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READING 1-1

A land transaction in biblical times


Purchasing a gravesite
The Old and New Testaments of the Bible, besides being doctrinal texts and
anthologies of narrative and poetry translated from Hebrew (the Old
Testament) and Greek (the New Testament) into many modern languages,
are sources of information about early Middle-Eastern cultural and social life,
including economic organization and practices of value-exchange, which is
the buying and selling of commodities for value received.
As mentioned in the course introduction, the earliest written parts of the Old
Testament are thought to date from before 1000 B.C.E. A major example of
these earliest writings may be Exodus 15-21, which is the account of the
Israelites wanderings after escaping from Egypt and of their receiving the
Decalogue (the Ten Commandments) and the Covenantal Law (sometimes
called the Mosaic Law because Moses delivered the written version). The
latest Old Testament sections are thought to have been written about 800
years or more after the earliest texts that is, about the last century B.C.E.
Most of the Old Testament probably was orally transmitted from generation
to generation long before being written down. The New Testament was
written between about C.E. 50 and 150.
The Bibles first monetary transaction is narrated in Genesis, the first of the
Old Testament books. This narration concerns Abraham, chosen by reason
of his faith to be the founding father (patriarch) of the Israelite nation and to
enter on their behalf into a Covenant here, an agreement or treaty
between God and a chosen people, with reciprocal obligations. Genesis 1250 tells the story of Abraham and his next three generations: Isaac, Jacob,
and Joseph. (The Old Testament patriarchal age when these leaders lived is
variously thought to have been ca. 2000-1000 B.C.E.) Exhibit 1 contains a
map of a portion of the Near East ca. 1700 B.C.E. It shows Hebron and
Haran, both of which are mentioned in this topic.

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Exhibit 11: The Near East ca. 1700 B.C.E.

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
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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
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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

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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.

While he has been wandering and sojourning, Abraham has become


very rich in livestock, silver, and gold [Genesis 13:2], and this
prosperity is evident to the Hittites who probably see it as a mark of
divine favour (You are the elect of God amidst us.).

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
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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

for a patriarchal gravesite, the expense is no object

this site will be historic the first piece of the promised land acquired
with a memorially recorded clear title

the spectacular price in itself stimulates that memory, of how Abraham


used his portable wealth to re-invest in the land in the context of such
symbolic gestures, especially of worship, price is secondary

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.

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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).

Humanist Issues in Commercial Practice

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).

Joseph as macroeconomic planner


The Joseph chapters in Genesis thus constitute a short novel, weaving the
genres of tale and romance into marvellous and myth-like themes of
estrangement and reconciliation, dying and reviving, prophecies and
dream-visions. But in Genesis 41 and 47, the dream-visions lead into an
account of what today we might call macroeconomic policy. For after
interpreting Pharaohs dream, Joseph advises,
Let Pharaoh, therefore, seek out a man of discernment and
wisdom, and place him in charge of the land of Egypt. And
let Pharaoh take steps to appoint overseers for the land so as
to organize the country of Egypt for the seven years of
plenty. They shall husband all the food of the good years that
lie immediately ahead, and collect the grain by Pharaohs
authority, to be stored in the towns for food. And let that
food be a reserve for the country against the seven years of
famine that are coming upon the land of Egypt, so that the
land may not perish in the famine.

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After Joseph [was appointed by Pharaoh] he traveled


throughout the land of Egypt. During the seven years of
plenty, when the land produced in overabundance, he
husbanded the various crops of the seven years that the land
of Egypt was enjoying, and stored the food in the cities,
placing in each city the crops of the fields around it. Joseph
gathered in grain in very large quantities, like the sands of the
sea, until he stopped taking stock, for it was past
computing.
The seven years of plenty that the land of Egypt enjoyed
came to an end, and the seven years of famine set in, just as
Joseph had predicted. There was famine in all the countries,
but in the land of Egypt there was food. And when all of
Egypt, too, came to feel the hunger and the people cried to
Pharaoh for bread, Pharaoh would tell all the Egyptians, Go
to Joseph; do whatever he tells you.
As the famine spread throughout the land, Joseph opened all
the stores and rationed grain to the Egyptians, since the
famine in the land of Egypt was becoming severe. And all the
world came to Joseph in Egypt to obtain rations, for famine
had gripped the entire world.
[Genesis 41:33-36,46-57]

[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.
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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]

Joseph as minister of agriculture


The story thus tells that Joseph, as the Pharaohs minister of agriculture, first
of all levies a tax paid in grain from the surpluses in the seven years of plenty.
Then when the famine years come, he rations (issues for sale in a
controlled way) this grain back to the Egyptians and to foreigners, always for
payment. As the scarcity continues, all the money in Egypt flows to the
Pharaohs treasury. When the people have no more to spend and therefore
can buy no grain to feed themselves or their animals, Joseph accepts
livestock in exchange for grain.
A year after the peoples money is gone, so also have all their animals been
bartered to the Pharaoh. Hungry again, they have no recourse other than to
offer their land and themselves in return for food: So Joseph acquired for
Pharaoh all the farm-land in Egypt, along with the people, as serfs on their
former land. Thereafter, in return for allocations of seed grain, the serfs have
to pay Pharaoh one-fifth of every future crop a perpetual income to the
state monopoly as long as harvests last.
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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
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consumes what he has without much concern for the future;


and sometimes he has nothing to store up.2
Having read this commentary by Luther, do you think he has justified
Josephs methods?
The Joseph story in the Koran
We turn now to another version of the Joseph story in this case from the
Koran, the holy book of Islam. In the Muslim religion of Islam, Allah is the
sole and supreme God. His prophet is Mohammed (ca. C.E. 570-632), to
whom Allahs messenger-angel revealed the scriptures that Mohammed was
to preach, and which shortly after Mohammeds death were collected as the
Koran.
In its version of the story, the Koran has less detail of Josephs economics.
Islam regards the Old Testament patriarchs, such as Abraham and Joseph, as
well as the New Testament Jesus and apostles, as figures to and through
whom God revealed his will, as he had to Mohammed. Therefore, certain
parts of the Jewish and Christian texts are adopted into the Koran in keeping
with the theme that Allah will recount to [Mohammed] the best of
histories [12:1].
Chapter 12 of the Koran initially follows the Genesis account of how
Josephs brothers conspired against him, and recounts his adventures in
Egypt and the family reconciliation. After it tells of Josephs interpretation of
the Pharaohs dream, the Koran goes on,
When he had spoken with [Joseph], the king said: You shall
henceforth dwell with us, honoured and trusted.
Joseph said: Give me charge of the granaries of the realm. I
shall husband them wisely.
Thus [Allah] gave power to Joseph, and he dwelt at his ease
in that land. [Allah bestows His] mercy on whom [He] will,
and never denies the righteous their reward.3
Although the Koran here chooses to highlight only the account of Josephs
family life, you will see elsewhere in this module that this Islamic book of
wisdom does deal extensively with economic issues and ethics. In the Koran
passage, you can see that Josephs installation as the Pharaohs minister is
treated as a moral tale of how the righteous prosper.

Business success in a life of the Buddha


This same theme, of divine favour or communication combined with
entrepreneurship to bring economic success, is cheerfully set out in one of
the stories in the Buddhist Jataka, or legends and lessons of the Buddha. The
Jataka was compiled in the period from the fourth to first centuries B.C.E.; it
recounts moral stories of the Buddhas many former births and lives. The
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Supreme Buddha usually is characterized as governor of monastic


transcendence of the self and the world.
Now turn to Reading 1-3. In this story, the Supreme Buddha inspires and
commends business success. The extract you will read is a translation of the
original, reflecting its unique literary style of storytelling.

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.

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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.

Humanist Issues in Commercial Practice

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
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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

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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]

When a man steals an ox or a sheep and slaughters or sells it,


he must repay five beasts for the ox and four sheep for the
sheepBut if the animal is found alive in his possession, be
it ox, donkey, or sheep, he must repay two for each one
stolen.
[Exodus 22:1-4]

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
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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.

Early religious and philosophic attitudes toward usury


In the Old Testament, the most important combination of religious
ordinances (rules of worship) with regulations for economic life is seen in
Exodus 22:25-27:
If you advance money to any poor man amongst my people,
you are not to act like a moneylender; you must not exact
interest from him.
If you take your neighbours cloak in pawn, return it to him
by sunset, because it is his only covering.
This rule is explained further in Leviticus 25:35-37:
If your brother-Israelite is reduced to poverty and cannot
support himself in the community, you must assist him as you
would an alien or a stranger, and he will live with you. You
must not charge him interest on a loan, either by deducting it
in advance from the capital sum, or by adding it on
repaymentDo not deduct interest when advancing him
money, or add interest to the payment due for food supplied
on credit.
Notice here how the rule against usury specifies methods of collecting the
interest. Observe also that the impoverished brother-Israelite is to be given
the consideration and hospitality accorded to an alien or a stranger.
But in Deuteronomy generally acknowledged to be the latest of the five
books of the law Israelites are differentiated from aliens:
You are not to exact interest on anything you lend to a
fellow-countryman, whether money or food or anything else
on which interest can be charged.
You may exact interest on a loan to a foreigner but not on a
loan to a fellow-countryman.
[Deuteronomy 23:19-20]

In Mesopotamian law codes and private contracts, to which Old Testament


law may be compared,creditors commonly charged an annual interest rate
of 20 per cent for loans of silver and 331/3 per cent for loans of grain.1
The Deuteronomic version of the Old Testament code appears to be unique
in permitting the taking of interest from foreigners while prohibiting it in
dealings between compatriots. This Deuteronomic version became a major
economic-religious issue in Christendom during the Middle Ages and the
Renaissance, and in Islam as well.
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Usury according to the Koran


The Koran tends to follow the spirit of the Old Testament Exodus and
Leviticus passages, quoted earlier:
Those that live on usury shall rise up before Allah like men
whom Satan has demented by his touch; for they claim that
usury is like trading. But Allah has permitted trading and
forbidden usury. He that receives an admonition from his
Lord and mends his ways may keep what he has already
earned; his fate is in the hands of Allah. But he that pays no
heed shall be consigned to Hell-fire and shall remain in it for
ever.
[Koran 2:275]

Allah has laid His curse on usury and blessed almsgiving


[donating to the poor] with increase.
Believers, have fear of Allah and waive what is still due to you
from usury
If your debtor be in straits, grant him a delay until he can
discharge his debt; but if you waive the sum as alms it will be
better for you.
[Koran 2:276]
When you contract a debt for a fixed period, put it in writing.
Let a scribe write it down for you with fairness; no scribe
should refuse to write as Allah has taught him. Therefore let
him write; and let the debtor dictate, fearing Allah his Lord
and not diminishing the sum he owes. If the debtor be a
feeble-minded or ignorant person, or one who cannot dictate,
let his guardian dictate for him in fairness. Call in two male
witnesses from among you, but if two men cannot be found,
then one man and two women whom you judge fit to act as
witnesses; so that if either of them commit an error, the other
will remember. Witnesses must not refuse to give evidence if
called upon to do so. So do not fail to put your debts in
writing, be they small or big, together with the date of
payment. This is more just in the sight of Allah; it ensures
accuracy in testifying and is the best way to remove all
doubt
[Koran 2:282]

