Medieval Money Lenders
At first, the bankers were motivated by profit, but soon they needed to keep lending money to ensure they didn’t lose what they had already invested. The two largest bankers, the Peruzzi and the Bardi, collapsed in the 1340s, and most historians believe that Edward III’s nonpayment of colossal loans. As the plague finally wound down in 1350, so did the violence against the Jews. Ordinary Medieval folks had already hated the wealthy Jewish money lenders; and resented their influence over the governing cliques of the various city-states of Europe. The indebted artisans felt exploited by being trapped into loans.
Modern banking has its auspicious beginnings in the early to mid Middle Ages. Primitive banking transactions existed before, but until the economic revival of the thirteenth century they were limited in scope and occurrence. By the dawn of the twelfth and thirteenth centuries, bankers were grouped into three distinct categories: the pawnbrokers, the moneychangers, and the merchant bankers. But with these economic specializations came religious denunciation and backlash. However, these bankers persevered and a new industry was born.
After the collapse of the Roman Empire in the late fifth century, there followed centuries of deep economic depression, sharp deflation of prices and sluggish monetary circulation. By the end of the thirteenth century, with its economic resurgence, three classes of credit agents became distinguishable: the pawnbroker, the moneychangers and deposit bankers, and the merchant bankers. The latter were the new elite of the profession, unprecedented in antiquity and in the early Middle Ages. Wealthy commercial entrepreneurs, uncrowned governors of city-states, lenders to monarchs, relatives of popes, they were in no way embarrassed by canonical strictures. At the opposite level of the profession, the pawnbrokers were degraded successors of the early medieval usurers. They were deliberate public sinners, likened to prostitutes, and hence tolerated on earth but earmarked for hell unless they repented and made full restitution of their 'accursed' gains. At the midpoint, the moneychangers and deposit bankers splintered away and formed the core of the profession. They owed their respectability to manual changing, which did not involve credit. They converted one currency into another, and for that service they charged a legitimate fee. No doubt it was an open secret that in long distance exchange, entailing a delay for transportation, a premium would be worked in by doctoring up the rate of conversion; it was equally obvious that the changers' stock in trade would be largely borrowed and lent at interest rates not openly declared. But these lapses were not public sins, and most changers lightened their guilt by including in their will a token bequest to a charity as restitution for any money gotten sacrilegiously.
A great number of medieval banking activities and their centers of operations were established in Italy. Florence, Genoa, Lucca, Venice, and Rome were some of the city-states that gave birth to these banking activities. Even thought Genoa did not become a banking leader per se in the medieval centuries, it happens to preserve the earliest notary minute books that have survived, and these books contain a fairly large number of documents showing bankers at work. Nearly all their entries involved credit transactions, but only a minority were drafted by or for bankers, who recorded routine operations in their own books and resorted to notaries only for special contracts.
It appears from the notary minutes and official records that the tenants of a banca (a bench set up in a public place for the purpose of exchanging currency) were responsible to the Genoese government for converting domestic and foreign currencies into one another as the market required, searching for forged or forbidden coins, and generally watching over the circulation. The government soon required them to keep their cash and records available for inspection, and to obtain guarantors who would be answerable for their outstanding debts up to a certain amount. In return for these restrictions, the government backed the bankers' credibility: it recognized entries in their books as legal proof of transactions carried out through them. Somewhat later, it ordered guardians of minors to deposit the wards money in a bank.
Some citizens found it convenient to deposit some of their money in a bank account and receive a moderate interest (often camouflaged as an optional bonus) while using the account for receiving and making payments by written transfer in the banker's book. A reliable depositor was often allowed to overdraw his account within certain limits. The banker, in turn, was entitled to invest in his own trade the deposits of his clients. A merchant created feedback credit by charging a banker (or, another merchant) with supplying foreign exchange in a foreign place, while agreeing overtly or covertly that he would waive repayment abroad in order to receive postponed payment in the currency and place of origin.
Records have survived about a merchant Genoese company involved in banking from 1244 to 1259: the Leccacorvo company. From its records, a picture of a typical merchant-banking organization can be studied. The organization was loose, almost rudimentary, but its business was not. The basic activities of the Leccacorvo company were in the field of exchange and deposit banking. Long distance contracts of exchange are the most frequent items in the series of notary minutes concerning that company. Transfer entries in the bankbooks, mostly overdrafts, are mentioned almost as often. Notary contracts were usually instruments of credit for people of means. The Leccacorvo bank did most of its business with established merchants, bankers, and government officials, including the communes of Genoa and Piacenza, the king of France and the Pope.
