It appears singular to us at present that it should have been once
considered unlawful to receive interest for lent money; but this
circumstance will excite no wonder when the reason of it is fully
explained. The different occupations by which one can maintain a family
without robbery and without war, were at early periods neither so
numerous nor so productive as in modern times; those who borrowed money
required it only for immediate use, to relieve their necessities or to
procure the conveniences of life; and those who advanced it to such
indigent persons did so either through benevolence or friendship. The
case now is widely different. With the assistance of borrowed money
people enter into business, and carry on trades, from which by their
abilities, diligence, or good fortune, so much profit arises that
they soon acquire more than is requisite for their daily support; and
under these circumstances the lender may undoubtedly receive for the
beneficial use of his money a certain remuneration, especially as he
himself might have employed it to advantage; and as by lending it he
runs the risk of losing either the whole or a part of his capital, or
at least of not receiving it again so soon as he may have occasion for
it.
Lending on interest, therefore, must have become more usual in
proportion as trade, manufactures, and the arts were extended; or
as the art of acquiring money by money became more common: but it
long continued to be detested, because the ancient abhorrence against
it was by an improper construction of the Mosaic law converted into
a religious prejudice[2], which, like many other prejudices more
pernicious, was strengthened and confirmed by severe papal laws.
The people, however, who often devise means to render the faults of
their legislators less hurtful, concealed this practice by various
inventions, so that neither the borrower nor lender could be punished,
nor the giving and receiving of interest be prevented. As it was of
more benefit than prejudice to trade, the impolicy of the prohibition
became always more apparent; it was known that the new-invented
usurious arts under which it was privately followed would occasion
greater evils than those which had been apprehended from lending on
interest publicly; it was perceived also that the Jews, who were not
affected by papal maledictions, foreigners, and a few natives who had
neither religion nor conscience, and whom the church wished least of
all to favour, were those principally enriched by it.
In no place was this inconvenience more felt than at the Romish court,
even at a time when it boasted of divine infallibility; and nowhere
was more care employed to remove it. A plan, therefore, was at length
devised, by which the evil, as was supposed, would be banished. A
capital was collected from which money was to be lent to the poor for
a certain period on pledges without interest. This idea was indeed not
new; for such establishments had long before been formed and supported
by humane princes. The emperor Augustus, we are told, converted into
a fund the surplus of the money which arose to the State from the
confiscated property of criminals, and lent sums from it, without
interest, to those who could pledge effects equal to double the
amount[3]. Tiberius also advanced a large capital, from which those
were supplied with money for three years, who could give security on
lands equivalent to twice the value[4]. Alexander Severus reduced the
interest of money by lending it at a low rate, and advancing sums to
the poor without interest to purchase lands, and agreeing to receive
payment from the produce of them[5].
These examples of the ancients were followed in modern Italy. In order
to collect money, the popes conferred upon those who would contribute
towards that object a great many fictitious advantages, which at
any rate cost them nothing. By bulls and holy water they dispensed
indulgences and eternal salvation; they permitted burthensome vows
to be converted into donations to lending-houses; and authorised the
rich who advanced them considerable sums to legitimate such of their
children as were not born in wedlock. As an establishment of this kind
required a great many servants, they endeavoured to procure these also
on the same conditions; and they offered, besides the above-mentioned
benefits, a great many others not worth notice, to those who would
engage to discharge gratis the business of their new undertaking; but
in cases of necessity they were to receive a moderate salary from the
funds. This money was lent without interest for a certain time to the
poor only, provided they could deposit proper pledges of sufficient
value.
It was, however, soon observed that an establishment of this kind
could neither be of extensive use nor of long duration. In order to
prevent the secret lending of money, by the usurious arts which had
begun to be practised, it was necessary that it should advance sums
not only to those who were poor in the strictest sense of the word,
but to those also who, to secure themselves from poverty, wished to
undertake and carry on useful employments, and who for that purpose
had need of capitals. However powerful the attractions might be,
which, on account of the religious folly that then prevailed, induced
people to make large contributions, they gradually lost their force,
and the latter were lessened in proportion, especially as a spirit of
reformation began soon after to break out in Germany, and to spread
more and more into other countries. Even if a lending-house should not
be exhausted by the maintenance of its servants, and various accidents
that could not be guarded against, it was still necessary, at any rate,
to borrow as much money at interest as might be sufficient to support
the establishment. As it was impossible that it could relieve all the
poor, the only method to be pursued was to prevent their increase, by
encouraging trade, and by supplying those with money who wanted only
a little to enable them to gain more, and who were in a condition
and willing to pay a moderate interest. The pontiffs, therefore,
at length resolved to allow the lending-houses to receive interest,
not for the whole capitals which they lent, but only for a part,
merely that they might raise as much money as might be sufficient to
defray their expenses; and they now, for the first time, adopted the
long-established maxim, that those who enjoy the benefits should assist
to bear the burthen--a maxim which very clearly proves the legality
of interest. When this opening was once made, one step more only was
necessary to place the lending-houses on that judicious footing on
which they would in all probability have been put by the inventor
himself, had he not been under the influence of prejudice. In order
that they might have sufficient stock in hand, it was thought proper to
give to those who should advance them money a moderate interest, which
they prudently concealed by blending it with the unavoidable expenses
of the establishment, to which it indeed belonged, and which their
debtors, by the practice a little before introduced, were obliged to
make good. The lending-houses, therefore, gave and received interest.
