USURY IN HISTORY.
It would require volumes to fully present the history of usury. A very
brief summary must suffice in this place. Yet this synopsis may serve
as a guide to those who may wish to pursue the investigation further
and who have access to any considerable library of general and
ecclesiastical history.
The exacting of usury has always been more or less practiced, and
there has always been a contention against it as impolitic and wrong.
In heathendom the philosophers and economists and common people were
usually arrayed against it, and the voice of christendom has been
practically unanimous in its denunciation until the 17th century. (For
History of Usury in the Church, see Chapter X.)
Greece: Greece had no laws forbidding usury. The trade in money was
left, like the trade in every thing else, without legal restraint. The
law declared that the usurer should not demand a higher rate than that
fixed by the original contract; it also advised "Let the usury on
money be moderate." One per cent. per month was the usual rate.
There were among the Greeks at various times thoughtful men, who
violently opposed the taking of increase. Solon, of aristocratic
blood, but with strong sympathies for the oppressed classes, led a
Nehemiah-like reformation. Solon was wise and patriotic. His name is a
synonym for unselfish devotion to the public good. He was given
authority in Greece in times of great financial distress. Debts were
increasing. Mortgage stones were erected at the borders of each tract
of land, giving the name of the creditor and the amount of his claim.
The interest could not be paid. Interest taking had concentrated the
wealth and power of the state in a few hands. The farmer lost all hope
and was only a laborer on the farm he once owned. The debtor who had
no farm to work for his creditor was yet in a worse condition; he was
the mere slave of his creditor and could be sold by him. The free
farmers were fast disappearing. The most of them were struggling with
miserable poverty. Solon at once came to the relief of this suffering
class. He released those who were enslaved and brought back those who
had been sold abroad. The great work of Solon for this oppressed class
has caused his name to be revered by all who have studied the history
of his times.
Plato opposed usury, but he does not give extended reasons. Also the
philosopher, Aristotle. His name is yet illustrious in the departments
of natural and moral science and economics. With regard to usury he
said: "Of all modes of accumulation, the worst and most unnatural is
interest. This is the utmost corruption of artificial degeneracy;
standing in the same relation to commerce that commerce does to
economy. By commerce money is perverted from the purpose of exchange
to that of gain; still this gain is occasioned by the mutual transfer
of different objects; but interest, by transferring merely the same
object from one hand to another generates money from money, and the
product thus generated is called offspring (toxos) as being precisely
the same nature as that from which it proceeds."
Rome: In the early ages of Rome there were no laws regulating the
loans of money. The practice was common and was one of the most
frequent subjects of popular complaint. In the celebrated secession of
the lower classes of the people to Mons Sacer, when civil strife and
fraternal bloodshed was threatened, the loudest outcry was against the
oppression of exhorbitant interest exacted by wealthy citizens of
those who were obliged to borrow. The common rate was twelve per cent.
per annum. This is inferred from the fact that six per cent. was
called half interest and three per cent. one-fourth interest.
The early records of Rome prove conclusively the odium attached to the
business of money-lending for profit. In the codification of laws in
the fifth century B.C. the rate of usury was fixed at one per cent.
per month. This limitation of usury was enacted after a long and
bitter contest between the rich lenders and the poorer classes.
A compromise seems to have been made in the assigned punishments. The
laws for the collection of debts and the punishment of exacting more
than the law permitted were alike extremely cruel.
The creditors of an insolvent debtor were given the power of cutting
his body in pieces and the power of selling his children into slavery.
The penalty of taking more than this legal interest was punished with
more severity than theft. The thief must restore double, but the
usurer must restore fourfold. This we learn from Cato's treatise on
"Agriculture." Cato's own opinion of usury is shown in the answer
which he made when he was asked what he thought of usury, his reply
was, "What do you think of murder?"
Nearly a hundred years later the Licinian law forbade all increase. A
little later we find the one-half of one per cent. permitted by law.
