Passionate about liberty and want a chance to win $4,000? Check out our video contest!
columns

This is part of a series

Oct 7, 2015

Ancient Greece’s Legacy for Liberty: Banking for Freedom in Athens

Athenian banks afforded women and slaves a chance at economic autonomy. This was possible because of lax enforcement of laws restricting their economic liberty.

In my last essay I described the role of economic freedom in ancient Athens.  Now I turn to a more specific instance, one that in particular served to empower the most disenfranchised sectors of Athenian society (women, immigrants, and slaves) – the banking industry.

The Athenian banking system, sometimes dismissed as a mere matter of pawnbroking, appears to have been far more sophisticated than has traditionally been recognized.  One recent scholar, Edward Cohen, notes:

By guaranteeing payments of funds at far-off locations, the banks … allowed customers to avoid the dangers and inconvenience inherent in transporting a large amount of coins or bullion. Thus when Stratokles needed funds available at the distant Black Sea, to which he was about to journey, he was able to leave his own money on loan in Athens and carry instead a bank guarantee of payment of principal and interest on 300 Cyzicene staters.1

In Cohen’s view, it was the relatively laissez-faire­ character of Athenian economic legislation that enabled the banks to be so successful – and to engage in healthy and competitive experimentation:

No activity was governmentally proscribed, no activity was governmentally mandated. … [T]he absence of governmental restriction or economic monopoly … resulted in wide variance in the terms on which, and the mechanisms through which, bankers sought funds.2

Cohen argues that the sophistication of the banking system has been underestimated in part because much of it was conducted in what today might be called the “informal sector.”  While this “hidden economy” has traditionally “received little attention” from scholars working on classical antiquity, Cohen writes, “contemporary economists have come to attribute to such ‘underground’ or ‘parallel’ markets various legitimate economic functions”:

Rather than an immoral challenge to legitimate authority, the underground economies’ circumvention of governmental inefficiencies or absurdities, ranging from counterproductive or inefficient systems of taxation to restrictions on the free operation of commerce, is now recognized as critical in many societies to even minimal effective functioning of the overall economy.3

One of the most striking features of the Athenian banking system was the scope it afforded to women and slaves.  Since Athenian citizens strongly preferred self-employment over wage labor, consigning the latter to the poorest and least skilled classes, it was difficult for bankers to find skilled employees; hence a banker would tend to entrust much of his business, to a considerable degree, to his wife or his slaves or both.  As a result, bankers’ wives and slaves ended up being the only ones qualified to inherit the business.  Cohen describes the consequence:

On the death of its proprietor, control of a banking business – with corresponding power and property – was routinely left not to a male descendant, but to a male slave and the proprietor’s widow – who were then joined in marriage.  Although the pattern was somewhat surprising even to Athenian citizens (and has been largely ignored by modern scholarship), this combination of spouse and slave was a natural response to legal, social, and economic factors inherent in the structure of Athenian life.4

Of course marriage to a slave or former slave would be illegal for an Athenian citizen; this may help to explain why most bankers were metics (resident aliens) rather than citizens.

How were banks run by women, slaves, and ex-slaves legally viable?  By the strict letter of Athenian law, “a woman’s direct economic prerogatives were … substantially inferior to the property rights of females in other, similarly male-dominated Greek communities”; yet in practice we “find the law adapting to economic reality by accommodating the personal and property needs of bankers’ wives” through a policy of “silent tolerance” that “refrained from applying statutory provisions” that would otherwise have blocked women’s ability to engage in commerce.5

Another recent scholar, Virginia Hunter, explains that

women engaged in a whole series of transactions that mimicked those of men, as codified in law. Not only did they own property, including land, but they gave gifts to their children and drew up wills accepted as valued by those around them. Women’s authority to do so was neither granted, protected, nor prohibited by law. It was spontaneous and uncodified, exercised in the private sphere, a matter of family practice, being widely and publicly accepted outside the household as within the competence of women.6

Slaves benefited from the same policy of legal laxity; Cohen writes that “Athenian courts … substantially disregarded personal status in mercantile matters,” meaning that in practice “slaves could be parties to commercial litigation” even if they were technically ineligible.7

When assessing an ancient society’s degree of freedom, we tend to focus on the official letter of the law; but a society’s reality can deviate from that letter either for the worse – the Soviet constitution, for example, in theory guaranteed robust freedoms of speech, press, religion, assembly, and public protest,8 but the Soviet record in practice fell a tad short of this promise – or for the better.  (A “constitution” in the sense of a written document, when a society has one, is not always a reliable guide to that society’s “constitution” (politeia) in the original sense of the way a political system works – its institutional and incentival structure.)  Banking policy was one area in which Athens’ deviations from the letter of the law were for the better.

Modern-day anarchist thinkers like Samuel E. Konkin III and James C. Scott have written about the liberatory potential of the informal sector;9 the same dynamic appears to have been at work in ancient Athens. 


  1. Edward E. Cohen, Athenian Economy and Society: A Banking Perspective (Princeton: Princeton University Press, 1992), pp. 15-16.
  2. Cohen (1992), pp. 41-44, 112.
  3. Cohen (1992), pp. 191-192.
  4. Cohen (1992), p. 61.
  5. Cohen (1992), pp. 101-102.
  6. Virginia J. Hunter, Policing Athens: Social Control in the Attic Lawsuits, 420-320 B.C. (Princeton:  Princeton University Press, 1994), p. 29.
  7. Cohen (1992), p. 96.
  8. 1936 Constitution of the USSR, ch. 10.
  9. On Konkin, see David S. D’Amato, “Black-Market Activism: Samuel Edward Konkin III and Agorism,” Libertarianism.org (28 April 2015); on Scott, see Kevin A. Carson, “Legibility and Control: Themes in the Work of James C. Scott,” Center for a Stateless Society Paper No. 12 (Winter/Spring 2011).

This is part of a series