But that the odious name might be avoided, whatever interest was
received, was said to be _pro indemnitate_; and this is the expression
made use of in the papal bull.
All this, it must be confessed, was devised with much ingenuity: but
persons of acuteness still discovered the concealed interest; and a
violent contest soon arose respecting the legality of lending-houses,
in which the greatest divines and jurists of the age took a part; and
by which the old question, whether one might do anything wicked, or
establish interest, in order to effect good, was again revived and
examined. Fortunately for the pontifical court, the folly of mankind
was still so great that a bull was sufficient to suppress, or at least
to silence, the spirit of inquiry. The pope declared the holy mountains
of piety, “sacri monti de pietà,” to be legal; and threatened those
with his vengeance who dared to entertain any further doubts on the
subject. All the cities now hastened to establish lending-houses; and
their example was at length followed in other countries. Such, in a
general view, is the history of these establishments: I shall now
confirm it by the necessary proofs.
When under the appellation of _lending-house_ we understand a public
establishment where any person can borrow money upon pledges,
either for or without interest, we must not compare it to the
_tabernæ argentariæ_ or _mensæ nummulariæ_ of the Romans. These were
banking-houses, at which the state and rich people caused their
revenues to be paid, and on which they gave their creditors orders
either to receive their debts in money, or to have the sums transferred
in their own name, and to receive security for them. To assign over
money and to pay money by a bill were called _perscribere_ and
_rescribere_; and an assignment or draft was called _attributio_. These
_argentarii_, _mensarii_, _nummularii_, _collybistæ_ and _trapezitæ_
followed the same employment, therefore, as our cashiers or bankers.
The former, like the latter, dealt in exchanges and discount; and in
the same manner also they lent from their capital on interest, and gave
interest themselves, in order that they might receive a greater. Those
who among the ancients were enemies to the lending of money on interest
brought these people into some disrepute; and the contempt entertained
for them was probably increased by prejudice, though those _nummarii_
who were established by government as public cashiers held so exalted a
rank that some of them became consuls. Such banking-houses existed in
the Italian States in the middle ages, about the year 1377. They were
called _apothecæ seu casanæ feneris_[6], and in Germany _Wechselbanke_,
banks of exchange; but they were not lending-houses in the sense in
which I here understand them.
Equally distinct also from lending-houses were those banks established
in the fourteenth century, in many cities of Italy, such, for example,
as Florence, in order to raise public loans. Those who advanced money
on that account received an obligation and monthly interest, which on
no pretext could be refused, even if the creditor had been guilty of
any crime. These obligations were soon sold with advantage, but oftener
with loss; and the price of them rose and fell like that of the English
stocks, but not so rapidly; and theologists disputed whether one could
with a safe conscience purchase an obligation at less than the stated
value, from a proprietor who was obliged to dispose of it for ready
specie. If the State was desirous or under the necessity of repaying
the money, it availed itself of that regale called by Leyser _regale
falsæ monetæ_, and returned the capital in money of an inferior value.
This establishment was confirmed, at least at Florence, by the pontiff,
who subjected those who should commit any fraud in it to ecclesiastical
punishment and a fine, which was to be carried to the papal treasury:
but long before that period the republic of Genoa had raised a loan
by mortgaging the public revenues. I have been more particular on
this subject, because Le Bret[7] calls these banks, very improperly,
lending-houses; and in order to show to what a degree of perfection the
princely art of contracting and paying debts was brought so early as
the fourteenth century.
Those who have as yet determined the origin of lending-houses with the
greatest exactness, place it, as Dorotheus Ascanius, that is Matthias
Zimmermann[8], does, in the time of Pope Pius II. or Paul II., who
filled the papal chair from 1464 to 1471; and the reason for supposing
it to have been under the pontificate of the latter is, because Leo X.
in his bull, which I shall quote hereafter, mentions that pope as the
first who confirmed an establishment of this kind. As the above account
did not appear to me satisfactory, and as I knew before that the oldest
lending-houses in Italy were under the inspection of the Franciscans, I
consulted the Annals of the Seraphic Order, with full expectation that
this service would not be omitted in that work; and I indeed found in
it more materials towards the history of lending-houses than has ever
been collected, as far as I know, by any other person.
