Episode 10. Echoes of Babylon: Unveiling the Ancient Roots of Finance and Banking Powerhouses

Embark on a voyage back in time to the bustling marketplaces and grand temples of the Neo-Babylonian Empire, where commerce thrived and the stakes were as high as the ziggurats. I, Mike D, am your guide into a world where the ancient Egibi banking dynasty laid the foundations for finance centuries before the Medici ever dreamed of in Florence. We'll navigate through the rise and fall of empires, witness the rise of Cyrus the Great, and dissect the economic regulations of an era brimming with innovation and change.

Feel the cobblestones underfoot as we trace business partnerships, the venture capital firms of antiquity, where risk was a dance with destiny, and profit a partner to the bold. Join me in examining the Egibi family's strategic genius, where commodity trading, land ownership, and financial services were masterfully intertwined. We'll also unravel the complex societal fabric of Neo-Babylon, where slaves played roles in business surprisingly akin to modern corporate executives, challenging our perceptions of ancient empires.

Concluding our historical saga, I'll illuminate how the economic threads woven by these ancient dynasties resonate still, shaping our understanding of money, trade, and the power of banking. From the birth of private enterprise in Babylon's fertile crescent to our current global markets, the journey of finance is a rich tapestry that tells the human story. For those drawn to the evolution of fiscal systems and the transformative impact of economic growth, this episode promises a treasury of insights. Join us as we explore the echoes of ancient finance that reverberate through the corridors of time.

Transcript

Speaker 1: 0:03

Welcome Podcast Listener. I am Mike D and this is the History of Money, banking and Trade Podcast. My goal is to expand your knowledge of the history and evolution of trade, along with money, banking and credit, from ancient civilizations all the way to the present. In this particular mini-series we are discussing the Neo-Babylonian Empire as we move from the fall of the Assyrians and then the subsequent rise of the Neo-Babylonian Empire and its economic life, where trade routes were arteries of prosperity and temples doubled as commercial hubs. This was kind of really a system that was basically set in place prior and the Neo-Babylonians were more or less kind of expanding upon this. So this is something that you would have seen initially with the rise of the Samarians around 3200 BCE, and it just kind of continue up to this day. But what we saw in the Neo-Babylonian Empire was this astronomical diaries that were records of market fluctuations, which showed that Babylonia was more or less market driven. From there we discussed the dramatic fall of the Neo-Babylonian Empire, along with the subsequent rise of Cyrus the Great, whose conquest more or less reshaped the map of the entire ancient world. But more importantly, we are able to see how markets were regulated during this relatively brief moment in time. In this next episode I wanted to get into a little bit more granular detail so that you can see how the Neo-Babylonian economy functioned through the eyes of just a couple of families. I feel like it's a useful tool to kind of really show how certain families started up from kind of I guess you could say obscurity and rose to be major power players in the ancient economic world.

Speaker 1: 2:04

Now I briefly mentioned the Agabee family. Now I want to be upfront. I'm not really sure if I'm pronouncing it correctly. I'm not sure if it's Agabee or Agabai. I might pronounce it both ways. I just don't know how it's really pronounced. I did look to see somebody else that pronounced it prior, but I couldn't really find any videos or anything that would indicate how to pronounce it properly. So there's a good chance that I'm pronouncing it incorrectly. I'm just not 100% sure. But I guess I'll just go with Agabee for now. But, like I said, it could be Agabai Just kind of want to throw it out there. So if you're listening, you understand that I just don't know how to pronounce it properly. But I did mention them prior and they happened to be one of the most widely known elites that were operating around this time Now, when I personally think of powerful banking families, the first family that really comes to my mind is the Medici and the Italian city states during the medieval period, or even the Fugars in Germany around that same time period, just a little bit later.

Speaker 1: 3:12

But powerful families really go back a lot further in time. We're talking nearly 2000 years before the Medici came out to the scene. We have this powerful family that was rising up through the Neobabalonian period and actually right through into the Persian Empire as well. So if this information about this family is so old, the question that I first asked is how did we know about this? Where did this information come from? And in this particular case it's somewhat unconventional and also controversial at that point when looking at it from a modern lens.

Speaker 1: 3:51

Now, my original idea when I first started reading about this family was, you know, the ancient Near East scholarship just sort of organically developed in Europe and then Near East obviously, or even in the Far East, and unfortunately it wasn't like this at all. Basically, what happened was people living in the Ottoman Empire in modern day Iraq, portion of it realized that Europeans were collecting these old, worthless scraps. The locals realized that they can just go find and collect old documents and sell it to Europeans to make an extra buck or two for the family. They were worthless anyway as far as they were concerned, so why not make a bit of money to provide for the family? And essentially, the local Ottomans were on the hunt. They were looking for these worthless documents that they can care less about. But someone happened to stumble upon nearly 4000 documents, but unfortunately about half were lost due to careless excavation and care after they were able to unearth their stuff. So the Europeans ended up collecting about 2000 documents related to the House of Agabey, of which, surprise surprise, most ended up in the British Museum. The rest had gone to other museums throughout Europe and America.

