Debt

  3. Historians speak of “bullion famines”—as most active mines dried up, such gold and silver that wasn’t sucked out of Europe to pay for eastern luxuries was increasingly hidden away, causing all sorts of difficulties for commerce. In the 1460s, the shortage of specie in cities like Lisbon had been so acute that merchant ships visiting with cargoes full of wares often had to return home without selling anything (Spufford 1988:339–62).

  4. Brook 1998. Needless to say, I’m simplifying enormously: another problem was the growth of landlordism, with many smallholders falling in debt to landlords for inability to pay. As members of the ever-increasing royal family and other favored families gained tax exemptions from the state, the tax burden on smallholders became so heavy that many felt forced to sell their lands to the powerful families in exchange for tenancy agreements to free those lands from taxes.

  5. Chinese historians count 77 different “miners’ revolts” during the 1430s and ‘40s (Harrison 1965:103–4; cf. Tong 1992:60–64; Gernet 1982:414). Between 1445 and 1449 these became a serious threat as silver miners under a rebel leader named Ye Zongliu made common cause with tenant farmers and the urban poor in overpopulated Fujian and Shaxian, sparking an uprising that spread to a number of different provinces, seizing a number of cities and expelling much of the landed gentry.

  6. Von Glahn (1996:70–82) documents the process. Gernet (1982:415–16) documents how between 1450 and 1500, most taxes became payable in silver. The process culminated in the “single lash of the whip” method: tax reforms put into place between 1530 and 1581 (Huang 1974, see Arrighi, Hui, Hung and Seldon 2003:272–73).

  7. Wong 1997, Pomeranz 2000, Arrighi 2007, among many others who make this point.

  8. Pomeranz 2000:273.

  9. The value of silver in China (as measured in gold) remained, through the sixteenth century, roughly twice what it was in Lisbon or Antwerp (Flynn & Giráldez 1995, 2002).

  10. von Glahn 1996b:440; Atwell 1998.

  11. Chalis 1978:157.

  12. China had its own “age of exploration” in the early fifteenth century, but it was not followed by mass conquest and enslavement.

  13. It’s possible that they were wrong. Generally populations did decline by 90 percent even in areas where no direct genocide was taking place. But in most places, after a generation or so, populations started recovering; in Hispaniola and many parts of Mexico and Peru, around the mines, the ultimate death rate was more like 100 percent.

  14. Todorov 1984:137–38; for the original, Icazbalceta 2008:23–26.

  15. One historian remarks: “By the close of the sixteenth century bullion, primarily silver, made up over 95 percent of all exports leaving Spanish America for Europe. Nearly that same percentage of the indigenous population had been destroyed in the process of seizing those riches” (Stannard 1993:221).

  16. Bernal Díaz 1963:43.

  17. Bernal Díaz: the quote is a synthesis of the Lockhart translation (1844 II:120) and Cohen translation (1963:412), though these appear to be based on slightly different originals.

  18. Bernal Díaz op cit.

  19. Cortés 1868:141.

  20. Most of the conquistadors had similar stories. Balboa came to the Americas to flee his creditors; Pizarro borrowed so heavily to outfit his expedition to Peru that after early reverses, it was only the fear of debtor’s prison that prevented his return to Panama; Francisco de Montejo had to pawn his entire Mexican possessions for an eight-thousand-peso loan to launch his expedition to Honduras; Pedro de Alvarado too ended up deeply in debt, finally throwing everything into a scheme to conquer the Spice Islands and China—on his death, creditors immediately tried to put his remaining estates to auction.

  21. e.g., Pagden 1986.

  22. Gibson 1964:253. All this is disturbingly reminiscent of global politics nowadays, in which the United Nations, for example, will urge poor countries to make education free and available to everyone, and then the International Monetary Fund (which is, legally, actually a part of the United Nations) will insist that those same countries do exactly the opposite, imposing school fees as part of broader “economic reforms” as a condition of refinancing the country’s loans.

  23. Following William Pietz (1985:8), who studied early merchant adventurer’s accounts of West Africa; though Todorov (1984:129–31) on the very similar perspective of the conquistadors.

  24. Some did go bankrupt—for instance, one branch of the Fuggers. But this was surprisingly rare.

  25. Martin Luther, Von Kaufshandlung und Wucher, 1524, cited in Nelson 1949:50.

  26. In Luther’s time the main issue was a practice called Zinskauf, technically rent on leased property, which was basically a disguised form of interest-bearing loan.

