The history of usury Abdalhaqq Bewley The prohibition of usury goes right to the legal and ethical roots of European civilisation. The prohibition was confirmed and even strengthened by the early Christians. St. Augustine for instance, who defined usury as occurring when a person expects to receive anything more than he has given, held usury to be so forbidden that any profits gained by it could not even be given away as charity. St. Thomas Aquinas was still continuing this position with clarity and vigour in the 14th century.
Very early on the ancient Jews had claimed a scriptural licence to practice usury and the conditions under which they claimed to be allowed to do so give us a profound insight into the real nature of the usurious transaction. Deuteronomy Chapter 23 verse 20 states: "Unto a stranger thou mayest lend upon usury, but unto thy brother thou shalt not lend upon usury." The word "stranger" in this text is generally interpreted as "enemy" and armed with this text, the Jews used usury as a weapon, finding in it a means of gaining power over their enemies. By means of usury, other people's need could be transformed into their subjection.
From ghettos in the larger cities of Christendom, Jewish money-lending activities were carried on throughout the "Dark" and "Middle Ages". They were allowed to continue under strict scrutiny and were tolerated by the authorities only for as long as they were seen to provide a useful service. Even in this oppressive situation it was possible for the moneylender to gain enormous wealth by the practice of usury – Simon of Norwich, for example. At one stage in 13th century England nearly half of the country's tax revenue was collected from the Jewish community who represented less than 5% of the population – but they were never able to turn their wealth into power, being subject to frequent and terrible popular purges, which in this country, resulted eventually min their expulsion from the country in the 14th century not to return for 350 years.
Money lending continued to exist on a small scale throughout the Middle Ages. Unscrupulous local merchants would take advantage of humble people who had got into difficulties by reason of a bad harvest or mismanagement or some other misfortune and would be forced to borrow to fulfil the ordinary necessities of life. In these cases there would usually be an attempt to conceal the usurious nature of the loan and if it did come to light, the usurer was subject to heavy penalties and became a social outcast.
Another area in which usury existed was right at the other end of the social scale. Kings and princes would raise enormous loans at interest, generally to finance some military expedition. These loans were usually raised from foreign sources, frequently Italian, and were paid by means of taxation, escaping by sheer size from the general prohibition.
However, to all intents and purposes, usury was completely excluded from all normal commercial and social transactions. It was like prostitution, known to exist but universally condemned and reviled as were those who practised it. In this atmosphere it was impossible for it to gain hold and So long as the status quo in Europe remained unchanged this attitude continued to prevail. However, starting with the Italian Renaissance in the 15th century things started to happen to gradually undermine the traditional order and they reached a head when on 31st October 1517, Martin Luther nailed his 95 theses to the church door in Wittenberg and the Reformation had begun. The repercussions of his challenge to the authority of Rome, went far beyond his apparent intention of reforming a corrupt institution. By his action he did more than any invading army had ever been able to do, he destroyed the unity of Western Christendom. His intention had been to break down the barriers between the individual and God; the actual result was to open the way to unlimited individual freedom of action. By breaking loose from Rome, he cast people ad rift from the anchor of traditional morality which had been held in place by the Church's Canon Law, part of which was, of course, the complete prohibition of usury. The Catholic Church, in spite of all its deviation and corruption, nevertheless represented an unbroken tradition leading back to the teaching of Jesus and before him Moses. When its authority was broken by the Reformation, it was inevitable in the freer atmosphere of Protestantism that the binding strictures on usury would be cast off.
This occurred, significantly, through the unlikely means of the rigorous Puritan moralist Calvin. Whereas before this the entire matter of usury had been subject to a whole body of traditional, time-honoured doctrine, he treated the ethics of money-lending as a particular case among the general problems confronting human society which had to be solved in the light of existing circumstances. In other words he took the law into his own hands. He arrogantly dismissed the passages on usury in the Old Testament and the judgements of the past as irrelevant in the light of the prevailing circumstances and arguing that taking interest on capital is as reasonable as taking rent for land, he opened the sluice gates to a flood which has since inundated the entire world. He took it upon himself to legalise the lending of money at interest, thus giving the sanction of the law to a practice that had been held to be illegal since earliest times. The fact that lie allowed only moderate interest and hedged his indulgence round with strict qualifications made no difference. The merchant now had a precedent from someone who spoke with religious y. According to Calvin the moral law had changed and therefore it was no longer immoral to charge interest. From then on the argument within the business community was not whether interest should be permitted, but how much.
From the Puritan atmosphere of Calvin's Geneva we move to the more salubrious goings-on at the court of Henry VIII in London. Henry had become extremely attached to one of his wife's maids-of-honour, one Anne Boleyn, and was determined to marry her. The Pope refused to annul his first marriage, being very reluctant to cross the powerful Emperor Charles V whose younger daughter, Catherine, was Henry's wife, and under Canon Law no other way of dissolving the marriage existed. So Henry, who, in his idealistic youth had earned the Pope's approval and the title "Defender of the Faith" for his denunciation of Martin Luther, proceeded to follow Luther's example by breaking with Rome and declaring himself Head of the Church in England.
