Life Before Visa and Mastercard
Food money in the shape of olives, dates, seeds or animals was lent. Among the Mesopotamians, Hittites, Phoenicians and Egyptians, interest was legal and often fixed by the state.
There are extant records of loans made by temple priests to merchants.
384 - 322 B.C.
Early philosophers like Aristotle, believed that usury was bad for society because the purpose of money was to move goods in society from person to person. The interest on money slowed all of that down, and hence, slowed down the progression of society.
"The most hated sort (of wealth getting) and with the greatest reason, is usury, which makes a gain out of money itself and not from the natural object of it. For money was intended to be used in exhange but not to increase at interest. And this term interest (tokos), whichmeans the birth of money from money is applied to the breeding of money because the offspring resembles the parent. Wherefore of all modes of gettng wealth, this is the most unnatural." - Aristotle POLITICS, 1258b
Roman law in the Lex Unicaria, recognized an interest (usury) rate of up to 12%.
The 12% usury rate was made the maximum rate by a decree of the Senate.
The Roman Empire adopted Christianity as the state religion.
Justinian lowered the usury (centesima usura) rates creating a sliding scale with 12% only applying to the foenus nauticum, 8% to business loans, 6% to those not in business, and 4% to distinguished persons and farmers.
1000 - 1100
Goldsmith's were offering to keep other people's gold and silver safe in their vaults, and in return people walking away with a receipt for what they have left there. The goldsmith's made out some receipts for gold which didn't even exist, and then they loaned it out to earn interest.
Around 1100 AD King Henry I was having a problem with the Goldsmiths. So he invented the "Tally Stick" system. This system lasted 726 years until 1826. Notches were carved along side a wooden stick, indicating various denominations, or amounts. Then the stick was split down the middle, with each half holding a record. Then the King would hold one-half in safekeeping to avoid counterfeiting and he would "spend" the other half into the kingdom or economy, and they would circulate as money.
The tally stick system worked really well for 726 years. It was the most successful form of currency in recent history and the British Empire was actually built under the Tally Stick system.