He who has deepest searched the wide abysm * * * * * * * * * * * * No Godlike thing knows aught of less and less, CHAPTER VI Interest Statute Overruled "During the later centuries of the Middle Ages,-whatever it may conceivably have been in earlier centuries, the effort to enforce the prohibition of usury, was a hopeless attempt to struggle with growing economic forces."-Part II W. J. Ashley, English Economic History, New York, 1893, vi, The Canonist Doctrine. WE E enter upon the time when it was thought wise and well to overrule the interest-statute of ancient Israel, early Christianity and the Middle Ages. The dawn of the industrial era is at hand. The history of the change of policy is outlined first in quotations from the pen of Professor W. J. Ashley, beginning with the citation at the top of the page, and continuing. "Now speaking generally, it may be said that, during the period from the eleventh to the fourteenth century, there was but a very small field for the investment of capital. In the trading centres there was, indeed, during the later part of the period, occasional opportunities for a man to take part in a commercial venture, and no obstacle was put by the Church or public opinion to a man's investing his money in this way, when no definite interest was stipulated for, but he became a bona fide partner in the risk as well as the gain. But such opportunities were very rare. We must not forget that England was almost entirely an agricultural country, and that its agriculture was carried on under a customary system which gave little opportunity for the investment of capital." I. 155. "It is scarcely denied by competent modern critics that, at some period at any rate, during the Middle Ages there was such an absence of opportunities for productive investment as relatively to justify this strong prejudice against interest; the only difference of opinion is as to how late that period reaches." I. 157. "One writer is of opinion that even before the twelfth century the economic condition of things was such that the papal decrees could not possibly meet with obedience; he can only regard the effort of the Church as a vain struggle against irresistible tendencies." I. 157. 76 "To another the prohibition seems justifiable far into the fifteenth century." I. 157. 77 "We can scarcely suppose that the prohibition of usury would have been maintained by public opinion, enacted by statute, and enforced in the courts throughout the fourteenth century, as it certainly was, if cases had been of frequent occurrence in which it really prevented legitimate commercial enterprise, or hindered the growth of manufactures. We may perhaps conclude that on the whole it was suited to the economic condition of western Europe, though there may sometimes have been cases in the active commercial life of the towns where it was felt to be a burden." I. 157 "It is to be observed that the conception of political economy as primarily a 'science' is one that dates only from Adam Smith." II. 380 "Political economy ought to 'treat material interests as subordinate to the higher ends of human development.' "78 "According to the doctrine of the Church, says Neumann, it was sinful 'to recompense the use of capital belonging to another.'" II. 428 "Or again, it is remarked that 'the European world, with settled order and increasing commerce, chafed under this enforced unselfishness.'" II. 428 Government needs opened the way to break down the intereststatute. "The great republics, Venice, Florence and Genoa, had found themselves compelled to demand forced loans from their citizens, and to prevent dissatisfaction by paying an annual interest. The practice spread to other states; and the transition was easy from compulsory loans to voluntary." I. 447 "As to the propriety of paying and receiving interest on such loans there was a warm controversy in the fourteenth and fifteenth centuries. It became a bone of contention between the different religious orders; the Dominicans and Franciscans throwing the weight of their influence on the side of the government and defending the whole system, the Augustinians attacking it." II. 448 Church charities further opened the way to take interest. "The term Mons, for a sum or heap of money, was the peculiar Florentine term, which came to be generally adopted. It was evidently the state montes which suggested the montes pietatis or charitable loan funds. . . . . . .. Their purpose was ex clusively philanthropic. But even with papal patronage and the promise of spiritual and temporal advantages to those who should subscribe towards so charitable a work, the managers of the montes found it necessary to make a small charge for the loan in order to cover working expenses. At first almost entirely the work of the Franciscans, most of them retained an ecclesiastical character, and were managed by clergy." II. 449-50. "Then the attack began. It was led by the rival order, the Dominicans. Here was a payment asked for a loan (1) from the very beginning of the period, (2) from a poor man, who obtained it for the relief of his immediate wants, and was not permitted to trade with it. It was this taking of payment from the poor and needy that Thomas de Vio found so hard to reconcile with the older doctrine of usury. But the Franciscans might fairly reply that, though a loan without payment were the best of all, if that was not to be had, a loan at a low rate from the charitable fund was better than recourse to the professional usurer. And this was the judgment of the Lateran Council of 1515, under Leo X." II. 451. 