How Ancient Mesopotamians Solved Runaway Debt The Story Of Money

TITLE: How ancient Mesopotamians solved runaway debt | The Story of Money CHANNEL: The Story of Money Podcast | Financial Times DATE: 2026-04-22 ---TRANSCRIPT--- When a king came to the throne, one of the very first things he did was to cancel everyone’s debts. [music] It was, I’m sure, an incredibly popular thing to do. It’s also something that kind of cleans the slate of all the problems that had existed prior to his reign. He now has people who are not desperate anymore. When we can come back to the details later, but it is remarkable how much this was obeyed, that people did this, that the lenders really did break the tablets on which the loans were recorded. People were free, and it was it must have been an amazing feeling.

[music] [music] Hello, and welcome to The Story of Money, a brand new podcast from the Financial Times, where we rummage through the past to make sense of the financial present and the future. Because if there’s one thing that finance has taught us, it’s that people keep making the same silly mistakes. And these days, we might use Bloomberg terminals, spreadsheets, and special purpose vehicles, but you can get into just as much hilarious trouble with a simple abacus. Or to put another way, those who do not study history are condemned to repeat it and lose money. Touche. I’m Gillian Tett, anthropologist turned FT columnist, and that background means I love looking at all the rituals and symbols and occasional historical absurdities of the financial world and show you why they matter today. And I’m Robin Wigglesworth, also an FT journalist, editor of our finance blog Alphaville, and someone who is therefore spent far too long staring lovingly at charts. So, together we’re going to tell the stories behind money, how it’s shaped empires, toppled economies, and occasionally made some questionable ideas seem brilliant, at least for a bit. Yes, this will be a finance podcast for history geeks and a history podcast for finance geeks. And well, if you’re sadly neither one, we’re going to try our hardest to make you a So, whether you’re a financier, a student, a historian, or just someone who wants to understand what the heck a bond actually is, well, then this is the podcast for you. So, on with the show. This message is brought to you by Nuveen. In 1898, John Nuveen had a vision to underwrite municipal bonds that would propel American infrastructure into the 20th century. More than 125 years later, that vision lives on. Today, Nuveen has grown into a leading global asset manager with expertise spanning public and private markets, still investing with a future in mind. Nuveen, invest like the future is watching. Visit nuveen.com/future to learn more. Investing involves risk. Principal loss is possible. [music] Today on The Story of Money, 4,000 years ago in ancient Mesopotamia, which is modern-day Iraq, rulers grappled with a political problem that still haunts our economies today. When debts grow faster than people’s ability to repay them, the entire economic system can start to crack. The only difference with today? Well, ancient Mesopotamian rulers figured out a way to keep things stable. And that’s where this photo you’re holding, Gillian, comes into play. Yes, here’s what I prepared earlier, and what this photo is of is a stele, which is a huge 7-ft black finger-shaped block of stone. And at the top, there’s an engraving with two figures. One’s a king standing, and the other’s a god seated on the throne. Those two figures, this is another picture of it here, are Hammurabi and the Mesopotamian sun god. And underneath, all around the stone, are this ancient script scribblings. So, what does this script say? What is it about? Well, the script is technically called cuneiform, and it explains a set of laws from ancient Mesopotamia. Like this one, number 48, which I’m going to read now. Can you do it in ancient Mesopotamian Greek, Gillian? Sadly not. You’ll start with my English, and the English goes like this. If a man has a debt lodged against him and the storm god Adad devastates his field or a flood sweeps away the crops or there’s no grain grown in the field due to insufficient water, in that year, he will not repay grain to his creditors, and he will not give interest payments for that year. That’s kind of ancient Babylonian version of force majeure, if you like. Yes, exactly. It is basically saying that if you were a farmer in ancient Mesopotamia and Adad messed up your crops and destroyed all your grains, then you wouldn’t have to pay back your debts for that year. Is that right? Absolutely. And these laws are called Hammurabi’s Code. Now, as it happens, you can find the original monuments in the Louvre in Paris. But it dates from the second millennium BC in Babylon, which is modern-day Iraq. And the author of this law was the ruler of ancient Babylon, Hammurabi, who was very interested in postponing and even wiping out debt. In fact, he’s known to have canceled debts three times during his reign. Mm, that’s pretty generous. I mean, I’ve got a big fat mortgage, and I like the sound of that, I have to admit. But Gillian, I have a confession. I’ve actually seen that famous stele in person when I was in Paris a few years ago with my daughter. She really wanted to see the Mona Lisa and was unmoved by this black basalt pillar. I thought it was incredibly cool. I used to play a computer game when I was a kid called Civilization, and I used to play quite often as