As complaints against usury, which was practised by many Christians,
but particularly by the Jews, became louder and more public in Italy
in the fifteenth century, Barnabas Interamnensis, probably of Terni,
first conceived the idea of establishing a lending-house. This man was
originally a physician; had been admitted to the degree of doctor; was
held in great respect on account of his learning; became a Minorite, or
Franciscan; acquired in that situation every rank of honour, and died,
in the first monastery of this order at Assisi (_in monte Subasio_[9]),
in the year 1474. While he was employed in preaching under Pope Pius
II. at Perugia, in the territories of the Church, and observed how much
the poor were oppressed by the usurious dealings of the Jews, he made
a proposal for raising a capital by collections, in order to lend from
it on pledges to the indigent, who should give monthly, for the use of
the money borrowed, as much interest as might be necessary to pay the
servants employed in this establishment, and to support it. Fortunatus
de Copolis, an able jurist of Perugia, who after the death of his wife
became also a Franciscan, approved of this plan, and offered to assist
in putting it into execution. To be assured in regard to an undertaking
which seemed to approach so near to the lending on interest, both
these persons laid their plan before the university of that place,
and requested to know whether such an establishment could be allowed;
and an answer being given in the affirmative, a considerable sum was
soon collected by preaching, so that there was a sufficiency to open a
lending-house. Notwithstanding this sanction, many were displeased with
the design, and considered the receiving of interest, however small it
might be, as a species of usury. Those who exclaimed most against it
were the Dominicans (_ex ordine Prædicatorum_): and they seem to have
continued to preach in opposition to it, till they were compelled by
Leo X. to be silent; while the Franciscans, on the other hand, defended
it, and endeavoured to make it be generally adopted. The dispute
became more violent when, at the end of a year, after all expenses were
paid, a considerable surplus was found remaining; and as the managers
did not know how to dispose of it, they at length thought proper to
divide it amongst the servants, because no fixed salaries had been
appointed for them. Such was the method first pursued at Perugia; but
in other places the annual overplus was employed in a different manner.
The particular year when this establishment began to be formed I have
nowhere found marked; but as it was in the time of Pius II., it must
have been in 1464, or before that period[10]. It is very remarkable
that this pontiff confirmed the lending-house at Orvieto (_Urbs Vetus_)
so early as the above year; whereas that at Perugia was sanctioned,
for the first time, by Pope Paul II. in 1467. It is singular also
that Leo X., in his confirmation of this establishment, mentions Paul
II., Sixtus IV., Innocent VIII., Alexander VI. and Julius II.; but
not Pius II. Pope Sixtus IV., as Wadding says, confirmed in 1472 the
lending-house at Viterbo, which had, however, been begun so early as
1469, by Franciscus de Viterbo, a Minorite[11].
In the year 1479 Sixtus IV. confirmed the lending-house which had been
established at Savona, the place of his birth, upon the same plan
as that at Perugia. The bull issued for this purpose is the first
pontifical confirmation ever printed[12]; for that obtained for Perugia
was not, as we are told by the editor, to be found in the archives
there in 1618, the time when the other was printed. I have never found
the confirmation of those at Orvieto and Viterbo. Ascianus sought for
them, but without success, in Bullarium Magnum Cherubini, and they are
not mentioned by Sixtus. This pontiff, in his bull, laments that the
great expenses to which he was subjected did not permit him to relieve
his countrymen with money, but that he would grant to the lending-house
so many spiritual advantages, as should induce the faithful to
contribute towards its support; and that it was his desire that money
should be lent from it to those who would assist gratis during a year
in the business which it required. If none could be found to serve on
these conditions, a moderate salary was to be given. He added a clause
also respecting pledges; but passed over in silence that the debtors
were to contribute anything for the support of the institution by
paying interest, which Barnabas, whose name does not occur in the bull,
introduced however at Perugia, and which the pope tacitly approved.