If you are travelling the road and a scribe cannot be found,


then let pledges be taken. If anyone of you entrusts another
with a pledge, let the trustee restore the pledge to its owner.
[Koran 2:283]

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Reading 1-4 3

Plato and Aristotle on extortionate interest


Moral philosophers of the classical era of Greek philosophy also condemned
usury. In The Republic, the Greek philosopher Plato (ca. 427-348 B.C.E.)
refers to contemporary politics, not to any religious code, when he analyzes
the methods practised by oligarchies. Oligarchy, which Plato distrusted just
as much as democracy, is rule by a privileged class or clique. He describes
one oligarchic method of entrenching power through accreting property,
gaining control of a state through the practice of money-lending:
The aim of life in an oligarchy is to become as rich as
possible. The power of the ruling class is due to its wealth,
they will not want to have laws restraining prodigal young
men from ruining themselves by extravagance.
They will hope to lend these spendthrifts money on their
property and buy it up, so as to become richer and more
influential than ever.2
Plato believed that the Athens into which he was born had lost the ideals of
the previous generation, known as the Periclean age after the Athenian
statesman Pericles (500-429 B.C.E.). Platos Laws, composed ca. 368 B.C.E.,
is an ideal prescription for an ideal state a utopia where everyone
would happily observe the high principles of religion, education, and
jurisprudence. It would be a state where the pursuit of riches would be
thwarted by laws such as one that not only holds usury to be an offence but
also punishes it by fining usurers; it would permit borrowers who are
charged interest to legally withhold both interest and principal:
Let there be nodepositing of money with one who is not
trusted, and no lending on usury, the law permitting the
borrower to withhold both interest and capital.3
Platos pupil, Aristotle (384-322 B.C.E.), in his Nichomachean Ethics, also
despises unscrupulous profithunters, among whom he includes
all who work at disreputable trades, souteneurs [pimps] and
men of that description, as well as usurers lending small sums
at extortionate interest. These are all specimens of people
who take more than they are entitled to from persons at
whose hands they ought not to take it. Their common factor
is the love of lucre.4
And in his Politics Aristotle writes,
The most hated sort [of wealth-getting], 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.
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Wherefore of all modes of getting wealth this is the most


unnatural.5
As the Old Testament writers saw lending at interest to be an impediment to
fraternal living in the promised land, so Plato envisions a state without usury,
though not necessarily without economic inequalities. As in the Jataka and in
the Koran, the legitimate exercise of intelligence and industry will be
rewarded, though not excessively, because
to be at once exceedingly wealthy and good is impossible
Our society, we pronounce, must have neither gold nor silver,
nor yet much making of profits from mechanic crafts, or
usury. But only such as husbandry yields or permits, and of
it only so much as will not force a man in his profit-gathering
to forget the ends for which possessions exist, that is to say,
soul and body. Concern for possessions should take the
lowest place in our esteem; for whereas the objects of
universal interest to men are in [total] three, interest in
possession, [even when] rightly pursued, holds the third and
lowest rank, the interest of the body is second, and the soul
first.6
Aristotle is rather less utopian than Plato, for he admits that happiness
seems to require a modicum of external prosperity, and it is difficult, if not
impossible, to engage in noble enterprises without money to spend on
them.7
Aristotle is being realistic about human needs and human nature. And in fact,
though the Covenant code of the Bible quoted earlier prohibits oppressing
fellow Israelites over debts, there are some indications in the Old Testament
that this law was not always observed. For example, when David rebels
against King Saul, he has no difficulty raising an army: To him gathered
every man in difficulties and every man sought by a creditor and every man
with a bitter spirit [Revised English Bible, 1 Samuel 22:1-2].
Another Old Testament wisdom book, Proverbs, clearly tries to address the
social problem with its cheerful claim that oppressive accumulation of wealth
will eventually breed philanthropy: He who grows wealthy through usury
and rents accumulates to benefit a patron of the poor [Proverbs 28:8] an
early trickle-down economic theory. The Anchor Bibles footnote on this
verse observes that it seems never to have occurred to the [Old Testament]
wisdom teachers that society might not always be sharply divided into rich
and poor.

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
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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.

Plato, Laws, pages 125-126.

6 Reading 1-4

Aristotle, The Ethics of Aristotle, Book 1, page 43.

Humanist Issues in Commercial Practice

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]

Tithing and taxation without a coin currency


You have read that the contributions to the temple are to be in currency
metals or bullion (gold, silver, copper) and in fine textiles, leathers (a dugonghide is the skin of a large aquatic herbivorous mammal that inhabited the
Indian Ocean; it was also sometimes called an Indian walrus), fine woods,
and precious stones. These contributions are for the creation and adornment
of the tabernacle. In Exodus 30, the ransom for the maintenance of the
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Reading 1-5 1

tabernacle and the priests is an annual contribution or tax on all adult


males registered by census. In the Old Testament world, a census is usually
connected with counting the males eligible for military service. Military
service theoretically was restricted to those ritually pure, so the temple
ransom or tax paid by adult males was a symbol of this purity, which
included not only spiritual but also physical fitness: freedom from plague.
Exodus 30 specifies this temple tax as a half-shekel per man, with the
shekels sacred weight presumably being checked by the priest as 20 gerahs
(a gerah is approximately half a gram, and so the tax is about 5 grams of
silver). This is still money by weight. Harpers Bible Dictionary says that
Hebrew weights carried denominational markings that were regulated by
religious authorities to ensure against corruption and fraud.1 Proverbs 11:1
declares that Dishonest scales are abominable to the Lord, but a true weight
pleases him.

Coins help the growth of business


Over time, Israels demographics shifted from those of a pastoral society to a
pastoral-agricultural and then a pastoral-agricultural and urban mix. Leviticus
25:29-31, on the law as it pertains to real-property sales, outlines one set of
conveyancing (title-transfer) rules for houses in villages and the open country
and another for houses in towns. This is one sign of growing economic
diversity. Urban dwellers also are more likely to pay their tithes in money
instead of in produce. Urbanization itself tends to accelerate the growth of
entrepreneurship, and business is facilitated by monetization (replacing
metal-by-weight with coinage). When denominational markings on weights
came into use, it was only a short stepto the production of locally made
coins as well. As the entry in Harpers Bible Dictionary explains,
No coins found in Palestine predate the late sixth century
B.C.E. The necessity to coin money was resisted, especially
inland from the port cities, where conservative usage of metal
rings and bars persisted. In [the Old Testament Book of]
Ezra 2:68-69 the Israelites had not only rebuilt Jerusalem, but
families made freewill offerings for the rebuilding of the
Temple, giving the Treasury sixty-one thousand darics of
gold, five thousand minas of silver, and one hundred priests
garments. The daric was then the principal gold coin
weighing 8.4 grams and punched with a die depicting the
Persian king shooting a bow.
Before the end of the fourth century, Jewish authorities
struck small silver coins with the approval of the Persian
government. The coins read in Hebrew yehud, Judah.
Persian authorities later issued some similar coins themselves.
The period 375-332 B.C.E. was a time of political upheaval;
the Phoenician city-states led two abortive revolts that
brought severe sanctions upon local rulers, including the
revocation of minting privileges. That necessitated the issue
of coins with ethnics (phrases that indicate which country
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Humanist Issues in Commercial Practice

minted the coin) in Aramaic the Persian diplomatic


language rather than Phoenician or Hebrew, since Persian
satrapy (government) officials assumed mint functions.
Most of the yehud coins were bronzes, struck between 360 and
332 B.C.E. One example bears the name of Yehizqiyyah, high
priest when Alexander the Great came to Jerusalem in 332
B.C.E. Another silver coin bears the name of Yohanan, high
priest in Samaria, a coin that may have been struck in
defiance of Persia ca. 340 B.C.E. during the last revolt.2

From religious tithes to political taxation


While the census and taxation are mentioned in Exodus 25 and 30 as the
instituting of religious offerings, taxation is featured in the Old Testament
books of Samuel and Kings as a political institution. Thus, in 1 Samuel 8, the
Israelites, who are ruled by God through the prophet and judge Samuel,
decide they want a king. God warns them of the consequences, among which
is the certainty of taxes:
Your seed crops and olive groves [the king] will tithe to make
gifts to his officers and servants Your flocks he will tithe
too.
[1 Samuel 8:15,17]
This was Josephs method on behalf of Pharaoh. Josephus, the major Jewish
historian in the early Roman period, records in his Antiquities of the Jews (a
survey of Jewish history from the second century B.C.E.) that the agricultural
tax introduced by Joseph in Egypt became a fixture in Israelite economic life
and that the later Roman occupiers set the tax at 25 percent of each harvest.3
But the people insist on having a king and Saul is appointed as their first
monarch. He is succeeded by David, then by Davids son Solomon (said to
have reigned in the middle of the tenth century B.C.E.). Solomon reigns in
peace and national prosperity. He keeps an opulent court, and undertakes the
building of the temple in Jerusalem, sparing no expense. Offerings (for the
temple), tribute, tolls, and taxes flow in:
Solomon reigned over all the kingdoms from the river
Euphrates [which flows through modern Syria and Iraq] to
Philistia [the former territory of the Philistines, northward
from the Nile along the seacoast of modern Israel] and as far
as the frontier of Egypt; they paid tribute and were subject to
him all his life.
[Revised English Bible, 1 Kings 4:21]
Tribute means levies imposed on the subject kingdoms; there is also a
suggestion that the people in these kingdoms, and Solomons own people,
paid individual taxes (poll tax). Solomon also raised money through
commercial levies and tolls probably excise taxes:
The weight of gold which Solomon received in any one year
was six hundred and sixty-six talents, in addition to the tolls
levied on merchants and traders who imported goods; all the
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Reading 1-5 3

kings of Arabia and the regional governors brought gold and


silver to the king. The king had a fleet of ships plying to
Tarshish [possibly in India or Africa]; once every three
years this fleet of merchantmen came home, bringing gold
and silver, ivory, apes, and monkeys.
[Revised English Bible, 1 Chronicles 9:13-14,21]
The weight of a talent in Solomons time is difficult to estimate. By the first
century C.E., a Jewish silver talent was 43,620 grams.4 The number of talents
of gold that Solomon is said to have received annually 666 looks rather
magical. Many biblical numbers such as seven, ten, twelve, and forty can take
on extra-numerical significance; Abrahams payment for the gravesite is a
multiple of forty; in the New Testament Book of Revelation 13:11-18 a beast
rises from the earth and puts its number on all those who buy or sell, and
the number is 666.
Thus far in our brief survey of the Old Testaments account of both temple
taxes (paid to priests) and state taxes (paid to kings), you have observed that
these obligations were paid not only in precious metals but also in goods.
Precious metals were tendered by weight, and almost anything valuable,
useful, or collectible could serve as money. Coinage would not be
introduced anywhere until the middle of the sixth century B.C.E. Even an
advanced civilization like China used jewels, bullion, and even tools as
money. The Guanzi, or Book of Master Guan, attributed to a Chinese sage of
the middle of the first century B.C.E., tells how
the early kings put a value on things from the farthest
distance that were difficult to find. They saw pearls and jade
as superior money, gold as medium [-value] money, and
spades and knives as inferior money. You cannot wear money
but you can be warm; you cannot eat money but you can fill
your belly. The early kings amassed stores of wealth with
which they ruled the people, thereby bringing peace to the
world.5
The Guanzis reference to implements (spades and knives) as inferior
money that is, money of smaller denominations than jewels or gold is
borne out by examples of bronze knife and hoe coins from the fifth
century B.C.E. It is worth noting that this ancient use of tools as money is
reversed in our modern view of money as a tool.
Since Solomon was fiscally regulating trade by imposing levies on imported
goods, he may well have been setting monetary exchange rates: the
merchants rate for bullion mentioned in the Abraham and Ephron
narrative (trade, of course, would also have been carried on by barter).

