Thou shalt not lend upon usury to thy brother; usury of money, usury of victuals, usury of any thing that is lent upon usury.
Unto a stranger thou mayest lend upon usury; but unto thy brother thou shalt not lend upon usury.
So who then is this “stranger” or (a better translation of the Hebrew nokri, “foreigner”)? Presumably, one against whom robbery and murder would have been justified as well. After all, the ancient Jews lived amidst tribes like the Amalekites, on whom God had specifically instructed them to make war. If by extracting interest one is, as he puts it, fighting without a sword, then it is only legitimate to do so from those “whom it would not be a crime to kill.”103 For Ambrose, living in Milan, all this was something of a technicality. He included all Christians and all those subject to Roman law as “brothers”; there weren’t, then, lot of Amalekites around.104 Later, the “Exception of St. Ambrose,” as it came to be known, was to become extremely important.
All of these sermons—and there were many of them—left certain critical questions unanswered. What should the rich man do when receiving a visit from his troubled neighbor? True, Jesus had said to give without expectation of return, but it seemed unrealistic to expect most Christians to do that. And even if they did, what sort of ongoing relationships would that create? St. Basil took the radical position. God had given us all things in common, and he had specifically instructed the rich to give their possessions to the poor. The communism of the Apostles—who pooled all their wealth, and took freely what they needed—was thus the only proper model for a truly Christian society.105 Few of the other Christian Fathers were willing to take things this far. Communism was the ideal, but in this fallen and temporary world, they argued, it was simply unrealistic. The Church must accept existing property arrangements, but also come up with spiritual arguments to encourage the rich to nonetheless act with Christian charity. Many of these employed distinctly commercial metaphors. Even Basil was willing to indulge in this sort of thing:
Whenever you provide for the destitute on account of the Lord, it is both a gift and a loan. It is a gift because you entertain no hope in recovering it, a loan because of our Lord’s munificence in paying you back on his behalf, when, having taken a small sum for the poor, he will give you back a vast sum in return. “For he who takes pity on the poor, lends to God.”106
Since Christ is in the poor, a gift of charity is a loan to Jesus, to be repaid with interest inconceivable on earth.
Charity, however, is a way of maintaining hierarchy, not undermining it. What Basil is talking about here really has nothing to do with debt, and playing with such metaphors seems ultimately to serve only to underline the fact that the rich man doesn’t owe the poor suppliant anything, any more than God is in any way legally bound to save the soul of anyone who feeds a beggar. “Debt” here dissolves into a pure hierarchy (hence, “the Lord”) where utterly different beings provide each other utterly different kinds of benefit. Later theologians were to explicitly confirm this: human beings live in time, noted St. Thomas Aquinas, so it makes sense to say that sin is a debt of punishment we owe to God. But God lives outside of time. By definition, he cannot owe anything to anyone. His grace can therefore only be a gift given with no obligation.107
This, in turn, provides an answer to the question: What are they really asking the rich man to do? The Church opposed usury, but it had little to say about relations of feudal dependency, where the rich man provides charity and the poor suppliant shows his gratitude in other ways. Neither, when these kinds of arrangements began to emerge across the Christian West, did the Church offer significant objections.108 Former debt peons were gradually transformed into serfs or vassals. In some ways, the relationship was not much different, since vassalage was, in theory, a voluntary, contractual relationship. Just as a Christian has to be able to freely choose to submit himself to “the Lord,” so did a vassal have to agree to make himself someone else’s man. All this proved perfectly consonant with Christianity.
Commerce, on the other hand, remained a problem. There was not much of a leap between condemning usury as the taking of “whatever exceeds the amount loaned” and condemning any form of profit-taking. Many—Saint Ambrose among them—were willing to take that leap. Where Mohammed declared that an honest merchant deserved a place by the seat of God in heaven, men like Ambrose wondered if an “honest merchant” could actually exist. Many held that one simply could not be both a merchant and a Christian.109 In the early Middle Ages, this was not a pressing issue—especially since so much commerce was conducted by foreigners. The conceptual problems, however, were never resolved. What did it mean that one could only lend to “strangers”? Was it just usury, or was even commerce tantamount to war?
