H.M. Hyndman

The Evolution of Revolution

Chapter 13
The Development of Usury

Out of mercantile money operations and the hoarding of gold for the purpose of increasing the area of trading arose money-lending and usury. Usury was the second great factor of wealth accumulation in antiquity, as also in the Middle Ages. And the influence of the moneyed class through its two sections of Merchants and Usurers, which were not infrequently combined, became so powerful that they were able to procure the enacment in their own favour against their clients and debtors of the most atrocious laws that were ever placed on a Statute Book. Hence, of all the class wars and economic antagonisms which have made the history of human society and civilisation since the beginning of private property the perpetual conflict between debtors and creditors was one of the most bitter. No nation escaped this internal disruption, in which the old gentile order was underpinned by slavery, private property, exchange and usury.

There was a never-ceasing economic and social fight between two forms of private property: private ownership of land on the one hand, private ownership of gold, lent to needy pro­prietors of the soil, on the other. The territory of the Athenian peasants was at one time palisaded with posts recording the mortgages held by the money-lenders. All Attica was in pawn to the usurers comparatively early in the growth of that small but important state. Debtors, no matter in what manner their debts were incurred, were liable to pay to the uttermost farthing the highest rates of interest, incurring, in case of default, at the demand of the creditors, imprisonment and other brutal forms of penalty. This wound up, in the event of the debtor’s final incapacity to discharge his indebtedness, with the right, frequently exercised, to enslave the unfortunate borrower to the usurer himself, or to sell him and his family into foreign slavery. Hence arose a relentless economic and social warfare where the usurers proved in the long run historically successful, but which in several cases brought about a definite revolt against the money lords, who had been carrying on their political and pecuniary antagonism to the free peasants and the gentile nobility at the same time.

To preserve the entire state from dissolution, the rights of the creditors were invaded and overthrown by the wrongs of their debtors.

In Athens two revolutions occurred within three generations, one mainly social, the other chiefly political. By the first the powers of the creditors were simply swept away, and the Government relieved the debtors of all their obligations. By the second the new political constitution, based on landownership, and political power founded upon ownership of land irrespective of any gentile relations, created the democratic state. The democracy, of course, were a superior class of citizens over against the slaves. What occurred in Attica happened also in the rest of the Greek states. But though debtors might be temporarily relieved from their burdens and made free men again at the expense of the money lords, usury soon resumed its ascendancy. No legislation could permanently check its advance.

Athens became as important in the world of commerce and money-lending as in the sphere of intellect, art and general culture. Corinth, although a producing as well as a trading centre, attained to such pre-eminence in the domain of luxury and elegant debauchery that she then held a position in the civilised world like that which Paris and the French Riviera hold to-day. Men who had gained wealth from slavery, commerce, piracy and usury flocked to this great and beautiful city of organised pleasure to squander their gains in the most costly and non-moral forms of enjoyment. Certainly in all branches of the acquisition of wealth, however unscrupulous or cruel, the Greeks were past masters; and the Romans, whose whole literature and science and general culture were due to the Greeks also, learnt from them all the methods of amassing riches in free and conquered countries with the least risk of loss.

The colonies of Tyre and other Phoenician cities, whose wealth was due almost exclusively to commerce, were, like Tyre herself, little more than trading centres of greater or less importance, with the exception of Carthage. These trading centres were minor octopuses drawing their wealth from persistent exploitation of foreign producers of every class. At times they derived huge advantages from the complete ignorance of their clients of the real exchange value of their products in the more highly developed society of which Tyre formed a part. The story that gold was so plentiful at one time in Tyre that the Tyrians made their anchors of gold, is doubtless based upon the tradition that they found the natives of Spain in possession of such quantities of silver, and ready to barter it on such very advantageous terms for Tyrian “trade,” that the Phoenician mariners loaded up their vessels, to the extent of all they could possibly carry, with the silver thus cheaply obtained.