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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.
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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

Coinage a trading convenience, but an ethical threat


Coinage fostered retail trading. In Politics, Aristotle writes on the usefulness
of coin, but also about its effect on the ethics of wealth-getting. Aristotle
regards coin as an ethical hazard:
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.
When the use of coin had once been discovered, out of the
barter of necessary articles arose the other art of wealthgetting, 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
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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 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 wealthgetting 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-gettingIn 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 limit8
As you can see from this passage, quoted from Reading 1-6, Aristotle rather
grudgingly concedes the necessity of international and retail trading of
necessary products, but he deplores the human desire for profit a desire
that is focused on coin.
Apparently, Aristotles ideal mode of trading would have been one where no
party makes a profit or sustains a loss. Cash would merely be a facilitating
agent in each transaction; at the close of business, every transactor has the
goods she or he needs while the money supply is still available for free
circulation through the system. What Aristotle appears to be afraid of is
monopoly, and particularly the cornering of the money. From two anecdotes
or case histories, of Thales and a Sicilian, that he recounts toward the end of
the passage, you can see that he tolerates state, but not individual,
monopolies.

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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.

Ibid., pages 648-649.

Josephus, Antiquities of the Jews, tr. R. Marcus, Loeb Classical Library (Cambridge,
Massachusetts: Harvard University Press, 1998) Book 14, paragraph 203.

Ibid., page 650.

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.

Humanist Issues in Commercial Practice

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

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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.

The art and science of wealth-getting


Thus, then, we have considered the art of wealth-getting which is
unnecessary, and why men want it; and also the necessary art of wealthgetting, which we have seen to be different from the other, and to be a
natural part of the art of managing a household, concerned with the
provision of food, not, however, like the former kind, unlimited, but having a
limit.
There are two sorts of wealth-getting, as I have said; one is a part of
household management, the other is retail trade: the former necessary and
honourable, while that which consists in exchange is justly censured; for it is
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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.

The story of Thales


It would be well also to collect the scattered stories of the ways in which
individuals have succeeded in amassing a fortune; for all this is useful to
persons who value the art of getting wealth. There is the anecdote of Thales
the Milesian and his financial device, which involves a principle of universal
application, but is attributed to him on account of his reputation for wisdom.
He was reproached for his poverty, which was supposed to show that
philosophy was of no use. According to the story, he knew by his skill in the
stars while it was yet winter that there would be a great harvest of olives in
the coming year; so, having a little money, he gave deposits for the use of all
the olive-presses in Chios and Miletus, which he hired at a low price because
no one bid against him. When the harvest-time came, and many were wanted
all at once and of a sudden, he let them out at any rate which he pleased, and
made a quantity of money. Thus he showed the world that philosophers can
easily be rich if they like, but that their ambition is of another sort. He is
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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.

The story of the Sicilian


There was a man of Sicily, who, having money deposited with him, bought
up all the iron from the iron mines; afterwards, when the merchants from
their various markets came to buy, he was the only seller, and without much
increasing the price he gained 200 per cent. Which when [the god] Dionysius
heard, he told him that he might take away his money, but that he must not
remain at Syracuse, for he thought that the man had discovered a way of
making money which was injurious to his own interests. He made the same
discovery as Thales; they both contrived to create a monopoly for
themselves. And statesmen as well ought to know these things; for a state is
often as much in want of money and of such devices for obtaining it as a
household, or even more so; hence some public men devote themselves
entirely to finance.

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

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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:
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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).
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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
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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

Parable of the talents


At this point in your reading of biblical texts, it may be useful to remember a
comment by the nineteenth-century German philosopher Friedrich
Nietzsche that the Bible sometimes argues with itself. For a good example,
read now how certain literal interpretations of Jesus thought-provoking,
argumentative observations about wealth are challenged by the parable of the
talents. (A parable is a story with an everyday setting and details designed to
illustrate a religious truth or moral lesson.):
A man going on a journeycalled his personal slaves and
handed his property over to them, giving to one five talents,
to another two, and to another one, to each according to his
ability, and then went away. Immediately, the one who had
received five talents put them to work and made five more, as
did the one who had two talents he made two more. But
he who had received one talent dug in the ground and hid his
masters money.
After a long time, the master of the slaves came and settled
accounts with them. The one who had received five talents
came forward with five other talents. Sir, he said, you gave
me five talents, and I have made five more talents. The
master said to him: Well done, good and trustworthy slave.
You have been trustworthy in a small matter. I will set you
over larger concerns. Share your masters prosperity. [The
one who had been entrusted with two talents showed he had
made two more, and was similarly commended.]

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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.

Jesus raises ethical issues of money


Jesus economic discourses consistently provoke thought about the use and
value of money. He recognizes that money is needed to live and to help
others to live, and at times also to make profoundly devotional gestures. He
commends a woman who comes to him while he is with his disciples and
anoints him with expensive ointment. The disciples object to what they see
as waste of money that could have been given to the poor (in John 12:5,
Judas Iscariot, the disciples treasurer, estimates the cost of the perfumed
ointment at three hundred denarii). But Jesus says the woman has performed
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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.

Parable of the Good Samaritan


This theme of added value is developed in the Good Samaritan parable,
which Jesus recounts as an answer to a lawyers trick question on the law of
loving ones neighbour as oneself [Leviticus 19:18; Luke 10:27]: The lawyers
question is Who is my neighbour? The parable tells how a Jew travelling
from Jerusalem to Jericho is beaten, robbed of his money and clothes, and
left half dead. A priest comes along, sees the victim and avoids him by
crossing the road; then a Levite (a temple officer) does likewise. Finally a
Samaritan comes along.
To Jews of Jesus time, Samaritans were religious outsiders, even heretics; the
priest and the Levite, like the lawyer whom Jesus is answering, are
coreligionists of the victim. The Samaritan pities the injured man, bathes his
wounds with expensive medications, transports him to an inn, and, when he
leaves, pays the innkeeper for the victims further keep and care:
Next day he produced two silver pieces and gave them to the
innkeeper, and said, look after him; and if you spend more, I
will repay you on my way back.
[Revised English Bible, Luke 10:25-37]
The narratives details carefully build the picture of contrasting behaviour,
and the crowning detail is the production of the two pieces of silver
probably two denarii and the verbal promissory note. Through feelings,
actions, and money, the Samaritan enacts the law that the priest and Levite
only preach: one might say he puts his money where their mouth is.

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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
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Reading 1-8 5

you, Simon? From whom do the kings of the earth exact


tribute or poll tax? From their citizens, or from the others?
When he replied, From the others, Jesus said to him, In
that case, the citizens are free. However, lest we should cause
offense to them, go to the sea and cast a hook, take the first
fish that comes up, and when you open its mouth you will
find a coin. Take that and give it to them for me and for
yourself.
[Matthew 17:24-27]
This story combines realism and myth. The realism is in the economic and
vocational details: Capernaum (where Matthew the disciple was called from
his tax-collecting table to follow Jesus) was a port of entry on the inland Sea
of Galilee. It was also on the boundary between two provinces or kingdoms,
where tax and customs collectors were at work.
The collectors here are professionally alert and honest: the sum they
require is exact, a half-shekel per man. Peter is a resident of Capernaum, and
answers to the local collector as a citizen would; he also was a fisherman by
trade, on the Sea of Galilee out of Capernaum, and so has the expertise to
catch a fish as instructed.
Notice again why the miracle is performed: to save the tax collectors from
embarrassment spare their sense of job-failure and to conform to
Jewish law even though Jesus is founding a new religion. The story illustrates
the humane use of money: the comfort and religious feelings of others are
worth procuring and spending a miraculous coin.
Those are the realistic details and, in narrative, as in advertising, realistic
(circumstantial) details persuade the reader or listener to accept the mythic
content. So Peter catches a fish and, just as Jesus has said, there is a coin in
its mouth the exact denomination (we are back to the realistic part again),
a shekel, to pay the tax for two men, Jesus and Peter. It is a miracle divine
provision but the flow chart and bookkeeping are exact.
The young Italian Renaissance artist, Masaccio (ca. 1410-1428), caught the
essence and process of this story in his painting The Tribute Money. This
brilliant three-phase scene simultaneously shows the tax collector accosting
Jesus and Peter (in mid-picture), Peter back at the shore collecting the coin
from the hooked fish (picture left), and Peter paying the collector outside the
temple (picture right). The money circulates across the painting, as in the
story.

