The scale and breadth of human history is almost unfathomable. Think of how much the world has changed in the last hundred years. Think of the suffrage movement which granted all adult women the right to vote. It seems like a whole different world to the one we know. How about if we go 150 years back, when the 13th Amendment ended slavery in the US? Or 800 years, when the absolute power of the English king was checked by the Magna Carta? I sense you are all starting to see a pattern here. All of these important aspects of our lives, which have propelled human history to where it is today, had to be put in place and written down as law at some point in time. So now let’s go back a long, long time to a place far, far away, and learn about the man who set the foundations for all laws to come.
The place in question is a city situated along the banks of the Euphrates River, south of present-day Baghdad, known as Babylon. The year is approximately 1780 BCE. The Ancient Greeks are scarcely on the scene, the Romans as we know them do not exist, and by historians’ best estimates, Moses will not be born for at least another 100 years. Yet in this time seemingly beyond time, ruled Hammurabi, the sixth king of the first dynasty of Babylon. He had inherited a growing kingdom from his father Sin-Muballit, and with this came the challenges of integrating greater amounts of territories, as well as a variety of new tribes, all with their own societal and cultural norms. Whereas there had previously been laws put in place by other Mesopotamian kings, Babylon did not have a stable and absolute set of laws which could be used to govern its growing populace, and so Hammurabi changed the course of human history, creating his eponymous Code of Hammurabi. Written in cuneiform (i.e. “If… then…” clauses) the Code of Hammurabi was a set of 282 laws which followed the legal principle of Lex Talionis, meaning that criminals should receive as punishments the injuries they inflicted upon their victims, with the most famous of these being “an eye-for-an-eye”. However, Hammurabi’s greatest contribution to law was perhaps his outlining of the presumption of innocence, something which has remained to this day. These laws were inscribed on an impressive 7’ 4” tall stele, adorned with an image of Shamash, the Babylonian God of light and justice, handing down the laws to Hammurabi, thus sealing beyond doubt their divine legitimacy. But this is not an historical nor a legal article I am writing, it is an economic one, so let us get into why these laws are so important economically.
Apart from the harsh, punitive laws concerning violent crime and theft, the Code also contained important legislation that helped advance the institutions of Ancient Babylon, often seen throughout history as important steps in economic development. Hammurabi set out wage prices for various professions, such as field labourers, herdsman and artisans, as well as prices for various capital assets like oxen, carts, and freight-boats. Apart from this, Hammurabi set maximum interest rates that could be charged by creditors, being 33.5% for grain loans, and 20% for silver. Whilst all of this may seem like givens in our society, keep in mind the importance of such legislation. Hammurabi essentially put in place fixed, minimum wages and capped interest rates, allowing for trade to be more efficient, workers to be properly compensated for their services, and limited predatory interest rate charging. Hammurabi also provided implicit insurance for his people through his development of contract law, which placed the blame and cost of destruction of property on the party who destroyed it. For example, if a sailor rents a ship and crashes it, he bears the cost, not the owner of the ship, and in a morbid touch consistent with Lex Talionis, if a builder builds a house poorly and it falls on the homeowner, killing him, then the builder shall be put to death.In the ancient world, Hammurabi’s contributions were revolutionary. By outlining in absolute terms what the laws of the land were, Hammurabi created stability and justice in Babylon. His economic legislation limited the exploitation of commoners by merchants and creditors, allowed people to have trust that they would not bear losses incurred by others on their property, and encouraged the provision of services, and the borrowing and lending of money and resources. Through this development of economic institutions, Babylon was able to become one of the pre-eminent trade centres in all of Ancient Mesopotamia.
Having placed Babylon in a position of internal stability, Hammurabi was able to take control of nearly the entirety of ancient Mesopotamia through diplomacy and war, making Babylon the premiere power in the region. The fact that we are still talking about him now, nearly four thousand years on, is the best testament to his importance, and the importance of his Code, that you could ever need.