From: C
Subject: banking
Chambers, pg. 55, "Athenian domination became unmistakeable in 454, when the league transferred its treasury from Delos to Athens."
My question is simply this: Was there a banking system present in these times? If so, when did it evolve?
I am also curious about what type of economy was present. On page 48 of Chambers in the section 'Solon and Political Reform', I see suggestion of a barter system in place. Would this observation be shared by any of you?
Finally, if it were a barter system, currency wouldn't typically be present. Barter systems, from what I understand, lacked the type of fungible unit that currency would provide. The function of a banking system in this culture eludes me, unless it were a record keeping function.
Any insight would be appreciated. =o)
From: H
Subject: Re: banking
The impression I had picked up from the text is that the treasury that was transfered from Delos was in cash - or gold, whatever was contributed at the time. On page 44, there is a discussion on the use of coinage in 625 B.C.E., which was not common. "Large projects . . . were assigned to citizens who were judged capable of bearing the cost." It doesn't sound like much of a banking system was in place. Looking a bit ahead to after 323 and Alexander's time, the world seems to have shrunk a bit. There is much more coming and going, trading and prosperity for some. At that point the need for banking becomes imperative. I didn't pick up any transition to this point though.
From: "Dr. E.L. Skip Knox" <sknox@VARNEY.IDBSU.EDU>
Subject: Re: banking
C's question, and H's answer, raise a somewhat larger question; namely, what do we mean by "banking"? I'm not going to try to answer yet but will invite others to describe what they regard as the key elements of banking. I'll offer one to get started: a bank keeps money from many people and *uses that money to lend to others* at interest.
Once we have a notion of what we mean by the term, then we will have more success at trying for an answer. This is a good illustration of how tricky it is to do history: we historians use ordinary vocabulary (e.g., "bank"), but the words themselves can change meaning over time. Being sensitive to those changes, knowing how to document them and to trace their course, is an important skill in our trade.
>I am also curious about what type of economy was present. On page 48 of
>Chambers in the section 'Solon and Political Reform', I see suggestion of a
>barter system in place. Would this observation be shared by any of you?
>
>Finally, if it were a barter system, currency wouldn't typically be
>present. Barter systems, from what I understand, lacked the type of
>fungible unit that currency would provide. The function of a banking system
>in this culture eludes me, unless it were a record keeping function.
I read that section on page 48 and didn't see anything that intimated barter. But, to reply to the question, barter is always in effect -- people barter goods and services even in modern industrialized economies. Conversely, a so-called barter economy does not necessarily preclude the use of coinage. The real question is what is the normal method of exchange.
Athens was running off coinage, at least from the 600s on, probably even earlier. The predominance of coinage was more evident in the city than in the Attic countryside, and certain types of transactions remained bartered. The country of Lydia (Croesus' kingdom) is often given credit for the invention of coinage, in the 700s. Money allows larger scale transactions and allows transactions to occur at higher velocity, both of which permit a greater accumulation of wealth. This dynamic was well understood by the Athenians.
=================================================================
Dr. E.L. Skip Knox - Boise State University
sknox@varney.idbsu.edu -or- skip@micron.net
enjoy the work, stay within the law, make lots of money: choose two
From: L
Subject: Re: banking
I, too, am under the impression that bartering was the main "banking"system.... but actually hadn't thought much about it until your question. I see mention of coins, though, and must assume that money had some value from time to time. Page 44 says, "the development of an economy based on coinage was slow." It says that coins weren't used until 625 bce (And WHAT in the world is BCE?? I haven't seen anything that explains this...) and in the fifth century bce the use of these coins seemed to catch on. I imagine some sytem of banking had to develop after fifth century (the text mentions that, suprisingly, there weren't even military treasuries until third century bce), as the usual problems (fraud, thievery, etc..) must have shortly ensued. It sounds like nothing formal developed for quite a while, though.
From: "Dr. E.L. Skip Knox" <sknox@VARNEY.IDBSU.EDU>
Subject: Re: banking
Well, gee, the topic of banking doesn't seem to have stirred the fires much. That's ok -- banking's pretty boring.
But I'll hold forth a bit because there are a great many practices and institutions that we take for granted and never think much about, that take on quite a different character in the cultures we study here.
So, to take up my own challenge: what is a bank? The economists will have a strict definition, of course, but my rough-and-ready one is that a banks is first of all a physical place where strangers store money. That is, a bank is something different from, say, a family treasury . . . or a state treasury (which replies, I think, to C's original question). Second, a bank is a place that *lends* money at interest; it, in fact, takes your money and my money and loans it to yet another stranger and the interest made on the loan is what covers the bank's expenses. It's only in rather recent times that a bank actually made *so* much money that it could also afford to pay interest on the actual deposits; the older function was merely that the bank was a safe place.
