MONEY LENDING AND MONEY-LENDERS IN ENGLAND

M

DURING THE 16TH AND 17TH CENTURIES

ARTHUR B. STONEX

College Department, Charles Scribner's Sons

WONEY lending, for however reasonable a return, was of doubtful legality and of questionable morality in England

far into the 17th century, and money-lenders were regarded with suspicion or scorn or with bitter hatred. A knowledge of these facts is necessary for a full understanding of much of the economic and social history of the time and of a surprisingly large amount of the literature of every sort.

Much of the dislike or positive hatred of any gain for the lending of money, common apparently to all peoples and in all times, has been due to the fact that the borrower has characteristically been one in distress whose misfortune alone makes the profit of the lender possible. The money-lender thus seems to take an unfair advantage of one at his mercy. The lender seems also to contribute little if anything—such as strength or skill-for which he should be paid. Before the development of modern business practices, most loans were in all probability for "necessitous consumption"; and the loans probably did not often involve loss or even appreciable sacrifice to the lenders. We can understand and sympathize with the ancient and medieval hostility toward the lender's gain if we think of the present-day loan-shark and his victims, and of our attitude toward both.

To Christians, the usurer's gains were peculiarly hateful, for they were repugnant to the essential doctrine and spirit of the New Testament, and were apparently in clear violation of the many specific prohibitions of usury in any form or amount to be found throughout the Old Testament, such as Exodus, XXII, 25; Levit. XXV, 35, 36, 37; Deut. XXIV, 19, 20; Ezek. XVIII, 13, and XXII, 12; Psalm XVI, and Prov., XXVIII, 8.

These prohibitions, formulated in the laws of the Church during the Middle Ages, became part of the Civil Law in most of the

nations of Europe. English legislation against usury, by which was meant gain of any sort or amount for the use of money, is recorded as early as the reign of Alfred (2 Roll. Abr. 800), and there is record of repeated legislation of the kind from this date down to the period beginning with 1545.1

From "An Act Against Usury" of 1545 (37 Hen. VIII, c. 9) the illegality of at least a moderate rate of interest becomes less certain. This act seems almost certainly to have permitted ten per centum. Seven years later, however, Parliament repealed the Act of 1545, and expressly prohibited "anny manner of Usurie encreace lucre gayne or interest to be had recevyed or hoped for." (Statutes of the Realm, Vol. IV, pt. I, p. 155). This Act was in turn repealed in 1571 by an act called "An Acte agaynst Usurie" (13 Eliz. c. 8) which nevertheless may have sanctioned ten per centum. There has been much dispute as to the exact meaning of this law; the present writer believes it is a characteristic bit of English compromise that really permitted ten per centum by prohibiting it with penalties so slight as to form no deterrent. Much heavier penalties were imposed against higher rates. This interpretation of the Act is in line with the interesting and often amusing debate that preceded its passage in the House of Commons.2

The Statute of 1623-1624 (21 Jac. I, c. 17), although also entitled "An Acte agaynst Usury," unquestionably did legalize eight per centum, but cautiously provided that "no Words in this Law contayned shalbe construed to allow the practice of Usurie in point of Religion and Conscience."

Whatever the precise legal status of interest throughout the eighty years from 1545 to 1624, there is no question as to the ecclesiastical and popular disapproval of it; and there is also no

1

1See Georg Schanz, Englische Handelspolitik, I, 547-564; W. J. Ashley, An Introduction to English Economic History and Theory, I, 159 et seq. See also Statutes of the Realm, 15 Edw. III, St. I., c. 5; 3 Hen. VII, c. 6 (7); and 11 Hen. VII, c. 6 and 8.

'The Journals of all the Parliaments During the Reign of Queen Elizabeth. Simonds D'Ewes, London edition of 1682, p. 171 et seq. See particularly the speeches by Mr. Bell and Sergeant Lovelace. The above interpretation of the statute is given by several contemporary writers but, among later commentators, only by Mark Ord in An Essay on the Law of Usury, Third Ed., London, 1808, p. 36 and pp. 149-150. Confusion regarding the meaning of the law has been due in part to the persistence of later scholars in ignoring or actually deleting one or more "nots" in the original act. See, for example, Plowden on Usury, p. 137, footnote, and Ashley, ut supra, II, 488, note 268.

question as to the persistence of the practice at both moderate and extortionate rates, and of an increasing number and variety of practitioners. We know most about the least worthy of these, and least about those who in popular esteem and economic function and importance corresponded to and prepared the way for the bankers of today. In fact, the early history of what we would call banking, in England, is not at all clear.

