The Evolution of Banking
The Evolution Of Banking by Andrew Beattie (Contact Author | Biography)
With the exception of the extremely wealthy, very few people buy their homes in all-cash transactions. Most of us need a mortgage or some form of credit to make such a large purchase. In fact, many people use credit in the form of credit cards to pay for everyday items. The world as we know it wouldn't run smoothly without credit and banks to issue it. In this article we'll, explore the birth of these two now-flourishing industries.
Divine Deposits
Banks have been around since the first currencies were minted - perhaps even before in some form or another. Currency, particularly the use of coins, grew out of taxation. In the early days of ancient empire, a tax of on healthy pig per year might be reasonable, but as empires expanded, this type of payment became less desirable. Additionally, empires began to need a way to pay for foreign goods and services with something that could be exchanged more easily. Coins of varying sizes and metals served in the place of fragile, impermanent paper bills. (To read more about the origins of money, see What Is Money?, Cold Hard Cash Wars and From Barter To Banknotes.)
Flipping a Coin
These coins, however, needed to be kept in a safe place. Because ancient homes didn't have the benefit of a steel safe, most wealthy people held accounts at their temples. Numerous people (like priests or temple workers), whom one hoped were both devout and honest, always occupied the temples, adding a sense of security. There are records from Greece, Rome, Egypt and Ancient Babylon that suggest temples loaned money out in addition to keeping it safe. The fact that most temples were also the financial centers of their cities is the major reason that they were ransacked during wars.
Because coins could be hoarded more easily than other commodities (like 300-pound pigs), there emerged a class of wealthy merchants that took to lending these coins, with interest, to
With the exception of the extremely wealthy, very few people buy their homes in all-cash transactions. Most of us need a mortgage or some form of credit to make such a large purchase. In fact, many people use credit in the form of credit cards to pay for everyday items. The world as we know it wouldn't run smoothly without credit and banks to issue it. In this article we'll, explore the birth of these two now-flourishing industries.
Divine Deposits
Banks have been around since the first currencies were minted - perhaps even before in some form or another. Currency, particularly the use of coins, grew out of taxation. In the early days of ancient empire, a tax of on healthy pig per year might be reasonable, but as empires expanded, this type of payment became less desirable. Additionally, empires began to need a way to pay for foreign goods and services with something that could be exchanged more easily. Coins of varying sizes and metals served in the place of fragile, impermanent paper bills. (To read more about the origins of money, see What Is Money?, Cold Hard Cash Wars and From Barter To Banknotes.)
Flipping a Coin
These coins, however, needed to be kept in a safe place. Because ancient homes didn't have the benefit of a steel safe, most wealthy people held accounts at their temples. Numerous people (like priests or temple workers), whom one hoped were both devout and honest, always occupied the temples, adding a sense of security. There are records from Greece, Rome, Egypt and Ancient Babylon that suggest temples loaned money out in addition to keeping it safe. The fact that most temples were also the financial centers of their cities is the major reason that they were ransacked during wars.
Because coins could be hoarded more easily than other commodities (like 300-pound pigs), there emerged a class of wealthy merchants that took to lending these coins, with interest, to