The ban on usury by the three major monotheistic religions (Judaism, Islam and Christianity) did much to complicate and obscure medieval financial practices. Marjorie Grice-Hutchinson has carefully studied the medieval prohibition of
interest and its implications. She points out that Jews were not forbidden to loan money at interest to Gentiles, which explains why, at least during the first half of the medieval period, most bankers and financiers in the Christian world
were Jewish.
This canonical ban on interest added greatly to the intricacies of medieval banking, though not (as many theorists have insisted) because bankers, in their attempt to offer a useful, necessary service, were forced to constantly search for new ways to disguise the necessary payment of interest on loans.
When bankers loaned money received from clients as a loan (or “time” deposit), they were acting as true financial intermediaries and were certainly doing a legitimate business and significantly contributing to the productive economy of their time. Still, the belated recognition by the Church of the legitimacy of interest should not be regarded as overall approval of the banking business, but only as authorization for banks to loan money lent to them by third parties. In other words, to act as mere financial intermediaries. The evolution of Church
doctrine on interest in no way implies a sanction of fractional-reserve banking, i.e., bankers’ self-interested use (which usually means granting loans) of demand deposits.
To a great extent, the conceptual confusion we are dealing with arose in the Middle Ages as a result of the canonical ban on interest. One of the main artifices devised by economic agents to conceal actual interest-paying loans was to disguise them as demand deposits. Let us see how they did it. One of the most notable guidelines found for this contract in the Corpus Juris Civilis stipulated that, if the depositary were unable to return the deposit on demand, not only was he guilty of theft for misappropriation, but he was also obliged to pay interest to the depositor for his delay in repayment. Hence, it should come as no surprise that throughout the Middle Ages, in order to circumvent the canonical ban on interest, many bankers and depositors expressly declared that they had taken
part in a monetary irregular-deposit contract, when they had actually formalized a true loan or mutuum contract. The method of concealment to which this declaration belonged was aptly named depositum confessatum. It was a simulated deposit which, despite the declarations of the two parties, was not a true deposit at all, but rather a mere loan or mutuum contract. At the end of the agreed-upon term, the supposed depositor claimed his money. When the professed depositary failed to return it, he was forced to pay a “penalty” in the
shape of interest on his presumed “delay,” which had nothing to do with the actual reason for the “penalty” (the fact that the operation was a loan). Disguising loans as deposits became an effective way to get around the canonical ban on interest and escape severe sanctions, both secular and spiritual.
The depositum confessatum eventually perverted juridical doctrine on the monetary irregular deposit, robbing these tenets of the clarity and purity they received in classical Rome and adding confusion that has persisted almost to the present day. In fact, regardless of experts’ doctrinal stand (either strictly against, or “in favor” within reasonable limits) on interest-bearing loans, the different approaches to the depositum confessatum led theorists to stop distinguishing clearly between the monetary irregular deposit and the mutuum contract. On one hand, over-zealous canonists, determined to expose all hidden loans and condemn the corresponding interest, tended to automatically equate deposit contracts with mutuum contracts. They believed that by exposing the loan they assumed was behind every deposit they would put an end to the pretense of the depositum confessatum. This is precisely where their error lay: they regarded all deposits, even actual ones (made with the essential purpose of safeguarding the tantundem and keeping it always available to the deposi-
tor) as deposita confessata. On the other hand, those experts who were relatively more supportive of loans and interest and searched for ways to make them acceptable to the Church, defended the depositum confessatum as a kind of precarious loan which, according to the principles embodied in the Digest, justified the payment of interest.
As a result of both doctrinal stances, scholars came to believe that the “irregularity” in the monetary irregular deposit referred not to the deposit of a certain quantity of a fungible good (the units of which were indistinguishable from others of the same type and the tantundem of which was to be kept continually available to the depositor), but rather to the irregularity of always disguising loans as deposits. Further-more, bankers, who had used the depositum confessatum to disguise loans as deposits and to justify the illegal payment of interest, eventually realized that the doctrine which held that
deposits always concealed loans could also be extremely profitable to them, because they could employ it to defend even the misappropriation of money which had actually been placed into demand deposits and had not been loaned. Thus, the canonical ban on interest had the unexpected effect of obscuring Roman jurists’ clear, legal definition of the monetary irregular-deposit contract. Many capitalized on the ensuing confusion in an attempt to legally justify fraudulent banking and the misappropriation of demand deposits. Experts
failed to clear up the resulting legal chaos until the end of the nineteenth century.
Let us now examine three particular cases which together illustrate the development of medieval banking: Florentine banks in the fourteenth century; Barcelona’s Bank of Deposit, the Taula de Canvi, in the fifteen century and later; and the Medici Bank. These banks, like all of the most important banks in the late Middle Ages, consistently displayed the pattern we saw in Greece and Rome: banks initially respected the traditional legal principles found in the Corpus Juris Civilis, i.e., they operated with a 100-percent reserve ratio which guaranteed the safekeeping of the tantundem and its constant availability to the depositor. Then, gradually, due to bankers’ greed and rulers’ complicity, these principles began to be violated, and bankers started to loan money from demand deposits, often, in fact, to rulers. This gave rise to fractional-reserve banking and artificial credit expansion, which in the first stage appeared to spur strong economic growth. The whole process ended in a general economic crisis and the failure of banks that could not return deposits on demand once the recession hit and they had lost the trust of the public.
Whenever loans were systematically made from demand deposits, the historical constant in banking appears to have been eventual failure. Furthermore, bank failures were accompanied by a strong contraction in the money supply
(specifically, a shortage of loans and deposits) and by the resulting inevitable economic recession. As we will see in the following chapters, it took economic scholars nearly five centuries to understand the theoretical causes of all of these
processes.
interest and its implications. She points out that Jews were not forbidden to loan money at interest to Gentiles, which explains why, at least during the first half of the medieval period, most bankers and financiers in the Christian world
were Jewish.
