the State and private banks managed to exist together. In one little village, that of Dionysias, near Lake Moeris, there were two private banks in A.D. 151. One was that of Palamedes and Company "are) T7lS IlaXa.ss ooue Kai µETOXWV OcovvaLabos," as a somewhat mutilated papyrus has it. The title occurs in a receipt for rent paid in to the bank for the account of a land-owner. (cf. Westermann and Kraemer, pp. 215-17.) With the end of the civilization of antiquity banking degen erated, for a period of some centuries, into a system of financial makeshifts. There were various reasons for this, the most impor tant, no doubt, being administrative decentralization and the weakening of governmental authority, with its inevitable counter part of commercial insecurity. The very widely distributed means of banking brings out the prevalence of this insecurity in a striking manner : as in Babylon, in Egypt and in Greece the sanctuaries were the banks. But if the phenomenon appears a similar one in those ancient countries and in mediaeval Europe it shows, upon analysis, fundamental differences. The ancient State was strong, whereas the mediaeval one was weak; and although the Christian churches and monasteries represented the mediaeval State religion, still, the Church in each country was no stronger than the State in question. Therefore there could be no such absolute guarantees for depositors in Church treasuries as had been common to those who used the temples as banks in antiquity.
But there was a certain guarantee—that furnished by the prac tical unanimity of opinion as to the inviolability of sacred build ings—and this was accepted as the best available one. The result was that people entrusted the officials of churches and monasteries with their money, either as a deposit to be withdrawn or as a cash payment for a stipulated annual income, whether perpetual or for a term. As for receipts calling for periodic payments by a church treasury, they came to be the most widely distributed of European commercial paper, and ranged through all denominations; they were negotiable, and as such were often divided into infinitesimal sums for the purpose of marketing them with poor investors. The order of the Templars (c. 1 1 18-13 2o) became the outstanding representative of ecclesiastical banking and its records show that its operations included almost every type of the modern bank's activities, including those of the trust company.
The relative lack of commercial security, and especially out side the Church, was not the only reason for the slow development of lay banking. Pagan theory had gained precedence in Europe over Pagan practice. Aristotle's dictum that interest taking is unnatural and consequently immoral was remembered, and it was forgotten that the ancient world, the Hebrews included, made no sin of interest but only of usury. The Church, indeed, made the distinction; but governments—excepting those of Lombardy and of Cahors—generally forbade their nationals engaging in the opera tions which are associated with banking. However, growing neces sity forced the issue: in 1148 the San Giorgio bank was formed in Genoa; and in 1157 the Vitale was constituted in Venice by a forced loan to the State, the loaners being empowered to organize as a bank. In 1407 a similar institution was founded in Genoa. In 1609 a municipal bank was opened in Amsterdam, where, however, no interest was paid on deposits, the purpose of the bank being rather that of a place of safe deposit under the city's guarantee.