Money Lending

Jews in Europe had always been involved with “banking” – that is, with arranging financial transactions of all kinds. This role was an integral part of being a medieval merchant. As they were gradually driven out of commerce, their banking role was to some degree also curtailed. They lost their role in the international transfer of funds, a natural corollary to international trade, to Christian competitors from Lombardy. Jews also began losing their role as deposit bankers, as recurrent attacks on Jews discouraged depositors. On the other hand, the growing need for credit in European society offered them opportunities in local money lending, an activity from which Christians were theoretically excluded.


The Banco Rosso in the ghetto of Venice, one of three paupers' banks managed by German Jews there.

There were two types of lending activity:

1) Pawn-broking. A Jew would extend credit, taking a pledge which was held in security for repayment of the obligation. In case of nonpayment, the object could be sold.

2) A more sophisticated type of lending, entailing collateral that was not a moveable physical object but a right (a right to the use of a piece of land, for example). The lender would collect regular income from the property to which he had a temporary right, as interest on the loan. Since in such cases the Jew did not have control over a pledged object, governmental enforcement of loan agreements was needed. Jews thus became even more dependent on their overlords.

Who was borrowing from the Jews, and on what terms? It is clear that people from all ranks of society were borrowing: nobles, clergy, burghers, and peasants. (Kings rarely borrowed from Jews; they preferred to tax them heavily or simply to confiscate their property.) Because of the high risks, the interest on loans was quite high. Interest of 43%, for example, was regarded as acceptable in France. Many of the Jewish lenders did not have much capital, and lent small sums to a few people; it was for this reason that money lending could support an entire Jewish community.

Records of articles left with Jews as pledges indicate the nature of loans. Of nineteen articles traced in loan documents by the scholar Gerard Nahon, 8 were articles of clothing, 5 were animals, 4 were household linens, 2 were jewelry, 1 was a cooking vessel. Lenders probably did not advance more than 50-75% of the value of the pledge, to compensate for depreciation, monetary changes, etc. There were a variety of other risks to take into account. There was an especially high risk that a Jewish lender would unwittingly accept a stolen item as pledge; he would not be indemnified if the article was subsequently claimed by its rightful owner.


A peasant and a Jewish money lender, from a 16th century German woodcut.

Interestingly, the positions outlined in Church law and in Jewish law regarding lending on interest were not essentially different. They were both based on a verse from Deuteronomy (Deut. 23:20-21: "Thou shalt not give interest to thy brother; interest of money, interest of foodstuff, interest of anything that is lent on interest; to a stranger thou mayest give interest; but to thy brother thou shalt not give interest.") Rabbinic law discouraged Jews from lending money on interest not only to other Jews, but even to Gentiles, because of the close social contact this might entail. Theoretically, only very learned men, staunch in faith and able to refute conversionist arguments, were to engage in this activity. But the realities of existence in Europe made such a restriction impossible. Lending on interest to Gentiles became essential to survival – which required, among other things, the ability to pay high special taxes.

Among Christians, there was general agreement that Christians must not charge interest to fellow Christians. Any interest, no matter how low, was regarded as "usury," and taking it was a sin. But the prevailing view of Church law was that a Jew could take interest from a Christian. This was justified by certain medieval German jurists who declared that "by the law of God no Jew should take usury, but their [God-ordained] station in life has ordained it otherwise."

However, there were churchmen who deviated from this position. 1) Many Christians, lay and ecclesiastical, understood the necessity of allowing Christians to lend to Christians. Pope Innocent III wrote in 1208 that "if the ban provided by the [Third] Lateran Council against such [Christian usurers] were to be promulgated against all transgressors, one would have to close the churches altogether, because of their multitude." 2) On the other hand, some Christian thinkers regarded even Jewish money lending to Christians as something that should be limited or prohibited. In 1198, Innocent III urged authorities in Narbonne to force Jews to remit interest on loans to all debtors who had gone on Crusades. Going further, the great theologian Raymond de Peñaforte in the thirteenth century taught that Jews were not to charge interest to Christians under any circumstances whatsoever.

The first country where money lending became the main occupation of the Jews was Angevin England. During the building boom after Norman conquest, when new churches, monasteries, and manors were being constructed, there was a great need for credit. The lending activity of Jews in England peaked in the twelfth and early thirteenth centuries. One Jewish lender alone, the wealthy Aaron of Lincoln, made possible the erection of nine important abbeys. But thereafter, due to the extortionate taxation of the Jews by Henry III, the capital available to Jewish lenders diminished greatly.

Over the course of the thirteenth century, the Church stepped up its anti-usury campaign. The Council of Oxford in 1222 had merely insisted that Jews pay tithes from usurious income. But later English churchmen, especially of the Franciscan order, fulminated against the practice of Jewish (as well as, of course, Christian) money lending, calling it a sin against God and man. Royal decrees of 1269 and 1271 progressively limited Jewish money lending; that of 1275 attempted to force Jews out of it entirely. But as English Jewry became impoverished by heavy taxation, there was less and less reason to tolerate their presence; the Jews were expelled from England in 1290.