Speaker 1: 5:14

The families' power spanned five generations, from around 600 to 482 BCE, so they were there at the beginning of the Neo-Babylonian Empire and they were still there for 50 or so years after the Acomended Persian Empire had basically kicked off. It appears to me that even though the family or partnership may have had great entrepreneurial skills and abilities, the fact is they needed permission from the palace or the temple in order to operate their enterprise. So from my perspective, really before they really get going, it appears to me that they must have had some kind of political connections or at least really good communication skills to ensure that they were able to essentially get a license to operate. And obviously when you're in that kind of business you have to be able to sell yourself and they must have had that great ability from the very beginning. And that's not really uncommon. I mean, you see that with a lot of fantastic families that survive for a few generations or more, it usually started out with the architect of the family who really is a smooth talking, great solicitor of business and can really whine and dine people and essentially get their way. So it must have been the case that early on this family had the ability to basically smooth talk the right people at the right time.

Speaker 1: 6:45

Now there appears to be some conflicts as to the origins of the family. The original thought was they were started by a man named Jacob and therefore he must have had Jewish origins. But this may not be 100% accurate, as it's possible that they were native Babylonian and not Jewish. The reason why this started out was because the New York Times wrote a piece in 1879 documenting the family, calling them the world's oldest bankers. And, to be clear, they really didn't start out as bankers. They were more like an entrepreneurial family that kind of really eventually got into banking. In fact, if you wanted to go look it up, there is in. The article is dated November 30th 1879. It's in the New York Times archives. If you want to go look up that article, I think it's a. It's an interesting article. It's fascinating to see journalism well over 140 years ago. So I enjoy reading those kind of things. So maybe it will, maybe won't.

Speaker 1: 7:51

So anyway, getting back to the family, there was a man named Saluia or Saluja. He was most likely the person that kicked off this dynasty. It appears that he originally made his money through the wholesale commodities business. In particular, he traded barley and dates outside the city of Babylon and he would import a man. He wasn't a one man band by any stretch of the imagination. In fact he had many partners through the course of his career. This is an important fact because he was a relatively unknown person at the time. He was savvy enough to go into business with the right people who could connect him with other successful people and eventually would link him up to the palace. He was also able to bring his son into the business. His son went by the name of Naboo Ahi Adin I'm not sure if I'm pronouncing that correctly, but the fact remains is this is, of course, this is, you know, 2000 plus years ago, but it sounds very modern in that you have a person that has a way to think about things, has a good business mindset, but also realizes he needs partners and people on the way to help connect them with the other people that could further the business. Most people cannot just start a business and grow it from ground zero without getting substantial help from other people and partners, and it sounds like this is the case with this family.

Speaker 1: 9:25

How it got kicked off, with this guy who, you know, just knew the right people in the right place at the right time. The father and son eventually were involved with the Heranu, which basically translates into a street or caravan that is organized as a business partnership on a debt equity basis. As such, these partnerships were commonly formed between a senior financial backer and a junior partner who more or less did all the work. The partnership would have been drafted as an interest free debt contract that implied that the backer would recoup his original capital upon the dissolution of the business, so that only the profits were shared or either reinvested or distributed in regular intervals and, if you recall from my previous episodes, these types of partnerships were neither new or unique, as they have been around for a while we're talking 1500 years by this point especially in the long distance trade.

Speaker 1: 10:36

Long distance trade was what really put Assyria on the map during its old empire and also what helped fund the Neo Assyrian empire. And since the Assyrians and the Babylonians were kind of sister cultures, it shouldn't be much of a surprise that the Neo Babylonians would basically pick up where the Neo Assyrians had left off. So when you look at this family and the general culture of long-distance trade, you can see how a lot of things that would be considered normal in today's business culture were normal back then. So, for example, the junior partners, who I just said did mostly the actual work, would eventually pay the senior partners back on any loans or any start-up capital that was provided to them. They would then go out on their own and create their own business. I guess one minor difference would be the fact that the junior partner was not allowed to bring on an additional partner. In reality, this type of contract would be quite risky for the junior partner, since he was basically flying alone and he would have to put a lot of work in in order to make this work out. But the rewards could be very high in the end, since there's a risk-reward ratio in this aspect. Right, you put a lot of risk up, you do a lot of work and you can make nothing and go broke, or you can make a lot of money, and this is really what I'm talking about.

Speaker 1: 12:12

For some reason, when I think of this, I tend to think of the dot-com start-up, whereas a young person, who may or may not have gone to college, or even finished high school, for that matter, would be putting all sorts of hours in the expectation that the dot-com business would be very successful and possibly sold to a much larger or pre-established business, and they can essentially cash out and become multi-millionaires, if not billionaires, by time they're the age of 30. In a way, I see a lot of similarities when comparing the Haranu companies to modern dot-coms or even, a step further, the app developers. So that's, they've kind of picked up the mantle there. This was precisely the type of business model that was adopted early on by the Egibi family. It was very much a situation where Seluja I mentioned him was going to go work hard and basically swing for the fences and because of this one could lose everything during a bad venture. So you're swinging for the fences, you might strike out and never get put back in the game. So there's a lot riding on that.

