About 9,000 years ago, East of the Mediterranean Sea, traveling hunter-gatherers changed for a settled farmer life. A number of them settled on the fertile borders of the Euphrates and the Tigris (in today’s Irak). Those who were the closest to the river side had the less efforts to make to irrigate their fields. Those who came later, had to dig and keep up long ditches. At the estuary of these rivers, in Sumer, 3200 BC, communities formed villages, each with its own god and led by an upper-priest.

He could invoke the will of the god. He organized the food supply – the harvest was gathered and stocked in the temple situated in the center, and from there distributed – and he appointed the people for the execution of specific tasks. The administration was kept up with wedge-form signs in clay tablets. That also applied to the registration of properties. Around 2500 BC the first schools for writers appeared. The writers had, among others, the task to print official textes. They were rolled in clay tablets with a graved cylinder. [1]

The writing in clay tablets also enabled to keep up the administration of loans. In this field a flourishing commerce had come about, in particular from highly positioned officials, who supplied loans privately to get rich quickly. Especially the farmers, who depended on weather conditions, got easily stuck in debts.

In the Law of Hammurabi (Babylon, 1740 BC) [2] the interest rate has been fixed.

art. 88. If a merchant has given corn on loan, he may take 33.3 percent of interest; if he has given silver on loan he may take 20 percent. [3]

Receipt for a loan on grain, to be paid back with interest.
(Babylon, 1900-1700 BC.)

When someone did not pay his debt he could be taken prisoner by the creditor. But he could also sell his wife, son and daughter or give them away for forced labour. In that case they had to serve in the house of the creditor for 3 years and be freed the fourth year (art. 117). To avoid massive fall into slavery, Hammurabi foresaw exceptions in the payment of interest.

art. 48. If any one owe a debt for a loan, and a storm prostrates the grain, or the harvest fail, or the grain does not grow for lack of water, in that year he need not give his creditor any grain, he washes his debt-tablet in water and pays no rent for this year.

From the beginning. loans have led to disruptions in society. Most often the farmers, and with that the food production, are the first to get in trouble. A remedy to restore the old situation and get the economy back on track is a debt cancellation. Texts have been retrieved, proving in Lagash (Sumer), already around 2400 BC a debt cancellation has taken place. And during the reign of Hammurabi at least four debt cancellations took place, in 1792, 1780, 1771 and in 1762 BC. [4] We see this remedy show up in various periods up to our time. [5]

During the reign of Hammurabi the respect for property was stringently ruled. In article 6 of his law the death penalty is given for theft from a temple or house, as well as for receiving the stolen goods. For theft of cattle, if you were rich enough, you could come away with a fine.

8. If any one steal cattle or sheep, or an ox, or a pig or a goat, if it belonged to a god or to the court, the thief shall pay thirtyfold therefor; if they belonged to a freed man he shall pay tenfold; if the thief has nothing with which to pay he shall be put to death.

The community had to pay for the material consequences of robbery on public roads.

art. 23. If the robber is not caught, then the victim shall claim under oath the amount of his loss; then shall the community compensate him for the stolen goods .

During the reign of king Ammisaduqa, 1646-1626 BC debt cancellation was applied for the last time. In the following centuries Babylon decays slowly and surely. Farmers lose their land to lenders. Large landownership increases, as well as abusive exploitation and debt-slavery. Violent conflicts occur between debtors and creditors. [4]

In Greece, around 1000 BC people lived essentially from growing cattle and many family-clans had more or less their own territory. Small villages became cities, where the clans had a lot of influence. The cities proclaimed themselves independent ‘polis’ (city-states), each headed by a ‘king’. Most of the times he was a kind of honorary citizen, who was surrounded by an advisory council of people who had ‘time’ (value) for the community. (That value consisted most of the times of their land property or their role in the defense of the city.) Around 800 BC the kingship disappears in most of the city-states and the council of heads of clans takes control. And because often they saw after their own interests first, there was often dissatisfaction among the citizens. Then, a strong person could take advantage of it, seize power and become a ‘tyrant’ (autocrat).

In Athens, the biggest city-state, the kingship was abolished in 753 BC and replaced by a council, the Aeropagus, in which about 60 heads of clans participated. The council was court as well as government. The heads of clans appointed magistrates, each time for a year. For the governmental tasks they chose 9 members among them. All decisions had to be approved by the council first.

Athens didn’t have a lot of farming fields and a number of rich landowners had started to use the slopes of the hills for vineyards and olive-trees. The wine and olive-oil was mainly exported. Athens developed into a prosper commercial town. The many commercial posts around the Mediterranean and Black Sea became colonies.

Also, during the many campaigns and foreign expeditions there was a lot of robbing, privateering and looting and slaves were captured in high numbers.

