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Reading 1-1 1
The narration begins when Abraham, then 75 years old and living in Haran,
located in what is now called Kurdistan, near Turkeys border with Syria,
hears and obeys Gods command to Go forth from [his] native land and
from [his] fathers home to a land that [God] will show [him] [Genesis 12:14]. With his wife Sarah, he travels to Egypt and then to Palestine where he
sojourns close to Jerusalem near Bethel, among the occupants of this area,
the Hittites. God has told him that the land of Palestine is the promised
future home of Abrahams descendants, but to this point Abraham and Sarah
are childless. He has taken his portable possessions with him from Haran,
and greatly increased these during the wandering, but Abraham is still
landless. Though he lives near Bethel for many years, during which time
Sarah (at age 90!) gives birth to Isaac, he is a sojourner only a resident
alien and not entitled to purchase land. He will live for a hundred years
2 Reading 1-1
after leaving his homeland, and generations of his descendants will still be
sojourners, then captives in Egypt, then wanderers.
Abrahams landless situation comes to a critical stage when Sarah (whose
name God has changed from Sarai to Sarah, just as he changed Abrams to
Abraham [Genesis 17:15]) dies. The living can manage as sojourners, but the
dead require a permanent resting-place and Sarah is after all the founding
matriarch of Israel. Thus, this first Old Testament monetary transaction is
for title to enough land for a gravesite:
The span of Sarahs life came to 127 years. Sarah died in
Kiriath-arba now Hebron in the land of Canaan; and
Abraham proceeded to mourn for Sarah and to bewail her.
Then Abraham rose from beside his dead and addressed the
children of Heth [the Hittite councilmen]: Although I am a
resident alien among you, sell me a burial site from your
holdings so that I may remove my dead for burial. The
children of Heth replied to Abraham: Pray, hear us, my lord!
You are the elect of God amidst us. Bury your dead in the
choicest of our burial sites. None of us will deny you a burial
ground to bury your dead.
Thereupon Abraham bowed low to the natives, the children
of Heth, and pleaded with them, saying, If you really wish
me to remove my dead for burial, you must agree to intercede
for me with Ephron, that he sell me the cave of Machpelah
which he owns, and which is on the edge of his land. Let him
sell it to me in your presence, at the full price, for a burial
site.
Ephron was on hand with the children of Heth. So Ephron
the Hittite replied to Abraham in the hearing of the children
of Heth all who sat on the council of that town: But no,
my lord, hear me out! I give you that land and the cave that is
in it. I make this gift in the presence of my kinsmen. Bury
your dead!
Abraham made a bow before the natives, as he addressed
Ephron in the hearing of the local people: If you will please
agree with me, I will pay the price of the land. Accept it from
me, that I may bury my dead there.
And Ephron replied to Abraham, saying, Pray, hear me, my
lord! The land will be four hundred shekels of silver what
is that between you and me? Then you can bury your dead.
Abraham complied with Ephrons request, and so Abraham
weighed out to Ephron the silver that he spoke of in the
hearing of the children of Heth four hundred shekels of
silver at the current merchants rate. Thus Ephrons land in
Humanist Issues in Commercial Practice
Reading 1-1 3
Machpelah, facing on Mamre the field with its cave and all
trees anywhere within the limits of that field was made
over to Abraham as his property, in the presence of the
children of Heth all who sat on the council of that town.
Abraham then buried his wife Sarah in the cave of the field of
Machpelah, facing on Mamre now Hebron in the land
of Canaan. And so the field with its cave passed from the
children of Heth to Abraham, as a burial site.
[Genesis 23:1-19]2
Offer, acceptance, and consideration
It is interesting to observe what is occurring both in and between the lines of
the story. It contains all the basic elements of a commercial transaction:
offer, acceptance, and consideration (tendering of money). The Hittite
council members of the town all come to pay their respects and express
sympathy to Abraham, whom they acknowledge as the elect [the favoured]
of God amidst us. They make a general offer of the choicest of their burial
sites, permitting his dead to be buried among theirs. This is a large
concession to an outlander, and the offer makes no mention of money. But
Abraham already has in mind an exclusive site: a specific place on the fringe
of a field owned by one of them, Ephron. The site apparently would be
accessible without crossing Ephrons land.
Abraham cleverly uses the councillors respect and sympathy, and their
general concession of burial among their dead, to solicit their help in
persuading Ephron to sell him this piece of land. Because Ephron is on
hand with the children of Heth (the other councillors), it appears that he has
already been a party to the general offer, and so now Abraham proceeds to
his own offer to purchase.
Witnesses, particularly community elders gathered in a public place, were
essential in early exchange-transactions, where title was registered in the
communitys memory. So Abraham asks, Let [Ephron] sell it to me in your
presence, at the full price, for a burial site.
Notice how he carefully specifies the property the cave of Machpelah
which [Ephron] owns, and which is on the edge of his land: the name (of
the cave and of the district), owner, and site location. The last paragraph of
the chapter reiterates these details: Ephrons land in Machpelah, facing on
[the town of] Mamre [Hebron] the field with its cave and all trees
anywhere within the limits of that field. These sentences are the equivalent
of modern legal descriptions of real-estate parcels.
The transacting for the land is equally detailed. Abrahams exigency, common
to newly-bereaved persons, has put him at a bargaining disadvantage, as he
readily admits by saying he is willing to pay whatever Ephron asks for: the
full price. Perhaps he is confident that Ephron will not overcharge in the
presence of the other Hittites, who must know current land values. It is hard
4 Reading 1-1
to believe that Abraham himself would have no idea of what the land would
fetch if transferred between Hittites.
Ephron opens by offering the land as a gift. Abraham treats this offer as an
individuals extension of the councillors communal proposal, and he bows
his thanks to all. But a gift can be informal, and Abrahams goal is to acquire
free title in exchange for value agreed, tendered, and received. So he insists
on paying a price agreeable to everyone. He therefore again leaves the
evaluation to Ephron, and even reminds him of the exigency: I will pay the
price of the land. Accept it from me, that I may bury my dead there.
So Ephron formally states his price, suggesting that it is nominal: What is
[four hundred shekels of silver] between you and me? Abraham
unhesitatingly weighs out the silver at the current merchants rate that
is, at equivalent monetary value of silver and passing of the title is
completed and witnessed by the councillors. Abraham buries Sarah; 38 years
later he also will be buried there, and in the next two generations so will their
son and daughter-in-law Isaac and Rebekah, and grandson Jacob and Jacobs
first wife Leah (mother of Judah, in whose line David and Jesus are born).
Reflections and implications
Take a few minutes to reflect on the transaction and our analysis of it. First,
read the three points following, then go back and reread the story from
Genesis with these key parts of the story in mind:
You now know that by leaving his home at Gods command, Abraham
has divested himself of land-commodity in return for a divine promise
that at an undetermined future time his descendants will be given the
land he now sojourns in.
You also know that Sarahs importance as matriarch of the future owners
of this promised land makes it important that she be buried here, in a
carefully identified place to which Abraham and his descendants hold
title.
Now that you have reread the story, ask yourself, could it be inferred from
Genesis 23 that the Hittites are purely altruistic, unselfishly concerned for
Abrahams need: that they truly respect Abraham, feel for his grief, offer him
one of their gravesites, and agree to recognize Ephrons sale to the outlander
all out of generous hospitality? Is Ephron also sincerely generous when he
offers the land as a gift?
Now reflect again on the issue of establishing the value of the land. The price
Ephron names is exorbitant. There are records from this patriarchal age of
whole villages being purchased for sums between 100 and 1000 shekels. One
source, The Anchor Bible, cites the prophet Jeremiah paying 17 shekels for a
Humanist Issues in Commercial Practice
Reading 1-1 5
piece of land like Ephrons (the account in the Old Testament book of
Jeremiah 32:6-15 cites similar legal details too). Does Ephron set the price
hoping that Abraham will refuse to pay so much? Is the gift offer still open
after they move on to the question of price?
Alternatively, could it be inferred that there is a councillors scheme to
exploit the outlanders situation? Is this story a biblical illustration that a
commodity is worth just as much as a purchaser is willing to pay for it, and
that scarcity (here, of land) drives price? Does the story also illustrate the
hazards of dealing while under the influence of strong emotion? These are
ethical and business-practice questions raised by the story in Genesis 23.
Again, it might be said that Abraham wants to pay a spectacularly high price
for the land because
this site will be historic the first piece of the promised land acquired
with a memorially recorded clear title
When this narrative says that Abraham weighed out to Ephron the silver,
four hundred shekels at the current merchants rate, we can see that the
story has been written down in an age before coinage, at least in the Middle
East. Abraham is paying in bullion, that is, lumps of precious metal in the
age before coinage. We will return to the history of coinage in Topic 1.4.
Summary
The Bibles first commercial transaction illustrates not only ancient landtransfer practice but also the human interplay and ethical considerations in
negotiating a contract. As you have learned in the commentaries to the
readings, the purchaser (Abraham) allows himself to be overcharged because
the land he is buying has immediate emotional value to him, and it also
embodies what is today called future consideration.
6 Reading 1-1
Michael Grant, Atlas of Classical History From 1700 BC to AD 565, Fifth Edition (New York:
Routledge, 1994), page 1. Copied under licence from CANCOPY. Further reproduction
prohibited.
Unless otherwise indicated, the biblical quotations were taken from the Anchor Bible, gen. eds.
William F. Albright and David N. Freedman (Garden City, New York: Doubleday, 1964
Genesis; 1965 Proverbs; 1986 Mark; 1971 Matthew; 1988 2 Kings).
READING 1-2
Joseph the dreamer and state planner
The Biblical story of Joseph is recounted in Genesis Chapters 37-50. In the
Koran, the authorized version of which was established during the caliphate
of Uthman ca. C.E. 610, there is a selective version of it in Sura (the
equivalent of chapter) 12. Lets look at the Genesis story first and see what
aspects of economic life are embedded in this fascinating tale.
Joseph, great-grandson of Abraham and son of Jacob and Rachel, is favoured
by Jacob over his brothers, who jealously plot to kill him but eventually sell
him to travelling merchants. He is taken to Egypt where, after being jailed on
a false charge of sexual assault, he is brought to the Pharaohs (rulers)
attention because of his power of oneiromancy, which is the art of
interpreting dreams to foretell the future. He explains how a dream the
Pharaoh has means that Egypt and its neighbours will have seven years of
abundant crops followed by seven years of famine. The Pharaoh makes him
minister in charge of dealing with these coming events.
By Josephs economic plan, Egypt stores so much grain in government
granaries during the abundant years that all through the famine it has a
surplus, which is sold to all outlanders who come and buy. Among the
buyers come Josephs brothers, and Joseph cleverly effects a reconciliation
with them and with his father, who has long believed him to be dead. He
brings all of them to live in Egypt, where Jacob dies, asking to be buried in
the cave that lies in the field of Machpelah[i]n the land of Canaan the
field that Abraham bought from Ephronfor a burial site [Genesis 49:2930] (see Topic 1.1).
Reading 1-2 1
[After reuniting with his family,] Joseph settled his father and
brothers and gave them land holdings in Egypt, on the pick
of the land the region of Rameses as Pharaoh had
commanded. And Joseph sustained his father and brothers,
and his fathers entire household, with food, down to the
youngest.
There wasno food in any country, for the famine was very
severe; and the lands of Egypt and Canaan languished from
hunger. Joseph gathered in all the money that was to be
found in the land of Egypt, as payment for the rations that
were being dispensed, and he put the money in Pharaohs
palace.
And when the money in the land of Egypt and in the land of
Canaan was spent, all Egypt came to Joseph, pleading, Give
us bread, or we shall perish under your eyes, for the money is
gone. Joseph replied, Give me your livestock, and I will
make distribution in return for your livestock, since your
money is gone. So they brought their livestock to Joseph,
and he sold food to them in return for horses, for their stocks
of sheep and cattle, and for asses. Thus he saw them through
that year with bread in exchange for all their livestock.
2 Reading 1-2
And when that year was ended, they came to him the next
year and said to him, We cannot hide from my lord that,
with the money and the animal stocks made over to my lord,
there is nothing left at my lords disposal except our persons
and our farm-land. Why should we perish before your very
eyes, both we and our land? Take us and our land in exchange
for bread, and we shall become serfs to Pharaoh, with our
land; only give us seed, that we may survive and not perish,
and that the land not turn into a waste.
So Joseph acquired for Pharaoh all the farm-land in Egypt;
for every Egyptian sold his field, since the famine was too
much for them; thus did the land pass over to Pharaoh. As
for the people, Joseph reduced them to serfs from one end of
Egypts territory to the other. Only the priests land he did
not take over; for it was the priests allotment from Pharaoh,
and they lived off the allotment that Pharaoh had made them,
which is why their land was not sold.
Joseph told the people, Now that I have acquired you and
your land for Pharaoh, here is seed for you to sow the land.
But when the harvest is in, you must give a fifth to Pharaoh,
keeping four-fifths as seed for yourselves, as food for
yourselves and members of your households, and to feed the
children. They answered, You have saved our lives! We are
thankful to my lord that we can be serfs to Pharaoh. And
Joseph made it a land law in Egypt, which is still valid, that a
fifth should go to Pharaoh. Only the land of the priests did
not pass over to Pharaoh.
[Genesis 47:11-26]
Reading 1-2 3
As you have read, the only non-government individuals in Egypt who are
free on their own, choice land are the members of Josephs family. However,
this period as an economic elite in Egypt will end after Josephs generation
dies. A new [Pharaoh ascended] the throne of Egypt, one who did not know
about Joseph [Revised English Bible,1 Exodus 1:8].
Reflections and implications
This story of Josephs economic policy and executive skills is told in the
larger context of the history of the patriarchal-matriarchal family who have
not only Gods favour but also impressive resourcefulness. If you were to
read the whole Joseph story in Genesis Chapters 37-50, you would find
adventures and the supernatural mixed in with the administration of state
economic policy that we have focussed on in this topic.
Even in this condensed version of the story, however, you have some
interesting issues to consider. For instance, why are the Egyptians so happy
to be reduced to serfs on their own former land, saying to Joseph: You have
saved our lives! We are thankful to my lord that we can be serfs to Pharaoh?
This question could be put in another way: Why does the Old Testament
here seem to be advocating a system of state monopoly? One answer to both
versions of the question is that the romance side the story-of-dreams-andsuccess-against-incredible-odds side of the story is being stressed.
However, the narrator clearly is fascinated by the methodology of exploiting
a crisis to build a monopoly or oligopoly, which is market control by one or
a few sellers, respectively. This early description of a state monopoly could be
lifted out of context and read as an endorsement (in a religious text!) of a
socioeconomic policy. But it could also be seen as an illustration of an
economic and moral lesson: even with the best of intentions, theres a danger
of falling into oppressive monopolistic practices.
An interesting commentary on the Joseph story was made by the sixteenthcentury Protestant reformer Martin Luther (1483-1546):
If anyone wishes to cite [as monopoly] the example of Joseph
in Genesis 41 [:48-57; 47:13-26], how the holy man gathered
up all the grain in the country and afterward, in a time of
famine, bought with it for the king of Egypt all the money,
cattle, land and people which certainly seems to have been
a monopoly, or selfish profiteering this is the answer:
Josephs transaction was no monopoly, but a common and
honest purchase, such as was customary in that country. For
he prevented no one else from buying during the good years,
but it was his God-given wisdom that enabled him to gather
in the kings grain during the seven years of plenty, while
others were accumulating little or nothing. The text does not
say that he alone bought up the grain, but that he gathered it
into the kings cities [Genesis 41:48]. If others did not do
likewise, the loss was their own. The common man usually
4 Reading 1-2
Reading 1-2 5
Summary
You have now seen that texts of Judaism, Islam, and Buddhism contain
stories of value-exchange, macroeconomic policy, and entrepreneurship. You
will have noticed that all these texts commend entrepreneurial skill. They also
connect human business enterprise and success with divine favour. The
modern expression, God helps those who help themselves, is not far
removed from the spirit of these passages of Wisdom literature.
6 Reading 1-2
Revised English Bible (Cambridge and Oxford: Cambridge University Press and Oxford
University Press, 1989).
Martin Luther, On Trade and Usury, in Luthers Works, ed. Walther I. Brandt (Philadelphia:
Muhlenberg Press, 1962), Volume 45, pages 262-263.
The Koran, Fourth edition, tr. N.J. Dawood (Harmondsworth: Penguin Books Ltd., 1974),
page 43.
READING 1-3
The story of Little Wayman
Once on a time when Brahmadatta was reigning in Benares in Kasi, the
Bodhisatta [the Supreme Buddha] was born into the Treasurers family, and
growing up, was made Treasurer, being called Treasurer Little. A wise and
clever man was he, with a keen eye for signs and omens. One day on his way
to wait upon the king, he came on a dead mouse lying on the road; and,
taking note of the position of the stars at that moment, he said, Any decent
young fellow with his wits about him has only to pick that mouse up, and he
might start a business and keep a wife.
His words were overheard by [Little Wayman] a young man of good family
but reduced circumstances, who said to himself, Thats a man who has
always got a reason for what he says. And accordingly he picked up the
mouse, which he sold for a farthing at a tavern for their cat.
With the farthing he got molasses and took drinking water in a waterpot.
Coming on flower-gatherers returning from the forest, he gave each a tiny
quantity of the molasses and ladled the water out to them; and thus in a little
while he obtained eight pennies.
Later, one rainy and windy day, the wind blew down a quantity of rotten
branches and boughs and leaves in the kings [garden], and the gardener did
not see how to clear them away. Then up came the young man with an offer
to remove the lot, if the wood and leaves might be his. The gardener closed
with the offer on the spot. Then this apt pupil of Treasurer Little repaired to
the childrens playground and in a very little while had got them by bribes of
molasses to collect every stick and leaf in the place into a heap at the
entrance to the [garden]. Just then the kings potter was on the look out for
fuel to fire bowls for the palace, and coming on this heap, took the lot off his
hands. The sale of his wood brought in sixteen pennies to this pupil of
Treasurer Little, as well as five bowls and other vessels.
Having now twenty-four pennies in all, a plan occurred to him. He went to
the vicinity of the city-gate with a jar full of water and supplied 500 mowers
with water to drink. Said they, Youve done us a good turn, friend. What
can we do for you? Oh, Ill tell you when I want your aid, said he; and as
he went about, he struck up an intimacy with a land-trader and a sea-trader.
Said the former to him, To-morrow there will come to town a horse-dealer
with 500 horses to sell. On hearing this piece of news, he said to the
mowers, I want each of you to-day to give me a bundle of grass and not
to sell your own grass till mine is sold. Certainly, said they, and delivered
the 500 bundles of grass at his house. Unable to get grass for his horses
elsewhere, the dealer purchased our friends grass for a thousand pieces.
Only a few days later his sea-trading friend brought him news of the arrival
of a large ship in port; and another plan struck him. He hired for eight pence
Humanist Issues in Commercial Practice
Reading 1-3 1
a well-appointed carriage which plied for hire by the hour, and went in great
style down to the port. Having bought the ship on credit and deposited his
signet-ring as security, he had a pavilion pitched hard by and said to his
people as he took his seat inside, When merchants are being shewn in, let
them be passed on by three successive ushers into my presence.
Hearing that a ship had arrived in port, about a hundred merchants came
down to buy the cargo; only to be told that they could not have it as a great
merchant had already made a payment on account. So away they all went to
the young man; and the footmen duly announced them by three successive
ushers, as had been arranged beforehand. Each man of the hundred severally
gave him a thousand pieces to buy a share in the ship and then a further
thousand each to buy him out altogether. So it was with 200,000 pieces that
this pupil of Treasurer Little returned to Benares.
Actuated by a desire to shew his gratitude, he went with one hundred
thousand pieces to call on Treasurer Little. How did you come by all this
wealth? asked the Treasurer. In four short months, simply by following
your advice, replied the young man; and he told him the whole story,
starting with the dead mouse. Thought Lord High Treasurer Little, on
hearing all this, I must see that a young fellow of these parts does not fall
into anybody elses hands. So he married him to his own grown-up daughter
and settled all the family estates on the young man. And at the Treasurers
death, he became Treasurer in that city. And the Bodhisatta passed away to
fare according to his deserts.
His lesson ended, the Supreme Buddha, the All-Knowing One himself, said,
It is through me, Brethren, that Little Wayman has just now risen to great
things in the Faith, as in times past to great things in the way of wealth. His
lesson thus finished, the Master made the connexion between the two stories
he had told and identified the Birth in these concluding words, Little
Wayman was in those days the pupil of Treasurer Little, and I myself Lord
High Treasurer Little.
Source: The Jataka: Stories of the Buddhas Former Births, tr. Robert Chalmers, ed. E.B. Cowell (Cambridge:
Cambridge University Press, 1895; Ann Arbor: University Micro-Films International, 1976), Book I,
Number 4, pages 19-20. Reproduced with permission.
2 Reading 1-3
READING 1-4
Early laws and attitudes about the use of
money and interest
Criminal and civil law in the Old Testament
Old Testament law is chiefly set out in the Pentateuch the first five books,
Genesis, Exodus, Leviticus, Numbers, and Deuteronomy, traditionally called
the books of the Mosaic law. Exodus Chapters 19-24 describe the
formalizations of the Covenant which God made verbally with Abraham,
Isaac, and Jacob. At Mount Sinai, Moses receives the Covenant in writing,
and [takes] the Book of the Covenant and [reads] it aloud for the people to
hear [Exodus 24:7]. This Covenant code has comprehensive rules of
worship, civil and criminal law, and property. It fuses religious law with what
would now be seen as criminal and civil codes. Among its economic aspects
are schedules of compensation, in money and in kind. For example,
When, in the course of a brawl, a man knocks against a
pregnant woman so that she has a miscarriage but suffers no
further injury, then the offender must pay whatever fine the
womans husband demands after assessment. But where
injury ensues you are to give life for life, eye for eye, tooth for
tooth, hand for hand, foot for foot, burn for burn, bruise for
bruise.
[Revised English Bible, Exodus 21:22-25]
This well-known passage is often called the lex talionis (law of retaliation or
revenge). It frequently is interpreted as requiring acts of revenge, but it can
also be read as limiting them: that is, by setting maximum penalties. You
should notice that it prescribes a fine for causing a miscarriage. Other
monetary and replacement-with-interest indemnities (compensation for
damage or loss) are set out, among them are
If [an ox whose owner knows it is vicious] gores a slave or a
slave-girl, its owner must pay thirty shekels of silver to their
master.
[Exodus 21:32]
The lex talionis is not explicitly being replaced here, but a commutative
system of fines, in money or in kind, for causing harm to persons is codified.
In this Revised English Bible translation of Exodus 21:32, taking a slaves life
incurs an indemnity of thirty shekels of silver; other English translations read
Humanist Issues in Commercial Practice
Reading 1-4 1
thirty pieces. This sum will come around again in the New Testament in
Topic 1.5. In Modules 2 and 3, you will see instances of the centuries-long
process of disengaging commercial practices from religious authority.
Reading 1-4 3
Summary
Early religious and philosophic thought deals with matters such as
compensation, fines, and other forms of indemnity. A continuing issue is that
of usury or interest-taking, which is invariably censured. You have read the
classical Greek philosophers bitterly condemning usury. To Aristotle, it was
the most hated sort of money-making; Plato said that even small lenders
Humanist Issues in Commercial Practice
Reading 1-4 5
were no better than pimps. The Koran consigns interest-takers to Hellfirefor ever. Old Testament law initially forbade all interest-taking, but its
final version, in the book of Deuteronomy, allowed interest on loans to
non-Jews; that books author apparently realized that the practice was
impossible to eliminate.
1
Barry Lee Eichler, in Harpers Bible Dictionary, gen. ed. Paul J. Achtemeier (San Francisco:
Harper & Row, 1985), page 571.
Plato, The Republic, tr. F.M. Cornford (Oxford: Oxford University Press, 1959),
Chapter XXXI, VIII.555B, page 280.
Plato, Laws, ed. A.E. Taylor, Everymans Library Edition (London: J.M. Dent & Sons Ltd.,
1966), Book V, page 741.
Aristotle, The Ethics of Aristotle, tr. J.A.K. Thomson, Penguin Classics (Harmondsworth:
Penguin Books Ltd., 1961), Book 4, page 115.
Aristotle, Politics, tr. B. Jowett (New York: Modern Library, 1943), Book 1, Chapter 10,
1258h.
6 Reading 1-4
READING 1-5
Origins of taxation and coinage
As you have read, when the Israelites trekked toward the Promised Land,
they were given a code of religious observance combined with rules of
socioeconomic conduct. A system of contributions was enjoined, to fund the
creation and maintenance of their religious sanctuary, the tabernacle or tent
of meeting [Exodus 33:7-11] precursor of Israels temple. Exodus 25 and
30 outline the process of contributing and collecting a personal offering for
ceremonial purposes. In a later Old Testament book, this offering is referred
to as the tax imposed on Israel in the wilderness by Moses [2 Chronicles
24:9]. This tax was established as follows:
The Lord spoke to Moses and said: Tell the Israelites to set
aside a contribution for me; you are to accept whatever
contribution each man freely offers. You may accept any of
the following: gold, silver, copper; violet, purple and scarlet
yarn; fine linen and goats hair; tanned rams skins and
dugong-hides; acacia-wood; oil for the [sanctuary] lamp,
spices for the anointing oil and for the fragrant incense;
cornelians and other stones ready for setting on the ephod
[the priests vestment] and the [priests] breastpiece.
Make me a sanctuary, and I shall dwell among the Israelites.
[Revised English Bible, Exodus 25:1-8]
The Lord said to Moses: When you take a census of the
Israelites, each man is to give a ransom for his life to the
Lord, to avert plague among them during the registration. As
each man crosses over to those already counted as he comes
of age, he must give half a shekel by the sacred standard at
the rate of twenty gerahs to the shekel, as a contribution
levied for the Lord. Everyone aged twenty or more who has
crossed over to those already counted will give the
contribution for the Lord to make expiation for your lives.
The money received from the Israelites for expiation you are
to apply to the service of the Tent of Meeting. The expiation
for your lives is to be a reminder of the Israelites before the
Lord.
[Revised English Bible, Exodus 30:11-16]
Reading 1-5 1
Reading 1-5 3
4 Reading 1-5
Advantages of coinage
With increasing offerings and tribute, tax, excise, and toll payments, it was
inevitable that coinage would come into general use. Croesus (reigned 560546 B.C.E.), the fabulously rich sixth century B.C.E. king of Lydia in Asia
Minor, is traditionally associated with the first coinage. The Greek historian
Herodotus (ca. 480-425 B.C.E.), in his account of the Persian invasion of
Greece, tells how Croesus appeased the oracle (shrine) of Apollo, the god of
prophecy, in the Greek city of Delphi, by sending gold and silver. Croesus
essentially was taking and paying for an opinion poll, somewhat in the
manner of a modern politician:
On those of the Lydians who were to bring these gifts to the
shrines Croesus laid command that they should ask the
oracles: Shall Croesus make war on the Persians, and shall
he take to himself any allied force? When the Lydians came
to where they were sent and dedicated the offerings, they
consulted the oracles, saying: Croesus, king of the Lydians
and of other nations, inasmuch as he has come to think that
these are the only oracles among [humankind], has sent to
you gifts worthy of your discoveries; so now it is you he asks
if he should make war upon the Persians and if he should
take to himself any allied force. That was their question; and
the judgement of both oracles came out the same, declaring
to Croesus that if he made war on the Persians he would
destroy a mighty empire; and they advised him to find out
which were the most powerful of the Greek peoples and
make them his friends.
