How many people of 2000 years ago were literate?

Only asking because a lot of verses in the Bible quotes exactly what some people said? How can you quote someone if you were not there at that moment to record it? Wasn't it all just hearsay? Almost like fishermen stories. He caught a small fish told a friend it was a big one and twenty years later it was the biggest fish ever caught? I thought about this question after i read a question about Moses and Gods magic tricks.