Probably the most notorious, and often catastrophic, way that this problem worked itself out in the High Middle Ages was in relations between Christians and Jews. In the years since Nehemiah, Jewish attitudes toward lending had themselves changed. In the time of Augustus, Rabbi Hillel had effectively rendered the sabbatical year a dead letter, by allowing two parties to place a rider on any particular loan contract agreeing that it would not apply. While both the Torah and the Talmud stand opposed to loans on interest, exceptions were made in dealing with Gentiles—particularly as, over the course of the eleventh and twelfth centuries, European Jews were excluded from almost any other line of work.110 This in turn made it harder to contain the practice, as witnessed in the common joke, current in twelfth-century ghettos to justify usury between Jews. It consisted, it is said, of reciting Deuteronomy 23:20 in interrogative tones to make it mean the opposite of its obvious sense: ‘Unto a foreigner thou mayest lend upon usury, but unto thy brother thou shalt not lend upon usury?’111
On the Christian side, in 1140 ad the “Exception of Saint Ambrose” found its way into Gratian’s Decretum, which came to be considered the definitive collection of canon law. At the time, economic life fell very much under the jurisdiction of the Church. While that might appear to leave Jews safely outside the system, in reality, matters were more complicated. For one thing, while both Jews and Gentiles would occasionally attempt to make recourse to the Exception, the prevailing opinion was that it only really applied to Saracens or others with whom Christendom was literally at war. After all, Jews and Christians lived in the same towns and villages. If one were to concede that the Exception allowed Jews and Christians the right to lend to each other at interest, it would also mean that they had the right to murder one another.112 No one really wanted to say that. On the other hand, real relations between Christians and Jews often did seem to skate perilously close to this unfortunate ideal—though obviously the actual murder (apart from mere economic aggression) was all on one side.
In part this was due to the habit of Christian princes of exploiting, for their own purposes, the fact that Jews did sit slightly outside the system. Many encouraged Jews to operate as moneylenders, under their protection, simply because they also knew that protection could be withdrawn at any time. The kings of England were notorious in this regard. They insisted that Jews be excluded from merchant and craft guilds, but granted them the right to charge extravagant rates of interest, backing up the loans by the full force of law.113 Debtors in Medieval England were regularly thrown in prisons until their families settled with the creditor.114 Yet the same regularly happened to the Jews themselves. In 1210 ad, for example, King John ordered a tallage, or emergency levy, to pay for his wars in France and Ireland. According to one contemporary chronicler “all the Jews throughout England, of both sexes, were seized, imprisoned, and tortured severely, in order to do the king’s will with their money.” Most who where put to torture offered all they had and more—but on that occasion, one particularly wealthy merchant, a certain Abraham of Bristol, who the king decided owed him ten thousand marks of silver (a sum equivalent to about a sixth of John’s total annual revenue), became famous for holding out. The king therefore ordered that one of his molars be pulled out daily, until he paid.
After seven had been extracted, Abraham finally gave in.115
John’s successor, Henry III (1216–1272 ad), was in the habit of turning over Jewish victims to his brother the Earl of Cornwall, so that, as another chronicler put it, “those whom one brother had flayed, the other might embowel.”116 Such stories about the extraction of Jewish teeth, skin, and intestines are, I think, important to bear in mind when thinking about Shakespeare’s imaginary Merchant of Venice demanding his “pound of flesh.”117 It all seems to have been a bit of a guilty projection of terrors that Jews had never really visited on Christians, but that had been directed the other way around.