It was from this same district that the Carthaginians after­wards derived such vast supplies of silver. It is said that nearly 50,000 slaves worked in one group of mines. Though this number is probably an exaggeration, it is certain that great quantities of silver were obtained from Spain, especially from the mines belonging to the Barca gens, of which Hannibal was a chief. It was this wealth, no doubt, which allowed him to keep up his wonderful seventeen years’ campaign. Carthage derived her supply of gold from West Africa, where the native tribes on the coast were in the habit of bartering the gold they obtained from the auriferous sand of the rivers for the articles they desired from the Phoenician traders. This business was done on the primitive lines of chaffering, which, indeed, were practised with tribes at a similar stage of development all over the then civilised world. This gold and silver then enabled the Mediterranean trading cities to gain their great economic influence.

Commerce on a large scale was regarded on the whole as a reputable means by which to acquire wealth, the process of exploitation of producers being concealed; usury, the lending of money in order to obtain more money in return for the original advance, always bore a bad name in the great slave societies of the West. Aristotle, who stood up so stoutly for the institution of slavery, had not a good word to say for usury or the lending of money at interest. In fact all lending of money at interest was stigmatised as usury. It was “money breeding money,” by the accident of owning a surplus of the universal equivalent, without any pretence whatever of even personal service, productive or unproductive. It was a direct trading upon the individual needs of the borrowers on security, which began by engendering hardship, in the majority of cases, and finished by the ruin and cruel harassment of the debtors. Therefore usury was an accursed thing.

How, then, has it come about that the lending of money, condemned alike by the philosophers of paganism and the fathers of the Church, should nowadays be regarded as quite a respectable business, when practised on “reasonable” terms, whether on a large or on a small scale? The change of view is really due, like nearly all the other modifications of opinion through the centuries, to the change in the form of production itself. Suffice it to say here that lending at interest in modern civilisation takes, in most cases, the form of participation in profit or income gained by the borrower. It rarely appears as an actual trading upon necessity. When it does, in the shape of pawnbroking, or lending at very high rates of interest, then society generally looks on such transactions from the ancient point of view. That, however, the debtor, according to law, is always in the wrong, and still liable to personal punishment for non-fulfilment of contract, is clear, since, until comparatively recent years, debtors in England were subject to close, and frequently to permanent, confinement if their creditors were not paid. Even in the twentieth century debtors, under pretence of “Contempt of Court,” are still subject in Great Britain to the same imprisonment, though this penalty is presumed to have been done away with many years ago. So difficult is it to shake off the dominance of the money power which had its origin thousands of years ago.

But the operations of money-lenders and usurers in general, even in Greece, Tyre and Carthage, were comparatively insignificant beside the scope of these pecuniary operations in the Roman Empire. The contrast between the early days of Rome, after the breakdown of the gentile relations and the establishment of the aristocratic republic, on private property and conquest – the contrast of Rome, with her free farmers and free citizen soldiery fighting for what they believed to be their own advantage, and the Rome of the great foreign wars for slaves, direct plunder and wider scope for trade and usury, with paid troops, was astounding. The intermediate struggle for political power between the aristocracy of the gentes and the plebeians who were attracted or brought into Rome from without resulted in the gradual victory of the latter. From the first Carthaginian War between the land-cultivating, land-worshipping aristocracy and people of Rome, with their growing military power, and the great Phoenician commercial and naval plutocracy of Carthage and its colonies, to the second Carthaginian War and Hannibal’s astounding invasion of Italy, there had grown up in Rome itself an entirely different view of trade and commerce from that which had previously existed.

The money wealth of Carthage consisted chiefly in silver, which then probably bore to gold the relation of 12 to 1. Scipio after his victories brought back from Carthage 120,000 pounds’ weight of silver, of probably sixteen ounces to the pound. This, taking gold at the above ratio, would represent not less than £675,000 in gold, an enormous sum in those days. In addition there was to be an annual payment from Carthage of 20,000 talents of silver for fifty years. At the same time Rome became possessor of the fine Carthaginian dependencies. These vast territorial gains, besides those which were made in Italy itself, planted the commercial spirit in Rome and provided the means for gratifying it. The Romans, then, not only the plebeians but the patricians, turned to commerce with Sicily, Sardinia and Spain, and thus began that career of worldwide vampirism, allied to military conquest, which attained such marvellous and unprecedented development.