The greater part of the lending-houses in Italy were established in the
fifteenth and following centuries by the Minorites Marcus Bononiensis,
Michael a Carcano[13], Cherubinus Spoletanus, Jacobus de Marchia,
Antonius Vercellensis, Angelus a Clavasio, and above all, Bernardinus
Tomitano, named also _Feltrensis_ and _Parvulus_. This man was born
at Feltri, in the country of Treviso, in the year 1439. His father
was called Donato Tomitano, and his mother Corona Rambaldoni; they
were both of distinguished families, though some assert that he was
of low extraction, and a native of Tomi, a small place near Feltri,
on which account he got the name of Tomitano. The name of _Parvulus_
arose from his diminutive stature, which he sometimes made a subject of
pleasantry[14]. This much at any rate is certain, that he had received
a good education. In 1456, when seventeen years of age, he suffered
his instructors, contrary to the inclination of his father, to carry
him to Padua, to be entered in the order of the Minorites; and on this
occasion he changed his christian-name Martin into Bernardinus. As he
was a good speaker, he was employed by his order in travelling through
Italy and preaching. He was heard with applause, and in many parts
the people almost paid him divine honours. The chief object of his
sermons was to banish gaming, intemperance, and extravagance of dress;
but he above all attacked the Jews, and excited such a hatred against
them, that the governments in many places were obliged to entreat or
to compel him either to quit their territories or not to preach in
opposition to these unfortunate people, whom the crowds he collected
threatened to massacre; and sometimes when he visited cities where
there were rich Jews and persons who were connected with them in trade,
he was in danger of losing even his own life. Taking advantage of this
general antipathy to the Jews, he exerted himself, after the example
of Barnabas, his brother Minorite, to get lending-houses established,
and died at Pavia in the year 1494. The Minorites played a number of
juggling tricks with his body, pretending that it performed miracles,
by which means they procured him a place in the catalogue of the
saints; and to render his name still more lasting, some of his sermons
have been printed among the works of the writers of the Franciscan
order[15].
The lending-houses in Italy, with the origin of which I am acquainted,
are as follows:--The lending-house at Perugia was inspected in 1485 by
Bernardinus, who enlarged its capital.
The same year he established one at Assisi, which was confirmed by Pope
Innocent, and which was visited and improved by its founder in 1487[16].
In the year 1486, after much opposition, he established a lending-house
at Mantua, and procured for it also the pope’s sanction[17]. Four years
after, however, it had declined so much, that he was obliged to preach
in order to obtain new donations to support it.
At Florence he met with still more opposition; for the rich Jews bribed
the members of the government, who wished in appearance to favour
the establishment of the lending-house, to which they had consented
eighteen years before, while they secretly thwarted it; and some boys
having once proceeded, after hearing a sermon, to attack the houses of
the Jews, the Minorites were ordered to abstain from preaching and to
quit the city[18]. It was however completely established; but by the
Dominican Hieronymus Savonarola[19].
In the year 1488 Bernardinus established a lending-house at Parma, and
procured for it the pope’s sanction, as well as for one at Cesena,
where the interest was defined to be “pro salariis officialium et aliis
montis oneribus perferendis.” About the conclusion of this year he was
at the other end of Italy, where he re-established the lending-house at
Aquila in the kingdom of Naples[20].
In the year following he established one at Chieti (_Theate_) in the
same kingdom, another at Rieti (_Reate_) in the territories of the
Church, a third at Narni (_Narnia_)[21]; and a fourth at Lucca, which
was confirmed by the bishop, notwithstanding the opposition of the
Jews, who did every thing in their power to prevent it.
In the year 1490 a lending-house was established at Piacenza
(_Placentia_) by Bernardinus, who at the same time found one at
Genoa which had been established by the before-mentioned Angelus a
Clavasio[22]. At this period also a lending-house was established at
Verona[23], and another at Milan by the Minorite Michael de Aquis.
In 1491 a lending-house was established at Padua, which was confirmed
by Pope Alexander VI. in 1493[24]; and another was established at
Ravenna[25].
In 1492 Bernardinus reformed the lending-house at Vicenza, where, in
order to avoid the reproach of usury, the artifice was employed of not
demanding any interest, but admonishing the borrowers that they should
give a remuneration according to their piety and ability. As people
were by these means induced to pay more interest than what was legally
required at other lending-houses, Bernardinus caused this method
to be abolished[26]. He established a lending-house also the same
year in the small town of Campo S. Pietro, not far from Padua, and
expelled the Jews who had lent upon pledges. At this period there were
lending-houses at Bassano, a village in the county of Trevisi, and also
at Feltri, which he inspected and improved[27].
In the year 1493 Bernardinus caused a lending-house to be established
at Crema, in the Venetian dominions; another at Pavia, where he
requested the opinion of the jurists, whom he was happy to find
favourable to his design; and likewise a third at Gubbio, in the
territories of the Church. At the same time another Franciscan
established at Cremona a _mons frumenti pietatis_, from which corn was
lent out on interest to necessitous persons; and it appears that there
had been an institution of the like kind before at Parma[28].
In the year 1494, Bernardinus, a short time before his death,
assisted to establish a lending-house at Montagnana, in the Venetian
territories[29], and to improve that at Brescia, which was likely to
decay, because the servants had not fixed salaries[30]. The same year
another Franciscan established the lending-house at Modena.
In the year 1506 Pope Julius II. confirmed the lending-house at
Bologna. That of Trivigi was established in 1509; and in 1512,
Elizabeth of the family of Gonzaga, as widow of duke Guido Ubaldus,
established the first lending-house in the duchy of Urbino at Gubbio,
and procured permission for it to coin money[31].