When Croesus heard the answers that were returned to him
from the god, he was exceedingly pleased at the oracles,
expecting of a certainty that he would destroy the kingdom of
Cyrus; and he sent to Delphi and paid a fee to the Delphians
at two gold staters a man (having found out their number by
inquiry). The Delphians in return gave Croesus and the
Lydians the right of primacy of consultation of the oracle,
remission of all charges, and the best seats at the festivals;
and, moreover, anyone of the Lydians who chose to might
become a Delphic citizen for all time to come.6
These gold staters were as much nuggets as coins, but they had consistent
weights and were stamped with official designs.
Croesus gesture of paying the Delphian priests or possibly the citizens
two staters each was a clever move: a general distribution, spreading the
wealth, is politically popular, and even now the term as rich as Croesus is
still used. The stamped gold pieces told every recipient who their benefactor
was just as cheques with the federal governments logo purport to do in
Canada today. As you can appreciate, just as soon as coins were developed,
their usefulness for sending political messages was perceived. And, being
government-issued, coined money could be government-controlled.
Humanist Issues in Commercial Practice
Reading 1-5 5
Coinage was also useful in times of national crisis. For example, Thucydides
(ca. 460-400 B.C.E.) history of the Peloponnesian War (431-404 B.C.E.)
between Athens and Sparta tells how the Athenian statesman Pericles
advised the citizens that
success in war depended principally upon conduct and
capital. Here they had no reason to [be despondent]. Apart
from other sources of income, an average revenue of six
hundred talents of silver was drawn from the tribute of the
allies; and there were still six thousand talents of coined silver
in the Acropolis, out of nine thousand seven hundred that
had once been there, from which the money had been taken
for the porch of the Acropolis, the other public buildings,
and for Potidaea. This did not include the uncoined gold and
silver in public and private offerings, the sacred vessels for
the processions and games, the Median spoils, and similar
resources to the amount of five hundred talents. To this he
added the treasures of the other temples. These were by no
means inconsiderable, and might fairly be used.
Nay, if they were ever absolutely driven to it, they might take
even the gold ornaments of Athene herself; for the statue
contained forty talents of pure gold and it was all removable.
This might be used for self-preservation, and must every
penny of it be restored. Such was their financial position
surely a satisfactory one.7
Reading 1-5 7
Themes which Aristotle deals with in the passage such as natural and
unnatural ways of acquiring wealth, attitudes toward riches and value,
futures trading, and monopolies will recur in the course. When reading
the full Politics passage Reading 1-6, you should also carefully notice what
Aristotle specifies as legitimate and personally fulfilling methods of wealthgetting. The Midas legend to which Aristotle refers is also included as
Reading 1-7.
Now go to Reading 1-6, which includes the Aristotle quotation you just read,
and then to Reading 1-7. You will be referred to Reading 1-6 in future topics.
Summary
You have seen how early monetization (the development of coinage)
facilitated the payment of religious tithes and state taxes, and fostered trade.
But it also introduced the possibility of individuals monopolizing wealth by
accumulating and hoarding it. Early economic theory favoured the free
circulation of money. Coinage, being used by kings and governors, could be
controlled by them one positive aspect of this control is that their
precious metal content was regulated.
1
J.W. Betlyon, Harpers Bible Dictionary, gen. ed. P.J. Achtemeier (San Francisco: Harper &
Row, 1985), page 649.
Josephus, Antiquities of the Jews, tr. R. Marcus, Loeb Classical Library (Cambridge,
Massachusetts: Harvard University Press, 1998) Book 14, paragraph 203.
Quoted in Money: A History, ed. Jonathan Williams (New York: St. Martins Press, 1997),
page 135.
Herodotus, The History, tr. David Greene (Chicago: University of Chicago Press, 1987),
Volume 1, paragraphs 53-54.
8 Reading 1-5
Thucydides, The Complete Writings of Thucydides: The Peloponnesian War, ed. John H. Finley,
Jr. (New York: Modern Library, 1954), Book 2, Chapter 13, page 92.
Aristotle, Politics, Book 1, Chapter 9, 1247a-1259a.
READING 1-6
Aristotle on the use of coinage and acquisition
of wealth
The art of exchange extends to all [possessions], and it arises at first from
what is natural, from the circumstance that some have too little, others too
much. Hence we may infer that retail trade is not a natural part of the art of
getting wealth; had it been so, men would have ceased to exchange when
they had enough. In the first community, indeed, which is the family, this art
is obviously of no use, but it begins to be useful when the society increases.
For the members of the family originally had all things in common; later,
when the family divided into parts, the parts shared in many things, and
different parts in different things, which they had to give in exchange for
what they wanted, a kind of barter which is still practised among barbarous
nations who exchange with one another the necessaries of life and nothing
more; giving and receiving wine, for example, in exchange for corn, and the
like. This sort of barter is not part of the wealth-getting art and is not
contrary to nature, but is needed for the satisfaction of mens natural wants.
The other or more complex form of exchange grew, as might have been
inferred, out of the simpler.
When the inhabitants of one country became more dependent on those of
another, and they imported what they needed, and exported what they had
too much of, money necessarily came into use. For the various necessaries of
life are not easily carried about, and hence men agreed to employ in their
dealings with each other something which was intrinsically useful and easily
applicable to the purposes of life, for example, iron, silver, and the like. Of
this the value was at first measured simply by size and weight, but in process
of time they put a stamp upon it, to save the trouble of weighing and to mark
the value.
On retail trade
When the use of coin had once been discovered, out of the barter of
necessary articles arose the other art of wealth-getting, namely, retail trade;
which was at first probably a simple matter, but became more complicated as
soon as men learned by experience whence and by what exchanges the
greatest profit might be made. Originating in the use of coin, the art of
getting wealth is generally thought to be chiefly concerned with it, and to be
the art which produces riches and wealth; having to consider how they may
be accumulated. Indeed, riches is assumed by many to be only a quantity of
coin, because the arts of getting wealth and retail trade are concerned with
coin. Others maintain that coined money is a mere sham, a thing not natural,
but conventional only, because, if the users substitute another commodity for
it, it is worthless, and because it is not useful as a means to any of the
necessities of life, and, indeed, he who is rich in coin may often be in want of
necessary food. But how can that be wealth of which a man may have a great
Reading 1-6 1
abundance and yet perish with hunger, like Midas in the fable, whose
insatiable prayer turned everything that was set before him into gold?
Hence men seek after a better notion of riches and of the art of getting
wealth than the mere acquisition of coin, and they are right. For natural
riches and the natural art of wealth-getting are a different thing; in their true
form they are part of the management of a household; whereas retail trade is
the art of producing wealth, not in every way, but by exchange. And it [retail
trade] is thought to be concerned with coin; for coin is the unit of exchange
and the measure or limit of it. And there is no bound to the riches which
spring from this art of wealth-getting.
In this art of wealth-getting there is no limit of the end, which is riches of the
spurious kind, and the acquisition of wealth. But the art of wealth-getting
which consists in household management, on the other hand, has a limit; the
unlimited acquisition of wealth is not its business. And, therefore, in one
point of view, all riches must have a limit; nevertheless, as a matter of fact,
we find the opposite to be the case; for all getters of wealth increase their
hoard of coin without limit.
Hence some persons are led to believe that getting wealth is the object of
household management, and the whole idea of their lives is that they ought
either to increase their money without limit, or at any rate not to lose it. The
origin of this disposition in men is that they are intent upon living only, and
not upon living well; and, as their desires are unlimited, they also desire that
the means of gratifying them should be without limit. Those who do aim at a
good life seek the means of obtaining bodily pleasures; and, since the
enjoyment of these appears to depend on property, they are absorbed in
getting wealth: and so there arises the second species of wealth-getting. For,
as their enjoyment is in excess, they seek an art which produces the excess of
enjoyment; and, if they are not able to supply their pleasures by the art of
getting wealth, they try other arts, using in turn every faculty in a manner
contrary to nature. The quality of courage, for example, is not intended to
make wealth, but to inspire confidence; neither is this the aim of the generals
or of the physicians art; but the one aims at victory and the other at health.
Nevertheless, some men turn every quality or art into a means of getting
wealth; this they conceive to be the end, and to the promotion of the end
they think all things must contribute.
unnatural, and a mode by which men gain from one another. The most hated
sort, and with the greatest reason, is usury, which makes a gain out of money
itself, and not from the natural object of it. For money was intended to be
used in exchange, but not to increase at interest. And this term interest,
which means the birth of money from money, is applied to the breeding of
money because the offspring resembles the parent. Wherefore of all modes
of getting wealth this is the most unnatural.
Enough has been said about the theory of wealth-getting; we will now
proceed to the practical part. The discussion of such matters is not unworthy
of philosophy, but to be engaged in them practically is illiberal and irksome.
The useful parts of wealth-getting are, first, the knowledge of live-stock
which are most profitable, and where, and how as, for example, what sort
of horses or sheep or oxen or any other animals are most likely to give a
return. A man ought to know which of these pay better than others, and
which pay best in particular places, for some do better in one place and some
in another. Secondly, husbandry, which may be either tillage or planting, and
the keeping of bees and of fish, or fowl, or of any animals which may be
useful to man. These are the divisions of the true or proper art of wealthgetting and come first.
Of the other, which consists in exchange, the first and most important
division is commerce (of which there are three kinds the provision of a
ship, the conveyance of goods, exposure for sale these again differing as
they are safer or more profitable), the second is usury, the third, service for
hire of this, one kind is employed in the mechanical arts, the other in
unskilled and bodily labour. There is still a third sort of wealth-getting
intermediate between this and the first or natural mode which is partly
natural, but is also concerned with exchange, viz., the industries that made
their profit from the earth, and from things growing from the earth which,
although they bear no fruit, are nevertheless profitable; for example, the
cutting of timber and all mining. The art of mining, by which minerals are
obtained, itself has many branches, for there are various kinds of things dug
out of the earth.
Reading 1-6 3
supposed to have given a striking proof of his wisdom, but, as I was saying,
his device for getting wealth is of universal application, and is nothing but the
creation of a monopoly. It is an art often practised by cities when they are in
want of money; they make a monopoly of provisions.
Source: Politics, translated by B. Jowett from Politics and Economics from The Oxford Translation of Aristotle,
edited by W.D. Ross (Oxford: Oxford University Press, 1921), Volume 10, Book 1, Chapter 9, 1247a-1259a,
pages 67-74, Chapter 12, pages 73-74. Reproduced by permission of Oxford University Press
(http://www.oup.com).
4 Reading 1-6
READING 1-7
The Midas story
The god [Bacchus] was glad to have his tutor back, and in return gave Midas
the right to choose himself a gift a privilege which Midas welcomed, but
one which did him little good, for he was fated to make poor use of the
opportunity he was given. He said to the god: Grant that whatever my
person touches be turned to yellow gold. Bacchus, though sorry that Midas
had not asked for something better, granted his request, and presented him
with this baneful gift. The Phrygian king went off cheerfully, delighted with
the misfortune which had befallen him. He tested the good faith of Bacchus
promise by touching this and that, and could scarcely believe his own senses
when he broke a green twig from a low-growing branch of oak, and the twig
turned to gold. He lifted a stone from the ground and the stone, likewise,
gleamed pale gold. He touched a sod of earth and the earth, by the power of
his touch, became a lump of ore. The dry ears of corn which he gathered
were a harvest of golden metal, and when he plucked an apple from a tree
and held it in his hand, you would have thought that the Hesperides had
given it him. If he laid his finger on the pillars of his lofty doorways, they
were seen to shine and glitter, and even when he washed his hands in clear
water, the trickles that flowed over his palms might have served to deceive
Danae. He dreamed of everything turned to gold, and his hopes soared
beyond the limits of his imagination.
So he exulted in his good fortune, while servants set before him tables piled
high with meats, and with bread in abundance. But then, when he touched a
piece of bread, it grew stiff and hard: if he hungrily tried to bite into the
meat, a sheet of gold encased the food, as soon as his teeth came in contact
with it. He took some wine, itself the discovery of the god who had endowed
him with his power, and adding clear water, mixed himself a drink: the liquid
could be seen turning to molten gold as it passed his lips.
Wretched in spite of his riches, dismayed by the strange disaster which had
befallen him, Midas prayed for a way of escape from his wealth, loathing
what he had lately desired. No amount of food could relieve his hunger,
parching thirst burned his throat, and he was tortured, as he deserved, by the
gold he now hated. Raising his shining arms, he stretched his hands to
heaven and cried: Forgive me, father Bacchus! I have sinned, yet pity me, I
pray, and save me speedily from this disaster that promised so fair! The gods
are kind: when Midas confessed his fault, Bacchus restored him to his former
state, cancelling the gift which, in fulfilment of his promise, he had given the
king. And now, he said, to rid yourself of the remaining traces of that gold
which you so foolishly desired, go to the river close by the great city of
Sardis. Then make your way along the Lydian ridge, travelling upstream till
you come to the waters source. There, where the foaming spring bubbles up
in great abundance, plunge your head and body in the water and, at the same
time, wash away your crime. The king went to the spring as he was bidden:
Humanist Issues in Commercial Practice
Reading 1-7 1
his power to change things into gold passed from his person into the stream,
and coloured its waters. Even to-day, though the vein of ore is now so
ancient, the soil of the fields is hardened by the grains it received, and gleams
with gold where the water from the river moistens its sods.
Source: Of Vehicles pages 248-250 from The Metamorphoses of Ovid translated by Mary M. Innes (Penguin
Classics, 1955), copyright Mary M. Innes, 1955. Reproduced by permission of Penguin Books Ltd.
(http://www.penguin.co.uk).
2 Reading 1-7
READING 1-8
The New Testament on wealth and the perversions of
money
Jesus attitude to wealth and salvation
When Jesus drives retailers and money-changers out of the Temple in
Jerusalem, the economic context is that all financial transactions in the
Temple had to be in temple-recognized currency such as shekels from Tyre
(whose King had contributed money and craftsmen when Solomon was
building the Temple a thousand years before). Licensed money-changers
were authorized to do currency exchanges in the Temple at favourable (to
them) discounts. Doves (pigeons) were also prescribed as temple offerings,
and were retailed to worshippers, probably at a considerable mark-up this
currency exchange and profiteering activity causes Jesus to object that the
Temple was being made "a robbers den" [Matthew 21:13].
Jesus objection to commerce in the Temple probably influenced a passage in
the Koran where the rules for pilgrimage to Mecca are set out. The Koran
seems to imply that believers can, up to a point, combine the pilgrimage with
business:
It shall be no offence for you to seek the bounty of your Lord
by trading. When you come running from Arafat [near
Mecca] remember Allah as you approach the sacred
monument.
[Koran 2:197-198]
The prescription may mean that one can trade only to a certain distance from
the mosque at Mecca a rule consistent with Jesus outlook.
Yet Jesus first disciple is the tax collector or customs officer Matthew, who
is called to follow Jesus while he is at work [Matthew 9:9-11]. The biblical
term for this revenue- collecting functionary is publican. Jews who were
publicans were held in general contempt because they worked directly or
indirectly for the occupying power, and were considered to be ritually impure
from handling Roman coins with pagan symbols on them. They also were
suspected of fraud. When Jesus dines with Matthew and his tax-collector
colleagues at Matthews house [Matthew 9:10], or with the wealthy chief tax
collector Zacchaeus [Luke 19:1-9], he is accused of consorting with
publicans and sinners.
In addition, Jesus adopts a provocative attitude to wealth and salvation. To a
rich man who asks him how one can win eternal life, he answers that
complete disinvestment or renunciation of wealth is necessary:
Sell everything you have and give to the poor, and you will
have measure in heaven; then come and follow me. When
[the questioner] heard this his heart sank, for he was a very
Humanist Issues in Commercial Practice
Reading 1-8 1
rich man. When Jesus saw it he said, How hard it is for the
wealthy to enter the kingdom of God! It is easier for a camel
to go through the eye of a needle than for a rich man to enter
the kingdom of God.
[Revised English Bible, Luke 18:22-25]
The rich man is being tested to see if his commitment is genuine (it isnt).
But the passage often is read literally. In the next chapter of Lukes gospel,
Jesus invites himself to Zacchaeus the tax collectors house, where Zacchaeus
donates half his possessions to charity a generous but not total
disinvestment and Jesus responds, Today salvation has come to this
house [Luke 19:1-9].
When reading Lukes account of Jesus counselling disinvestment, it is worth
knowing that Luke wrote his Gospel later than those of Mark and Matthew,
and with expectations of an imminent parousia. The parousia is the expected
Second Coming of Jesus. It is linked with Bible declarations of a new
millennium of peace and with the end of this world. After this event, money
would be of no consequence. Therefore there is no doubting Lukes anticapital propensities.1
2 Reading 1-8
Then the one who had received one talent came forward.
Master, he said, knowing you to be a hard man, reaping
where you did not sow, and gathering up where you had not
winnowed, I was afraid, and went and hid your talent in the
ground. See you have what belongs to you.
But his master answered him: You worthless, lazy slave! You
know that I reap where I have not sowed, and I gather where
I have not winnowed, so you ought to have invested my
money with bankers, so that when I came again I should have
received my own back, with interest. Therefore take away
from him the one talent, and give it to the man who has ten
talents. For to everyone who has, more will be given, and he
will have plenty, but from the man who has nothing even
what he has will be taken away.
[Matthew 25:14-29]
The parables narrative context is the worldly matter of putting money to
work: the investing and not investing of large assets, or earning interest
from them. In New Testament times, a talent was equivalent to six
thousand denarii [plural of denarius]. (You may recall from earlier in this
topic that one denarius was paid as wage for a days labour.) In the Middle
Ages, the word talent came to be used in English as a synonym for abilities
or natural gifts, but here the parables narrative hook to catch the listener or
reader is the impressive sums (especially huge in the servants eyes) the
master is handing over in trust.
Two of the recipients are enterprising. They put [the talents] to work and
double them, obviously by astute investment. But the third is so
overwhelmed by this fiduciary challenge that he literally buries the money
and realizes no gain. Notice that the master when dismissing him says that at
least the servant should have invested [the] money with bankers, so that
when I came again I should have received my own back, with interest.
Though the parables religious theme is that God will call his people to
account at the Second Coming or (same thing) Last Judgment, the
resourceful commercial behaviour is commended. The storys surface layer of
meaning a tale of entrepreneurial success on one hand and commercial
irresoluteness on the other is therefore compelling.
Reading 1-8 3
a sacred office by anointing him for burial [Matthew 26:10-13]. In the same
vein he recognizes the monetary sacrifice of the widow who contributes her
mite or lepton:
As Jesus sat by the [temple] treasury, he watched as the
crowds put money into the treasury. Many rich people put in
large sums. A poor widow came, and dropped in two copper
coins, together worth less than one cent. He called his
disciples to him. I tell you truly, he said, this poor widow
gave more than all those who are contributing to the treasury.
They have given from their superfluity, but she, out of her
poverty, has put in all she had, all she had to live on.
[Mark 12:41-44]
Here he affirms that money, when properly used, can have not only its
accepted denomination but an added or surplus value, estimated (if it can
be) in emotional, ethical, even spiritual, terms. In explaining those
contributions, of the ointment and the mite, Jesus argues that the womens
decisions to spend what money they have brings them a satisfaction that is in
itself an added or surplus value over and above the moneys denomination.
4 Reading 1-8
This is why Jesus sees the same piece of currency being at one and the same
time Caesars money and Gods, depending on how the money is used. A
delegation of Pharisees (strict observers and interpreters of the Mosaic law)
and political supporters of King Herod, Romes puppet ruler in Judea, comes
to him with a church-or-state question: Is it lawful to pay taxes to Caesar, or
not? Since Jews, who paid temple tax, also had to pay tax to the occupying
authority, this was a no-win question. To answer yes might satisfy the lawyer
but certainly would allow the Pharisees to accuse Jesus of setting Caesar
above the God of the Jews. To answer no was politically dangerous, for Jesus
was Caesars subject:
Jesus, aware of their malice, said, You casuists [people who
reason cleverly but falsely]! Why put me on trial? Show me
the tax money. They brought him a denarius, and Jesus
asked them, Whose representation and inscription is this?
Caesars, they said. Then pay to Caesar what belongs to
Caesar, he said, and pay to God what belongs to God.
When they heard this, they wondered, left him, and went
away.
[Matthew 22:15-21]
The tax money Jesus asks to be shown is a Roman denarius, which carried
the Emperors portrait and an inscription proclaiming Caesars divinity a
political and blasphemous proclamation that was a continuing offence to
Jews. He asks his questioners if they know to whom the portrait and
inscription refer; then he gives them his famous answer, which is both
ambiguous and precise about the meaning of to God. Those who consider
Caesar to be a god will pay the tax to Caesar both as Emperor and as a god.
Those who recognize Caesar as political ruler, but only a man, can pay the
political tax but continue to worship Israels God and pay the temple tax with
Jewish coins. Jesus clever use of the coin illustrates that it is up to the
individual to believe or not believe in the coins pompous imagery and
inscription, and that, with money, conscience choices always have to be
made.
A miraculous payment
In Matthew 17, there is another story, this time not about Caesars tax but
the temple tax, which by Jesus time was paid by all adult male Jews in
Palestine and throughout the Roman Empire. The Roman administration cooperated with the temple authorities collecting this tax; the annual payment
was half a Jewish shekel per man. Jesus and his disciples are Jews but also
(from the point of view of the gospel writers, who are writing decades after
Jesus death) Jewish Christians. In this story, Jesus clearly regards himself and
his followers to be exempt. But so as not to embarrass the zealous tax
collectors who accost Peter, Jesus agrees to pay. But there is no money, and
so to find a shekel, a little miracle has to be performed.
When they came to Capernaum, the collectors of the halfshekel tax came to Peter [also called Simon], asking, Does
not your master pay the tax? and he replied, Yes. When he
reached home, Jesus asked him first, How does it appear to
Humanist Issues in Commercial Practice
Reading 1-8 5
Reading 1-8 7
(Topic 1.3). Matthew is the only gospel writer who tells that Judas tried to
reverse what he had done.
In the narrative of how Judas attempts to give the money back actually
trying to buy Jesus life again his revulsion at himself and at the money is
clear. When he throws it at the sanctuary and the priests actually consider for
a minute whether to put it back in the temple treasury, there is a sense of the
terrible corruption of everyone in the story who has touched the coins. The
coins are neutral, just tokens. When the priests call the thirty pieces blood
money, they are attaching (as psychologists say, transferring) their own guilt
to the money. Matthews story is probably the most powerful of all
representations of the human psychological engagement with money.
A second gravesite
This money-is-as-it-is-used aspect of the betrayal story does not close with
the purchase of the Field of Blood. Judas unwitting and the priests selfjustifying purchase of a charitable gravesite for foreigners is contrasted, in the
same chapter, with the relation of how Jesus grave and burial costs are
donated:
At evening there came a rich man from Arimathea, named
Joseph, who was attached to Jesus, and he went in to Pilate
and asked for the body of Jesus, and Pilate ordered it to be
given to him. Joseph took the body, wrapped it in clean linen,
laid it in a new tomb of his own which he had dug out of the
rock, rolled a great stone to the door of the tomb, and went
away.
[Matthew 27:57-60]
This second gravesite is thus given altruistically a Jews Good Samaritan
gesture. The first gravesite, Potters Field, is bought for a rate that is both a
slaves price and a kings ransom. That is the range of moneys potential.
You also saw in the Abraham-Ephron transaction how Abraham was willing
to pay any sum to acquire a permanent gravesite. Abraham is engaged in an
act of piety. So Abraham essentially throws money at Ephron; what matters
to him is that the transaction be binding, and value tendered and received
will make it so.
The word piety derives from the Latin pius, dutiful, and means both
careful of the duties owed by created beings to God and faithful in duties
naturally owed to parents, relatives, friends, superiors, etc.2 The piety and
willingness to spend involved in the acquisition of the graves of Sarah and
Jesus could not have been expressed without the money of Abraham and
Joseph of Arimathea. The Potters Field burial place in Matthew 27 is paid
for with blood money. (A potters field is still defined as a burial place for
unidentified persons or the poor.) As Jesus logically suggested about the
denarius, money itself is indifferently ready to be Gods or Caesars.
8 Reading 1-8
Summary
You have seen how Jesus pronouncements about money and the account of
Judas betrayal suggest that money itself is morally neutral, and takes on
negative or positive value including added value according to how
it is used. From the story of Sarahs gravesite (in Topic 1.1) through the
stories of Potters Field and the grave of Jesus, the ethics of exchange grow
exclusively out of human motivations.
1
Barry Gordon, The Economic Problem in Biblical and Patristic Thought (Leiden: E.J. Brill,
1989), page 65.
The Compact Edition of the Oxford English Dictionary (New York: Oxford University Press,
1977), Volume 1, page 892.
George Simmel, Philosophy of Money, tr. Tom Bottomore and David Frisby (London and New
York: Routledge, 1990), page 210.
Reading 1-8 9
READING 1-9
Womens work and household economics
In classical Greek literature, including the dialogues of Plato and Aristotle,
there are glimpses of everyday work and production. In The Republic, Plato
has Socrates begin from the premise that a state comes into existence
because no individual is self-sufficing,1 and goes on to explain a theory of
division of labour by natural aptitude into specializations food
production, weaving, shoemaking, toolmaking, building, and so on.
Production specializations like these then lead to marketing and
manufacturing for export. But, through Socrates, Plato suggests that actually
earning income is detrimental to ones character and results in an infatuation
with money.
This point of view is illustrated in a dialogue between Socrates and an old
man called Cephalus, who is wealthy through an inheritance and agrees that it
is better to inherit money than to work for it:
Socrates:
Reading 1-9 1
2 Reading 1-9
Reading 1-9 3
Summary
You have been introduced to the role of women as literally the first
economists. Throughout Module 1, you have seen how monetary
transactions and commercial ethics were aspects of moral and religious
teaching and practice. In philosophical as well as religious texts, you have
observed how human motivations and energies were characteristically
focussed on wealth, especially when money had begun to circulate in the
form of coinage. Once in circulation, money becomes not only a medium of
exchange, but also a medium of ethical, emotional, and even spiritual choices.
When reading the representative texts surveyed here, you can see that it is
not easy to separate religious faith from the good faith required between
humans in their everyday dealings with one another.
4 Reading 1-9
The Compact Edition of the Oxford English Dictionary, Volume 1, page 831.
READING 1-10
Xenophon on household economics
[The speaker, the I in the following excerpt from Xenophons Oeconomicus, is usually
Ischomachus, and as the passage begins he is addressing his wife. The other I who breaks
in occasionally is Socrates.]
At present we two share this estate. I go on paying everything I have into
the common fund; and you deposited into it everything you brought with
you. There is no need to calculate precisely which of us has contributed
more, but to be well aware of this: that the better partner is the one who
makes the more valuable contribution.
In reply to this, Socrates, my wife answered, What should I be able to do to
help you? What ability have I got? Everything depends on you. My mother
told me that my duty is to practise self-control.
By Zeus, wife, I said, my father said the same to me. But self-control for
both man and woman means behaving so that their property will be in the
very best condition and that the greatest possible increase will be made to it
by just and honourable means.
And what do you envisage that I might do to help improve our estate?
asked my wife.
By Zeus, I said, try to do as well as possible what the gods have given
you the natural ability to do, and which the law encourages, as well.
And what is that? she asked.