Speaker 1: 13:29

And in reality, I guess the thing that kind of really sticks with me when I think about this kind of business is I kind of tend to think of the risky stock trader who puts up a big portion of their own money, or all their own money, and then they go and leverage it like crazy and they can hit a couple of doubles and triples and home runs and really start making lots of money and then next thing you know they're eating dog food. Right, they're dead broke. So that's kind of what I think about when I think of this kind of business. You're in this long distance trade, you have a couple of good successive missions, you're making a lot of money, and then you have one bad trip and you lose everything. And when I say everything, I'm referring to all the properties you had acquired in the past. So that was obviously something that these people that especially the junior partners, when they get involved into this. They ran the risk and many junior partners would have struck out and lost everything. So, in the end, what I'm kind of getting at is this just reminds me of a lot of your typical boom and bust traders. Some are out there flaunting their Lamborghinis because they hit big, while others have to move back in with their parents' house because they weren't broke.

Speaker 1: 14:51

Now, the Agabe family they obviously didn't go broke. They were very successful enough that they eventually acted as venture capital, in that the Hurrano contracts were supplied to other junior partners, and that's kind of really the way I look at it. You go into business with several junior partners. Each one has their own business plan, their own business idea. They want to trade this, they want to trade that. You fund their business and you hope they make a lot of money and you hope that you can get repaid back. It's not unlike a lot of venture capital, in my opinion.

Speaker 1: 15:28

So, ultimately, the primary business of the Agabe family was to first collect, then transport and then store certain commodities. Essentially, they were the middlemen between the producer and the consumer of goods. Ultimately, the problem was the farmers were able to produce their crops, but they did not have a means to transport it to the city, and essentially that's where the Agabe family stepped in. In addition, as their business grew, they would have branched out into the lending side of the business as well, so they were eventually accepting deposits and then providing loans from those particular deposits. They would have also paid off clients' debts and also would have provided credit to other businesses or people just looking for a working capital. The success of this family and its commodity business allowed them to purchase large plots of land, so you can see how they're diversifying their business portfolio, and being a large landlord would typically enable them to acquire political connections, and that's exactly what they did.

Speaker 1: 16:46

And the notable ruler who helped the house of Agabe become powerful was Nebuchadnezzar II, who ruled from 605 to 562 BCE. Now you got to understand the process back then. Nebuchadnezzar formed his military by giving people land, but the lands needed to be farmed out, but the landowners were also members of the military, so therefore a solution was needed, in that if you're a farmer and you're in the military, well, you can't be doing two things at the same time if you are out fighting a foreign war. So that's where the house of Agabe came in. They were initially more or less a form of property managers. During the reign of Nebuchadnezzar, they found people that would go out and farm the land for the landowners while they were out fighting for the king. The farmers were vital to the overall economy and then the state in general, because they had to pay rent and tax to the king and, in addition, these farmers would have had to pay irrigation fees. So, in the end, the farmers obviously fed the population, but also were generating much needed revenue for the king.

Speaker 1: 18:05

The Neo-Babalonians, and really much of the ancient world, did not have much in terms of bureaucracy at the time. Therefore, the responsibility of collecting taxes from a designated area was given to certain individuals. These people would have been known as tax farmers. The way the system works was there would be an auction to a highest bidder that would typically front the king the tax revenue based on the bid that they put forth. The tax farmer would then have to go back and collect the taxes from the individuals and the designated region that they were bidding for. And to give you an idea how common this was, this would have been a very similar system that the Romans would use during the height of their empire. So we're talking a thousand years later, they're still the same system in place.

Speaker 1: 18:58

Well, that's guaranteed money for the king and you know he would know how much tax revenue he's going to get. But the problem was it did not protect the ordinary citizens, who were often overtaxed by the tax farmer. This in and itself could be very profitable business for the tax farmer. You give the king a million dollars, we'll say we're going to use you know today's money and you go out and collect two million and keep the difference. So you just made a million dollars.

Speaker 1: 19:29

Now this became a problem in Rome, as some of these tax farmers were extremely aggressive and often collected and far amount that was in excess of what they should have been paying. They also collected payments for certain infrastructure projects, such as payments for the building of bridges for troop and commerce movements. In addition, they collected taxes for the purpose of making military payments, such as payments for the production of military equipment. And, last but not least, they would have collected flour for the distribution to the people and the palace. In addition, the Mesopotamians had a vast like public works projects that they had set up throughout the region, and one of the things they had was they had built this big canal systems that would have run off the rivers and this obviously would have been vital to the farming community and the overall health of the society in general, because these canal systems were essentially providing a lot of water for the farms and obviously, if you have the farms, you're going to grow the food and people are going to not starve to death, right?