Not being by any means so scrupulous as those in whose footsteps he followed, he did not hesitate to take as much advantage as possible from the new situation. The licence that he proceeded to take in matrimonial matters is notorious. It is less well-known, though infinitely more important in historical terms, that one of his first actions was, following on from Calvin's precedent, to raise a loan from City merchants at the rate of ten per cent per annum, which rate was fixed as the limit for moderate interest, thus putting the seal of royal and religious approval on usury in England.
However, it must not be thought that the ancient prohibition was set aside without a voice being raised. A furious debate on the subject raged for well over a century. Many treatises and pamphlets were written and countless sermons and speeches given. One cleric in an ironic mood, said on the subject, "This hath been the general judgement of the Church for above this fifteen hundred years, without opposition, in this point. Poor silly Church of Christ that could never find a lawful usurie before this golden age wherein we live." The Frenchman Bodin, whose authority on economic matters was above question and who had no ecclesiastical axe to grind bluntly reasserted the traditional position when he said, referring to Calvin: "Those who maintain under the cover of religion that moderate usury of four or five percent is just because the borrower gains as much as the lender, go against the Law of God which forbids usury absolutely and cannot be revoked." But none of this was able to really impinge on the course events were inexorably taking. The situation was in some ways comparable to the nuclear debate in our own time. None of the passionate views expressed for or against nuclear disarmament in the public arena has any real effect on whether nuclear arms are manufactured and deployed for the simple reason that the decisions concerning these things are made in another sphere altogether and public opinion has no bearing on it one way or the other. So it was also with the introduction of usury. The source of political power had changed and the guardians of morality no longer had any real access to it.
Eventually, of course, the Churchmen themselves capitulated, and compromised rather than appear ridiculous – the Church of England has always been prone to the philosophy of "If you can't beat them join them." They officially redefined usury to fit in with normal business practice. It was now only usury to charge extortionate rates of interest and exactly what constituted an extortionate rate of interest was not clearly defined: so to all intents and purposes businessmen had a completely free rein. Whereas previously business practice had been subject to the moral law, now the moral law could be altered by business practice...
From ghettos in the larger cities of Christendom, Jewish money-lending activities were carried on throughout the "Dark" and "Middle Ages". They were allowed to continue under strict scrutiny and were tolerated by the authorities only for as long as they were seen to provide a useful service. Even in this oppressive situation it was possible for the moneylender to gain enormous wealth by the practice of usury – Simon of Norwich, for example. At one stage in 13th century England nearly half of the country's tax revenue was collected from the Jewish community who represented less than 5% of the population – but they were never able to turn their wealth into power, being subject to frequent and terrible popular purges, which in this country, resulted eventually min their expulsion from the country in the 14th century not to return for 350 years.
Money lending continued to exist on a small scale throughout the Middle Ages. Unscrupulous local merchants would take advantage of humble people who had got into difficulties by reason of a bad harvest or mismanagement or some other misfortune and would be forced to borrow to fulfil the ordinary necessities of life. In these cases there would usually be an attempt to conceal the usurious nature of the loan and if it did come to light, the usurer was subject to heavy penalties and became a social outcast.
Another area in which usury existed was right at the other end of the social scale. Kings and princes would raise enormous loans at interest, generally to finance some military expedition. These loans were usually raised from foreign sources, frequently Italian, and were paid by means of taxation, escaping by sheer size from the general prohibition.
However, to all intents and purposes, usury was completely excluded from all normal commercial and social transactions. It was like prostitution, known to exist but universally condemned and reviled as were those who practised it. In this atmosphere it was impossible for it to gain hold and So long as the status quo in Europe remained unchanged this attitude continued to prevail. However, starting with the Italian Renaissance in the 15th century things started to happen to gradually undermine the traditional order and they reached a head when on 31st October 1517, Martin Luther nailed his 95 theses to the church door in Wittenberg and the Reformation had begun. The repercussions of his challenge to the authority of Rome, went far beyond his apparent intention of reforming a corrupt institution. By his action he did more than any invading army had ever been able to do, he destroyed the unity of Western Christendom. His intention had been to break down the barriers between the individual and God; the actual result was to open the way to unlimited individual freedom of action. By breaking loose from Rome, he cast people ad rift from the anchor of traditional morality which had been held in place by the Church's Canon Law, part of which was, of course, the complete prohibition of usury. The Catholic Church, in spite of all its deviation and corruption, nevertheless represented an unbroken tradition leading back to the teaching of Jesus and before him Moses. When its authority was broken by the Reformation, it was inevitable in the freer atmosphere of Protestantism that the binding strictures on usury would be cast off.
