Money, Bank Credit, and Economic Cycles - The Ludwig von Mises ...

Historical Violations of the Legal PrinciplesGoverning the Monetary Irregular-Deposit Contract 47Aristolochus, who owned a field “he bought while owingmoney to many people,” as well as of Sosynomus, Timodemus,and others who went bankrupt, and “when it was necessaryto pay those to whom they owed money, they all suspendedpayments and surrendered their assets to creditors.” 11Demosthenes wrote other speeches providing importantinformation on banking in Greece. For example, in “AgainstOlympiodorus, for Damages,” 12 he expressly states that a certainComoplaced some money on demand deposit in the bank of Heraclides,and the money was spent on the burial and other ritualceremonies and on the building of the funerary monument.In this case, the deceased made a demand deposit whichwas withdrawn by his heirs as soon as he died, to cover thecosts of burial. Still more information on banking practices isoffered in the speech “Against Timothy, for a Debt,” in whichDemosthenes affirms thatbankers have the custom of making entries for the amountsthey hand over, for the purpose of these funds, and fordeposits people make, so that the amounts given out andthose deposited are recorded for use when balancing thebooks. 1311 Demosthenes, Discursos privados I, Biblioteca Clásica Gredos (Madrid:Editorial Gredos, 1983), pp. 157–80. The passages from the text arefound on pp. 162, 164 and 176, respectively, of the above edition. Forinformation on the failure of Greek banks, see Edward E. Cohen, AthenianEconomy and Society: A Banking Perspective (Princeton, N.J.: PrincetonUniversity Press, 1992), pp. 215–24. Nevertheless, Cohen does not seemto understand the way in which bank credit expansions caused the economiccrises affecting the solvency of banks.12 Demosthenes, Discursos privados II, Biblioteca Clásica Gredos (Madrid:Editorial Gredos, 1983), pp. 79–98. The passage mentioned in the maintext is found on p. 86.13 Ibid., pp. 99–120. The passage cited is found on p. 102.