The terror inflicted by kings carried in it a peculiar element of identification: the persecutions and appropriations were an extension of the logic whereby kings effectively treated debts owed to Jews as ultimately owed to themselves, even setting up a branch of the Treasury (“the Exchequer of the Jews”) to manage them.118 This was of course much in keeping with the popular English impression of their kings as themselves a group of rapacious Norman foreigners. But it also gave the kings the opportunity to periodically play the populist card, dramatically snubbing or humiliating their Jewish financiers, turning a blind eye or even encouraging pogroms by townsfolk who chose to take the Exception of Saint Ambrose literally, and treat moneylenders as enemies of Christ who could be murdered in cold blood. Particularly gruesome massacres occurred in Norwich in 1144 ad, and in France, in Blois in 1171. Before long, as Norman Cohn put it, “what had once been a flourishing Jewish culture had turned into a terrorized society locked in perpetual warfare with the greater society around it.”119
One mustn’t exaggerate the Jewish role in lending. Most Jews had nothing to do with the business, and those who did were typically bit players, making minor loans of grain or cloth for a return in kind. Others weren’t even really Jews. Already in the 1190s, preachers were complaining about lords who would work hand in glove with Christian moneylenders claiming they were “our Jews”—and thus under their special protection.120 By the 1100s, most Jewish moneylenders had long since been displaced by Lombards (from Northern Italy) and Cahorsins (from the French town of Cahors)—who established themselves across Western Europe, and became notorious rural usurers.121
The rise of rural usury was itself a sign of a growing free peasantry (there had been no point in making loans to serfs, since they had nothing to repossess). It accompanied the rise of commercial farming, urban craft guilds, and the “commercial revolution” of the High Middle Ages, all of which finally brought Western Europe to a level of economic activity comparable to that long since considered normal in other parts of the world. The Church quickly came under considerable popular pressure to do something about the problem, and at first, it did try to tighten the clamps. Existing loopholes in the usury laws were systematically closed, particularly the use of mortgages. These latter began as an expedient: as in Medieval Islam, those determined to dodge the law could simply present the money, claim to be buying the debtor’s house or field, and then “rent” it back to the debtor until the principal was repaid. In the case of a mortgage, the house was in theory not even purchased but pledged as security, but any income from it accrued to the lender. In the eleventh century this became a favorite trick of monasteries. In 1148 it was made illegal: henceforth, all income was to be subtracted from the principal. Similarly, in 1187 merchants were forbidden to charge higher prices when selling on credit—the Church thereby going much further than any school of Islamic law ever had. In 1179 usury was made a mortal sin and usurers were excommunicated and denied Christian burial.122 Before long, new orders of itinerant friars like the Franciscans and Dominicans organized preaching campaigns, traveling town to town, village to village, threatening moneylenders with the loss of their eternal souls if they did not make restitution to their victims.
All this was echoed by a heady intellectual debate in the newly founded universities, not so much as to whether usury was sinful and illegal, but precisely why. Some argued that it was theft of another’s material possessions; others that it constituted a theft of time, charging others for something that belonged only to God. Some held that it embodied the sin of Sloth, since like the Confucians, Catholic thinkers usually held that a merchant’s profit could only be justified as payment for his labor (i.e., in transporting goods to wherever they were needed), whereas interest accrued even if the lender did nothing at all. Soon the rediscovery of Aristotle, who returned in Arabic translation (and the influence of Muslim sources like Ghazali and Ibn Sina), added new arguments: that treating money as an end in itself defied its true purpose; that charging interest was unnatural, in that it treated mere metal as if it were a living thing that could breed or bear fruit.123
But as the Church authorities soon discovered, when one starts something like this, it’s very hard to keep a lid on it. Soon, new popular religious movements were appearing everywhere, and many took up the same direction so many had in late Antiquity, not only challenging commerce but questioning the very legitimacy of private property. Most were labeled heresies and violently suppressed, but many of the same arguments were taken up amongst the mendicant orders themselves. By the thirteenth century, the great intellectual debate was between the Franciscans and the Dominicans over “apostolic poverty”—basically, over whether Christianity could be reconciled with property of any sort.