The historical account I have here given, displays in the strongest
light the great force of prejudice, and particularly of the prejudice
of ecclesiastics. Notwithstanding the manifest advantages with which
lending-houses were attended, and though a great part of them had
been already sanctioned by the infallible court of Rome, many, but
chiefly Dominicans, exclaimed against these institutions, which they
did not call _montes pietatis_, but _impietatis_. No opposition gave
the Minorites so much uneasiness as that of the Dominican Thomas de
Vio, who afterwards became celebrated as a cardinal under the name
of Cajetanus. This monk, while he taught at Pavia in 1498, wrote a
treatise De Monte Pietatis[32], in which he inveighed bitterly against
taking pledges and interest, even though the latter was destined for
the maintenance of the servants. The popes, he said, had confirmed
lending-houses in general, but not every regulation that might be
introduced into them, and had only given their express approbation of
them so far as they were consistent with the laws of the church. These
words, he added, had been wickedly left out in the bulls which had been
printed; but he had heard them, and read them, in the confirmation
of the lending-house at Mantua. I indeed find that these words are
not in the copy of that bull given in Wadding, which is said to have
been taken from the original; nor in the still older confirmation of
the lending-house at Savona. But even were they to be found there,
this would not justify Cajetan’s opposition, as the pope in both
these bulls recommended the plan of the lending-house at Perugia to
be adopted, of which receiving interest formed a part. Bernardinus de
Bustis[33], a Minorite, took up the cause in opposition to Cajetan,
and, according to Wadding’s account, with rather too much vehemence.
Among his antagonists were Barrianus and Franc. Papafava, a jurist of
Padua[34]. As this dispute was revived with a great deal of warmth in
the beginning of the sixteenth century, it was at length terminated by
Pope Leo X., who in the tenth sitting of the council of the Lateran
declared by a particular bull that lending-houses were legal and
useful; that all doubts to the contrary were sinful, and that those who
wrote against them should be placed in a state of excommunication[35].
The whole assembly, except one archbishop, voted in favour of this
determination; and it appears from a decree of the council of Trent,
that it also acknowledged their legality, and confirmed them[36].
Notwithstanding this decision, there were still writers who sometimes
condemned them; and who did not consider all the decrees, at least
the above one of the Lateran council, as agreeable to justice. Among
these was Dominicus de Soto, a Dominican. All opposition, however, in
the course of time subsided, and in the year 1565, Charles Borromeo,
the pope’s legate at the council of Milan, ordered all governments and
ecclesiastics to assist in establishing lending-houses[37].
Of the lending-houses established after this period in Italy, I shall
mention those only of Rome and Naples. It is very remarkable that
the pope’s capital should have been without an institution of this
kind till the year 1539, and that it should have been formed by the
exertions of Giovanni Calvo, a Franciscan. Paul III., in his bull of
confirmation, ordered that Calvo’s successors in rank and employment
should always have the inspection of it, because the Franciscans had
taken the greatest pains to endeavour to root out usury[38].
The lending-house at Naples was first established in 1539 or 1540.
Two rich citizens, Aurelio Paparo, and Leonardo or Nardo di Palma,
redeemed all the pledges which were at that time in the hands of the
Jews, and offered to deliver them to the owners without interest,
provided they would return the money which had been advanced on them.
More opulent persons soon followed their example; many bequeathed large
sums for this benevolent purpose; and Toledo, the viceroy, who drove
the Jews from the kingdom, supported it by every method possible. This
lending-house, which has indeed undergone many variations, is the
largest in Europe; and it contains such an immense number of different
articles, many of them exceedingly valuable, that it may be considered
as a repository of the most important part of the moveables of the
whole nation. About the year 1563, another establishment of the like
kind was formed under the title of _banco de’ poveri_. At first this
bank advanced money without interest, only to relieve confined debtors;
afterwards, as its capital increased, it lent upon pledges, but not
above the sum of five ducats without interest. For larger sums the
usual interest was demanded[39].
At what time the first lending-house was established at Venice I have
not been able to learn[40]. This State seems to have long tolerated the
Jews; it endeavoured to moderate the hatred conceived against these
people, and gave orders to Bernardinus to forbear preaching against
them[41]. It appears to me in general, that the principal commercial
cities of Italy were the latest to avail themselves of this invention;
because they knew that to regulate interest by law, where trade was
flourishing, would be ineffectual or useless; or because the rich Jew
merchants found means to prevent it.
