19. Of lending upon Interest. Specie is the sign of value. It is evident that he who has occasion for this sign ought to pay for the use of it, as well as for everything else that he has occasion for. All the difference is that other things may be either hired or bought; while money, which is the price of things, can only be hired, and not bought.[33]

　　To lend money without interest is certainly an action laudable and extremely good; but it is obvious that it is only a counsel of religion, and not a civil law.

　　In order that trade may be successfully carried on, it is necessary that a price be fixed on the use of specie; but this should be very inconsiderable. If it be too high, the merchant who sees that it will cost him more in interest than he can gain by commerce will undertake nothing; if there is no consideration to be paid for the use of specie, nobody will lend it; and here too the merchant will undertake nothing.

　　I am mistaken when I say nobody will lend; the affairs of society will ever make it necessary. Usury will be established, but with all the disorders with which it has been constantly attended.

　　The laws of Mahomet confound usury with lending upon interest. Usury increases in Mahometan countries in proportion to the severity of the prohibition. The lender indemnifies himself for the danger he undergoes of suffering the penalty.

　　In those eastern countries, the greater part of the people are secure in nothing; there is hardly any proportion between the actual possession of a sum and the hopes of receiving it again after having lent it: usury, then, must be raised in proportion to the danger of insolvency.

　　20. Of Maritime Usury. The greatness of maritime usury is founded on two things: the danger of the sea, which makes it proper that those who expose their specie should not do it without considerable advantage, and the ease with which the borrower, by means of commerce, speedily accomplishes a variety of great affairs. But usury, with respect to landmen, not being founded on either of these two reasons, is either prohibited by the legislators, or, what is more rational, reduced to proper bounds.

　　21. Of Lending by Contract, and the State of Usury among the Romans. Besides the loans made for the advantage of commerce, there is still a kind of lending by a civil contract, whence results interest or usury.

　　As the people of Rome increased every day in power, the magistrates sought to insinuate themselves in their favour by enacting such laws as were most agreeable to them. They retrenched capitals; they first lowered, and at length prohibited, interest; they took away the power of confining the debtor's body; in fine, the abolition of debts was contended for whenever a tribune was disposed to render himself popular.

　　These continual changes, whether made by the laws or by the plebiscita, naturalised usury at Rome; for the creditors, seeing the people their debtor, their legislator, and their judge, had no longer any confidence in their agreements: the people, like a debtor who has lost his credit, could only tempt them to lend by allowing an exorbitant interest, especially as the laws applied a remedy to the evil only from time to time, while the complaints of the people were continual, and constantly intimidated the creditors. This was the cause that all honest means of borrowing and lending were abolished at Rome, and that the most monstrous usury established itself in that city, notwithstanding the strict prohibition and severity of the law.[34] This evil was a consequence of the severity of the laws against usury. Laws excessively good are the source of excessive evil. The borrower found himself under the necessity of paying for the interest of the money, and for the danger the creditor underwent of suffering the penalty of the law.

　　22. The same Subject continued. The primitive Romans had not any laws to regulate the rate of usury.[35] In the contests which arose on this subject between the plebeians and the patricians, even in the sedition on the Mons Sacer, nothing was alleged, on the one hand, but justice, and on the other, the severity of contracts.[36]

　　They then only followed private agreements, which, I believe, were most commonly at twelve per cent per annum. My reason is, that in the ancient language of the Romans, interest at six per cent was called half-usury, and interest at three per cent, quarter-usury.[37] Total usury must, therefore, have been interest at twelve per cent.

　　But if it be asked how such great interest could be established among a people almost without commerce, I answer that this people, being very often obliged to go to war without pay, were under a frequent necessity of borrowing: and as they incessantly made happy expeditions, they were commonly well able to pay. This is visible from the recital of the contests which arose on this subject; they did not then disagree concerning the avarice of creditors, but said that those who complained might have been able to pay, had they lived in a more regular manner.[38]

　　They then made laws which had only an influence on the present situation of affairs: they ordained, for instance, that those who enrolled themselves for the war they were engaged in should not be molested by their creditors; that those who were in prison should be set at liberty; that the most indigent should be sent into the colonies; and sometimes they opened the public treasury. The people, being eased of their present burdens, became appeased; and as they required nothing for the future, the senate was far from providing against it.

　　At the time when the senate maintained the cause of usury with so much constancy, the Romans were distinguished by an extreme love of frugality, poverty, and moderation: but the constitution was such that the principal citizens alone supported all the expenses of government, while the common people paid nothing. How, then, was it possible to deprive the former of the liberty of pursuing their debtors, and at the same time to oblige them to execute their offices, and to support the republic amidst its most pressing necessities?

　　Tacitus says that the law of the Twelve Tables fixed the interest at one per cent.[39] It is evident that he was mistaken, and that he took another law, of which I am going to speak, for the law of the Twelve Tables. If this had been regulated in the law of the Twelve Tables, why did they not make use of its authority in the disputes which afterwards arose between the creditors and debtors? We find no vestige of this law upon lending at interest; and let us have ever so little knowledge of the history of Rome, we shall see that a law like this could not be the work of the decemvirs.

