Money Lending in the Middle Ages

Or You Think Your Visa Card's Rates Are Bad?

by Katherine Ashe

Matthew 25:26-27: “His lord answered and said unto him, ‘Thou wicked, slothful servant,thou knewest that I reap where I sowed not, and gather where I have not strawed: Thou oughtest therefore to have put my money to the exchangers and then at my coming I should have received mine own with usury.’”

That is the Parable of the Talents, Jesus’s teaching regarding money lending. Granted he was using this story as a parallel of what he expected of his followers in terms of making things of the spirit known and not hiding them. But he hardly would have used the example of usury if he opposed it – though he didn’t think it a proper activity in the Temple itself, obviously.

There is an impression abroad that money lending was forbidden to Christians during medieval times. It certainly was not. In fact the principal bankers to the lordly class were the knightly Orders, the Hospitallers and the Templars, and the Church itself was not above acting as collection agent for even the worst of usurers.

Regarding the knightly Orders, this business of theirs came about naturally in the course of their leadership in crusades to the Holy Land. A lord, leaving home for a venture to the Middle East that would last several years in all likelihood, needed to be able to draw funds in Palestine. Secured by his rents back home, he took a loan, payable at the Templars’ or the Hospitallers’ headquarters at Acre. The loan entailed interest, for the knightly bankers took risks: would or could the properties entailed actually be able to repay the debt? Like any anxious banker, the knights charged what interest the business could support, sometimes 20% to 30% per annum.

The lord, upon signing for the loan before leaving home, received a written receipt cashable for silver or gold coin at Acre. This was not the beginning of notations of debt standing in the place of actual money. For that one must look back to ancient Egypt and temple credits and debits for the faithfuls’ contributions to Ra, or taxes owed and paid to pharaoh. (See David Graeber’s “Debt, The First 5000 Years” for an intriguing summary of the subject by an instigator of “Shut Down Wall Street.”) http://www.amazon.com/Debt-The-First-000-Years/dp/1933633867/ref=sr_1_1?ie=UTF8&qid=1338844580&sr=8-1

Apart from the Templars and Hospitallers, one could, in the 13th century, take a loan from the bankers in the French city of Cahors. Let’s have a look at one such debt.

In the year 1232 Ranulf the Earl of Chester died, leaving a note for a debt of 200 marks, owed him by his young cousin Simon de Montfort. The note went as payment of a debt Ranulf owed to Piers Mauclerc, the Count of Brittany, and Piers sold the debt for quick cash to a money lender of Cahors – though the interest rate with this banker was 60% per annum.

The Cahorsine banker did nothing to inform Montfort of his receipt of the debt and application of the 60% interest rate to it, but let it accumulate that monstrous interest for five years, at which point the debt amounted to 2,080 marks. Even then he did nothing to collect but instead, at considerable profit to himself, sold the interest-heavy debt to the Bishop of Soisson – and left him to collect the full amount.

The Bishop wrote to Montfort, informing him of the debt and demanding payment of 2,080 marks. Montfort, under the impression that this interest rate was ludicrous – and that Ranulf had leant him money interest free in the first place (he had already repaid most of what his cousin had leant) – refused to pay anything more than the originally owed 200 marks. At which the Bishop of Soisson excommunicated this debtor. An excommunicated person was cast out of the company of fellow Christians and bound over to hell.

Now that is debt-collection clout. The antidote was to go on crusade, which Montfort did. And that not only lifted excommunications but cleared all debts as well.

Christians certainly weren’t forbidden the practice of usury – even fairly outrageous usury. Still it’s commonly thought that because of the Christian ban on money lending, Jews were forced to turn exclusively to that corner of trade.

Jews were banned from most other businesses. They could not buy land and thus take part in
the largest money-making activities of the time, the raising of sheep, grain and horses -- the remunerative underpinnings of noble and peasant economies. Nor could Jews take part in the manufacturing crafts as these were controlled by guilds, and each guild was devoted to the service of its patron saint. Jews were certainly excluded there. So, barred from most means of livelihood, Jews made careers in the exchange and lending of money. And they charged interest.

However, the Jews were not so selective of their clientele as were the knightly orders, nor nearly as grindingly usurious as the Cahorsines. They did business with anyone who seemed a likely prospect for return of capital and some reasonable interest. And sometimes they did business under compulsion, knowing they would never get their money back – as when the leant to King Edward I who, final realizing he could wring no more money out of the Jews, expelled them from England. It was the handy ultimate way to cancel his debts.

He was not the first to use this tactic. Ransacking of the Jews’ street – which of course offered a good possibility of destroying their fiscal records – was practiced by the Londoners repeatedly, most notably when they burnt the whole street to cinders in 1264.

Montfort had expelled the Jews from Leicester in 1231, and promised the people of Leicester
in 1255 that he would not permit them to return. Since, in 1231, Montfort was not yet Earl of Leicester, had no henchmen and very little money (and was probably in debt to the Jews himself, having belatedly received the loan from Cousin Ranulf), it is very unlikely that he accomplished this expulsion solely with his own powers. It would appear that the force provided was the people of Leicester themselves, and the motivation not a sudden religious passion but the usual, practical settling up of debts by causing the debt-holders to flee for their lives.

That Jews did survive, and even prospered, under such living and working conditions as
these in England during the Middle Ages is cause for awe, and deep respect for their business capabilities.

For the Montfort/Cahor debt see Bemont, Simon de Montfort, 1930, p. 60; Shirely, Royal Letters, Vol. II, p.16; Calendar of Patent Rolls,1232-47, p. 185; and (me) Ashe, Montfort the Early Years, p. 120 and note, p. 307.


Montfort: The Early Years, 1229 - 1243

Montfort: The Angel With the Sword

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