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

40 Money, Bank Credit, and Economic Cyclesthe bankers privileges so they could carry out their activitieswith impunity in exchange for specific favors, but they haveeven created government banks in order to directly takeadvantage of the corresponding profits.Although banking activities developed long ago and practicallycoincided with the appearance of money, the dawn oftrade, and the first steps in the division of labor 3 , we will presentand illustrate the violation of traditional legal principles in3 The archeologist Lenor Mant discovered among the ruins of Babylon aclay tablet with an inscription attesting to intercity trading and the useof commercial and financial means of payment. The tablet mentions anArdu-Nama (the drawer, of the city of Ur) ordering a Marduk-Bal-at-Irib (the drawee) of the city of Orkoe to pay in Ardu-Nama’s name thesum of four minas and fifteen shekels of silver to Bel-Abal-Iddin withina set time period. This document is dated the 14th of Arakhsamna, year2 of the reign of Nabonaid. For his part, the researcher Hilprecht discoveredin the ruins of the city of Nippur a total of 730 baked clay tabletswith inscriptions, thought to have belonged to the archives of a bankexisting in the city in 400 B.C., called Nurashu and Sons (see “Origen ydesenvolvimiento histórico de los bancos,” in the Enciclopedia universalilustrada europeo-americana [Madrid: Editorial Espasa-Calpe, 1979], vol.7, p. 477). In turn, Joaquín Trigo, apart from offering us the above information,reports that around the year 3300 B.C. the temple of Uruk ownedthe land it exploited, received offerings and deposits and granted loansto farmers and merchants of livestock and grain, becoming the first bankin history. In the British Museum we also find tablets recording the financialoperations of the bank Sons of Egibi. The sequence of the tabletsdemonstrates that from the time of the Assyrians, and for more than 180years, the institution was controlled by a true financial dynasty. TheCode of Hammurabi facilitated the transfer of property and strictly regulatedthe rights associated with it, as well as commercial activity, limitinginterest rates and even establishing public loans at 12.5 percent. Partnershipagreements were also regulated, as was the keeping of accountsof operations. The Manu Smriti of India also makes reference to bankingand financial operations. In short, remaining records indicate that financialoperations occurred between 2300 and 2100 B.C., though the spreadof the “banking” business began between 730 and 540 B.C., when Assyrianand New Babylonian dynasties ensured safe trade, which gave riseto specialized banks. This activity also spread to Egypt, and later fromthere to the Ancient Greek world (Joaquín Trigo Portela, “Historia de labanca,” chapter 3 of the Enciclopedia práctica de la banca (Barcelona: EditorialPlaneta, 1989), vol. 6, esp. pp. 234–37).