My post from last month highlighting a number of less well known inventions from the ancient Near East proved quite popular, so a sequel is of course forthcoming. Once again, this series avoids covering well known innovations like cities, writing, schools, agriculture and the wheel. Here are some more inventions that you may not know came from the ancient Near East.
1. Investment Banking
Modern banking traces its origins to Babylonian temples in the early 2nd millennium BC. Ancient Mesopotamian temples always had a redistributive economic function. Temples took in donations and tax revenue and amassed great wealth. They then redistributed these goods to people in need such as widows, orphans, and the poor (sometimes the temples became corrupt and hoarded wealth, but that’s a topic for another article).
After a thousand years of this, the priests who ran the temples were literally sitting on giant piles of money. So around the time of Hammurabi (in the 18th century BC), they began to make loans. Old Babylonian temples made numerous loans to poor and needy entrepreneurs. The loans were made at reduced below-market interest rates lower than those offered on loans given by private individuals, and sometimes arrangements were made for the creditor to make food donations to the temple instead of repaying interest.
Nevertheless, the temples still lacked many of the features of a full bank. They did not take deposits, issue checks, or engage in fractional reserve banking. They were religious institutions offering loans as a charity service, closer to modern microfinance initiatives than to Goldman Sachs.
Something closer to modern banking emerged in the neo-Babylonian period in the 7th century BC. Banking was conducted by certain families who passed the trade on from parents to children. The Ea-iluta-bani family of the city of Borsippa was active from 687 to 487 BC. Beginning as mid-level land owners possessing several tracts of agricultural land, the men of the family married well, received decent sized dowries, and invested their liquid assets (mostly silver and food products) in loans.
Numerous contract documents have been recovered which list recipients of loans, the amount loaned, the term of the loan and the interest rate to be paid. When the loan was repaid, the tablet was usually broken. This gives us a possibly skewed picture of loans, because the only tablets we can read are from the loans that were not repaid.
What we can tell is that the Ea-iluta-bani family generally loaned at 20% annual interest. In other cases, possibly when the debtor was less reliable, items were taken as security in lieu of interest. If the loan was not repaid, the item would be kept and sold. Sometimes the security was an item that increased in value, such as a slave that could perform service for the creditors for the duration of the loan. This was in effect a disguised form of interest.
The Ea-iluta-bani family tended to make about half of their loans in silver and the other half in food products. There were no coins in use, so silver was measured by weight and purity. Silver had the advantage of having a fairly constant value. Food products on the other hand tended to decrease in value shortly after the harvest time and increase in value during times of the year when they were less plentiful. The family, therefore, tried structure contracts so as to lend out foodstuffs when they were cheapest and get repaid when they were more more expensive, making a greater profit.
Silver, on the other hand, could be loaned out at any time. 80% of our surviving contracts are for periods six months or less, but this may simply indicate that short term loans were less likely to be repaid. The Ea-iluta-bani family women would often loan out their dowry as a long term investment in order to make a steady stream of profit from interest payments.
By the time of the Persian Empire, finance was a major business in the cities Babylon, Borsippa, Sippar, Uruk, Nippur, Uruk, Larsa and Ur. Banking families such as the Egbi in Babylon, Iddin-Nabu of Babylon and Murashu of Nippur became very wealthy and even engaged in international commerce with countries outside of Mesopotamia. The Murashu broadened their investments under Persian rule, in addition to simple loans they branched out into real estate and managed and rented land. Due to their large land holdings, the Murashu family became extremely powerful in Persian-controlled Mesopotamia. They may have become too powerful. All record of their activity ceases after the 10th year of Darius II in 413 BC. Either the records are lost, or Darius moved to end their power.
2. Poison Gas
In AD 256, the Sassanid Persians under Shah Shapur I laid siege to the Roman border fortress town of Dura-Europos in Syria on the Euphrates River. During the assault, the Persians built several siege ramps. They also dug a number of mines to try and cause the walls of the fortress to collapse.