This story was repeated to a degree in northern France. In the thirteenth century Jewish bankers in the royal domain in France felt the brunt of increasing ecclesiastical propaganda against usury. Efforts were made by the king to control interest rates. These efforts are reflected in decrees of 1218, 1223, 1230, attempting to regulate and restrict Jewish money lending. But it was extremely difficult to control petty loans extended to borrowers on the security of pawns, which must have constituted the customary form of Jewish money lending to farmers and artisans. In 1254, the pious Louis IX outlawed all interest charges, arguing, "Let the Jews live from the work of their hands or from trade." But this ran counter to economic realities: Jews owned no land and were not permitted to engage in guild-associated trades. In 1306, in an effort to get rid of the problem, Philip the Fair expelled the Jews from France. He cited the Jews' usurious contracts, their oppression of orphans and widows, and their fraudulent practices. But Jews were allowed to return to France and engage in lending in 1315, purportedly because of the clamor of the common people in need of credit. However, popular agitation, culminating in violent attacks on them by the so-called “Pastoureaux,” resulted in a new expulsion decree in 1322. In a short time there was again a shortage of credit. Thirty-nine years later, in an economic crisis, the king once again recalled the Jews, having legalized the high interest rate of 86 2/3 % per year. But increased hostility led to a final expulsion in 1394.

In the German states, Jewish money lending peaked in the thirteenth and fourteenth centuries. After the Black Death in 1348, German Jewry, decimated and impoverished, was forced more and more to concentrate on petty money lending. This aroused the intense hostility of the population. Rulers who, through their taxation, were silent partners of Jewish lenders were now less and less willing to defend Jews. German ecclesiastical propaganda also became much more vehement. German Church synods, particularly that of Bamberg in 1451, demanded the total abolition of interest, and threatened to place under interdict all parishes and communities tolerating Jewish usury. Accordingly, in 1452-53 the bishops of Minden and Würzburg forbade Jews to charge interest on all future loans. In Württemberg new Jewish settlers were admitted only after they promised to abstain from usury. The regulations were not adhered to, of course, and Jewish money lending contributed to a wave of expulsions of Jews from many German areas in the fifteenth century.


A Jew of 16th century Worms. The money bag, garlic, and yellow ring-badge identify the man as a Jew.

In Italy, the increasing concentration of Jews in money lending produced sharp reactions from the clergy. The papacy itself was constantly moderating its attitude toward Jewish money lending. The issue was first raised 1198 by Innocent III. But the language of church decrees increasingly reflected a rethinking of the matter. The concept of “immoderate usury” began to appear – with the implication that “moderate” usury should be allowed. Thus, church councils of 1228, 1227, and 1246 decreed that "because the Jews severely oppress Christians by the exaction of usury, and since usury has been universally forbidden by the Lord, we have caused it to be decreed by the Council that Jews shall never receive any immoderate usury." What, then, was considered "moderate interest"? Unfortunately, the sources are unclear. Pope Gregory IX, at any rate, approved of the 20% rate allowed by James I of Aragon.

A number of outstanding Italian ecclesiastics made the campaign against usury a key element of their preaching. It was, indirectly, a campaign against the toleration of a Jewish presence. More practically-minded churchmen established the so-called monti di pieta, charitable organizations which, by extending loans to needy Christians at nominal interest rates, would make Jewish money lending obsolete. Monti di pieta evolved under Church sponsorship, and played a growing role growing agitation against Jews and Judaism. The statutes of these pious foundations often included crude anti-Jewish language. For example, the preamble of the statutes of the Faenza monte di pieta defined the purpose of the new foundation as aiming at the "destruction of the perfidious voraciousness of the accursed usury, most specifically that of the Jews."

In addition to being a sinful activity, Jewish money lending was regarded by Church authorities as an activity that gave Jews a way to oppress the Christian population and undermined its beliefs. Rigord, monk and chronicler of Philip Augustus, condemned usury itself, but also expressed horror at its social results: "When [the Jews] had made a long sojourn [in Paris],” he wrote, “they grew so rich that they claimed as their own almost half of the whole city, and had Christians in their houses as menservants and maidservants, who were open backsliders from the faith of Jesus Christ, and Judaized with the Jews. And this was contrary to the decree of God and the law of the Church. And whereas the Lord had said by the mouth of Moses in Deuteronomy (23:20-21),'Thou shalt not lend upon usury to thy brother,' but only 'to a stranger,' the Jews in their wickedness understood by 'stranger' every Christian, and they took from the Christians their money at usury. And so heavily burdened in this wise were citizens and soldiers and peasants in the suburbs, and in the various towns and villages, that many were constrained to part with their possessions.”

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