The notary minutes also show that the bank was steadily expanding its investments in the direction of trade. Other known investments were: fine French cloth, oriental silk, spices, furs, cotton goods, wool for the growing local industry, salt for universal consumption- all these through the usual commercial contracts of sea loan or commenda. (1)
Another Italian city conducted banking in a similar, but distinctive manner. The Tuscan city of Lucca, although overshadowed by her neighbor Florence in the later Middle Ages, was in the thirteenth century the chief center of the silk industry and the hub of a network of mercantile banking partnerships which by 1300 extended to every major European financial and commercial center. Locally, her moneychangers, at first catering primarily to foreign visitors, had moved beyond manual exchange and dealings in bullion into the area of deposit and transfer banking.
In thirteenth century Lucca, two groups of professional bankers can be distinguished. The first, the moneychangers, had already flourished for a long time. The second, merchants engaged in long-range commerce were perfecting the financial techniques and business organization upon which thirteenth century international commerce and finance were to rest. Although the process was by no means complete, the moneychangers were evolving into deposit and transfer bankers at the same time the international merchants increasingly generated commercial credit by routine dealings in foreign exchange.
The art of money changing was an esteemed one in Lucca. In 1111 the oath required of all money changers or spice dealers wishing to set up shop in the cathedral square was inscribed upon the facade of the cathedral of San Martino, where it can still be seen today. The oath, in which the changers and dealers in spices swore to commit 'no theft, nor trick nor falsification', was also visible to their customers, who crowded the cathedral square to change money or to buy exotic herbs and medicines at the portable tables and stalls set up there. Although manual exchange continued as an essential service of the moneychangers, by the thirteenth century they were adding other functions to their repertory.
The cathedral square remained the center of the changers activities throughout the Middle Ages. Outdoor business activities were conducted from a seat behind a portable table, tavola, probably covered by a canopy. The ground upon which the table stood was either owned or leased by the changer. Much of the changers business was conducted from shops ranged in houses fronting the Court of San Martino.
While the organization of the moneychangers business seems family oriented, individual changers occasionally pooled their resources in partnerships. Such enterprises were small, characteristically involving two or perhaps three changers. The term of individual partnership arrangements was usually short, three months to a year. But once two changers came together they tended to remain as such for a considerable time by successively drawing up new partnership arrangements.
Occasionally however, almost all money changers and merchant bankers had to cross the path of the major social consciousness of the Middle Ages, the church and its condemnation of interest gained from loans, referred to as 'usury'.
The church's condemnation of usury did not stop usurers from existing or practicing their trade. From at least the beginning of the thirteenth century, theologians and canonists distinguished usury or profit on a loan, mutuum, from such everyday transactions as contracts of association, societas; of location, locatio; and of sale, emptio. Nor did the growth of modern business methods arise from the drive to circumvent the condemnation of usury. Even when the prohibition of usury did not affect commercial practice, it did affect the spiritual state of the businessman. From the thirteenth to the fifteenth century there was a separation between the usurer-pawnbroker and the merchant banker. Nevertheless, it took a long time to distinguish between the merchant and the usurer; and with good reason, if the merchant practiced methods tolerated by the church, he usually practiced others which it branded and condemned as usury.
The documentary evidence supporting the church's stand against usury can be found in the course of the long but divided thirteenth century (ca. 1180 to ca. 1280), when the monetary economy was undergoing its great expansion. The eternal and terrestrial fate of the usurer was decided by the condemnations of the general councils: Lateran III in 1179, Lyon II in l274, and Vienna in 1311.
The Second Lateran Council (1139) had condemned usury as 'ignominious.' Lateran III went further: canon 25, quia in omnibus, erected three capital decisions: (1) excommunication for open usurers, the church's categorization of the usurer during this period, thus excluding him from the Christian community; (2) refusal of inhumation in Christian ground; and (3) interdiction of usurers' offerings- thus excluding them from the essential practice of medieval public beneficence.