Cunningham is not willing to accept the origin of deposit banking which is given by the writer of a curious old tract, The Mystery of the New Fashioned Goldsmiths or Bankers, etc., who declared, in 1676, that "almost Thirty years since" the goldsmiths had begun the practice of accepting deposits and, later, paying interest on them and lending money to merchants and others at higher rates.1 Cunningham believes there must have been some such banking system earlier, but he gives no earlier example.2

The article on Banks and Banking in the Eleventh edition of the Encyclopædia Britannica says that goldsmiths "took deposits from the time of James I onwards, and thus established deposit banking as early as that reign." However, the pamphlet just referred to seems to be the only authority for the statement, and that pamphlet definitely sets the date at about 1646. It seems doubtful, indeed, if any such institution as the banks of Venice and Antwerp existed before the founding of the Bank of England in 1694. Bacon in his essay Of Usury, which first appeared in 1625, recommends that "there be certain persons licensed to lend to known merchants upon usury ... (but) Let it be no bank or common stock . . .; not that I altogether mislike banks, but they will hardly be brooked, in regard to certain suspicions." John Benbrigge's Usura Accomodata, or A Ready Way to Rectifie Usury of 1646, would seem to make equally clear that no bank existed in England at least as late as that date, for Benbrigge's tract is itself a proposal for a banking system, a "bank of piety" for the poor, and a "bank of trade."

Nevertheless, there is clear evidence that an approximation of our banking system existed in England long before 1646. There are apparently clear references to a "bank" as early as 1604 and 1605. Middleton in his Blacke Booke of 1604, says, of a "usurer," "his only

J. B. Martin, The Grasshopper in Lombard Street, London, 1892, reprint, pp. 285-392.

'William Cunningham, The Growth of English Industry and Commerce, 3rd ed., II, 142.

recreation was but to hop about the Bourse before twelve to hear what news from the Bank." The reference here seems to be to some institution closely analogous to our banks and certainly to some London institution. Just what is referred to, however, is not clear. The phrase "in bank" referring apparently to a practice of depositing money and receiving interest for it, occurs still earlier. Edward Hake, who published a second edition of his Newes out of Paules Churchyarde in 1579, and who says that edition contained no "other whole Satyr" not found in the edition of 1567, though it contained enlargements "here and there . . . in many places," declares that wealthy "country Gentlemen" by racking rents and letting out their lands raised large "sumes of coine":

The Civilian declares in Wilson's Discourse that "bishops and priestes" put "their owne money secretly in bank, for the same gayn," i.e. usury. The reference here may, of course, be to a continental practice; earlier Wilson speaks of the custom of lending gold

1 Middleton's Works, ed. Bullen, VIII, 28-29.

'Bishop Hall in the fifth of his Byting Satires, which appeared first in 1599, says of the heir of a usurer:

"... he the bankes hath broke

And needs mote now some further playne o'erlooke."

(Page 83 of his Satires and Other Poems, edited by P. H., 1838, London.) Here, however, the reference may be to the gambling term. (See the New Eng. Dictionary.)

Volpone in Jonson's play of that name, first performed in 1605, or 1606,

says:

"I turn no monies in the public bank,

No usure private." (Act I, sc. I, lines 38, 39)

But here the reference is pretty certainly to the Venetian institution, for the play is laid in Venice. Other early uses of the word may be found in the New English Dictionary.

Sixth page of the syxt Satyr. The Isham reprints, No. 2, edited by Charles Edmonds, London, 1872. For an account of the earlier edition see page xvii of the Introduction, and Hake's "To the gentle Reader."

A Discourse uppon usurye, by way of Dialogue and oracions, etc., written by Dr. Thomas Wilson in 1569 (published 1572), fol. 163 verso.