Wife, the gods seem to have shown much discernment in yoking together
female and male, as we call them, so that the couple might constitute a
partnership that is most beneficial to each of them Ploughing, sowing,
planting, and herding is all work performed outdoors, and it is from these
that our essential provisions are obtained. As soon as these are brought into
the shelter, then someone else is needed to look after them and to perform
the work that requires shelters. The nursing of newborn children requires
shelters, and so does the preparation of bread from grain, and likewise
making clothing out of wool. Because both the indoor and the outdoor tasks
require work and concern, I think the god, from the very beginning, designed
the nature of woman for the indoor work and concerns and the nature of
man for the outdoor work. For he prepared mans body and mind to be
more capable of enduring cold and heat and travelling and military
campaigns, and so he assigned the outdoor work to him. Because the woman
was physically less capable of endurance, I think the god has evidently
assigned the indoor work to her. And because the god was aware that he had
both implanted in the woman and assigned to her the nurture of newborn
Humanist Issues in Commercial Practice
Reading 1-10 1
children, he had measured out to her a greater share of affection for newborn
babies than he gave to the man. And because the god had also assigned to
the woman the duty of guarding what had been brought into the house,
realizing that a tendency to be afraid is not at all disadvantageous for
guarding things, he measured out a greater portion of fear to the woman than
to the man. And knowing that the person responsible for the outdoor work
would have to serve as defender against any wrongdoer, he measured out to
him a greater share of courage.
Because it is necessary for both of them to give and to take, he gave both
of them equal powers of memory and concern. So you would not be able to
distinguish whether the female or male sex has the larger share of these. And
he gave them both equally the ability to practise self-control too, when it is
needed. And the god granted the privilege to whichever one is superior in
this to gain a larger share of the benefit accruing from it, whether man or
woman. So, because they are not equally well endowed with all the same
natural aptitudes, they are consequently more in need of each other, and the
bond is more beneficial to the couple, since one is capable where the other is
deficient.
Because we know what has been assigned to each of us by the god, we
must each try to perform our respective duties as well as possible. The law
encourages this, for it yokes together husband and wife, and just as the god
made them partners in children, so the law has appointed them partners in
the estate. And the law declares honourable those duties for which the god
has made each of them more naturally capable. For the woman it is more
honourable to remain indoors than to be outside; for the man it is more
disgraceful to remain indoors than to attend to business outside
[pages 141-145].
I replied, you will have to stay indoors and send forth the group of slaves
whose work is outdoors, and personally supervise those whose work is
indoors. Moreover, you must receive what is brought inside and dispense as
much as should be spent. And you must plan ahead and guard whatever must
remain in reserve, so that the provisions stored up for a year are not spent in
a month. And when wool is brought in to you, you must see that clothes are
produced for those who need them. And you must also be concerned that
the dry grain is in good condition for eating. However, I said, one of your
proper concerns, perhaps, may seem to you rather thankless: you will
certainly have to be concerned about nursing any of the slaves who becomes
ill.
Oh, no, exclaimed my wife, it will be most gratifying if those who are
well cared for will prove to be thankful and more loyal than before.
[pages 145-147]
were brought in from outside, surely my guarding the things indoors and my
budgeting would seem pretty ridiculous.
And I replied: Yes, but my bringing in supplies would appear just as
ridiculous if there were not someone to look after what has been brought in.
Dont you see how people pity those who draw water in a leaky jar, as the
saying goes, because they seem to labour in vain?
Yes, by Zeus, said my wife, they are truly miserable if they do that.
But, wife, your other special concerns turn out to be pleasant: whenever
you take a slave who has no knowledge of spinning, and teach her that skill
so that you double her value to you: and whenever you take one who does
not know how to manage a house or serve, and turn her into one who is a
skilled and faithful servant and make her invaluable; and whenever it is in
your power to reward the helpful and reasonable members of your
household and to punish any of them who appears to be vicious. But the
sweetest experience of all will be this: if you prove to be better than I am and
make me your servant. Then you will have no need to fear that as your years
increase you will be less honoured in the household; but you may be
confident that when you become older, the better partner you have been to
me, and the better guardian of the estate for the children, the greater the
respect you will enjoy in the household. For it is not because of youthful
grace that beautiful and good things increase for human beings, but rather
because of their virtues. [pages 145-147]
If you wish to avoid confusion, and instead wish to know exactly how to
manage our property and to put your hands easily on whatever we need to
use and to please me by giving me whatever I request, let us decide on the
appropriate place for each item, and when we put it there, let us teach the
maid to take it from that place and to put it back there again. That way we
will know how much of our property is safe, and how much of it is not. For
the place itself will indicate what is missing, and a glance will detect anything
that needs attention. And if we know where each thing is, we can put our
hands on it quickly so that we will never be unable to make use of it.
[page 151]
Reading 1-10 3
looks, when shoes are arranged in rows, each kind in its own proper place,
how beautiful to see all kinds of clothing properly sorted out, each kind in its
own proper place, how beautiful bed-linens, bronze pots, table-ware! And
what a facetious man would laugh at most of all, but a serious man would
not: even pots appear graceful when they are arranged in a discriminating
manner.
It follows from this that all other things somehow appear more beautiful
when they are in a regular arrangement. Each of them looks like a chorus of
equipment, and the interval between them looks beautiful when each item is
kept clear of it, just as a chorus of dancers moving in a circle is not only a
beautiful sight in itself, but the interval between them seems pure and
beautiful, too. Without going to any trouble or inconvenience, wife, we can
check whether these statements of mine are true. Moreover, wife, there is no
need to be despondent either about the difficulty of finding someone who
will learn where the proper places are and remember to put each thing back
where it belongs, I said. For surely we know that the city as a whole has
ten thousand times as many things as we, but still you can order any of the
slaves to buy anything you want from the market and bring it to you, and not
one will be uncertain what to do. All of them clearly know where to go to get
each item. The only reason for this, I continued, is that each thing is
arranged in its proper place. We first began by putting together the things
that we use for sacrifices. After that we separated the fancy clothing that
women wear at festivals, the mens clothing for festivals and for war, bedding
for the womens quarters, bedding for the mens quarters, womens shoes,
and mens shoes. Another type consisted of weapons, another of spinning
implements, another of bread-making implements, another of implements
used for other food, another of bathing implements, another of kneading
implements, another of dining implements. And we divided all this
equipment into two sets, those that are used daily and those used only for
feasts. We set aside the things that are consumed within a month, and stored
separately what we calculated would last a year. That way we shall be less
likely to make a mistake about how it will turn out at the end of the year.
When we divided all the contents by types, we carried each thing to its
proper place [pages 155-157].
After this, we showed the slaves where they should keep the utensils they use
every day for example, those needed for baking, cooking, spinning, and so
forth, and we handed these over to them and told them to keep them safe.
Whatever we use for festivals or entertaining guests or at rare intervals we
handed over to the housekeeper; and when we had shown her where they
belong, and had counted and made an inventory of each thing, we told her to
give every member of the household what he or she required, but to
remember what she had given to each of them and when she got it back, to
return it to the place from which she takes things of that kind. Now, when
we appointed our housekeeper, we looked for the one who seemed to have
the greatest degree of self-control in eating, drinking wine, sleeping, and
intercourse with men, and who, furthermore, seemed to have memory and
4 Reading 1-10
I advised her not to spend her time sitting around like a slave, but, with
the help of the gods, to try to stand before the loom as a mistress of a
household should, and furthermore to teach anything that she knew better
than anyone else, and to learn anything that she knew less well; to supervise
the baker, and to stand next to the housekeeper while she was measuring out
provisions, and also to go around inspecting whether everything was where it
ought to be. These activities, I thought, combined her domestic concerns
with a walk. I said that mixing flour and kneading dough were excellent
exercise, as were shaking and folding clothes and linens. I said that after she
had exercised in that way she would enjoy her food more, be healthier, and
truly improve her complexion.
At that point [Socrates] said, Ischomachus, I think Ive heard all I need to
know about your wifes activities for now. For a start, both of you deserve
the highest praise.
Source: Xenophon, Oeconomicus, tr. Sarah B. Pomeroy (Oxford: Clarendon Press, 1995), pages 141-163.
Reproduced with permission from Sarah B. Pomeroy.
Humanist Issues in Commercial Practice
Reading 1-10 5
READING 2-1
Reflections and projections in time
In moving from Module 1 to Module 2, why does the course appear to leap
forward in time at least a millennium? You may be asking why the Roman era
is not addressed, particularly since the Romans political and economic
domination of the Holy Land was an issue in Module 1. And, since the
Roman Empire also took in Greece, much of western Europe, Africa, and
the rest of the Middle East, did its systems of law, commerce, and
communication not also manage the Roman worlds economy? Indeed they
did, as can be seen from the New Testament gospel of Luke, where the
second chapter begins by telling how the first Roman emperor, Augustus
Caesar (63 B.C.E.-C.E. 14), decreed that all the world should be censused
for taxation purposes.
However, for our purposes it should be recognized that Roman justice drew
on Greek ideas of natural law a system of rules and principles for human
conduct which might be discovered by human rational intelligence. This was
a theory propounded by the Greek philosopher Plato, and carried forward by
the Roman philosopher-statesman, Marcus Tullius Cicero (106-43 B.C.E.),
particularly in his treatise De Res Publica, in which, among other topics, Cicero
dealt with the right uses of property. When the Roman Empire was
Christianized in the fourth century C.E., Christians, as members of the state
religion, found themselves called to exercise worldly responsibility. Augustine
(C.E. 354-430), the Christian bishop of a Roman province in Africa, adopted
Ciceros ideas into his theology.
Because Augustine became a father of the medieval (and modern) Roman
Catholic Church, his thought is an intellectual bridge between Greco-Roman
philosophy and Western medieval beliefs and ideas notably through
Augustines influence on Thomas Aquinas. The following passage is typical
of Augustines counsel to Christians in Rome on the uses of worldly
possessions:
Use the world, let not the world hold you captive. You are
passing on the journey you have begun; you have come, again
to depart, not to abide This life is but a wayside inn. Use
money as the traveller at an inn uses table, cup, pitcher and
couch, with the purpose not of remaining, but of leaving
them behind.1
Augustine develops this life-as-pilgrimage theme in his 22-volume treatise,
The City of God (C.E. 413-426), in which he interprets human history as a
struggle between the City of God (the citizens of the church) and the
Earthly City of the world and its temptations. Defining a humane community
as an assemblage of reasonable beings bound together by a common
agreement as to the object of their love,2 Augustine explores, among other
topics of faith and justice, the subject of rightful ownership and use of
worldly property.
Humanist Issues in Commercial Practice
Reading 2-1 1
From Ciceros De Res Publica 1:17, Augustine takes the idea that everything
rightly belongs to those persons who are just, and that these persons are
entitled to acquire and possess property conditional on their just use of it.3 A
major right use of possessions is distribution through charity.
Augustine advocated not only distributive justice but also productive labour
activity that the Greek and Roman middle and upper classes shunned. He
may be the originator of the work ethic that appeared in seventeenth-century
religious circles, and which you will encounter later in Modules 6 and 9. He
stressed the enjoyment of useful work and the nobility of occupations such as
agriculture, medicine, navigation, and other skilled crafts. Unlike Aristotle
and Plato, who, as you saw in Module 1, had no great regard for labour or
trading, Augustine recognizes the usefulness of these occupations:
A trader said to me, Behold I bring indeed from a distant
quarter merchandise to these places wherein there are not
those things which I have brought, by which means I may
gain a living: I ask but as a reward for my labour that I may
sell dearer than I have bought: for whence can I live, when it
has been written, The worker is worthy of his reward
[Luke 10:7]?4
As you will learn in Module 2, the medieval Roman Catholic theologian
Thomas Aquinas inherits Greek, Roman, and early Christian philosophic
ideas about social organization. In his theological treatises, Aquinas cites
Aristotle, Cicero, and other Greek and Roman teachers, thereby following
Augustine in reconciling classical philosophy with biblical teaching just as
Muslim scholars had been reconciling the Old and New Testaments with the
Koran since the early seventh century.
2 Reading 2-1
St. Augustine, In Johannis Evangelium, Chapter 40, page 10, quoted in Barry Gordon, The
Economic Problem in Biblical and Patristic Thought (Leiden: E.J. Brill, 1989), page 121.
St. Augustine, The City of God, quoted in Barry Gordon, The Economic Problem in Biblical
and Patristic Thought, page 122.
Barry Gordon, The Economic Problem in Biblical and Patristic Thought, page 124.
St. Augustine, Errationes in Psalmos 70, Sermon 1, quoted in Barry Gordon, The Economic
Problem in Biblical and Patristic Thought, pages 127-128.
READING 2-2
Thomas Aquinas on wealth, happiness, commerce,
and usury
The Roman Catholic theologian and saint Thomas Aquinas (ca. 1225-1274) is
best known for his two massive summae or summaries of human knowledge,
the Summa Contra Gentiles (1259-1264), and the Summa Theologica (ca. 12651274) whose full title was Summa Totius Theologica. The former may be freely
translated as a defence of the truth of the Catholic faith against pagans,
and the latter as a summary of all theology. Aquinas was a Dominican
monk and a professor at the University of Paris.
In one section of the Summa Contra Gentiles, Aquinas argues that mans felicity
(happiness) does not consist in wealth. In sections of the second, or middle,
part of Summa Theologica, Aquinas closely examines justice and injustice, and
in this context he writes on the ethics of commercial life. If you compare the
following excerpt from Summa Contra Gentiles with the passages from
Aristotles Politics (Topic 1.4) and Nichomachean Ethics (Topic 1.3), you will see
how Aquinas echoes Aristotles views on the acquisition and the uses of
wealth:
It isclear that riches are not the highest good for man.
Indeed, riches are only desired for the sake of something else;
they provide no good of themselves but only when we use
them, either for the maintenance of the body or some such
use. Now, that which is the highest good is desired for its
own sake and not for the sake of something else. Therefore,
riches are not the highest good for man.
Again, mans highest good cannot lie in the possession or
keeping of things that chiefly benefit man through being
spent. Now riches are chiefly valuable because they can be
expended, for this is their use. So, the possession of riches
cannot be the highest good for man.
Besides, an act of virtue is praiseworthy in so far as it comes
closer to felicity. Now, acts of liberality and magnificence
[munificence], which have to do with money, are more
praiseworthy in a situation in which money is spent than in
one in which it is saved. So, it is from this fact that the names
of these virtues are derived. Therefore, the felicity of man
does not consist in the possession of riches.
Again, this becomes evident in the fact that riches are lost in
an involuntary manner, and also that they may accrue to evil
men who must fail to achieve the highest good, and also that
riches are unstable and for other reasons of this kind
which may be gathered from the preceeding arguments.1
Humanist Issues in Commercial Practice
Reading 2-2 1
can buy happiness, but rather that its right use can bring happiness, even if
money does not represent mans supreme good. While arguing that spiritual
and moral wealth is increased through spending in good causes, Aquinas
also restates the economic principle that wealth does good (spiritual, moral,
and economic) only when circulated.
Reading 2-2 3
4 Reading 2-2
Reading 2-2 5
Aquinas on usury
In this context of commutative justice, Aquinas also deals with other spiritual
and economic sins, especially usury. Condemnation of usury by the
medieval Church did not make interest-taking a crime, except where
extortionate rates were exacted. It was an offence against Church law, just as,
say, adultery was. The ecclesiastical courts could impose penalties ranging
from fines to excommunication. Even bankers feared excommunication, as
well as the stigma of being publicly declared sinners. Thus, the Churchs
censure of usury had significant historical effects.
Usury, which Aquinas defines as making a charge for a loan,12 was
condemned by the Bible, the Koran, and by classical philosophers
(Topic 1.3). In his discussion of injustices, Aquinas takes up the sin of usury
which arises in the course of lending. The first two of his four points of
enquiry are
1. Is it a sin to make a charge for lending money, which is what usury is?
2. Is one entitled to take anything by way of compensation for a loan?
Turn now to Reading 2-4. Aquinas has begun these inquiries into fraud
(Question 77, Reading 2-4) and usury by labelling both of these activities
sins. Fraud is a form of theft, forbidden by the Old Testament
commandment Thou shalt not steal [Exodus 20:15], as well by the sacred
texts of other religions. However, as will be seen in Topic 2.3, the Catholic
Church and the commercial community were diverging in their attitudes
toward money-lending. The excerpts from Summa Theologica in Reading 2-4
are all taken from Aquinas replies; they represent his last word thoughts
on usury in this work, written in the last decade of his life, including all the
passages in which he explicitly associates usury with sin.
In Reading 2-4, notice how Aquinas begins his answer to the question Is it a
sin to make a charge for lending money?:
Making a charge for lending money is unjust in itself, for one
party sells the other something non-existent, and this
obviously sets up an inequality which is contrary to justice.
As you can see from the reading, contrary to justice is usually as far as
Aquinas goes in condemning interest-taking, though in the passage on
charging a higher price for postponement of payment, he affirms that the
selling-on-time strategy
amounts to making a charge for a loan, which is what usury
consists in. By the same token, if a buyer wants to buy
something for less than its just price in return for paying for it
before delivery, there is also a sin of usury, for this sort of
allowance in respect of advance payment is also in the nature
of a loan, the charge for which is the reduction in the just
price. If, on the other hand, a seller is willing to take a lower
price in order to have the cash in hand, he is not committing
usury.
6 Reading 2-2
Reading 2-2 7
8 Reading 2-2
Summary
This topic has explained the important place of religious thought in the
commercial life of the Middle Ages. The thirteenth-century theologian
Thomas Aquinas considered fraud and usury to be sinful, and he advocated
the practices of distributive and commutative justice. Aquinas literally
summarized all previous classical and religious thought about commerce and
human social relationships. He reinforced all the scriptural and philosophic
condemnations of usury with his own exhaustive examples and analyses of
usurious practices. His summae, and especially the Summa Theologica, was an
authoritative document in fact, a casebook text on religious and
humanist issues in commercial life. Even after the sixteenth-century
Protestant Reformation divided the Roman Catholic Church, Aquinas
counsels still exerted their influence on Western religious, social, and
commercial thought.
1
St. Thomas Aquinas, Summa Contra Gentiles, in On the Truth of the Catholic Faith: Summa
Contra Gentiles, ed. V.J. Bourke (Garden City, New York: Doubleday & Co. Inc., 1956),
Part 1, Chapter 30, pages 116-117.
St. Thomas Aquinas, Summa Contra Gentiles, Part 1, Chapter 29, page 116.
St. Thomas Aquinas, Summa Theologica (Blackfriars Edition, London: Eyre & Spottiswoode;
New York: McGraw-Hill Book Co., 1964), 1-2, Question 4, Article 7.
Brian Tierney, Medieval Poor Law (Berkeley and Los Angeles: University of California Press,
1959), page 97.
10
11
Ibid., Article 2.
12
13
14
Ibid.
Reading 2-2 9
15
10 Reading 2-2
Dante, Inferno, in The Divine Comedy, tr. H.F. Carg, ed. O. Kuhns (New York: Thomas Y.
Crowell & Co., 1987), Canto 19.
READING 2-3
Thomas Aquinas on fraud
Question 77. Fraud committed in the course of buying and selling
Reading 2-3 1
justified in charging for any loss he may suffer. All of this is not, of course, to
deny that somebody who has benefited greatly from a transaction might
spontaneously offer more than the due price; this is a matter of his
honourable feeling.
Hence: 1. Human law, as we have already seen, is made for the people as a
whole, which includes many who fall short of being virtuous, and not merely
for the virtuous. Human law cannot, therefore, prohibit whatever is contrary
to virtue; it is enough for it to prohibit whatever destroys social intercourse,
allowing everything else to be permissible, not in the sense of approving it,
but of not attaching a penalty to it. It is in this sense, i.e. of withholding
punishment, that the law holds it to be permissible for a seller to over-charge
and for a buyer to under-pay, unless there is either fraud or a gross disparity;
in such a case even human law compels restitution, as, for instance, in the
case where somebody is tricked into paying or losing more than fifty per cent
of the just price. Divine law, on the other hand, leaves nothing contrary to
virtue unpunished, so that any failure to keep a due balance in contracts of
sale is counted to be contrary to divine law. He who profits is, therefore,
bound to make restitution to the party who loses out, provided the loss is an
important one. And I use this latter term advisedly, because we cannot always
fix the just price precisely; we sometimes have to make the best estimate we
can, with the result that giving or taking a little here or there does not upset
the balance of justice.
Article 2. Can a sale become unjust and illicit on account of some flaw
in the thing sold?
THE SECOND POINT: 1. A flaw in the thing sold would not seem to
render a sale unjust and illicit. For what makes up the substance of any thing
is obviously to be reckoned above everything else in that thing, and yet a
substantial flaw in the commodity would not seem to render the sale thereof
unjust. This is illustrated by the case of artificial gold or silver being sold
instead of the genuine metal, since it serves all the human needs that gold
and silver serves, in the shape of vases and such like. There is, therefore, all
the less reason for a sale being illicit for lesser defects.
2. A quantitative defect in a commodity would seem especially to be contrary
to justice, which consists in equality. But quantity is determined by some
measure, and the measures of things used by men are not fixed; they vary
greatly, as Aristotle points out. Defects in the thing sold are, therefore,
unavoidable, from which it follows that a sale cannot be invalidated on this
score.
3. A thing has a flaw if it lacks some quality which it ought to have. But the
ability to assess the quality of a thing presupposes considerable knowledge,
which many sellers lack. A sale is, therefore, not unlawful because of a flaw in
the thing.
2 Reading 2-3
REPLY: An object of sale can have three sorts of flaw in it. The first flaw
affects the identity of a thing, and if a seller knows that what he is selling is
flawed in this sort of way, he is committing fraud in selling it, so that the sale
is rendered illicit. This is what is in question in the reproach which Isaiah
makes against certain people, Your silver has become dross, your wine mixed with
water, the point being that such a mixture brings about a change of identity.
Another sort of flaw is in respect of quantity, which is determined by
measure. It follows that if somebody knowingly uses a defective measure in a
contract of sale, he is committing fraud and the sale is illicit. This is why
Deuteronomy says, You shall not have in your bag two kinds of weight, a large and a
small. You shall not have in your house two kinds of measures, a large and a small, and,
a little later, For all who do such things, all who act dishonestly are an abomination to
the Lord your God. And the third sort of flaw is in relation to the quality of a
thing, as in the case where somebody sells a sickly animal as if it were healthy.
If this is done knowingly, the sale is vitiated by fraud, and rendered illicit.
In all these cases a person who makes an unjust sale not only commits a sin,
but is bound to make restitution. Of course, if the seller is unaware of any of
these defects in the thing sold, he personally commits no sin since the
injustice is only material and not willed and does not make the sale unjust as
we have already explained, although he is bound to make restitution when he
does discover the facts.
So far, then, we have spoken about the seller, but the same principles apply
to the buyer. For a seller may sometimes think that one of his possessions is
a less precious kind of thing than it in fact is, as in the case where somebody
sells gold in place of brass. In such a case the buyer, if he is aware of this,
commits an injustice in buying it, and is bound to make restitution. And the
same goes for a flaw in the quality or the quantity.
The measures of commercial commodities are bound to be different in
different places because these commodities are in such different supply
everywhere, so that there is usually a more complex system of weights and
measures where goods are in abundant supply. Nevertheless in any given
region it is the business of the government of the state to determine what are
just measures, having regard to local conditions. It is, therefore, not
permissible to infringe measures established by public authority or by custom
in this way.
It is Augustine who points out that the price of commercial commodities is
not assessed in accordance with their relative position on some absolute scale
in the natural world, for a horse is sometimes sold for more than a slave, but
in accordance with their usefulness to men. A seller or buyer need not,
therefore, know the hidden properties of an object of sale; he needs to know
only those that pertain to its suitability for human use, such as that a horse is
sturdy and a good goer. And a buyer or seller can easily find out such points.
Reading 2-3 3
Article 3. Is the seller bound to declare any defect in the thing sold?
THE THIRD POINT: 1. A seller would not seem to be bound to disclose
flaws in the object of sale. For since a seller does not compel a buyer to buy,
he is in the position of submitting the object of sale to the judgement of the
buyer. But knowledge and judgement go together in the same person. It
would not, therefore, seem to be logical to hold the seller responsible for any
mistake a buyer may make by being too precipitate and failing to make due
inquiries.
REPLY: One is never entitled to put somebody in the way of danger or loss,
although one is not always obliged to promote anothers advantage by help
or advice; it is only particular circumstances that impose this necessity.
Examples of this occur where somebody is in ones charge or where no other
help is available. But a person who offers another something for sale puts
him in the way of danger or loss by the very fact of offering him something
defective, if that thing is such as will occasion loss or danger. There could be
loss where the thing offered for sale could be marked down in price on
account of the flaw but is not in fact so reduced; and there could be danger
where the flaw makes the use of the thing sold difficult or harmful, as where
one sells another a lame horse instead of a good runner, a tumble-down
house instead of a solid one, or mouldy or even poisonous food instead of
food in good condition. It follows that if such defects are not obvious and
the seller himself does not disclose them, the sale will be fraudulent and
illicit, and the seller is bound to make restitution.
Where, on the other hand, the flaw is obvious, as where a horse has only one
eye, or where other people might find a use for the object of sale even
though the buyer could not, and where, moreover, the seller takes a fair
amount off the price, he is not bound to disclose the flaw. Under such
conditions a seller is entitled to look after his own interests and keep quiet
about the flaw, since a buyer might be tempted to take off more from the
price than is warranted by the flaw.
Hence: 1. One can make up ones mind only on the basis of evidence, since,
as Aristotle says, every man judges what he knows. It follows that where the flaws
would remain hidden unless they were disclosed by the seller, the buyer is not
really in a position to make a judgement.
2. A man is not bound to call in a crier to advertise any flaw in what he sells
because to do so would be to frighten off potential buyers before they had a
chance to get to know of the things good qualities and utility. He is,
however, bound privately to inform every interested buyer who is in a
position to assess good and bad points; for a thing can perfectly well have a
flaw in one respect and yet be very useful in others.
4 Reading 2-3
Article 4. Is one entitled to make profits by selling for more than the
purchase price?
REPLY: Profit, which is the point of commerce, while it may not carry the
notion of anything right or necessary, does not carry the notion of anything
vicious or contrary to virtue either. There is, therefore, nothing to stop profit
being subordinated to an activity that is necessary, or even right. And this is
the way in which commerce can become justifiable. This is exemplified by
the man who uses moderate business profits to provide for his household, or
to help the poor; or even by the man who conducts his business for the
public good in order to ensure that the country does not run short of
essential supplies, and who makes a profit as it were to compensate for his
work and not for its own sake.
Not everybody who sells something for more than he himself paid is in
commerce, but only somebody who buys precisely in order to sell it again at
a higher price. Therefore if a person buys something, not in order to resell it,
but to keep it, and then subsequently wants to sell it for some reason, he is
not strictly engaging in a commercial transaction, even though he is now
asking a higher price. And he is entitled to do this either because he has
improved the thing in some fashion, or because prices have gone up in
response to local changes or the lapse of time, or because he has incurred
risks in transporting it about or in having it delivered. In such cases neither
the purchase nor the sale is unjust.
Source: Thomas Aquinas, Summa Theologica (Blackfriars Edition, London: Eyre and Spottiswoode; New
York: McGraw-Hill Book Co., 1964), 2-2, Question 77.
Humanist Issues in Commercial Practice
Reading 2-3 5
READING 2-4
Thomas Aquinas on usury
Question 78. The sin of usury
Reading 2-4 1
One is entitled neither to sell money for more money than the quantity that
has been lent and has to be repaid, nor to expect or ask for anything other
than feelings of goodwill which cannot be reduced to money value, and
which as a result can prompt the borrower to offer a loan spontaneously in
return.