Judas and the perversion of money


Lets now move a little further along the theme of moneys acquired value-inuse by looking at the corruption of wealth into blood money.
Whereas the widows mite incident and the Good Samaritan parable are New
Testament illustrations of a value-added effect of money when it is properly
6 Reading 1-8

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used, Judas betrayal of Jesus is presented as a terrible perversion of the


value-received contract.
Johns gospel portrays Judas as the disciples treasurer and a thief; he had
charge of the common purse and used to pilfer the money kept in it [Revised
English Bible, John 12:6]. Matthews account of the betrayal says he did it for
money, and it follows the money through chapters 26 and 27:
Then one of the twelve [disciples] the one called Judas
Iscariot went to the chief priests. What are you willing to
give me, he asked, if I hand him over to you? They agreed
to pay him thirty silver pieces, and from that moment he
looked for a chance to betray him. [Jesus said to the
disciples,] See, the hour is almost here, and The Man is
delivered up into mens hands. Get up, and let us go. My
betrayer is near. While he was still speaking, Judas, who was
one of the twelve, came with a great crowd from the chief
priests and the elders of the people, [armed] with swords and
clubs. The betrayer had given a sign, telling them, The one
whom I kiss is the man take him. Immediately he went
up to Jesus and said, Greetings, master! and kissed him. But
Jesus said to him, Friend, you are here. Then they came up,
laid hands on Jesus, and led him away.
[After the chief priests had handed Jesus over to Pilate,] then
Judas the traitor, seeing that Jesus had been condemned,
repented and took the thirty silver pieces to the chief priests
and elders of the people. I have sinned by betraying an
innocent man! he said. But they replied, How does that
concern us? That is your affair. Throwing down the silver
pieces toward the Most Holy Place, he withdrew and went
away and hanged himself. Picking up the silver pieces, the
chief priests said, It is unlawful to put this into the treasury,
for it is blood money. Therefore, after coming to an
agreement about it, they used the money to buy Potters Field
as a burying place for foreigners, and to this day that field is
known as The Field of Blood.
[Matthew 26:14-16,45-50; 27:3-8]

Thirty pieces of silver


Judas asks, and bargains for, a fee. The accounts in the gospels of Mark and
Luke say that Judas received money. However, Matthews narrative names
and stresses three times the infamous thirty pieces of silver. As
mentioned in Topic 1.4, the Bible has many magic numbers: three and
thirty are among them. Matthew does not say whether the payment was
Judas or the priests figure, but both sides agree on it. You have seen in the
Exodus passage on penalties and compensation that thirty shekels of silver
is the indemnity for the loss of use of a slave the price of a slaves life

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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

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This moral neutrality or indifference of currency is an aspect generally noted


by the modern economist, George Simmel:
The nature and effectiveness of money is not to be found
simply in the coin that I hold in my hand; its qualities are
invested in the social organizations and the supra-subjective
norms that make this coin a tool of endlessly diverse and
extensive uses despite its material limitations, its
insignificance and rigidity.3

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.

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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:

You strike me as not caring overmuch about money;


and that is generally so with men who have not made
their own fortune. Those who have are twice as fond
of their possessions as other people. They have the
same affection for the money they have earned that
poets have for their poems, or fathers for their
children: they not merely find it useful, as we all do,
but it means much to them as being of their own
creation. That makes them disagreeable company;
they have not a good word for anything but riches.

Cephalus: That is quite true.2


In the Politics excerpt on coinage and wealth-getting, which you read in
Reading 1-6, you also saw Aristotle censuring unnatural methods of
wealth-getting such as retail trade or, worst of all, usury. However, Aristotle
also says there is a necessary and honourable human activity that leads to
natural riches, and that natural riches and the natural art of wealth-getting
are part of the management of a household. This is where we can begin
to trace the origins of formal economics in womens work.
Up to this point, this module has largely been about men transacting,
teaching, and theorizing about money and values. Here is one more brief
incident from the New Testament; it has to do with the domestic work of
Martha and her sister Mary, who are adherents of Jesus:
While [he and his disciples] were on their way, Jesus came to
a village where a woman named Martha made him welcome.
She had a sister, Mary, who seated herself at the Lords feet
and stayed there listening to his words. Now Martha was
distracted by her many tasks, so she came to him and said,
Lord, do you not care that my sister has left me to get on
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Reading 1-9 1

with the work by myself? Tell her to come and give me a


hand. But the Lord answered, Martha, Martha, you are
fretting and fussing about so many things; only one thing is
necessary. Mary has chosen what is best; it shall not be taken
away from her.
[Revised English Bible, Luke 10: 38-42]
Because she has issued the invitation, Martha is bound by the rules of
hospitality to make her guests comfortable. There are at least thirteen guests,
and she obviously has much to do. Mary is caught up in listening to Jesus,
with the resulting picture of one woman busy in the world (much cumbered
about serving is the 1611 King James translations charming description of
Marthas necessary household busy-ness) while the other listens to spiritual
teaching.
Translators and commentators have a difficult time rendering and explaining
just what Jesus seems to be saying to Martha: Is he really telling her that her
devoted household work is less important than Marys devoted listening to
doctrine? (He may just be saying that Martha is being too kind to her guests
and making too many dishes for the meal.) The answer could be in a parable
he tells later in Lukes gospel, one of three in a sequence of illustrations
about losing and finding:
If a woman has ten silver coins and loses one of them, does
she not light the lamp, sweep out the house, and look in every
corner till she finds it? And when she does, she calls her
friends and neighbours together, and says, Rejoice with me!
I have found the coin that I lost. In the same way, I tell you,
there is joy among the angels of God over one sinner who
repents.
[Luke 15:8-10]
Here, domestic thrift and work the economy of the household are said
to bring satisfaction that is comparable to divine joy.
Considering these two passages from St. Lukes gospel together, lets look at
what message might be derived from them. Of the four gospel writers, Luke
is by far the one most interested in the place of women, in both social and
religious life. Of the three women in the two stories, two are fully engaged in
domestic duties. Without question, the ratio of women necessarily dedicated
to household work at the time probably was far higher than two to one. But
it is characteristic of Lukes narratives that one of the sisters determinedly
joins the men to learn (or to exercise?) this tantalisingly undefined one
thingnecessary. There is an implication that Mary has a sense of vocation
that is, of a calling, for all the male disciples literally were called. The
gospel author has Jesus authoritatively ratify her determination and her right,
at the very least, to be educated.

2 Reading 1-9

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Xenophon on household economics


At least one classical text views womens work in the home as a domestic
profession. The Greek author who deals with economics more
comprehensively than Plato, Aristotle, or any others of the era is Socrates
pupil, Xenophon (ca. 430-356 B.C.E.), in his Oeconomicus3 (ca. 360 B.C.E.).
The word oeconomicus is roughly derived from the Greek oikos, meaning house
or family, with a suffix meaning to regulate or manage, so that the English
terms economics and economy can be defined as the art or science of
managing a household, especially with regard to household expenses.4
In Xenophons writing, estate management is defined as a branch of
knowledge (I.1), and is discussed in two dialogues: the first one between
Socrates and a landowner, Critobolus, the second between Socrates and
Ischomachus, whom Socrates characterizes as a gentleman
someone who is both beautiful and good (VII:13-17). Ischomachus is
married, and has made his wife an equal partner in the running of their estate.
If we are to believe Aristotle, such a partnership was unusual in classical
Greece: writing on household management, he sees it as a male province
because the slave has no deliberative [rational] faculty at all; the woman has,
but it is without authority.5 Aristotle does not consider educating women.
Xenophons Socrates-Ischomachus dialogue tells how Ischomachus
introduces his wife into economic partnership in their estate.
Read the next three paragraphs of this reading to guide you on what to look
for in the Oeconomicus extract in Reading 1-10. Then study Reading 1-10.
When you have finished reading it, return to this page and reread these three
paragraphs.
In these Oeconomicus passages, Ischomachus and his wife can be seen as
partners in a jointly-owned company, operating their farm property and
household: I go on paying everything I have into the common fund; and
you deposited into it everything you brought with you [into the marriage,
presumably her dowry]. In the latter part of Oeconomicus, Ischomachus
explains that his wifes capabilities at home give him time to go to business in
the market and he speaks of his knowledge of the international grain trade
and of private enterprises. (Ischomachus estate produces textiles, leather,
grain, olives, wine, and building materials.) Though the home operation
applies principles of organization, comfort, and aesthetics, it appears there is
surplus produce to trade. The female housekeeper (a servant) is given a
share of our success.
As you observed previously, Aristotle has nothing to say about educating
women, even though he concedes that they have a deliberative faculty.
And he sees household and state management as a male preserve. So it is
striking that Xenophon has Ischomachus regarding his wife as: 1. initially
contributing to the familys capital (1-4:1); 2. having equal powers of
memory and concern (1-4:2) that is, intellect; and 3. capable of proving
to be better than [he is] and [making him her] servant (1-4:3) in the
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Reading 1-9 3

household business. The views expressed through Ischomachus are morally


and economically revolutionary for the age.
You will have noticed that Ischomachus wife generally displays alertness in
the discussion, not to mention tolerance of Ischomachus often rather
patronizing tone, and you should remember that Ischomachus voice is also
Xenophons, explaining his theory of household management to his readers.
And it is a revolutionary theory for its time, arguing that in economic affairs
women should have at least equal status with men. Whereas Aristotle does
not consider educating women, it is clear from Xenophons sentence, When
wehad made an inventory of each thing, (1-4:4) that his chatelaine
can read and write.

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

Plato, The Republic, Chapter VI, II.368, page 55.

Ibid., Chapter I, I.330, page 6.

Xenophon, Oeconomicus, tr. Sarah B. Pomeroy (Oxford: Clarendon Press, 1995),


pages 141-163.

The Compact Edition of the Oxford English Dictionary, Volume 1, page 831.

Aristotle, Politics, Book 1, Chapter 9, 1260a.10.

Humanist Issues in Commercial Practice

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
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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]

My wife replied, It would surprise me if the leaders activities did not


apply more to you than to me. For if you were not concerned that supplies
2 Reading 1-10

Humanist Issues in Commercial Practice

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]

I said to my wife: Sailors on ships which are comparatively small find


places for their equipment, and even when they are violently tossed about
they still keep them in order, and even when they are terrified they can still
find what they need to get. What about us? We have large storerooms in the
house so that we can keep things separately in them, and the house rests on a
firm foundation. Wouldnt it be sheer stupidity on our part if we dont find
some good place where each thing can be easily found? I have already told
you that it is good for equipment to be arranged in order and that it is easy to
find a place in the house that is suitable for each piece of it. How beautiful it
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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

Humanist Issues in Commercial Practice

the foresight both to avoid being punished by us for negligence and to


consider how, by pleasing us in any way, she might be rewarded by us in
return. We taught her to be loyal to us by giving her a share of our joy when
we were happy, and if we had any trouble, we called on her to share it too.
We trained her to be eager to improve the estate by taking her into our
confidence and by giving her a share in our success. We instilled a sense of
justice in her by giving more honour to the just than to the unjust, and
showing her that the just live lives that are richer and better suited to a free
citizen than the unjust. And so we appointed her to this post.
He went on: Besides all this, Socrates, I told my wife that there would be no
point in all these arrangements unless she personally was concerned
constantly to maintain the order that we had established.
Itold my wife to consider herself as guardian of the household laws,
and to examine the equipment whenever she saw fit.
She said it would have been more difficult for her if my instructions had
been that she should neglect her possessions than if she were required to be
concerned about her own goods. For, she added, just as it seems natural
for a decent woman to be concerned about her children and not to neglect
them, so too, it gives a decent woman more happiness to be concerned about
her own possessions, inasmuch as they belong to her, rather than to neglect
them. [pages 153-159]

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.

