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

Historical Violations of the Legal PrinciplesGoverning the Monetary Irregular-Deposit Contract 53making deposits as well as payments. In addition, due to theirhighly-developed accounting system, paying debts throughbanks became extremely convenient, as there was an officialrecord of transactions—an important piece of evidence in caseof litigation.The Hellenistic banking system outlived the Ptolemaicdynasty and was preserved during Roman rule with minorchanges. In fact, Ptolemaic centralized banking had someinfluence on the Roman Empire: a curious fact is that Dio Cassius,in his well-known Maecenas speech, advocates the creationof a Roman government bank which would offer loansto everyone (especially landowners) at reasonable interestrates. The bank would draw its capital from earnings on allstate-owned property. 25 Dio Cassius’s proposal was never putinto practice.BANKING IN ROMESince there are no Latin equivalents of the speeches byIsocrates and Demosthenes, Roman banks are not documentedin as much detail as their Greek counterparts. However,we know from Roman law that banking and the monetaryirregular deposit were highly developed, and we havealready considered (in chapter 1) the regulations classicalRoman jurists provided in this area. Indeed, Roman argentariiwere not considered free to use the tantundem of deposits asthey pleased, but were obliged to safeguard it with the utmostdiligence. This is precisely why money deposits did not payinterest and in theory were not to be lent, although the depositorcould authorize the bank to use the money for makingpayments in his name. Likewise, bankers took in time“deposits,” which were actually loans to the bank or mutuumcontracts. These paid interest and conferred upon bankers theright to use the funds as they thought fit for the duration ofthe agreed-upon term. References to these practices appear asearly as 350 B.C. in comedies such as Plautus’s Captivi, Asinariaand Mostellaria, and Terence’s Phormio, where we find25 Ibid., p. 623.