If a seller wants to charge more than the just price for his goods in return for
allowing a postponement of payment, he is quite obviously committing
usury, since this sort of postponement is in the nature of a loan. For asking
more than the just price in respect of such a postponement amounts to
making a charge for a loan, which is what usury consists in. By the same
token, if a buyer wants to buy something for less than its just price in return
for paying for it before delivery, there is also a sin of usury, for this sort of
allowance in respect of advance payment is also in the nature of a loan, the
charge for which is the reduction in the just price. If, on the other hand, a
seller is willing to take a lower price in order to have the cash in hand, he is
not committing usury.
Somebody who borrows money subject to the payment of interest does not
approve the sin of usury but uses it. And what he likes is not the taking of
interest but the lending, which in itself is good.
Somebody who borrows money subject to the payment of interest gives the
lender an opportunity not so much to charge interest but to lend; it is the
lender himself who out of his own evil heart makes this an occasion of sin. It
is, therefore, a case of the lender allowing himself to stumble and not of the
borrower positively providing a stumbling-block.
If somebody entrusts his money to a money-lender who could not go on
lending money at interest without this money or entrusts it to him so that the
latter can make even grosser profits out of lending, he is giving the other an
occasion to sin, so that he is an accomplice in his sin. If, on the other hand,
he entrusts his money for safe-keeping to a lender who has other means to
lend money at interest, he is not committing a sin, but is using the sinner for
good.
Source: Thomas Aquinas, Summa Theologica (Blackfriars Edition, London: Eyre and Spottiswoode; New
York: McGraw-Hill Book Co., 1964), 2-2, Question 78.
2 Reading 2-4
READING 2-5
Usury in religious theory and in fact: Luther and Calvin
In its best attempts to mediate economic behaviour, the medieval Roman
Catholic Church issued manuals for the guidance of priests and parishioners
interpretations that tried to balance economic reality with the Old
Testament laws (Topic 1.3) and Jesus New Testament directive to lend
without expecting any return [Luke 6:35].
For example, Reginald Pecock, Bishop of Chichester (1395-1460), wonders
in the middle of the 1400s just how literally this cryptic passage in Lukes
gospel is to be interpreted, and he complains that the Bible comes up short
in defining usury:
The whole teaching given upon usury in the now named
book [St. Lukes gospel] is little enough or over [too] little for
to learn, know and have sufficiently [insight] into mans
benefit and into Gods true service and law-keeping
concerning what is to be learned and known about usury. To
readers and students in this matter it mustbe open [made
clear].
Is there any more written about usury in all the New
Testament except this [Luke 6], Give ye loan, hoping no
thing thereof [in return], and all that is about usury written
in the Old Testament favours usury more than it disapproves
of it.
How therefore, should any man say that the sufficient
learning and knowledge about usury or of the virtue contrary
to usury is grounded in Holy Scripture? How shall this little
now repeated clause [in Luke 6] be sufficient to answer and
resolve all the hard scrupulous doubts and questions which
every day need to be resolved in mens bargainings and
business together?
Each man having to do with such questions may soon see
that Holy Writ gives little or no light thereto at all. For all that
Holy Writ says on the subject is that [Jesus] forbids usury as
unlawful; but though you believe hereby that usury is
unlawful, how shall you know hereby what usury is, so that
you may be aware not to do it, and of when usury is taking
place in a bargain even though it appears to some people that
it isnt, and how there is no usury in a bargain even though to
some people it seems that there is?1
Reading 2-5 1
Pecock here confines his questioning to the Bible, and he does not read very
widely in either the Old or the New Testament. You should now go to
Reading 2-4 and compare Pecocks narrow search with Aquinas Reply, in
Article 1, whether it is a sin to take usury for money lent. Aquinas also draws
on the Luke text when he points out that the lending is included amongst
the [Bibles] counsels.
What is interesting about Aquinas writing on these theological-economic
quandaries (as in Topic 2.2) is that his penetrating mind can argue on both
sides of each question. It seems that when once an argument validating the
charging of interest is found, it takes an Aquinas-level mind to refute that
argument. You should also notice that in his replies, Aquinas does find
biblical evidence against usury, but he finds it necessary to cite warning
passages from Plato and Aristotle.
When Aquinas writes, The Jews were forbidden to lend upon interest to their
brothers2 he is referring to the Old Testament verses in Deuteronomy [23:1920] that forbid the Israelites to take interest from one another, but permit
interest-taking when lending to non-Jews. Aquinas replies that taking interest
from foreigners is still wrong, but generates income so that business people
do not need to commit a greater wrong by taking interest from their coreligionists.
You may detect a sort of theory of inoculation here, whereby a small
injection of rule-breaking is permitted or administered to safeguard against a
general outbreak. In fact, Aquinas argument was turned into financial policy
by the Fifth Lateran Council in 1515. The councils in the Roman Catholic
Church system were very high-level assemblies of the Church spiritual
leaders and theologians where matters of Church policy were discussed.
In 1515 the Council supported a new system of church-approved agencies
which began to appear in the 1460s, essentially pawnshops created to make
low-interest loans to the poor. They were called montes pietatis, meaning
mounts of piety. By 1509, 87 of these pawnshops were already operating in
Italy. At a time when conventional lenders charged from 20 to 50 percent on
small loans, the montes charged around five percent. The Franciscan order of
friars had urged that this system be instituted to give the poor an alternative
to the high-charging moneylenders. The Dominican order of monks, to
which Aquinas had belonged, objected to charging any interest high or
low on the grounds that interest-taking subverted Christian brotherhood.
But the 1515 Council accepted the argument that the charges made by the
montes were not interest but contributions to defray operating costs.
Within the Catholic Church, the debate over the montes continued into the
seventeenth century. There is no solid evidence of anyone asking what
possessions poor people could offer as pledges for loans, or how they could
repay. Unlike monks, who were cloistered within the boundaries of their
monasteries, the friars went about the public community assisting the people,
especially the poor, and thereby saw social conditions up close. Thus, with
the establishment of the Churchs own lending agency, the usury question
2 Reading 2-5
Reading 2-5 3
Reading 2-5 5
for them. It may happen that the same wares, brought from
the same city by the same road, cost vastly more in one year
than they did the year before because the weather may be
worse, or the road, or because something else happens that
increases the expense at one time above that at another time.
Now it is fair and right that a merchant take as much profit
on his wares as will reimburse him for their cost and
compensate him for his trouble, his labor, and his risk. Even
a farmhand must have food and pay for his labor. Who can
serve or labor for nothing? The gospel says, The laborer
deserves his wages [Luke 10:7].
But in order not to leave the question entirely unanswered,
the best and safest way would be to have the temporal
authorities appoint in this matter wise and honest men to
compute the costs of all sorts of wares and accordingly set
prices which would enable the merchant to get along and
provide for him an adequate living, as is being done at certain
places with respect to wine, fish, bread, and the like.
Where the price of goods is not fixed either by law or
custom, and you must fix it yourself, here one can truly give
you no instructions but only lay it on your conscience to be
careful not to overcharge your neighbor, and to seek a
modest living, not the goals of greed. Some have wished to
place a ceiling on profits, with a limit of one-half on all wares;
some say one-third; others something else. None of these
measures is certain and safe unless it be so decreed by the
temporal authorities and common law. What they determine
in these matters would be safe.
Therefore, you must make up your mind to seek in your
trading only an adequate living. Accordingly, you should
compute and count your costs, trouble, labor, and risk, and
on that basis raise or lower the prices of your wares so that
you set them where you will be repaid for your trouble and
labor.7
Do you remember (from Topic 1.2) the story of how Joseph saw Egypt
through the seven-year crop failure and in the process created a state
monopoly? In Topic 1.2, you also saw Luther argue that Joseph was not a
monopolist. In On Trade and Usury, Luther essentially describes medieval
(and modern) monopolistic, market-cornering, and price-collusion practices:
Again, there are some who buy up the entire supply of certain
goods or wares in a country or a city in order to have these
goods entirely under their own control; they can then fix and
raise the price and sell them as dear as they like or can. Now I
have said above that the rule by which a man may sell his
goods as dear as he will or can is false and un-Christian. It is
far more abominable that one should buy up a whole
6 Reading 2-5
Reading 2-5 7
Usury redefined
The practice of Zinskauf was so widespread that in 1425 Pope Martin V
issued a papal bull (decree) legitimizing it, and this was reaffirmed by Pope
Calixtus III in 1455. To Luther, it is offensive that this contract [Zinskauf ]
should be rescued by canon law from the taint of usury13 offensive
because, among other reasons, when I buy zinss on a specified piece of land,
Humanist Issues in Commercial Practice
Reading 2-5 9
I buy not the land but the zinss payers toil and effort on that land, by which
he is to bring me my zinss.14 For these and other thunderous reasons, Luther
concludes that
Emperor, kings, princes and lords ought to watch over this
matter, look after their lands and people, and help and rescue
them from the gaping jaws of usury. The diets [the Church
councils] should be dealing with this as one of the most
pressing matters; instead, they just let it lie, and in the
meantime serve the papal tyranny, burdening lands and
people more and more heavily as time goes on.15
Remember that in the 1523 letter quoted earlier in this topic, Luther denied
Jacob Strauss argument that paying interest was as much a sin as taking it. In
this usury section of the 1524 Trade and Usury essay, he concedes that
circumstances may alter cases, if
it happens that both buyer and seller need their property and
can therefore neither lend nor give, but have to help
themselves by means of the kauf [purchase of interest]
transaction. If this can be done without violating canon
[Church] law, which provides for the payment of four, five or
six gulden on the hundred, it may be tolerated. But they
should always have the fear of God in mind, and be afraid of
taking too much rather than too little, so that greed may not
become a factor in addition to the security of a reasonable
purchase contract. The smaller the percentage the more godly
and Christian the contract.
It is not my task, however, to point out when one ought to
pay 5, 4, or 6 per cent. I leave it to the law [presumably, civil
law] to determine when the property is so good and so rich
that one may charge 6 per cent. There are some who not
only deal in insignificant properties but also charge too high a
rate: 7, 8, 9, or 10 per cent. The rulers ought to look into this.
Here the poor common folk are secretly fleeced and severely
oppressed.16
Public usurers generally charged from 32 to 43 percent in Italy as in
the small loan business in modern North America. The montes pietatis were
customarily charging six percent at the time they began to receive papal
approval, beginning with Pope Paul II in 1467.17 The montes pietatis, you may
remember, were low-interest lending institutions or pawnshops introduced
by the Franciscans to offer poor Christians some alternative to the high rates
charged by usurious moneylenders. When a full Church council granted final
approval to these low-rate establishments in 1515, the Church had finally
given interest-taking the protection of canon law. Hence Luthers admission
that in cases of mutual need the kauf transaction [can be entered into if] this
can be done without violating canon law, which provides for the payment of
four, five, or six [percent]. Interest-taking thus was legalized and usury was
10 Reading 2-5
Reading 2-5 11
Summary
Thus, in the later Middle Ages (an era often referred to as the Early-Modern
period), the definition and moral image of usury became increasingly elastic.
Moving from Aquinas conviction that usury was unjust and therefore sinful,
the Catholic Church first sought to control interest-taking by controlling
rates. Control grew into condonement, and the Reformed (Protestant)
churches followed the same philosophical route. In an increasingly
mercantilist world, the practice of capital investment was finding ways to
justify itself.
12 Reading 2-5
Reginald Pecock, The Repressor of Over-much Blaming of the Clergy (1455), quoted in
Tawney, Religion and the Rise of Capitalism (Harmondsworth: Penguin Books Ltd., 1961),
page 292, note 71.
Martin Luther, Luthers Works, gen. ed. Helmut T. Lehmann (Philadelphia: Fortress Press,
1955), Volume 45, pages 284-285.
10
11
12
13
14
15
16
17
18
Quoted in Benjamin Nelson, The Idea of Usury (Chicago: University of Chicago Press, 1969),
page 79.
19
20
21
22
Reading 2-5 13
READING 2-6
Thomas Mores Utopia
Mores Utopia is actually about two places: the first, presented in Book I, is
Mores England, which is realistically analyzed for its social, legal, moral, and
economic distresses presented as a dystopia, an unideal and degraded
place. In contrast, Book II features a land where humanist ideals prevail, and
neither injustice, nor crime, nor poverty exist.
Somewhat in the style of Plato and Xenophon, Utopia is presented as a
dialogue, or a monologue-explanation, by a fictional character called Raphael
Hythlodaeus and with commentary from More. The name Raphael means
the physician of health, and his story is, as it were, a diagnosis of what is
wrong with England, followed by a prescription of how to make the country
healthy by imitating the constitution of Utopia. To keep the discourse
from becoming overly serious (for More is writing as a satirist, and satire is
best effected with a comic touch), the surname Hythlodaeus means welllearned in nonsense. The character Raphael has been everywhere and seen
everything.
As a reader, you may take Utopia as seriously as you like, but remember that,
besides being a leading European humanist, More was a statesman who held
many important government positions under Henry VII and Henry VIII,
eventually (1529) becoming Henry VIIIs Lord Chancellor the kingdoms
highest legal officer. However, in each kings reign, a close watch was kept on
criticism of the regime, hence Mores self-protective pretence of describing
no place in particular.
Reading 2-6 1
2 Reading 2-6
Reading 2-6 3
Reading 2-6 5
6 Reading 2-6
money to the dying man, tempting him at the very last to take the money
instead of praying. Will he choose the strongbox key or the rosary?
The utopian question, Suppose that someone removed it by stealing it and
that you diedknowing nothing of the theft,what did it matter to you? is
reflected on by Shakespeares Othello:
He that is robbd, not wanting what is stoln,
Let him not knowt, and hes not robbd at all.9
In Utopia, the hoarding of money is linked to the hoarding of other more
vital resources:
Consider in your thoughts some barren and unfruitful year
in which many thousands of men have been carried off by
famine. I emphatically contend that at the end of that scarcity,
if rich mens granaries had been searched, as much grain
could have been found as, if it had been divided among the
people killed off by starvation and disease, would have
prevented anyone from feeling that meager return from soil
and climate. So easily might men get the necessities of life if
that blessed money, supposedly a grand invention to ease
access to those necessities, was not in fact the only barrier to
our getting what we need.10
Reading 2-6 7
Summary
You have sampled Thomas Mores political and economic analysis of two
supposedly-imagined commonwealths, one representing a European state as
it is and the other describing (actually, prescribing) a no place that Europe
should try to become. The analysis of the dystopia of Achoria gives an
accurate picture of economic conditions at the time. The utopian
descriptions of the ideal society are part Platonic, part biblical, and the first
of many subsequent utopian economic visions that continue toward the
twenty-first century.
8 Reading 2-6
St. Thomas More, Utopia, in Complete Works of St. Thomas More, eds. Edward Surtz and
J.H. Hexter (New Haven: Yale University Press, 1965), Volume 4, Book I, pages 91-93.
Ibid.
Shakespeare, Othello, in The Arden Shakespeare, ed. M.R. Ridley (London: Methuen & Co.
Ltd., 1965), Act 3, Scene 3, lines 348-349.
10
St. Thomas More, Utopia, in Complete Works of St. Thomas More, Book II, page 243.
11
12
READING 2-7
Marco Polos travels
Marco Polo was a member of a Venetian trading family, and set off with his
father and uncle in 1271, bound for the court of the Mongol Great Khan
Khublai (or Kubla). The court was near the city Polo called Kanbalu (now
Beijing) in the Cathay region, at that time the empire of the
Yuan Dynasty (1279-1368). This was the second trading journey of the two
elder Polos to Kanbalu, where they had been received by the Khan in the
1260s. On this occasion, all three were taken into the Khans service where,
for seventeen years, Marco made many administrative journeys to the
empires distant provinces, including Tibet, Burma (Myanmar), and southern
India. They did not return to Venice until 1295.
Marco Polo soon after became a prisoner of war of the Genoese for three
years, and supposedly dictated his travellers tale while in prison. The book is
best read as a romantic account (whose veracity is often questionable) of
what was, to Europeans then and for centuries after, an exotic and
mysterious land as in the English poet Samuel Taylor Coleridges 1797
poem Kubla Khan, or a Vision in a Dream, which begins
In Xanadu did Kubla Khan
A stately pleasure-dome decree.1
Polos book had a wide readership, among whom two centuries later was
Christopher Columbus, who owned a copy and wrote marginal notes in it.
One of these notes says mercacciones innumeras, or an incalculable amount
of trade. Today, Western business still has visions of expanding its markets
to China.
Reading 2-7 1
pack-horses, loaded with raw silk, make their daily entry; and
gold tissues and silks of various kinds are manufactured to an
immense extent. In the vicinity of the capital are many walled
and other towns, whose inhabitants live chiefly by the court,
selling the articles which they produce in the markets of the
former, and procuring from thence in return such as their
own occasions require.2
As you can infer from this excerpt, Kanbalu was not only the political but
also the economic centre of China: To this city everything that is most rare
and valuable in all parts of the world finds its way. An obvious parallel with
the Khans centralized rule and economy is that of the biblical King Solomon
(Topic 1.4). The exotica making its daily entry to each monarchs city is
wealth on display. And wealth on display is equivalent to power on display: in
1899, six centuries after Marco Polos book, the American economist
Thorstein Veblen would make the term conspicuous consumption famous.
(You will read more about Veblen in Module 9.)
Now go to Reading 2-8 to read Polos account of paper money and trading
practices at the Khans court.
The descriptions from Marco Polos account are in more senses than one a
natural history of money. When Polo says at the beginning of chapter 18 that
the Khan may be said to possess the secret of the alchemists, he is referring
to the speculative science of the Middle Ages that sought to discover the
elixir of life and the secret of transmuting base metals into gold. Alchemy
was a quite respectable field of study through the eighteenth century, and was
dabbled in by members of the Royal Society, chartered in 1660 by Charles II
of England for the advancement of science. As Marco Polo suggests,
governments have the alchemical power of saying just what will be accepted
as legal tender of creating money by fiat (decree). Among the Royal
Societys members interested in alchemy were the distinguished scientists
Robert Boyle and Isaac Newton. Newton would later be appointed Master of
the Royal Mint! You will meet him in Module 5.
Notice also in this account of paper-bark money how thriftily the mulberry
trees are used. The silk-worms that are allowed to feed on their leaves
produced one of the Orients most sought-after exports; the inner rind of the
trees yields the paper pulp for the banknotes. The notes are graduated in size
according to the values they represent. Observe also that Polo, who himself
had never seen paper money (which would not come into use in Europe until
the late 1600s), gives his European readers the values in equivalent Venetian
coinage. Venice, as a great trading power, had its own coinage circulating
round Europe. The point here is that Polo naturally thinks of money as
minted coins, and knows he is telling his readers about something amazing
money that literally grows on trees!
Otherwise, the process of authorizing the paper is familiar to moderns: the
signing by treasury officers, who also append their personal seals; the
Treasurer (principal officer) dipping his seal into vermilion a bright red
2 Reading 2-7
water insoluble pigment to make the watermarks on the notes. The notes,
thus authenticated, are the sole legal tender by which, Polo says, every
article may be procured. In fact, as Polo goes on to recount in the next
section, every article must be purchased with these bills.
Reading 2-7 3
to Chinese thrift and ingenuity, but also to the civility and mutual trust of a
society that agrees to recognize an everyday product as a token of exchange.
Is it also a utopian fantasy that, instead of allowing the Khans paper money
to be imposed on them, the residents of Kain-du require the Khan to
validate their salt-cakes with his stamp?
According to Polo, the salt-cakes are officially valued at eighty to a gold
saggio: a Venetian saggio weighed one-sixth of an ounce in troy or apothecaries
weight, or just over five grams, so each cake represented value equivalent to
about six one-hundredths of a gram of gold. Polo says the mountain people
also use this salt as a condiment. The Chinese Guanzi (quoted in Topic 1.4)
says You cannot eat money, but here it is eaten. You may recall that the
Guanzi also said that items used as money ran from pearls and jade (superior
money) through to spades and knives. Salt therefore is a credible medium of
exchange; it also was used in Ethiopia. Literally consuming (ingesting) money
was a recognized practice in medieval European medicine. One of the
characters in Chaucers Canterbury Tales is a well-to-do physician who
Kept the gold he gained from pestilence.
For gold in physic is a fine cordial,
And therefore loved he gold exceeding all.4
Chaucer of course is being ironic when he suggests that doctors love gold
for its medicinal value, not its pecuniary value. But an authoritative medieval
medical textbook, Bartholomaeus Anglicus states that among metalle is nothing
so effectuelle in vertue [potency] as golde, [for it] helpethagens [against]
cardeakle passioun [cardiac stresses]. In the Chaucer quotation, the word
cordial means stimulating to the heart.
Summary
In this topic, you have been introduced to a medieval traders account of
Chinese trade and economic practice, including its monetarist ingenuity and
its administrative control of prices. Marco Polos book is an early exercise in
promoting the advantages of global trading, as well as polishing the image of
trading a theme that will be addressed in Module 4. Government creation
of paper money, as related here in China, will also be a recurring theme in
later modules (4, 5, and 10). Finally, you should ask yourself whether the
centralized economic organization that Polo describes is closer to Thomas
Mores land of Utopia or to the land of Macaria.
4 Reading 2-7
Samuel Taylor Coleridge, Kubla Khan: or A Vision in a Dream, in English Romantic Poetry
and Prose, ed. R. Noyes (New York: Oxford University Press, 1957), page 391.
Marco Polo, The Travels of Marco Polo, eds. W. Marsden and T. Wright (London and Toronto:
J.M. Dent, 1854, repr. 1926), Book 1, Chapter 17.
Money: A History, ed. Jonathan Williams (New York: St. Martins Press, 1997), pages 100-101.
Geoffrey Chaucer, Canterbury Tales, tr. J.U. Nicolson (Garden City, N.Y.: Garden City
Publishers Co. Inc., 1934), page 14.
READING 2-8
From Travels of Marco Polo
Of the Kind of Paper Money Issued by the Grand Khan, and Made to Pass Current
Throughout His Dominions
In this city of Kanbalu is the mint of the grand khan, who may truly be said to possess the
secret of the alchemists, as he has the art of producing money by the following process. He
causes the bark to be stripped from those mulberry-trees the leaves of which are used for
feeding silk-worms, and takes from it that thin inner rind which lies between the coarser
bark and the wood of the tree. This being steeped, and afterwards pounded in a mortar, until
reduced to a pulp, is made into paper, resembling (in substance) that which is manufactured
from cotton, but quite black. When ready for use, he has it cut into pieces of money of
different sizes, nearly square, but somewhat longer than they are wide. Of these, the smallest
pass for a denier tournois; the next size for a Venetian silver groat; others for two, five, and
ten groats; others for one, two, three, and as far as ten besants of gold.
The coinage of this paper money is authenticated with as much form and ceremony as if it
were actually of pure gold or silver; for to each note a number of officers, specially
appointed, not only subscribe their names, but affix their signets also; and when this has
been regularly done by the whole of them, the principal officer, deputed by his majesty,
having dipped into vermilion the royal seal committed to his custody, stamps with it the
piece of paper, so that the form of the seal tinged with the vermilion remains impressed
upon it, by which it receives full authenticity as current money, and the act of counterfeiting
it is punished as a capital offence. When thus coined in large quantities, this paper currency
is circulated in every part of the grand khans dominions; nor dares any person, at the peril
of his life, refuse to accept it in payment. All his subjects receive it without hesitation,
because, wherever their business may call them, they can dispose of it again in the purchase
of merchandise they may have occasion for, such as pearls, jewels, gold, or silver. With it, in
short, every article may be procured. Several times in the course of the year, large caravans of
merchants arrive with such articles as have just been mentioned, together with gold tissues,
which they lay before the grand khan. He thereupon calls together twelve experienced and
skilful persons, selected for this purpose, whom he commands to examine the articles with
great care, and to fix the value at which they should be purchased.
Upon the sum at which they have been thus conscientiously appraised he allows a reasonable
profit, and immediately pays for them with this paper; to which the owners can have no
objection, because, as has been observed, it answers the purpose of their own disbursements;
and even though they should be inhabitants of a country where this kind of money is not
current, they invest the amount in other articles of merchandise suited to their own markets.
When any persons happen to be possessed of paper money which from long use has
become damaged, they carry it to the mint, where, upon the payment of only three per cent.,
they may receive fresh notes in exchange. Should any be desirous of procuring gold or silver
for the purpose of manufacture, such as of drinking-cups, girdles, or other articles wrought
of these metals, they in like manner apply at the mint, and for their paper obtain the bullion
they require. All his majestys armies are paid with this currency, which is to them of the
Humanist Issues in Commercial Practice
Reading 2-8 1
same value as if it were gold or silver. Upon these grounds, it may certainly be affirmed that
the grand khan has a more extensive command of treasure than any other sovereign in the
universe.
Source: Marco Polo, The Travels of Marco Polo, eds. W. Marsden and T Wright (London: Cassell & Co., 1926),
Chapter 18, pages 202-203.
2 Reading 2-8
READING 2-9
From Travels of Marco Polo
Of Money Made of Salt
The money or currency [the inhabitants of the Chinese province of Kan-Du] make use of is
thus prepared. Their gold is formed into small rods, and (being cut into certain lengths)
passes according to its weight, without any stamp. This is their greater money: the smaller is
of the following description. In this country there are salt-springs, from which they
manufacture salt by boiling it in small pans. When the water has boiled for an hour, it
becomes a kind of paste, which is formed into cakes of the value of twopence each. These,
which are flat on the lower, and convex on the upper side, are placed upon hot tiles, near a
fire, in order to dry and harden. On this latter species of money the stamp of the grand khan
is impressed, and it cannot be prepared by any other than his own officers. Eighty of the
cakes are made to pass for a saggio of gold. But when these are carried by the traders
amongst the inhabitants of the mountains and other parts little frequented, they obtain a
saggio of gold for sixty, fifty, or even forty of the salt cakes, in proportion as they find the
natives less civilized, further removed from the towns, and more accustomed to remain on
the same spot; inasmuch as people so circumstanced cannot always have a market for gold,
musk, and other commodities. And yet even at this rate it answers well to them who collect
the gold-dust from the beds of the rivers, as has been mentioned. The same merchants travel
in like manner through the mountainous and other parts of the province of Thebeth, last
spoken of, where the money of salt has equal currency. Their profits are considerable,
because these country people consume the salt with their food, and regard it as an
indispensable necessary; whereas the inhabitants of the cities use for the same purpose only
the broken fragments of the cakes, putting the whole cakes into circulation as money.
Source: Marco Polo, The Travels of Marco Polo, eds. W. Marsden and T. Wright (London: Cassell & Co.,
1926), Chapter 38, pages 241-242.
Humanist Issues in Commercial Practice
Reading 2-9 1
READING 2-10
Womens work in the European Middle Ages
In the artisan, shopkeeping, small-farming, and unskilled labouring classes at
any period of pre-industrial society, the modern social historian, Lawrence
Stone, explains:
Husband, wife and children tended to form a single economic
unit, like the crew of a ship, in which the role of the wife was
critical. When the husband was away, she looked after his
affairs for him. On a smallholding, she had limited but very
clearly defined duties over which she had full control: she
managed the dairy and poultry side of the business, and
marketed the produce. If there was cottage industry, she was
in charge of spinning the yarn, knitting, glove-stitching and
lace-making. If her husband was a day labourer, on the other
hand, she and her children were likely to do no more than
assist him in the back-breaking work in the fields. She might
also set up an ale-house in the home, or sell perishable goods
from door to door. In the cloth-manufacturing areas, the
family was even more a wholly interdependent economic unit,
since the putting-out system prevailed and spinning was
exclusively done by women and children.1
Putting-out, contracting, or what is now called outsourcing, was the preIndustrial Revolution system of contracting out work to be done at home, at
piecework rates without guarantee of steady employment. As Stone implies,
putting-out was common in cloth-manufacturing, where turning raw wool to
cloth took many separate processes.