Humanist Issues in Commercial Practice

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

In Aquinas argument that money has no life except in exchange-use (riches


are valuable because they can be expended, for this is their use), you can
see how he follows Aristotles idea, in Politics, that money is simply a medium
for measuring demand and facilitating transactions. And anyone virtuously
engaging in acts of liberality and magnificence [generosity and
munificence] obviously needs money to do so, as Aristotle also says: It is
difficult, if not impossible, to engage in noble enterprises without money to
spend on them.2
When Aquinas writes about justice in Summa Theologica, he discusses it as one
of what Christian philosophers called the Cardinal Virtues. There were seven
of these virtues. Four of them, designated by the pre-Christian Aristotle in
Nichomachean Ethics as natural virtues, were prudence, justice, fortitude, and
temperance. To these, the Christian philosophers added the theological
virtues of faith, hope, and charity. There is also another virtue that includes
the seven just listed: Aquinas refers to it as magnificence, which would be
rendered in Modern English as munificence or magnanimity.
Aquinas other observation about wealth that it is unstable carries over
from chapter 29 of Summa Contra Gentiles, where he argues that the highest
good for man should be what is most enduring, for an endless duration of
the good is naturally desired.3
Here he has in mind biblical passages such as Possessions are impermanent,
and no treasure lasts for generations [Proverbs 27:24], and Jesus instruction
in the Sermon on the Mount:
Do not accumulate wealth for yourselves on earth, where
both moth and rust consume, and where thieves break in and
steal; but store away for yourselves heavenly treasure, where
moth and rust do not consume, and where thieves do not
break in and steal. Where your wealth lies, there also will be
your heart.
[Matthew 6:19-21]

Money is merely a medium


This thought gains increasing validity during the growth of commerce and
capitalism in the Middle Ages as coinage and paper come to represent rather
than embody their printed value. Here Aquinas follows Aristotles line in
Politics, that money is simply a medium for measuring demand and facilitating
exchange. Exchanging money for the support of the body or for some
similar purpose is in itself an exercise that underlines the ephemeral nature
of money. And attempting to prolong possession of wealth by hoarding
things is to lose their chief advantage, which consists in their being spent.
Since acts of virtue lead to happiness, and liberality and munificence are acts
of virtue, it follows that spending in good causes brings praise to the donor,
and happiness to both recipient and giver. Aquinas is not arguing that money
2 Reading 2-2

Humanist Issues in Commercial Practice

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.

Moral and economic theories about money come together


In this short passage from Summa Contra Gentiles on the instability of wealth,
you can begin to see how one of the great minds of the Middle Ages
develops a synthesis of classical and biblical monetary ideas with the realities
of the world of commerce. Economic matters do have a place in the
theological issue of mans supreme good. Aquinas further develops this
synthesis of moral philosophy with economic theory in Summa Theologica. In
that work, he writes about concerns of justice and injustice as human beings
transact with one another: matters of property, trading, and a fair price.
As a member of the Dominican monastic order, Aquinas had taken a vow of
poverty. In chapter 133 of Summa Contra Gentiles, In What Way Poverty Is
Good, he had suggested that poverty is praiseworthy according as it frees
man from the vices in which some are involved through riches, and by
removing preoccupations with wealth, poverty is useful to those disposed
to busy themselves with better things.4
But he also concedes that external riches are necessary for the good of
virtue, since by them we support our body and give assistance to other
people5 even monks, and students, need food and shelter.
Then, posing the question Does happiness require external goods
[possessions]? in Summa Theologica, he answers,
External goods are required for the imperfect happiness open
to us in this life, not that they lie at the heart of happiness, yet
they are tools to serve happiness which lies, says Aristotle, in
the activity of virtue. Ownership of [external goods] is
required in order to lead a life of contemplative virtue, and of
active virtue as well, particularly the last, which calls for many
more [external goods].6
This passage suggests that Aquinas has no objection to the acquisition and
ownership of wealth. But in various places, he couples the privilege of
ownership with the obligation of benevolent use; for example,
Earthly goods which a man has from God are his, as far as
the ownership of them goes; [but] not so with the use of
them, which he must not keep to himself, but share with
others, who can be supported out of what he has over and
above his own needs.7
Here there is an implication that surplus wealth should be distributed, rather
than saved for times of shortage.
Humanist Issues in Commercial Practice

Reading 2-2 3

Distributive and commutative justice


The arguments just given from the Summa Theologica come in the section of
the treatise devoted to a discussion of justice. They deal with what is termed
distributive justice, which is the process of trying to rectify the disparities
between the Haves and Have-Nots in society.
Aquinas arguments were not merely abstract, for they influenced the
medieval Catholic Churchs social thinking about the poor. Medieval Church
law of the twelfth century and later required parishioners to contribute to the
relief of the poor in every parish. The Church specified that parishioners
should pay their tithes (one-tenth of income) to the Church and then donate
to the poor out of the remaining nine-tenths. The tithe money was collected
by the parish priests, who in turn were ordered to exercise hospitality, that
is, to feed the hungry.
In addition, the medieval churches connections with their local artisans and
merchants guilds meant that guild members were encouraged to act as
corporate donors to organized charitable work, and a common form of
medieval charity was to leave [in a will] an endowment for the poor of the
parish under the administration of a parish priest.8
As one scholar comments, I am inclined to think that, taken all in all, the
poor were better looked afterin the thirteenth century than in any
subsequent century until the present one. The only reservation we need make
is that perhaps that is not saying much.9
In the interests of balance, you should keep in mind the medieval Churchs
attempts at social betterment when we turn, in Topic 2.3, to look more
closely at the economic abuses by some of its officers.

Sins of fraud and usury


Still on the topic of justice in Summa Theologica, Aquinas turns to an ethical
discussion of sins involved in the commerce of buying, selling, and moneylending:
We must now consider sins that arise in the course of
voluntary transactions. The first of these is fraud, which is
committed in the course of buying and selling (Question 77);
the second is usury, which occurs in loans (Question 78).
In relation to the first sin, there are four points of inquiry:
1. Can selling be unjust by reason of the price, or in other
words is one entitled to sell something for more than it is
worth?
2. Can selling become unjust on account of some flaw in the
thing sold?
3. Is the seller bound to disclose any defect in the thing
sold?

4 Reading 2-2

Humanist Issues in Commercial Practice

4. Is one entitled to make profits by selling something for


more than one had oneself paid to buy it?10
You should now study Reading 2-3, which is an excerpt from Summa
Theologica, where Aquinas takes up questions related to the sin of fraud in the
course of buying and selling the issue of a fair or just price which was a
critically important theme of discussion in those times. As you read, notice
that in the openings in each of these enquiries (The First Point, The
Second Point, and so on) Aquinas presents a deliberately persuasive but
intellectually dishonest argument. This is called a casuistic argument. The
Reply in each case is Aquinas response to the casuistic view. His method
is to argue on both sides of every question.
As you study Reading 2-3 on fraud, you should notice that each side of the
argument about fair pricing cites authority the Old and New Testaments,
classical authors, or historical Church authorities such as Augustine. These
citations show that medieval thinkers were applying religious principles to the
practicalities of justice in the area of human commerce.
Aquinas introduces this section by saying, We must now consider sins that
arise in the course of voluntary transactions [emphasis added], and in his
Replies he makes statements such as, In all these cases a person who
makes an unjust sale not only commits a sin, but is bound to make
restitution.11 Here he designates a spiritual trespass and prescribes a material
compensation. Note the practicality and the common-sense logic of his
replies.
Aquinas method of arguing on both sides is called dialectic an important
term that you will encounter again when you study Karl Marx in Module 8 of
this course. In this context of arguing over the theory of setting a fair price,
the both-sides debate is in itself a form of intellectual exchange or transaction
of views.
Another term you should become familiar with is commutative. The Latin
word for to exchange is commutare, so it is commonly said that, in this
section of Summa Theologica dealing with aspects of commercial exchange,
Aquinas is dealing with commutative justice the principles that regulate
the relationships and obligations between individuals, as, for example, in the
exchange of goods. Commutative justice requires proportionate equality in
dealings with others (giving to each his or her due).
As you read Aquinas arguments on both sides, you should remember that
the Reply sections are Aquinas way of getting in the last word. And you
should also try to see that even if the theological elements were removed
from Aquinas arguments, basic ethical principles of modern economic and
business practice are being set out principles based on justice.

Humanist Issues in Commercial Practice

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

Humanist Issues in Commercial Practice

In his conclusions on usury (last three paragraphs of Reading 2-4), Aquinas


returns to a clear condemnation of the sin of usury and of how the
business of even giving ones money to a known lender to lend out is an
occasion to sin.

The marketplace secular and religious trading


What is interesting, in passages like these, is the picture of medieval traders
sellers and buyers, lenders and borrowers finding ways of getting
around the religious prohibitions of interest-taking. It is also impressive that
this monk, writing his massive treatise on what was known about God and
man, could be so perceptive about the ways of the marketplace.
Moreover, in his writings on moral philosophy, Aquinas deals not only with
the secular marketplace but also with the commercializing of Church
sacraments and appointments. The practice of buying and selling benefices
(Church appointments such as parish priesthoods with guaranteed income
and pleasant living conditions) was called simony. This word had its origins
in the story of Simon Magus, who in the New Testament [Acts 28:18-20]
offers the Christian apostles money if they will give him their power of
healing.
In Summa Theologica 2.2, Question 100, Aquinas considers whether it is
lawful to take money for the sacraments; or for religious actions; or for
things connected with [the spiritual]. He argues,
A spiritual thing is notfor buying and selling, and for three
reasons. First, because a spiritual thing cannot be appraised at
any earthly price. Secondly, a thing is not for sale if the
seller is not the owner. Ecclesiastical superiors are not [the]
owners but the guardians of spiritual matters. Thirdly, sale
strikes at the source of spiritual matters, since they flow from
the freely-giving will of God. Our Lord tells us, Freely you have
received, freely give [Matthew 10:8].
And so, by buying or selling a spiritual thing a man treats
God and divine matters with irreverence, and consequently
commits a sin of irreligion. By selling a gift of the Holy Spirit
a man declares, in a way, that he is the owner of that gift; this
is heretical.13
In the next extract from Question 100, Aquinas argues both sides of the
issue again, as he discusses the question of whether Abraham committed
simony by purchasing a sacramental property, namely his wife Sarahs
gravesite (Topic 1.1). Notice how, with a display of fine hair-splitting,
Aquinas absolves both Abraham and Ephron of simony, a church offence
that certainly hadnt been invented in Abrahams lifetime. (As you have just
learned, simony is named after a New Testament figure.) Ephron sinnedif
he intended [in the first place] to accept the money. His intention cannot be
proven: Abraham insisted on paying. So Ephron is guilty not of simony but
Humanist Issues in Commercial Practice