The name _mons pietatis_, of which no satisfactory explanation has been
as yet given, came with the invention from Italy, and is equally old,
if not older. Funds of money formed by the contributions of different
persons, for some end specified, were long before called _montes_. In
the first centuries of the Christian æra, free gifts were collected
and preserved in churches by ecclesiastics, partly for the purpose of
defraying the expense of divine service, and partly to relieve the
poor. Such capitals, which were considered as ecclesiastical funds,
were by Prudentius, in the beginning of the fifth century, called
_montes annonæ_ and _arca numinis_[42]. Tertullian calls them _deposita
pietatis_[43]; and hence has been formed _montes pietatis_. At any
rate I am of opinion that the inventor chose and adopted this name in
order to give his institution a sacred or religious appearance, and to
procure it more approbation and support.
I find however that those banks employed in Italy, during the
thirteenth and fourteenth centuries, to borrow money in the name of
States, for which the public revenues were mortgaged and interest
paid, were also called _montes_[44]. In this sense the word is used by
Italian historians of much later times; and those are greatly mistaken,
who, with Ascian and many others, consider all these _montes_ as real
lending-houses. These loan-banks or _montes_ received various names,
sometimes from the princes who established them, sometimes from the
use to which the money borrowed was applied, and sometimes from the
objects which were mortgaged. Of this kind were the _mons fidei_, or
loan opened by Pope Clement VII. in the year 1526, for defending his
capital[45]; the _mons aluminarius_, under Pope Pius IV., for which the
pontifical alum-works were pledged; the _mons religionis_, under Pius
V., for carrying on the war against the Turks; and the _montes farinæ_,
_carnium_, _vini_, &c., when the duties upon these articles were
pledged as a security. To facilitate these loans, every condition that
could induce people to advance money was thought of. Sometimes high
interest was given, if the subscribers agreed that it should cease,
and the capital fall to the bank after their death; and sometimes
low interest was given, but the security was heritable and could be
transferred at pleasure. The former were called _montes vacabiles_, and
the latter _montes non vacabiles_. Sometimes the State engaged to pay
back the capital at the end of a certain period, such for example as
nine years, as was the case in regard to the _mons novennalis_, under
Paul IV.; or it reserved to itself the option of returning the money
at such a period as it might think proper, and sometimes the capital
was sunk and the interest made perpetual. The first kind were called
_montes redimibiles_, and the second _irredimibiles_[46]. One can here
clearly discover the origin of life-rents, annuities, tontines, and
government securities; but the further illustration of this subject I
shall leave to those who may wish to employ their talents on a history
of national debts. I have introduced these remarks, merely to rectify
a mistake which has become almost general, and which occasioned some
difficulties to me in this research; and I shall only observe further,
that the popes gave to their loans, in order to raise their sinking
credit, many of those spiritual advantages which they conferred on the
_montes pietatis_. This error therefore was more easily propagated, as
both were called _montes_; and hence it has happened that Ascianus and
others assert that many lending-houses were misapplied by the popes in
order to raise public loans.
From the instances here adduced, one may see that the first
lending-houses were sanctioned by the pontiffs, because they only
could determine to the Catholics in what cases it was lawful for
them to receive interest. This circumstance seems to have rendered
the establishment of them out of Italy difficult. At any rate the
Protestants were at first averse to imitate an institution which
originated at the court of Rome, and which, according to the prevailing
prejudice of the times, it alone could approve; and from the same
consideration they would not adopt the reformation which had been made
in the calendar.
The first mention of a lending-house in Germany, which I have as yet
met with, is to be found in the permission granted by the emperor
Maximilian I. to the citizens of Nuremberg, in the year 1498, to
drive the Jews from the city, and to establish an exchange-bank. The
permission further stated, “That they should provide for their bank
proper managers, clerks, and other persons to conduct it according
to their pleasure, or as necessity might require; that such of their
fellow-citizens as were not able to carry on their trades, callings,
and occupations without borrowing and without pledging their effects,
should, on demand, according to their trade and circumstances, receive
money, for which pledges, caution and security should be taken; that at
the time of payment a certain sum should be exacted by way of interest;
that the clerks and conductors of the bank should receive salaries for
their service from the interest; and that if any surplus remained it
should be employed for the common use of the city of Nuremberg, like
any other public fund.”
It here appears that the lending-houses in Germany were first known
under the name of exchange-banks, by which was before understood any
bank where money was lent and exchanged; but it does not thence follow,
as Professor Fischer thinks[47], that they were an Italian invention.
The citizens of Nuremberg had not then a lending-house, nor was one
established there till the year 1618. At that period they procured
from Italy copies of the regulations drawn up for various houses of
this kind, in order to select the best. Those of the city of Augsburg
however were the grounds on which they built, and they sent thither
the persons chosen to manage their lending-house, that they might
make themselves fully acquainted with the nature of the establishment
at that place[48]. In the year 1591, the magistrates of Augsburg had
prohibited the Jews to lend money, or to take pledges; at the same time
they granted 30,000 florins as a fund to establish a lending-house, and
the regulations of it were published in 1607[49].