The making of a piece of cloth entailedmany distinct
processes. The preliminary process of carding [combing the
raw wool into slivers] and spinning were always by-industries
[contracted-out work], performed by women and children in
their cottages; but the weavershad their gild; and so had the
fullers [who cleaned and thickened the cloth]and the
shearmen [who finished the cloth] and the dyers.2
All these processes, except spinning, chiefly employed men, whose
organization into artisans guilds gave them a measure of economic
protection. Guilds were professional associations of artisans and merchants.
The guilds set and maintained standards of merchandise, craftsmanship, and
training, and regularized weights, fair prices, and competition. Links between
religion and commercial life were visible in the guilds contributions of
money and work to their local churches, where they often maintained chapels
and celebrated the holy days of the patron saints of their particular trades
for example, Saints Crispin and Crispinian, the patrons of leather workers.
Spinners (some of whom, though a minority, were men) normally did not
form guilds, and women were thus mainly excluded from this form of
professional fellowship. One long-enduring relic of the cottage-industry
Humanist Issues in Commercial Practice
Reading 2-10 1
system was the reference to unmarried women as spinsters you can still
find this definition in present-day dictionaries.
Note that the first essential for a family men, women, and children to
engage in home industry was a home to work in. Therefore, the enclosure
system that made people homeless also made it impossible for them to work.
Look back at the long passage from Mores Utopia quoted in Topic 2.4, in
which More details the loss-of-employment consequences of eviction from
a household not rich but numerous, since farm work requires many hands.
So also did cottage industry work, and as in todays developing countries
large families supplied child labour.
In the Family, Sex and Marriage passage, Stone is describing pre-1500 as much
as post-1500 conditions. In fact, his explanation parallels the Old
Testaments job description for an admirable wife. The qualifications include
farming, clothmaking, merchandising (both buying and selling),
entrepreneuring all these in addition to home-making:
She seeks out wool and flax, and delights to work with her
hands. She rises while it is still night to provide food for
her household. She examines a field and buys it. From her
earnings she plants a vineyard. She samples merchandise to
be sure it is good; She puts her hand to the spindle,and
her fingers ply the spindle. She makes a wrapper and sells
it, and supplies a sash to the merchant. Give her the reward
she has earned, and let the gates ring with praise of her deeds.
[Proverbs 31: 13-31]
Remember also (from Topic 1.6) Xenophons description in his Oeconomicus
of a well-to-do Greek household in which the wife plays an equal even
superior part in the estate management.
There is a medieval counterpart of Xenophons book: a treatise written in
Paris in the 1390s and titled Le Mnagier de Paris, Trait de Morale et dconomie
Domestique, compos vers 1393 par un Bourgeois Parisien. The middle class
householder appears to have written this book as a manual on personal
deportment and household management for his young wife, whom he had
married when she was fifteen years old and an orphan. While the book gives
a thorough picture of medieval French bourgeois domestic life, the tone of
the instruction is consistently patronizing.
2 Reading 2-10
The Family, Sex and Marriage in England 1500-1800 (Harmondsworth: Penguin Books, 1988),
pages 139-140.
Eileen Power, Medieval People (London: Methuen & Co. Ltd., 1966), page 153.
READING 2-11
Margery Kempes business ventures
The sense of womens social role intimated in the Stone and Old Testament
passages is confirmed in the medieval spiritual autobiography (a confessional
account of personal religious life and experiences) of Margery Kempe (ca.
1373-ca. 1440).
Margery Kempe was born to a middle-class family in Norfolk county,
England, and married John Kempe when she was 20. They had 14 children.
Shortly after the birth of the first child, she was touched by the hand of our
Lord with great bodily sickness, through which she lost her reason for a long
time.1 Throughout the book she refers to herself in the third person, and
most usually as this creature. At this time she began to have religious
visions, first of devils and then, recurrently, of Jesus, with whom she began
to believe she had a special relationship. To the detriment of her marriage
and social relationships, she spent most of the rest of her life in pilgrimage
and visionary experiences in a lifes journey towards God, as her
translator puts it.
Though she could not write, her life account, dictated to a priest and taken
down in Latin, The Book of Margery Kempe, is intended as a record of her
feelings and revelations2 rather than of her secular life. Nevertheless, the
book gives information about the working and economic life of a medieval
woman. She tells how, when recovering from her first breakdown, she
developed a kind of superiority complex, dressing in high fashion, telling her
husband she had married beneath her station, and going into business for a
wrong reason:
And then, out of pure covetousness, and in order to maintain
her pride, she took up brewing, and was one of the greatest
brewers in the townfor three or four years until she lost a
great deal of money, for she had never had any experience in
that business. For however good her servants [workers] were
and however knowledgeable in brewing, things would never
go successfully for them. For when the ale had as fine a head
of froth on it as anyone might see, suddenly the froth would
go flat, and all the ale was lost in one brewing after another,
so that her servants were ashamed and would not stay with
her. Then this creature thought how God had punished her
before and she could not take heed and now again by
the loss of her goods; and then she left off and did no more
brewing.
And then she asked her husbands pardon because she would
not follow his advice previously, and she said that her pride
and sin were the cause of all her punishing, and that she
would willingly put right all her wrongdoing. But yet she did
not entirely give up the world, for she now thought up a new
enterprise for herself. She had a horse-mill. She got herself
Humanist Issues in Commercial Practice
Reading 2-11 1
two good horses and a man to grind peoples corn, and thus
she was confident of making her living. This business venture
did not last long, for shortly afterwards, on the eve of Corpus
Christi [Day], the following marvel happened.
The man was in good health, and his two horses were strong
and in good condition and had drawn well in the mill
previously, but now, when he took one of those horses and
put him in the mill as he had done before, this horse would
not pull in the mill in spite of anything the man might do.
The man was sorry, and tried everything he could think of to
make his horse pull. Sometimes he led him by the head,
sometimes he beat him, and sometimes he made a fuss of
him, but nothing did any good, for the horse would rather go
backwards than forwards. Then this man set a pair of sharp
spurs on his heels and rode on the horses back to make him
pull, but it was no better. When this man saw it was no use,
he put the horse back in his stable, and gave him food, and
the horse ate well and freshly. And afterwards he took the
other horse and put him in the mill. And just as his fellow
had done so did he, for he would not pull for anything the
man might do. And then this man gave up his job and would
not stay any longer with the said creature.3
Margery Kempes brewing venture appears to be much grander than setting
up as an alewife brewing and retailing ale from her own house. Her husband
does not appear to have a say in the venture, or in the milling business she
next tries. Because her father had been a town mayor, and alewifery was a
proletarian occupation, she aims at a much bigger business, and does in fact
become one of the greatest brewers in [Kings Lynn] which was a
flourishing Norfolk business centre. Her substantial losses indicate
substantial outlay. Commercial ale-brewing was closely regulated as to quality,
and most towns and city boroughs appointed or elected aleconners to
inspect the product regularly. Hence the sequence of product failures
becomes public knowledge: there is an indication that the professional
brewers whom she hired became worried about their craft reputations and
therefore resigned. Something of the same process happens in her next
venture, into grain milling another enterprise requiring capital equipment.
Brewing and milling were considered to be trades to prosper at, sometimes
not always ethically. The aleconners were necessary in preventing watering
and adulterating of the product; milling gave unscrupulous operatives a
chance to misappropriate stock, because the grain usually was left at the mill
by the grower and the product collected later. Millers traditionally were said
to have thumbs of gold when it came to manipulating scales. Margery
Kempes contemporary, Chaucer, writes about a typical miller in The
Canterbury Tales, an operator who
Could steal corn and full thrice charge his fees;
And yet he had a thumb of gold.4
2 Reading 2-11
Reading 2-11 3
Summary
This topic has outlined womens contributions to medieval labour and
commerce. Women performed home work that included not only household
economy, but also industrial piecework put out to cottagers. Unlike many
of their male counterparts and fellow workers, women performing industrial
crafts like spinning and weaving were shut out from membership in trade
organizations (guilds). You have also read from the spiritual biography of
Margery Kempe, which illustrates the difficulties experienced by a medieval
woman who attempted to turn her housekeeping skills of brewing and
provisioning into commercial enterprises. Margery Kempes story, as
excerpted here, should be compared with the Xenophon passages from
Module 1, where a successful wife-and-husband partnership is described, and
where fostering of the womans skills and administrative abilities is
advocated. This theme of womens efforts to establish their place in
economic life will be featured again in subsequent modules.
4 Reading 2-11
Eileen Power, Medieval People (New York: Barnes & Noble, Inc., 1966), page 330.
Margery Kempe, The Book of Margery Kempe, tr. B.A. Windeatt (Harmondsworth: Penguin
Books, 1985), pages 44-45.
Eileen Power, Medieval People (New York: Barnes & Noble, Inc., 1966), page 81.
READING 3-1
Setting the stage: The decline of feudalism and
the service ethic
The system of feudalism had developed after the collapse of the Emperor
Charlemagnes (C.E. 768-814) government over most of western Europe.
By the middle of the tenth century, monarchs could no longer protect their
larger landowners from one another or from raiding foreigners like the
Norsemen. So a system of mutual protection within and between classes of
society developed, with obligations up and down the social scale. The weak
would obtain the protection of the strong by pledging vassalage, meaning
loyalty and service. This service could be military or economic, that is,
providing labour and produce, or both. Besides protection, the overlord
would grant fiefs (estates of land) to the vassals; tenancy of these lands, in
diminishing parcels, was in turn apportioned down the social ladder. The
social glue of feudalism was mutual obligation, usually paid in goods and
services for example, fighting rather than in money.
But money, including cash wages, increasingly became a significant way of
settling obligations. The turn of one kind of economy into another is
nostalgically described by a character in William Shakespeares As You Like It,
written around 1600. Economic change probably had set in many years
before this plays creation, but the excerpt expresses the end-of-an-era
uneasiness that change brings on. In the play, an old servant offers his
companionship and his life savings (he obviously was receiving some cash
wages) to the penniless and exiled son of his dead master. The young man
sees the gesture as reflecting a service ethic that is dying out:
O good old man, how well in thee appears
The constant service of the antique world
When service sweat[ed] for duty, not for meed [payment]!
Thou art not for the fashion of these times,
Where none will sweat but for promotion,
And having that will choke their service up
Even with the having [being promoted, will withhold
service].1
And the relative novelty of being paid in coin figures comically in
Shakespeares Loves Labours Lost, where a villager is paid by two separate
men to deliver letters. The first man calls the payment remuneration; the
other says, Theres thy guerdon2 [reward]. When the villager (who has
never heard either term before) looks closely at the two coins, he finds that
while remuneration is a much bigger word than guerdon, the guerdon coin is
sixteen times the value of the other one.
Reading 3-1 1
About a century before these plays were written, Europe was running short
of bullion when a fresh source of gold and silver was discovered in the
Americas. Montaignes sixteenth-century view of the exploitation of this
source is the subject of Topic 3.1.
2 Reading 3-1
William Shakespeare, As You Like It, ed. H.J. Oliver (Harmondsworth: Penguin Books Ltd.,
1968), Act 2, Scene 3, lines 56-62.
William Shakespeare, Loves Labours Lost, ed. J. Kerrigan (Harmondsworth: Penguin Books
Ltd., 1985), Act 3, Scene 1, lines 126-169.
READING 3-2
Michel de Montaigne
In the first half of the 1500s, while Thomas More was envisioning his
cashless utopia and Luther and Calvin were working out their theories and
compromises on interest and commerce, Europe was experiencing a
phenomenal economic return from the exploration and discovery of new
lands. Nowhere were the returns on investment greater than in the Americas,
or Indies as Columbus initially called them. As the explorers reports and
plunder began to arrive, especially in Spain and Portugal, the bullion and
precious artifacts of Peru and Mexico not only enriched the treasuries of
European monarchs like Philip II and Isabella of Spain, but also inspired
European dreams and fantasies. People dreamed of limitless resources, of El
Dorado mountains of gold waiting to be exploited. The dreams were
nourished by published accounts of expeditions to Mexico and Peru by
writers such as Bernal Diaz del Castillo (ca. 1496-1584), a soldier with
Hernando Corts 1519 expedition to Mexico, and Francisco Lpez de
Gmara (1510-1560), a priest in Corts household. Horrific struggles
between the conquistadors (conquerors) and the Indians, and the dreadful
exploitation of the latter, pivoted on the Indies resources, and especially on
gold.
One of the readers of these accounts certainly of Lpez de Gmaras
was the French essayist, Michel de Montaigne (1533-1592). Montaigne
studied law and the classics, travelled widely in Europe, and was mayor of
Bordeaux for two terms. However, he is renowned for his essays on a wide
variety of subjects; he published 127 of them in three volumes. The first two
books appeared in 1580 and the third posthumously in 1595.
Just as Thomas More coined the term utopia for the pre-existing concept or
dream of an ideal commonwealth, Montaigne first applied the word essai
(literally, an attempt or try) as a modest description of reflective or
argumentative prose compositions. The essay was to become a major literary
form of expression (though students faced with writing an essay might well
remember that essays are supposed to be attempts).
Montaigne developed the art of catching the readers attention by opening
with a personal reminiscence or by describing a common experience, then
subtly moving on to profound moral and ethical issues. The essay entitled
Of Vehicles starts out with the mundane topic of motion sickness: I
cannot stand for long and found it even more difficult to stand in my
youth either a coachor a boat.1 He then moves on to a short historical
discussion of vehicles in war and peace, then to the role of vehicles in what
we might call conspicuous (and exotic) consumption, and from there to
excesses in the uses of gold and the even greater excesses committed in its
acquisition. This last what has been destroyed or lost in the acquisition of
wealth is the real subject to which Of Vehicles has been conveying the
reader. And since Montaigne clearly was familiar with accounts of the
conquests of Mexico and Peru, his humanist mind had been trying to come
Humanist Issues in Commercial Practice
Reading 3-2 1
to terms with the horrors of procuring the gold of the Indies, and with the
ways in which the gold itself brought out the moral differences between the
civilizations of America and Europe. Turn now to Reading 3-3 and read
Montaignes essay as it details the conquest of Peru.
reconnects the cutting up of the Indians gold with the violent methods used
to get it. Montaigne leaves final judgments up to the reader.
It is possible that Montaigne was writing this essay at the time when the
Spanish Armada was being defeated, in 1588. For certain, when he was
composing the entries for this volume of essays, the Dutch Republic had
already declared its independence from Spain and was fighting its Spanish
occupiers more successfully than the Indians of the Americas were able to
do. Defeats by England and the loss of the Netherlands hastened what
Montaigne would have felt to be Spains deserved decline as a world power.
1
Reading 3-2 3
READING 3-3
From Michel de Montaignes essay
Of Vehicles
Our world has lately discovered another and who can assure us that it is
the last [to be found] since...ourselves have known nothing of this one till
now? another, no less large, populous, and manifold than itself, but so
new and so infantile that it is still being taught its ABC. It is not fifty years
ago that it knew neither letters, nor weights and measures, nor clothes, nor
corn, nor vines. It was still naked in its mothers [earths] lap, and lived only
on the milk that it sucked from her....
I very much fear that we shall have greatly hastened the decline and ruin of
this other hemisphere by our contact, and that we shall have made it pay very
dearly for our arts. It was an infant world, and yet, with all our advantages in
valour and natural strength, we have not whipped it into subjection to our
teaching; we have not won its favour by our justice and goodness, or
subdued it by our magnanimity. As most of their responses in our
negotiations with them testify, its people were in no sense our inferiors in
natural clarity of understanding and cogency.
The astonishing magnificence of the cities of Cuzco and Mexico and, among
many similar things, that kings garden in which all the trees and fruit, and all
the plants were exquisitely fashioned of gold to the same size and in the same
order as they would have in any ordinary garden; also the animals in his
private apartments, which were modelled after every kind that lived in his
land or his seas; and, in addition, the beauty of their workmanship in
precious stones, feathers, cotton, and painting; all these things show that they
were in no way inferior to us in industry either. But as to religious conduct,
obedience to the law, goodness, liberality, loyalty, and honest dealing, it was
greatly to our advantage that we had not as much as they. By excelling us in
these virtues, they ruined, sold, and betrayed themselves....
Consider that these [European] strangers were mounted on great, unfamiliar
monsters, and opposed to men who had never seen a horse, or indeed any
animal trained to carry a man or bear any other burden; that [the Europeans]
were furnished with hard and shining skin [armour], and sharp and glittering
weapons, and were opposed to men who would barter a great pile of gold
and pearls for the marvel of a gleaming mirror or a knife, and who had
neither the knowledge nor the means with which they could have pierced our
steel, even if they had had the time.
Reading 3-3 1
Add the thunder and lightning of our cannon and musketry enough to
frighten even Caesar, if he had been surprised at that hour and with so little
experience against people who were naked, except in so far as they had
risen to the invention of some cotton fabric; that they had no other arms, at
best, but bows, stones, sticks, and wooden shields; that these peoples were
taken at a disadvantage, under the pretence of friendship and good faith, and
betrayed by their curiosity to see new and unknown things. Place to the
account of the conquerors, I say, this disparity, and you deprive them of the
entire credit for all their victories....
Why did not so noble a conquest fall to Alexander, or to the ancient Greeks
and Romans! Why did not this vast change and transformation of so many
empires and peoples fall to the lot of men who would have gently refined
and cleared away all that was barbarous, and stimulated and strengthened the
good seeds that nature had sown there, not only applying to the cultivation
of the land and the adornment of cities the arts of this hemisphere, in so far
as they were necessary, but also blending the Greek and Roman virtues with
those native to the country?
What a compensation it would have been, and what an improvement to this
whole earthly globe, if the first examples of our behaviour offered to these
peoples had caused them to admire and imitate our virtue, and had
established between them and us a brotherly intercourse and understanding!
How easy it would have been to turn to good account minds so innocent and
so eager to learn, which had, for the most part, made such good natural
beginnings!
On the contrary, we have taken advantage of their ignorance and
inexperience to bend them more easily to treachery, lust, covetousness, and
to every kind of inhumanity and cruelty, on the model and after the example
of our own manners. Who ever valued the benefits of trade and commerce at
so high a price? So many towns razed to the ground, so many nations
exterminated, so many millions put to the sword, and the richest and fairest
part of the world turned upside down for the benefit of the pearl and pepper
trades! Mere commercial victories! Never did ambition, never did public
hatreds drive men, one against another, to such terrible acts of hostility, and
to such miserable disasters.
2 Reading 3-3
God and the truth of our religion, which they advised them to embrace,
adding a few threats into the bargain.
The [natives] answer was this: that, as to [the Spaniards] being peaceable,
they had not that appearance even if they were; as to their king, since he
begged he must be poor and needy; and that whoever had parcelled things
out to them must be a man who loved quarrels, to give another person
something that was not his, in order to set him at odds with its ancient
possessors. As to the provisions, they would supply them. Of gold they had
little, it being a thing to which they attached no value since it did not help
them in their daily life, which they were only anxious to spend in a happy and
pleasant way. But their visitors might boldly take as much as they could find,
except what was used in the service of their gods. As to the one God, what
had been said about him had given them pleasure, but they had no wish to
change their religion, having followed it happily for so long; and it was their
custom to take counsel only from their friends and acquaintances.
The Spaniards drove out the last representatives of the two most powerful
monarchies in that world and perhaps in the whole world who were
kings over so many kings. One was the king of Peru, whom they took in
battle and for whom they demanded a ransom so exorbitant that it passes all
belief. But when this was duly paid, and the king had given proof in his
negotiations of a frank, generous, and steadfast spirit, also of a clear and
orderly mind, the conquerors took it into their heads, after extorting one
million, three hundred and twenty-five thousand, five hundred weight of
gold, besides silver and other things no less in value, so that their horses were
never shod with anything but solid gold, to find out, by any treacherous
means they could think of, what the rest of this kings treasures might
amount to, and then to get possession of all that he had in reserve.
They trumped up a false charge against him, and advanced false proofs that
he was plotting to raise an insurrection in the provinces to restore him to
liberty. Thereupon, by a nice [subtle] judgment pronounced by those very
men who had contrived this treachery, he was condemned to be publicly
hanged and strangled, after being forced to purchase remission from the
torment of being burnt alive by accepting baptism, which was given to him at
the moment of execution. He endured this horrible and monstrous fate
without betraying himself by look or word and with a truly royal gravity of
demeanour. Then, to pacify the people, who were dazed and dumbfounded
by these strange events, the Spaniards made a show of being greatly grieved
at his death, and ordered him a magnificent funeral.
The other, the king of Mexico, after putting up a long defence of his besieged
city, during which he and his people showed the utmost that endurance and
perseverance can do if ever a prince and a nation did so, had the misfortune
to fall alive into the hands of the enemy, the condition of surrender being
that he should be treated as a king and nothing about his conduct as a
prisoner showed him to be unworthy of the title. After their victory,
however, the Spaniards did not find all the gold they had promised
themselves. So, after first ransacking and rifling everything, they set about
Humanist Issues in Commercial Practice
Reading 3-3 3
As for the revenue, even in the hands of a thrifty and careful prince [Philip II
of Spain Montaigne is being ironical] it is far from corresponding to the
expectations held out to his predecessors, or to that abundance of riches
which they found on their first landing in these new countries for though
a great deal is brought over, this is plainly nothing compared with what we
should expect this is because, the use of coin being entirely unknown to
[the natives], their gold was all found in one place, since it served only as an
object for show and parade. It was, in fact, a piece of furniture that had been
preserved from father to son by many powerful kings, who were always
exhausting their mines in order to create this vast pile of vessels and statues
for the adornment of their palaces and temples, instead of keeping their gold,
as we do, in circulation and for commerce. We divide and convert it into a
thousand shapes, we spread it abroad and disperse it. Imagine our kings
amassing all the gold they could find for several centuries, and keeping it in
idleness!...
As for pomp and magnificence, which were the cause of my entering on this
discourse, neither Greece, nor Rome, nor Egypt has any work to compare,
either for utility, or difficulty, or grandeur, with that road, to be seen in Peru,
which was constructed by the kings of the country and led from the city of
Quito as far as Cuzco a distance of nine hundred miles. It was twenty-five
yards wide, straight, level, and paved; and it was enclosed on either side by
fine, high walls, parallel with which, on the inside, ran two perennial streams,
bordered by the fine trees of the kind that they call molles. Where they met
with mountains and rocks, they cut and levelled them, and they filled in the
valleys with stone and chalk. At daily stages on the road were fine palaces
stocked with provisions, garments, and weapons, both for travellers and for
any armies that have to pass that way....
Let us return to our [topic of] vehicles. In place of chariots or any other kind
of conveyance, they had themselves carried by men, and on their shoulders.
This last king of Peru, on the day that he was captured, was thus carried on
golden poles, seated in a chair of gold, into the midst of his battle array. As
fast as they killed these bearers of his, in order to bring him down for they
4 Reading 3-3
wished to take him alive as many others struggled to take the places of the
dead. So they could never upset him, whatever slaughter they made of these
people, until a horseman seized him round the body and pulled him to the
ground.
Source: Essays by Michel de Montaigne (pages 276-285), translated by J.M. Cohen (Penguin Classics, 1958),
copyright J.M. Cohen, 1958. Reproduced by permission of Penguin Books Ltd.
(http://www.penguin.co.uk)
Humanist Issues in Commercial Practice
Reading 3-3 5
READING 3-4
Francis Bacon and Of Usury
Francis Bacon (1561-1626) was an English parliamentarian, Attorney
General, and Lord Chancellor, and, like Michel de Montaigne, published his
book, entitled Essays, or Counsels Civil and Moral, between 1597 and 1625.
One of the best known of Bacons essays is Of Usury, which, in the
manner of Aquinas, examines both sides of the issue. Of Bacons seven brief
arguments against usury, the first and most important is that:
Usury makes fewer merchants. For, were it not for this lazy
trade of usury, money would not lie still, but would in great
part be employed upon merchandizing, which is the [chief
vein] of wealth in a state.1
In other words, receiving interest with no risk inhibits the entrepreneuring
spirit. But after enumerating the pros and cons of usury, Bacon concludes
that to speak of abolishing of usury is idle. All states have ever had it, in one
kind or [interest] rate or other. Sothat opinion must be sent to Utopia. He
means that abolition would be impossible in the real world, and so he turns,
as Luther did (Topic 2.3), to an estimation of reasonable rates.
Here you should know that in Elizabeth Is reign (reigned 1558-1603), the
accepted interest rate was ten percent; Elizabeths successor, James Is
(reigned 1603-1625) parliament, set it at eight percent. These were ceiling
rates. It seems clear from Bacons proposals following that he is comfortable
with these ceilings when he considers the numbers that will stimulate trade
and commerce. Bacon himself lived on credit for most of his life, and died in
debt in 1626. (While he had the reputation of being the finest lawyer in the
kingdom, he was arrested for debt in a London street by his goldsmithbanker creditor, Simpson.) Whenever Bacon was spoken to about his
spending and debts, he would blame Mr. Simpson; nevertheless, none of
Bacons personal financial ineptitude shows in Of Usury.
Reading 3-4 1
than give [up] his trade of usury and go from certain gains to
[risky] gains. Let these licensed lenders be in number
indefinite, but restrained to certain principal cities and towns
of merchandizing; for then they will be hardly able to
[influence the rates charged] in the country: so as the licence
of nine will not suck away the current rate of five; for no man
will send his monies far off, nor put them into unknown
hands.
If it be objected that this doth [in some way] authorize usury
which before was in some places but permissive [merely
ignored]; the answer is, that it is better to mitigate usury by
declaration [official regulation], than to suffer it to rage by
connivance [being ignored].2
Francis Bacons personal difficulties with money, when compared with his
written thoughts on the regulation of lending, are something of a triumph of
reality over theory. In Bacons lifetime, there were many popular publications
about commercial life both respectable and disreputable commercialism
and about money. A recurring topic was usury and the usurer. A brief
quotation from a 1596 publication reflects the stereotypical image of the
interest-taker and shows how far Bacons treatment is from that popular
stereotype:
Usury (a devil of good credit in [London])having privily
stolen a sufficient stock from the old miser his father, hath
lately set up for himself, and hath four of his brothers his
apprentices. The first of them is Hardness-of-Heart.
The fourth is Rapine, and he jets [scoots] about the streets to
steal:his stock is false keys, [burglars tools], and swordand-buckler [shield]; him [Usury] employs to rob from them
he hath lent money to, to the end they may be the fitter to
commit a forfeiture [foreclosure].3
The 1560 English translation of the scriptures, the Geneva Bible, was the
most popular of the versions in English until the King James Version
replaced it in 1611. The Geneva Bible had extensive marginal notes for home
study and its note to the Deuteronomy verses on usury reads This [lending
to strangers] was permitted [at the time] for the hardnesse of their [Old
Testament Jews] hearts. This marginal note is the source for the name of
Usurys chief brother, Hardness-of-Heart, in this quotation.
Reading 3-4 3
Summary
You have seen how an Early-Modern analytic mind analyzes usury as a purely
commercial and administrative not church matter. You also have seen
how Francis Bacon keeps alive the stereotype of Jews as unregulated
moneylenders running a practice that the state needs to bring within its
control.
