Interest (usury)

Lending and Pawnbroking

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,mensariinummulariicollybistæ 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 farinæcarniumvini, &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. 3¼d.; 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 ]

Footnotes

2  J. D. Michaelis, in Syntagma Commentationum, ii. p. 9; and his Mosaisches Recht. iii. p. 86.

3  Sueton. Vita Augusti, cap. 41.

4  Taciti Annal. vi. 17.—Sueton. Vita Tiberii, cap. 48.—Dio Cassius, lviii. 21.

5  Ælius Lamprid. Vita Alex. Severi, cap. 21.

6  M. Manni circa i sigilli antichi dei secoli bassi, vol. xxvii. p. 86. The author here quotes from an ancient city-book the following passage:—“Franciscus fenerator pro se et apotheca seu casana fenoris, quam tenebat in via Quattro Pagoni,” &c.

7  Algemeine Welthistorie, xlv. p. 10.

8  This theologian, born at Eperies in Hungary in 1625, was driven from his native country on account of his religion, and died superintendant at Meisse in 1689. He wrote, besides other works, Dorothei Asciani Montes Pietatis Romanenses, historice, canonice, et theologice detecti. Lipsiæ, 1670, 4to. This book is at present very scarce. I shall take this opportunity of mentioning also the following, because many who have written on lending-houses have quoted it, though they never saw it:—Montes Pietatis Romanenses, das ist, die Berg der Fromheit oder Gottesforcht in der Stadt Rom. Durch Elychnium Gottlieb. Strasburg, 1608, 8vo. It contains nothing of importance that may not be found in Ascianus.

9  Of this Barnabas I know nothing more than what I have here extracted from Waddingii Annales Minorum, tom. xiv. p. 93. Wadding refers to Marian. lib. v. c. 40. § 17; and Marc. 3. p. lib. 5. cap. 58. The former is Marianus Florentinus, whose Fasciculus Chronicoram Ordinis Minorum, which consists of five books, was used in manuscript by Wadding, in composing his large work, and in my opinion has never been printed. Marc. is Marcus Ulyssoponensis, whose Chronica Ordinis Minorum I have not been able to procure, though it is translated into several languages. See Waddingii Scriptores Ordinis Minorum. Romæ 1650, fol. pp. 248, 249.

10  This is confirmed by M. B. Salon, in t. 2. Contr. de Justit. et Jure, in ii. 2 Thom. Aquin. qu. 88. art. 2. controv. 27: “Hujus modi mons non erat in usu apud antiquos. Cœpit fere a 150 annis, tempore Pii II.” In C. L. Richard's Analysis Conciliorum Generalium et Particularium, Venetiis, 1776, 4 vol. fol. iv. p. 98, I find that the first lending-house at Perugia was established in the year 1450; but Pius II., under whose pontificate it appears by various testimonies to have been founded, was not chosen pope till the year 1458.

11  Bussi, Istoria della città di Viterbo. In Roma, 1742, fol. p. 271.

12  It may be found in Bolle et Privilegi del Sacro Monte della Pietà di Roma. In Roma, 1618: ristampati l'anno 1658. This collection is commonly bound up with the following work, which was printed in the same year and again reprinted: Statuti del Sacro Monte della Pietà di Roma. This bull is inserted entire by Ascianus, p. 719, but in the Collection of the pontifical bulls it is omitted.

13  This Michael travelled and preached much in company with Bernardinus, and died at Como in 1485.—Wadding, xiv. p. 396.

14  The Piccolimini, nephews of the pope, having once paid their respects to him at Siena, he told them he was their namesake.—Wadding, xiv. p. 447.

15  Waddingii Scriptores Ordinis Minorum, p. 58. Fabricii Biblioth. Mediæ et Infimæ Æt. i. p. 586.

16  Wadding, xiv. pp. 398, 433.

17  It may be found entire in Wadding, xiv. p. 411. It was ordered that the pledges should be worth double the sum lent, and that they should be sold if not redeemed within a year.

