June 5, 2023

A History of Loans: People Borrowing Money Through the Ages


When did people begin trading? When did money first come into the picture? These are interesting questions to ponder as you pay your loans and calculate rents and mortgages. It’s the kind of question you’d want to ask your local mortgage company, but each has a different answer for the same question.

One thing everyone agrees with is that money has no actual value. Its value may be determined by different governments and their various financial institutions. Mainly, the value of money is equivalent to the level of importance and almost reverence that people put on it.

Money is useful. It helps people trade goods and services for a certain amount and put a price on the amount of service rendered or the product being sold. It also helps people keep track of how their own ‘value’ rises as they acquire properties.

Let’s look at how money — and in this case, loans — started and when it connected to the modern age.

During Pre-Historic Times

The world first saw the use of coins as currency in 600 B.C. During that time, the region is known as Lydia (located in modern-day Turkey), and they built an industrial facility to create these coins. It was used for everyday trading and as general currency to be used by people.

About a century or so later, the Chinese followed the example of the Lydians. Perhaps it was because of the trade that came to them from the area or bought to them by traders. They followed the system of coin currency and devised their own, a network of using paper money as currency. This happened during 770 B.C.

In Rome and Greece of Antiquity

Rome and Greece were considered the models of modern societies on how communities should function. It’s no surprise that these people adopted forms of currency to create a system of finance in their respective communities. While they were more than some time apart in establishing contact, the Romans managed to follow the Greeks’ finance practices.

The system of pawn brokerage, or lending money with security in the form of items as collateral, was observed in these societies. As small as a jar or as large as property, any item was held in faith to keep the risk down for the person or entity lending money.

The Middle Ages: The Age of Venice

During medieval times, Venice was the place to be. It was a progressively rich place thanks to the financial scene happening here. There was a bit of controversy in the practices here, which was observed between the Christians and the Jews.

At that time, Christians weren’t allowed to lend money with interest. Jews were a different case; they could lend with interest to non-Jews. Most traders in Venice preferred to transact with Jews rather than Christians, as they could lend with interest compared to Christians.

The 18th Century: From Early to Late

This was the age of the affluent societies, of the Rothschilds and the different associations in the U.K. Mayer Amschel Rothschild “came up” with international banking when five of his sons settled in Five European cities. This created a network where money flowed back to the family, making them one of the wealthiest clans in work.

Societies in the UK and Birmingham also sprouted in coffee houses and taverns. One such society was Ketley’s Building Society, found in 1775 by the owner and landlord of an inn. Monthly subscriptions from members financed the building of structures owned by the society, mostly member houses.

From 1932 to 70s: Foundations of the Modern Age

The US Congress and other businessmen were most active during this age. The Federal Home Loan Bank system came into existence during this age. This was to create an easier way of mortgage financing, creating ways for the residential mortgages to be used as lending collateral.

Credit cards and the computerization of transactions also happened during this age. The Diners Club card occurred, which was initially a small cardboard card. The BankAmericard — later Visa — was also launched by the Bank of America in Fresno, California.

To this day, some forms of lending and trading retain their old forms. We’ve also seen how technology has aided financial institutions in creating new ways of making deals and doing transactions. Some people prefer to use virtual currencies, and they are also encouraged right now to limit contact between persons. As technology continues its steady move, it is expected that we’ll see new forms of doing business rise, founded on these ancient and time-tested traditional ways of dealing with money.