The part played by authority in all this is obvious. There were the texts in Exodus and Leviticus; there was Luke 4:35—apparently a mistranslation; there was a passage in the Politics, which some now say was mistranslated also.61 But practical considerations contributed more to the doctrine than is sometimes supposed. Its character had been given it in an age in which most loans were not part of a credit system, but an exceptional expedient, and in which it could be said that “he who borrows is always under stress of necessity.” If usury were general, it was argued, “men would not give thought to the cultivation of their land, except when they could do nought else, and so there would be so great a famine that all the poor would die of hunger; for even if they could get land to cultivate, they would not be able to get the beasts and implements for cultivating it, since the poor themselves would not have them, and the rich, for the sake both of profit and of security, would put their money into usury rather than into smaller and more risky investments.”62 The man who used these arguments was not an academic dreamer. He was Innocent IV, a consummate man of business, a believer, even to excess, in Realpolitik, and one of the ablest statesmen of his day.
No man, again, may charge money for a loan. He may, of course, take the profits of partnership, provided that he takes the partner’s risks. He may buy a rent-charge; for the fruits of the earth are produced by nature, not wrung from man. He may demand compensation—interesse—if he is not repaid the principal at the time stipulated. He may ask payment corresponding to any loss he incurs or gain he foregoes. He may purchase an annuity, for the payment is contingent and speculative, not certain. It is no usury when John Deveneys, who has borrowed £19 16s., binds himself to pay a penalty of £40 in the event of failure to restore the principal, for this is compensation for damages incurred; or when Geoffrey de Eston grants William de Burwode three marks of silver in return for an annual rent of six shillings, for this is the purchase of a rent-charge, not a loan; or when James le Reve of London advances £100 to Robert de Bree of Dublin, merchant, with which to trade for two years in Ireland, for this is a partnership; or when the priory of Worcester sells annuities for a capital sum paid down.57 What remained to the end unlawful was that which appears in modern economic textbooks as “pure interest”—interest as a fixed payment stipulated in advance for a loan of money or wares without risk to the lender. “Usura est ex mutuo lucrum pacto debitum vel exactum … quidquid sorti accedit, subaudi per pactum vel exactionem, usura est, quodcunque nomen sibi imponat.”58 The emphasis was on pactum. The essence of usury was that it was certain, and that, whether the borrower gained or lost, the usurer took his pound of flesh. Medieval opinion, which has no objection to rent or profits, provided that they are reasonable—for is not everyone in a small way a profit-maker?—has no mercy for the debenture-holder. His crime is that he takes a payment for money which is fixed and certain, and such a payment is usury.
True, the Church could not dispense with commercial wickedness in high places. It was too convenient. The distinction between pawnbroking, which is disreputable, and high finance, which is eminently honorable, was as familiar in the Age of Faith as in the twentieth century; and no reasonable judgment of the medieval denunciation of usury is possible, unless it is remembered that whole ranges of financial business escaped from it almost altogether. It was rarely applied to the large-scale transactions of kings, feudal magnates, bishops and abbots. Their subjects, squeezed to pay a foreign moneylender, might grumble or rebel, but, if an Edward III or a Count of Champagne was in the hands of financiers, who could bring either debtor or creditor to book? It was even more rarely applied to the Papacy itself; Popes regularly employed the international banking-houses of the day, with a singular indifference, as was frequently complained, to the morality of their business methods, took them under their special protection, and sometimes enforced the payment of debts by the threat of excommunication. As a rule, in spite of some qualms, the international money-market escaped from it; in the fourteenth century Italy was full of banking-houses doing foreign exchange business in every commercial center from Constantinople to London, and in the great fairs, such as those of Champagne, a special period was regularly set aside for the negotiation of loans and the settlement of debts.63
It was not that transactions of this type were expressly excepted; on the contrary, each of them from time to time evoked the protests of moralists. Nor was it mere hypocrisy which caused the traditional doctrine to be repeated by writers who were perfectly well aware that neither commerce nor government could be carried on without credit. It was that the whole body of intellectual assumptions and practical interests, on which the prohibition of usury was based, had reference to
