Medieval Moneylending - Sarah Woodbury

Medieval Moneylending

Edward Longshankes (Edward I) got himself in debt to various moneylenders in order to fund his wars.  During his reign, he fought with his father in the Baron’s War against Simon de Montfort, against Llywelyn ap Gruffydd, the Prince of Wales, against the French, and against the Scots.  All of these wars cost money.

A king had a couple of options when on a quest for funds.  One, he can tax his people.  Edward certainly did that.  Two, he can confiscate funds from those over whom he wields power.  I blogged earlier about what he did to Jewish coinsmiths in 1278 (  Henry VIII had the great plan of starting his own religion and confiscating the wealth of the Catholic Church.  That was a little more radical than Edward, who often relied on the third method, money lending.

In the Middle Ages, a number of money lending options were open to him.  He borrowed from the Jews in England until he took all their money and expelled them from England.  Christians were forbidden to lend money, so he turned to the Italian banking families.

“In Medieval Europe, moneylenders were needed as everywhere else. However, the situation was complicated by the fact that Christian laws forbade “usury” or the practice of charging interest on loans. In consequence, the function of moneylending was assumed by members of the Jewish communities who were exempt from usury laws and who were not prohibited by their own traditions to lend money to non-Jews. Thus European Jews practically held a monopoly on moneylending.”

But then came the Italians:

“By the middle of the 12th century the Jews, who were leading money changers and moneylenders, had begun to make business loans. Because the business appeared to be lucrative, powerful rivals soon ended the Jewish hegemony. By the middle of the 13th century the Italians from Lombardy had taken over the leadership. They sometimes had the privilege of minting coins. They could solicit deposits, which the Jews were often prohibited from doing. They also managed to get around the church’s edict against interest. They did not make loans and charge interest but bought and sold bills of exchange payable in foreign currency. They were, therefore, merchants in banking who hoped by the difference in exchange to make a profit equal to the interest rate they would have charged for a loan.”

The power that these families wielded can be seen in the following explanation from Wikipedia regarding John Peckham, the Archbishhop of Canterbury during Edward’s Welsh wars:

“Peckham laid stress on discipline, which often resulted in conflict with his clergy. His first episcopal act was calling a council at Reading in July of 1279 in order to implement ecclesiastical reform, but Peckham’s specifying that a copy of Magna Carta should be hung in all cathedral and collegiate churches offended the king as an unnecessary intrusion into political affairs. Another ruling was on non-residence of clergy in their livings. The only exception Peckham was prepared to make on non-residence was if the clerk needed to go abroad to study.At the Parliament of Winchester in 1279, the archbishop compromised and Parliament invalidated any regulation of the council dealing with royal policies or power. The copies of Magna Carta were taken down.   One reason the archbishop may have backed down was that he was in debt to the Italian banking family of the Riccardi, who also were bankers to Edward and the pope, and Peckham was under threat of excommunication from the pope unless he repaid the loans.”