The trade in the ancient world developed very quickly – with the introduction of the first transport options. Shortly after the idea that people could trade with each other, another idea came up. Namely, to lend a certain amount of money or thing, the borrower promising to repay it later.
Babylonians and Assyrians: very first known loans
The very first known loans were between Babylonians and Assyrians in about 1300 BC. Shortly afterwards, other people living in the Mediterranean, such as Phoenicians, Greeks, Romans and Carthaginians, started to use the credit. At the beginning of our era, the vast area of the Roman Empire quickly helped develop the credit business.
After the collapse of the Roman Empire, the loans were very widely used, because at that time there were a lot of territories through which the money was not a safe decision. Therefore, it was easier to make different types of payments with loans and badges. In the Middle Ages (around 500 to 1500), lending was an essential part of the wealth of cities and cities across Italy. At that time, no trade without loans was conceivable. Borrowers or lenders could be found in any part of the community – both poor and rich. It has been claimed that such transactions have involved even the Pope of Rome and other senior members of the Christian Church. In the Middle Ages there were various forms of credit.
What is “Sea Loans”?
One of them was ” sea loans ”, where a capitalist, or a big money owner, issued a certain amount of money to merchants. If the trip with the ship and the trade was successful, the capitalist could make a significant profit. However, there was a risk that the ship would disappear and that all the money invested would be lost. The spread of credit on the American continent has made a major contribution to credit development. The first case of credit was related to English colonization in the early 17th century. Mayflower’s trip from England to the now-known Plymouth city in Massachusetts was a great achievement, but the cost of the trip was very high. The pilgrims who went on this trip were looking for funding for the trip for 3 years. A wealthy merchant in London agreed to pay the money provided, provided that pilgrims will have to work for 7 years to pay for that money. After several times the agreed time limit, the loan was paid after 25 years. In 1783, when the US War of Independence ended, trade between the new US and Europe could recover.
Loan issuers also continued to operate legally. The maturity of the loans at this time was from 6 to 24 months. There were also exceptional cases in which they were repaid for a much longer period. In the 19th century, loan repayment terms were very well reflected in the rapidly growing economy. The 12-month maturity was one of the most popular, but in 1830 the average maturity of the loan was only 6 months. The financial crisis of 1837 in the US due to the centralized banking system and various other errors was a stepping stone for credit agencies. A couple of them developed and are also present today. Credit can be defined as a loan for a certain period of time.
Its origins lie in a very ancient past.
This business has been occurring at different times, and all layers of society have been part of it. The credit industry is an important part of the economies of several countries and has directly affected a number of important financial developments. In spite of all this, the nature of credit has never changed, because people have had and will most likely need the money to get the coveted property as soon as possible or to achieve their goal.