Changes

In ancient societies, such as Rome, Mesopotamia, and Egypt, governments were generally creditors and not in debt. They would finance to institutions or individuals at given lending rates. At times of war or major state projects, funds would be raised through taxes and directly used. If there was an immediate crisis where the state required financial support, then the state would generally turn to its wealthy families for support. Wealthy families had incentive to simply give their money to the state if it meant the survival of the state, as the wealthiest families were often the ones that ruled or had the most to lose. The state could even simply confiscate wealth in order to finance its enterprises. The general pattern in antiquity, particularly in the Old World, is that the state would allow creditors to loan individuals and debt. The state would periodically issue decrees to forgive debts, particularly in periods where debt levels became high and could threaten the overall economy. This also proved popular for rulers, particularly if forgiving debts did not hurt the rulers but mainly affected debt collectors. Even if debt forgiveness affected the state's finances, this forgiveness of debts could be seen as less painful than allowing too many people to default. <ref>For more on early debt in antiquity, see: Hudson, Michael. 2018. ...<i>And Forgive Them Their Debts: Lending, Foreclosure and Redemption from Bronze Age Finance to the Jubilee Year</i>. ISLET.</ref>

In the contentious European wars of the late Medieval period and early Modern period, kings began to finance their wars using debt. Initially, kings could raise taxes and then directly finance their wars. However, it became increasingly hard for kings to keep order by raising taxes in times of war, particularly as wars became frequent. It was simply easier to borrow. Kings also believed they were put in place by God so they often had little to fear from creditors. This made it a problem as creditors soon began to refuse to lend to kings since they realized they may not be paid back. This created financial crisis crises for monarchs, particularly when wars became long, and began to affect different monarchies throughout Europe.<ref>For more on how wars in Europe changed finances for states, see: Glete, Jan. 2002. <i>War and the State in Early Modern Europe: Spain, the Dutch Republic, and Sweden as Fiscal-Military States, 1500-1660</i>. Warfare and History. London ; New York: Routledge.</ref>