Borrowing Apollo’s Money: Incentivization and Enforcement of Loan Contracts from the Temple of Apollo at Delos
Abstract: Over the course of the fifth to the second-century BCE, hundreds of individuals contracted loans from the Temple of Apollo on the Aegean island of Delos. The terms of these agreements included the amount of principal and interest, the property that was placed as security, loan guarantors in case of default, and a list of witnesses. Commentators have used these loans in an attempt to reconstruct the bureaucratic operation of the temple, the amount of money the temple handled, and to analyze the geographical extent of its lending activities. Despite the amount of information these loan documents provide, two central questions have not been answered in either the primary or secondary literature concerning their operation: How does one explain the sheer number of debtors to the temple? And, also, why does the temple continue to lend money in the face of increasing numbers of debtors? I argue that the large number of debtors was a product of the Temple of Apollo’s aggressive growth strategy. When the temple’s larger financial operations of property and land rentals, tax collection, and loans are viewed together, it is clear the temple wanted to maximize its revenue through the use of loans. It embraced loans as its preferred means of rapid growth and manipulated its contractual incentives in order to encourage borrowing in the expectation of future interest revenue. The most important of these incentives was the lack of penalties in case of late payment or default. The results of such aggressive tactics succeeded in luring borrowers away from traditional lending sources, but it resulted in hundreds of defaults and the limited ability to enforce repayment. This was an acceptable risk for the temple, as it did not change its lending practices during the entire time during which it loaned money. I propose that the temple relied upon religious obligation as a culturally self-enforcing mechanism in order to transfer the burden of enforcement onto the borrower.