Speaker 1: 20:44

So in the ancient society, farming was basically everything and if you recall from the earliest episodes, the Sumer episodes, you might recall that I had mentioned that Mesopotamia had rich alluvial soil, which was vital for the ability to grow crops because the soil would have retained oxygen and water better. So obviously, having alluvial soil is fantastic and it's great and all, but the problem that this region had was rainfall was often insufficient to support the farms. Egypt also had alluvial soil, but Mesopotamian Egypt were vastly different when it comes to the irrigation of it, because Egypt could rely on the annual inundations of the Nile, and this inundation would basically be the Nile flooding just in time for the farmers. Unfortunately, the tigers and the Euphrates would often flood, but not at the right time when it was typically needed, because it would typically flood during the harvest time. So therefore, engineers had to create elaborate irrigation systems, such as dams and canals, that would provide the fields of the water they needed and also protect it when it would ultimately flood during the harvest the worst time for the flood. Now, this is an expensive system and therefore everybody had to pay a fee to maintain the irrigation system. And when I say everyone, I'm also including the temples. And this is where the agabies came in.

Speaker 1: 22:27

Now, since they had already had experience in tax farming, getting into a similar project such as irrigation fees and taxes would have been kind of a natural transition, or at least they had built up the skill set to kind of move into that part of the business as well. The family was ultimately responsible for the maintenance of canals, along with collecting fees and taxes for the king to maintain these irrigation systems, and luckily this process was nearly identical to that of the tax farming process, whereas they would bid on the job and pay the king in advance and then go back and collect the taxes and fees from everybody else. So essentially what they did was they combined the two businesses, whereas individuals would basically pay a lump sum to the family, and that would cover the irrigation and toll fees, along with the amount of taxes owed to the king. So I could see like the ancient equivalent of flow advertising to the people that hey, we can bundle your home and auto policy, but in this particular case, we can bundle your irrigation and your taxes together and you just have to make one payment and we'll take care of the rest. Now, in addition to this tax farming and irrigation fee tax collection they also were transporting commodities through these canals.

Speaker 1: 23:56

So essentially, if you think about it, what they had effectively done was they had effectively gained ownership of these canals because they had paid the king the money for these, and now they had to collect fees from people, and because of that, they could look at a competitor who was also using the canal to transport goods and they could charge them an excess amount, thus making their goods more expensive when it got to the market, while the Agabee products would have been a lot cheaper, since they didn't have the excess toll fees that their competitors had to pay. So, in reality, they had a monopoly on the canals and they could have run people out of business that they maybe didn't like or felt that they were a threat. And, in a way, what this really reminds me of is this is almost precisely what John D Rockefeller had done when he set up his standard oil monopoly, by negotiating favorable freight rights from the railroads, and if the railroads didn't play ball, he owned all the oil essentially by this point, and he could just stop shipping altogether and freeze them out. Now, I didn't read any articles that would have indicated that the Agabee family did that per se, but it certainly could have been very easy for them to do, and it's quite possible that they did do this. It's just we just don't have the data or the records that have been collected, or maybe we haven't, they just haven't been read yet, so there's always that possibility as well. So, in the end, what they ultimately did is they would have had the combination of the tax farming and irrigation tax collection, which would have enabled them to be an efficiently run company in comparison to the direct competitors, because they ultimately controlled the supply chain and their competitors didn't.

Speaker 1: 25:53

And to give you an idea what I'm referring to, the Agabee family had controlled large tracks of land that produce a large amount of commodities. What they also did was rent out a portion of their lands for farmers, which means they basically moved into sharecropping as well, while this didn't make as much money on the front end, it was very profitable on the back end, and the reason being is the way their leasing agreements worked. Were they eventually shifted from grains to dates, and what they did was they lowered their rent to the tenants in the early years because this type of farming took a lot longer to develop. So the way they viewed it was they would forego short term gains and rent in order to obtain a much higher gain from those trees, which typically took years to mature and to start yielding crops. It should also be noted that these trees required quite a bit of water and therefore typically had to be grown close to the water supply. In a weird way, it kind of reminds me of the issues they have in California with the fact that they have a limited water supply. Yet the farmers grow nuts to consume and it's very profitable, but the problem is it takes a ton of water and the people that ultimately end up paying for this is the average Californian, and this kind of would have been a similar process in the Neobabalonian period, because they would have consumed a ton of water for these trees and their taxes and fees would have gone up in order to maintain this water source and the average person would have been paying for it.