Banks in the sense of the word don't appear until the 13th century, first in Spain and Italy. There were no banks at all in the ancient world. Well, I should qualify that: I'm not at all versed in ancient economics, so I suppose I should say that I'm not *aware* of a banking system in the ancient world. The Romans may have had something that might qualify.
Certainly Athens had no banks. The treasury of the Delian League is a good example of what had to be done in the absence of such mechanisms.
Athens annually collected a good chunk of change from the League members. This was real, physical coins, in boxes and chests, stacked up. Physical, tangible wealth like this is a constant open invitation to thieves, adventurers and neighboring states. To begin with, the money was to be kept in some neutral location, but how then to protect it?
Answer: put the money in a sacred place. Generally speaking, the gods aren't very good at *preventing* theft, but then anti-theft devices weren't very sophisticated in the ancient world anyway. But even if the robber got away undetected, the gods would *punish* him after the fact! The whole idea was to put a treasury in some place that would inspire awe and fear, the only real deterrent to theft. The temple on Delos was such a place--politically neutral and religiously charged.
This is one reason why the move of the treasury from Delos to Athens was so significant. It politicized the treasury.
=================================================================
Dr. E.L. Skip Knox - Boise State University
sknox@varney.idbsu.edu -or- skip@micron.net
enjoy the work, stay within the law, make lots of money: choose two
From: JM
Subject: banking
I think that the use of coinage becoming a nessity comes about when the Greeks feel that they want to live on a little more than they are used to, in the text pg. 44 (again) It states," With few luxuries available, Greeks could subsist on small incomes." During the early period when they were content with little or none it must of been easy to use a bartering system, but like in the present time period people may have wanted more than they could afford. Do you think that this could have attributed to the use of coins and doing away with the bartering system? It also may of gotten to hard to keep track of all of the debtors.
From: "Dr. E.L. Skip Knox" <sknox@VARNEY.IDBSU.EDU>
Subject: Re: barter system
H's mention of letters of credit toward the end of her message is a good point. I won't go further here (unless asked), but I would recommend to anyone interested in economics and in business institutions in general to keep an eye out, as we move through Greece to Rome and then into and out of the Middle Ages, for evidence of things like letters of credit. Other points of interest are insurance, trade associations, contracts, bills of exchange, checks, stocks, oh and I don't know what all. Your text may not speak to all these, but feel free to bring them up.
Remember, *everything* has a history.
From: jk
Subject: Banking, my two cents worth
Banking and barter
I was confused when I read Chambers pg. 44 "Solon and Political Reform". Chambers states without much explanation that Athenian economy was trying to feed the population of Attica. Why? I becomes clear to me, after reading the discussions, that farmers with established "barter accounts" (my words) had been taking more food and supplies out of the system then they had been putting in. Even during good years, subsistence farmers were probably eager to extend their accounts, it meant more food for their families, now. Reading between the lines, I contend that there was a rudimentary banking system ("barter accounts"), but it was not well run because it allowed this overextension to occur.
The legend of David in Egypt during the years of feast, then famine would be an example of a similar system that was well run.
I didn't see anyone answer this, so B.C.E. = Before Christian Era
From: L
Subject: Re: banking
JM,
Good point!! In a smaller-scale culture, the use of money (hiding away the *really* valuable stuff in a "bank" and using a representative of it: coins) seems kinda silly. They subsisted on trading REAL goods and services, and I hadn't thought of that angle before. And certainly they could subsist on small incomes; they had only their necessities to meet and didn't (that I am aware of anyway) have many things to buy on long-term credit (with the possible exception of land ownership which is briefly mentioned in the text). Thanks for the insight!
L :)
From: L
Subject: Re: Banking, my two cents worth
Jk,
Thanks for the (BCE) translation...:)
On page 48-49, I found the passage you're talking about....from looking at the map on page 33, it appears that Attica was the region in which Athens was; perhaps they werethe only urban area in this region....and therefore assumed the responsibilties of care over its territory.
I agree with your interpretation of the bartering system. It seems to have been developing out of necessity as the land couldn't sustain the amount of people on it adequately. I don't think it was a formalized system at all; I think it must have just begun out out necessity. Of course, it was the precendent of more formalized bartering and then banking, but I don't think anything that formal had developed at that point.
After Solon took over, it seems his policies dominated all of Attica, and I assume from that that Athens held power of the farmlands, which had to be outside the perimeters of Athens itself. (A city can't support itself agriculturally....I think it must have had farms outside the city walls that it had claim to in some way....) Perhaps this explains this somewhat...????
My ideas anyway.....:) *L*