An Amazing Temple: the Oldest Bank in the World

Today there is much talk about banks and interest on loans. But how things worked in antiquity? Come on to ancient Mesopotamia (Iraq), and here we find the oldest Bank in the world that dates back more than 5000 years ago.

Archaeological excavations at Uruk ( modern Warka) in Mesopotamia  (Iraq) were conducted  at  the end of the 1920s,  bringing  to light the remains of a large  temple, called Red Temple by Julius Jordan (1928) (1), which was both a place of worship, and the oldest bank in the world. The priests-bankers of Uruk had two main roles. First the worship of the god   who lived in the inner temple ( sacred to the god), and, second,  the custody of wealth in  name of that same god. Immense wealth had been accumulated from the different gifts of the faithful, who offered to the god jewelry, cattle, large plots of land, houses and slaves. The priests-bankers of Uruk stored the non-perishables goods in the treasure room of the Red Temple, while temple slaves did work the land.

What’s really remarkable is that the assets held in the Temple had been used to support lending, charging interest on loans.  In reading Hammurabi’s Code we learn important things on the annual rate of interest in ancient Mesopotamia. The clay tablets show that the old Babylonians charged an interest rate of 30% payable annually in barley or other cereal grains. The ancient concept of interest differed substantially from today, but contracting parties did draw up a written contract,

“If a man purchase silver or gold, manservant or maid servant, ox, sheep or ass, or anything else from a man’s son, or from a man’s servant without witnesses or contracts, or if he receive (the same) in trust, that man shall be put to death as a thief”  (2).

Interest on capital “was not a product of capital from which it veered away as a stand-alone item Among the Babylonians,” Professor M. Caroselli said (3).  “The rate of interest was instead incorporated into capital, a key element in order to increase profit.”  Hammurabi’s Code had provided severe penalties to punish those who had not fulfilled  their obligations to the Temple treasury (the return of capital, and the payment of interest). In the event of late payment or non-payment of interest, the  interest rate charged by the Temple treasury went up to 100% on the whole of capital originally  lent. However,  the debtor could repay the annual amount of interest though different payment systems like animals, slaves and fruits of the Earth:

“If he [the agent] have not the money to return, he shall give to the merchant (grain or) sesame, at their market value according to the scale fixed by the king, for the loan and its interest which he has obtained from the merchant”  (4).

In the draft of the contract, the priest-bankers were flanked by scribes, who took care of the mandatory records written on clay tablets, where  there were both the names of those applicants who received loans, and the amount of the loan as well as interest on  loans. Hammurabi’s goal was thus a complete codification  of  existing business practices dating back to the most ancient peoples of Mesopotamia like the Sumerians (Uruk was a Sumerian city):

“If he [the agent] does not meet with success where he goes, the agent shall double the amount of money obtained and he shall pay it to the merchant”  (5).

Those were the days, and no one was better than Hammurabi! The world have known better days, when all the customers were pleased; but there is nothing more that can be done, alas. Today all the  bank’s customers appear dissatisfied; they are penniless, they are sick and tired of banks, because they are out of the pocket. Given how things go, have we not maybe reached a point where we will need a new Hammurabi? If only it were true!

Pious hopes, and a forgotten chapter in history of the world.

Notes

1)      Julius Jordan, Uruk-Warka nach den Ausgrabungen durch die Deutsche Orient-Gesellschaft, WVDOG, 51. Leipzig, J.C. Hinrichs, 1928.

2)      R. F. Harper, The Code of Hammurabi King of Babylon, London, The University of Chicago Press,  1904,  p. 13.

3)      M. Caroselli, “Miseria e grandezza della vita bancaria nell’antichità”, in Economia e Storia, gennaio-marzo 1977, pp. 5-7.

4)      F. Harper, The Code of Hammurabi King of Babylon, cit.,  Number 51,  p. 29.

5)      Ivi, Number 101, p. 35.