In the Netherlands, France and England, lending-houses were first known
under the name of _Lombards_, the origin of which is evident. It is
well known that in the thirteenth and following centuries many opulent
merchants of Italy, which at those periods was almost the only part
of Europe that carried on an extensive trade, were invited to these
countries, where there were few mercantile people able to engage deeply
in commerce. For this reason they were favoured by governments in most
of the large cities; but in the course of time they became objects of
universal hatred, because they exercised the most oppressive usury,
by lending at interest and on pledges. They were called _Longobardi_
or _Lombardi_, as whole nations are often named after a part of their
country, in the same manner as all the Helvetians are called Swiss,
and the Russians sometimes Moscovites. They were, however, called
frequently also Caorcini, Caturcini, Caursini, Cawarsini, Cawartini,
Bardi, and Amanati; names, which in all probability arose from some
of their greatest houses or banks. We know, at any rate, that about
those periods the family of the Corsini were in great consideration at
Florence. They had banks in the principal towns for lending money; they
demanded exorbitant interest; and they received pledges at a low value,
and retained them as their own property if not redeemed at the stated
time. They eluded the prohibition of the church against interest when
they found it necessary, by causing the interest to be previously paid
as a present or a premium; and it appears that some sovereigns borrowed
money from them on these conditions. In this manner did Edward III.
king of England, when travelling through France in the year 1329,
receive 5000 marks from the bank of the Bardi, and give then in return,
by way of acknowledgement, a bond for 7000[50]. When complaints against
the usurious practices of these Christian Jews became too loud to be
disregarded, they were threatened with expulsion from the country, and
those who had rendered themselves most obnoxious on that account, were
often banished, so that those who remained were obliged to conduct
themselves in their business with more prudence and moderation. It is
probable that the commerce of these countries was then in too infant a
state to dispense altogether with the assistance of these foreigners.
In this manner were they treated by Louis IX. in 1268, and likewise
by Philip the Bold; and sometimes the popes, who would not authorise
interest, lent their assistance by prohibitions, as was the case in
regard to Henry III. of England in 1240.
In the fourteenth century, the Lombards in the Netherlands paid to
government rent for the houses in which they carried on their money
transactions, and something besides for a permission. Of this we have
instances at Delft in 1313, and at Dordrecht in 1342[51]. As in the
course of time the original Lombards became extinct, these houses
were let, with the same permission, for the like employment[52]; but
governments at length fixed the rate of interest which they ought
to receive, and established regulations for them, by which usurious
practices were restrained. Of leases granted on such conditions, an
instance occurs at Delft in the year 1655. In 1578, William prince of
Orange recommended to the magistrates of Amsterdam Francis Masasia,
one of the Lombards, as they were then called, in order that he
might obtain for him permission to establish a lending-house[53], as
many obtained permission to keep billiard-tables, and Jews letters
of protection. In the year 1611, the proprietor of such a house at
Amsterdam, who during the latter part of his lease had gained by his
capital at least thirty-three and a half per cent., offered a very
large sum for a renewal of his permission; but in 1614, the city
resolved to take the lombard or lending-house into their own hands, or
to establish one of the same kind. However odious this plan might be,
a dispute arose respecting the legality of it, which Marets[54] and
Claude Saumaise endeavoured to support. The public lending-house or
lombard at Brussels was established in 1619; that at Antwerp in 1620,
and that at Ghent in 1622. All these were established by the archduke
Albert, when he entered on the governorship, with the advice of the
archbishop of Mechlin; and on this occasion the architect Wenceslaus
Coberger was employed, and appointed inspector-general of all the
lending-houses in the Spanish Netherlands[55]. Some Italians assert
that the Flemings were the first people who borrowed money on interest
for their lending-houses; and they tell us that this practice began in
the year 1619[56]. We are assured also, that after a long deliberation
at Brussels, it was at length resolved to receive money on interest at
the lending-houses. It however appears certain that in Italy this was
never done, or at least not till a late period, and that the capitals
of the lending-houses there were amassed without giving interest.
This beneficial institution was always opposed in France; chiefly
because the doctors of the Sorbonne could not divest themselves of the
prejudice against interest; and some in modern times who undertook
there to accommodate people with money on the like terms, were punished
by government[57]. A lending-house however was established at Paris
under Louis XIII., in 1626; but the managers next year were obliged to
abandon it[58]. In 1695, some persons formed a capital at Marseilles
for the purpose of establishing one there according to the plan of
those in Italy[59]. The present _mont de piété_ at Paris, which has
sometimes in its possession forty casks filled with gold watches
that have been pledged, was, by royal command, first established in
1777[60].