  27. In Baker 1974:53–54. The reference to Paul is in Romans 13:7.

  28. He argued that the fact that Deuteronomy allows usury under any circumstances demonstrates that this could not have been a universal “spiritual law,” but was a political law created for the specific ancient Israeli situation, and therefore, that it could be considered irrelevant in different ones.

  29. And in fact, this is what “capital” originally meant. The term itself goes back to Latin capitale, which meant “funds, stock of merchandise, sum of money, or money carrying interest” (Braudel 1992:232). It appears in English in the mid–sixteenth century largely as a term borrowed from Italian bookkeeping techniques (Cannan 1921, Richard 1926) for what remained when one squared property, credits, and debts; though until the nineteenth century, English sources generally preferred the word “stock”—in part, one suspects, because “capital” was so closely associated with usury.

  30. Nations that, after all, also practiced usury on one another: Nelson 1949:76.

  31. Ben Nelson emphasized this in an important book, The Idea of Usury: From Tribal Brotherhood to Universal Otherhood.

  32. Midelfort 1996:39.

  33. Zmora 2006:6–8. Public financing at this period largely meant disguised interest-bearing loans from the minor nobility, who were also the stratum from which local administrators were drawn.

  34. On church lands: Dixon 2002:91. On Casimir’s gambling debts: Janssen 1910 IV:147. His overall debt rose to half a million guilders in 1528, and over three quarters of a million by 1541 (Zmora 2006:13n55.)

  35. He was later accused of conspiring with Count Wilhelm von Henneburg, who had gone over to the rebels, to become secular Duke of the territories then held by the Bishop of Wurzburg.

  36. From “Report of the Margrave’s Commander, Michel Gross from Trock-au,” in Scott & Scribner 1991:301. The sums are based on a promise of 1 florin per execution, ½ per mutilation. We do not know if Casimir ever paid this particular debt.

  37. For some relevant accounts of the revolt and repression: Seebohm 1877:141–45; Janssen 1910 IV:323–26; Blickle 1977; Endres 1979; Vice 1988; Robisheaux 1989:48–67, Sea 2007. Casimir is said to have ultimately settled into exacting fines, eventually demanding some 104,000 guldens in compensation from his subjects.

  38. Linebaugh (2008) makes a beautiful analysis of this sort of phenomenon in his essay on the social origins of the Magna Carta.

  39. It is telling that despite the endless reprisals against commoners, none of the German princes or nobility, even those who openly collaborated with the rebels, was held accountable in any way.

  40. Muldrew 1993a, 1993b, 1996, 1998, 2001; cf. MacIntosh 1988; Zell 1996, Waswo 2004, Ingram 2006, Valenze 2006, Kitch 2007. I find myself strongly agreeing with most of Muldrew’s conclusions, only qualifying some: for instance, his rejection of MacPherson’s possessive individualism argument (1962) strikes me as unnecessary, since I suspect that the latter does identify changes that are happening on a deeper structural level less accessible to explicit discourse (see Graeber 1997).

  41. Muldrew (2001:92) estimates that in c. 1600, eight thousand London merchants might have possessed as much as one-third of all the cash in England.

  42. Williamson 1889; Whiting 1971; Mat
hias 1979b; Valenze 2006:34–40.

  43. Gold and silver were a very small part of household wealth: inventories reveal on average fifteen shillings of credit for every one in coin (Muldrew 1998).

  44. This principle of a right to livelihood is key to what E.P. Thompson famously called “moral economy of the crowd” (1971) in eighteenth-century England, a notion that Muldrew (1993a) thinks can be applied to these credit systems as a whole.

  45. Stout 1742:74–75, parts of the same passage are cited in Muldrew 1993a:178, and 1998:152.

  46. To be more precise, either piety (in the Calvinist case) or good natured sociality (in the case of those that opposed them in the name of older festive values)—in the years before the civil war, many parish governments were divided between the “godly” and “good honest men” (Hunt 1983:146)

  47. Shepherd 2000, Walker 1996; for my own take on “life-cycle service” and wage labor, see, again, Graeber 1997.

  48. Hill 1972:39–56, Wrightson & Levine 1979, Beier 1985.

  49. Muldrew 2001:84.

  50. For a classic statement on the connection of Tudor markets, festivals, and morality, see Agnew (1986).

  51. Johnson 2004:56–58. On the two conceptions of justice: Wrightson 1980. Bodin’s essay was widely read. It drew on Aquinas’ view of love and friendship as prior to the legal order, which, in turn, harkens back to Aristotle’s Nicomachean Ethics, which reached Europe through Arab sources. Whether there was also a direct influence from the Islamic sources themselves we do not know, but considering the degree of general mutual engagement (Ghazanfar 2003) it seems likely.