80 "The montes, it was decided, could rightly demand a moderate interest, if they could not otherwise furnish this loan, and if their object was not to make gain, but to cover working-expenses. The council added thereto a definition of usury. This is the proper interpretation of usury, when gain is sought to be acquired from the use of a thing not in itself fruitful (such as a flock, or a field), without labour, expense, or risk, on the part of the lender.'" ÍÍ. 451. "How important was the new departure in the canonist doctrine brought about by the acceptance of the principle of montes pietatis is very evident. Churchmen were more and more reconciled to the idea of payment for the use of money, even by the poor who could make no business investment of the loan. The moral distinction tended more and more to become one between excessive demand and moderate demand, rather than between gratuitous and non-gratuitous loan. The doctrine of usury, which had at first assumed a rigid form, necessary perhaps for the middle ages, 81 now began to shape itself in accordance with a broader conception of the oppressive use of moneypower; and that was all that the Church really meant by still clinging to the term 'usury.'" II. 451. "Again the counter-Reformation brought with it a return to severer views. Yet..... the reaction came too late. . . The easiest method of obtaining capital was by means of a loan on interest." II. 452-3. "It is apparent that there was no longer any practical difference between payment for the use of money (usura) and interest." II. 453. "In 1553, Albert V. of Bavaria, in the amended Bavarian code issued in that year, declared the permissibility of . . . ... an annual rent (or return) for money lent, so long as it was not excessive." II. 454. 82 "The example of Albert was soon followed in several of the Protestant States, such as Saxony (1572), Mecklenburg (1572) and Brandenburg (1573). But his successor, William V.,whose sympathy with the counter-Reformation is indicated by his title, 'the Pious," felt his conscience ill at ease, and after in vain seeking a unanimous and unambiguous opinion from the theologians both of Ingolstadt and of Rome, at last laid the question, in 1580, before Gregory XIII. 'Was the contract commonly entered in Germany allowable? which ran as follows: "Titius, having a certain sum of money, hands it over to Sempronius for no defined purposes, but to be used at the pleasure of the debtor, on the following conditions, that Titius should have the right, by contract and legal obligation, sometimes expressed in one form, and sometimes in another, to receive every year, so long as the said sum is left in the hands of Sempronius, five per cent., and at the end the whole of the capital sum.'" II. 455 "The reply of Gregory was not to be regarded as condemning all agreements to pay five per cent; they were allowable if they took the form either of contract or partnership, with security of capital and fixed profit; or of a purchase of rentcharge, or of a contract for legitimate interest." II. 455-6. "In his earlier writings Luther went so far as to declare that the theory of interest was a mere pretext; no man could so certainly count on making a profit with his own money that he could justly contract to receive compensation for foregoing the use of it." II. 457 "It was Melancthon who first, on the Protestant side, realized what were the consequences of the acceptance of the principle of interest under the new conditions made possible by modern commerce. The old doctrine itself he was ready enough to defend, and he adduced to its support all the well-known arguments. But, then, he recognized the validity of interest much more universally than Luther. Melancthon ready to allow that interest might justly be demanded from the very day that the loan was contracted. The only reservations he had to make were that the interest should be moderate, according to the estimate of just men." II. 457-8. was "The judgment of Calvin was certainly of much influence in weakening the old repugnance to usury. Calvin's teaching was .. in a very real sense, a turning point in the history of European thought." II. 458-9. "Calvin's own words: 'Although I do not visit usuries (payments for the use of money) with wholesale condemnation, I cannot give them my indiscriminate approbation, nor, indeed, do I approve that any one should make a business of moneylending. Usury for money may lawfully be taken only under the following conditions, and not otherwise. 'Among these conditions are: "That usury should not be demanded from men in need; nor is it lawful to force any man to pay usury who is oppressed by need or calamity,' and 'he who receives a loan on usury should make at least as much for himself by his labour and care as he obtains who gives the loan.'" II. 459 "Calvin very clearly realized the danger of appearing to give a general approbation to the taking of payment for the use of money. He begins his letter (to Oecolampadius, first printed in 1575) by remarking that he has learnt from the example of others how dangerous it is to give an opinion,' 'for if we altogether condemn usuries we shall impose severer restrictions upon consciences than the Lord Himself desired; while, if we make the least concession, many will use it as a pretext, and will snatch at a bridleless license, which can never afterwards be checked by any moderation or exemption.' It is not clear that the letter was ever intended for publication." II. 459, 458. "What Calvin feared took place. In after centuries Calvin's great authority was invoked for the wide proposition that to take reward for the loan of money was never sinful. . . . His carefully qualified approval of the claim for usury when it was made by one business man to another, was wrested into an approval of every sort of contract concerning the loan of money." II. 460. Coming to England for the struggle against interest: "In the second half of the sixteenth century we find the clergy both at variance among themselves, and also in a large measure disregarded by the business world." II. 467. "Bishop Jewel, in his Exposition upon the Epistles to the Thessalonians, written some time before 1571, but not published till 1583, takes up a position. 'What if one rich man lend money to another? What if a merchant take money to usury of a merchant, and both be the better? Here is no sting or biting! What if a thief or pirate take usury of a thief or pirate?' He goes on to argue that the merchant who trades on borrowed capital has to raise the price in order to pay the interest. 'Who then payeth the ten pounds? . The poor people that buy the corn. They feel it in every morsel they eat.' " II. 468. "In 1577 Bullinger declared that bargains to receive payment for the use of money were 'not in themselves unlawful, nor yet condemned in the Holy Scriptures.' 'Usury is in the scripture condemned, so far as it is joined with iniquity, and the destruction of our brother or neighbor. Usury is forbidden in the Word of God, so far forth as it biteth his neignbor.'" II. 469. "The position of the more learned clergy at the end of the century is probably represented by Miles Mosse, whose sermons |