Hammurabi, leader of the Babylonians. So, it was really awesome to see this beautiful, imposing relic of his era. And obviously, the reason why you brought in this photo is because we are going to be talking about this ancient practice of Mesopotamian debt forgiveness and what we can possibly learn from it today. Because although this might seem very distant from our modern world, the theme of debt today is more important than ever. We’re living in a world that’s drowning in debt, and we just keeps getting bigger and bigger with no end in sight, and no one has any answer for how to actually reduce it. So, looking back in time and seeing how another ancient kingdom dealt with a massive explosion of debt and some of the innovations they unleashed might just possibly help us to look afresh at where we are today. So, to actually talk about what happened in Mesopotamia, we have a proper expert. That is Amanda Podany, professor emerita of history at California State University, Pomona, and a research affiliate at NYU. Hi, Amanda. Great to have you here. Hi, it’s a pleasure to be here. So, Amanda, set scene for us back in ancient Mesopotamia, which is hard for most of us to imagine or really know much about. Um, we’re dealing with a wildly different kind of society and financial system for today’s episode. But tell us how ancient Mesopotamia actually operated. Yes, that’s a big question. Mesopotamia is what is now Iraq for the most part. Um, also parts of what is now Syria, and it’s the place where we have the world’s earliest known cities so far. And it was a place where when they started to urbanize, when they started to live in large groups together, they had to figure out how that was going to work, you know. So, this is a place where you really see the first efforts by human beings to to get along with one another in close quarters with people who aren’t necessarily related to you. And fortunately for us, they developed a writing system, cuneiform, which you mentioned, which was um perfectly suited to to recording the languages that they spoke, and they’ve been deciphered. We can read their their texts. And the other lovely thing they did was they chose to write on clay because they had a lot of it. It was a river valley. And clay is very, very durable. And so, when the documents were discarded, especially the ones that had been baked, they don’t disintegrate. They just lie in the ground waiting for us. And so, we have this particularly lovely um coincidence that we have both a very, very early urban culture from about 3,300 BCE when they started writing, and hundreds of thousands of documents survived. Wow. So, unlike many other ancient cultures that wrote on papyrus or on parchment or skin or whatever, we just have this vast amount of information for ancient Mesopotamia. And therefore, we have these incredible insights into aspects of their culture that we can reconstruct a great deal about the economy and about the society. So, it’s a bit like, you know, having a vast collection of bank statements frozen in clay tablets from thousands and thousands of years ago, a bit like Pompeii suddenly being frozen in time when the volcano hit it. And within the system, you know, this urban setting, one of the world’s first urban settings where people were going around not just creating debt, but writing them down, and the main character of our story, Hammurabi, came to the throne and ruled Babylonia in 1792 BCE. So, Amanda, who was this Hammurabi guy? Hammurabi was a king of the city of Babylon at a time when Babylon was not yet Of course, it’s such a familiar name now that we always assume that somehow it has always been that. But at the time that he came to power, it was one of a half dozen states that had divided Mesopotamia up between them. They wouldn’t have thought of themselves as being in ancient history. In his time, they had had urban civilization for 1,500 years by then, and they believed they’d had it for hundreds of thousands of years. So, Hammurabi came to the throne. He inherited it from his father. His kingdom was not at that point a particularly powerful place. And for more than 20 years of his reign, he ruled just like the other kings around him. He traded with them, he went to war with some of them. There were diplomatic relationships between them. The kingdom went along just fine. And then, actually it wasn’t till about his 29th year that he started to expand his kingdom and to sort of try to create an empire. And he comes down to us as one of the biggest names in Mesopotamian history. I think most people learned about Hammurabi in school. He’s someone that is familiar to a lot of people. And yet in his own lifetime, he was not that big of a name until quite late. And I think even after at the end of his reign, he would have been really surprised to know that thousands of years later, he is the one person that everyone has heard of. Because there were many more people, many more kings who I think at the time they would have thought were much more significant. But we know about him because of his code of law. Yes, so tell us about the code of law because the code of law is what made him famous and put him into the history books. What was it and why does it matter? Well, let me tell you how it was found because that’s in a way how it got into the history books. In 1902, it was discovered in an excavation not in in Mesopotamia, actually in in Iran. And it was found and it was this beautiful, as you’ve seen it, Robin, when you were talking about