We’ve been getting into debt for thousands of years
Humans have a long and complicated history with debt. It’s only recently that bankruptcy has become a widely available option. Did you know that credit and debt actually predate money itself? In his book Debt: The First 5000 Years, David Grabel takes a deep dive into the history and consequences of debt and credit for human civilization. On the history of debt versus money, Grabel research shows that, “Coinage was only invented around 600 BC, but expense accounts, bar tabs, and compounded interest rates go back to at least 3500 BC. For most of human history, money was an accounting tool, not something people carried around and actually used to buy things.” (1)
In medieval England, creditors used a device called a tally stick to keep track of debts. They would make notches in a stick to quantify how much was owed, then snap the stick in half. One half, called the stock, was kept by the creditor, while the debtor took the other half, called the stub. The stock could be bought, sold, or traded, becoming in and of itself a form of currency. Snapping the stick in half was a security measure. Since no two sticks will snap in exactly the same way, it was impossible to forge a stock. When it came time for the debt to be collected, the stock was matched to the stub – if the two pieces fit back together, then they could be sure the stock was authentic.
Medieval England was also well known for another debt-related reason – debtor’s prisons. Those who were unable to pay their debts could have a warrant issued for them. Then, they would be arrested, incarcerated, and forced into labor in order to pay off their debts.
Check back soon for Bankruptcy, Debt Consolidation, and Debt Settlement – Don’t fall prey to scammers! Part 2. In the meantime, check out our page on avoiding debt consolidation scams.