Speaker 1: 27:50

Now, these commodities that were produced on this land were typically purchased in the cities by individuals and, more importantly, they were also purchased by the temples in the palace. So ultimately, the Egobies were producing and then shipping a lot of their own commodities, but it's important to note that they were also shipping commodities that they didn't produce, so from third parties that were producing and they were shipping and they were tax-forming and also they were operating an ancient form of venture capital. So you can see they had a very diverse portfolio of businesses that they were operating Before the Egobie had emerged as powerful landowners and lenders with commercial interest from Babylon to Uruk, which is a hundred miles south, and to Persia and the east. The House Egobie were also branching out into other business ventures as well. They were selling, buying and exchange in houses in various cities and towns. They also bought and sold boats for shipping and they were slavers. Of course, there were slavers Buying and selling hundreds of slaves.

Speaker 1: 29:05

Before I get started on the slavery subject, it is important to note that slavery was much bigger in the Roman Empire than it was at this time and therefore slaves were much more expensive in the Neo-Babylonian Empire in comparison to that of the Roman Empire. To give you an idea, a slave could cost as much as many years of income of a hired worker, and I got into this prior. But the slavery aspect was really fascinating to me, because these aren't chattel slaves that we eventually see in the American South and also in the Caribbean, I should also add as well, because the Caribbean slaves were probably treated worse than the North American slaves, because in the Caribbean they would just work to death. They'd put them on a sugar plantation and they would work for three or four years, they'd die and they'd just import other Africans from Africa and they'd just put them on the sugar plantation and they'd die and they'd just keep the cycle going. At least in the North American aspect, the slaves did live a lot longer. I certainly don't want to downplay the fact that slaves in North America were still treated just absolutely horribly and there's no reason why people to this day shouldn't know the story of the North American slave and what they had to go through, because slavery was much different in Neo-Babylonian times and I dare to say they were treated way better than slaves in North America and obviously the Caribbean so like, for example, in the American South, a slave could be beaten severely if they ever learned how to read and write, and it would be really bad for them if they got caught reading. So therefore, basically everything was done to keep the North American slaves from having basically any form of education.

Speaker 1: 31:12

Probably the one thing that was similar to the Americans like South slavery was that people in Neo-Babylonian times that were born into slavery would typically be slaves for life, since they couldn't buy their own freedom like they could in Greece and Rome. So, ultimately, slavery in Roman times was really kind of similar to how slavery was in the Neo-Babylonian times. And to give you an idea of a vast difference between American chattel slavery versus Neo-Babylonian and even Roman slavery was some of the slaves in the antiquity could be trained as businessmen. Yes, they could be trained to run a business. These slaves were savvy and intelligent enough to be placed as the head of a business, as a lot of these slaves had amazing skill sets that allowed them to operate and run business ventures for the family. Could you imagine that in the American South? That just blows my mind.

Speaker 1: 32:16

I just have a hard time wrapping my head around that we have family run businesses or small businesses that are run by people that make a lot of money. Some don't make as much as others, but some of these business people in this country, whether it's a small business or a corporate CEO, have an amazing compensation package, while they're also having employees that are on food stamps and working in Section 8 and they're making tons of money, but I guess that's a whole different conversation. However, 2,500 years ago, we have executives who were slaves, who were working for essentially very little or nothing at all. So ultimately, it was possible that one can train a slave to run a business with the sole intent to sell it later for a big profit. In fact, there are documented accounts of a business that was in its third generation of ownership that had entrusted at least 3 of his slaves with running his business during a prolonged period of his absence. Think about that you have.

Speaker 1: 33:30

The grandfather started the business. Then the son took over the business. He passes it on to his grandson. He's running the business and he has absolutely no desire to be there 24, seven, seven days a week. He just says I'm gonna go on vacation to wherever and I'm gonna leave it up to my three trusted slaves and they'll probably run the business better than he could. That's amazing to me. Also, kind of going back to what I was getting to just a second or two ago, developing a slave executive could be a form of investment, because if you train an educated slave to run a certain type of business, they could be very valuable to sell on the open market.

Speaker 1: 34:13

The Egobies may have been the biggest slavers in Mesopotamia and it's quite possible that they would have participated in this, since they had their hands in so many different businesses that it's quite possible that they would have trained slaves to run certain aspects of the business and then they would sell them off and make a handsome profit in the end. So if you look at the Egobie family up to this point, they've become rich and powerful, they own a ton of land and they are developing some political clout in the meantime. Therefore, some of his family members would have ended up becoming leading government officials, such as land management and treasurer to the king, which sounds a lot like the Medici family years later and the medieval Italian city states, and this in particular with regards to the Pope. So you can see how the more things change, the more they remain the same. So when we get to the Medici family eventually, you can almost play this episode and say, wow, I see a lot of similarities there, and it's quite incredible, in my opinion.

