Early Lending & Credit
Long before stock markets, people borrowed, lent and charged interest. Here is how credit began in ancient Mesopotamia, how Italian bankers built modern finance and why those ideas still shape markets today.
Ancient loans
Some of the oldest written records are loan contracts on clay tablets from Mesopotamia. Farmers borrowed grain or silver and repaid after the harvest with interest. Around 1754 B.C., the Code of Hammurabi set maximum interest rates: about 33% a year on grain loans and 20% on silver.
Milestones in credit
| When | Milestone |
|---|---|
| About 1754 B.C. | Code of Hammurabi caps interest rates |
| 1100s | Venice borrows from its citizens through tradable government loans |
| 1397 | The Medici Bank is founded in Florence |
| 1494 | Luca Pacioli publishes the first printed guide to double-entry bookkeeping |
| 1694 | The Bank of England is founded to lend to the government |
Public-record history; early dates are approximate.
Italian bankers
Medieval Italian bankers, sitting at benches called “banca,” changed money and made loans. They spread the bill of exchange, a paper promise that let merchants move money across Europe without carrying coins. Double-entry bookkeeping, where every transaction is recorded twice, let businesses track profits and debts accurately, and is still the basis of every balance sheet.
Double-entry bookkeeping still underlies every balance sheet.
Why it matters today
- Interest is the price of time, a concept thousands of years old.
- Government borrowing created the first large tradable securities.
- Trust and record-keeping made lending between strangers possible.
- Every modern bond, loan and bank account descends from these ideas.
Key takeaways
- Loans with interest date back to ancient Mesopotamia.
- Hammurabi’s code capped interest rates.
- Italian bankers spread bills of exchange and double-entry bookkeeping.
- Government borrowing created early tradable securities.