  52. Gerard de Malynes’s Maintenance of Free Trade (1622), cited in Muldrew 1998:98, also Muldrew 2001:83.

  53. Chaucer is full of this sort of thing: the Wife of Bath has much to say about conjugal debts (e.g., Cotter 1969). It was really in the period of about 1400–1600 that everything came to be so framed as debt, presumably reflecting the first stirrings of possessive individualism, and attempts to reconcile it to older moral paradigms. Guth (2008), a legal historian, thus calls these centuries “the age of debt,” one which was then replaced after 1600 by an “age of contract.”

  54. Davenant 1771:152.

  55. Marshall Sahlins (1996, 2008) has been emphasizing the theological roots of Hobbes for some time. Much of the following analysis draws on his influence.

  56. Hobbes himself doesn’t use the term “self-interest” but does speak of “particular,” “private,” and “common” interests.

  57. De L’Esprit 53, cited in Hirschman 1986:45. Exploring the contrast between Shang’s “profit” and Helvétius’ “interest” would be a telling history in itself. They are not the same concept.

  58. “Interest” (from interesse) comes into common usage as a euphemism for usury in the fourteenth century, but it only comes to be used in its more familiar, general sense in the sixteenth. Hobbes doesn’t use “self-interest,” though he speaks of “private” and “common” interests; but that term was already current, having appeared in the work of Machiavelli’s friend Francesco Guicciadini in 1512. It becomes commonplace in the eighteenth century (see Hirschman 1977, 1992, especially chapter 2, “on the concept of interest”; Dumont 1981; Myers 1983, Heilbron 1998).

  59. Sée (1928:187) notes that until around 1800, “interesse” was the common word for “capital” in French; in English the preferred word was “stock.” It is curious to note that Adam Smith, for one, actually returns to the Augustinian usage, “self-love,” in his famous passage about the butcher and the baker (Wealth of Nations 1.2.2).

  60. Beier 1985:159–63; cf. Dobb 1946:234. Consorting with gypsies was also a capital crime. In the case of vagrancy, justices found it so difficult to find anyone willing to press charges against vagrants that they were eventually forced to reduce the penalty to public whipping.

  61. In Walker 1996:244.

  62. Helmholtz 1986, Brand 2002, Guth 2008.

  63. Helmholz 1986, Muldrew 1998:255, Schofield & Mayhew 2002, Guth 2008).

  64. Stout 1742:121.

  65. “The horrors of the Fleet and Marshalsea were laid bare in 1729. The poor debtors were found crowded together on the ‘common side,’—covered with filth and vermin, and suffered to die, without pity, of hunger and jail fever … No attempt was made to distinguish the fraudulent from the unfortunate debtor. The rich rogue—able, but unwilling to pay his debts—might riot in luxury and debauchery, while his poor unlucky fellow-prisoner was left to starve and rot on the ‘common side’ ” (Hallam 1866 V:269–70.)

  66. I do not want to argue that the more familiar narrative of “primitive accumulation,” of the enclosure of common lands and rise of private property, the dislocation of thousands of one-time cottagers who became landless laborers, is false. I simply highlight a less familiar side of the story. It’s especially helpful to highlight it because the degree to which the Tudor and Stuart periods were actually marked by a rise of enclosures is a heated matter of debate (e.g., Wordie 1983). The use of debt to split communities against themselves is meant in the same vein as Silvia Federici’s (2004) brilliant argument about the role of witchcraft accusations in reversing popular gains of the late Middle Ages and opening the way to capitalism.

  67. “Personal credit received a bad press in the eighteenth century. It was frequently said that it was wrong to go into debt simply to pay for everyday consumption goods. A cash economy was celebrated and the virtues of prudent housekeeping and parsimony extolled. Consequently retail credit, pawnbroking, and moneylending were all attacked, with both borrowers and lenders the targets” (Hoppit 1990:312–13.)