Then under Sylla the legal rate is made three per cent. In the time of
Antony and Cleopatra it is four per cent. For a time there was utter
confusion and intolerably oppressive rates prevailed. Horace, in his
Satires, speaks of one lending at sixty per cent. In the reign of
Tiberius Cæsar, Rome was again shaken with another usury sedition, an
uprising of the people against the usurers. The law was finally
adjusted in the Justinian Code, by a compromise permitting six per
cent. and severely restraining the exorbitant rates.
Three hundred and twenty-three years B.C., Livy speaks of a creditor
who kept his debtor in irons, claiming, besides the debt, the interest
which he exacted with greatest severity. It was soon after decreed
that this cruelty should end and that no citizen should be placed in
irons or sold into slavery for debt.
At the close of the republic the rate was twenty-four per cent.
England: In the earliest periods of which we have any records we find
that the doctrine, that letting money to hire was sinful, prevailed
universally over the island of Great Britain. It was the prevailing
opinion that interest, or usury, as it was then called, was unjust
gain, forbidden by divine law, and which a good Christian could
neither receive nor pay. In common law the practice of taking increase
was classed among the lowest crimes against public morals. So odious
was it among Christians that the practice was confined almost wholly
to the Jews, who did not exact usury of Jews but of the Christians.
The laws of King Alfred, about 900 A.D., directed that the effects of
money-lenders upon usury should be forfeited to the king, their lands
to the lords under whom they were held, and they should not be buried
in consecrated ground.
By the laws of Edward the Confessor, about 1050 A.D., the usurer
forfeited all his property and was declared an outlaw and banished
from England. In the reign of Henry II, about the close of the
twelfth century, the estates of usurers were forfeited at their death
and their children were disinherited.
His successor, Richard I, was yet more severe, forbidding the usurers
attending his coronation, nor would he protect them from mob violence.
During the thirteenth century the severities against the usurers were
not relaxed. King John confiscated their gathered wealth without
scruple. It is recorded that he exacted an enormous fine of a Jew in
Bristol for his usuries, and when the Jew refused to pay he ordered
one of his teeth to be drawn daily until he should pay. The Jew is
said to have endured the pulling of seven, but then weakened and paid
the fine.
Henry III was equally harsh and severe in his measures. He exacted all
he could and then turned them over to the Earl of Cornwall. "The one
flayed and the other emboweled." It is written in the chronicles of
England, 1251 A.D., "By such usurers and licentious liurs as belong to
him, the realme had alreadie become sore corrupted."
In the fourteenth century, under the three Edwards, the taking of
interest was an indictable offence and Edward III made it a capital
crime.
In the fifteenth century, under Henry VII, the penalty was fixed at
one hundred pounds and the penalty of the church added, which was
excommunication.
Attorney General Noy, in the reign of James I, thought the taking of
money by usury was no better than taking a man's life. He said:
"Usurers are well ranked with murderers."
In the sixteenth century, under Henry VIII, it was enacted that all
interest above ten per cent. was unlawful. Less was not collectable by
law, but was not a punishable offence.
Edward VI revived the old laws condemning all interest.
Mary I, next following, executed these laws with extreme severity.
Elizabeth restored the laws of Henry VIII, in which usury less than
ten per cent. was not a punishable offence. This edict of Elizabeth
adds: "In the interpretation of the law it shall be largely and
strongly construed for the repression of usury."
This law of Henry VIII and Elizabeth, with the rate of interest
reduced, was the statute law of England until 1854, when all the usury
laws were repealed.
In 1694 William and Mary II entered into a contract to secure a
permanent loan and pledged the kingdom to pay interest on it forever.
The loan marked the turning point in the popular mind with regard to
usury. As it was approved in their necessity by the king and queen at
the head of the Protestant world, ecclesiastics began to shift their
ground and to apologize for, and excuse, that which had been formerly
unequivocably condemned. As the crown was the head of both the church
and the state, the condemnation of usury seemed tinged both with
disloyalty and heresy. The courts too began to modify their decisions
to bring them into harmony with the action of the crown.
The change in the usury laws were not made by enactments of
Parliament, but by the decisions of courts. The precedents were
gradually accumulated and the statutes were merely made to conform to
them.