Debt (59 page)

“Not to rob and to return what they borrow”—a telling juxtaposition, considering that in Scholastic theory, lending money at interest had itself been considered theft.

And Luther
was
referring to interest-bearing loans here. The story of how he got to this point is telling. Luther began his career as a reformer in 1520 with fiery campaigns against usury; in fact, one of his objections to the sale of Church indulgences was that it was itself a form of spiritual usury. These positions won him enormous popular
support in towns and villages. However, he soon realized that he’d unleashed a genie that threatened to turn the whole world upside-down. More radical reformers appeared, arguing that the poor were not morally obliged to repay the interest on usurious loans, and proposing the revival of Old Testament institutions like the sabbatical year. They were followed by outright revolutionary preachers who began once again questioning the very legitimacy of aristocratic privilege and private property. In 1525, the year after Luther’s sermon, there was a massive uprising of peasants, miners, and poor townsfolk across Germany: the rebels, in most cases, representing themselves as simple Christians aiming to restore the true communism of the Gospels. Over a hundred thousand were slaughtered. Already in 1524, Luther had a sense that matters were spilling out of control and that he would have to choose sides: in that text, he did so. Old Testament laws like the Sabbatical year, he argued, are no longer binding; the Gospel merely describes ideal behavior; humans are sinful creatures, so law is necessary; while usury is a sin, a four to five-percent rate of interest is currently legal under certain circumstances; and while collecting that interest is sinful, under
no
circumstances is it legitimate to argue that for that reason, borrowers have the right to break the law.
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The Swiss Protestant reformer Zwingli was even more explicit. God, he argued, gave us the divine law: to love thy neighbor as thyself. If we truly kept this law, humans would give freely to one another, and private property would not exist. However, Jesus excepted, no human being has ever been able to live up to this pure communistic standard. Therefore, God has also given us a second, inferior, human law, to be enforced by the civil authorities. While this inferior law cannot compel us to act as we really ought to act (“the magistrate can force no one to lend out what belongs to him without hope of recompense or profit”)—at least it can make us follow the lead of the apostle Paul, who said: “Pay all men what you owe.”
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Soon afterward, Calvin was to reject the blanket ban on usury entirely, and by 1650, almost all Protestant denominations had come to agree with his position that a reasonable rate of interest (usually five percent) was not sinful, provided the lenders act in good conscience, do not make lending their exclusive business, and do not exploit the poor.
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(Catholic doctrine was slower to come around, but it did ultimately accede by passive acquiescence.)

If one looks at how all this was justified, two things jump out. First, Protestant thinkers all continued to make the old Medieval argument about
interesse:
that “interest” is really compensation for the money that the lender
would
have made had he been able to place his money
in some more profitable investment. Originally, this logic was just applied to commercial loans. Increasingly, it was now applied to all loans. Far from being unnatural, then, the growth of money was now treated as completely expected. All money was assumed to be capital.
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Second, the assumption that usury is something that one properly practices on one’s enemies, and therefore, by extension, that all commerce partakes something of the nature of war, never entirely disappears. Calvin, for instance, denied that Deuteronomy only referred to the Amalekites; clearly, he said, it meant that usury was acceptable when dealing with Syrians or Egyptians; indeed with all nations with whom the Jews traded.
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The result of opening the gates was, at least tacitly, to suggest that one could now treat
anyone
, even a neighbor, as a foreigner.
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One need only observe how European merchant adventurers of the day actually were treating foreigners, in Asia, Africa, and the Americas, to understand what this might mean in practice.

Or, one might look closer to home. Take the story of another well-known debtor of the time, the Margrave Casimir of Brandenburg-Ansbach (1481–1527), of the famous Hohenzollern dynasty:

Casimir was the son of Margrave Friedrich the Elder of Brandenburg, who has come to be known as one of the “mad princes” of the German Renaissance. Sources differ on just how mad he actually was. One contemporary chronicle describes him as “somewhat deranged in his head from too much racing and jousting;” most agree that he was given to fits of inexplicable rage, as well as to the sponsorship of wild, extravagant festivals, said often to have degenerated into wild bacchanalian orgies.
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All agree, however, that he was poor at managing his money. At the beginning of 1515, Friedrich was in such financial trouble—he is said to have owed 200,000 guilders—that he alerted his creditors, mostly fellow nobles, that he might soon be forced to temporarily suspend interest payments on his debts. This seems to have caused a crisis of faith, and within a matter of weeks, his son Casimir staged a palace coup—moving, in the early hours of February 26, 1515, to seize control of the castle of Plassenburg while his father was distracted with the celebration of Carnival, then forcing him to sign papers abdicating for reason of mental infirmity. Friedrich spent the rest of his life confined in Plassenburg, denied all visitors and correspondence. When at one point his guards requested that the new Margrave provide a couple guilders so he could pass the time gambling with them, Casimir made a great public show of refusal, stating (ridiculously, of course) that his father had left his affairs in such disastrous shape that he could not possibly afford to.
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Casimir dutifully doled out governorships and other prize offices to his father’s creditors. He tried to get his house in order, but this proved surprisingly difficult. His enthusiastic embrace of Luther’s reforms in 1521 clearly had as much to do with the prospect of getting his hands on Church lands and monastic assets than with any particular religious fervor. Yet at first, the disposition of Church property remained moot, and Casimir himself compounded his problems by running up gambling debts of his own said to have amounted to nearly 50,000 guilders.
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Placing his creditors in charge of the civil administration had predictable effects: increasing exactions on his subjects, many of whom became hopelessly indebted themselves. Unsurprisingly, Casimir’s lands in the Tauber Valley in Franconia became one of the epicenters of the revolt of 1525. Bands of armed villagers assembled, declaring they would obey no law that did not accord with “the holy word of God.” At first, the nobles, isolated in their scattered castles, offered little resistance. The rebel leaders—many of them local shopkeepers, butchers, and other prominent men from nearby towns—began with a largely orderly campaign of tearing down castle fortifications, their knightly occupants being offered guarantees of safety if they cooperated, agreed to abandon their feudal privileges, and swore oaths to abide by the rebels’ Twelve Articles. Many complied. The real venom of the rebels was reserved for cathedrals and monasteries, dozens of which were sacked, pillaged, and destroyed.