In 1214, the canon Usurarum of Lyon II- extended the preceded condemnations to foreign usurers such as the Sienese and Florentines in England, and those called pretatores in Italy, cahorsini in France, and renovatores in Provence.
The isolation of the usurers was completed by canon 15 of the Council of Vienna (131l}, which extended excommunication to those who authorized usury or protected usurers: legislators authorizing a minimum usury rate and public authorities who utilized it, princes and public powers protecting usurers, and confessors giving absolution to unrepentant usurers.
These religious proscriptions made the outlook of the usurers very bleak. Against him aligned one ideological concern of the moment: work. Work was emerging from a long malediction inherited by archaic societies and sanctioned by Genesis, where work was man's punishment for original Sin. Around the middle of the twelfth century, work became a positive virtue and a touchstone of the socio-religious value system. Everyone doing work expected to be justly compensated, to receive a profit for performing a duty. However, the usurer is the merchant banker who receives the most shameful profits of all, since lending at interest brings him money without his having worked. The usurer wants to make a profit without any work at all and even while sleeping, which is against the teaching of the church: 'You will earn your bread by the sweat of your brow.' The usurer found himself, in time, linked to the worst 'evildoers', the worst occupations, the worst sins, and the worst vices; for he was an evildoer of the highest degree, a pillager and robber. Secular law did not punish usurers by hanging them, as it did highwayman and robbers of common law, because usurers did not disturb the public order and sometimes were even useful to the public: but the church pursued them like all robbers because they lived off their usury.
The second degrading occupation often mentioned in relation to usury was prostitution. The open usurer, like the prostitute, practiced a public occupation that was both well known and shameful. Still, with prostitutes there were extenuating circumstances; they work even if their work is humiliating, and also, ownership of the money actually passed from the client to the prostitute, and this is not the case with the usurer's loan to the debtor.
If while living, the usurers' ordeal was intense, death was not going to bring him peace. Because his fate is to die impenitent, his is the atrocious death of the great sinners before who awaits hell. Then comes the problem of the burial place. The interment of the usurer is tragic. Normally he is refused a Christian grave, in compliance with the prescriptions of the third Lateran Council. But if by error or ignorance there are churchmen who give him a Christian funeral, either his interment is disturbed by 'diabolic incidents', or it is said that only a simulacrum of the corpse which is interred, the true burial place of the usurer being hell.
In terms of eternal salvation, which was the essential concern for the great majority of people in the thirteenth century (including usurers), the situation was dramatic. The choice was not just between heaven (unthinkable for the majority of usurers) and hell. A third path to eternity opened up at the end of the twelfth century: purgatory, excised from hell to become an antechamber of heaven.
Only a belief in purgatory and the practices to which it gave rise could permit the exigencies of religion to be thus adopted, by the devices of reparation and the reduction of suffering, to the complexities of a new reality. Certainly not everything was won for the usurer at the beginning of the thirteenth century. In the Divine Comedy there are no usurers in purgatory: they are all in hell, at the end of the seventh circle in the rain of fire. They are all portrayed as sad people, each with a purse hanging perpetually from their neck. But with the beginning of the thirteenth century new ideological possibilities emerged and with the birth of purgatory, the dawn of banking begins.
Notes:
(1) Commenda (recommendation), a one time loan issued by the lender to a traveling faction. All the risks involving the capital were carried by the lender and no claims could be filed against him by third parties coming in contact with the borrower. The lender took a hefty share of the profits (usually three quarters) with the remaining going to the borrower.
Sources:
Ashley, William J. An Introduction to English Economic History and Theory. London 1888.
Baldwin, John w. Masters, Princes; and Merchants: the Social Views of Peter the Chanter and His Circle. Princeton, 1970.
DeRoover, Raymond. Cambridge Economic History of Europe 3. Cambridge, 1963.
Fichtenau, Heinrich. The Carolingian Empire, trans. Peter Munz. Oxford, 1957.
Lopez, Robert S. Middle Ages. The Commercial Revolution of the Middle Ages. Englewood Cliffs, NJ. 1971.
1-10-2008 by John Ingram
Roberto Naranjo makes the claim that purgatory is a theological innovation that made possible the rise of modern banking ('But with the beginning of the thirteenth new ideological possibilities emerged and with the birth of purgatory, the dawn of banking begins.') This is utter nonsense, though this mistake is even repeated by William Greider in his book 'Secrets of the Temple' (on the Federal Reserve System). Purgatory is not an innovation that appeared during the Middle Ages, it is a foundational teaching of the Church. Please consult the article on Purgatory in the Catholic Encyclopedia, http://www.newadvent.org/cathen/12575a.htm Thank you very much.