Reading 2-2 7

of overcharging (a breach of commutative justice). Abraham is in the clear all


along, for the land is not consecrated as a gravesite until after the purchase.
Aquinas continues:
We have no authority for supposing that the cave which
Abraham bought for a burial-place was consecrated ground,
and so he could buy the site, in order to turn it into a
cemetery, just as now it would be lawful to buy an ordinary
field as a site for a cemetery or even a church. Nevertheless,
since even among the pagans burial-grounds were looked on
as religious, Ephron sinned in selling if he intended to accept
the money as payment for a burial-place. However Abraham
did not sin in buying, because he merely intended to purchase
an ordinary plot of ground. Even now it is legitimate in the
case of necessity to sell or buy land on which a church has
stood, as we have also said with regard to what has been
mentioned about the material of sacred vessels.14

Church pardoners join the marketplace


One of the most blatant simony practices it would eventually be one of
the motivators of Martin Luthers Reformation was the selling of
indulgences, or certificates of pardon. In Catholic doctrine, forgiveness of
sins requires contrition (in the heart), confession (by the mouth), and also
some act of penance such as giving alms that is, offerings to the
church, which would use the money for worthy causes such as feeding the
poor or maintaining hospitals. When these three stages of contrition,
confession, and penance were completed, the priest could forgive the
trespasser. But the process came to be abused by short-cutting. Professional
fund-raisers, called pardoners, were licensed by Rome or by dioceses to
travel from parish church to parish church literally selling certificates or
tokens of forgiveness. Obviously this practice drew money to the central
administration in Rome and away from parishes, and especially hindered the
pastoral work in poorer church districts.
Many of Aquinas contemporaries, and many later critics, were less moderate
than Aquinas in their attacks on simony. In his epic allegorical poem, The
Divine Comedy (really a drama rather than the modern sense of the word
comedy), completed in 1321, the Italian writer Dante describes a journey
through the Inferno (Hell), Purgatory, and Paradise. In each place he
encounters characters from myth, history, and contemporary society who
represent virtues or sins and who get their just rewards or otherwise.
Thus, Dante envisions simoniacs (those who committed simony) in the
eighth (next-to-lowest) circle of Hell, where they are wedged upside-down in
crevices and burn eternally.15
The English poet, Geoffrey Chaucer (ca. 1343-1400), himself an admirer of
Dante, satirizes indulgence sellers in one of his Canterbury Tales, where a vain
and corrupt Pardoner outlines all the tricks of the trade. Ironically, this

8 Reading 2-2

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pardoners invariable sermon-text when he preaches is Radix malorum est


cupiditas or the love of money is the root of evil. [1 Timothy 6:10].
Chaucers style of writing, which subjects the misbehaviour of individuals,
society, or institutions to ridicule, is known as satire. Satire often employs
irony, which is saying something but meaning its opposite. You will meet the
style of satire in the works of Thomas More (Topic 2.4), Bernard Mandeville
(Topic 3.5), Jonathan Swift (Topic 5.3) in his satirical solution to the Irish
Problem, and in many of Charles Dickens works. These social observers
were the forerunners of modern political cartoonists.

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.

Aristotle, The Ethics of Aristotle, Book 4, page 126.

St. Thomas Aquinas, Summa Contra Gentiles, Part 1, Chapter 29, page 116.

Ibid., Part 2, Chapter 133, page 178.

Ibid., page 177.

St. Thomas Aquinas, Summa Theologica (Blackfriars Edition, London: Eyre & Spottiswoode;
New York: McGraw-Hill Book Co., 1964), 1-2, Question 4, Article 7.

Ibid., 2-2, Question 32, Article 5.

Brian Tierney, Medieval Poor Law (Berkeley and Los Angeles: University of California Press,
1959), page 97.

Ibid., page 109.

10

St. Thomas Aquinas, Summa Theologica, 2-2, Question 77, Article 1.

11

Ibid., Article 2.

12

Ibid., Question 78, Article 1.

13

Ibid., Question 100.

14

Ibid.

Humanist Issues in Commercial Practice

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.

Humanist Issues in Commercial Practice

READING 2-3
Thomas Aquinas on fraud
Question 77. Fraud committed in the course of buying and selling

Article 1. Is anybody entitled to sell something for more than it is


worth?
THE FIRST POINT: 1. One would seem to be entitled to sell something for
more than it is worth. For what is just in the transactions of ordinary life is
determined by the laws of the land. But the [commercial] Code allows buyers
and sellers to deceive each other this occurs when the seller sells
something for more and the buyer buys for less than it is worth. One is,
therefore, entitled to sell something for more than it is worth.
REPLY: To practise fraud so as to sell something for more than its just price
is an outright sin in so far as one is deceiving ones neighbour to his
detriment. This is why Cicero declares, Contracts are to be free of lies: the seller is
not to plant a sham-bidder or the buyer somebody who undercuts the sale price.
Granted, however, that there is no fraud, there are two ways of looking at a
contract of sale. If we look at it first of all as it is in itself, we can say that
such a transaction was introduced for the common benefit of both parties, in
so far as each one needs something which the other has, as Aristotle explains.
But what is equally useful to both should not involve more of a burden for
one than for the other and any contract between two parties should,
therefore, be based on an equality of material exchange. But the value of
consumer products is measured by the price given, which as Aristotle
pointed out, is what coinage was invented for. It follows that the balance of
justice is upset if either the price exceeds the value of the goods in question
or the thing exceeds the price. To sell for more or to buy for less than a thing
is worth is, therefore, unjust and illicit in itself.
The other way in which we can look at a contract of sale is in so far as it
happens to bring benefit to one party at the expense of the other, as in the
case where one badly needs to get hold of something and the other is put out
by not having it. In such a case the estimation of the just price will have to
take into account not merely the commodity to be sold but also the loss
which the seller incurs in selling it. The commodity can here be sold for more
than it is worth in itself though not for more than it is worth to the
possessor.
If, on the other hand, a buyer derives great benefit from a transaction
without the seller suffering any loss as a result of relinquishing his property,
then the latter is not entitled to charge more. This is because the surplus
value that accrues to the other is due not to the seller but to the buyers
situation: nobody is entitled to sell another what is not his own though he is
Humanist Issues in Commercial Practice

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

Humanist Issues in Commercial Practice

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.

Humanist Issues in Commercial Practice

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

Humanist Issues in Commercial Practice

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

Article 1. Is it a sin to make a charge for lending money?


REPLY: 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.
Money, however, according to Aristotle, was invented chiefly for exchanges
to be made, so that the prime and proper use of money is its use and
disbursement in the way of ordinary transactions. It follows that it is in
principle wrong to make a charge for money lent, which is what usury
consists in. Similarly a man is just as much bound to restore money earned in
this way as he is to make restitution for any other ill-gotten gains.
The Jews were forbidden to lend upon interest to their brothers, that is to say,
to their fellow Jews. What we are meant to understand by this is that lending
upon interest to any man is wrong in itself, in so far as we ought to treat
every man as our brother and neighbour, especially in the epoch of the
Gospel to which we are all called.
The civil law leaves certain sins unpunished to accommodate imperfect men
who would be severely disadvantaged if all sins were strictly prohibited by
suitable sanctions. Human law, therefore, allows the taking of interest, not
because it deems this to be just but because to do otherwise would impose
undue restrictions on many people.
A man is not always bound to make a loan to another, and it is to this extent
that lending is included amongst the [Bibles] counsels. Yet a man is
prohibited by way of precept from making a profit out of such a loan.

Article 2. Is one entitled to seek any other compensation for lending


money?
REPLY: Somebody who makes a loan is within his rights to settle terms of
compensation for the loss of any advantage which he is entitled to enjoy, for
this does not amount to selling the use of money, but is a question of
avoiding loss. And it can happen that the borrower avoids a greater loss
thereby than that incurred by the lender, in which case the borrower finances
the others loss out of his own advantage.

Humanist Issues in Commercial Practice

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

Humanist Issues in Commercial Practice

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

Humanist Issues in Commercial Practice

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

Humanist Issues in Commercial Practice

was beginning to turn from Should it be allowed? to an issue of what rates


should actually be charged.

Luther on usury and profiteering


Martin Luther (1483-1546) was an Augustinian monk who had become a
priest, doctor of theology, and university professor. He taught biblical
exegesis (interpretation) at the University of Wittenberg in Germany.
On the eve of All Saints Day in 1517, in a historically famous (although
perhaps legendary) gesture, he publicly posted his Ninety-Five Theses on
the door of the castle church in the city. The theses (or propositions for
discussion) were his protest against what he saw as the Roman Catholic
Churchs economic and other abuses; they constituted an invitation to
theological, public debate about those abuses particularly the selling of
indulgences (Topic 2.2). The incident that triggered Luthers call for reform
was the egregious salesmanship of a friar named John Tetzel (not unlike
Chaucers Pardoner), who was travelling through Germany selling
indulgences to finance the building of St. Peters in Rome. As Luther
described it,
St. Peter of Rome must now go through the whole world
begging for the building of his church, gathering great heaps
of alms for Gods sake and paying for themwith
indulgences.3
Along with this abuse, Luther also opposed the Churchs toleration of and
he alleged its profiting from interest charges.
From before 1520, Luther had written pamphlets and sermons against usury
and the Catholic Churchs institutional involvement in the practice. The
Church doctrinally considered as usury any monetary profit that flowed from
any source except labour. Yet the Church itself, through its central
administration in Rome and through its bishoprics, actually lent out money
and competed in this sphere with the banking companies that were rising in
Europe. In the fifteenth and sixteenth centuries, successive papal councils
(called Diets) tried to eliminate or at least regulate the Churchs lending
practices, but with little effect.
Many preachers who followed Luther in the Reformation movement and the
establishment of the Protestant Church found the Catholic Churchs
involvement in usury an irresistible target. There are numerous instances of
Protestant clergy preaching or writing that, because usury was forbidden in
Deuteronomy (Topic 1.3), all debtors should withhold the interest, and
sometimes even the principal. From Topic 1.3, you recall that Plato too, in
his Laws,4 had suggested that borrowers should be permitted to withhold
both interest and principal.
Luther was frequently asked his opinion of other clergys hot-headed
counselling; here is part of one of his replies, in a letter to the Chancellor of
the kingdom of Saxony:
Humanist Issues in Commercial Practice

