BANKING

Banking enabled people in the ancient world to exchange money, obtain loans, and conduct other financial transactions. Certain individuals, such as priests and wealthy businessmen, usually provided these financial services. Gradually, both private and public banks developed throughout the Greek world and the Roman empire.

In early Greece, most banking activities occurred in the temples. Priests provided loans to individuals and held deposits for them. A temple was a natural location for the safekeeping of money because it was a sacred place. Few people would dare to anger the gods by stealing anything from within a temple. Some financial transactions in the temple were purely verbal. Usually, however, people signed a written statement in the presence of witnesses, as proof of the loan or deposit.

As more Greek city-states began to coin money, the coinage differed from place to place. This led to the rise of professional money changers who knew the value of the various coins and could arrange for fair exchanges. Money changers set up tables at local markets in cities throughout Greece. They played an especially important role in trade, since merchants traveling through the Mediterranean world had to deal with various foreign currencies. In addition to exchanging coins, the money changers accepted deposits, transferred money between accounts, and made loans. In this way, they acted as private bankers. They usually operated as individuals but sometimes formed small associations. However, transactions occurred in the marketplaces or in private residences—not in banks, as they are today. By the 300s B.C., the money changers had taken most financial activities out of the temples.

During the Hellenistic* period, some Greek cities created public banks to conduct the financial business of the city. One of the most significant developments during this period was the creation of a large public banking system in Egypt under the Ptolemaic dynasty*. The most highly organized banking system in ancient times, it included a central bank in the city of Alexandria, a network of royal banks throughout Egypt, provincial* banks in important Egyptian cities, and branch banks in small cities and towns. This system employed thousands of people and carried out almost all the banking activities in Egypt. Its most important responsibilities included collecting tax revenues for the kingdom and supplying money for the monarchy’s expenses.

The Romans adopted certain banking practices from the Greeks and developed new ones. During the first centuries B.C. and A.D., most Roman banks were small. In place of professional bankers, wealthy businessmen and merchants conducted most financial transactions. They established new methods that improved the banking system. One of the most important of these was the introduction of bills of exchange, which are written authorizations to pay a sum of money to a specific person. This is similar to the use of checks today. Instead of cash transactions, most Roman bankers conducted business through these bills of exchange. This system gradually spread throughout the Roman world.

As the Roman empire expanded, the owners of large estates handled most local banking activities. As a result, banks remained small. During the A.D. 200s, however, the Roman imperial* government took over some banking within the empire and created a more organized banking system. Over time, the government passed laws to regulate the banking system, and some of these laws influenced banking during the Middle Ages and afterward. (See also Coinage; Money and Moneylending; Ptolemaic Dynasty.)

* Hellenistic referring to the Greek-influenced culture of the Mediterranean world during the three centuries after Alexander the Great, who died in 323 B.C.

* dynasty succession of rulers from the same family or group

* provincial referring to a province, an overseas area controlled by Rome

* imperial pertaining to an emperor or empire

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