seeing it in the Louvre. It’s so spectacular. And 7-ft tall. It’s awe-inspiring, isn’t it? It’s almost it meant to be awe-inspiring, it seems. Yes. Yes. Yes. I mean, 7-ft tall would have been much taller than the people were at the time. I mean, they probably they were under 5-ft at the time. It would have been very prominent and and then when it was discovered, there was a lot of excitement because it was the first code of law that had been found from the ancient world, the earliest the earliest code of law at that time. And so it made it into the newspapers and there was a lot of excitement. Cuneiform could be read and so it was translated quite quickly and there are lots of fascinating things in the laws. And so everyone said the world’s first law maker. Well, very quickly after that, they discovered that there were earlier laws and that these in fact the idea of writing laws down had existed for at least 300 years before Hammurabi. But he got into the history books right away because of this first law maker idea. And he stayed there. The king who perhaps did make the first laws, whose name is Ur-Nammu, is not a household name. But it’s not just the stele, it’s also the laws are very complete. There are so many of them. They give us such a really interesting insight into so many aspects of the society and the economy of ancient Mesopotamia that they are studied extensively for that reason as well. It’s one of the longest, I think probably the longest collection of laws that survives. So, in essence, give us a very quick sense of what those laws say. The laws are really interesting because they really read like a collection of legal precedents rather than they’re not absolute laws at all. They are um conditional. So, it’s always if someone did this, then this would be the punishment. And most of them very very sort of quotidian. Like the the one that you read, they are if someone loses their crop, then they don’t have to pay the interest. If a man wants to divorce his wife, he has to do this and he has to return her dowry to her. Some of them are for crimes. The ones that are best known are the eye for an eye rules, which is if someone takes out one man’s eye, his eye will be taken out or whatever. Um but even those aren’t necessarily very straightforward. They vary depending on the circumstances. Okay, so he’s famous for these law codes and that is beautiful stele in the Louvre. But, you know, obviously what we care about today at least is the debt forgiveness and how that functioned uh given, you know, the fact that sometimes people talk about this in the modern day. Uh and I’m fascinated by this idea that justice or giving justice was synonymous with forgiving debts. So, let’s go into how this actually worked. We’re in ancient Babylon, Hammurabi comes to the throne in 1792 BC. But before we do that, give us a sense of how the economy actually operated in those days. What were people actually doing? The vast majority of people were involved in some way in agriculture. It was a clearly an agriculturally based economy. The climate of Mesopotamia was such that they were dependent upon the rivers for irrigation. There was not enough rainfall to support agriculture. And so there was a lot of work also around controlling the rivers, making sure that the flood didn’t destroy the crops, making sure that there were levees and reservoirs and so forth to control the water. But it was very very productive land once it was properly irrigated. Every year silt was brought down onto into the river valley and the soil was rich. And so they were capable of producing vast amounts of grain, which was mostly barley. But the other major agricultural product in a way was the sheep and the goats. And they would produce wool from the sheep, which they used to make textiles. And textiles, interestingly, were one of the major exports of the Mesopotamians. They didn’t have much in the way of traditional natural resources. They didn’t have mineral ores, they didn’t have stone, they didn’t have precious goods that came out of the ground. They did, we know now of course, have oil, but they didn’t use it. They didn’t have internal combustion engines, so 3,000 years later. Exactly. So, the textiles were very important to them. But what that meant is that most people had some sort of connection to herding or agriculture, even if their job title was something completely different. This was a monarchy, obviously. The palace would provide various civil servants and people who worked for the palace with a plot of land that they would farm and that that [clears throat] plot of land would provide their salary. Some other people were paid in in grain by the palace directly because the palace owned vast amounts of land. But also there were very important institutions. The temples were very important and they too owned estates. And there dependents would also be provided with either plots of land or rations or salaries in um grain and wool. So, the whole economy then is really dependent on everybody having you movement of these of these goods. But this was a kind of economy where people got themselves into debt all the time, right? Debt was a big issue in ancient Mesopotamia. How did that happen? It was a very big issue because people were paying their rents, they were paying their taxes. And they had to pay those and sometimes their fields didn’t produce enough grain in order to provide that. And so the obvious thing to do would be to go to someone who had more money than you and