In Topic 3.3, you will learn about the rewards and risks of merchantventuring and about bottomry, a method of raising venture capital while
getting around state-imposed interest ceilings. In Topic 3.4, you will study in
some depth the story of a famous and apparently stereotypical Renaissance
moneylender who is still seen in modern theatres and studied
(controversially) in schools: Shakespeares Shylock, in The Merchant of
Venice.
4 Reading 3-4
Francis Bacon, Of Usury, in Francis Bacon: A Critical Edition of the Major Works, ed. Brian
Vickers (Oxford: Oxford University Press, 1996), page 422.
Thomas Lodge, Wits Miserie (1596), in Life in Shakespeares England: A Book of Elizabethan
Prose, ed. J.D. Wilson (Harmondsworth: Penguin Books Ltd., 1968), pages 156-157.
Harold Pollins, Economic History of the Jews in England (East Brunswick, N.J.: Associated
University Presses, Inc., 1982), page 19.
READING 3-5
Marlowes The Jew of Malta and Shakespeares
Merchant-venturing Marlowe
The Jew of Malta is Barabas. He is a misanthrope who has studied medicine
to become an expert poisoner, then learned military engineering so as to
[slay] friend and enemy with [his] stratagems, and has now gone in for
usury so as to fill debtors prisons with bankrupts. He is a typical Marlowe
protagonist with bigger-than-life aspirations: whatever Marlowes heroes or
villains desire, they want it in colossal surplus.
Having ascertained that money brings the greatest power to hurt, Barabas has
been acquiring it by the normally risky and respectable activity of merchantventuring investing in shipping and cargoes. Marlowe begins the play
with a description of Barabas trading successes, actually a kind of audit of his
latest entrepreneurial activities as well as a prospectus of ventures calculated
to return wealth beyond the dreams of avarice:
Enter BarabasIn his counting house, with heaps of gold before him
Barabas: So that of thus much that return was made;
And of the third part of the Persian ships
There was the venture summd and satisfied.
As for those Samnites, and the men of Uz,
That bought my Spanish oils and wines of Greece,
Here have I pursd their paltry silverlings.
Fie, what a trouble tis to count this trash!
Well fare the Arabians, who so richly pay
The things they traffic for with wedge of gold,
Whereof a man may easily in a day
Tell [count] that which may maintain him all his
life.
Give me the merchants of the Indian mines,
That trade in metal of the purest mould;
The wealthy Moor, that in the eastern rocks
Without control can pick his riches up,
And in his house heap pearl like pebble stones,
Receive them free, and sell them by the weight!
Humanist Issues in Commercial Practice
Reading 3-5 1
In The Merchant of Venice, however, the protagonist, Antonio, says that his
ventures are not in one bottom trusted.3 Bottomry contracts had to be
honoured however [they might] exceed the usualrate of interest, and
Antonio makes a very unusual security pledge.
So at the outset of The Jew of Malta, Barabas is, at least in his own imagination
and wonderful language, a merchant Midas: everything he has touched has
turned to gold (hes contemptuous of silver), or to jewels, silks, or oils. This
is the fable aspect of the play. But realism quickly sets in, for the cataloguespeech is interrupted by one of his merchant ship captains bringing word that
a fleet has just arrived safely in Malta and will be allowed to unload when
Barabas himself will come and custom them that is, pay the import
duty.
The reference to customs payment reflects the historical fact that the island
of Maltas strategic and commercially valuable location in the centre of the
Mediterranean was exploited by its garrison and governors, the Christian
order of the Knights of St. John, who controlled and taxed trading. In Act I,
Scene 2, the Knight-Governor and council are dealing with a crisis: warships
have arrived offshore to back up the Turkish ambassadors demand for ten
years of unpaid peace treaty tribute from Malta. Short of money, the council
decrees that
First, the tribute-money of the Turks shall all be levied
amongst the Jews, and each of them to pay one half of his
estate. Secondly, he that denies to pay, shall straight
become a Christian. Lastly, he that denies this [conversion],
shall absolutely lose all he has.4
Barabas momentarily resists paying half his wealth and converting to
Christianity, and the Governor expropriates all showing in the process
that the administrators (like the thirteenth-century English kings) know
nothing about investment capital or the importance of the role of
moneylenders in financing commerce:
Barabas:
Reading 3-5 3
Knight:
So Barabas finds himself in the same position the Jews were in when Edward
I expelled them from England in 1290 (Topic 3.2). This historic economicreligious plight lends itself very well to Marlowe, in whose plays nothing is
done by degrees, and where all desired commodities power, knowledge,
love, wealth exist to be monopolized, seized, won, or lost totally.
Incidentally, the officer who reports that Barabas assets have been seized
declares that they, being valued, amount to more than all the wealth in
Malta. Barabas has or wants all the ready wealth in Malta; the state by
eminent domain takes it all away in an instant to give it to another state.
Boom and bust make sensational theatre. In this respect, The Jew of Malta is
an early representation, in popular literature, of a business bust through
government intrusion.
Marriage-venturing Shakespeare
In The Jew of Malta, Marlowe inflates the monopolistic acquisitiveness of
Barabas to mythic proportions Barabas does not need modern advertising
to sell him on the myth of having it all. Nor does he disguise his immense
acquisitiveness, thereby making himself the prime target of government
regulators: We take particularly thine to save the ruin of a multitude.6
Whereas The Jew of Malta makes romance out of money, The Merchant of Venice
is a marriage comedy that reflects Elizabethan societys practice of making
money out of romance. Marriage comedies are typically about lovers
negotiating their way around obstacles that stand in the way of their marrying
one another; these plays conclude in betrothals or wedding festivities.
Negotiation in a Shakespearean marriage comedy frequently includes the
literal working-out of the property settlements that were entailed in middleand upper-class marriages. Modern pre-nuptial agreements are an obvious
parallel, though in Shakespeares time such agreements normally were
negotiated between the parents of the prospective bride and groom, or by
the groom and the brides father, or where considerable property and
inheritance issues were at stake by legal agents of both families.
Shakespearean comedy is no laughing matter when it comes to marital
property. Here, from another Shakespeare play, The Taming of the Shrew, is a
brief and realistic example of sixteenth-century marriage negotiations.
Petruchio, who has come to wive it wealthily in Padua. If wealthily, then
happily in Padua,7 is proposing to marry Baptistas elder daughter Katherina,
and he deals not with the prospective bride but with the father. Notice the
full disclosure of financial standing:
Petruchio: Signor Baptista, my business asketh haste,
And every day I cannot come to woo.
You knew my [late] father well, and in him
[know] me,
Left solely heir to all his lands and goods
4 Reading 3-5
Reading 3-5 5
6 Reading 3-5
Portia:
Nerissa:
Reading 3-5 7
other way around, thereby freeing herself from her dead fathers
encumbrance.
Summary
In this topic, you have looked at popular sixteenth-century dramatic
renderings of two types of business venturing for wealth: merchant-venturing
(by sea) and marriage-venturing. Both required venture capital; each type of
venturing inspired romantic dreams in the venturers dreams of fabulous
wealth and prizes, including the hand of a rich and beautiful woman.
1
The Compact Edition of the Oxford English Dictionary (New York: Oxford
University Press, 1977), Volume 1, page 1017.
10
11
12
13
14
15
16
Reading 3-5 9
READING 3-6
Location
Initial characters
Tape location
[minutes (')
and
seconds (")]
Act 1
Scene 1
Scene 2
Scene 3
2'00"
12'24"
18'55"
Act 2
Scene 1
Scene 2
Scene 3
Scene 4
Scene 5
Scene 6
Scenes 7 & 9
Scene 8
Bassanio, Gratiano
Jessica, Launcelot
Gratiano, Lorenzo, Salarino,
Solanio
Shylock, Launcelot
Portia, Nerissa, suitors
27'25"
28'45"
30'06"
31'23"
34'43"
Act 3
Scene 1
Scene 2
Scene 3
Scene 4
Scene 5
Venice, a street
Belmont, outside Portias house
Venice, a street
Belmont, in Portias house
Not in video version
Solanio, Salarino
Portia, Bassanio
Shylock, Antonio, jailer
Portia, Lorenzo, Jessica
47'19"
58'07"
75'28"
77'52"
80'44"
110'00"
Jessica, Lorenzo
111'00"
Act 4
Scene 1
Scene 2
Act 5
Scene 1
Reading 3-6 1
Introduction
The tape locations provided here refer to a version of Shakespeares The
Merchant of Venice from a production originally staged at Londons National
Theatre in 1970. The play was directed by Jonathan Miller, and stars
Laurence Olivier as Shylock and Joan Plowright (Oliviers wife) as Portia. In
1973, the stage production was re-adapted and directed as a television film by
John Sichel; the directorial conception in the film remains chiefly Jonathan
Millers. The films complete playing time is 131 minutes.
Note:
You should view the complete play initially to get an understanding of the plot and the characters and then look
more closely at the scenes discussed below.
him bad news about the search for Jessica, Shylock solemnly covers his
Venetian or assimilation clothing with a prayer shawl, tells Tubal to find an
officer to arrest Antonio for debt, and leaves for the synagogue where, as he
will say in Act 4, Scene 1, he will register an oath in Heaven against
Antonio.
Reading 3-6 3
this sequence (his last scene and exit) everything he has. Listen, though, for
his long wail even after he has exited, and notice the discomfiture and shame
it properly causes his tormentors.
4 Reading 3-6
READING 3-7
Emotions and commerce in The Merchant of
Venice
Reading 3-7 1
has frequently expressed contempt for Shylock, telling him in public how he
hates Shylocks interest-taking, and scorning him as a religious outsider.
Shylock in turn says:
I hate [Antonio because] he is a Christian;
But more, [because] in low simplicity
He lends out money gratis and brings down
The rate of usance [usury, interest] here with us in Venice.
If I can catch him once upon the hip [at a disadvantage],
I will feed fat the ancient grudge I bear him.
He hates our sacred nation and he rails
On me, my bargains, and my well-won thrift,
Which he calls interest.5
The ancient grudge is spoken as if it needs no explanation. The major
cause of difference between these two men might be that Antonio is a
financial risk-taker, while Shylock is a cautious investor who has built up his
capital by degrees.
Whereas Antonios business culture is shipping, and therefore risky,
Shylocks business culture is based on the steady and secure growth of
money, just as his dryland ancestors based their lives on growing livestock.
This traditional way of prospering by steady accretion is illustrated when the
two first come together about the 3000 ducats. Shylock makes Antonio listen
to an Old Testament story [Genesis 30] of how Jacob outsmarts his uncle
and employer Laban when Laban tries to cheat him of his due wages that
were to be paid in piebald sheep. By using a counter-strategy, Jacob succeeds
in acquiring even more sheep than Laban tried to cheat him out of. (Like the
Portia and Jessica plots, the Jacob tale is about the younger generation
freeing itself from the older.)
When Antonio impatiently asks if this story of making sheep breed was
inserted [in the Bible] to make interest good? Or is your gold and silver ewes
and rams? Shylock replies I cannot tell, I make it [money] breed as fast.6
Antonio is proud of being a risk-taking entrepreneur, and though he shows
that he also has read the Jacob story, he is contemptuous of Shylocks
association of interest-taking with clever stock-breeding. Yet, when Aristotle
writes of wealth-getting (Topic 1.3), there is an interesting grey area between
respectable and disrespectable wealth-getting, with livestock breeding as an
example:
There are two sorts of wealth getting; one is a part of
household management, [which is] necessary and honourable,
while that which consists in exchange is justly censured; for it
is unnatural, and a mode by which men gain from one
another. The most hated sortis usury, which makes gain
out of money itself, and not from the natural object of it. For
money was intended to be used in exchange, but not to
increase at interest. And this term interest, which means the
birth of money from money, is applied to the breeding of
money.
2 Reading 3-7
Reading 3-7 3
even talk about interest. He lends out money gratis and wants to make his
position clear:
Antonio: Shylock, albeit I neither lend nor borrow
By taking nor by giving of excess [interest],
Yet to supply the ripe wants of my friend,
Ill break a custom.
Shylock: Methoughts you said you neither lend nor borrow
Upon advantage [interest]?
Antonio: I do never use it.12
Antonio is prepared to secure the loan and pay whatever fee, excess, or
advantage is necessary, as long as it is not called interest. The centuries-old
debates on usury, and the financial dodges used to get around being seen to
charge or pay interest, are concentrated in this abrasive dialogue between the
Jew and the merchant. Furthermore, one of them is determined to practice
the old law given in Deuteronomy 23:19; the other conducts himself by the
principle in verse 20. You should look at Deuteronomy 23:19-20 (in
Topic 1.3) and decide which verse applies to which character here, keeping in
mind that when Antonio tells Shylock:
If thou wilt lend this money, lend it not
As to thy friends, for when did friendship take
A breed of barren metal [from] his friend?13
the word friend also means relative. Notice then that although Antonio
would prefer not to have to meet Shylock anywhere, their financial principles
have them meeting in their religions mutual Testament.
To repeat: Shakespeare focuses generations of religious and economic debate
in this scene, not to mention cultural and religious tensions. And
essentially looking the other way Antonio agrees to the strange forfeiture.
Is this a plot by Shylock to harm Antonio? Bassanio thinks so: I like not fair
terms and a villains mind,14 he says. But Shylock first asks Antonio to Go
with me to a notary, seal me there yourbond,15 then he appears to change
his mind and sends Antonio ahead: Then meet me forthwith at the notarys;
Give him direction for this merry bond, And I will go and purse the ducats
straight, And presently, Ill be with you.16 If Shylock has a plot in mind, it
seems strange that he would let Antonio dictate to the notary on the terms of
the bond. In the first two acts of the play, the only plot that can be detected
in Shylocks approach to this loan is when he lets his Christian servant,
Launcelot Gobbo, break his contract and join Bassanios entourage. Shylock
says that Gobbo is a huge feeder, Snail-slow, and he sleeps by day,
and
Therefore I part with him, and part with him
To one that I would have him help to waste
His borrowed purse.17
4 Reading 3-7
Reading 3-7 5
6 Reading 3-7
Reading 3-7 7
If he had taken Bassanios tender of twice the ducats or more, he would have
recouped some of the money Jessica took and Venice would thereby have
received an economic boost from Belmont (Portias money). Though
Shakespeare opts for the splendid theatrics of the last-minute rescue in The
Merchant of Venice, he also shows that there always are the practical
possibilities and processes of business as usual.
Summary
In The Merchant of Venice, you have seen a loan arrangement turn to a matter
of profound contention when human feelings come into play. Such is often
the case in everyday commercial life, though not so dramatically as in the
case of Shylocks merry bond. Shakespeare is pushing the humanist issues
to extremes in order to vividly illustrate how historical, cultural, and religious
tensions can be catalyzed by that neutral element, money. You have also
seen, in the continuing theme of marriage-venturing, how Shakespeare
presents Portias progression from a woman who is regarded by marriageventurers as a property in herself, or a passive holder of property, to the
clever custodian of her own money during the brief period between her
marriage ceremony and its consummation. While doing so, she consolidates
her own emotional property rights in her husband by negotiating away his
commitment to Antonio. Finally, you have observed the human issue of
Shylocks exclusion from the heart of Venetian society even though he is
the principal circulator of money through the commercial system of Venice.
1
10
11
12
13
14
15
16
17
18
19
Reading 3-7 9
10 Reading 3-7
20
21
22
23
24
25
26
William Harvey, Movement of the Heart and Blood in Animals, quoted in Gillian Beer,
Arguing with the Past: Essays in Narrative from Woolf to Sidney (London: Routledge, 1989),
page 104.
READING 3-8:
Machiavelli, Mandeville, and Hobbes
Machiavelli and rulers self-interest
The Prince is often regarded as the ultimate textbook on how rulers can
maintain power while pursuing their own interest. Machiavelli dedicated the
book to a member of the powerful Florentine family, the Medici, and hoped
that it would show how useful he could be as a political consultant. The Prince
therefore speaks to the self-interest of both the author and the Medici to
whom the book was dedicated. Machiavelli is famous for his candid appraisal
of human behaviour:
My intention is to write something useful for anyone who
understands it; it seems more suitable to me to search after
the effectual truth of the matter rather than the imagined
one. There is such a gap between how one lives and how
one ought to live that anyone who abandons what is done for
what ought to be done learns his ruin rather than his
preservation: for a man who wishes to make a vocation of
being good at all times will come to ruin among so many who
are not good.1
And so Machiavelli develops his advice to princes on when to be as violent
as the lion and when to be as cunning as the fox in dealing with their subjects
and other rulers. His practical politics came to be called realpolitik (political
realism) in the twentieth century. For example, to the question of whether it
is better for a public figure to be loved than to be feared, Machiavelli answers
that, when one cannot be both loved and feared,
It is much safer to be feared than to be loved. For one can
generally say this about men: that they are ungrateful, fickle,
simulators and deceivers, avoiders of danger, greedy for gain;
and while you work for their good they are completely yours,
offering you their bloodwhen danger is far away; but when
[danger] comes nearer to you they turn away. And men are
less hesitant about harming someone who makes himself
loved than one who makes himself feared because love is
held together by a chain of obligation which, since men are a
sorry lot, is broken on every occasion in which their own selfinterest is concerned; but fear is held together by a dread of
punishment which will never abandon you.2
One of the ways by which rulers can inspire love is through generosity
what Aquinas called magnificence or magnanimity (Topic 2.2). Machiavelli
weighs generosity against the princes own self-interest, and concludes that,
while it would be good to be considered generous; nevertheless, generosity
used in such a manner as to give you a reputation for it will harm you.3 And
so, generosity is best reserved for special situations. For example:
Humanist Issues in Commercial Practice
Reading 3-8 1
For that prince who goes out with his soldiers and lives by
looting, sacking, and ransoms, who controls the property of
others,generosity is necessary, otherwise he would not be
followed by his troops. And with what does not belong to
you or to your subjects you can be a more liberal giver,for
spending the wealth of others does not lessen your reputation
but adds to it; only the spending of your own is what harms
you.4
This may be the origin of leveraging transactions, and buying votes, with
other peoples money.
On self-interested bees
Bernard Mandeville had The Prince as one of his models when he wrote The
Fable of the Bees, or Private Vices, Publick Benefits. Mandeville was born in
Rotterdam, Holland; he studied philosophy and medicine, and practised as a
specialist in nerve and stomach disorders on which he published a Treatise of
the Hypochondriak and Hysterick Passions. After marrying in England, he settled
there and even anglicized his name from Bernard de Mandeville. Influenced
by the moral Selected Fables, Set in Verse by the seventeenth-century French
author, Jean de la Fontaine, Mandeville began to publish humorous
commentaries aimed at prodding readers into thinking about ethics. One of
these pieces was a verse pamphlet, The Grumbling Hive, or Knaves Turnd Honest.
He later added explanatory prose essays to this poem and republished it in
1714 as The Fable of the Bees.
Mandevilles Fable is satirical and paradoxical the paradox being that,
when properly controlled or organized (he sometimes seems to say
cultivated), private vice can be a public virtue. Where Machiavelli theorized
the self-interest of the prince, Mandeville theorizes the self-interest of the
masses. Mandevilles satire portrays human society as a Spacious Hive well
stockd with Bees, where These Insects livd like Men, and all Our Actions
they performed in small [miniature].5 The social hive is structured in such
a way that all its members can practice whatever vice suits their self-interest,
and the collectivity of practiced vices underpins the prosperity, strength, and
greatness of the nation-hive:
Thus every Part was full of Vice,
Yet the whole Mass a Paradice;
Flatterd in Peace, and feard in Wars
They were thEsteem of Foreigners,
And lavish of their Wealth and Lives,
The [equal] of all other Hives.
Such were the Blessings of the State;
Their Crimes conspired to make them Great;
And Virtue, who from Politicks
Had learnd a Thousand cunning Tricks,
Was, by their happy Influence,
Made friends with Vice: And ever since
The worst of all the Multitude
2 Reading 3-8
Reading 3-8 3
4 Reading 3-8
Reading 3-8 5
6 Reading 3-8
Reading 3-8 7
their own strength and their own invention shall furnish them
with.
In such condition, there is no place for industry, because the
fruit [profit] thereof is uncertain; and consequently no
cultivation of the earth; no navigation, nor use of the
commodities that may be imported by sea; no commodious
building; no instruments [processes, projects] of moving and
removing such things as require much force; no knowledge of
the face of the earth; no account of time; no arts; no letters;
no society; and which is worst of all, continual fear, and
danger of violent death; and the life of man, solitary, poor,
nasty, brutish, and short.19
As you can see, industry and commerce have their place here in this warning
list of the life-enhancing endowments lost through the conflict of
uncontrolled interests. And in the Leviathan chapters that follow this one, on
contracts personal, social, and political, Hobbes argues that the anchor of all
relationships is the keeping of ones contract. It is a simply stated principle:
He therefore that breaks his covenant, and consequently
declares that he thinks he may with reason do so, cannot be
received into any society that unite themselves for peace and
defence.20
This disinterested ethic is stated with the same plain force in other texts that
we have been considering: at the beginning of Platos Republic, for example,
where the businessman Cephalus tells Socrates that doing rightconsists in
nothing more or less than telling the truth and paying back any thing we may
have received [that is, meeting ones obligations]21; or Proverbs 21:6: He
who acquires wealth through deceitful words will find it is a fleeting breath
and a deadly snare.
Summary
The human tendencies toward self-interest were first illustrated with
reference to Machiavellis, Hobbes, and Mandevilles theories on either
restraining or channelling it. Both approaches to the problem of self-interest
attempted to promote the ethical organization of socially destructive
impulses. In the rest of Module 3, you saw how Renaissance, or EarlyModern, instances of cash dealing were replacing the feudal service
economy of the Middle Ages. Inhumane exploitation of the newly
discovered Americas brought extorted bullion into the economies of
European nations. More positively, however, the new overseas lands also
promoted merchant-venturing, of which marriage-venturing was a kind of
ancillary commerce. Both sorts of venturing required risk capital, and
through the eyes of playwrights Christopher Marlowe and William
Shakespeare, you have taken a critical look at some of the human risks
involved in that commerce. The plays of these humanist writers depict
commercial figures used by the State as sources of capital while those same
states also dehumanized them as outsiders. In this module, the concern of
8 Reading 3-8
society with usury has been observed anew. At a time when his
contemporary, Francis Bacon, was arguing that usury should be legalized and
state-regulated, Shakespeare sensationally dramatized the theme of interesttaking in The Merchant of Venice. Also in that play, through the role of Portia,
you have seen that women of those times however independent-minded
were still considered as the prizes in the commercial marriage market.
Portias resourcefulness in making sure she is chosen by the suitor she
prefers, and in protecting her inheritance, are dramatic exceptions to the
gender conventions of the time.
1
Bernard Mandeville, The Fable of the Bees, ed. F.B. Kaye. (Oxford:
Clarendon Press, 1947), Volume I, page 18.
10
11
12
13
14
15
16
Ibid.
17
18
19
20
21
Reading 3-8 9
READING 4-1
John Lockes theory on individual labour
Early views on land ownership
In Topic 1.1, you read about a relatively simple transaction in which the
biblical patriarch, Abraham, secured title to a piece of land by paying an
agreed monetary price for it. Thomas Aquinas, whose
theological-philosophical thoughts on commercial exchange you read in
Topic 2.2, also theorized about land ownership. In a Summa Theologica
question on right, Aquinas brings up the matter of right to title, and gives
an example from the right to land:
Natural right or the naturally just is that which of itself is
adequate to and commensurate with [the rights of others]
Take the ownership of property; considered in itself there is
no reason why this field should belong to this man rather
than to that man, but when you take into account its being
put under cultivation and farmed without strife, then, as
Aristotle makes clear, it tallies with being owned by this not
that individual.1
Here is the Aristotle argument to which Aquinas is referring:
let us consider what should be our arrangements about
property: should the citizens of the perfect state have their
possessions in common or not? Three cases are possible:
(1), the soil may be appropriated [by one person], but the
produce may be thrown for consumption into the common
stock. Or (2), the soil may be [held in] common, and may
be cultivated in common, but the produce divided among
individuals for their private useor (3), the soil and the
produce may be alike common.
When the husbandmen are not the owners [of the land which
they cultivate], the case will beeasier to deal with; but when
they till the ground [common land] for themselves the
question of ownership will give a world of trouble. If they do
not share equally its enjoyments and toils, those who labour
much and get little will necessarily complain of those who
labour little and receive or consume much. But indeed there
is always a difficulty in men living together and having all
human relations in common, but especially in their having
common property. Property should be in a certain sense
common, but, as a general rule, private.2
Clearly, Aquinas, and Aristotle before him, are linking labour to property
right: by expending labour on unimproved land, one establishes a claim to
that land. Notice that when Aristotle refers to the worked-on lands produce
and enjoyments, he seems to mean the crop yield. Neither he nor Aquinas
suggest any capital return (other than from the sale of produce, presumably):
Humanist Issues in Commercial Practice
Reading 4-1 1
what these two humanist thinkers are defining is the right of labour to
property.
2 Reading 4-1
Reading 4-1 3
4 Reading 4-1
title and the economic value of work by going back to the primary
theological text of his culture and giving that text an economic interpretation.
The first chapter of Genesis, the Creation story with its catalogue of living,
growing, and yielding resources, is clearly the source that Locke echoes.
Genesis is echoed again by another Enlightenment economist, the Irish-born
Parisian banker Richard Cantillon, who wrote his Essai sur la nature du
commerce in the early 1730s. It begins:
The land is the source or matter from whence all wealth is
produced. The labour of man is the form which produces it:
and wealth in itself is nothing but the maintenance,
conveniences, and superfluities of life. Land produces
herbage, roots, corn, flax, cotton, hemp, shrubs and timber of
several kinds, with divers [sundry] sorts of fruits, bark, and
foliage like that of the mulberry tree for silkworms; it supplies
mines and minerals. To all this the labour of man gives the
form of wealth.10
Aristotle and Aquinas, you will remember from the beginning of this topic,
are saying that anyone who expends labour on ownerless land can claim title
to that land, commensurate with the labour expended. Observe closely how
Locke treats this in paragraphs 27 and 32 of Reading 4-2.
Reading 4-1 5
6 Reading 4-1
48.
49.
Hence money led to land monopoly, and the need to seek land farther and
farther away. Fortunately, there is America with its possibilities of going back
to the beginning.
Reading 4-1 7
is worthy of his hire [Luke 10:7]. In biblical times, hire generally meant
day wages, paid to free labourers hired for a fixed period for specific services.
Leviticus 19:13 stipulates that workers should be paid at the end of each
days service: The wages of him that is hired shall not abide with thee all
night until the morning.
And in Module 3, it was explained that money, including money wages or
remuneration, was increasingly replacing the medieval arrangements of
service obligation and mutual protection. You also read (in Topic 3.5)
Bernard Mandevilles explanation of how, in his increasingly commercial
society, bartering goods and services was becoming too complicated:
The seller, who transfers the property of a thing, will never
part with it [unless] for a consideration which he likes better
than he likes the thing you want. Which way shall I persuade
a man to serve me, when the service I can repay him in is
such as he does not want or care for? Money obviates and
takes away all those difficulties by being an acceptable reward
for all the services men can do one another. 12
Summary
When Locke, the analytic philosopher celebrated for his theory of mind,
turned to economics, he grounded value in land, humankinds first
endowment, and in labour, humankinds first vocation. He argued that the
entitlement to land through labour was first recorded in religious texts. As
well as the Old Testament Genesis passages cited by Locke, you should recall
the first economic transaction in both the Bible and the Koran Abrahams
acquisition of the land for Sarahs grave. In that incident there was, first, the
intellectual and emotional labour of persuading the Canaanite to sell, then the
securing of title by paying the asking price which, though the land was
overvalued, was to Abraham merely a token charge.