At the same time, the revival of Roman law—which, as we’ve seen, began from the assumption of absolute private property—put new intellectual weapons in the hands of those who wished to argue that, at least in the case of commercial loans, usury laws should be relaxed. The great discovery in this case was the notion of interesse, which is where our word “interest” originally comes from: a compensation for loss suffered because of late payment.124 The argument soon became that if a merchant made a commercial loan even for some minimal period (say, a month), it was not usurious for him to charge a percentage for each month afterward, since this was a penalty, not rental for the money, and it was justified as compensation for the profit he would have made, had he placed it in some profitable investment, as any merchant would ordinarily be expected to do.125
The reader may be wondering how it could have been possible for usury laws to move in two opposite directions simultaneously. The answer would seem to be that politically, the situation in Western Europe was remarkably chaotic. Most kings were weak, their holdings fractured and uncertain; the Continent was a checkerboard of baronies, principalities, urban communes, manors, and church estates. Jurisdictions were constantly being renegotiated—usually by war. Merchant capitalism of the sort long familiar in the Muslim Near West only really managed to establish itself—quite late, compared with the situation in the rest of the Medieval world—when merchant capitalists managed to secure a political foothold in the independent city-states of northern Italy—most famously, Venice, Florence, Genoa, and Milan—followed by the German cities of the Hanseatic League.126 Italian bankers ultimately managed to free themselves from the threat of expropriation by themselves taking over governments, and by doing so, acquiring their own court systems (capable of enforcing contracts) and even more critically, their own armies.127
What jumps out, in comparison with the Muslim world, are these links of finance, trade, and violence. Whereas Persian and Arab thinkers assumed that the market emerged as an extension of mutual aid, Christians never completely overcame the suspicion that commerce was really an extension of usury, a form of fraud only truly legitimate when directed against one’s mortal enemies. Debt was, indeed, sin—on the part of both parties to the transaction. Competition was essential to the nature of the market, but competition was (usually) nonviolent warfare. There was a reason why, as I’ve already observed, the words for “truck and barter” in almost all European languages were derived from terms meaning “swindle,” “bamboozle,” or “deceive.” Some disdained commerce for that reason. Others embraced it. Few would have denied that the connection was there.
&n
bsp; One need only examine the way that Islamic credit instruments—or for that matter, the Islamic ideal of the merchant adventurer—were eventually adopted to see just how intimate this connection really was.
It is often held that the first pioneers of modern banking were the Military Order of the Knights of the Temple of Solomon, commonly known as the Knights Templar. A fighting order of monks, they played a key role in financing the Crusades. Through the Templars, a lord in southern France might take out a mortgage on one of his tenements and receive a “draft” (a bill of exchange, modeled on the Muslim suftaja, but written in a secret code) redeemable for cash from the Temple in Jerusalem. In other words, Christians appear to have first adopted Islamic financial techniques to finance attacks against Islam.
The Templars lasted from 1118 to 1307, but they finally went the way of so many Medieval trading minorities: King Phillip IV, deep in debt to the order, turned on them, accusing them of unspeakable crimes; their leaders were tortured and ultimately killed, and their wealth was expropriated.128 Much of the problem was that they lacked a powerful home base. Italian banking houses such as the Bardi, Peruzzi, and Medici did much better. In banking history, the Italians are most famous for their complex joint-stock organization and for spearheading the use of Islamic-style bills of exchange.129 At first these were simple enough: basically just a form of long-distance money-changing. A merchant could present a certain amount in florins to a banker in Italy and receive a notarized bill registering the equivalent in the international money of account (Carolingian derniers), due in, say, three months’ time, and then after it came due, either he or his agent could cash it for an equivalent amount of local currency in the Champagne fairs, which were both the great yearly commercial emporia, and great financial clearing houses, of the European High Middle Ages. But they quickly morphed into a plethora of new, creative forms, mainly a way of navigating—or even profiting from—the endlessly complicated European currency situation.130