borrow the money to pay your taxes. And then when the the harvest happened, at that point you could then pay the person back, ideally. Unfortunately, the standard interest rate on grain was 33 and a third percent. And that was due where whenever you paid it. That’s very high. It’s very high. And were they paying that in grain or in money? Were there actual coins? It varied. They didn’t have coinage yet. They paid some things in silver, but they would weigh the silver on a scale. So, a person would keep his wealth in a coil of silver, which he would you know, clip a piece off the coil and then weigh it and that would be paying in silver. But most people were much more likely to pay in grain. The problem with that is the king didn’t really want that much grain coming into his palace. It was incredibly heavy, it was very hard to ship. And therefore, he wanted some middleman to turn that into silver for him. And this is where one gets the people who were really central to this debt issue, who were usually merchants who had a lot of wealth. And the people would pay their taxes that were collected by this person who was called the overseer of the merchants. He would then somehow turn that into silver. And this is unfortunately the part of the system that we don’t really see exactly how it happened. But he would sell those commodities to to get silver, which he would then send to the king. So, the king gets his taxes and rents in a fairly easy format for him to use. Whereas people weren’t responsible for trying to turn their own grain into silver ahead of time. So, what happens if people couldn’t pay back their debts? I mean, you know, we hear stories about people selling themselves into slavery or selling their feet into slavery to pay back their debts. But is that was that common? It was. People did get themselves into terrible debt. And often there was a sort of pledge against the debt. So, they would pledge their house or their field. And sometimes they would pledge their family as a sort of guarantee against the repayment. And so they would lose access sometimes to their farm, which of course then made it much more difficult to get to to pay back the debt cuz they’ve lost control of their farm. And sometimes they would indeed the family members or the debtor himself would be would become a debt slave of the person to whom they owed the money. But he would sell his wife and children before he sell himself into slavery. Yes. Yes. [laughter] Yeah. I give the whole new sense of debt crisis. It really does. It really is. And it wasn’t chattel slavery. Debt slavery was different because there was an end point to it. There was a point at which it was considered that the debt had been worked off by the people who had been working for the the lender. But it was years and so that meant that that person was functionally enslaved for several years. And this also then created a crisis because you have a situation where the king is sort of losing control of his own economy because the entrepreneurs to whom he has delegated the collection of the taxes and the collection of the interest on them and so forth, those people are now basically usurping some of the manpower that he would otherwise have working for him, they they’re working for the lenders. And this was a huge crisis for the country when too many people were in debt. Wow, so it creates a whole new sense of a fiscal crisis. Amanda, we’ve got this largely agreeing agricultural economy, the palace controls much of the farming, the provisions, they operate through these merchant intermediaries, but debts are building up all the time between people and the palace and other entrepreneurs and and merchants and traders. And as you say, the risk is that more and more people become indentured slaves, indentured servants. Uh and this huge gap in equality makes, I assume, people pretty unhappy. I’d be unhappy if I had to sell my kids into servitude. Uh and of course they can’t work. So to sort out the economy, the palace then has to wipe the debt slate clean, right? Yes, that is what they did. And they had been doing it for hundreds of years before Hammurabi’s time. The very first instance of this is way back in about 2450 BCE. There was a king named Enmetena, and he ruled a a city-state called Lagash. And this is really around the earliest time when kings even started writing inscriptions to tell us what they were doing. And so, who knows, perhaps he wasn’t the earliest. But he was a king who presented himself as someone who was kind to his people and who was a basically a good guy. And in his inscriptions, he describes a number of things that he did, one of which was he engaged in diplomatic uh negotiations with a neighboring land, and he um declared that they were brothers, and this was the way that they described an alliance, that the two kings were brothers. And then he puts in his inscription that he, quote, “Canceled obligations, restored child to mother and mother to child.” He canceled obligations regarding interest-bearing loans. When it says he restored mother to child and child to mother, it means that he’s allowing a child who’s in debt slavery to return to the family. Wow. Um that the term that’s used for that in Sumerian, which was the language that was spoken at that time, is amargi, which means that literally return to mothers. That was their term for freedom. It would have been folks’ memories of all these new debt jubilee campaigns to the third world of today and people saying that wiping out debt is