Locke grounded his arguments in biblical traditions, classical philosophy, and
in medieval theological-philosophical ideas. His original contributions to
economic philosophy are the proposals that labour itself was a property
whose investment earned real property rights, and that labour was the
element that gave property its value. Therefore, by stressing the individual
(man,master of himself and proprietor of his own person and the actions
or labour of it, had still in himself the great foundation of property in
paragraph 44) as creator of wealth through work, Locke strongly influenced
subsequent economic and social theorists, including Karl Marx. He also is
foreshadowing the work of Adam Smith, whose ideas will be the subject of
Topic 6.2.
Reading 4-1 9
10 Reading 4-1
Ibid., Paragraph 8.
H.C. Black, Blacks Law Dictionary (St. Paul, Minnesota: West Publishing
Co., 1990), page 1026.
John Locke, Essays on the Law of Nature, ed. W. von Leyden (Oxford:
Clarendon Press, 1958), page 149.
99
10
Richard Cantillon, Essai sur la nature du commerce, tr. Henry Higgs (New
York: Augustus M. Kelley, 1964), page 3.
11
12
Bernard Mandeville, The Fable of the Bees, Volume II, pages 348-349.
READING 4-2
From John Locke, Of Property
25. Whether we consider natural reason, which tells us that men,
being once born, have a right to their preservation, and consequently to meat
and drink and such other things as nature affords for their subsistence; or
revelation, which gives us an account of those grants God made of the world
to Adam, and to Noah and his sons; it is very clear that God, as King David
says (Psalm 115: 16), has given the earth to the children of men, given it to
mankind in common. But this being supposed it seems to some a very great
difficulty how any one should ever come to have a property in anything. I
will not content myself to answer that if it be difficult to make out property
upon a supposition that God gave the world to Adam and his posterity in
common, it is impossible that any man but one universal monarch should
have any property upon a supposition that God gave the world to Adam and
his heirs in succession, exclusive of all the rest of his posterity. But I shall
endeavor to show how men might come to have a property in several parts
of that which God gave to mankind in common, and that without any
express compact [contract] of all the commoners.
26. God, who has given the world to men in common, has also given
them reason to make use of it to the best advantage of life and convenience.
The earth and all that is therein is given to men for the support and comfort
of their being. And though all the fruits it naturally produces and beasts it
feeds belong to mankind in common, as they are produced by the
spontaneous hand of nature; and nobody has originally a private dominion
exclusive of the rest of mankind in any of them, as they are thus in their
natural state; yet, being given for the use of men, there must of necessity be a
means to appropriate them some way or other before they can be of any use
or at all beneficial to any particular man. The fruit or venison which
nourishes the wild Indian, who knows no enclosure and is still a tenant in
common, must be his and so his, i.e., a part of him, that another can no
longer have any right to it before it can do him any good for the support of
his life.
27. Though the earth and all inferior creatures be common to all
men, yet every man has a property in his own person; this nobody has any
right to but himself. The labour of his body and the work of his hands, we
may say, are properly his. Whatsoever then he removes out of the state that
nature has provided and left it in, he has mixed his labour with, and joined to
it something that is his own, and thereby makes it his property. It being by
him removed from the common state nature has placed it in, it has by this
labour something annexed to it that excludes the common right of other
men. For this labour being the unquestionable property of the labourer, no
man but he can have a right to what that is once joined to, at least where
there is enough and as good left in common for others.
Reading 4-2 1
29. Though the water running in the fountain be every ones, yet
who can doubt but that in the pitcher is his only who drew it out? His labour
has taken it out of the hands of nature where it was common and belonged
equally to all her children, and has thereby appropriated it to himself.
30. Thus this law of reason makes the deer that Indians who has
killed it; it is allowed to be his goods who has bestowed his labour upon it,
though before it was the common right of every one. And amongst those
who are counted the civilized part of mankind, who have made and
multiplied positive laws to determine property, this original law of nature, for
the beginning of property in what was before common, still takes place; and
by virtue thereof what fish any one catches in the ocean, that great and still
remaining common of mankindis, by the labour that removes it out of that
common state nature left it in, made his property who takes that pains about
it. And even amongst us, the hare that anyone is hunting is thought his who
pursues her during the chase; for, being a beast that is still looked upon as
common and no mans private possession, whoever has employed so much
labour about any of that kind as to find and pursue her has thereby removed
her from the state of nature wherein she was common, and has begun a
property.
31. It will perhaps be objected to this that if gathering the acorns, or
other fruits of the earth, etc., makes a right to them, then any one may
engross as much as he will. To which I answer: not so. The same law of
nature that does by this means give us property does also bound [limit] that
2 Reading 4-2
property, too. God has given us all things richly (I Tim. 6: 17), is the voice
of reason confirmed by inspiration. But how far has he given it us? To enjoy.
As much as any one can make use of to any advantage of life before it spoils,
so much he may by his labour fix a property in; whatever is beyond this is
more than his share and belongs to others. Nothing was made by God for
man to spoil or destroy. And thus considering the plenty of natural
provisions there was [for] a long time in the world, and the few spenders, and
to how small a part of that provision the industry of one man could extend
itself and engross [acquire] it to the prejudice of others, especially keeping
within the bounds set by reason of what might serve for his use, there could
be then little room for quarrels or contentions about property so established.
32. But the chief matter of property being now not the fruits of the
earth and the beasts that subsist on it, but the earth itself, as that which takes
in and carries with it all the rest, I think it is plain that property in that, too, is
acquired as the former. As much land as a man tills, plants, improves,
cultivates, and can use the product of, so much is his property. He by his
labour does, as it were, enclose it from the common. Nor will it invalidate his
right to say everybody else has an equal title to it, and therefore he cannot
appropriate, he cannot enclose, without the consent of all his fellow
commoners all mankind. God, when he gave the world in common to all
mankind, commanded man also to labour, and the penury of his condition
required it of him. God and his reason commanded him to subdue the earth,
i.e., improve it for the benefit of life, and therein lay out something upon it
that was his own, his labour. He that in obedience to this command of God
subdued, tilled, and sowed any part of it, thereby annexed to it something
that was his property, which another had no title to, nor could without injury
take from him.
33. Nor was this appropriation of any parcel of land by improving it
any prejudice to any other man, since there was still enough and as good left,
and more than the yet unprovided could use. So that, in effect, there was
never the less left for others because of his enclosure for himself; for he that
leaves as much as another can make use of does as good as take nothing at
all. Nobody could think himself injured by the drinking of another man,
though he took a good draught, who had a whole river of the same water left
him to quench his thirst; and the case of land and water, where there is
enough for both, is perfectly the same.
34. God gave the world to men in common; but since he gave it them
for their benefit and the greatest conveniences of life they were capable to
draw from it, it cannot be supposed he meant it should always remain
common and uncultivated. He gave it to the use of the industrious and
rational and labour was to be his title to it not to the fancy or
covetousness of the quarrelsome and contentious. He that had as good left
for his improvement as was already taken up needed not complain, ought not
to meddle with what was already improved by anothers labour; if he did, it is
plain he desired the benefit of anothers pains which he had no right to, and
Humanist Issues in Commercial Practice
Reading 4-2 3
not the ground which God had given him in common with others to labour
on, and whereof there was as good left as that already possessed, and more
than he knew what to do with, or his industry could reach to.
35. It is true, in land that is common in England or any other country
where there are plenty of people under government who have money and
commerce, no one can enclose or appropriate any part without the consent
of all his fellow commoners; because this is left common by compact, i. e., by
the law of the land, which is not to be violated. And though it be common in
respect of some men, it is not so to all mankind, but is the joint property of
this country of this parish. Besides, the remainder after such enclosure would
not be as good to the rest of the commoners as the whole was when they
could all make use of the whole; whereas in the beginning and first peopling
of the great common of the world it was quite otherwise. The law man was
under was rather for appropriating. God commanded, and his wants forced
him to labour. That was his property which could not be taken from him
wherever he had fixed it. And hence subduing or cultivating the earth and
having dominion, we see, are joined together. The one gave title to the other.
So that God, by commanding to subdue, gave authority so far to appropriate;
and the condition of human life which requires labour and material to work
on necessarily introduces private possessions.
36. The measure of property nature has well set by the extent of
mens labour and the conveniences of life. No mans labour could subdue or
appropriate all, nor could his enjoyment consume more than a small part, so
that it was impossible for any man, this way, to entrench upon the right of
another, or acquire to himself a property to the prejudice of his neighbor,
who would still have room for as good and as large a possession after the
other had taken out his as before it was appropriated. This measure did
confine every mans possession to a very moderate proportion, and such as
he might appropriate to himself without injury to anybody, in the first ages of
the world. And the same measure may be allowed still without prejudice to
anybody, as full as the world seems; for supposing a man or family in the
state they were at first peopling of the world by the children of Adam or
Noah [who with their children had the earth to themselves after the creation
and after the flood], let him plant in some inland, vacant places of America;
we shall find that the possessions he could make himself, upon the measures
we have given, would not be very large, nor, even to this day, prejudice the
rest of mankind, or give them reason to complain or think themselves injured
by this mans encroachment, though the race of men have now spread
themselves to all the corners of the world and do infinitely exceed the small
number which was at the beginning. I dare boldly affirm that the same
rule of property, viz., that every man should have as much as he could make
use of, would hold still in the world without straitening [limiting] anybody,
since there is land enough in the world to suffice double the inhabitants, had
not the invention of money and the tacit agreement of men to put a value on
it introduced by consent larger possessions and a right to them; which,
how it has done, I shall by-and-by show more at large.
4 Reading 4-2
37. This is certain, that in the beginning, before the desire of having
more than man needed had altered the intrinsic value of things which
depends only on their usefulness to the life of man, or had agreed that a little
piece of yellow metal which would keep without wasting or decay should be
worth a great piece of flesh or a whole heap of corn, though men had a right
to appropriate, by their labour, each one to himself as much of the things of
nature as he could use, yet this could not be much, nor to the prejudice of
others, where the same plenty was still left to those who would use the same
industry. To which let me add that he who appropriates land to himself by
his labour does not lessen but increase the common stock of mankind; for
the provisions serving to the support of human life produced by one acre of
enclosed and cultivated land are to speak much within compass ten
times more than those which are yielded by an acre of land of an equal
richness lying waste in common. And therefore he that encloses land, and
has a greater plenty of the conveniences of life from ten acres than he could
have from a hundred left to nature, may truly be said to give ninety acres to
mankind; for his labour now supplies him with provisions out of ten acres
which werethe product of a hundred lying in common. I have here rated
the improved land very low in making its product but as ten to one, when it is
much nearer a hundred to one; for I ask whether in the wild woods and
uncultivated waste of America, left to nature, without any improvement,
tillage, or husbandry, a thousand acres yield the needy and wretched
inhabitants as many conveniences of life as ten acres of equally fertile land do
in Devonshire, where they are well cultivated.
Before the appropriation of land, he who gathered as much of the
wild fruit, killed, caught, or tamed as many of the beasts as he could; he that
so employed his pains about any of the spontaneous products of nature as
any way to alter them from the state which nature put them in, by placing any
of his labour on them, did thereby acquire a propriety in them; but, if they
perished in his possession without their due use, if the fruits rotted or the
venison putrified before he could spend it, he offended against the common
law of nature and was liable to be punished; he invaded his neighbors share,
for he had no right further than his use called for any of them and they might
serve to afford him conveniences of life.
Reading 4-2 5
their possessions enlarged with the need of them; but yet it was commonly
without any fixed property in the ground they made use of till they
incorporated, settled themselves together, and built cities; and then, by
consent, they came in time to set out the bounds of their distinct territories,
and agree on limits between them and their neighbours, and by laws between
themselves settled the properties of those of the same society.
39. And thus, without supposing any private dominion and property
in Adam over all the world exclusive of all other men, which can in no way
be proven, nor any ones property be made out from it; but supposing the
world given, as it was, to the children of men in common, we see how labour
could make men distinct titles to several parcels of it for their private uses,
wherein there could be no doubt of right, no room for quarrel.
40. Nor is it so strange, as perhaps before consideration it may
appear, that the property of labour should be able to overbalance the
community of land; for it is labour indeed that put the difference of value on
everything; and let anyone consider what the difference is between an acre of
land planted with tobacco or sugar, sown with wheat or barley, and an acre
of the same land lying in common without any husbandry upon it, and he
will find that the improvement of labour makes the far greater part of the
value. I think it will be but a very modest computation to say that, of the
products of the earth useful to the life of man, nine-tenths are the effects of
labour; nay, if we will rightly estimate things as they come to our use and cast
up the several expenses about them, what in them is purely owing to nature,
and what to labour, we shall find that in most of them ninety-nine
hundredths are wholly to be put on the account of labour.
6 Reading 4-2
43. An acre of land that bears here twenty bushels of wheat, and
another in America which with the same husbandry would do the like, are,
without doubt, of the same natural intrinsic value; but yet the benefit
mankind receives from the one in a year is worth 5 pounds, and from the
other possibly not worth a penny if all the profit an Indian received from it
were to be valued and sold here; at least, I may truly say, not one-thousandth.
It is labour, then, which puts the greatest part of the value upon land,
without which it would scarcely be worth anything; it is to that we owe the
greatest part of all its useful products; for all that the straw, bran, bread of
that acre of wheat is more worth than the product of an acre of as good land
which lies waste is all the effect of labour. For it is not barely the ploughmans
pains, the reapers and threshers toil, and the bakers sweat [that] is to be
counted into the bread we eat; the labour of those who broke the oxen, who
digged and wrought the iron and stones, who felled and framed the timber
employed about the plough, mill, oven, or any other utensils, which are a vast
number requisite to this corn, from its being seed to be sown to its being
made bread, must all be charged on the account of labour, and received as an
effect of that; nature and the earth furnished only the almost worthless
materials as in themselves. It would be a strange catalogue of things that
industry provided and made use of, about every loaf of bread before it came
to our use, if we could trace them: iron, wood, leather, bark, timber, stone,
bricks, coals, lime, cloth, dyeing drugs, pitch, tar, masts, ropes, and all the
materials made use of in the ship that brought any of the commodities used
by any of the workmen to any part of the work; all which it would be almost
impossible, at least too long, to reckon up.
44. From all which it is evident that, though the things of nature are
given in common, yet man, by being master of himself and proprietor of his
own person and the actions or labour of it, had still in himself the great
foundation of property; and that which made up the greater part of what he
applied to the support or comfort of his being, when invention and arts had
improved the conveniences of life, was perfectly his own and did not belong
in common to others.
Reading 4-2 7
47. And thus came in the use of money some lasting thing that
men might keep without spoiling, and that by mutual consent men would
take in exchange for the truly useful but perishable supports of life.
48. And as different degrees of industry were apt to give men
possessions in different proportions, so this invention of money gave them
the opportunity to continue and enlarge them; for supposing an island,
separate from all possible commerce with the rest of the world, wherein there
were but a hundred families, but there were sheep, horses, and cows, with other
useful animals, wholesome fruits, and land enough for corn for a hundred
thousand times as many, but nothing in the island, either because of its
commonness or perishableness, fit to supply the place of money; what reason
8 Reading 4-2
could anyone have there to enlarge his possessions beyond the use of his
family and a plentiful supply to its consumption, either in what their own
industry produced or they could barter for like perishable, useful
commodities with others? Where there is not something both lasting and
scarce, and so valuable to be hoarded up, there men will not be apt to enlarge
their possessions of land were it ever so rich, ever so free for them to take.
For, I ask, what would a man value ten thousand or a hundred thousand
acres of excellent land, ready cultivated and well stocked, too, with cattle, in
the middle of the inland parts of America where he had no hopes of
commerce with other parts of the world to draw money to him by the sale of
the product? It would not be worth the enclosing, and we should see him
give up again to the wild common of nature whatever was more than would
supply the conveniences of life to be had there for him and his family.
49. Thus in the beginning all the world was [like] America, and more
so than that is now; for no such thing as money was anywhere known. Find
out something that has the use and value of money amongst his neighbors,
you shall see the same man will begin presently to enlarge his possessions.
50. But since gold and silver, being little useful to the life of man in
proportion to food, raiment, and carriage, has its value only from the consent
of men, whereof labour yet makes, in great part, the measure, it is plain that
men have agreed to a disproportionate and unequal possession of the earth,
they having, by a tacit and voluntary consent, found out a way how a man
may fairly possess more land than he himself can use the product of, by
receiving in exchange for the overplus [surplus] gold and silver which may be
hoarded up without injury to any one, these metals not spoiling or decaying
in the hands of the possessor. This partage [allocation] of things in an
inequality of private possessions men have made practicable out of the
bounds of society and without compact, only by putting a value on gold and
silver, and tacitly agreeing in the use of money; for, in governments, the laws
regulate the right of property, and the possession of land is determined by
positive constitutions.
51. And thus, I think, it is very easy to conceive how labour could at
first begin a title of property in the common things of nature, and how the
spending it upon our uses bounded it. So that there could then be no reason
of quarrelling about title, nor any doubt about the largeness of possession it
gave. Right and convenience went together; for as a man had a right to all he
could employ his labour upon, so he had no temptation to labour for more
than he could make use of. This left no room for controversy about the title,
nor for encroachment on the right of others; what portion a man carved to
himself was easily seen, and it was useless, as well as dishonest, to carve
himself too much or take more than he needed.
Source: John Locke, Of Property, Chapter 5 of The Second Treatise of Government, ed. Thomas P. Peardon
(New York: Macmillan Publishing Co., 1989), pages 16-30. Copied under licence from CANCOPY. Further
reproduction prohibited.
Humanist Issues in Commercial Practice
Reading 4-2 9
READING 4-3
Goldsmiths and the origins of modern banking
Banking services and activities are believed to have been carried out in
Mesopotamia as early as the third century B.C. In the Genesis 23 story of
Abrahams bargain with Ephron (Topic 1.1), you may remember that
Abraham pays for Sarahs gravesite in silver weighed out at the current
merchants rate. It is quite likely that this story was orally passed on for
generations before being written down (some time before 1000 B.C.); so the
merchants rate indicates a very early market system of evaluating and
trading with bullion.
The English word bank comes from early Italian money dealers
conducting transactions in market places and at fairs from behind what was
called a banko (counter) or tavola (table), which probably comes from the
Greek trapeza (table).1
In New Testament times, there were political and economic reasons for
moneychangers to ply their trade in the Temple at Jerusalem, for the Jewish
and Roman coins that circulated in Palestine had to be carefully
discriminated in use for trade, taxes, and religious offerings. In the parable of
the talents (Topic 1.5), the servant who buries his talent is criticized for not
at least [investing the] money with bankers and earning interest
[Matthew 25:27]. As the only equivalents of banks in the Bible appear to be
temple and state treasuries, depositing with individual moneychangers or
moneylenders seems to be what is meant when bankers are mentioned.
Those were some of the elements of banking that prevailed until the
establishment of private commercial banks and the fifteenth-century papal
small-loan, low-interest banking system of the montes pietatis (Topic 2.3) began
to formalize the profession. Luca Paciolis 1494 treatise on double entry
bookkeeping is one of the clues that sophisticated mercantile and monetary
transacting had been going on for a long time: one historian traces the first
unquestionable examples of double entry accounts to around 1340.2
Nevertheless, both before and alongside what we now regard as banking
institutions, the entrepreneuring moneychanger/moneylender thrived, most
usually while carrying on the profession of goldsmithing. Goldsmith-banker
was the term used by Thomas More (Topic 2.4) when describing the
dystopian economic climate in which
any nobleman whatsoever or goldsmith-banker or
moneylender or, in fact, anyone else from among those who
either do no work at all or whose work is of a kind not very
essential to the commonwealth, [can] attain a life of luxury or
grandeur on the basis of his nonessential work.3
Reading 4-3 1
2 Reading 4-3
In 1656, when England was at war with Spain, the English navy captured a
Spanish ship with a cargo of silver from the Americas. The ingots were
valued at 300,000 pounds sterling; the government sold the bullion to
Edward Backwell and another prominent goldsmith, Thomas Viner, for
130,000 pounds in ready money which the two goldsmiths promptly
recovered, plus a colossal profit, after paying a nominal fee to have the silver
coined at the Royal Mint.
After Charles Is son was invited back to rule as Charles II, Backwell carried
on, directly lending money to Charles II and his brother James, Duke of
York (who became King James II on Charles death in 1685). Throughout
the 1660s, England was at war with the Dutch Republic over sea trade
routes. To fund this war, Charles IIs government constantly borrowed
money where it could, and goldsmiths Edward Backwell and Thomas Viner
frequently bankrolled the Exchequer (the Canadian equivalent of the
Ministry of Finance). Because Backwell was especially interested in
preserving English trade routes, he tended to lend his money for
maintenance of the Navy and the British military garrison at Tangier (a
Moroccan port stronghold held by the English at the western entry to the
Mediterranean).
Reading 4-3 3
From these diary entries, it is clear that Backwell the goldsmith was taking
deposits, changing foreign money, and also dealing in precious metal articles
trading the candlesticks (possibly taken originally as pledge for a loan) for
the silver-plated articles is a typical barter exchange in the goldsmith
business. The last entry above tells three things about goldsmith customer
relations. First, six percent was an attractive rate of interest on Pepys money:
it was the maximum statutory rate of interest fixed by Act of Parliament in
1660. Second, money deposited with Backwell could be withdrawn at an
hours notice. Third, a goldsmiths business, and the customers security and
convenience, depended on the goldsmith staying alive.
Seven months after this September 1664 entry, the Great Plague broke out
and by November 1665 had killed about 100,000 persons, or between a
quarter and a third of Londons population. Pepys diary is one of the best
contemporary records of the catastrophe.
Backwell happened to be away in Belgium on government business from
about June until December of 1665, and this absence from London during
the height of the Great Plague may have saved his life. On July 22, 1665,
Pepys notes that Backwells senior clerk, Mr. Shaw his right hand, is ill just
at a time when people are panicking and withdrawing money.5 On July 26,
Pepys writes This day poor Robin Shaw at Backwells died and Backwell
himself now in Flanders.6
Because of his nervousness about goldsmiths mortality the possibility of
their dying Pepys was in the habit of keeping very large sums in cash at
home: two weeks after receiving Creeds offer to deposit 200 pounds at six
percent with Backwell in Pepys name, Pepys writes Having now almost
1000 [pounds], if not above, in my house, I know not what to do with it.7
Reading 4-3 5
In this Pepys entry for October 19, 1666, Backwells and Viners reply about
Parliament debating the matter of permitting the King to issue out his privyseals refers to forcing loans by royal writs a practice condemned by
English parliaments in the seventeenth century and never used by Charles II
even though Pepys says he threatened it here. This incident shows how close
these goldsmiths were to the king and administrators: their business and its
assets required them to watch the governments policies closely.
Summary
These chronicles of a seventeenth-century goldsmith-banker with strong ties
to the government of the day illustrate the broad human range of one
London goldsmiths dealings from small bartering, deposit and loan, and
currency-exchange transactions right up to loans to the state. In this latter
function, Backwell the goldsmith-banker facilitated the circulating of money
a commodity which, by the seventeenth century, appeared to be regarded
as intrinsically useful and easily applicable to the purposes of life
(Reading 1-6, second paragraph).
1
Raymond de Roover, The Rise and Decline of the Medici Bank 1397-1494 (Cambridge:
Harvard University Press, 1963), page 15.
Ibid., page 1.
Reading 4-3 7
8 Reading 4-3
All references are to Samuel Pepys, The Diary of Samuel Pepys, eds. R.C. Latham and
W. Matthews, 11 volumes (London: G. Bell & Sons, 1970-1983).
10
11
12
13
14
15
Dictionary of National Biography (London: Oxford University Press, 1950), Volume II,
pages 794-795.
READING 4-4
National banks
How usury laws fostered bills of exchange
In his detailed study of the fifteenth-century Medici private bank and the
milieu in which it operated in Florence and across Europe, historian
Raymond de Roover reminds us that commercial activity is always human
activity:
The history of the Medici Bank adds to our knowledge of the
roots of modern business. From the standpoint of business
history, this study brings out one main point: techniques have
changed, but human problems have remained the same. How
to pick out the right person and put [that person] in the right
place was as much a problem for the Medici as it is in
business today.1
In Topic 1.3, you read how classical philosophers, the Old Testament, and
the Koran taught that interest-taking (usury) was offensive and even sinful.
In Topics 2.2 and 2.3, you saw how Thomas Aquinas reinforced the Catholic
Churchs official resistance to the practice, and also how the church and the
Protestant reformers came to accommodations with interest-taking. The first
question that de Roover sets out to answer is: Since the Church forbade the
taking of interest, how did it happen that the Medici and other [early] bankers
were able to operate and lend money at a profit without laying themselves
open to charges of usury?2 Here is his answer:
According to [church] law, usury consisted in any
incrementdemanded above the principal solely on the
strength ofa straight loan. Consequently, usury in the
Middle Ages did not apply to exorbitant rates only, but
extended to all interest, whether high or low, excessive or
moderate. [But] if it could be shown that a given contract
was neither explicitly nor implicitly a loan, there was no usury
involved
Since the taking of interest was ruled out, the bankers had to
find other ways of lending at a profit. The favourite method
was by means of exchange of bills. It did not consist in
discounting as practised today, but in the negotiation of bills
payable in another place and usually in another currency.
Interestwas included in the price of the bill, which was
fittingly called a bill of exchange. Although the presence of
concealed interest is undeniable, the merchants argued and
most of the theologians accepted these views that an
exchange transaction was not a loan. In other words, the
exchange transaction was used to justify the credit
transaction, and speculative profits on exchange served as a
cloak to cover interest charges
Humanist Issues in Commercial Practice
Reading 4-4 1
Reading 4-4 3
In 1688, the Dutch Prince William of Orange became King William III of
England. The Dutch-English trade war was over, and one result of the closer
relations between the two countries was the English commercial
communitys access to the Dutch banking system. The Dutch procedures
appeared attractive when compared to Englands goldsmith-banker market,
which was not easy to control. There were always suspicions that any given
goldsmith might have no reserves to back the deposit receipts or promissory
notes they issued and that a depositors money could immediately be used to
pay other depositors. And as Pepys worried the goldsmith might die.
The Dutch banks inspired confidence, and attempts began at forming some
kind of central bank in England.
4 Reading 4-4
Reading 4-4 5
Governor, and 107 of the original subscribers met this qualification. John
Locke put in 500 pounds and later 200 more.10
Among the first 500 subscribers to the bank were six goldsmiths. In the
banks first year or two, it was thought that goldsmiths would be driven out
of business by national banking. John Clapham quotes an anonymous
pamphleteer, writing in 1695, who recorded his perception that the new bank
had already
Almost crush d several sorts of Blood-suckers, mere Vermin,
Usurers and Gripers [grasping, foreclosing lenders],
Goldsmiths, Tally-Jobbers, Exchequer Brokers [bill
discounters], and knavish Money-Scriveners, and PawnBrokers, with their Twenty and Thirty per cent [interest].11
Tally-Jobber refers to the ancient practice of representing the amount of
debt or a payment by notching a wooden rod or stick, called a tally-stick, or
tally. The stick was then split lengthwise; the debtor and creditor each
retained a half, with matching notches, as legal proof of the debt a sort of
counterfoil of a wooden document. As time went on, tallies were
documented on paper. Paper inspired more confidence by carrying written
promises to pay on demand.
