Saturday, January 7, 2017

"The Evolution of Private Loan Agreements"

Ms. Ou has an interesting history that both Bloomberg and FT Alphaville have looked at.
She's pretty sharp.
Here's one of her older pieces that was sitting in the linkvault and that I had meant to post.
From her personal blog, Elaine's Idle Mind:
Adab, Mesopotamia. ca. 2900 BC

LUM-ma: Hey, can I borrow some barley to feed my kids? Harvest didn’t turn out so good this year.
MUG-si: You’ll pay me back next season?
LUM-ma: Yeah, totally.
MUG-si: Can I get that in writing?
LUM-ma: Sure, here you go:

Source: Early Dynastic and Early Sargonic Tablets from Adab in the Cornell University Collections [1]. Names are made up.
Source: Early Dynastic and Early Sargonic Tablets from Adab in the Cornell University Collections [1]. Names are made up.
Akkad, Mesopotamia. ca. 2750 BC 
Farmer #1: Dammit, I’ve been drafted to go fight in Sumer. I don’t have time for this, I have farm stuff to do.
Farmer #2: I’ll take care of your farm while you’re gone. When you come back, we’ll split the harvest.
Farmer #1: Hell no, last time we tried this you let my fields get overrun with weeds and crocodiles.
Farmer #2: My buddy will guarantee that I follow through this time. If I screw up, he’ll compensate you for damages. He’s a merchant right here in Akkad so you know you can trust him.
Farmer #1: Fine. Can I get this in writing?
Farmer #2: Yup! Here:

This represents the first known surety bond [2].
This represents the first known surety bond involving a third-party guarantor [2].
Babylon, Mesopotamia. 1820 BC 
Ilshu-bani: Can you spot me a couple shekels of silver? I need to buy some seeds.
Sin-tajjar: Ugh, I’m so sick of you always borrowing money from me. Get a job, man.
Ilshu-bani: I’ll pay you back at harvest time!
Sin-tajjar: That’s seven months from now. Don’t you understand the time value of money? I’ll loan you the shekels at 20% interest.
Ilshu-bani: 20%?! Good grief! What if I can’t pay that back?
Sin-tajjar: I’m not too worried. If you can’t pay me back, I get to make you my slave. Apparently that’s a law now.
Ilshu-bani: Freaking Hammurabi.
Sin-tajjar: Do you want the silver or not?
Ilshu-bani: Fine.
Sin-tajjar: Cool. Just print your name here:

Contract terms on the front, names of participants and witnesses on the back.
 
Contract terms on the front, names of participants and witnesses on the back [3]. The Code of Hammurabi put the first legal code in place to turn tribal customs into common law. The Code included standard interest rates.
Arsinoites nome, Egypt. 172 BC. 
Aristokles: Can I borrow 3 talents and 780 drachma for 13 months?
Theokles: Sure, I charge 24% interest.
Aristokles: No problem.
Theokles: What happens if you don’t pay me back?
Aristokles: You get to have my wife!
Theokles: I’d… really rather have the money.
Aristokles: Nah, take my wife. Here, I’ll even put it writing for you:

A note in the right margin seems to indicate that (after some time?) both participants were dead, the affair had devolved to the sons of the contracting parties, and only the wife was still alive [4]
 
A note in the right margin seems to indicate that (after some time?) both participants were dead, the affair had devolved to the sons of the contracting parties, and only the wife was still alive. Source: Advanced Papyrological Information System [4]
Rome, Roman Republic. 100 AD....

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