part of social liberation. Um and we’ll come back to that in a moment, but one thing I’m fascinated by is that people used to say that the economic evolution of mankind was that we had barter first, and then money, and then debt. But of course, this shows that debt was there right at the very beginning. Yes. Um Adam Smith had it wrong in terms of how he imagined the economy. Debt in some ways came first. Well, I think the reason that some of those theories were wrong is they couldn’t read cuneiform when they first came up with the theories. That’s why we wanted you on the program to explain [laughter] that to us. Well, I think we should all learn cuneiform at school, really. Wouldn’t that be great? I think in a way, because it wasn’t deciphered until the mid-19th century and a lot of this research on this kind of work is really quite recent, I think it’s taking a while for economic historians and economists to realize that there is this amazing wealth of information so early on how people dealt with these same issues that that uh continue today. Anyway, the point that about Enmetena, where he says he canceled obligations regarding interest-bearing loans, shows that he really was, at that point, that early, re- realizing that it was the interest-bearing loans that were causing the problems and that that was what had to be canceled. But when did they do debt cancellations? What what was the trigger for these things? It tended to be when a new king came to the throne. So when a king came to the throne, and Hammurabi did this himself, one of the very first things he did was to cancel everyone’s debts. And it was, I’m sure, an incredibly popular thing to do. In today’s world, you do it to buy votes. I mean, he didn’t have to buy votes in those days, but he was trying to curry favor, wasn’t he? Yes, trying to be liked, not wanting to be usurped by someone else. But I think the other thing is he’s trying to get his economy in order, because it’s not just a popular move, it’s also something that kind of cleans the slate of all the problems that had existed prior to his reign. He now has people who are not desperate anymore. We can come back to the details later, but it is remarkable how much this was obeyed, that people did this, that the lenders really did, you know, break the tablets on which the loans were were recorded. People were free, and it was it must have been an amazing feeling. So just to quickly jump in there, the concept of wiping the slates clean, does that come from the idea that they literally wiped those old clay slates clean of all the marks showing the debt records, or is that just an urban myth? I think that’s got to be an urban myth, because I think the the phrase is probably pre-decipherment of cuneiform. So I think there’s probably later slates that got uh wiped clean. Did you say they broke the slates of debt? They’re not slates, they’re clay tablets, but yes, they literally broke them. And the mechanism that took place was that the king would declare a debt release, and he would then bring together his high officials from all across his land into the capital city. He would light a golden torch, which was the symbol of having uh begun this debt release. And there’s some thought that it might have even been a fire signal, that the the torch was lit and then there was a fire signal that spread across the kingdom from one city to another as people saw the symbol that the the fire, they would know that the the debt release was happening. Possibly, that’s somewhat debated, but there certainly was a golden torch that was lit. And then the people he had brought into the uh capital city would get a copy in cuneiform of what he had determined was going to be the set of regulations around this particular debt release. We have a couple of these that survive. So it’s a bit like an ancient equivalent of sending out a notice via Bloomberg terminal, telling everyone you’ve restructured the debts, you know. Yes. More glamorous. And a little bit more time-consuming to write, because they all had to be handwritten. Yes. But um but yes, they would get this, and then they would go back to their towns, and they would set up uh committees to have everybody bring their loan contracts, and they would determine which ones had been canceled out of the many loans that existed, because not all of them were. And then they would break the tablets of the ones that were canceled, so nobody could now claim um to go back to the the the debt run and say, “See, I still have your tablet, you still owe me.” They couldn’t do that. They didn’t have the tablets anymore. And so these tablets then being broken was a sort of very um not just a symbol, but also very practical way of making sure that a lender couldn’t demand a debtor to pay him or her a debt that actually was no longer owed because it had been canceled. But the king was very clear that these were the debts of the need that were canceled and not commercial debts. What was the distinction in ancient Mesopotamia? I think what they realized was the people who were desperately poor were the ones who were in debt um out of need, whereas big commercial operations were thriving, and they were good for the economy, and you didn’t want to cancel their debts because you’d completely mess them up. So it’s a bit like they’re wiping out credit card debts and mortgages, but not commercial corporate loans, as it were. Exactly. So the people who benefited were the the the poor people. And in fact, Hammurabi makes a big