Athens had silver mines in Laurion, 65 km (40 miles) South of the city, where 10 to 20,000 captured slaves were working in lamentable conditions. Because the silver had to be extracted from leaded layers, most of them didn’t live long. The slaves were property of a number of Athenian aristocrats, who hired them out to the mine-owners.

Aristoteles (384 - 322 BC) justified slavery by saying: "How would aristocrats otherwise find time to learn what has to be learned, to keep up culture and develop political virtues?"

Also the exploitation with loans and the fall into slavery was usual. One out of three inhabitants of Athens was a slave. The farmers used to borrow seeds for sowing and restitute it after the harvest. With the rise of money this had changed. They had to borrow it with interest now. And when they could not pay off their debts, they lost the property of their fields. Then they had to hand over 5/6 of the crop to the owner of the land. Their payment obligations were graved in horois (pawn-stones) placed at the edge of their field, with the name of the creditor, the borrowed amount, the interest rate and the date of expiration.

Fragment of a horoi
http://www.agathe.gr/id/agora/image/2008.16.0566

When they didn’t succeed to meet their obligations, their wife and children and often themselves had to work as slaves for years to get out of debts. And because Athens had already many slaves, they were often sold and put to work in one of the many colonies. In the long run, the landowners had difficulties to find farmers wanting to work for them.

By 600 BC Athenian merchants started to import grain, because the local production had become too small. This removed the shortnesses, but also made the grain prices slump. For the farmers the situation became untenable. The council saw it and in 594 BC they appointed Solon, a popular philosopher and poet, as absolute ruler to solve the problems.

Solon decided to execute a debt cancellation for the farmers and forbade credit with slavery clauses. The horois were destroyed. Also, he redeemed as many farmers from the colonies as he could and fetched them back to Athens. This was not about some generous liberation, but simply to get the agricultural production going again. For the same reason in Attica, where the food was produced, more people got free access to wells. [6] He also proposed citizenship to foreign artisans, who wanted to settle in Athens. For free Athenians handwork was beneath contempt.

There was a lack of drachmes, caused, among others, by the landowners, who had hoarded large quantities. Solon made the coin smaller, which lightened the existing debts, brought more money into the economy and stimulated the export. But with the exception of olive-oil the export of local agricultural products was forbidden. They were needed for the local population. Also, the use to pay fines with cattle was abolished. From then on, fines had to be paid in drachmas. From 592 BC he introduced a complete new law system in the fields of criminal law, family law, constitutional law and procedural law. From the laws of Dracon, in force until then, he maintained the death penalty only for murder.

In the field of governance, the population was divided in 4 castes; not according to origin, but according to wealth. The two richest castes were allowed to participate in the Areopagus, which kept control over the most important political and juridical issues. The third class citizens were allowed to participate in a council of 400, which had to counterbalance somewhat the power of the Areopagus. The poorest could participate in an assembly that could discuss and take decisions about matters submitted by the council of 400. The fourth class also took part in a new court, that would progressively take away civil and military cases from the power of the Areopagus.

Never the less the aristocrats had kept the highest power and political unrest remained. In 560 BC Peisistratus, a banished aristocrat, seized power. Although he was very popular among the population, he still ordered their disarming to prevent possible rebellion. As an additional precaution he took hostage the sons of leading aristocratic families. During his reign the tax system was reviewed. The privilege of tax reduction for the rich was abolished. The farmers got land and loans at 5 percent interest. The water supply of Athens was improved. He constructed roads and stimulated commerce and industry. A period of calm and prosperity started. But then again, the son of Peistratus, Hippias, was a ‘tyrant’ in the modern sense of the word, who, among others expelled hundreds of Athenians from their homes and banished them from the country.

The Greek form of democracy

Hippias lost his power to Cleistines, again a banished Athenian aristocrat, who, with a reform in 507 BC, greatly reduced the power of the aristocrats. The citizens were divided, according to their place of residence, into 10 ‘demes’ (quarters / cantons). The Council of 400 (‘Boule’) was expanded to 500 and by drawing of lots each ‘deme’ got 50 members. The ‘Boule’ proposed the laws and the population, gathering about 40 times a year, could accept or reject them, or send them back to be amended.

The drawing of lots was, for the Athenians, the best way to obtain a fair representation of the people. Elections existed, but these were rather inverse elections. The people could elect the politicians to be bannished for 10 years. The politician who got 6000 votes was banned. It turned out to be an excellent way to avoid political excesses and social unrest.

At the time of Aristotle (384 – 322 BC) Greece had expanded into some 1,500 city-states around the Mediterranean and the Black Sea, of which hundreds were a ‘democracy’.