Themes
Before the Conquest
There is no real evidence of Jews settling England before the 1070s - the Doomsday book recorded a Manasser settled in rural Oxfordshire - however it is believed that this was only an incidence of a gentile with an unusual (for a gentile) Old Testament name.
The Tsarfat Jewish Community
We do know that Jews from Rouen arrived at the invitation, if not the command, of William the Conqueror, to introduce an established network of credit and trading links between his new English lands and his French ones. The English and Northern French Jewish communities would remain connected by family ties, literature and rabbinical exchange throughout the period of English medieval Jewish settlement.
Royal WardsJews, as the only outsiders in an otherwise homogeneous Christian society, were wards of the king. This meant that Jews came under
the direct jurisdiction and protection of the crown, a status which allowed them, for example, freedom of the king's highways, exemption from tolls, the ability to hold land directly from the king, and physical protection in any of the vast network of royal castles built to assert Norman authority over the kingdom. Perhaps the combination of these privileges, their non-Christian Jewish religion (which of course during periods of crusading zeal dredged up Jewish complicity in the crucifixion of Christ), and the perception of Jews being a part of the royal court, created from the start a propensity for attracting resentment, which would come to flare up over the next centuries whenever an urban mob needed a focus target or individual incidents occurred between a Christian and a Jew. At thesame time, we have equal evidence that strong, warm, neighbourly individual Christian-Jewish interrelationships existed in the English cities eventually settled by the Jews. The Rouen Jews settled first in London, and by the early 1100s started to move out into the more important provincial cities offering strong royal protection for their families. The 17th century antiquarian Anthony Wood wrote that the Jews first came to Oxford in 1075, although there is no surviving evidence to set this date. We do know that the medieval Oxford Jewry was very well established by the 1140s.
Benefits to the King
The protection of the Jews as wards of the crown brought equally useful benefits to the king, as technically, the Jews and their property more or less were at his disposal at all times. The king, therefore, had the right to extract special taxes, or tallages at any time from his Jews, which circumvented always having to negotiate for extra funds from his barons. However, the Norman and Plantagenet kings tended to realize that the Jews were most useful to them when as a vibrant merchantile community they were left unhampered to simply get on with business, generating credit, facilitating trade and freely building up individual wealth. This created ever greater royal tax bases throughout the kingdom, and a reliable stash of ready-capital resided in the Jewish community whenever needed by the king.
Under the Norman Kings
After the death of William the Conqueror in 1087, his second son, William Rufus became king of England. Wildly unpopular with his Norman as well as Anglo-Saxon subjects, William Rufus valued the Jews. He enjoyed infuriating the former by staging debates at court between churchmen and Jews, tauntingly saying he would convert to Judaism if they had the better arguments. William Rufus managed to prevent in England the massacres of Jews that occurred in Rouen, and across France and the Rhineland, in the bloody frenzy the preceded the departure of the First Crusade in 1096. Henry I took the throne in 1100 after his brother was killed in a supposed hunting accident. Henry retained Jews at court and continued the favourable Norman policy toward the Jews, issuing a formal charter reiterating their royal protection, and special privileges of liberty which fostered a 35 year period of Jewish prosperity and growth extending further out into the provinces.
Chaos and Change Amid the War of Stephen/Matilda
Henry's death without a surviving male heir in 1135 brought about the chaotic war between Henry's daughter Matilda (the Empress Maud) and his nephew, Stephen of Blois. Stephen was crowned by those barons who felt a male was needed on the throne, but was immediately challenged by Matilda and those barons who supported her claim to the crown. Character flaws in both leaders combined with nearly equal military strengths to neutralize either's ability to bring the civil war to a conclusion, as baronial loyalties and alliances shifted back and forth chaotically between Matilda and her cousin in a debilitating stalemate of 19 long years. Stephen was unable to provide consistent protection for anyone, never mind the Jews, and communities were at the mercy of whichever side momentarily had control over them. The breakdown of law and order made travel extremely dangerous and it is believed that during this period Jews abandoned trade almost entirely in favour of money-lending, a necessary profession prohibited by the Bible, which Christians had always been glad to leave to the Jews, who were damned anyway.
