How Did the Ancient Greeks and Romans Conduct Banking?

Modern Western culture is indebted to the ancient Greeks and Romans in many ways. Writing, religion, government, and art all came to medieval Europe through the Greeks and Romans. Banking is another concept that originated in the Hellenic world, although its influence on medieval Europe was not as direct. The Athenians developed a sophisticated banking system in the 5th century BCE that eventually influenced economies throughout the Greco-Roman world. Hellenistic kingdoms adopted Athenian banking and later the Romans would expand upon this system with their own monetary theories.

In the years between the Greco-Persian Wars (499-449 BCE) and the Peloponnesian War (431-404 BCE) Athens became the premier Greek city-state. The Athenians achieved their status through a combination of shrewd political moves, naval prowess, and effective economic policies.

Control of the Delian League was another crucial component of Athenian hegemony in the Hellenic world. The Delian League began as an anti-Persian alliance of Greek city-states in 478 BCE, during the latter stages of the Greco-Persian Wars. Although Athens was the leading state in the league, the ships and gold the alliance collectively used were initially held on the island of Delos. Other prominent cities that had significant sanctuaries, such as Delphi and Olympia, also had notable treasury houses. These early treasury houses were a mixture of sacred, state, and financial institutions, housing a plethora of goods including votive offerings, cult statues, weapons, gold, and silver. The shrewd Athenian statesman, Pericles (495-429 BCE), saw great economic potential in this system, so he made the decision to move the Delian League’s treasury to Athens in 454 BCE.

When Pericles and the Athenians took control of the Delian League’s treasury, it ensured that the Greco-Roman economies would follow a new path. The Athenians decreed that their allies would adopt Athenian coins, weights, and measures, thereby elevating Athens’ economic position in the Greek world. The move also meant that the Athena cult would essentially become the Bank of Athena.

The Bank of Athena

The Parthenon in Athens was another achievement of Pericles, as the wonder was built during his tenure as strategos of Athens. Dedicated as a temple for the city’s patron goddess, Athena, the Parthenon also began operating as a bank during the Peloponnesian War. The 5th century BCE historian, Thucydides, wrote how the Delian League’s war effort was funded by this Bank of Athena:

“Their strength came from the financial income they paid and that, for the most part, success in war was a matter of judgment and abundant revenues. He told them they could take confidence, since six hundred talents in tribute usually came in every year from the allies apart from other revenue, and on the acropolis there was still six thousand talents in coined silver remaining at that time (the largest amount had been nine thousand seven hundred, from which they had made expenditures for the gateway of the acropolis and the other buildings as well as for Portiada) and, apart from that, uncoined silver in private and public dedications, and there was all the sacred equipment for processions and contests and booty from the Mede and everything else of that sort, not less than five hundred talents; going further, he added the considerable amount from the other sanctuaries.”

Bullion from the Parthenon as well as golden statues were used to make minted coins, but the banking activities of the Athena Temple were not limited to holding and minting currency. The Temple made interest bearing loans for secular purposes, which it used to fund the war effort and building projects. The administrative structure of the Bank of Athena quickly assumed a character that very much resembled that of a modern bank.

Another decree from the Athenian authorities established a board of treasurers who oversaw operations of the Athena treasury. The board of treasurers managed all aspects, not only of the Athena bank, but also of the other local sanctuaries. The records indicate that each deity had property and funds assigned to them that were listed separately. The Athenian banking system was quite efficient and effective in the early stages of the Peloponnesian War, but things changed as the war endured. As the Spartan-led Peloponnesian League got the upper hand, the Athenian banking system began experiencing significant monetary problems. By the end of fiscal year 423/422 BCE, the Athenian debt to the sacred treasuries had reached 5,600 talents with an accumulated interest of 1,400 talents. Spartan victory in the war proved to be the final blow to Athenian hegemony, but Athenian banking concepts survived.

When Alexander the Great died in 323 BCE, his empire was divided by his generals into several kingdoms, signaling the start of the Hellenistic Era. This period was marked by the spread of Greek art, language, and culture in general, which also included coinage, monetary theory, and banking. Greek inspired banking and economics was perhaps the most evident in Ptolemaic Egypt.

