There is a story in the Bible about a Pharaoh who had some bad dreams he couldn’t explain. He dreamt about seven fat cows being eaten by seven lean cows and seven full ears of grain being devoured by seven thin and blasted ears of grain. A fellow named Joseph was able to explain those dreams. Joseph told the Pharaoh that seven good years would come and after that seven bad years would follow. Joseph advised the Egyptians to store food in large storehouses. The Egyptians followed his advice and built large storehouses for food. In this way Egypt survived the seven years of scarcity.1
What is less known, because it is not recorded in the Bible, is that the food storage resulted in a financial system. The historian Friedrich Preisigke discovered that the Egyptians used grain receipts for money and had organised a banking system with the use of those grain receipts.2 According to the Bible, Joseph took all the money from the Egyptians.3 This may have made them look for another form of money.
Farmers bringing in grain did get receipts for the grain they brought in. Bakers who wanted to make bread, returned the receipts for which they received grain. Most people were farmers and grain was the main diet in Egypt so grain receipts represented value. In this way they became money.
Rot and the storage cost caused the value of the receipts to decline over time. This was like a holding tax on money similar to the stamps in Wörgl. It stimulated the Egyptians to spend their money. It is not clear whether there were loans made with this money. The actions of Joseph may have helped to create this money as he allegedly proposed the grain storage and took all the money from the Egyptians.
Centuries after the great pyramids were built, during the reign of Ramesses the Great, Egypt became a leading power again. Some historians claimed that the new wealth of Egypt was built upon the grain financial system. The grain money remained in use after the introduction of coins around 400 BC until it was finally replaced by Roman money.
The grain money and banking system were stable and survived for more than 1,500 years, probably because there weren’t financial crises caused by interest payments. This suggests that a financial system based on this money could last 1,000 years or more.
Featured image: Joseph interpreting the Pharaoh’s dream. Illustrations for La Grande Bible de Tours. Gustave Doré (1866). Public Domain.