Reading 2-5 3

To begin with, it is true that lending money at interestis


un-Christian. The best and only way to help here is to
abolish the practice altogether. Dr. Strauss [author of a
treatise against usury] does not do justice to the problem,
however. Hedoes not sufficiently deal with [the element of]
risk, which is the only excuse for this business.
The most dangerous point in this booklet, however, is
Strausss teaching that the debtor ought not to pay the
interest to the usurious creditor for then he would be
agreeing with the usurious creditor and would sin along with
him. This is not right. For the debtor has acted correctly, and
is free of sin, if he tells the creditor that [the transaction] is
usury.
There is not enough time now to show what the [civil
authorities] should do to abolish the lending of money at
interest, for the [practice] varies greatly from one territorial
state to the other, so that the matter cannot be settled [at one
stroke of the pen]. In the meantime people should be
encouraged to endure this wrong in a Christian way for
awhile.5

Power and influence of the bankers


You can understand from this passage that Luther is unsure of what is to be
done about the business practices going on around him. Medieval theology
was finding it difficult to cope with the realities of peasant agricultural
economies changing into early capitalist economies, which required capital.
Capital in turn required secure and profitable investment conditions.
The most spectacular investment in Luthers lifetime was the money lent to
the Holy Roman Emperor by the German banking family, the Fuggers, who
controlled more capital than any other bankers in Europe. In 1356, the Holy
Roman Empire, which was a consortium of the Germanic principalities of
central Europe, had assigned the right of electing its Emperor to seven
princes and three archbishops. In 1438, the Archduke of Austria was elected
Emperor. His family, the Habsburgs, were with one exception consistently
re-elected from 1438 until 1806. One of their methods of ensuring reelection was bribing the ten Electors.
The Emperor in Luthers time was Charles V (reigned 1519-1556), whose
vastly expensive election campaign was funded by loans at interest
from the banker Jakob Fugger.
Charles V was chronically short of funds, and Fugger thereafter kept
reminding him of the obligation. In reforming the Catholic Church in
Germany, Luther himself called on the assistance of Germanys princes,
thereby inviting the German state to recognize the new faith. Consequently,
as the titular head of a Protestant Church and indebted to bankers, Charles V
4 Reading 2-5

Humanist Issues in Commercial Practice

could be embarrassed if that church antagonized his creditors by protesting


too vigorously against interest-taking.
So you can see that while Luther writes lending money at interest is unChristian, he also has to acknowledge the economic and political reality that
the practice of lending varies greatly from one territorial state to the other.
Like Bishop Pecock, the English near-apologist for usury, Luther wishes for
a clear-cut definition of its practice.

The root of all evil and the prospect of price control


In his essay On Trade and Usury (1524), Luther begins by quoting, like
Chaucers Pardoner, a saying of St. Paul, The love of money is the root of
all evil [1 Timothy 6:10]. On trade practices, Luthers written opinions often
sound as if they are being delivered straight from the pulpit (you will hear
something of the same thunderous tone when you read Karl Marx in
Module 8):
Among themselves the merchants have a common rule which
is their chief maxim and the basis of all their sharp practices,
where they say: I may sell my goods as dear as I can. They
think this is their right. Thus occasion is given for avarice,
and every window and door to hell is opened. What else does
it mean but this: I care nothing about my neighbor; so long
as I have my profit and satisfy my greed, of what concern is it
to me if it injures my neighbor in ten ways at once? There
you see how shamelessly this maxim flies squarely in the face
not only of Christian love but also of natural law. How can
there be anything good then in trade? How can it be without
sin when such injustice is the chief maxim and rule of the
whole business? On such a basis trade can be nothing but
robbing and stealing the property of others.6
Luther also suggests that, if prices cannot be governed by the individual
merchants conscience, then state price controls should be imposed. As you
read the following passage, youll be reminded by the biblical quotation that
this is a theologian discoursing on trade and fair pricing:
You ask, then, How dear may I sell? How am I to arrive at
what is fair and right so I do not take increase from my
neighbor or overcharge him? Answer: That is something
that will never be governed either by writing or speaking; nor
has anyone ever undertaken to fix the value of every
commodity, and to raise or lower prices accordingly. The
reason is this: wares are not all alike; one is transported a
greater distance than another and one involves greater outlay
than another.
In this respect, therefore, everything is and must remain
uncertain, and no fixed determination can be made, any more
than one can designate a certain city as the place from which
all wares are to be brought, or establish a definite cost price
Humanist Issues in Commercial Practice

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

Humanist Issues in Commercial Practice

commodity for that purpose. Even the imperial and secular


laws forbid this; they call it monopolia, i.e., transactions for
selfish profiteering, which are not to be tolerated in country
or city. Princes and lords would punish it and put a stop to it
if they really wanted to do their duty. For such merchants act
as if Gods creatures and Gods goods were created and given
for them alone, as if they could take them from others and set
on them whatever price they chose.8
Here is another piece of selfish profiteering: Three or four
merchants have in their control one or two kinds of goods
which others do not have, or do not have for sale. When
these men see that the goods are valuable and are advancing
in price all the time because of war or some disaster, they join
forces and let it be known to others that the goods are much
in demand, and that not many have them for sale. If they find
any who have these goods for sale, they set up a dummy to
buy up all such goods. When they have cornered the supply,
they draw up an agreement to this effect: since there are no
more of these goods to be had, we will hold them at such and
such a price, and whoever sells cheaper shall forfeit so and so
much.9

Luther on the time payment plan


Luthers strictures give a vivid picture of commercial practices in his time, a
time when the secular and religious economies and politics of Europe were
radically changing. He sees or hears about perceived abuses everywhere, and
tells about financial arrangements which were devised to get around the
disapproval of both the Catholic and Protestant churches. One of these
practices was the time-payment contract. Earlier, in his analysis of usury
(Reading 2-4), Aquinas had written that the taking of an extra charge for time
payments in retail sales was usury. Luther takes the same view:
There are some who have no conscientious scruples against
selling their goods on time and credit for a higher price than
if they were sold for cash. Indeed, there are some who will
sell nothing for cash but everything on time, so they can
make large profits on it. Observe that this way of dealing
which is grossly contrary to Gods word, contrary to reason
and every sense of justice, and springs from sheer wantonness
and greed is a sin against ones neighbor; for it does not
consider his loss, but robs and steals from him that which is
his. The seller is not trying to make a modest living, but to
satisfy his lust for profits. According to divine law he should
not sell his goods at a higher price on the time payment plan
than for cash.10
When Luther says that the practice just described is not according to divine
law, the law he means is from the Old Testament: You must not charge
your [fellow countryman] interest on a loan, either by deducting it in advance
Humanist Issues in Commercial Practice

Reading 2-5 7

from the capital sum, or by adding it on repayment. Do not deduct interest


when advancing him money, or add interest to the payment due for food
supplied on credit. [Leviticus 25:36-37]. The difference between the cash
and on-credit prices in the process Luther describes is actually a form of
usury.

Human ingenuity practises usury by other means


Usury is still the subject of the second half of Luthers 1524 essay On Trade
and Usury. The most interesting parts of the interest-taking segment are
Luthers explanations of how usury was ingeniously disguised by elaborate
contracts.
One such device to get around usury, which he criticises at length, was the
Zinskauf. In modern usage the German word Zins translates as tax or
interest; it derives from Latin census for when Old Testament kings and
the later Roman occupiers of Palestine intended to levy tax, they usually
conducted a census (Topic 1.4). Kauf means purchase. One of Luthers
modern editors, James Atkinson, gives a succinct explanation of how the
Zinskauf process circumvented the prohibition against interest-taking:
The practice stems from the medieval transaction whereby a
feudal landlord turned over a piece of land as a fief [a tenure
of land] in perpetuity in return for a specified annual return in
the form of livestock or produce called a Rente. From the
landlords standpoint this contractual arrangement was a
Rentenkauf (the purchase of a rent). In the course of time, as
properties other than acreage came to be the chief security in
the transaction, and as money became the chief and
ultimately the sole factor in the transaction, the terms Zins
(literally, interest) and Zinskauf (literally, purchase of
interest) were used interchangeably with Rente and
Rentenkauf. Under these circumstances it became increasingly
important to make a theological distinction between this type
of contract and an interest-bearing loan, which was
universally condemned as usury. According to this distinction
the transaction came to be regarded as a sale (Kauf ) rather
than as a loan, and the Zins or Rente as a delayed cash
payment rather than as interest on a loan. The creditor, then,
was one who purchased a fixed and regular income or the
right thereto, and the debtor was one who sold (for money or
property) such income. This interpretation exempted the
Zinskauf from the ban on usury.11
In On Trade and Usury, Luther is condemning the Zinskauf because it was
a mere paper relationship between the pretended landlord and tenant. As
you will learn in Module 3, the medieval feudal system fostered mutual
human obligations between classes such as landholders and tenants. By
adopting fictional landlord and tenant roles, the Zinskauf participants are
repudiating their real selves, who are the fellow countrymen of the Old
Testament rule on usury.
8 Reading 2-5

Humanist Issues in Commercial Practice

The payment Zins involved in this kind of arrangement, or scheme as


Luther saw it, was to be seen as a tribute, and not interest, paid by the debtor
(the modern mortgage payment is a partial but not exact analogy). What the
debtor paid was to be seen as income to the creditor, and not interest. The
purpose was to disguise a loan contract as a sale contract, and in fact, by
turning over the land the creditor buys an income or annuity, paid by the
debtor. Luther saw through the process, recognizing that the buyer [is] the
receiver of zinss:
Let us now devote our attention to the matter of buying, in
particular the zinss kauff since this involves a pretty pretense
by which a man can seemingly without sin burden
others and get rich without worry or effort. In the other ways
of dealing each person obviously knows for himself if he is
selling too dear, offering inferior wares, securing a legacy by
fraud, or trafficking in counterfeit goods. But this slippery
and newly-invented business very frequently makes itself an
upright and loyal protector of damnable greed and usury.
Second. Although the zinss contract is now established as a
proper and admissible operation, it is nevertheless an odious
and hateful practice for many reasons. In the first place, it is a
new and slippery invention, especially in these recent perilous
times when nothing good is invented any more, and the
thoughts and minds of all men are bent upon wealth and
honor and luxury without restraint.
In the second placein this contract the advantage of the
buyer [of income], or the receiver of zinss, is invariably looked
upon as greater and better and more desirable than that of the
seller, or the payer of zinss. This is a sign that the transaction
is never made for the sake of the seller, but always for the
sake of the buyer; for every mans conscience suspects that it
may not be right to buy zinss, but no one has any doubt that
he can give away or sell what is his own at any risk he cares to
take. So perilously close does this purchase contract come to
the conscience!
In the fourth place, everyone will have to admit that whether
this contract is usury or not, it accomplishes exactly the same
thing that usury accomplishes, that is, it lays burdens upon all
lands, cities, lords, and people, sucks them dry, and brings
them to ruin as no usury could have done.12

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

Humanist Issues in Commercial Practice

more or less redefined by the Catholic Church and by the reformer


Luther as taking excessive interest.

