If you have a debt forgiven or discharged for less than the full amount owed, the debt is considered canceled in the amount you no longer have to pay. However, the law provides several exceptions in which the amount you do not have to pay is not canceled debt. But did you know that King Hammurabi cancelled debt for all citizens?
During King Hammurabi’s reign, all citizens’ debts were canceled in 1792, 1780, 1771, and 1762 BC.
The Debt Cancellation
General debt cancellation proclamations began long before Hammourabi’s reign and continued afterward. Debt cancellation can be traced back to 2400 BC in Lagash or Sumer, six centuries before Hammurabi’s reign. The most recent occurrence occurred around 1400 B.C. in the Nuzi. From 2400 to 1400 BC, historians have identified approximately thirty general debt cancellations in Mesopotamia.
Michael Hudson, a historian, is correct in asserting that general debt cancellation was a key feature of Mesopotamian Bronze Age societies. Several Mesopotamian words for these cancellations cleared the slate: amargi in Lagash, nig-sisa in Ur, andurarum in Ashur, misharum in Babylon, and shudutu in Nuzi.
Debt cancellation proclamations were a cause for a grand celebration, usually at the Spring festival. The tradition of destroying the tablets on which debts were inscribed was established during Hammurabi’s dynasty. The public authorities kept a strict record of debts on tablets preserved in the Temple.
When Hammurabi died in 1749 BC, after a 42-year reign, his successor, Samsuiluna, canceled all debts owed to the state and ordered that all tablets be destroyed except those about trade debts.
The general debt cancellation proclaimed by Ammisaduqa, the last governor of the Hammurabi dynasty who came to the throne in 1646 BC, was very detailed, with the clear intention of preventing creditors from exploiting loopholes. Official creditors and tax collectors who had expropriated peasants were ordered to compensate them and return their property or face execution. In cases where a creditor had taken property under duress, he would be executed unless he returned it and repaid its total value. (Source: Human Journey)
Goodbye Debt Forgiveness
When the practice of debt forgiveness died out later in the first millennium BCE, clean slates were no longer declared. Economic polarization, bondage, and social collapse began, as they had at the end of the Roman empire.
Most economists believe canceling debts is so far-fetched that it could never have been implemented in practice. Scholars such as economic historian Michael Hudson have traced a long tradition of debt forgiveness proclamations in the Near East. That tradition dates back to the beginning of written inscriptions, which began in Sumer in the mid-third millennium BCE.
Historians and archaeologists recognize this, but economists are less aware of it. Indeed, the concept of debt cancellation appears to be unthinkable. They question whether a Jubilee Year could have been implemented in practice, let alone regularly. The Mosaic debt Jubilee is widely perceived to be a utopian ideal. (Source: Human Journey)
Image from NationalGeographic