Hailey Johnson
The Persian Empire had a strong economy, with a variety of agricultural goods produced and traded. The Persians had a well-established tax and tribute system, with taxes paid in unminted silver, and tributes in predetermined weights of products such as ebony, ivory, and horses. The empire also divided conquered lands and collected taxes from each province. The Achaemenid Empire issued coins from 520 BC–450 BC to 330 BC, with the Persian daric as the first gold coin and the siglos as a similar silver coin. The first modern bank in Iran was the British-owned New Oriental Bank, which began operations in 1888. Following the 1921 Persian coup d'état and the establishment of the Pahlavi dynasty, there was a push for a domestic banking system, with the creation of the Bank Sepah in 1925 and Bank Melli Iran in 1928.
| Characteristics | Values |
|---|---|
| Modern banking system | Established in Iran in the late 1880s |
| First modern bank in Iran | British-owned New Oriental Bank |
| First branch | Tehran |
| Other branches | Mašhad, Tabrīz, Rašt, Isfahan, Shiraz, and Būšehr |
| First major foreign loan | 500,000 pounds sterling at 6% per annum |
| First element of a domestic banking system | Army-connected Bank Sepah |
| Banknotes | Issued by Bank Melli Iran in 1932 |
| Taxation | The Persian government collected taxes from each province |
| Royal mint | Sardis in western Anatolia |
| Trade coins | Darics and sigloi |
| Gold standard | Darics in the western Persian empire and Asia Minor |
| Currency | Rial |
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What You'll Learn
- The first modern banks in Iran were established by foreign powers in the late 1880s
- The Imperial Bank of Persia was established in 1890
- The Persians did not use markets or have a place to buy and sell goods
- The Persian Achaemenid Empire issued coins from 520 BC–450 BC to 330 BC
- The Persian economy was largely agricultural
The first modern banks in Iran were established by foreign powers in the late 1880s
The Persian Achaemenid Empire had a strong economy, with a well-established tax and tribute system. The empire's vast size meant that a variety of agricultural goods were produced and traded. In addition, the Persians had a system of coinage, with darics and sigloi being trade coins that enjoyed great prestige and were often imitated in weight, purity, and design. The darics served as the gold standard throughout the western part of the Persian Empire and Asia Minor.
However, the Persians did not have a modern banking system until the late 1880s when the first modern banks were established by foreign powers. The British-owned New Oriental Bank was the first modern bank to start operations in Iran in 1888, opening branches in Tehran, Mašhad, Tabrīz, Rašt, Isfahan, Shiraz, and Būšehr. The bank was successful in Iran, but it did not have a favourable reputation in London, and it was liquidated in 1893.
In 1889, Paul Julius Reuter secured a royal charter from the UK government for the Imperial Bank of Persia, the first such document issued for an overseas British bank since 1864. The bank started operations by opening its first branch in Tehran. The Imperial Bank was given the exclusive right to issue banknotes and was exempted from any taxation. It was also to provide the Persian government with individually negotiated loans. In 1892, the bank extended the first major foreign loan to the government of Iran for 500,000 pounds sterling at 6% per annum, which added to its leverage against the Persian government.
In 1890, the Loan and Discount Bank of Persia was established to keep British financial influence in check, although it never appeared to make profits during its three decades of operations. Following the 1921 Persian coup d'état and the establishment of the Pahlavi dynasty, nationalist sentiment in Iran favoured the creation of a domestic banking system. Bank Melli Iran was established in 1928 with the intent to take over the note-issuing monopoly role, and it issued its first banknotes in March 1932.
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The Imperial Bank of Persia was established in 1890
The Imperial Bank of Persia (IBP) was established in 1889, with its first branch opening in Tehran in December of that year. The bank was founded by Paul Julius Reuter, who secured a royal charter from the UK government on 2 September 1889, marking the first such document issued for an overseas British bank since 1864. The IBP's first banknotes were issued in 1890, and it operated as the only bank of issue in Iran until 1932.
The establishment of the IBP can be traced back to 1888 when George Reuter, son of Paul Julius Reuter, travelled to Tehran to renegotiate a concession on changed terms. This followed a pledge by the Shah in 1887 that he would not engage in railway construction without Russian approval. The modified concession was signed on 30 January 1889, granting Reuter control over Persian banking and mining.
The IBP was headquartered in the UK but operated from its main office in Tehran. The bank's initial capital of £1 million was subscribed 15 times over within a few hours of issue in London. The bank set about establishing a branch network and also purchased the business of the local branch of the New Oriental Bank Corporation. Despite these early signs of success, the IBP struggled to turn a profit in its first three decades of operations.
