6

money, and the like. I say this only, that Usury is a 'concessum propter duritiem cordis :'7 for since there must be borrowing and lending, and men are so hard of heart as they will not lend freely, Usury must be permitted.

8

Some others have made suspicious and cunning propositions of Banks, discovery of men's estates, and other inventions; but few have spoken of Usury usefully.

It is good to set before us the incommodities and commodities of Usury, that the good may be either weighed out, or culled out; 10 and warily to provide, that, while we make forth 11 to that which is better, we meet not with that which is worse.

The discommodities of Usury, are, first, that it makes fewer merchants; for were it not for this lazy trade of Usury, money would not lie still,12 but would in great part be employed upon merchandising, which is the vena porta' 13 of wealth in a state: the second, that it makes poor merchants; for as a farmer cannot husband his ground so well if he sit at a great rent, so the merchant cannot drive his trade so well, if he sit 14 at great Usury: the third is incident to the other two; and that is, the decay of customs 15 of kings, or states, which ebb or flow with merchandising: the fourth, that it bringeth the treasure of a realm or state into a few hands; for the usurer being at certainties, and others at uncertainties, at the end of the game most of the money will be in the box; and ever a state flourisheth when wealth is more equally spread the fifth, that it beats down the price of land; for the employment of money is chiefly either merchandising, or purchasing; 16 and Usury waylays both the sixth, that it doth dull and damp all industries, improvements, and new inventions, wherein money would be stirring, if it were not for this slug: the last, that it is the canker and ruin of many men's estates, which in process of time breeds a public poverty.

:

On the other side, the commodities of Usury are, first, that howsoever Usury in some respect hindereth merchandising, yet in some other it advanceth it; for it is certain that the greatest part of trade is driven by young

merchants upon borrowing at interest; so as if the usurer either call in, or keep back his money, there will ensue presently a great stand 17 of trade: the second is, that were it not for this easy borrowing upon interest, men's necessities would draw upon them a most sudden undoing, 18 in that they would be forced to sell their means (be it lands or goods), far under foot,19 and so, whereas Usury doth but gnaw upon them, bad markets would swallow them quite up. As for mortgaging or pawning, it will little mend the matter: for either men will not take pawns without use, or if they do, they will look precisely for the forfeiture.20 I remember a cruel moneyed man in the country, that would say, 'The devil take this Usury, it keeps us from forfeitures of mortgages and bonds.' The third and last is, that it is a vanity to conceive that there would be ordinary borrowing without profit; and it is impossible to conceive the number of inconveniences that will ensue, if borrowing be cramped: therefore to speak of the abolishing of Usury is idle; all states have ever had it in one kind or rate, or other; so as that opinion must be sent to Utopia.21

To speak now of the reformation and reglement 22 of Usury, how the discommodities of it may be best avoided, and the commodities retained. It appears, by the balance of commodities and discommodities of Usury, two things are to be reconciled; the one that the tooth of Usury be grinded, that it bite not too much; the other, that there be left open a means to invite moneyed men to lend to the merchants, for the continuing and quickening of trade. This cannot be done, except you introduce two several sorts of Usury, a less and a greater; for if you reduce Usury to one low rate, it will ease the common borrower, but the merchant will be to seek 23 for money and it is to be noted, that the trade of merchandise being the most lucrative, may bear Usury at a good rate other contracts not so.

To serve both intentions, the way would be briefly thus that there be two rates of Usury; the one free and general for all; the other under licence only to

persons, and in certain places of merchandising. First, therefore, let Usury in general be reduced to five in the hundred, and let that rate be proclaimed to be free and current, and let the state shut itself out to take any penalty 24 for the same; this will preserve borrowing from any general stop or dryness; this will ease infinite borrowers in the country; this will, in good part, raise the price of land, because land purchased at sixteen years' purchase will yield six in the hundred, and somewhat more, whereas this rate of interest yields but five: 25 this by like reason will encourage and edge 26 industrious and profitable improvements, because many will rather venture in that kind, than take five in the hundred, especially having been used to greater profit. Secondly, let there be certain persons licensed to lend to known merchants upon Usury, at a higher rate, and let it be with the cautions following: let the rate be, even with the merchant himself, somewhat more easy than that he used formerly to pay; for by that means all borrowers shall have some ease by this reformation, be he merchant, or whosoever; let it be no bank or common stock, but every man be master of his own money; not that I altogether mislike banks, but they will hardly be brooked, in regard of certain suspicions. Let the state be

answered,27 some small matter for the licence, and the rest left to the lender; for if the abatement be but small, it will no whit discourage the lender; for he, for example, that took before ten or nine in the hundred, will sooner descend to eight in the hundred, than give over his trade of Usury, and go from certain gains to gains of hazard. Let these licensed lenders be in number indefinite, but restrained to certain principal cities and towns of merchandising; for then they will be hardly able to colour other men's moneys 28 in the country: so as the licence of nine will not suck away the current rate of five; for no man will send his moneys far off, nor put them into unknown hands.