Casimir’s reaction was to hedge his bets. At first he bided his time, assembling an armed force of about two thousand experienced soldiers, but refusing to intervene as rebels pillaged several nearby monasteries; in fact, negotiating with the various rebel bands in such apparent good faith that many believed he was preparing to join them “as a Christian brother.”
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In May, however, after the knights of the Swabian League defeated the rebels of the Christian Union to the south, Casimir swung into action, his forces brushing aside poorly disciplined rebel bands to sweep through his own territories like a conquering army, burning and pillaging villages and towns, slaughtering women and children. In every town he set up punitive tribunals, and seized all looted property, which he kept, even as his men also expropriated any wealth still to be found in the region’s cathedrals, ostensibly as emergency loans to pay his troops.

It seems significant that Casimir was, of all the German princes, both the longest to waver before intervening, and the most savagely vengeful once he did. His forces became notorious not only for executing accused rebels, but systematically chopping off the fingers of accused collaborators, his executioner keeping a grim ledger of amputated
body parts for later reimbursement—a kind of carnal inversion of the account ledgers that had caused him so much trouble in his life. At one point, in the town of Kitzingen, Casimir ordered the gouging out of the eyes of fifty-eight burghers who had, he declared, “refused to look at him as their lord.” Afterward he received the following bill:
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[Signed] Augustin, the executioner, who the Kitzingers call “Master Ouch.”

The repression eventually inspired Casimir’s brother Georg (later known as “the Pious”) to write a letter asking him if Casimir was intending to take up a trade—since, as Georg gently reminded him, he could not very well continue to be a feudal overlord if his peasants were all dead.
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With such things happening, it is hardly surprising that men like Thomas Hobbes came to imagine the basic nature of society as a war of all against all, from which only the absolute power of monarchs could save us. At the same time, Casimir’s behavior—combining as it does a general attitude of unprincipled, cold-blooded calculation with outbursts of almost inexplicably vindictive cruelty—seems, like that of Cortés’s angry foot soldiers when unleashed on the Aztec provinces, to embody something essential about the psychology of debt. Or, more precisely, perhaps, about the debtor who feels he has done nothing to deserve being placed in his position: the frantic urgency of having to convert everything around oneself into money, and rage and indignation at having been reduced to the sort of person who would do so.

The peasants’ visions of communistic brotherhood did not come out of nowhere. They were rooted in real daily experience: of the maintenance of common fields and forests, of everyday cooperation and neighborly solidarity. It is out of such homely experience of everyday communism that grand mythic visions are always built.
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Obviously, rural communities were also divided, squabbling places, since communities always are—but insofar as they are communities at all, they are necessarily founded on a ground of mutual aid. The same, incidentally, can be said of members of the aristocracy, who might have fought endlessly over love, land, honor, and religion, but nonetheless still cooperated remarkably well with one another when it really mattered (most of all, when their position as aristocrats was threatened); just as the merchants and bankers, much as they competed with one another, managed to close ranks when it really mattered. This is what I refer to as the “communism of the rich,” and it is a powerful force in human history.
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The same, as we’ve seen repeatedly, applies to credit. There are always different standards for those one considers friends or neighbors. The inexorable nature of interest-bearing debt, and the alternately savage and calculating behavior of those enslaved to it, are typical above all of dealings between strangers: it’s unlikely that Casimir felt much more kinship with his peasants than Cortés did with the Aztecs (in
fact, most likely less, since Aztec warriors were at least aristocrats). Inside the small towns and rural hamlets, where the state was mostly far away, Medieval standards survived intact, and “credit” was just as much a matter of honor and reputation as it had ever been. The great untold story of our current age is of how these ancient credit systems were ultimately destroyed.

Recent historical research, notably that of Craig Muldrew, who has sifted through thousands of inventories and court cases from sixteenth- and seventeenth-century England, has caused us to revise almost all our old assumptions about what everyday economic life at that time was like. Of course, very little of the American gold and silver that reached Europe actually ended up in the pockets of ordinary farmers, mercers, or haberdashers.
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The lion’s share stayed in the coffers of either the aristocracy or the great London merchants, or else in the royal treasury.
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Small change was almost nonexistent. As I’ve already pointed out, in the poorer neighborhoods of cities or large towns, shopkeepers would issue their own lead, leather, or wooden token money; in the sixteenth century this became something of a fad, with artisans and even poor widows producing their own currency as a way to make ends meet.
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Elsewhere, those frequenting the local butcher, baker, or shoemaker would simply put things on the tab. The same was true of those attending weekly markets, or selling neighbors milk or cheese or candle-wax. In a typical village, the only people likely to pay cash were passing travelers, and those considered riff-raff: paupers and ne’er-do-wells so notoriously down on their luck that no one would extend credit to them. Since everyone was involved in selling something, however just about everyone was both creditor and debtor; most family income took the form of promises from other families; everyone knew and kept count of what their neighbors owed one another; and every six months or year or so, communities would held a general public “reckoning,” cancelling debts out against each other in a great circle, with only those differences then remaining when all was done being settled by use of coin or goods.
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