The IBP played a significant role in the Persian financial administration, providing loans to the Qajar government between 1892 and 1919. These loans were secured using Caspian fisheries and the custom dues of the Persian Gulf ports, raising concerns among Persian nationalists. The bank also tended to finance primarily British-linked businesses, such as Sassoon and the Anglo-Iranian Oil Company, and refrained from extending credit to Iranian nationals.
In the context of shifting Iranian politics, the IBP's banknotes bore the portrait of Naser al-Din Shah Qajar even after his assassination in 1896. Following the 1921 Persian coup d'état and the establishment of the Pahlavi dynasty in 1925, nationalist sentiment in Iran favoured the creation of a domestic banking system. The Bank Melli Iran was established in 1928 and issued its first banknotes in March 1932, leading to the withdrawal of the IBP's banknotes later that year.
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The Persians did not use markets or have a place to buy and sell goods
The Persians did not use money or engage in trade, and they did not have a centralized economic system. Instead, the economy of the Achaemenid Empire was a conglomeration of regional economies, each with its own mint and currency system geared towards local commerce. The empire's economy was also based on barter, with goods and services being exchanged directly for other goods and services without the use of money.
The Persians did not have a standardized currency until the reign of King Darius, who introduced a reformed currency system consisting of gold Darics and silver Sigloi. This new currency became popular throughout the ancient world and was used for more than 150 years. However, it is important to note that the use of this currency was mainly confined to the Western part of the Achaemenid Empire, and it is unclear if it was widely used within Persia itself.
The Persian economy was also influenced by the empire's vast size, which allowed for the production and trade of a variety of agricultural goods. In addition, the Persians sponsored many endeavors to gain new trade partners and improve their trade system through the construction of roads, ports, and trading posts. The labor for these projects was provided by peasants, who played a significant role in the economic system by owning land, farming, and raising livestock.
Overall, the Persian Achaemenid Empire had a strong and diverse economy that was based on agriculture, taxation, tribute, and local commerce rather than markets or a centralized monetary system.
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The Persian Achaemenid Empire issued coins from 520 BC–450 BC to 330 BC
The Achaemenid Empire, also known as the First Persian Empire, was a strange blend of centralised and decentralised power structures. The empire's economy was largely based on agriculture and the division of state lands. However, the empire also had a well-established tax and tribute system, which provided the majority of its finances.
The Achaemenids fully exploited and developed coinage production in Western Asia, but it seems that barter remained important in the Iranian heartland. The minting of coins in Iran only started later, from around 330 BC under Alexander the Great and the Seleucid Empire. The first mint for the new coinage was located at Sardis in Lydia, and it remained the central mint for the duration of the Achaemenid Empire. There is some debate about whether a second mint operated in the same area, but the first interior mint in Babylon was not operational until close to the time of Alexander the Great in 330 BC.
Coinage gradually spread through the empire as a convenient medium of barter for its pure metal value, but not as a true currency. The existence of darics, sigloi, and other coins circulating the empire can give a false impression of the economy at the time. The Achaemenid coinage included official imperial issues (darics and sigloi) as well as coins issued by provincial governors (satraps). The creation of the darics and sigloi is dated to the last decade of the 6th century BC, during the reign of Darius I.
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The Persian economy was largely agricultural
The Persians did not use markets and had no central meeting place for buying and selling, as was common in Greece. Instead, the economy was based on a system of dividing up state lands, with peasants farming the land and producing agricultural goods that provided for people within the empire and also made up a large portion of exported goods.
The main source of funds for the Persian government was through taxes and tributes. Taxes were primarily paid in unminted silver, with the amount based on the weight and purity of the silver. Some areas, particularly those on the farthest edges of the empire, paid tribute to the government in the form of predetermined weights of products produced in the region, such as ebony, ivory, and horses.
While the Persians did have a system of coinage, with the first gold coins, known as darics, and similar silver coins, known as sigloi, being issued from 520 BC to 450 BC, barter was also an important aspect of the economy. Coinage gradually spread through the empire as a convenient medium of barter, but it was not used in the true sense of a currency.
The first modern bank in Iran was the British-owned New Oriental Bank, which opened branches in several cities in 1888. However, the establishment of a domestic banking system did not occur until the 1920s, following the Persian coup d'état and the establishment of the Pahlavi dynasty, which favored the creation of a national banking system.
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Frequently asked questions
Yes, the Persians had a banking system. The first modern bank in Iran was the British-owned New Oriental Bank, which opened branches in Tehran, Mašhad, Tabrīz, Rašt, Isfahan, Shiraz, and Būšehr in 1888.
The first bank in Persia was the Imperial Bank of Persia, established in 1889.
The Persian Achaemenid Empire issued coins from 520 BC–450 BC to 330 BC. The Persian daric was the first gold coin, and along with the silver siglos, they represented the first bimetallic monetary standard.
