How was interest for loans set in the ancient Near East? It is difficult to imagine a situation in which interest ‘rates’ are not intimately connected to the workings of a capitalist ‘market’, but the overwhelming evidence indicates that they were set by royal decree at 20% per annum – pretty much for the entire history of the ANE. This came to be seen as the proper rate, decreed by the gods. It is best described as a customary amount rather than a commercial one. To be sure, there were variations, at times as high as 60% per month (720% per annum), at times lower, but the factors here were extra-economic. A major factor was the desire, by the small number of landlords and the state, to ensure indentured labor (as I pointed out earlier). Another version was the ‘loan’ as an advance payment on an everyday item, such as ivory, a peacock, a monkey, or some common metal like gold – which functioned in a centripetal fashion, to be brought in to enhance the prestige of the potentate in question. In other words, interest rates were socially determined.
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