If it be objected that this doth in a sort authorise Usury, which before was in some places but permissive;

the answer is, that it is better to mitigate Usury by declaration,29 than to suffer it to rage 30 by connivance.

NOTES ON ESSAY XLI.

1. Usury.' The word usury, which in Bacon's time meant simply interest, has now come to mean exorbitant interest. It is in the former sense that we must understand it throughout this essay.

For many years it was considered a heinous moral wrong to require in repayment of a loan anything over and above ⚫ the sum originally lent, and hence the origin of laws against usury, which restricted or even prohibited the exaction of interest by lenders. In many cases these laws originated in a commendable desire to protect borrowers against unscrupulous money-lenders, and they have a reasonable justification in the fact that, in an age when profitable investment of money was unheard of, and the bulk of a man's wealth was hoarded up, he suffered no loss by lending money, provided it were repaid to him. In Christian countries the exaction of interest was regarded with abhorrence because of the severe denunciations of the practice in several passages of Holy Scripture (Exod. xxii, 25, 26; Lev. xxv, 35-37).

The whole state of society has, however, greatly changed since laws of this kind were common, and the many and various ways in which capital can now be invested and profitably employed, have originated a large class of business men who borrow for profit (a class totally distinct from those who borrow from necessity), and who are content to allow the lender a share of that profit called interest, keeping the remainder as their own reward.

The folly of laws restricting interest was conclusively exposed by Jeremy Bentham, 1747, in Defence of Usury, who showed their mischievous effect upon general commerce, and their utter inefficacy in regard to the protection of needy borrowers. It is now quite clear to every intelligent man that a loan is a commodity which has a value, and that the price of loans must be determined not by legislation, but, like the value of everything else, viz., by the bargaining of the market; that is, in other words, by the equation of supply and demand.

An Act of Parliament, passed by Henry VIII in 1545, limited the rate of interest to ten per cent. per annum; this was repealed as heinously sinful in the reign of Edward VI, but re-enacted in 1571 by Queen Elizabeth. The subject occupied the attention of the legislature in several sessions of

Parliament shortly before this essay was written, and in 1624 another Act was passed reducing the maximum rate of interest to eight per cent.

2. 'invectives'-severe censures, reproaches.

(From inveigh.) 3. 'The drones, a lazy race, are driven from their hive'-Virgil, Georgics, iv, 168.

5.

4. 'In the sweat of thy brow thou shalt eat thy bread;' not 'in the sweat of another's brow.' See Gen. iii, 19. 'orange-tawny bonnets.' In the Middle Ages it was customary to enforce by law certain styles of dress upon the different ranks and professions of society, and it was not uncommon to compel Jews to wear head-dresses of yellow. Such a dress of distinctive colour was probably the Jewish gaberdine' of Shylock-Merchant of Venice, I, iii.

6. against nature for money to beget money.'

Interest was considered a wicked or incestuous offspring, begotten by the money lent. Hence, in the Merchant of Venice, Antonio

asks Shylock :

'When did friendship take

A breed for barren metal of his friend?'

The following passage from Meres will illustrate the same conceit :

'Usurie and encrease of gold and silver is unlawful because against nature; nature hath made them sterill and barren, usurie maketh them procreative.'

The conceit was originated by Aristotle, De Republ., lib. i, cap. x, in a passage of which the following is a translation:

'Usury is justly to be censured; for it has not its origin in nature but amongst ourselves; for usury is most reasonably detested, as the increase of our fortune arises from the money itself, and not by employing it to the purpose for which it was intended. For it was devised for the sake of exchange, but usury multiplies it, and hence usury has received the name of Tókos or produce, for whatsoever is produced is itself like its parents; and usury is merely money born of money, so that of all means of money-making this is the most contrary to nature.'

7. 'A concession by reason of hardness of heart.' See Matt. xix, 8. 8. 'Banks'-i.e. public societies or corporations permitted by the

State to lend money under certain restrictions, and on certain conditions; in contradistinction to private money-lenders.

As the first of the proposed means for checking usury, Bacon designates this as suspicious and cunning;' in his day money matters were so imperfectly understood that banking as a business was looked upon with suspicion.

The first public bank established in modern Europe was that of Venice, founded in 1157; it existed for more than