Lending money has been a big part of human history. It dates back to ancient Mesopotamia, when people would lend each other money with the expectation of getting back their money in the future. In the Middle Ages, loaning money was a way of making money. However, in the Judeo-Christian religions, it was considered wrong to borrow money at interest. This influenced the development of philanthropy in the Italian Renaissance, when wealthy people began giving money to poor people as a way of appeasing their guilt over the way they had benefited by charging interest on their loans.
Loans originated in Mesopotamia
Loans originated in Mesopotamia, an ancient region of the Middle East. The region was populated by the ancient Sumerians, Akkadians, and Babylonians. It is the land between the Tigris and Euphrates, which flows into the Persian Gulf.
The first cities of Mesopotamia were Ur and Nineveh. They were located along the Euphrates. The dry climate of the region led to the need for irrigation. As a result, farmers began borrowing seeds against later payments.
This practice was extended in Mesopotamia by the wealthy private creditors. Those creditors were able to extract a fixed rate of return from the loans. In return for the loans, the creditors were able to accumulate wealth.
A great deal of the information about this practice comes from ancient Mesopotamian law codes. These laws were written on clay tablets. The most well-known Mesopotamian code is the Code of Hammurabi.
Banks take collateral to repay loans
Collateral is an asset that the lender may repossess if the borrower does not repay the loan. This reduces the risk for the lender.
Collateral can be a home, car or even a piece of jewelry. Some lenders allow borrowers to use their savings account as collateral.
The best type of collateral is cash. If a borrower is able to convert their savings into cash, the interest rate will be lower. For instance, a $3,000 deposit in a savings account is preferable over a $3,000 mortgage.
Collateral can also be an investment portfolio. An investment portfolio can include stocks, bonds and even Treasury bonds. It can be difficult to assess the value of an investment.
Usury taboo in Judeo-Christian religions
Many religious organizations and historical societies have considered usury to be wrong or illegal. However, the religious prohibitions against it are based on the belief that charging interest is a sin. For most of human history, the practice of moneylending was considered taboo.
The ancient Greeks outlawed usury on loans. In the Middle Ages, many historians considered usury to be a crime. As the global expansion of civilizations created new opportunities for capital, the demand for loaned money grew.
During the Reformation, the Church began to view moneylending more favorably. One example of this was a new financial instrument called zinskauf, which was a sale of a fixed amount of money for an annual income. This instrument was similar to an annuity.
Italian Renaissance philanthropy was inspired by guilt about how they’d profited from charging interest
The Italian Renaissance was a period of cultural and artistic progress in Italy, beginning in the late 14th century. Although its exact origins are still uncertain, historians point to a number of factors that contributed to its development. These include the emergence of new trade routes and a growing class of artisans. It also had an impact on the Papal States and Rome.
In the late 14th and early 15th centuries, the Italian economy was plagued by the Black Death, which wiped out more than a third of Europe’s population. During this period, a group of scholars based in Florence and Venice rediscovered Greek texts such as Homer, Tacitus, and other classical authors. This led to a revival of linguistic studies in the Renaissance academies of Florence and Venice.