Speaker 1: 35:23

Now, since they were essentially money machines, at this point they could have provided what we would call retail banking operations by the fact that they would have been taking in deposits and providing loans, and they would have rolled over client's debts by paying it off early and then refinancing it, and then they would have participated in international trade as well. In a way, a lot of their wealth was generated from portal banking operations, as they use money from deposits that were made by others to fund certain business ventures. In fact, there have been historians who have cited the terms of commercial lending and Babylonian times as prototypes, not only for classic antiquity, but for the Italian city states years later in medieval Europe. A perfect example of that would be the fact that they would have taken interest-bearing debt and they would have combined it with profit sharing agreements, and in the case of the Babylonians, the partner was often a member of the palace or a temple, whereas in medieval Italy, oftentimes they had to partner with some or higher up in the state government or even within the Catholic church. To get a sense as to their banking operations, archeologists went through thousands of clay tablets in Babylonia, where they discovered that a lot of people had taken out loans and were in fact in debt to the Agabee family at one point or another. And, as I mentioned, the family's wealth survived for five generations. This would have been longer than Medici family, that, I might add. That alone suggests that people were paying back their loans, so it's quite reasonable to believe that there was a healthy debt market in place, because if a population was full of debt beats, the family couldn't have survived for that long. So the fact that the family thrived for five generations suggests that they generally collected on their debts.

Speaker 1: 37:23

Now, however, there was a major difference with regards to their banking operations. It is believed that they paid the same rate of interest to the depositors as they charged for the loans, which doesn't make a lot of sense from a modern perspective, but that's just how they did business back then. So, in other words, there wasn't a spread generated between the rates at which they borrowed versus which they lent at. There certainly wasn't a 363 banking model in place. You might be familiar with this. It's where you borrow at 3%, you lend at 6% and you're on the golf course at 3 pm. So therefore, there was no margin for arbitrage and there certainly wasn't a credit superstructure to magnify the supply of monetary model on hand either. However, the IGB took out anti-credit loans, that is, they allowed for advances where the collateral that secured the loan generated the interest being charged. You can see this to this day, as many real estate investors have an expressed model that says rent is paying interest. In addition, the family also pledged urban property to obtain commercial lines of credit as well.

Speaker 1: 38:43

Now, to get an understanding of how the lending operations worked, there was a clay tablet that was discovered from the fourth generation family member. In this tablet, they show a receipt of 10 shekels of silver that had been recorded by the IGB family member. The original debtor had died and the wife was left paying the debts which were incurred by him during his lifetime. It also goes on to show that the debt had been paid and there was no outstanding amount left. In addition, the document was signed by a witness and, if you recall from my previous episodes, especially the Sumer episodes, it was common practice for a receipt to be given to an ex debtor as proof of payment and that the other receipt was also given to the ex creditor for bookkeeping purposes. So it's possible that this tablet recovered was a copy of a receipt that was retained by one side or the other. Now, obviously, that's a relatively minor case study, but it's still interesting to see that they have detailed records of individuals basically paying off debts, and we can see this 2,500 years later. So I just find these little things pretty neat to look at.

Speaker 1: 40:09

But in general, the private banker class had become a prominent position in the Neo Babylonian Empire, and this is something you will not see when we get to the Greeks and then the Roman Empire, because they viewed banking and the banker class a lot different than they viewed it in the Neo Babylonian times. So ultimately, tablets have been recovered that have shown contracts written up by private bankers and their clients. In one particular agreement, a tablet shows an individual receiving six shackles of gold of which, if the loan is not repaid the following month, interest shall increase. Around the same time period. Prior to the fall of Elam, there were Elamite bankers who followed the Babylonian model of banking. In fact, a tablet was discovered in Elan which indicated that six gold shackles were lent at a favorable rate of one pound of silver, which would have been a ratio of 10 to one. However, on the envelope, which is the only part that is available for inspection, unless it is broken in the presence of a judge, the loan is discounted to one gold shackle, which would indicate that it was actually a rate of 12 to one. The idea of using an envelope goes back to the ancient Samaritan days, when the temples would put tokens inside the envelopes for auditing purposes, and this is something we had previously discussed when we were discussing the Sumer practices with the temples. Other tablets were found in and around Elam around this time of the Neo Babylonian period. That shows transactions including the sale of sheep or even the assignment of sheep to certain shepherds.

Speaker 1: 42:00

Even after the Acomended Persians took over, the family was able to stay in business and continued to work as tax farmers, but was now collecting for a new king. Essentially, new management took over and they just worked for the new manager. So essentially, what happened was a family member went to the Persian court and essentially just lobbied to get connected to Cyrus to basically let him know that hey, we have experience doing this and we know the people. So therefore, why don't you just let us continue to do this Now?

Speaker 1: 42:35

Ultimately, what may have separated the Agabee family from other businesses was the fact that they used and perfected reinvestment. It appears that a lot of businesses would typically only use a small portion of their proceeds to reinvest back into the business during this time period. So you get your money, hey, I made the money and then peace out, I'm gonna go do something else. In fact, it sounds like only 10, and maybe even up to as high as 15%, of revenues were ever really reinvested back into businesses. So that could be a reason why we haven't read a lot about more prestigious families building generational wealth during ancient Mesopotamia, and it could be just to the fact that there wasn't really a reinvestment mechanism or mindset that had been developed. Or maybe there actually are a lot more families and we just haven't gotten around to it. I'm not really sure. But the fact remains is the Agabee family were probably the most well-known powerful family in this time period, but they weren't the only one. There were others Not many, but there were others and unfortunately the problem is is we don't have a lot of information about the other families that we do know of. I'm gonna just discuss one more family, and in this family I just don't, honestly, I don't have a lot of information about them. We know them through various records that have been produced, but unfortunately there's not a lot known by them. So this particular family is the NIRSYN family.