This occurred, significantly, through the unlikely means of the rigorous Puritan moralist Calvin. Whereas before this the entire matter of usury had been subject to a whole body of traditional, time-honoured doctrine, he treated the ethics of money-lending as a particular case among the general problems confronting human society which had to be solved in the light of existing circumstances. In other words he took the law into his own hands. He arrogantly dismissed the passages on usury in the Old Testament and the judgements of the past as irrelevant in the light of the prevailing circumstances and arguing that taking interest on capital is as reasonable as taking rent for land, he opened the sluice gates to a flood which has since inundated the entire world. He took it upon himself to legalise the lending of money at interest, thus giving the sanction of the law to a practice that had been held to be illegal since earliest times. The fact that lie allowed only moderate interest and hedged his indulgence round with strict qualifications made no difference. The merchant now had a precedent from someone who spoke with religious y. According to Calvin the moral law had changed and therefore it was no longer immoral to charge interest. From then on the argument within the business community was not whether interest should be permitted, but how much.
From the Puritan atmosphere of Calvin's Geneva we move to the more salubrious goings-on at the court of Henry VIII in London. Henry had become extremely attached to one of his wife's maids-of-honour, one Anne Boleyn, and was determined to marry her. The Pope refused to annul his first marriage, being very reluctant to cross the powerful Emperor Charles V whose younger daughter, Catherine, was Henry's wife, and under Canon Law no other way of dissolving the marriage existed. So Henry, who, in his idealistic youth had earned the Pope's approval and the title "Defender of the Faith" for his denunciation of Martin Luther, proceeded to follow Luther's example by breaking with Rome and declaring himself Head of the Church in England.
Not being by any means so scrupulous as those in whose footsteps he followed, he did not hesitate to take as much advantage as possible from the new situation. The licence that he proceeded to take in matrimonial matters is notorious. It is less well-known, though infinitely more important in historical terms, that one of his first actions was, following on from Calvin's precedent, to raise a loan from City merchants at the rate of ten per cent per annum, which rate was fixed as the limit for moderate interest, thus putting the seal of royal and religious approval on usury in England.
However, it must not be thought that the ancient prohibition was set aside without a voice being raised. A furious debate on the subject raged for well over a century. Many treatises and pamphlets were written and countless sermons and speeches given. One cleric in an ironic mood, said on the subject, "This hath been the general judgement of the Church for above this fifteen hundred years, without opposition, in this point. Poor silly Church of Christ that could never find a lawful usurie before this golden age wherein we live." The Frenchman Bodin, whose authority on economic matters was above question and who had no ecclesiastical axe to grind bluntly reasserted the traditional position when he said, referring to Calvin: "Those who maintain under the cover of religion that moderate usury of four or five percent is just because the borrower gains as much as the lender, go against the Law of God which forbids usury absolutely and cannot be revoked." But none of this was able to really impinge on the course events were inexorably taking. The situation was in some ways comparable to the nuclear debate in our own time. None of the passionate views expressed for or against nuclear disarmament in the public arena has any real effect on whether nuclear arms are manufactured and deployed for the simple reason that the decisions concerning these things are made in another sphere altogether and public opinion has no bearing on it one way or the other. So it was also with the introduction of usury. The source of political power had changed and the guardians of morality no longer had any real access to it.
Eventually, of course, the Churchmen themselves capitulated, and compromised rather than appear ridiculous – the Church of England has always been prone to the philosophy of "If you can't beat them join them." They officially redefined usury to fit in with normal business practice. It was now only usury to charge extortionate rates of interest and exactly what constituted an extortionate rate of interest was not clearly defined: so to all intents and purposes businessmen had a completely free rein. Whereas previously business practice had been subject to the moral law, now the moral law could be altered by business practice...
In presenting this historical overview, it has clearly been impossible for me to cover in detail the two hundred or so years involved and I have necessarily taken a particular thread and followed it through weft and warp of the historical continuum. However, when all the details are filled in, the conclusions that I have drawn will be seen to remain true and valid. My purpose was to show how, in a period of under two centuries, the transaction of usury changed from being a crime absolutely condemned since ancient times, subject to the severest penalties of the law and despised by all people, to being respected and recognised business practice whose practitioners were honoured with the highest possible accolades the state could award.
The rightness of the position of our earlier ancestors on this issue is made daily more clear as the insidious effects of usury make themselves more and more felt on the environment and in our lives. It is hoped that this seminar will help to focus attention on the harmful and destructive nature of usury which has now become so inextricably bound up with modern life and awaken awareness of it as an important political issue. Our forbears demonstrated that life is possible without it and it may well be that a cure for the otherwise terminal sickness of the society in which we live lies in the return to the ancient prohibition of it which formed the starting point of this paper.
The rightness of the position of our earlier ancestors on this issue is made daily more clear as the insidious effects of usury make themselves more and more felt on the environment and in our lives. It is hoped that this seminar will help to focus attention on the harmful and destructive nature of usury which has now become so inextricably bound up with modern life and awaken awareness of it as an important political issue. Our forbears demonstrated that life is possible without it and it may well be that a cure for the otherwise terminal sickness of the society in which we live lies in the return to the ancient prohibition of it which formed the starting point of this paper.
Usury: The Root Cause of The Injustices of Our Times (PAID, Norwich, UK, 1987) The False Growth Cycle Inherent in the Credit-based Economy Together with some Historical Illustrations 17 May, 2007 23:07 The Open Trade Network is a non-profit making voluntary organisationbased in Norwich, UK. Tel: +44-(0)870-730 3132
No comments:
Post a Comment