[The following is the rate of profit or interest which pawnbrokers in
this country are entitled to charge per calendar month. For 2_s._ 6_d._
one halfpenny; 5_s._ one penny; 7_s._ 6_d._ three halfpence; 10_s._
twopence; 12_s._ 6_d._ twopence halfpenny; 15_s._ threepence; 17_s._
6_d._ threepence halfpenny; £1 fourpence; and so on progressively and
in proportion for any sum not exceeding 40_s._ For every sum exceeding
40_s._ and not exceeding 42_s._ eightpence; and for every sum exceeding
42_s._ and not exceeding £10, threepence to every pound, and so on in
proportion for any fractional sum. Where any intermediate sum lent
on a pledge exceeds 2_s._ 6_d._ and does not exceed 40_s._, a sum
of fourpence may be charged in proportion to each £1. Goods pawned
are forfeited on the expiration of a year, exclusive of the date of
pawning. But it has been held that the property is not transferred,
but that the pawnbroker merely has a right to sell the article; and
consequently that, on a claim after this period, with tender of
principal and interest, the property must be restored if unsold (Walker
_v._ Smith, 5 _Barn._ and _Ald._ 439). Pledges must not be taken from
persons intoxicated or under twelve years of age. In Great Britain
pawnbrokers must take out a license, which costs £15 within the limits
of the old twopenny-post, and £7 10_s._ in other parts. No license
is required in Ireland. A second license, which costs £5 15_s._, is
required to take in pledge articles of gold and silver.
From 1833 to 1838 the number of pawnbrokers in the metropolitan
district increased from 368 to 386; in the rest of England and Wales,
from 1083 to 1194; and in Scotland, from 52 to 88; making a total of
1668 establishments, paying £15,419 for their licenses, besides the
licenses which many of them take out as dealers in gold and silver. The
business of a pawnbroker was not known in Glasgow until August 1806,
when an itinerant English pawnbroker commenced business in a single
room, but decamped at the end of six months; and his place was not
supplied until June 1813, when the first regular office was established
in the west of Scotland for receiving goods in pawn. Other individuals
soon entered the business, and the practice of pawning had become so
common, that in 1820, in a season of distress, 2043 heads of families
pawned 7380 articles, on which they raised £739 5_s._ 6_d._ Of these
heads of families 1375 had never applied for or received charity of
any description; 474 received occasional aid from the relief committee,
and 194 were paupers. The capital invested in this business in 1840
was about £26,000. Nine-tenths of the articles pledged are redeemed
within the legal period. There are no means of ascertaining the exact
number of pawnbrokers’ establishments in the large towns of England.
In 1831, the number of males above the age of twenty employed in those
at Manchester was 107; at Liverpool, 91; Birmingham, 54; Bristol, 33;
Sheffield, 31.
The following curious return was made by a large pawnbroking
establishment at Glasgow to Dr. Cleland, who read it before the British
Association in 1836. The list comprised the following articles:--539
men’s coats, 355 vests, 288 pairs of trowsers, 84 pairs of stockings,
1980 women’s gowns, 540 petticoats, 132 wrappers, 123 duffies, 90
pelisses, 240 silk handkerchiefs, 294 shirts and shifts, 60 hats, 84
bed-ticks, 108 pillows, 262 pairs of blankets, 300 pairs of sheets,
162 bed-covers, 36 tablecloths, 48 umbrellas, 102 _bibles_, 204
watches, 216 rings, and 48 _Waterloo medals_. There were about thirty
pawnbrokers in Glasgow in 1840. In the manufacturing districts, during
the prevalence of strikes, or in seasons of commercial embarrassment,
many hundreds of families pawn the greater part of their wearing
apparel and household furniture. The practice of having recourse to
the pawnbrokers on such occasions is quite of a different character
from the habits of dependence into which many of the working classes
suffer themselves to fall, and who, “on being paid their wages on the
Saturday, are in the habit of taking their holiday clothes out of
the hands of the pawnbroker to enable them to appear respectably on
the Sabbath, and on the Monday following they are again pawned and a
fresh loan obtained to meet the exigencies of their families for the
remainder of the week.” It is on these transactions and on such as
arise out of the desire of obtaining some momentary gratification that
the pawnbrokers make their large profits. It is stated in one of the
reports on the poor laws that a loan of threepence, if redeemed the
same day, pays annual interest at the rate of 5200 per cent.; weekly,
866 per cent.;
4_d._, annual interest 3900 per cent., or 650 p. c. weekly;
12_d._, annual interest 1300 per cent., or 216 p. c. weekly.
It is stated that on a capital of sixpence thus employed (in weekly
loans), pawnbrokers make in twelve months 2_s._ 2_d._; on five
shillings they gain 10_s._ 4_d._; on ten shillings, 22_s._ 3¼_d._; and
on twenty shillings lent in weekly loans of sixpence, they more than
double their capital in twenty-seven weeks, and should the goods pawned
remain in their hands for the term of twelve months (which seldom
occurs), they then frequently derive 100 per cent.[61]]