The advent of a market for credit relies on a supply of and demand for surplus financial resources. The demand for credit can be driven by trade or investment or even large consumer purchases. The supply of credit can come from deposits with banks or the reserves of insurance companies. Today, the endowments of universities and charities, as well as sovereign wealth funds, add other sources of capital for lending to financial markets. In classical Greece, a similar form of institutional lender existed in the form of temples, which held large endowments that invested not only in land but in loans. They supplied credit to their local economies in an era before the emergence of banks and insurance companies as institutional lenders.
Delos, an island in the Aegean Sea near Mykonos, had contained a city of political importance in the 5th century B.C. This city was home to the common war treasury of the Delian League, an alliance led by Athens, until the mid-5th century. Delos was perhaps even better known as a religious center. The island was home to a notable Temple of Apollo. Its relevance in finance dates to when this temple was initially endowed by Polycrates, a tyrant from Samos, who had captured the nearby island of Rheneia and gifted the island to the temple. The temple then leased this land to tenants.
In classical Greece, temples accumulated endowments which included funds for the temple itself, like the endowment of Polycrates in the case of Delos, as well as special funds bequeathed by private persons for the celebration of a particular festival, feast, or sacrifice. At Delos in the 3rd century B.C. about one such dedication was established every five years or so on average. In each case, the expenses for the occasion would be paid out of interest earned by investing the money in loans. As such, the temple was something of a financial institution even if this was not its raison d’être.
Delos was ruled by the Athenians, who relocated the treasury of the Delian League from the island to Athens, until 314 B.C. at which point the city became independent. The island remained a mercantile center as neighboring states traded in goods there. In the 3rd century, the city of Delos grew and its docks were expanded. The Temple of Apollo there was important to the region’s economy during the period of foreign rule and during the period of independence alike. The temple leased lands it owned and lent money but also created demand for goods and services not required by ordinary households, ranging from precious metals to the renovation of temple structures. It was an ecclesiastical center but also an economic nucleus.
If the purpose of a bequest managed by the temple was to be respected then the donated money had to be lent so interest could be earned. Some temples, like that of Delos, also lent their own surplus funds on top of those tied to private dedications. The hieropoioi, officials in charge of temples and sacred rites for terms of one year, also had the responsibility of making loans and recording these in temple accounts. They wrote an annual report of the inventory of sacred objects and the amounts of money spent and received by a temple. While other temples accumulated and lent out money, the records of the Temple of Apollo at Delos survive in greater volume than most.
Larger scale financial activity was crucial to temples and even the lending regulations of a few temples survive. They suggest that the manner of lending at Delos was similar to that elsewhere. At Delos, from the 5th century to the 2nd century B.C., the temple made loans at 10% interest, paid annually. A sanctuary at Amorgos also lent at 10%, payable once per year. While the temple at Delos was an institutional lender, it still made just a few loans per year. Nonetheless, this no doubt made it very important to the island’s economy.
Temple loans were made to individuals, and sometimes to states, for terms of one to five years and were secured by land or houses. Loans were more often secured by land initially but this fell and loans secured by housing became more common. This may reflect urbanization and/or the diminishing importance of land wealth to the local economy. This possibility would also explain why the temple invested money in loans in the first place rather than buying and either cultivating or leasing out land, as was the custom in Asia Minor. There may have been more opportunities to invest in the form of loans. Other information shows that rents on land were falling and rents on houses rising, backing up this possibility.
Individuals without property might receive consent to borrow against a relative’s property but loans were generally made to wealthy people. Some loans were secured by more than one property while other loans could be small, between 30 and 200 drachmae. While the reserves of the temple at Delos were lent to other cities during the era of rule from Athens, after independence, the borrowers were locals and the government of Delos.
While meant to be repaid far sooner, records show loans to individuals could last decades in the case of delinquency. Despite having real estate as collateral, there were probably inadequate legal mechanisms for recovering on a defaulted loan. However, as a benefit to the temples, which required payments on the loans to fund religious life, loans from temples were generally exempt from debt cancellation laws. Delinquency was not without consequences; at Amorgos, the fine upon default could amount to half of the principal of the loan. At Priene, the administrator of the Temple of Athena was regarded as being particularly vigilant in managing the temple’s loans and working towards timely payment by any borrowers in default.
The Temple of Apollo at Delos also lent money to city governments. From 377 to 373 B.C., thirteen states borrowed from the Delos temple. Only two faithfully honored the terms of the loan; the rest defaulted and only one-fifth of the money was repaid. This could very well have encouraged the temple to lend nearly exclusively locally once the period of Athenian control ended. As it happens, the credit of Greek cities was often poor. So, interest rates on loans to cities were no lower on average and sometimes slightly higher than those to individuals.
Still, temples lent money to cities. The Temple of Athena at Priene made loans to that city when the latter needed funds. Similarly, the Temple of Pythian Apollo in Karthaia made loans to the city on several occasions, though these were guaranteed by some of its citizens. The practice of citizens guaranteeing the debts of the state was common.
The survival of loan records from several places across a few centuries in antiquity allows interest rates to be tracked in the credit markets of classical Greece. These show that interest rates seem to have fallen over the time that the temple at Delos was active in lending. For example, loans secured by real estate seem to have fallen from a prevailing interest rate of 8% to 12% from the 5th century to the early 3rd century B.C. to 6.67% to 10% by the early 2nd century B.C. Interest rates on unsecured loans also fell.
For its part, the Delos temple reported that it was encountering difficulty in actually loaning its money out. More loans were actually being made which suggests that this difficulty was due more to larger sums left with the temple to be managed than competing sources of credit for borrowers driving demand for loans elsewhere. In the 3rd century, when interest rates seem to have fallen in Greece, there were clearly many bequests left with the temple at Delos, a factor that, if present elsewhere too, may have driven the interest rates lower in the first place.
The temple at Delos, as with all others in Greece, was not intended to be a lending institution primarily. It invested its endowments out of necessity to achieving a cultural purpose. Lending is often incidental to other projects. An insurance company may lend money to maximize its profits, but the basic purpose of insurance is distinct from lending. Retailers may offer consumer credit and merchants may make sales on trade credit but they do so merely to secure customers for their goods. Churches, charities, and universities also lend surplus funds in financial markets but they are not primarily financial institutions. A great deal of surplus capital is made available for lending from sources that do not view the accumulation of such capital as fundamental to their purpose. Still, the financial system better enables them to meet their primary objective.
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1. Archibald, Zofia, et al. “Chapter 7 – Devine Financiers: Cults as Consumers and Generators of Value.” The Economies of Hellenistic Societies, Third to First Centuries BC, Oxford University Press, Oxford, 2011, pp. 142–165.
2. Homer, Sidney, and Richard Eugene Sylla. A History of Interest Rates. Wiley, 2005.
3. Kent, John Harvey. “The temple estates of Delos, Rheneia, and Mykonos.” Hesperia, vol. 17, no. 4, 1948, pp. 243–338.
4. Reger, Gary. “Private property and private loans on independent Delos (314-167 B. C.).” Phoenix, vol. 46, no. 4, winter 1992, pp. 322–341.