So Rome, having defeated Carthage in this first great struggle for domination in the basin of the Mediterranean, was herself captured by Carthaginian methods of commerce, afterwards supplemented by usury to an unparalleled extent. All the struggles between patricians and plebeians, all the assassinations of leaders, slaughter in the streets of Rome and in the provinces, proscriptions by Sylla, wholesale popular vengeance under Marius, were trifling when compared with the effects of this ruthless money power, which now spread through all the recently conquered provinces. The vast numbers of slaves, captured and sold in such quantities by the victorious legions that slaves became a mere drug in the market, the treasures looted from the temples and the houses of wealthy citizens were all of small value compared with the riches extorted from the subject populations of Greece and other countries by the swarm of predatory mercantile agents, money-lenders and farmers of the indemnities and taxes who followed in the wake of the victorious armies. The terrible inflictions of war itself might have been overcome, lived down and forgotten, but the persistent drain of tribute and usury by the merciless blood-suckers who settled down upon the provinces engendered a hatred of the Romans and their rule which led to ruthless butchery by the suffering natives whenever an opportunity for revenge arose.

At the commencement of the great war against Mithridates, in which Sylla played so wonderful a part, no fewer than 100,000 Italians of this type are said to have been massacred in the various cities, either by the direct order or with the connivance of the king. The numbers of the victims thus disposed of may have been exaggerated, but that the debtors and tax-payers, having got their chance, made the most of it is quite certain. Similar revolts were of frequent occurrence alike throughout the successful and unsuccessful periods of the Republic, and always directed against the same class, but, like the risings of the slaves, to no purpose in the long run. With this difference, however, that the money power had come to stay throughout the whole period of private property civilisation, whereas slavery, in the form of chattel slavery, was destined to undergo marked modification. The success of the Carthaginian wars was the most important factor in the transformation of the old agricultural, aristocratic Rome into the Rome of the commercial era. Though the long class struggle between plebeians and patricians had been complicated, as in Greece, by the antagonism between debtors and creditors, which introduced the direct pecuniary element into class warfare, the debtors, by the relaxation of the law and cancellation of many of the debts, had gained a temporary victory. Nevertheless, prior to her crowning victories over her great rival, Rome was still the Rome of landowners of various grades. She and her allies had not, so far, been drawn into the network of commercialism and usury. Rome, in fact, after her success against Carthage, had to go through another period of crisis before her position was secured. The transition period well-nigh ruined the Republic.

The first-fruits of the new mercantilism were anarchy at home and general war in Italy and the provinces. Everywhere the small owners and cultivators disappeared, their land passed into the possession of a few great proprietors, and usury spread like a plague. “A small oligarchy of great and little capitalists alone grew rich amidst the universal ruin ... This plutocracy enriched itself by despoiling mercilessly Italy and Asia, where the in­crease of imposts and fraudulent devices of the financial farmers of the revenue and taxes impoverished and crushed with debt the middle class and the people; by this means there was super-added to the gain of forcing the revenue for Italian capitalists the further profit from usury made easy and from the trade in men, whom they caused to be kidnapped in the adjacent countries and sold in Rome ... Meanwhile the public finances were disordered and the army disorganised; the fleet which had beaten Carthage lay idle in the ports of Italy. Rome failed even to put down the new and bloody revolts of the slaves which had broken out in Sicily and Campania"6#8221; (Fereero).

Such were the first effects of the growth of mercantilism in Rome. The great popular awakening under the leadership of the peasant of genius, Marius, whose defeat of the Cambri and Teutons gave him practically supreme power, was wholly unable to check or direct this economic influence. Efforts made to attract people to conquered lands soon failed from the sheer inexperience of agriculture of those who accepted the offers.

