Finance & Loans
How Money Lending Shaped the Middle Ages
January 22, 2015 by admin · Leave a Comment
The Dark and Middle Ages were complicated moments in human history, especially for the practice of usury. On the surface, the Church was staunchly opposed to money lending because of moral overtones from the Bible. For a time, the Church permitted Jewish moneylenders to exist in various courts to facilitate the lending of large sums of money, but when the economy was in a down swing the attitudes shifted dramatically.
If that sounds familiar, it’s because there has always been public frustration with interest rates in the event of a financial crisis. In the Dark Ages, this trouble stemmed from certain groups of people. The Church was ok, for instance, vilifying the Jewish money lenders as they allowed the Medici family to continue its practices virtually unimpeded.
During the early 1200s, the Church tried to formalize its stance on the matter of usury by passing some laws on the subject. They created a loophole we know as interest, which allowed money lenders to collect interest in circumstances the Church was accepting of.
The creditor was not lending money in these situations, he was taking a loss. The interest was something akin to compensation for that loss. Interest comes from the Latin word “intereo,” or “to be lost.” If the loan was seen as a gain or a profit, the Church could consider it illegal. Eventually, the amount of effort that lenders put into loans was also taken into consideration. Some lenders were tracking so many loans they found themselves unable to do anything else. In those cases, lenders were seen as people who shouldered substantial risk without thought of profit.
Phineas Upham is an investor from NYC and SF. You may contact Phin on his Phineas Upham website or LinkedIn page.