This canonical ban on interest added greatly to the intricacies of medieval banking, though not (as many theorists have insisted) because bankers, in their attempt to offer a useful, necessary service, were forced to constantly search for new ways to disguise the necessary payment of interest on loans.
When bankers loaned money received from clients as a loan (or “time” deposit), they were acting as true financial intermediaries and were certainly doing a legitimate business and significantly contributing to the productive economy of their time. Still, the belated recognition by the Church of the legitimacy of interest should not be regarded as overall approval of the banking business, but only as authorization for banks to loan money lent to them by third parties. In other words, to act as mere financial intermediaries. The evolution of Church
doctrine on interest in no way implies a sanction of fractional-reserve banking, i.e., bankers’ self-interested use (which usually means granting loans) of demand deposits.
To a great extent, the conceptual confusion we are dealing with arose in the Middle Ages as a result of the canonical ban on interest. One of the main artifices devised by economic agents to conceal actual interest-paying loans was to disguise them as demand deposits. Let us see how they did it. One of the most notable guidelines found for this contract in the Corpus Juris Civilis stipulated that, if the depositary were unable to return the deposit on demand, not only was he guilty of theft for misappropriation, but he was also obliged to pay interest to the depositor for his delay in repayment. Hence, it should come as no surprise that throughout the Middle Ages, in order to circumvent the canonical ban on interest, many bankers and depositors expressly declared that they had taken
part in a monetary irregular-deposit contract, when they had actually formalized a true loan or mutuum contract. The method of concealment to which this declaration belonged was aptly named depositum confessatum. It was a simulated deposit which, despite the declarations of the two parties, was not a true deposit at all, but rather a mere loan or mutuum contract. At the end of the agreed-upon term, the supposed depositor claimed his money. When the professed depositary failed to return it, he was forced to pay a “penalty” in the
shape of interest on his presumed “delay,” which had nothing to do with the actual reason for the “penalty” (the fact that the operation was a loan). Disguising loans as deposits became an effective way to get around the canonical ban on interest and escape severe sanctions, both secular and spiritual.
The depositum confessatum eventually perverted juridical doctrine on the monetary irregular deposit, robbing these tenets of the clarity and purity they received in classical Rome and adding confusion that has persisted almost to the present day. In fact, regardless of experts’ doctrinal stand (either strictly against, or “in favor” within reasonable limits) on interest-bearing loans, the different approaches to the depositum confessatum led theorists to stop distinguishing clearly between the monetary irregular deposit and the mutuum contract. On one hand, over-zealous canonists, determined to expose all hidden loans and condemn the corresponding interest, tended to automatically equate deposit contracts with mutuum contracts. They believed that by exposing the loan they assumed was behind every deposit they would put an end to the pretense of the depositum confessatum. This is precisely where their error lay: they regarded all deposits, even actual ones (made with the essential purpose of safeguarding the tantundem and keeping it always available to the deposi-
tor) as deposita confessata. On the other hand, those experts who were relatively more supportive of loans and interest and searched for ways to make them acceptable to the Church, defended the depositum confessatum as a kind of precarious loan which, according to the principles embodied in the Digest, justified the payment of interest.
As a result of both doctrinal stances, scholars came to believe that the “irregularity” in the monetary irregular deposit referred not to the deposit of a certain quantity of a fungible good (the units of which were indistinguishable from others of the same type and the tantundem of which was to be kept continually available to the depositor), but rather to the irregularity of always disguising loans as deposits. Further-more, bankers, who had used the depositum confessatum to disguise loans as deposits and to justify the illegal payment of interest, eventually realized that the doctrine which held that
deposits always concealed loans could also be extremely profitable to them, because they could employ it to defend even the misappropriation of money which had actually been placed into demand deposits and had not been loaned. Thus, the canonical ban on interest had the unexpected effect of obscuring Roman jurists’ clear, legal definition of the monetary irregular-deposit contract. Many capitalized on the ensuing confusion in an attempt to legally justify fraudulent banking and the misappropriation of demand deposits. Experts
failed to clear up the resulting legal chaos until the end of the nineteenth century.
Let us now examine three particular cases which together illustrate the development of medieval banking: Florentine banks in the fourteenth century; Barcelona’s Bank of Deposit, the Taula de Canvi, in the fifteen century and later; and the Medici Bank. These banks, like all of the most important banks in the late Middle Ages, consistently displayed the pattern we saw in Greece and Rome: banks initially respected the traditional legal principles found in the Corpus Juris Civilis, i.e., they operated with a 100-percent reserve ratio which guaranteed the safekeeping of the tantundem and its constant availability to the depositor. Then, gradually, due to bankers’ greed and rulers’ complicity, these principles began to be violated, and bankers started to loan money from demand deposits, often, in fact, to rulers. This gave rise to fractional-reserve banking and artificial credit expansion, which in the first stage appeared to spur strong economic growth. The whole process ended in a general economic crisis and the failure of banks that could not return deposits on demand once the recession hit and they had lost the trust of the public.
Whenever loans were systematically made from demand deposits, the historical constant in banking appears to have been eventual failure. Furthermore, bank failures were accompanied by a strong contraction in the money supply
(specifically, a shortage of loans and deposits) and by the resulting inevitable economic recession. As we will see in the following chapters, it took economic scholars nearly five centuries to understand the theoretical causes of all of these
processes.
Комментариев нет:
Отправить комментарий