From: Robert Hettinga <rah@shipwright.com>
Date: Wed, 24 Dec 1997 12:43:29 +0800
To: cypherpunks@cyberpass.net
Subject: Ancient Banking History
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Date: Tue, 23 Dec 1997 08:45:55 -0500
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From: Robert Hettinga <rah@shipwright.com>
Subject: Ancient Banking History
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From: Frank Sudia <aurelius@panix.com>
To: Digital Commerce Society of Boston <dcsb@ai.mit.edu>
cc: Kawika Daguio <kdaguio@aba.com>, Richard Field <field@pipeline.com>,
        Stewart Baker <sbaker@ns.steptoe.com>,
        Frank Sudia <frank.sudia@bankerstrust.com>,
        Bernard Frischer <frischer49@aol.com>
Subject: Ancient Banking History
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Reply-To: Frank Sudia <aurelius@panix.com>

Dear Friends,

 One key problem facing many who seek to reinvent tha banking system is
 that they are only dimly acquainted with banking.  Indeed many of us who
 work for banks also suffer this problem, because banking has become so
 encrusted with concepts from different eras that it's difficult to tell
 what is fundamental.

 So whilst we are attempting reinvent ourselves it might behoove us to get
 back to basics, which is what you get from "Athenian Society & Economy: A
 Banking Perspective," by Edward E. Cohen, Princeton, 1992.  (Amazon)

 Drawing on empricial evidence, Cohen presents an intensive study of
 Athenian banking practices during the 80 year period between the defeat of
 Athens in the Peloponnesian Wars and the death of Alexander the Great in
 323 BC. First he debunks the myth that there were no commercial loans, and
 then goes on to adduce complex banking transactions carried on with only a
 bag of silver coins and a table ("trapeza" in Greek, "banc(h)a" in Italian
 and most other languages).  According to Demosthenes, a trapeza is "a
 business operation producing a risk-laden return from other people's
 money."  Seeing these transactions arising in their simplest forms is very
 instructive, because it shows you what really matters about them.

 The trapeza took deposits and made loans, some of the proceeds of which
 were redeposited (and reloaned), thus expanding the money supply without
 fiat currency.  There was zero government regulation!  There were no
 checks, as payors and payees all showed up in person.  There were bills of
 exchange to minimize transport of coins.  There were 6,000 drachmas in a
 talent, and (I think) 20 drachmas in a Cyzicene stater, another popular
 big coin.  Much of the business was undisclosed, to help clients reduce
 taxes, escape judgements, etc. Notions of interest were different: 1% a
 month for landed loans, 18-100% (per voyage) for maritime loans. Etc...

 I'm only part way thought it, but thought I would share this info, for all
 you history buffs out there.

 Cheers,
 Frank

 --------------------------------------------------------------
 	Frank W. Sudia, Consultant, BT Strategic Ventures
 	1 Bankers Trust Plaza, MS 2371, New York, NY 10006
 	Tel: 212-250-5242  Fax: 212-250-9347  Home: 212-809-5150
 	frank.sudia@bankerstrust.com
 --------------------------------------------------------------



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Robert Hettinga (rah@shipwright.com), Philodox
e$, 44 Farquhar Street, Boston, MA 02131 USA
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