The history of rental relations stared over 4,000 years ago. This history is rich and varied, like the history of mankind itself. To our surprise, the bases of rental relations in years past have a lot in common with what, at a first glance, seems innovative today. We will make a short review of the evolution of this sphere of relations and list key stages in its development.
First deal
Nobody knows the exact date of the first rent agreement. Nevertheless, the first material evidence of this type of activity dates to about 2,000 years BC. During a dig in 1984 at the Sumerian city of Ur, archaeologists discovered a prototype for the first rental agreement. These were clay tablets in which the sides set down their responsibilities for the paid transfer for a certain period of agricultural goods, the right to use water resources, etc. These clay tablets told the archaeologists that the first lessors were, as a rule, priests living in temples in the city of Ur.
First rental company
Scientists have found evidence that, between 400 and 450 BC approximately, in the ancient city of Nippur, the Murashu family opened the first rental company known in the history of mankind. The Murashu family was the undisputed leader on the market for rental services in the Persidian Empire. It specialized in the rental of land, but also rented a number of associated products: livestock, agricultural goods and sowing equipment.
Other examples of rental in the ancient world
Other ancient civilizations, such as ancient Greece, Egypt and Rome also used rental as an effective and sometimes the only accessible means of receiving the necessary means of production or land for farming. In those times, like in Russia now, the possibility of acquiring the use of means of production was a serious affair: the rental of land and equipment made it possible for entire settlements to receive a means of survival.
Well known for their business acumen and success in international trade, the Phoenicians rented out ships. The nature of ship rental agreements in ancient times was not significantly different from current leasing deals. To meet the requirements of their clients as much as possible, the Phoenicians, in addition to renting ships, offered ship crews as an additional service. It was the Phoenicians that were the forefathers of financial rental (leasing) rather than simple rental. The term over which the ship was transferred to the use and ownership of the lessee was close to the term of their useful life span. The lessee also carried the lion’s share of the risks and benefits connected with the ownership and use of the ships.
Rental in the Middle Ages
In 1066 England was subject to a sudden attack from the Norwegian king and a Norman duke. Within two weeks of the start of the campaign, both fleets reached the shores of England. Neither the Norwegian king nor the Norman duke has sufficient ships or sufficient time and money to build fleets and simultaneously finance this type of military campaign. For these times, this was a serious military operation. The English were unable to find any other explanation for the phenomenon other than divine intervention. However, in fact it was much more simple – both leaders found sources of financing – they rented fleets, crews and arms and successfully implemented their business plan.
In the Middle Ages it was popular to rent horses and agricultural equipment. It is a known historical fact that in the Middle Ages rental of knight’s armor was widespread, as this was very expensive. For example, in 1248 the knight Boniface Manganella, who was planning to go on the seventh crusade, rented a full set of knight’s amour. Interest on the rental amounted to about 25% of the cost of the armor.
Growth in rental agreements in the 19th century
In the nineteenth century there was a significant increase in rental activity, mainly due to an increase in the variety of rented items used in society. Rapid development of technology in agriculture, production and transport meant that rental was much in demand in business. For example, companies that were actively building railroads gave other companies that managed rolling stock the right to use their rails for a rental payment. In turn, the rolling stock was also rented out to transport companies.
The rapid development of the railroads acted as a major stimulus to the development of rental as a sector in the U.S. Together with the railway construction boom, so-called equipment trusts started to develop, which attracted funds from investors and invested these in buying rolling stock and other equipment. This rolling stock and equipment was in turn rented to shipping and rail companies, involved in the transportation of passengers and freight. Private investors received special certificates based on which they could receive their investment back, plus interest.
Rental in the first half of the 20th century
Along with the technical progress in the 20th century, rental has become more and more topical. Increased interest among producers of equipment in using leasing as a sales tool has acted as a new stimulus for development. At the start of the century producers already understood that it is difficult to find the funds to pay for expensive equipment in one go, and in most cases simply impossible. A significant number of producers considered rental agreements according to which the right of ownership remained with the lessor for the term of the agreements, as a way of retaining ownership of the technology on which the equipment was based. As an example, we can look at the bell Telephone Company, which in 1877 announced a decision to provide its telephone apparatuses only under rental agreements. There was a similar situation in other sectors also until antitrust legislation was passed and equipment producers were forced to sell their equipment.
With the development of car manufacturing, rental became a part of life in society in the U.S. and Europe. The first car rental agreements were signed in 1918. Nevertheless, the Chicago car dealer Zolly Frank is considered to be the father of modern automobile rental, as he was the first to offer, at the start of the 1940s, not rental of individual vehicles, but long-tem leasing of entire fleets of vehicles.
As mentioned above, the main reasons for the activation of rental relations in the first half of the 20th century was the use of rental by equipment producers as a means of promoting their products and protecting production technology. As these relations developed, they evolved, as a result of which most producers of equipment, who initially dealt with rental directly, set up special financial companies that were fully owned and controlled by them. Equipment producers that were not involved in rental started to actively stimulate the development of independent rental companies.
Initially these companies all had a narrow specialty, as they started their work using credits from producers, but at they grew they lost their narrow specialties.
Birth of leasing
The date of the birth of leasing is considered to be 1954, when ordinary rental received an additional feature that consequently provided gigantic growth in this sector in developed countries in the West. This was the possibility of using accelerated amortization of the leased item for taxation purposes.
The entire history of the development of the leasing industry in the West demonstrates that accelerated amortization for taxation purposes is one of the main features differentiating leasing from rental. Rental combined with accelerated amortization allows leasing companies to transfer the benefit of accelerated amortization to the lessee, which is reflected in a reduction in the cost of financial rental.
In most cases rent included the obligation or the right of the lessee to acquire the rented item at the end of the agreement. On one hand accelerated amortization made it possible to optimize taxation for the lessee during the agreement, and on the other – at the end of the agreement there was no additional taxation upon the transfer of the property to the ownership of the lessee, as the equipment was practically totally amortized. The institution of accelerated amortization lay at the root of the creation of leasing as such, and also made leasing competitive compared with regular rental or credits. | 