statement about this. He does say that he is someone who is the kind to his people, he makes sure that the rich person doesn’t impose upon the poor person, he protects the poor people, he protects widows and orphans, he he um is someone who wants to be thought of as someone who is kind and and supportive of the people in his kingdom. And he we have hundreds of letters from him that survive. And the letters written to and from him show that in fact he really was that person. He did care very deeply about making sure that justice prevailed. So a gardener, for example, finds that someone else has taken over his field, and he complains to the king, and the king writes to the person who’s in charge of that region, “Make sure this gardener gets back his field, check all the documents.” I mean, micromanaging, but but clearly doing it in a way Well, he’s the ultimate populist with a conscience, in a way, but let’s go to the question of how it actually worked once it was actually enacted. What did it actually do to the economy, and do we have any examples or indication of what that meant to people’s lives? It seems to have had the impact that was desired. It does seem as though the economy did stabilize after these um edicts. And that the people who were the happiest about it, of course, the poor, did manage to recover. Not just were they released from their debts, but sometimes they got back things that had would seem as though they were impossible to get back. So, for example, there was a man named Pu-ili, um whose documents uh survive, and he had to borrow money from a rich man, and he pledged his field. And the man who he had pledged the field to, the the lender, um went ahead and just took all the grain from that field, assuming that Pu-ili would have to spend all of that grain to pay back the the debt. Well, right at that point, uh the debt e- uh release edict was pronounced. And Pu-ili had a right not just to his field, but to the entire produce of the field as well that had been uh harvested by the lender. Guess Pu-ili. Yes, exactly. I mean, perfect timing for him. But it it really meant that the lenders had to be surprisingly honest, cuz it was up to them to take those tablets and say, “Yes, this money was owed to me, and now it isn’t anymore.” And we know about Pu-ili because actually his his lender was not as honest, and Pu-ili they complained. But for the most part, it seems as though the lenders did what they were told because there’s another one another example of a woman named Natuptum. Um, and Natuptum was a lender. She had lent money to a couple, and um again there was a debt release at the time after she’d lent this money to to this couple. And she went to look for the tablet on which the uh the loan was inscribed, and she found that she couldn’t find it. And so she actually went to the officials and she said, “I cannot find the tablet. I know you need to break the tablet, so I brought this clot of earth. And I’m going to give you this clot of earth in place of the tablet. Please break this.” And then you know they So they broke the clot of earth. And then they recorded on another tablet that if the actual loan document ever shows up, she’s obligated or whoever owns it is obligated to have it properly broken. But for the time being, the loan was canceled by breaking this this clot of earth. It’s like losing your ATM PIN or losing your bit Bitcoin code suddenly, you know, what do you do about that? You can’t get access to something. You have to try and be inventive instead. Oh, exactly. And it really does show the honesty that you she could have said, “Well, I can’t find the tablet, so maybe it didn’t exist.” That she felt obligated. There’s also something behind this which I should mention, which is they had this profound belief that the god Shamash in particular, but the the gods in general were watching. And that if you had sworn an oath to do something, you absolutely had to do it at all the gods would punish you. There is a sort of really strong sense that divine justice will prevail if people lied. What the lenders would sometimes do is try and kind of twist the truth a little bit. So they would say, “Well, actually this wasn’t a loan for need. This was actually a business investment, and therefore I don’t have to pay them back.” But there were there were officials who were watching out for this and who were investigating. And so when a debt release was proclaimed, it was a big deal for the whole country. Just fascinating and very thought-provoking in terms of the parallels with today. We’re going to take a quick break now, and when we come back, we’ll talk about the rest of Hammurabi’s reign, about Babylon and beyond, and the lessons that we can learn from this about debt relief for today. This message is brought you by Nuveen. The future of fixed income investing will continue to blur the lines between public and private markets. Nuveen’s credit platform was built to navigate the shifting landscape, channeling capital toward the businesses, infrastructure, and energy solutions that are shaping tomorrow’s economy, all while aiming to deliver the resilience and returns that portfolios seek today. Nuveen, invest like the future is watching. Visit nuveen.com/future to learn more. Investing involves risk. Principal loss is possible. And we are back. Uh so Amanda, I I’m fascinated by this. Uh I still like to understand even better like how this affected the economy. I mean, it sounds a bit like it was kind of switching the computer on and off