The History of Loans and Their Importance

Phoenician ship Carved on the face of a sarcophagus, 2nd century CE / Wikimedia Commons

There are dozens of different ways to view history. You can see history from the perspective of technologies, in which case you read the world in terms of the Agricultural Revolution, and the Industrial Revolution. You can think biologically, in Darwinian terms of evolution and survival of the fittest. You can think militarily, comparing the great conquering empires of the past. Or, you can think economically – measuring the world according to money and resources. In this article, we’ll take a short economic tour of world history, looking at how the humble loan became one of the world’s most important concepts, right up to the modern day.

Early Civilization

Loans might feel like something issued by a bank, and therefore requiring a complex formation of civilization to support, but actually the loan as a concept has been around for as long as trading has occurred between tribes. This means that before the first cities in Mesopotamia and Egypt, there were loans. Indeed, the creation of ‘money’ – as the New Yorker details – in the early years of humanity’s civilization was a sanctification of the idea of a loan, seeing as cash itself never had any intrinsic value – it simply promised the ability to exchange it for a useful commodity in the future.

Cities and Commerce

Fast-forward a few thousand years, and we arrive in the ancient world. Here, you can find countless examples of individuals and groups of guilds and merchants using loans in order to build fleets for trading, to invest in resources from afar, and to fund great engineering projects. At this time, the loan was one of the most important mechanisms by which civilizations such as the Phoenicians developed their network of city states across the Mediterranean. Individuals would loan boat builders the cash to build trading vessels. These individuals would then enjoy the profits of the vessels in the future.


Another two millennia land us in modern times – and these are times which we might call the ‘Capitalist Era’. Early Protestant Calvinism, which developed from the 17th century into a force in the Victorian times, posited that man should please God through his labor. This led to a huge increase in productivity, as the new capitalists worked harder and harder to accrue cash. The loan was in full swing during this early period of capitalism – funding factories, and the purchase of raw materials that were to be worked on in the new centers of industry.

Digital Age

The loan is fundamentally the same in the digital age, except it is far easier to secure, and far more important for individuals and families than it is for businesses and corporations. Generally, Cash loans can now be taken online, and they can land instantly into your bank account without your having to head into a local institution, wait in a queue, and have your details fastidiously checked and taken down. In this modern era, then, cash liquidity is at an all-time high, which enables more people to live better lives – all thanks to the humble loan.

Next time you get one of these modern small title loans – or something on credit – consider the thousands of years of history that have led to the creation of this basic, but important historical concept.



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