Loan Rates today

Credit rates today

Rome Loan At the end of the third millennium A.D. Aurelia Taesis, an analphabetic lady from Memphis in Egypt, died of illiteracy and died of her death, but left his debts of 18,000 drachma beans. She was a solitary women without a fortune and was compelled to look for help in dealing with debts.

However, the lady who loaned her the cash to pay off the debts was not a philanthropist: She was still the debtor of Karanis and the creditor from the Karanis settlement had a right to all the properties of Karanis until the loan was repaid. Rather than pay interest on the loan, it had to make its arts of weave and domestic service available to the creditor on a full-time base.

Considering the unlikely fact that Aurelia was ever able to repay the loan by "signing" a paper she couldn't even see, she sold herself mainly because of her father's debts for the remainder of her home slavery period in a town about 30 yards from her house. This is because it is presented to us along with hundreds of other everyday papers in the shape of Papyrus, originally gathered by the Victorians and archeologists.

However, it is not only Papyrus that tells us about the practices of giving cash to the needy in the Roman Empire. Recently unscrambled "Bloomberg" pills found in the City of London show that credit was part of daily routine throughout Empire. Yearly interest rates for these pawnshops credits fluctuated between 45 and 75 percent per year, which is very similar to the interest rates currently charged by pawnshops, but well below the interest rates charged by some credit institutions, which can rise above 1,000 percent per year.

Even though the pawnee and some other evidence suggest that it was professionals and semi-professional creditors who provided these relatively small credits, many of the credits granted in Ancient Rome were peer-to-peer. Several of them were literal payment day credits, as for example in Ad 140, when Antonius Heronianus, a trooper of the first cohesion of a roman army force, had to lend from his companion Iulius Serenus an amount in Silberdenarii which he pledged to repay with interest once he had gotten his wage.

Most of the credits in an agro-dominant community like Egyptian Rome, however, were payment day credits, in the meaning that the debts would have to be repaid after the "payday" of the crop. Empire was very conscious of the risks of high interest rate credit. As the avoidance of societal turmoil was a central goal of the Rome province administration, the state interfered to avoid the most serious excess of loan dogfish.

Firstly, interest rates in Egyptian Rome were capped at 12 per cent per year for bank notes, which was a decrease from the 24 per cerce ceiling before the Ptolemaic period of Rome's occupation. However, instead of thinking in percentage rates, individuals thought in multipliers and fractions: so if you pay one per 100 loaned individuals, for every monthly period in which you had the loan, this corresponds to an interest rate of 12 drachma on a 100 drachma loan for one year - or 12 percent on our conditions.

There have been some successes in this effort to restrict interest rates, but there are many instances of higher interest rate credits, although they never approach today's payment day loan rates, especially for smaller sums. Like always, it was the smaller debtor who was paying the higher interest. However, there was an easy way around such constraints, as it was likely that in some cases the amount actually disbursed to the borrowers was less than the amount stated in the documents.

Moreover, the sum of interest payments in Egypt never could have exceeded the amount of raised funds. We see here an impartial approach: defaulters could be arrested, but those who felt they had a complaint against a creditor had the right to turn to the authority, as they did when Publius Marcius Crispus, an épistrategus, one of the chief trustees in Egypt, got this Petition in ad 147:

Ptolemy is one of these men... ruthless in his behavior and violence, leads the lives of a money lender and commits every disrespectful and prohibited act by charging interest at the level of one statesman per minute [an interest fee of 48 per cent] per months, due to the powers he has in the nom, disregarding the rulings of the prefs and the decrees of the Kaiser.

Others will also find that in a few years they have received eightfold the principal from someone else, although it is prohibited to charge more interest than the principal over the life of the loan. Ptolemy, the plaintiff, has requested that the interest he owe be capped at 12 per cent as required by statute, but we do not know whether he was successful in his claim.

So, can we draw anything from the ancient Rome experiences? Maybe the crux is that percentages do not need to be understandable in order to be effectively restrictions on extortionate practice. Humans could understand what they were paid in interest under total monetary conditions and could object if they felt that they were being abused.

Maybe we could use similar practice to clarify the realities of high interest rates for those who need a loan. Kelly is a LAHP-funded doctoral candidate doing financial research at King's College London in Egypt, Rome.

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