18  Wadding, xiv. p. 446.

19  D. Manni circa i Sigilli Antichi, tom. xxvii. p. 92, where much information respecting this subject may be found.

20  Wadding, xiv. p. 451.

21  Ibid. pp. 462, 465.

22  Ibid. xiv. pp. 480, 481.

23  Ibid. p. 517.

24  Ibid. xiv. pp. 93, 482.

25  Ibid. p. 514.

26  Ibid. xv. pp. 6, 65.

27  Wadding, xv. pp. 7, 9, 12.

28  Ibid. xv. pp. 37, 45, 46.

29  Ibid. xv. 67.

30  Ibid. xv. p. 68. Bernardinus considered the giving of wages as a necessary evil.

31  Della Zecca di Gubbio, e delle Geste de' Conti e Duchi di Urbino; opera di Rinaldo Reposati. Bologna, 1772, 4to.

32  It is to be found in the well-known large collection of juridical writings quoted commonly under the title Tractatus Tractatuum. Venetiis, 1584, fol. p. 419, vol. vi. part 1. It has also been printed separately.

33  His works were printed together, in folio, at Brescia in 1588.

34  The work of the former appeared in 1496. The writings of both are printed in the work of Ascianus, or Zimmermann, which has been often quoted already.

35  This bull, which forms an epoch in the history of lending-houses, may be found in S. Lateranen. Concilium Novissimum. Romæ, 1521, fol. This scarce work, which I have now before me, is inserted entire in Harduini Acta Conciliorum, tom. ix. Parisiis, 1714, fol. The bull may be found p. 1773. It may be found also in Bullarium Magnum Cherubini, i. p. 560; Waddingii Annal. Minor. xv. p. 470; Ascianus, p. 738; and Beyerlinck's Theatrum Vitæ Hum. v. p. 603.

36  This is the conclusion formed by Richard, in Analysis Conciliorum, because in sess. 22, cap. 8, lending-houses are reckoned among the pia loca, and the inspection of them assigned to the bishops.

37  Waddingii Annal. Minor. xv. p. 471.

38  Ibid. xvi. p. 444; Ascianus, p. 766.

39  (Summonte) Historia de Napoli, 1749, 4to, vol. iv. p. 179.—Giannone, vol. iv.—De' Banchi di Napoli, da Michele Rocco. Neap. 1785, 3 vols. 8vo, i. p. 151.

40  Vettor Sandi, in Principi di Storia civile della Republica di Venezia. In Venezia 1771, 4to, vol. ii. p. 436. The author treats expressly of the institution of this bank, but the year when it commenced is not mentioned.

41  Waddingii Annal. Minor. xv. p. 67.

42  Hymnus ii. honorem Laurentii. The poet relates, that in the third century the pagan governor of the city demanded the church treasure from Laurentius the deacon.

43  This passage, with which Senkenberg was not acquainted, may be found in Tertullian's Apolog. cap. 39, edition of De la Cerda, p. 187.

44  This word however is not to be found in the Glossarium Manuale.

45  See the bull in Bullarium Magnum, n. 17.

46  See Petr. Gregorius Tholosanus de Republica. Francof. 1609, 4to, lib. xiii. c. 16, p. 566; and Ascianus, p. 753.

47  Geschichte des Teutschen Handels, ii. p. 454.

48  Gokink's Journal für Teutschland, 1784, i. p. 504, where may be found the first and the newest regulations respecting the lending-house at Nuremberg.

49  Stettens Geschichte der Stadt Augsburg. Frankf. 1742, 2 vols. 4to, i. p. 720, 789, 833.

50  Fœdera, vol. iv. p. 387.

51  Beschryving der Stadt Delft. 1729, fol. p. 553.

52  Salmasius de Fœnore trapezitico. Lugd. 1640, 8vo, p. 744.

53  De Koophandel van Amsterdam. Rott. 1780, 8vo, i. p. 221.

54  S. de Marets Diss. de trapezitis.

55  Beyerlinck, Magnum Theatrum Vitæ, tom. v. p. 602.

56  Richard, Analysis Concilior. iv. p. 98.

57  Turgot, Mem. sur le prêt à intérest, &c. Par. 1789, 8vo.

58  Sauval, Hist. de la Ville de Paris.

59  Rufel, Hist. de la Ville de Marseille; 1696. fol. ii. p. 99.

60  Tableau de Paris. Hamb. 1781. 8vo, i. p. 78.

61  Waterston's Cyclopædia of Commerce.