Banking

The ancient and modern Greek word for bank is trapeza, literally "table," based on the original conception of a money changer conducting business on a tabletop. By strict definition, as provided by the fourth-century Athenian orator Demosthenes (36.11), a trapeza is "a business operation producing risk-laden revenues from other people's money." In short, the "bank" went from being a money changer to being an entity that guarded and invested other people's

Money while under constraint to return said money upon demand. Usually, the money entrusted to the bank was invested in interest-bearing loans to a variety of merchants and venturists. (It was a system much like today's, but without the free toasters for opening new accounts.)

The earliest "banks" were, in fact, the temples. As mentioned above, religion was a common form of wealth acquisition in ancient Greece, especially in the form of dedications stored in temples or treasuries. The temples could then invest the money from their treasures as needed. For example, the Temple of Athena in Athens loaned money to the state between the years 433-427 b. c.e. at 6 percent interest. This was a generous arrangement, as interest rates of up to 30 percent were levied on loans made to merchants and shipmasters, obviously to cover the probability of business failure or sinkage (Gkamas 2000, 214).

The earliest known non-temple-oriented banker was Philostephanos of Corinth, who is recorded as having received an investment of 70 talents from one Themistocles. In fourth-century Athens, the most famous banker was Pa-sio, remarkable not only for his wealth but also because he was a former slave, having inherited the bank from his former masters (see chapter 6). There was nothing especially unusual about this—slave manumission was quite common, especially for highly skilled, highly trained slaves. Furthermore, Athenian citizens seldom held the office of banker. As a profession that ultimately depended on the work and money of others, banking was not seen as a particularly respectable occupation; usually only metics and slaves who were prevented from owning land engaged in it (Gkamas 2000, 214).

By the late Classical and early Hellenistic periods, the poleis were coming to appreciate the benefits of banking, and state banks began to appear, beginning in Miletos and quickly extending to such regions as Cos, Ephesus, and Sardis. Perhaps the largest such establishment was the state bank of Alexandria, established by the Ptolemies and continuing into the Roman era. The primary responsibilities of the Bank of Alexandria were the guardianship of state revenues and the collection of taxes, although private individuals could also invest their money in this bank. Complementing the official state bank was a system of corn banks and private banks. Corn banks functioned in many respects the same way "coin" banks did, especially as corn virtually served as currency in Egypt. Government granaries existed throughout Egypt, all centralized through a main corn bank in Alexandria. The private banks, like the state bank, received monies and made investments. Unlike the state bank, however, the regulations and requirements for obtaining a business loan from the private banks were not so severe, and thus these smaller institutions were more influential in making the loans necessary for the functioning of the nonagricultural aspects of society (Gkamas 2000, 214)