Egypt was a fertile location for the adoption of Greek banking and monetary theories because it was home to preexisting advanced economic ideas. Egyptian documents show that from about 3100 BCE Egyptians used weights and measures that functioned as a type of currency. In the 12th dynasty (c. 1985-1773 BCE), the Egyptians standardized these weights into an advanced system. The deben was a unit of measure that equaled about 93.3 grams, while a kite equaled slightly less than ten grams. One deben equaled ten kites. The deben was used as a measure of copper, silver, or gold while the kite was used only to measure the more precious elements of gold and silver. This system of proto-currency made it more likely that the Egyptians would adapt to the other advanced economic ideas introduced by the Ptolemies.

The second king of the Ptolemaic dynasty, Ptolemy II (ruled 284-246 BCE), was an active ruler who commissioned many public works projects. Ptolemy II funded the construction of the Lighthouse of Alexandria and possibly the Library of Alexandria, although the latter was likely started during the rule of his father. A canal that linked the Red Sea to the Mediterranean Sea was also built during Ptolemy II’s rule. All of these ambitious projects were expensive and required sound monetary and banking policy to fund them.

Ptolemy II embarked on these energetic public works projects while adopting some Greek banking and monetary policies. Coin currency obviously made person-to-person transactions easier, but it also opened the door for the emergence of banking in Egypt. Ptolemy I (ruled 302-282 BCE) introduced coinage to Egypt, which was based on the drachma used throughout the Greek world. Due to a lack of silver mines in Egypt, the Ptolemaic drachma weighed less then other drachmas and those used within Egypt were made of bronze. The amount of bronze coins circulating greatly increased during Ptolemy II’s rule, partially due to the requirement to pay taxes with coins. The ubiquitous yet cumbersome nature of hard currency meant that a banking system was needed for the collection of taxes and the loaning of credit.

Ptolemy II oversaw the formation of a banking system in Egypt that borrowed from the Athenian system, but also added some new details. There were both state and private banks that were licensed and franchised by the crown, with at least one bank in the capital of every nome (province). Royal banks collected coin taxes and both royal and private banks awarded credit and loans to private individuals at the exorbitant rate of 24%. Needless to say, the high, fixed interest rate prevented the development of a credit and debt economy.

As the Ptolemies refashioned Egypt’s economy to more closely align with that of the Greek world, the Romans were initiating their own banking and monetary changes while drawing inspiration from Greek precedents.

The first Roman silver coins were probably minted to commemorate the completion of the Via Appia from Rome to Capua in 312 BCE. Instead of using the widespread drachma as a currency standard, the Romans created the silver denarius as their standard coin. In addition to the denarius, the Romans also minted the sesterce, which was a bronze coin. Four sesterces equaled one denarius, and in an order below was the copper as, four of which equaled one sesterces. As the medium valued in currency among the three denominations, the sesterce was the most commonly used coin for peer to peer transactions. Roman coins were technically worth their weight in silver, bronze, or copper, but the state did hold large amounts of gold. The coins were also minted by the state, which is where Roman banking and monetary theory emanated.

Romans generally considered banking a lowly profession that was on par with acting. This was likely due to the fact that making money from interest on loans was seen as an unworthy profession. Not all Roman banks and bankers profited from interest, but it appears several did and many utilized relatively modern monetary policies such as fractional reserve banking. This simply means that banks that practiced this policy would lend a portion of their reserves at interest. Roman records show that loans were referred to as a nomen or nomina (name), as they referred to the names of the debtors.

Roman banks were structured similar to the Ptolemaic model, with the state bank having a monopoly on minting but also allowing for private bankers. Banks and bankers were further divided into two primary categories by function. The faeneratores were moneylenders who functioned more like modern brokers and intermediaries while argentarii were similar to traditional bankers.

Primary historical sources offer a glimpse into how Roman banking worked and how the average Roman perceived the profession. The 1st century CE Roman biographer, Suetonius, wrote that two of Rome’s illustrious emperors had bankers in their families. None other than Augustus (ruled 27 BCE – 14 CE) had a grandfather who was described as a “money-changer,” possibly a faeneratore. And Suetonius wrote that one of Vespasian’s (ruled 69-79 CE) grandfathers “later turned banker among the Helvetii.” Apparently the fact that bankers were in those two emperors’ families did not inhibit their rises to power. Banking was obviously a relatively complicated system in the way it functioned as well as how it was perceived by the people.