  68. Wealth of Nations 1.2.2.

  69. Muldrew makes this point: 1993:163.

  70. Theory of Moral Sentiments 4.1.10.

  71. “The man who borrows in order to spend will soon be ruined, and he who lends to him will generally have occasion to repent of his folly. To borrow or to lend for such a purpose, therefore, is in all cases, where gross usury is out of the question, contrary to the interest of both parties; and though it no doubt happens sometimes that people do both the one and the other; yet, from the regard that all men have for their own interest, we may be assured that it cannot happen so very frequently as we are sometimes apt to imagine” (Wealth of Nations 2.4.2). He does occasionally acknowledge the existence of retail credit, but he grants it no significance.

  72. Reeves 1999. Reeves, like Servet (1994, 2001) shows that many were aware of the variability of money-stuffs: Puffendorf, for example, made a long list of them.

  73. When we attribute value to gold, then, we simply recognize this. The same argument was usually invoked to solve the old Medieval puzzle about diamonds and water: Why is it that diamonds are so expensive, though useless, and water, which is useful in all sorts of ways, hardly worth anything at all? The usual solution was: diamonds are the eternal form of water. (Galileo, who objected to the entire premise, at one point suggested that those who make such claims should really be turned into statues. That way, he suggested, in inimitable Renaissance style, everyone would be happy, since (1) they would be eternal, and (2) the rest of us would no longer have to listen to their stupid arguments.) See Wennerlind 2003, who notes, interestingly, that most European governments employed alchemists in the seventeenth century in order to manufacture gold and silver for coins; it’s only when these schemes definitively failed that the governments moved to paper currency.

  74. Kindleberger 1984; Boyer-Xambeu, Deleplace, & Gillard 1994; Ingham 2004:171. Rather, this path eventually led to the creation of stock markets: the first public bourses, in fifteenth-century Bruges and Antwerp, began not by trading shares in joint-stock ventures, which barely existed at the time, but by “discounting” bills of exchange.

  75. Usher (1934, 1944) originally introduced the distinction between “primitive banking,” where one simply lends out what one has, and “modern banking,” based on some sort of fractional reserve system—that is, one lends more than one has, thus effectively creati
ng money. This would be another reason why we have now moved to something other than “modern banking”—see below.

  76. Spufford 1988:258, drawing on Usher 1943:239–42. While deposit notes were used, private bank notes, based on credit, only appear quite late—from London goldsmiths, who also acted as bankers, in the seventeenth and eighteenth centuries.

  77. See Munro 2003b for a useful summary.

  78. MacDonald 2006:156.

  79. Tomas de Mercado in Flynn 1978:400.

  80. See Flynn 1979; Braudel 1992:522–23; Stein & Stein 2000: 501–05, 960–62; Tortella & Comín 2002. The number of juros in circulation went from 3.6 million ducats in 1516 to 80.4 million in 1598.

  81. The most famous exponent of this position was Nicholas Barbon (1690), who argued that “money is a value made by law” and a measure in just the same manner as inches or hours or fluid ounces. He also emphasized that most money was credit anyway.

  82. Locke (1691:144) also cited in Caffentzis 1989:46–47, which remains the most insightful summary of the debate and its implications. Compare Perlman & McCann 1998:117–20; Letwin 2003:71–78; Valenze 2006:40–43.

  83. We tend to forget that the materialism of the Marxist tradition is not some radical departure—Marx was, like Nietzsche, taking bourgeois assumptions (though in his case, different ones) and pushing them in directions that would outrage their original proponents. Anyway, there is good reason to believe that what we now call “historical materialism” is really Engels’ addition to the project—Engels being himself nothing if not bourgeois in background and sensibilities (he was a stalwart of the Cologne stock exchange).

  84. Macaulay 1886:485—the original essay was published in the Spectator, March 1, 1711.

  85. Faust II, Act 1—see Shell 1992, Binswanger 1994 for a detailed analysis. The connection with alchemy is revealing. When in 1300 Marco Polo had remarked that the Chinese emperor “seemed to have mastered the art of alchemy” in his ability to turn mere paper into something as good as gold, this was clearly meant as a joke; by the seventeenth century most European monarchs actually did employ alchemists to try to produce gold from base metals; it was only their failure that led to the adoption of paper money (Wennerlend 2003).