Though this 1695 pamphleteer gives a good example of the lack of esteem in
which low end goldsmithing-pawnbroking-banking could be held, he was
premature in believing that goldsmith-banking was doomed. Reputable
goldsmiths notes soon were being accepted by the bank, and goldsmiths
trade continued alongside chartered banking. A goldsmithing partnership,
Freame and Gould, opened a Bank of England account in 1695; in the early
1700s, the partnership became Freame and Barclay. The Barclay
goldsmithing family went on to found the present-day Barclays Bank.
Goldsmiths activities had in fact laid the groundwork for the bank. Although
continental European banking long preceded the formation of the Bank of
England, Raymond de Roover acknowledges that the modern banking
system based on the circulation of notes and the discounting of commercial
paper was evolved in England during the seventeenth century.12 He credits
this evolution to the exchange, deposit and lending activities of the London
goldsmiths under Elizabeth and James I [that] culminated in the foundation
of the Bank of England.13
early years of the bank carry the bearers written calculation of payments
made and balance remaining, as on a savings account passbook. The bearer
notes can be compared to modern debit cards.
Accomptable notes signified that the holder had funds on deposit, and
could in turn write notes called drawn notes by the Bank of England in
1717 against those deposited funds. The bank would not honour any
drawn note unless funds to its value actually were on deposit. This drawn
note system eventually led to modern cheques. At the beginning of the
1700s, the term cheque was the name given to the counterfoil of an
Exchequer (treasury) note. The counterfoil was used to check for forgery or
alteration of the note. The drawn note became a draft, and by 1774 the
English dramatist Samuel Foote could expect his audience for The Cozeners
(Cheats) to understand A draft on his banker, I reckon A hundred and
ninety-two pounds Oh, here he iswith the cheque.14
You have already seen Marco Polos account of the paper currency being
used in thirteenth-century China (Topic 2.5). Though the Bank of England
was issuing paper against deposits, it was the Stockholm Bank (or Bank of
Sweden) that first circulated the ancestors of the modern banknote.
Beginning in 1661, the Stockholm Bank issued credit notes in various
denominations. These banknotes were backed by silver money on deposit;
they were signed by the banks directors and carried the banks seal. After
about five years, the bank was found to be issuing more paper than the
deposits justified, and the government abolished the enterprise.
But the banknotes issued by the Bank of England (and the Bank of Scotland,
founded in 1695) succeeded in establishing confidence in paper money from
banks with guaranteed reserves and administrative control. Reserves generally
were expected to be in gold or silver coin, to which all paper promises to pay
were supposed to be convertible on demand. Even Adam Smith, a strong
defender of banking and banknotes, stipulated [convertibility] as an essential
condition.15
Summary
In this topic you have read about the establishment of a national bank and
the formal issue of bank bearer notes and other paper instruments. In
Topic 4.2, you read about a single goldsmith-banker who, in the middle of
the seventeenth century, acted as a significant lender to the English
government. By the end of the century, a new means of raising money for
the current national debt was needed. The Bank of England was created to
meet that need, and nearly 130 subscribers responded, confident that their
principal would be safe and that their interest would be paid out of taxes.
The new banks charter signified royal approval of the enterprise
including the paying of interest on money subscribed, and on deposits. As
the English monarch was (and is) not only head of state but also head of the
Church of England, it could be said that, in England at least, interest-taking
(usury) now had the approval of State and Church.
Reading 4-4 7
8 Reading 4-4
Raymond de Roover, The Rise and Decline of the Medici Bank 1397-1494,
page 5.
Ibid., page 9.
R.R. Palmer, A History of the Modern World (New York: A.A. Knopf, 1954),
page 96.
The Compact Edition of the Oxford English Dictionary, page 1018, note 3.
Raymond de Roover, The Rise and Decline of the Medici Bank 1397-1494,
page 15.
10
11
12
13
Ibid.
14
15
Jonathan Williams, Money (New York: St. Martins Press, 1997), page 185.
READING 4-5
Coinage and valuation
In one of the excerpts from Thomas Mores Utopia that you read in
Topic 2.4., the Achorian king consults his councillors on ways of raising
money:
One [councillor] advises crying up the value of money when
[the king] has to pay any and crying down its value below the
just rate when he has to receive any with the double result
that he may discharge a large debt with a small sum and,
when only a small sum is due him, may receive a large one.1
This manipulation of currency was explained as the process of calling in
coins to the Royal Mint, which would melt, re-coin, and re-strike new
denomination stamps before returning them to the owners. European
monarchs, including kings Henry VII and Henry VIII, who ruled during
Mores lifetime, frequently used this fiscal tactic. In 1601, the Exchequer
under Elizabeth I settled the mint price (the silver content) of an English
five-shilling, or crown, coin at five shillings and two pence (51/6 shillings).
The ratio of silver content to denomination inspired confidence in the coin
without making it vulnerable to being melted down for its bullion value. This
remained the standard for English money throughout the seventeenth
century. It was, of course, illegal for citizens to melt or forge the coinage
in fact the crime of multiplying metals was punishable by death. But coinmutilation, by clipping or filing coins and melting the clippings or filings, and
exportation by smuggling to the Continent, were widespread practices the
human side of finance constantly asserting itself.
Thomas Gresham (ca. 1519-1579) was Queen Elizabeth Is chief advisor on
finance and trade, and her royal factor (agent) to the important money
market of Antwerp, where he watched the fluctuations of rates and
negotiated short-term and long-term loans for his government. In a 1558
letter to the queen, Gresham used the memorable phrase bad money drives
out good. He meant that when debased money coins deliberately minted
with short-weight bullion content, or proper coins subsequently clipped is
circulating along with coins of legal content, the latter will tend to be
exported, leaving only the inferior money in circulation. This aptly phrased
principle, that bad money drives out good, came to be known as Greshams
Law.
When Charles IIs mint carried out a re-coinage in 1662-1663, its political
purpose was to have the new kings portrait on the money. But aesthetics and
security also were considered. Pierre Blondeau, a French-born engineer, was
employed to design and produce a new issue of coins that were rounder than
any previously minted. Until this time, coins always had been more or less
round discs that could have their thin edges clipped without much notice
from the public. So long as the denomination was visible and the coin
something like the right size, it would keep circulating. Clipping the new,
Humanist Issues in Commercial Practice
Reading 4-5 1
rounder coins was discouraged by three features: any segment taken off the
circle would be apparent; the new coins had raised edges (as all current
Canadian coins have) and these thicker edges resisted cutting; the edges also
were milled, that is, a machine (invented by Blondeau for this assignment)
struck a pattern into the metal.
The modern process of milling coins usually is to cut or press in little
transverse ribs or grooves, as Canadian 10 and 25 coins are; if you examine
a $2 coin you will see that its edges are alternately smooth and milled.
All denominations of seventeenth-century English coins from pennies
through crowns contained silver; exceptions were farthings (a quarter of a
penny) and halfpennies, which were copper. In this re-coinage during the
1660s, a gold coin, the guinea, was struck for the first time; its nominal value
was 20 shillings, revalued in 1717 to 21 shillings. It stayed in circulation
until 1823.
One sidelight on this re-coinage is Edward Backwells opinion of the new
money. On November 23, 1663, Samuel Pepys wrote in his diary:
So back again with Alderman Backwell, talking of the new
money, which he says will never be counterfeited, he believes,
but it is deadly inconvenient for telling [counting], it is so
thick and the edges are made to turn up.2
The older coins with their thin edges would easily slide off one another and
could be counted with one hand: such coins and the one-handed counting
technique can be seen in the sixteenth-century Flemish artist Quentin Metsys
painting, The Money Changer and His Wife, also known as The Banker and His
Wife. Hence a goldsmith like Backwell with many coins to count would
notice the thick, non-sliding edges at once, and so would anyone (a
goldsmith, perhaps?) interested in shaving or clipping little segments of
precious metal from the coins.
A revaluation proposal
Depletion of the existing coinage and revaluation of it were the subjects of a
report to Charles IIs Commissioners of the Treasury by William Lowndes,
the Secretary of the Treasury, or Exchequer. The report was titled An Essay
for the Amendment of the Silver Coins, and it was submitted in September 1695
coincidentally, the year in which the Bank of England was issuing its first
paper money.
Lowndes proposal for the metal money had two motives. One was to
address a shortage of full-weight (unclipped) silver coins in circulation; the
other motive was the same as that for chartering the bank to raise funds
for the war against France. The government needed money, and his
recommended method of raising it was to cry up the silver coinage exactly in
the manner of Utopias King of Achoria. Lowndes, in fact, took as his model
the enemy king Louis XIV, who was notorious for what Lowndes called the
Extrinsick Denomination of Frances coins that is altering their value
2 Reading 4-5
Reading 4-5 3
of tax payment money in the Exchequer. He found that the unclipped coins
in the sample were mainly crowns and half-crowns. Nearly half of the lower
value coins were deficient in weight (though not, of course, in value for
taxes). The progressive re-mintings of these underweight coins resulted in a
shortage of silver coins, and of silver for coins. And this shortage was being
exacerbated by the melting and exporting of coin to Holland illegal
practices whose drastic penalties were risked because of the high silver
content in English coins. Besides their profitability to the government,
official re-coinages helped prevent this illegal melting and exporting.
The official denomination of the crown piece was, in 1695, still as it had been
in 1601, that is, five shillings. Its bullion content, slightly less than one ounce
of silver valued at five shillings two pence in 1601, was worth six shillings
21/2 pence in 1695. In trade, the crown and half-crown were passing at a
premium: hardly anyone would pay a crown piece for goods priced at five
shillings. In other words, these coins were being revalued on the street,
where people had a keen sense of their intrinsic value. Lowndes proposed
that, for the time being, existing full-weight silver coins would be rated at the
value of their bullion content: the crown would be worth six shillings 21/2
pence, while full-weight shillings (nominally 12 pence) would be worth one
shilling two pence (14 pence).
The proposed revaluation thus represented 20 percent. The present coins
would stay in circulation at their new values until they were gradually
replaced by new coins with the same silver weight and fineness as their
existing counterparts but stamped with the new denominations. The coins
would also have new names: the crown coin would be called a sceptre and
the new one shilling three pence coin a testoon, which is the name applied
to the Henry VII shilling that was taken out of circulation in 1548. An
important feature of the re-coinage would be that, even with the new
testoon, the old shilling would stay in a re-coined form with about 20 or 25
percent less silver. Lowndes proposed that only crown coins might be
brought to the mint, tested and marked (not re-coined) as being full-weight,
and returned to circulation. Because of clipping and melting down, there
were hardly any full-weight shillings in circulation.
According to Lowndes plan, the revaluation could be reversed when the war
ended. He also claimed that his proposal would leave all holders of coin at
least as well off as before. Re-coinage (to sceptres, testoons, and generally to
new bullion weights) when it came would be done quickly so as not to cause
panic when coin was withdrawn. In that interval of coin shortage, Lowndes
proposed substituting for coin an issue of bearer bills (temporary paper
money), to be cancelled when the new coin was issued.
Some Considerations of the Consequences of the Lowering of Interest, and Raising the
Value of Money (1691). In the 1691 essay, he also wrote that economics should
be a matter of common sense:
This business of Money and Coinage is by some Men, and
amongst them some very Ingenious Persons, thought a great
Mystery, and very hard to be understood. Not that truly in
itself it is so. But because [in their own interests] People that
treat of it wrap up the Secret they make advantage of in
mystical, obscure and unintelligible ways of Talking; which
Men, from a preconceived opinion of the difficulty of the
subject, take for Sense, in a matter not easie to be penetrated
[except] by the Men of Art, [and] let pass for Current without
Examination. Whereas, [if they] would look into these
Discourses, enquire what meaning [the Ingenious Persons ]
words have, they would find, for the most part, either their
Positions to be false, their deductions to be wrong, or (which
often happens) their words to have no distinct meaning at all.
Where none of [this jargon] be, there their plain, true, honest
Sense would prove very easie and intelligible if expressed in
ordinary and direct Language.4
Locke is probably the first advocate ever of humanizing economic discourse.
In 1695, as one of the original investors in the Bank of England and as a
member of the national Council of Trade (not to mention being the
philosopher who posited the value added by labour), Locke saw revaluation of
the coinage as monetary devaluation. He argued that if the denominations of
the money were raised by 20 percent (Lowndes actually proposed
25 percent), hoarders would be the only beneficiaries:
Those only who have great Sums of weighty Money [fullweight crowns and half-crowns]hoarded upwill get [gain]
by it. To thosethe proposed change of our Money will be
an increase of one fifth added to their Riches, paid out of the
pockets of the rest of the Nation. This weighty Money
hoarded up, Mr. Lowndescomputes at One Million and Six
hundred thousand pounds. So that by raising our Money one
fifth, there will be Three hundred and
twenty thousand Pound given to those who have hoarded up
our weighty Money; which hoarding up of Money is thought
by many to have no other merit in it than the prejudicing [of]
our Trade and public Affairs, and increasing our necessities,
by keeping so great a part of our Money from coming abroad
[circulating], at a time when there was so great need of it.
If the Sum of unclipd Money in the Nation be, as some
suppose, much greater, then there will by this contrivance of
the raising of our Coin, be given to these rich Hoarders much
above the aforesaid Sum of Three hundred and twenty
thousand Pounds of our present Money. No body else but
these Hoarders can get a Farthing by this proposed change of
Humanist Issues in Commercial Practice
Reading 4-5 5
Reading 4-5 7
Summary
You have learned what tended to happen to bullion-content coins as they
passed through human hands, and why governments periodically re-coined.
The theorists arguments over bullion content revolved around public
confidence in money. The issue debated by Locke and Lowndes was
essentially the same. Whether embodied in coinage or paper, moneys value
depends on faith. This controversy is probably the first publicly documented
debate over the value of circulating money.
In this course, you have already seen philosophical, ethical, and theological
reflections on economic questions. From medieval times, these reflections
(for example, those by Aquinas and Luther) brought religious and economic
principles together. Lockes Second Treatise of Government argument even has
some echoes of this kind of discourse (In the beginning). When in
Further Considerations he stubbornly argues for the status quo of 86, not 69
grains in the shilling, it is hard to avoid the impression that he is standing for
a principle enjoined in sacred texts, such as Dishonest scales are abominable
to the Lord, but a true weight pleases him [Proverbs 11:1], and Do not
give short weight or measure [Koran 11:84].
At the end of the seventeenth century, economics still had a theological echo,
and the monetary philosophers arguing over the question of how many
grains of silver there should be in a shilling seems at times not far removed
from the medieval theologians debate about how many angels could dance
on the head of a pin. But people had a practical concern over what the coins
in their pockets would actually buy.
8 Reading 4-5
10
READING 4-6
Images of trading from journalism to coffee,
insurance, and fiction
Trade as political policy
Mercantilism generally means a nations economic policy, whereby a
government encourages (and sometimes regulates) the achievement of a
positive balance of exports over imports. The term also can refer to a
devotion to trade or commerce. In the excerpt from Aristotles Politics
(Reading 1-6), you read a characteristic early view of business:
There are two sorts of wealth-getting; one is a part of
household management, the other is retail trade: the former
necessary and honorable, while that which consists in
exchange is justly censured; for it is unnatural, and a mode by
which men gain from one another.1
John Locke was not so negative. His monetary treatises Some Considerations
and Further Considerations (Topic 4.4) are not just about the content and
denominations of coinage, but also about the optimum uses of capital. To
Locke, the three ways for an individual to employ capital are improvement of
land, paying debts, and earning returns on trade.2 And he asserts that a
nations interest, besides maintaining sound money and keeping it in
circulation among the population, is healthy international trade; for, It is not
any sort of [tinkering with] Coinage [that keeps] your Money here: that
wholly and only depends upon the Balance of your Trade.3
Locke can nearly be said to have coined the term balance of trade. The
Oxford English Dictionary lists its first use in 1668, by Josiah Child, in a treatise
called A New Discourse of Trade. Along with improvement and in the
beginning, balance of trade is one of Lockes favourite terms.
Trade and free trade were becoming popular buzzwords in mercantile and
seagoing Europe. In the English civil war of 1642-1647 between King and
Parliament, the kings side was generally supported by the landed classes,
whose income was primarily from rents; the parliamentary cause was
supported by mercantile interests, especially in London, where the greatest
part of the countrys trade was centred. (The king fled from London at the
start of the war and set up his headquarters in Oxford.)
By the start of the 1680s, parliament had split into two factions on the issue
of who should succeed the heirless Charles II. One conservative faction
supported the succession of Charles brother James; the other faction wanted
Parliament to have final choice of successor.
In the name-calling during the debates on succession, the conservatives took
to calling their opponents Whiggamores (a Scots Gaelic word for a sheep
stealer), or Whigs, and the responding insult (based on an Irish Gaelic term
for a cattle rustler) was Toraig, pronounced Tory.
Humanist Issues in Commercial Practice
Reading 4-6 1
By the early 1700s, these factions had evolved into recognized political
parties the Tories and the Whigs. The latter name eventually went through
North American changes to Clear Grits and then Liberals. The Whigs were
the party of trade, and it was they who supported the Dutch Prince Williams
accession as William III of England in 1688. During Williams reign, and with
new alliances in Europe, trade was galvanized to a higher level of activity. A
business mentality was beginning to influence affairs of state and the outlook
of European rulers.
Reading 4-6 3
was a periodical that Addison and his associate Richard Steele began
publishing in March 1711, replacing their earlier publication, The Tatler,
started in April 1709. The Spectator ran six days a week until December 1712,
then resumed for about six months in 1714. Addison wrote the lions share
of the columns, and he is Mr. Spectator the roving reporter who writes on
subjects of general interest, on the arts (literature, music, theatre), as well as
on what would now be called lifestyles and was then called manners.
Addison supported the Whig party the mercantilist interest in his
politics, and therefore there is some understated political editorializing in the
Royal Exchange item. First, there is the implication that England is taking
leadership in a progressive and enlightened age an age of trade and
prosperity. My good friend Sir Andrew, mentioned in the second
paragraph, is an invented character, Sir Andrew Freeport, who turns up
regularly in The Spectators columns. As his name indicates, Freeport is (like
the Whigs) an advocate of free trade and tariff-free international borders.
Locke and his disputant Nicholas Barbon (Topic 4.4) disagreed over coinage,
but both had pretty much the same views about tariffs as Freeport:
There is nothing so prejudicial totradeas the many laws
for prohibiting commodities, or laying too high a duty, which
amounts to a prohibition. For by such prohibition, the trade
to such a country is wholly lost, by which the profit that
themerchant used to get by selling the foreign goods, the
profit of the owners of the ship for the freight, the profit
from the native commodities that used to be sent in
exchangeare lost.7
The Spectators conclusion is that trade has been a catalyst of democracy (so
many private [citizens] who in [former] time would have been the vassals
[servants] of some powerful baron, [are] now negotiating like princes), and
it has multiplied the number of the rich. This was a widespread idea.
Barbon said, That nation is accounted rich, when the greatest number of the
inhabitants are rich. And they are only made rich by industry, arts, and traffic
[trade].8
In the first paragraph of the Addison excerpt, notice the global origins of the
traders at the Exchange. Whereas in Marco Polos time (Topic 2.5) European
merchants went to Asia, by the eighteenth century there was two-way traffic.
You may also have noticed that one of the ways in which trade and
commerce were celebrated in journalism and popular literature of the time
was by cataloguing rare and exotic commodities that were transported from
far away. Mercantilism was opening up the world and bringing its products to
people in ways that could be intimately felt. Notice how The Spectator
catalogue emphasizes clothing, then food, drink, and medicines: the products
of trade are worn on ones body; they are tasted on the palate, and they
remedy ones ailments. Even the journal itself, an early newspaper (The
Spectator was one of the very first daily news and opinion publications), was a
by-product of trade. In the 1670s, news sheets single pages of print that
were also called broadsides began to appear, pinned on the walls of places
4 Reading 4-6
Reading 4-6 5
Reading 4-6 7
rest (at 8 pounds each) over ten years of age. Two-thirds were
to be males.13
These organizations were all joint stock companies, with their shares publicly
traded. The English companies were government-chartered and so their
nominal head was the monarch. As Carswell points out, the 1713 slaving
contract technically made Englands Queen Anne (1702-1714) the
contractor.
There is another ironic side to this slave trading by joint stock companies.
Stock in them constituted something quite rare at the time: a form of
property that married women could properly hold as a personal estate. In
1685, 20 percent of the English East India Companys stock was held by
women,14 who thereby could be regarded as implicated in the slave trade
(ethical stock portfolios were then unknown).
As you can see, Europeans trafficking in other races misery was accelerating
as Montaigne foresaw a century before and wrote Who ever valued the
benefits of trade and commerce at so high a price?15 And now women had
begun to be involved in international trading, as stockholders.
Reading 4-6 9
also to seek out a Northwest Passage to the Orient where Columbus had
been unable to discover a southwesterly one. The Hudsons Bay charter gave
the company exclusive trading, settlement, and exploration rights in and from
the territory that came to be known as Ruperts Land. The territory
comprised the entire Hudson Bay drainage system, which included what is
now Northern Quebec and Ontario north of the Laurentian watershed, all of
Manitoba, most of Saskatchewan, southern Alberta, and portions of the
Northwest Territories, Minnesota, and North Dakota. The company also
traded into what are now the states of Washington, Oregon, Idaho, and
Montana. And, of course, the Companys brief was to carry on to Marco
Polos China if a Northwest Passage was found.
In 1870, three years after Confederation, Canada bought Ruperts Land from
the Hudsons Bay Company for 300,000 pounds in cash and two million
hectares of land in what are now the Prairie provinces.
Summary
You have seen how the European mercantilist spirit was promoted in novels
and plays, and by a medium to which trade itself gave rise the newspaper.
It is striking to realize that, just when women were achieving a narrow
foothold in merchant-venturing as shareholders in joint stock enterprises, a
woman writer was factually explaining to her readers just how a slave trading
contract was made and carried out. Aphra Behns description implicates
European shareholders and Africans.
This module has taken you from Lockes theory of labour as a humans
property (in Topic 4.1) to this reminder of the importation of African slave
labour to those very Americas that Locke idealized as a world of brave new
beginnings. Topics 4.2 and 4.3 pointed to the important commercial role
played by the goldsmith-bankers before the development of national banks
and the start-up of the Bank of England. Topic 4.4s description of
seventeenth-century manipulation of coinage, at a time when paper
banknotes were beginning to be issued, should have reminded you of the
human issue of confidence in money. Even the rational and optimistic
philosopher John Locke needed to be certain that there were 86 grains of
silver in the shilling he held in his hand.
10 Reading 4-6
Aphra Behn, Oroonoko: or The History of the Royal Slave (New York:
W.W. Norton, 1973), page 3.
Ibid.
10
11
12
13
John Carswell, The South Sea Bubble (London: Cresset Press, 1960), page 65.
14
15
Reading 4-6 11
READING 4-7
Joseph Addison on The Royal Exchange
There is no place in the town which I so much love to frequent as the Royal
Exchange. It gives me a secret satisfaction, and, in some measure, gratifies
my vanity, as I am an Englishman, to see so rich an assembly of countrymen
and foreigners consulting together upon the private business of mankind,
and making this metropolis a kind of emporium for the whole earth. I must
confess I look upon high-change to be a great council, in which all
considerable nations have their representatives. Factors in the trading world
are what ambassadors are in the politic world; they negotiate affairs, conclude
treaties, and maintain a good correspondence between those wealthy
societies of men that are divided from one another by seas and oceans, or
live on the different extremities of a continent. I have often been pleased to
hear disputes adjusted between an inhabitant of Japan and an alderman of
London, or to see a subject of the Great Mogul entering into a league with
one of the Czar of Muscovy. I am infinitely delighted in mixing with these
several ministers of commerce, as they are distinguished by their different
walks and different languages: sometimes I am justled among a body of
Armenians; sometimes I am lost in a crowd of Jews; and sometimes make
one in a group of Dutchmen. I am a Dane, Swede, or Frenchman at different
times; or rather fancy myself like the old philosopher, who upon being asked
what countryman he was, replied that he was a citizen of the world.
Though I very frequently visit this busy multitude of people, I am known to
nobody there but my friend Sir Andrew, who often smiles upon me as he
sees me bustling in the crowd, but at the same time connives at my presence
without taking any further notice of me. There is indeed a merchant of
Egypt, who just knows me by sight, having formerly remitted me some
money to Grand Cairo; but as I am not versed in the modern Coptic, our
conferences go no further than a bow and a grimace.
This grand scene of business gives me an infinite variety of solid and
substantial entertainments. As I am a great lover of mankind, my heart
naturally overflows with pleasure at the sight of a prosperous and happy
multitude, insomuch that at many public solemnities I cannot forbear
expressing my joy with tears that have stolen down my cheeks. For this
reason I am wonderfully delighted to see such a body of men thriving in their
own private fortunes, and at the same time promoting the public stock; or, in
other words, raising estates for their own families, by bringing into their
country whatever is wanting, and carrying out of it whatever is superfluous.
Nature seems to have taken a peculiar care to disseminate the blessings
among the different regions of the world, with an eye to this mutual
intercourse and traffic among mankind, that the natives of the several parts
of the globe might have a kind of dependence upon one another, and be
united together by this common interest. Almost every degree produces
something peculiar to it. The food often grows in one country, and the sauce
Humanist Issues in Commercial Practice
Reading 4-7 1
many private men, who in his time would have been the vassals of some
powerful baron, negotiating like princes for greater sums of money than were
formerly to be met with in the Royal Treasury! Trade, without enlarging the
British territories, has given us a kind of additional empire: it has multiplied
the number of the rich, made our landed estates infinitely more valuable than
they were formerly, and added to them an accession of other estates as
valuable as the lands themselves.
Source: Joseph Addison, The Spectator, Number 69, May 19, 1711.
Reading 4-7 3
READING 4-8
Samuel Pepys on insider knowledge
Up and to Alderman Backewells, where Sir W. Rider by appointment met us
to consult about the insuring of our Hempship [textile ship] from Archangell,
in which we are all much concerned by my Lord Treasurers command.
Back to the Coffee-house and then to the Change, where Sir W Rider and I
did bid 15 per cent [insurance premium]; and nobody will take it under
20 per cent, and the lowest was 15 per cent to be [added] in case of loss;
which we did not think fitto give. And so we parted. Thence to the
Temple; but being there too soon and meeting Mr. Moore, I took him up
and to my Lord Treasurers and thence to Sir Ph. Warwickes, where I found
him and did desire his advice; who left me to do what I thought fit in this
business of the insurance. And so back again to the Temple, all the way
telling Mr. Moore what had passed between my Lord and me yesterday.
I homewards and called at the Coffee-house, and there by great accident hear
that a letter is come that our [Hempship] is safe come to Newcastle: with this
news I went, like an asse, presently to Alderman Backewell and told him of it;
and he and I went to the [African Companys] house in Broadstreete to have
spoke with Sir W Rider to tell him of it, but missed him. Now, what an
opportunity had I to have concealed this, and seemed to have made an
insurance and got 100 [pounds], with the least trouble and danger in the
whole world. This troubles me, to think I should be so [short-sighted].
So back again with Alderman Backewell, talking of the new money; which he
says will never be counterfeited, he believes, but it is deadly inconvenient for
telling, it is so thick and the edges are made to turn up.
I find him as full of business and, to speak the truth, he is a very [painstaking]
man and ever was, and nowadays is well paid for it.
So home and to my office, doing business late in order to the getting a little
money; and so home to supper and to bed.
Source: Samuel Pepys, The Diary of Samuel Pepys, eds. R.C. Latham and W. Mathews (London: G. Bell &
Sons, 1970-1983), November 23, 1663, Volume 4, pages 394-396.
Humanist Issues in Commercial Practice
Reading 4-8 1