　　The Licinian law, made eighty-five years after that of the Twelve Tables,[40] was one of those temporary regulations of which we have spoken. It ordained that what had been paid for interest should be deducted from the principal, and the rest discharged by three equal payments.

　　In the year of Rome 398, the tribunes Duellius and Menenius caused a law to be passed which reduced the interest to one per cent per annum.[41] it is this law which Tacitus confounds with that of the Twelve Tables,[42] and this was the first ever made by the Romans to fix the rate of interest. Ten years after,[43] this usury was reduced one-half,[44] and in the end entirely abolished;[45] and if we may believe some authors whom Livy had read, this was under the consulate of C. Martius Rutilius and Q. Servilius, in the year of Rome 413.[46]

　　It fared with this law as with all those in which the legislator carries things to excess: an infinite number of ways were found to elude it. They enacted, therefore, many others to confirm, correct, and temper it. Sometimes they quitted the laws to follow the common practice; at others, the common practice to follow the laws; but in this case, custom easily prevailed.[47] When a man wanted to borrow, he found an obstacle in the very law made in his favour; this law must be evaded by the person it was made to succour, and by the person condemned. Sempronius Asellus, the pr犚or, having permitted the debtors to act in conformity to the laws,[48] was slain by the creditors for attempting to revive the memory of a severity that could no longer be supported.[49]

　　I quit the city, in order to cast an eye on the provinces.

　　I have somewhere else observed that the Roman provinces were exhausted by a severe and arbitrary government.[50] But this is not all; they were also ruined by a most shocking usury.

　　Cicero takes notice that the inhabitants of Salamis wanted to borrow a sum of money at Rome, but could not, because of the Gabinian law.[51] We must, therefore, inquire into the nature of this law.

　　As soon as lending upon interest was forbidden at Rome, they contrived all sort of means to elude the law;[52] and as their allies,[53] and the Latins, were not subject to the civil laws of the Romans, they employed a Latin, or an ally, to lend his name, and personate the creditor. The law, therefore, had only subjected the creditors to a matter of form, and the public were not relieved.

　　The people complained of this artifice; and Marius Sempronius, tribune of the people, by the authority of the senate, caused a plebiscitum to be enacted to this purport, that in regard to loans the laws prohibi, ting usury between Roman citizens should equally take place between a citizen and an ally, or a citizen and a Latin.[54]

　　At that time they gave the name of allies to the people of Italy properly so called, which extended as far as the Arno and the Rubicon, and was not governed in the form of a Roman province.

　　It is an observation of Tacitus[55] that new frauds were constantly committed, whenever any laws were passed for the preventing of usury. Finding themselves debarred from lending or borrowing in the name of an ally, they soon contrived to borrow of some inhabitant of the provinces.

　　To remedy this abuse they were obliged to enact a new law; and Gabinius[56] upon the passing of that famous law, which was intended to prevent the corruption of suffrages, must naturally have reflected that the best way to attain his end was to discourage the lending upon interest: these were two objects naturally connected; for usury always increased at the time of elections,[57] because they stood in need of money to bribe the voters. It is plain that the Gabinian law had extended the Senatus Consultum of Marcus Sempronius to the provinces, since the people of Salamis could not borrow money at Rome because of that very law. Brutus, under fictitious names, lent them some money[58] at four per cent a month,[59] and obtained for that purpose two Senatus Consulta; in the former of which it was expressly mentioned that this loan should not be considered as an evasion of the law,[60] and that the governor of Sicily should determine according to the stipulations mentioned in the bond of the Salaminians.

　　As lending upon interest was forbidden by the Gabinian law between provincials and Roman citizens, and the latter at that time had all the money of the globe in their hands, there was a necessity for tempting them with the bait of extravagant interest, to the end that the avaricious might thus lose sight of the danger of losing their money. And as they were men of great power in Rome, who awed the magistrates and overruled the laws, they were emboldened to lend, and to extort great usury. Hence the provinces were successively ravaged by every one who had any credit in Rome: and as each governor, at entering upon his province, published his edict[61] wherein he fixed the rate of interest in what manner he pleased, the legislature played into the hands of avarice, and the latter served the mean purposes of the legislator.

　　But the public business must be carried on; and wherever a total inaction obtains, the state is undone. On some occasions the towns, the corporate bodies and societies, as well as private people, were under the necessity of borrowing —— a necessity but too urgent, were it only to repair the ravages of armies, the rapacity of magistrates, the extortions of collectors, and the corrupt practices daily introduced; for never was there at one period so much poverty and opulence. The senate, being possessed of the executive power, granted, through necessity, and oftentimes through favour, a permission of borrowing from Roman citizens, so as to enact decrees for that particular purpose. But even these decrees were discredited by the law; for they might give occasion to the people's insisting upon new rates of interest, which would augment the danger of losing the capital, while they made a further extension of usury.[62] I shall ever repeat it, that mankind are governed not by extremes, but by principles of moderation.