First Written Record of the Oxford Jewry 1141
Oxford was one of those castle towns which changed hands several times between the forces of Matilda and Stephen. It is from one of these periods that the first written record of the medieval Oxford Jewry survives. In 1141 Matilda was under siege in Oxford Castle and, in dire need of cash, extracted as much gold as she could from the Jews before escaping, dressed in white, across the snow on the frozen Thames. Oxford Castle fell to Stephen, and in his rage to pursue and route his cousin, he demanded money from the Oxford Jewry. The chronicler Brother Nigellus recorded that when the Jews of Oxford complained that they had been depleted by Matilda, Stephen set fire to the first house in the Jewry, that of Aaron f. Isaac, and threatened to burn down the rest of the Jewry if the money he required was not forthcoming immediately. Aaron's house was located at the top of the Jewry, right at Carfax, where the present day Edinburgh Woollen Mills shop is now.
Ancient Money Lenders
A Golden Age for the Jews under Henry II (The First Angevin King)
The Stephen/Matilda stalemate was finally resolved with a novel solution: Stephen would remain King for the rest of his lifetime, but would be succeeded by Matilda's son, Henry Plantagenet, Count of Anjou. Henry II was a very capable administrator who surrounded himself with extremely able ministers. His firm centralized organization restored stability and order, and renewed the shattered economy, and the Jews returned to their position as protected and valued wards of the king. By this time Christian moneylenders, particularly syndicates in Lombardy and Cahors, could no longer resist the profits in money-lending and went into competition with the Jews. However, there was such economic expansion under Henry II that there was plenty of demand for credit, and major Jewish fortunes were made in London, Oxford, Lincoln, Bristol and Norwich which were merely the largest and wealthiest of the many English Jewries. When Aaron of Lincoln died in 1186, he had such wealth that a separate exchequer was set up just to evaluate the extent of Aaron's holdings in property and pledges for the purposes of death duties, one of the crown's major ways of capitalizing on the prosperity of its Jews.
Aaron's House
Beginnings of a Particular Hatred Myth: The Blood Libel
A hideous hoax, ironically perpetuated by a disaffected Norwich Jew in 1144 against his own people, started a particularly ignominious phenomenon that spread throughout Europe: Blood Libel, the accusation that Jews abducted and crucified Christian children as part of some Passover rite. Numerous Norwich Jewish leaders were executed in what should have been a unique, unfounded accusation. However the prosperity of the Jews under Henry II attracted resentment from swelling groups of individuals indebted to the Jews. In 1168 the accusation of ritual child murder was made among the Gloucester Jews and more were killed. The fabrication spread to Northern France in 1171, where the population of an entire Jewry at Blois was burned to death, and the Tsarfatic community on both sides of the Channel was plunged into despair. Whenever a Christian child died accidentally or in some uncertain manner, the Jews were accused, in Bury St. Edmund in 1181, in Bristol 1183, in Winchester 1192, in London 1244 and in Lincoln in 1255, resulting in massacres of Jews each time. This Blood Libel which began in England would, over the next hundreds of years, spread to more than 150 other Jewries from the Rhineland to the Middle East, with great loss of Jewish life each time.
Richard Coeur de Lion
Richard I continued to protect the Jews, if only for financial reasons.
However knightly indebtedness combined with the crusading fever of the reign to ignite mob violence against the Jews in London, in Norwich, Lynn and York where the entire Jewries in those places were murdered. The trapped Jews of York committed suicide in terror. Interconnected Tsarfat Jewries, English and French, wrote eloquently of their grief. The mobs burned all records of debts to the Jews.
Richard sent out renewed orders to protect the Jews and, expanding upon the special Jewish exchequer which his father had set up to deal with the estate of Aaron of Lincoln, formalized it as the separate Exchequer of the Jews. For better protection of the Jews, and particularly for better protection of the records of their transactions, roughly 25 towns were designated to have ‘archae', centralized record chests monitored by panels of local Christian and Jewish keyholders, into which copies of all Jewish transactions were to be deposited under pain of prosecution. The Crown was not about to let records of Jewish revenue be destroyed by mob violence again. When Richard was held for ransom in Germany on his way back from Crusade in 1194, it was the king's Jews who were pressed to come up with the enormous ransom. Richard, who spent almost no time in England, died in France in 1199. However, his Exchequer of the Jews records, along with the general system of centralized recordkeeping instituted by his father and continued by succeeding reigns combine to give historians the most remarkable documentation of any medieval Jewish population in Europe. The unique situation in Oxford, where 12th and 13th century monastic records were preserved by the colleges which took them over, coupled with a surviving house-by-house survey taken in 1279, makes Oxford's arguably the single best documented 13th century Jewry in the world.
