by Howard Hudson
Although it may not seem like the most interesting and surprising topic to be delving into, the history of lending is actually a lot more compelling and complex than you might realize.
While today’s consumers can enjoy the convenience of online lending, the act of borrowing money has not always been this straightforward.
Keep reading to discover the eight most fascinating facts about loans throughout history. You may be surprised to find out just how many momentous progressions in human civilization would not have been possible without the use of credit.
Although payday loans are available in abundance online today to pay for unexpected emergencies and unforeseen bills, with trusted lenders such as Cash Lady, Cash Into Pay, LendUP and Cashnet USA offering a lifeline to those in need of a quick and unquestioned influx of cash, way back in Mesopotamia in 2,000 BCE, farmers would borrow seeds to pay back at a later date when their crops began to yield. They would then request a new advance for next season’s planting, continuing the cycle of borrowing and repaying, only to borrow again.
In 1754, the first interest rates were introduced when Sumerian temples were used as banks as well as places of worship. It was at this time that largescale loans started to emerge, and with that came the creation of credit and the notion of charging interest.
Silver also started to become more in demand, leading to the Code of Hammurabi being issued, a regulation that defined the price of silver and the amount of interest that could be charged on this precious metal.
During this period of time, religion ruled the roost, and both the Bible and the Quran banned the practice of lending. The only people that were permitted to lend were Jews, which led to them later being persecuted.
The word bankrupt is derived from both the Italian word for bench, ‘banca,’ and the Latin word for broken, ‘rupt.’ In Italy, Jews were not permitted to own land and, therefore, they had to lend money from benches. When a particular dealer ran out of money, their bench would be broken, hence the term bankrupt.
The Philadelphia Savings Fund Society first opened its doors in December 1816 with the purpose of providing the average American citizen with the opportunity to save and borrow money. This was the start of more mainstream lending that was accessible to all rather than just the wealthy.
A man named Frank McNamara made history in this year by paying for his dinner with a cardboard card, known today as a Diners Club Card. It was only eight years later that the Bank of America cottoned on to the advantages of this way of lending money and launched the BankAmericard, which it sent out to over 60,000 consumers across the U.S.
Just as lenders were starting to struggle with the abundance of paperwork and filing that was needed to keep on top of the rising popularity of credit, the evolution of computers and electronic data saved the day.
Suddenly, consumers were able to fill out loan applications online, meaning that borrowers did not even have to leave the comfort of their own homes to be approved for credit.
No longer did businesses have to rely on bank loans, as instead they could enjoy competitive loans online where lenders actively competed against one another to provide the best terms. Not only did this result in better lending rates but also an increase in loan approvals.
As to the future of lending, who really knows? Except it is safe to say that the trend of online lending is here to stay and that is definitely no bad thing.