　　He pays least, says Ulpian, who pays latest.[63] This decides the question whether interest be lawful; that is, whether the creditor can sell time, and the debtor buy it.

　　______

　　1. The salt made use of for this purpose in Abyssinia has this defect, that it is continually wasting away.

　　2. Herodotus, Bk. i, tells us that the Lydians found out the art of coining money; the Greeks learned it from them: the Athenian coin had the impression of their ancient ox. I have seen one of those pieces in the Earl of Pembroke's cabinet.

　　3. It is an ancient custom in Algiers for the father of a family to have a treasure concealed in the earth. —— Laugier de Tassis, History of the Kingdom of Algiers.

　　4. C犘ar, De Bello Civ., iii.

　　5. Tacitus, Annals, vi. 17.

　　6. The Laws of the Saxons, 18.

　　7. See chapter 12 of this book.

　　8. Supposing a mark of eight ounces of silver to be worth forty-nine livres, and copper twenty sols per pound.

　　9. History of the Civil Wars of the Spaniards in the West Indies.

　　10. In France, Law's project was called by this name.

　　11. Socrates, History of the Church, ii. 17.

　　12. There is much specie in a place when there is more specie than paper; there is little, when there is more paper than specie.

　　13. With the expenses of carriage and insurance deducted.

　　14. In 1744.

　　15. See book xx. 23.

　　16. Pliny, Natural History, xxxiii, art. 13.

　　17. Ibid.

　　18. They received ten ounces of copper for twenty.

　　19. They received sixteen ounces of copper for twenty.

　　20. Pliny, xxxiii, art. 5.

　　21. Freinshemius, dec. 2, v.

　　22. Ibid. They struck also, says the same author, half denarii, called quinarii; and quarters, called sesterces.

　　23. An eighth, according to Bud獘s; according to other authors, a seventh.

　　24. Pliny, Natural History, xxxiii, art. 13.

　　25. Ibid.

　　26. See Father Joubert, Science of Medals, p. 59, Paris, 1739.

　　27. Extract of Virtues and Vices.

　　28. See Savote, part II, 12, and Le Journal des Savants of the 28th of July, 1681, on a discovery of fifty thousand medals.

　　29. See Savote, ibid.

　　30. Ibid.

　　31. Chapter 21.

　　32. England.

　　33. We do not speak here of gold and silver considered as a merchandise.

　　34. Tacitus, Annals, vi. 16.

　　35. Usury and interest among the Romans signified the same thing.

　　36. See Dionysius Halicarnassus, who has described it so well.

　　37. Usur?semisses, trientes, quadrantes. See the several titles of the digests and codes on usury, and especially Leg. 17, with the note, ff. de usuris.

　　38. See Appius's speech on this subject, in Dionysius Halicarnassus, v.

　　39. Annals, vi. 16.

　　40. In the year of Rome 388. —— Livy, vi. 25.

　　41. Unciaria usura. —— Ibid., vii. 16.

　　42. Annals, vi. 16.

　　43. Under the consulate of L. Manlius Torquatus and C. Plautius, according to Livy, vii. 27. This is the law mentioned by Tacitus, Annals, vi.

　　44. Semiunciaria usura.

　　45. As Tacitus says. Annals, vi.

　　46. This law was passed at the instance of M. Genucius, tribune of the people. —— Livy, vii, towards the end.

　　47. Verteri jam more foenus receptum erat. —— Appian. On the Civil War, i.

　　48. Permisit eos legibus agere. —— Ibid.; and theEpitome of Livy, lxiv.

　　49. In the year of Rome 663.

　　50. Book xi. 19.

　　51. Letters to Atticus, v. 21.

　　52. Livy, xxxv. 7.

　　53. Ibid.

　　54. In the year 561 of Rome. —— See Livy, xxv. 7.

　　55. Annals, vi. 16.

　　56. In the year 615 of Rome.

　　57. See Letters to Atticus, iv. 15, 16.

　　58. Ibid., vi. i.

　　59. Pompey having lent 600 talents to King Ariobarzanes, made that prince pay him thirty Attic talents every thirty days. —— Ibid., v. 21, vi. 1.

　　60. Ut neque Salaminiis, neque cui eis dedisset, fraudi esset. —— Ibid.

　　61. Cicero's edict fixed it to one per cent a month, with interest upon interest at the expiration of the year. With regard to the farmers of the republic, he engaged them to grant a respite to their debtors; if the latter did not pay at the time fixed, he awarded the interestmentioned in the bond. —— Ibid., vi. 1.

　　62. See what Lucretius says, in the 21st letter to Atticus, v. There was even a general Senatus Consultum, to fix the rate of interest at one per cent per month. See the same letter.

　　63. Leg. 12, ff. de verb. signif.