Hence it happened that, when Mithridates began his attack, bankruptcy and disaster stared the statesmen of the Republic full in the face. There was danger and defeat in every direction. Devastation throughout Italy and distrust elsewhere. That Rome should have surmounted this terrible crisis where barbarism and civilisation seemed successfully combined in arms against her, and misfortunes in the field had to be met with an almost empty treasury, is one of the wonders of her eventful history. But surmount it she did. The tide again turned in her favour. The influx of wealth into the great city transcended by far anything previously experienced. This wealth consisted in a mass of silver and gold, with art treasure and luxuries. Rome was a non-producing or at least a non-exporting centre throughout. Even the Italians who settled in her provinces, and devoted themselves and their families to the Romanisation of their respective districts and to commerce and usury, acted as agents draining away these riches amassed from the plunder of the known world.

In this respect Rome differed from other great cities of the Mediterranean basin – Carthage, Alexandria, Corinth, Antioch, Marseilles, even Athens, though they got wealthy through commerce, were able to meet their imports in part by genuine products of their own. Not so Rome. All the trade with her was in one direction: towards this huge vampire city which sucked in wealth and obtained her supplies from Egypt and elsewhere by reason of tribute and taxes imposed as the result of conquest. Money capital, therefore, used in Roman com­merce was wholly unproductive. Commerce helped to take back from Rome its money; and that tended in periods of disturbance to bring about pecuniary crises of utmost intensity at the centre. For the only capital which Rome possessed was commercial capital and money-lenders’ capital, in the shape of the precious metals. Commercial capital, however, used in connection with a trade which is all from the circumference to the centre cannot by any possibility increase the wealth of that centre. The only means, therefore, by which Rome could enlarge her resources was by lending money, instead of spending it in luxury, in purchasing votes, in securing the support of the soldiery – on which vast sums were expended both in Republican and Imperial times – in giving vast displays to gratify the people, and similar wholly unproductive ways. And the only means of adding to the wealth already acquired was – Usury.

Rome, consequently, became the usurer of usurers. Quite apart from the borrowers on a large scale, the artisans and small cultivators, who were all along working side by side with slavery, were always liable to fall into distress. Then they were at the mercy of the lenders, who disbursed money which they could not profitably use in any other way, exacting for the accommodation heavy rates of interest which soon turned debtors into slaves. Money was the one thing needful to rich and poor alike. To the rich who wanted it for the purposes enumerated above; to the poor who had to make indispensable payments or fill up the void occasioned by some unforeseen misfortune. War helped usury in both ways above and below. So it came about that, though much of the really high-born aristocracy had disappeared, those who had taken their places as patricians were still more addicted to commercial transactions, large financial affairs of a profitable character and downright usury than their predecessors. Now the most powerful men in Rome rivalled the rich plebeians in their greed for gain and in their lack of scruples as to how they became possessed of it. Pompey the Great was a usurer on a large scale, and demanded and obtained rates of interest which would be considered satisfactory by the most grasping of modern Shylocks. Even when lending to a large municipality his charge was 4 per cent a month or 48 per cent a year. Caesar, who from his democratic policy in regard to the lower classes of citizens has been regarded as a man not only of great ability but of enlightened and humane views, Caesar himself was closely connected by marriage and otherwise with great money-lenders, and lost no chance of turning an honest penny in the domain of finance. So with the majority of the others. Crassus, Lucullus, Cato, the uncle of Maecenas, Brutus, all made use of the cash which had come to them in various ways for the purpose of extorting high rates of interest from borrowers in and out of Rome itself. In this department of money-dealing the Romans had little to learn.

Moreover, if commerce and usury were conducted wholesale, and the gains were proportionately great, then the transactions were quite honourable. The scale was the criterion of respect­ability. Cicero is careful to say so. Petty transactions were unworthy; conveyance on a large scale, however, was another matter. In fact the Romans of high degree took much the same view of commerce and usury that society in London to-day takes of shopkeeping. A small trader is a man of low class, but the head of a great store or of a series of shops marches up the ladder of profiteering through various grades of distinction into the House of Lords. The same with usury, which lost its ill-smelling odour in practical life in proportion to the magnitude of the loans. Even so to-day a wealthy pawnbroker is detestable: his son or grandson is a Cabinet Minister and a peer.