Speaker 1: 44:16

Now, this was another generational family business that functioned for nearly a hundred years and would have encompassed approximately four generations. Their business ventures included large-scale lending operations, along with functioning in the import-export business. Apparently, the business was most notably run by Eden Marduk, who was in business for 78 years, so this guy was around forever. In addition, the family business was not a royal merchant and thus operated entirely private. I had talked about the Aguibi family, but they weren't entirely private, as they would have from time to time acted as agents on behalf of a palace or a temple. This family never did that.

Speaker 1: 45:05

So what we do see is we see various contracts that were written up for partnerships and loans, in particular with regards to this family. One particular partnership is between Eden Marduk and Naboo Ukin, from the month of Tabut of the 40th year of Nebuchadnezzar, king of Babylon, until the month of Marcus I of the 42nd year. I don't really know what that means, but sounds interesting. Anyway, ultimately, what the contracts were, where shackles would be paid to the partnership and in return they would receive intervals of beef and meats and they would receive other things as well. In addition, the family had written up mortgage contracts and other loan agreements with predefined interest rates and payback periods. In addition, there were contracts that were written up for bankruptcy protection, inheritance, power of attorney, marriage, divorce and even adoptions.

Speaker 1: 46:14

Ultimately, looking at these families and their written records, it really gives us a good glimpse into how the businesses will run and how the economy more or less functioned in the Neobabalonian period. It gives us an idea how trade and finance were very much linked together and allowed the Neobabalonians to build massive infrastructure projects and allowed for commerce to take place and get goods from the farms to the people that needed it. And really what I wanted to do in this episode was kind of highlight a couple of the families. Now it's very difficult because just not a lot of written records have been unearthed, so it's possible that we get more information about these two particular families and, on top of it, maybe we get some information about some other prestigious families. There are some families that are mentioned in the records, but honestly, there's just really no information and you can't gather a lot from that.

Speaker 1: 47:18

Now, one thing you can kind of extrapolate from these written records that have been unearthed is the fact that Babylon was a stratified city with various defined classes. Now, to the top would have obviously been the nobility, but below them you would have had your bankers and your merchants and your priests and temple officials and government officials, so they would have formed kind of the upper echelon of society and really they would have kind of fell in that upper middle class to middle class kind of tier. Below that would have been, I guess you would say, the lower middle class or the working class, and they would have consisted of the bakers, the brewers, the butchers, the carpenters, coppersmiths and other artisans. The problem here is the lower middle class probably would have been hurt by the large slave labor, which ultimately would have depressed their salaries and even taken the place of women in industry and therefore would have lowered household incomes. In a weird way it almost feels like the automation of the ancients, but instead of computers or automated machines it's people in bondage. A lot of slaves were apprenticed to take the jobs of the lower middle class. You can have slave barbers, slave bakers, and they would have been able to engage in business for themselves and they tended to undercut the non slave labor lower middle class person.

Speaker 1: 49:01

And of course, like I've said in this episode and even in previous episodes, slavery was a lot different in the neo-Babylonian period and in reality up through the Roman period than the American chattel slavery system. And ultimately this highlights the role of government in the neo-Babylonian time period and in reality, the overall market performance and therefore economic activity would have thrived in states with a strong and active central government during this time period. And in all honesty, I'm not really sure you can have thriving trade and finance and just overall economic growth unless you have a strong central system in place, like you had in Babylonia during this time period. I mean, you look at Greece. Greece really didn't flourish until Athens came along in the time of the Delian League, which would have been the 5th century BCE.

Speaker 1: 50:08

And in reality what you'll see is when strong central governments and I'm not saying centrally controlled governments by any stretch of imagination, because you can see here that the neo-Babylonians let the market forces dictate prices what I'm saying is you need a strong government that can protect trade, that can protect legal agreements, that has a court system in place. So ultimately, if you don't have a good, well run government, you're just going to have a bunch of warlords controlling various regions and that's going to ultimately affect trade between the different regions. Because in the end you're going to need some kind of standardized ways and measures. You're going to need some kind of standardized legal ramifications for whatever you want to do. You're going to need a strong military to protect trade. So without that you're not really going to have a thriving economy and you're certainly not going to have thriving trade.

