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

Historical Violations of the Legal PrinciplesGoverning the Monetary Irregular-Deposit Contract 51amounted to sixty talents; given a constant value for gold, thiswould add up to nearly forty-four million dollars. 22BANKING IN THE HELLENISTIC WORLDThe Hellenistic period, especially Ptolemaic Egypt, was aturning point in the history of banking because it marked thecreation of the first government bank. The Ptolemies soonrealized how profitable private banks were, and instead ofmonitoring and cracking down on bankers’ fraudulent activities,decided to cash in on the overall situation by starting agovernment-run bank which would conduct business withthe “prestige” of the state.Although there was never a true government monopoly onbanking, and private banks (mostly run by Greeks) continuedto operate, Egypt’s prosperity secured a predominant role forthe state bank. Rostovtzeff observes that the Ptolemaic bankalso developed a sophisticated accounting system:Refined accounting, based on a well-defined professionalterminology, replaced the rather primitive accounting offourth-century Athens. 23Several archaeological studies show how widespreadbanking was during the Hellenistic period in Egypt. Anincomplete document found in Tebtunis containing dailyaccount records of a rural bank in the province of Heracleopolisshows the unexpectedly high number of villagers22 Trigo Portela, “Historia de la banca,” p. 238. Raymond Bogaert, in contrast,estimates Passio’s annual income before his death at nine talents,several times larger:Cela donne en tout pour environ 9 talents de revenus annuels.On comprend que le banquier ait pu constituer en peu d’annéesun important patrimonie, faire des dons généreux à lacité et faire les frais de cinq triérchies. (Bogaert, Banques et banquiersdans les cités grecques, p. 367 and also Cohen, AthenianEconomy and Society, p. 67)23 Michael Rostovtzeff, The Social and Economic History of the HellenisticWorld (Oxford: Oxford University Press, 1953), vol. 1, p. 405.