When once Rome had come under the yoke of money it was quite impossible for her to emancipate herself. There were no more rich and civilised territories to be despoiled. At home the greater part of rural production was conducted, whether on a large scale by slaves, or by freemen and coloni on a small, for the direct supply of the great proprietors and their retainers and urban slaves, within convenient distance of the towns and cities, or for the maintenance of the small owners and their families on the spot. It was this natural production, the main features of cultivation in parts of Italy remote from Rome and throughout the provinces, which kept Rome from collapsing much sooner than she did. Urban interests dominated. But rural economy upheld the State, when the cultivators were not utterly ruined by devastation due to civil wars and foreign invasions, the spread of great slave-worked farms and pasturage as well as the weight of taxation and military service. Even when such ruin had been wrought other small farmers sprang up again, and continued to hold their own. For the money system, though all-powerful in Rome itself, never obtained complete control in the country districts.

This brief survey of Roman usury shows how completely the money power had become dominant all over the Empire wherever men were driven to borrow from any cause whatsoever. The decline and fall of Imperial supremacy left it still in control, wherever payments in kind were even partially replaced by pecuniary relations. Where money, the universal equivalent, was pressingly needed there the money-lender and usurer came in as an indispensable functionary in the society of the day. Rich and poor fell equally into his grasp: the wealthy noble who required advances for display or the impoverished peasant who was forced, as before, to pledge his holding in order to purchase seed in a bad season or to procure the tools necessary for his occupation. The usurer has extended all over the globe from the bunnia and shroff of India to the small pawnbroker and petty Shylock of the cities, from the bankers of the West, inheriting their trade from the commercial cities of the Mediterranean, to the great finance houses advancing on railway and other bonds.

Throughout the long period of overthrow and turmoil follow­ing upon the great barbarian invasions the money-lender and usurer still held his own, increasing his charges to the borrowers, and demanding all the tangible security he could for his advances on the ground of the uncertainty of the times. During the Middle Ages the same usurers were ever the most unpopular of mankind. Not unfrequently they suffered grievous bodily harm and even death at the hands of their suffering debtors. But neither the most stringent laws nor the most vehement religious exhortations could restrain the influence of money accumulated in private hands. If Jews attained to pre­eminence in this particular department of trade, this was due not to their special original aptitude for such business, but because, shut out from the land and regarded with detestation in other walks of life, they, with their close racial connection in all countries, were driven to money-lending and general financial operations if they wished to increase their wealth. Yet though private vengeance has often been wrought upon Jews and their competitors in usury, especially in agricultural countries, the ancient and worldwide antagonism between debtors and creditors has never, in modern history, resulted in such social revolutions as previously recorded. In spite of the legislation against usury on the one hand, and the attempts of the courts at times to prevent the creditors from obtaining their pound of flesh, the actual position of the debtor was exceedingly bad in all civilised countries. So far from the law preventing usury, it swelled the rates demanded for accommodation on account of the presumed risk on the one hand, and treated the debtors as virtual criminals on the other. Thus from first to last no law, no ethic, no religion could prevail. The fathers of the Church were as incapable of restricting usury by their denunciations as the pagan philosophers of old or the futile moralists of to-day. Legislators and ecclesiastics alike found money in the form of usury uncontrollable in its operations. So late as 1854 usury laws were still on the English Statute Book, while debtors could nevertheless be imprisoned by the usurers for the non-payment of debts incurred. So difficult is it to relieve mankind from this form of pecuniary oppression.

But why is it that usury and the trading upon the necessities of others is regarded at the present time with little of the obloquy which attached to it throughout antiquity, in the Middle Ages, and even comparatively recently in modern times ? Because the bulk of such transactions take the shape of a participation in the profits derived from the exploitation of labour, and consequently only lending which takes the obnoxious shape and savour of fraud is regarded as in any way nefarious. Usury, in fact, has become almost a negligible factor in modern financial economy, when contrasted with the vast returns derived from the “legitimate gains” of money capital embarked in industrial enterprise – gains which far transcend in good times any direct usury ever extracted from borrowers.

Last updated on 7.7.2006