Richard's brother John's lack of judgement and popularity meant that he was always short of money and support. While his barons might grumble at John's incompetence and resist his ever-increasing demands for money, the Jews had no such leverage. John pressed his Jews to provide a royal dowry for his daughter, Joan, followed too quickly by the massive so-called Bristol Tallage, which depleted the wealthiest Jews upon which it largely fell. John's bumbling loss of the vast continental Norman and Angevin lands not only set into motion conflicts that would last for centuries, but would come to have specific effects on the English Jews somewhat later, particularly in Oxford.
Countdown: the Reigns of Henry III and his son Edward I
Henry III came to the throne as a small child and while a council of magnates ran the country for him in his minority, the Jews of England had a decade and more to recover, unimpeded by crippling financial demands from the crown. A second wave of Jewish magnates came to dominate finances, among them David of Oxford, and the many sons of Magister Moses.
But by 1240 Henry III, who also developed ill will with his barons, turned more and more to his Jews for money. Between 1240-1260, a relatively small Jewish population of 5000 paid out more than £70,000, and to do so, they had to sell off many of their mortgage bonds at a discount, often to a vulture-like coterie of court insiders keen to grasp up debtors' land. This only exacerbated tensions and when Simon de Montfort lead his barons in revolt, the Jews were a particular focus of hatred, and massacres again occurred in 1263-4. Oxford, once again, was spared this violence, but its Jewry was swelled by refugees from less fortunate towns.
Edward I (The Prince Edward, Edward Longshanks, Hammer of the Scots)
Edward, as prince, asked for control of the Jewries, which he then proceeded to issue with ever more restrictive statutes---first forbidding them from taking any more property into bond. As king, Edward progressively restricted more means by which the Jews could lend money, and how they lived. At the same time that he kept restricting their means of generating income, he also taxed them, but crown income from the Jews trickled to ever smaller amounts. Edward's wife, Eleanor of Castile, having to scrabble together a new Queen's Treasury since the loss of all its income properties in Northern France by King John, ruthlessly attached herself to as many Jewish bonds and Jewish properties as she could-with particularly devastating effect in the Oxford Jewry. With virtually all means of income denied them and property being confiscated, some Jews undoubtedly resorted to coin clipping to meet demands of taxes and living expenses---however many innocent Jews would be swept up in the coin clipping purges that ended in the hanging of hundreds of Jews throughout England. Edward's curbing of the Jews served to placate the gentry who had rebelled against his father with de Montfort, and who, as members of the Parliament were now better moved to supply Edward with the money that he needed to fight his expensive wars in Wales, Scotland and France. (It was Edward who built the massive, expensive fortresses which still stand in northern Wales.)
Medieval Jewish Money Lenders
The End of the English Jewry, and the Medieval Tsarfatic Community
Hard Money Lenders
New waves of crusading zeal and the demand to convert the Jews welled up again in the 1280s and, in 1288 in preparation for his own crusade, King Edward expelled the Jews from Gascony. However, deeply in debt and in need of huge financial grants from Parliament, Edward succumbed to popular pressure which had become an amalgam of both debt resentment and an end to Christian religious tolerance. Edward expelled the depleted Jewish community from England in 1290, more or less in exchange for a £100,000 tax grant from his Christian subjects. Allowed to take only the chattels they could carry, the decimated population of England's Jews (which in Oxford had been reduced to women and a few elderly men) left for the Tsarfatic communities of Northern France---only to have that community dispersed forever when Philip Augustus followed the English lead and expelled them in 1306. The last trace of any medieval Oxford Jew is found on a list of Jews living in Paris in 1296, where Meir of Oxford (a.k.a. Myer of Cricklade) is recorded as 'Mahy de Quiquelarde, L'englais'.