again to get things going, and you know, it works with my laptop. Did it really work that way for the economy? It’s hard to tell because the documents that survive are not complete. We don’t have all of the records that we would love to have in order to know what was going wrong beforehand and what went right afterwards. The fact that they did repeat them periodically through a king’s reign, they would need another one, suggests that it didn’t completely solve everything. Obviously things did get bad again. Yeah, there was three during Hammurabi’s reign, right? There were. Yes, there was one that took place just before his 13th year, and then not again till his 32nd year. And that one was very limited in its scope, so it must have been fairly effective in Hammurabi’s reign. His successor, his son, had four of them over the course of his reign. So there were I think someone’s estimated there were about 30 of these debt releases in the period of the dynasty of Hammurabi. He wasn’t the first in the dynasty, so it’s over about a 300-year period. Um, but they were unpredictable, and so it’s not that people could say, “Ah, well, it’s this many years. We know there’s a debt release coming.” It might or might not come. It does suggest that they were successful initially, but that they didn’t solve the problem. The other thing of course is there were a group of people who weren’t particularly happy with this, and these were the entrepreneurs who had invested or had had provided the the loans, and they had to just accept that they weren’t going to get those repaid. One of the things that mitigated that a little bit though is those same people who lent the money were also um borrowers themselves in a way in that their own interest rates and and taxes that they owed to the king were canceled at the same time. Okay. The king wasn’t just saying, “Okay, well, you guys you need to absorb all of this.” He too took the hit of saying if taxes were overdue, he would just ignore them now. And so that was good for the lenders as well. Cru social. So in modern parlance, it’s a bit like everyone having a haircut on their debt. Yeah. So I mean, we’ve learned a little bit about Hammurabi’s debt cancellations now. How did his reign end? What was the rest of his life like? You said earlier that he’d be surprised that he’s as famous as he is today. The period starting in his 29th and 30th years where he started to initially defend his kingdom against outside attackers, and then quickly turned to becoming an aggressor himself. It was a surprising change to his his sort of way of ruling to to create this empire. And then he died, and his son, whose name was Samsu-iluna, took over from him. And almost immediately he faced rebellions. And these were not sort of debt problems. These were rebellions of people who didn’t want to be in his empire. But it went father to son um for many generations after that with the same dynasty ruling Babylon and ruling the area around Babylon until the kingdom came to an end. But the kingdom did come to an end in 1595 BCE with a lot of rebellions and um disruptions and ultimately the conquest of Babylon by a group of people called the Hittites who came from what is now Turkey. In terms of the debt cancellation, you know, other kingdoms did this as well, but perhaps one of the most interesting characters in all this story is Ammisaduqa, the last of the Hammurabi dynasty, who actually went to great lengths to explain how debt cancellations worked and why they were good. Yes, Ammisaduqa’s is the most interesting because it’s the only complete example we have of one of these edicts. He wasn’t quite the last of the dynasty. He’s the last king who is known to have been related to Hammurabi. But Ammisaduqa, he’s very late. He’s in the um mid-17th century BCE, so a whole century after Hammurabi. And his edict survives in full, and it has many has more than 20 paragraphs, if you will, that describe exactly whose debts were released, who was not uh subject to this. And it’s really fascinating. It would be lovely to have the same from Hammurabi, to have the text that he gave out to his officials that would have governed how his edict was um uh initiated and implemented. But we have this one from Ammisaduqa, and we have one just a tiny fragment of one from Samsu-iluna, who was Hammurabi’s son, and it has the same clauses in it as Ammisaduqa’s in about the same places, even though it’s very very fragmentary. And so it seems as though perhaps from one king to the next they used the same edict, that they would keep the same text. They might change it a little bit depending on the circumstances of their time, but they seem to have have kept the same same parts to it. Cut and paste approach towards kingly debt relief, if you like. If it worked, then you kept the same. So let’s step back for a moment and think about the implications of this, because I first stumbled on the story of Mesopotamia through the works of an anthropologist called David Graeber, who argued that essentially when you have economies based around a financial system which has no capacity constraint around how much credit you can create, um as opposed to one where there is a capacity constraint where you tie finance to something like gold that’s in short supply, when you have no capacity constraint, debt tends to become bigger and bigger and bigger until you either have a social explosion and a political rebellion, or you have to do something about the debt to restructure it. Do you think that