Speaker 1: 51:12

And if you look at, say, an example being post-Roman Europe, it really wasn't until you had well run city-states in medieval Europe, in places like Venice for example, that they were able to thrive. And if you go back through this series of Mesopotamia, you can see how, when the certain empires from the certain city-states that rose up and controlled the region for 100 plus years or 500 years, whatever it may be now, the fact is it was probably more to do about power and hegemony, and not so much for the benefit of the economy. But the unintended consequence of a powerful central ruler is it inadvertently facilitated market stability and therefore pushed forward stronger economic performance. In reality, since the age of Hammurabi, which, if you recall, he ruled from 1792 to 1750 BCE, babylonia really developed into a mixed economy with bureaucratic interventions, but private markets really helped begin to flourish and thus Babylonia was really shaped by their economy. That ultimately probably marked the beginnings of capitalism and this ultimately shaped the way society operated and evolved. But the one thing you have to understand is this research and understanding of the ancient world is constantly shifting and evolving as more documents are unearthed and, more importantly, read, because we have thousands of tablets that haven't been read yet, because so much has been dug up.

Speaker 1: 53:02

Certain, as seriologists initially suggested that since there was no word for market, that therefore Babylonia was based on a market-less society with widespread capitalistic activities, which I have a hard time understanding that statement because it feels like that contradicts itself. The famous as seriologists, who I've referenced several times during this series, defined this widespread capitalistic activities as quote which in a relatively peaceful way, employ economic means to achieve gains made in relationship to prices unquote as contrasted with the capitalistic economies, which are defined by the presence of institutions dependent upon markets and exchanges as the dominant mechanism of integration. However, when looking at old Babylonia along with neo-Babalonia, so we're talking a thousand years. This region very much had successful periods of private business activities and therefore the idea of a market-less society seems to have lost steam over the years. And it appears that new research seems to contradict that statement anyway and, in all honesty, this kind of sums up ancient Babylonia perfectly. So what ends up happening is initial research would point to one direction and then more things are brought up and unearthed, and then this completely shifts and the idea goes in a different direction.

Speaker 1: 54:40

And in reality that was how the archaeologists initially viewed the ancient economies in Mesopotamia. So, for example, morse Silver, who certainly believed that ancient Mesopotamia played a host of multinational firms and experienced lengthy and significant periods of unfettered market activity, he counteracted the market-less economy by stating that it is a clear account, or at least an explanation, of the criteria which could serve as proof for the existence of markets. He said that the assumption that a simple reference to something sold or bought, to a hiring contract or loan given, is sufficient evidence for markets in credit, labor, land and commodities. So in other words, what he's saying is everything that we've been talking about so far in this episode, and even in the previous episodes we could clearly see that markets have been developed, and this contradicts the original thought. That's what I'm kind of getting at.

Speaker 1: 55:52

They initially thought that this was a market-less society. There were no markets. They were centrally controlled and, if anything, it was the king or the palace that would have dictated everything. Because what happens was in ancient Sumer. Initially, the economy was more or less controlled by the temple, as it would have centrally planned and it would have distributed certain goods to the people throughout the region and they would have relied upon, obviously, public and even private enterprise.

Speaker 1: 56:25

But by the time we get to the Neo-Babylonians, we see them shifting from publicly owned to privately owned, and I've read certain accounts. That basically uses the recent Soviet Union as an example of how their economy was transformed. When Communism fell, the publicly owned businesses were transferred to private ownership. Now, in the case of the Soviet Union, were those transactions of above board? It certainly didn't appear so, as the politically connected people were able to swoop in and purchase the majority of the assets at fire sale prices. The end result were basically overnight billionaires. Now you see something similar in Babylonia. As those in the palace, in the temple, they basically looked around and said there is a lot of money to be made here and therefore, since they are in power, they were able to transfer the assets themselves, along with friends and family, of the palace and the temple. And, just like the former USSR, corruption would have underpinned the privatization process that was initiated and propelled by the self dealing ruling families, local warlords and temple officials, who were already at the top of the social pyramid anyway. Furthermore, a lot of privatization would have come from the Tamkouros, who often had official roles within the public bureaucracy to begin with, but in the end there might have been some corruption, but the fact remains that the Neo-Babylonians carried forward the Mesopotamian evolution of trade, money and finance.

Speaker 1: 58:15

I want to thank you for taking your time to listen to this episode. This is going to conclude our series on Mesopotamia because, going forward, the Mesopotamians will no longer be in control of Mesopotamia. So therefore, we are going to shift gears and we are going to head over to Africa and we are going to go through the Egyptian histories and then from there we will go a little south and we will go down into Nubia and from there we will discuss the history of trade and a little bit of money and very little bit of finance, because Egypt was a very self sustaining society and trade wasn't as important as it was in Mesopotamia, but it still was important and money was used last. So but I still think it's going to be a great series to talk about and, in particular, I'm excited to talk about Nubia, because places like Nubia are kind of left behind in our education curriculum, especially our history class. A lot of people don't know much about it. So eventually we'll get there and I think it's going to be fun and we're going to learn something new and I really hope you enjoy this and I hope you continue to enjoy this.

Speaker 1: 59:30

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