that is a story of where we are today, Robin, that we’re facing a world that’s just drowning in more and more debt? There is no answer to it, and we’re going to have to work out a way to either forgive the debts or wipe them out, or face a political explosion? Mm, yes and no. I mean, looking at the world today, it is easy to conclude we’re facing a political explosion right now. I mean, I think this history stuff when it comes to debt relief is fascinating. I’m always skeptical that we can learn that much from it. The reason of course we do have bankruptcy courts at least for for people and companies, if not for governments. But you know, countries do go bankrupt as well. We do have debt restructuring. It’s never fun, but I think that sort of wholesale debt cancellation, we forget, you know, one person’s debt is another person’s asset, right? And I think it maybe worked in ancient Mesopotamia because it’s unpredictable. But I bet if we had anything like this, people would game the crap out of it. And so pricing loans would take account of the danger they might not get paid back, and so the interest rate would be higher. Exactly, Amanda. You pointed out that interest rates were really high, 10, 20, 30%. And you know, if I was a lender, I would charge those kind of interest rates if I knew that at any given time the ruler could kick the bucket. And I’d basically have the loan wiped out, the clay tablet broken. I guess the other question is whether there’s other more subtle ways of wiping out debts or reducing them on the behalf of the government like unleashing sky-high inflation that Yeah. effectively removes debts by virtue of prices rising or whether something like financial repression where a government deliberately engineers a situation where the bond yields are below the prevailing rate of inflation, which essentially means that any of the lenders subsidize um any attempt to pay down the debts. I mean, that’s another way of trying to get, if you like, restructuring through the back door. Yeah. A mix of a restructuring, inflation, repression, economic growth, dare I say it. Obviously, we haven’t had a ton of it over the past few decades, but uh I think it’s it’s a classic of all of the above. And I do think like debt cancellations, I mean, I think you know, the cliché is that capitalism needs, you know, bankruptcy just like, you know, heaven needs hell. You need something like that. You need some sort of a mechanism to recognize and reorder obviously unsustainable debts. And it’s quite often messy. It’s easier if you’re an individual person. We have bankruptcy courts. And it’s very hard if you’re a big country. And yet, it must be telling that they actually managed to do it. And from what Amanda is saying, the fact they did these periodic but unpredictable debt jubilees meant that not only did they avoid a dramatic political explosion, if I understand you right, Amanda. You didn’t have the rebellions because of this. Um but they also managed to reboot the economy a bit. Yes, I think that’s right. I think obviously, it’s a much smaller economy than the ones we’re talking about today. Also, the kings, I think were concerned with being seen as kind. Um I mentioned it for Hammurabi, but it was a it was a general rule. You could be overthrown if you weren’t. So, I think that was part of it. I think it was it was partly because they had a problem with the economy, but I think when they did it right at the beginning of every reign, it was simply on in order to say, “I’m a good guy. I’m doing what everyone’s done before me that you would expect a king to do, and that is to relieve the debts of the of the poor people.” Another interesting thing is that they didn’t think that lenders were bad people, even though they had these high interest rates. It wasn’t as though that was some sort of a a bad profession to be in. It was seen as a perfectly legitimate profession to be in. And and people all aspired to wealth. It was not something that was seen as bad. And so, the perceptions of things were were somewhat different. And And as I said about the gods, I think that’s a fundamental difference from the present. It’s so much of this in their minds was tied into theology because they had no they had no word for religion. They couldn’t separate it from politics. They couldn’t separate it from economics. The gods were in charge of everything. And so, so much of this, in a way that is just not true in the modern world, was about trying to get the gods on your side. You know, that you you did these things so that the gods would would bless your kingdom and bless your family and so forth. You wanted Shamash in your corner, essentially. You absolutely did, yes. If only prime ministers or central bank governors had the ability to terrify people into submission today, I think they’d be very happy. But I guess that’s real value of looking back to a place like Mesopotamia or those centuries ago and saying, “Yes, some things are different, but some things are similar.” And it casts our current situation into much sharper relief and helps us to have a little bit more imagination about how we actually look at it. So, thank you so much for teaching us about Mesopotamia and explaining debt forgiveness um in the style of Hammurabi. [music] Thank you so much for having me. This is really a pleasure. So, that’s it for the week’s episode of The Story of Money from the Financial Times with me, Gillian Tett. And me, Robin Wigglesworth. Please join us again next week. [music] [music]