Calvin and the legitimization of interest


John Calvin (1509-1564), the founder of non-Lutheran Protestantism,
established his religious centre in Geneva, from where Calvinist theology and
codes of civil conduct widened their influence.
In his writing on economic relationships, Calvins term for excessive interest is
biting usury, from one of the Old Testament Hebrew words for interest
neshek, which means to bite.
The economic historian Benjamin Nelson tracks Calvins thinking on usury
from 1545 onward. In that year Calvin wrote, If we wholly condemn usury
we impose tighter fetters on the conscience than God himself [does]. Calvin
argued that the Deuteronomic law on usury [Deuteronomy 23:19-20], which
forbids taking interest from brother Jews but permits it in dealing with nonJews, was given to the Jews only, as a political law, and need not apply to
Christians. And since Christianity is a proselytizing religion (that is, one
which receives, and seeks to convert, members of other faiths), and since in
St. Pauls opinion there is no such thing as Jew and Greek,for you are all
one person in Jesus Christ [Revised English Bible, Galatians 3:28], Calvin
continued:
Usury is not now unlawful, except in so far as it contravenes
equity and brotherly union. Let each one, thennot do to his
neighbour what he would not have done to himself. To
exercise the trade of usury, since heathen writers [that is,
Plato, Aristotle] counted it amongst disgraceful and base
modes of gain, is much less tolerable among the children of
God; but in what cases, and how far it may be lawful to
receive usury upon loans, the law of equity will better
prescribe than any lengthened discussions.18
The law of equity appears to mean fair dealing and an active conscience.
Like Luther, Calvin condemned excessive rates of interest, and warned
against exploiting the poor. Nelson notes, for example, that in the
ordinances of February 3, 1547, for the country parishes of the government
of Geneva, Calvin and his fellow ministers fixed the maximum rate of usury
at five per cent, on penalty of confiscation of the principal, plus a fine in
accordance with the exigencies of the case.19
Unlike Luther, or Aquinas, or Aristotle, Calvin had political authority in the
religious city-state of Geneva, where he and his fellow Calvinists
promulgated their famous Protestant Ethic. The term Protestant Ethic
was actually coined by the German economist and sociologist Max Weber in
his 1904-1905 work, The Protestant Ethic and the Spirit of Capitalism, where he
traced the characteristics of hard work, self-denial, and rational organization
to religious origins. You will read more about Weber in Module 9.

Humanist Issues in Commercial Practice

Reading 2-5 11

The Geneva community was an experiment in creating a religious utopia a


brotherhood and sisterhood of persons in spiritual, social, and commercial
harmony. When he read the Deuteronomy text, Calvin simply refused to
accept the differentiation between Jew and
non-Jew brother and other. Nelson writes that Calvin charted the path
to the world of Universal Otherhood, where all become brothers in being
equally others.20 That is, there could be conscientious equal dealings
between all. Notice that, as explained earlier, Zinskauf participants were
already othering themselves in what Luther regarded as a non-brotherly
way.
By interpreting the Deuteronomic law as he did, Calvin succeeded in
legitimizing usury.21 In addition, Calvin is the first religious leader to
exploit the ambivalence of [Deuteronomy] in such a fashion as to prove that
it was permissible to take usury from ones brother, and everyone from the
sixteenth to the nineteenth century who advocated a more liberal usury law
turned to Calvin for support.22 In effect, the old and new Western religious
establishments were ceding moral authority over the behaviour of money.

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.

St. Thomas Aquinas, Summa Theologica, 2-2, Question 78, Article 1.

Martin Luther, Luthers Works, gen. ed. Helmut T. Lehmann (Philadelphia: Fortress Press,
1955), Volume 45, pages 284-285.

Plato, Laws, Book V, page 741.

Martin Luther, Luthers Works, Volume 40, pages 50-55.

Ibid., Volume 45, pages 247-248.

Ibid., pages 249-250.

Ibid., page 262.

Ibid., page 266.

10

Ibid., page 261.

11

Ibid., Volume 44, page 96, note 61.

12

Ibid., pages 295-297.

13

Ibid., page 297.

Humanist Issues in Commercial Practice

14

Ibid., page 303.

15

Ibid., Volume 45, page 310.

16

Ibid., page 305.

17

Ibid., page 305, note 152.

18

Quoted in Benjamin Nelson, The Idea of Usury (Chicago: University of Chicago Press, 1969),
page 79.

19

Ibid., page 79, note 18.

20

Ibid., page 73.

21

Ibid., page 74.

22

Ibid., pages 73-74.

Humanist Issues in Commercial Practice

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.

Manipulating the value of money


The aspect of Utopia that most concerns us here is the guided tour through
early sixteenth-century monetary policy. Near the island of Utopia live a
people called the Achorians, whose king has kept them in a perpetual state of
war, or readiness for war, with another kingdom (just as Mores kings, Henry
VII and Henry VIII, for many years campaigned to keep provinces that
previous English kings had captured from France). The Achorian king
consults his councilors on how to raise money. Raphael now takes up the
explanation:
One [councilor] 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.
Another suggests a make-believe war under pretext of which
he would raise money and then, when he saw fit, make peace
with solemn ceremonies to throw dust in his simple peoples
eyes because their loving monarch in compassion would fain
avoid human bloodshed. Another councilor reminds him of
certain old and moth-eaten laws, annulled by long
Humanist Issues in Commercial Practice

Reading 2-6 1

non-enforcement, which no one remembers being made and


therefore everyone has transgressed. The king should exact
fines for their transgression, there being no richer source of
profit nor any more honorable than such as has an outward
mask of justice! Another recommends that under heavy
penalties he prohibit many things and especially such as it is
to the peoples advantage not to allow. Afterwards for money
he should give a dispensation to those with whose interests
the prohibition has interfered.1
Crying up and crying down the value of money is simply the manipulation
of currency. Nowadays, such manipulation is attributed to arbitrageurs or
guys in red suspenders taking or abandoning large positions in the money
markets, or to actual or interpreted pronouncements by the Governor of the
Bank of Canada or the U.S. Treasury Secretary. The strategy of official
announcement (or, on occasion, circulation of rumour) was practised by
Henry VII. Arbitrage, or profiting from the varying exchange values of
currencies, was already a well-known practice in the Middle Ages. A character
in Chaucers Canterbury Tales (1390s) was the pilgrim-merchant who
speculated profitably in currency exchange: At money-changing he could
make a crown.
The most common way for governments to manipulate currency values was
by devaluation. The method was to debase the coinage by adding alloys,
issuing short-weight coins, or by clipping segments off the coins. All of these
practices were capital offences if committed by citizens. As you will learn in
Module 4, milled-edge coins were introduced in the seventeenth century to
discourage clipping. Paying debts in devalued currency is obviously
recommended here by the hypothetical kings councilors.
The scheme of phony war and the collecting of tax money for it was
another of Henry VIIs economic policies. Again, this fiscal strategy is
recommended to the Achorian king. Defence budgets can tend to disappear
into the general government revenue (even in modern times, along with
government pension plan or employment insurance contributions). And the
revived enforcement of long-defunct laws, or the invention of new ones
all with financial penalties is a well-known modern species of cash cow, as
with law enforcement agencies frequent declarations of war on selected
misdemeanours and malefactors (as in recent war on drugs or war on
crime).

More compares what is with what could be


In contrast to Achoria, there is another state not far (in a moral as well as a
geographic sense) from Utopia. It is called Macaria, and the Macarians have a
constitution that strictly limits the powers of their rulers. Raphael, the
narrator of Mores story, has no hope that the English government would
wish to hear about the Macarians, who actually keep their kings on a tight
and balanced budget, permitting them to run neither deficits nor surpluses:

2 Reading 2-6

Humanist Issues in Commercial Practice

What if then I were to put before them the law of the


Macarians, a people not very far distant from Utopia? Their
king, on the day he first enters into office, is bound by an
oath at solemn sacrifices that he will never have at one time
in his coffer more than a thousand pounds of gold or its
equivalent in silver. They report that this law was instituted by
a very good king, who cared more for his countrys interest
than his own wealth, to be a barrier against hoarding so much
money as would cause a lack of it among his people.
He saw that this treasure would be sufficient for the king to
put down rebellion and for his kingdom to meet hostile
invasions. It was not large enough, however, to tempt him to
encroach on the possessions of others. The prevention of the
latter was the primary purpose of his legislation.
His secondary consideration was that provision was thus
made to forestall any shortage of the money needed in the
daily business transactions of the citizens. He felt, too, that
since the king had to pay out whatever came into his treasury
beyond the limit prescribed by law, he would not seek
occasion to commit injustice. Such a king will be both a terror
to the evil and beloved by the good. To sum it all up, if I tried
to obtrude these and like ideas on men strongly inclined to
the opposite way of thinking, to what deaf ears should I tell
the tale!2
Permitting the war-chest of a thousand pounds of gold or its equivalent in
silver suggests that More remembered Pericles declaration in Thucydides
Peloponnesian War (Topic 1.4) that Athens had treasury reserves sufficient to
win against Sparta.

Human consequences of enclosing land


In Mores lifetime, England carried on a profitable international trade in
wool. As in the sixteenth century, and again in the eighteenth century, there
were movements to increase the grazing lands for sheep. Not only was the
wool valuable, but the overseeing of sheep was not labour-intensive.
Common grazing lands traditionally had been annexed to villages for the
purpose of sustaining a milk cow and vegetable patch for each family. Tenant
family farms were leased out generation after generation in return for rents
of produce and service in lieu of cash or supplementing small monetary
rents. Tenants and villagers usually had no tenure contract, but only
traditional service connections. It was these common pastures of village
agriculturalists that landlords (who often included the Church) were
enclosing with fences, with the social consequences of evicting dwellers,
levelling houses, and fencing in large grazing tracts for the production of a
single crop or resource, that is, wool. The effect was that former common
lands became private property. In England, parliamentary Enclosure Acts
Humanist Issues in Commercial Practice

Reading 2-6 3

authorizing enclosure (essentially privatization) of land were still


being passed in the nineteenth century.
Writing again about Achoria (as a satire of the state policy of enclosure in
England), Mores description of enclosure economies of scale and monopoly
process is like some of Luthers most indignant writing, and a foreshadowing
of the nineteenth-century social criticism of Karl Marx:
Your sheep, I answered, which are usually so tame and so
cheaply fed, begin now, according to report, to be so greedy
and wild that they devour human beings themselves and
devastate and depopulate fields, houses, and towns. In all
those parts of the realm where the finest and therefore
costliest wool is produced, there are noblemen, gentlemen,
and even some abbots, though otherwise holy men, who are
not satisfied with the annual revenues and profits which their
predecessors used to derive from their estates. They are not
content, by leading an idle and sumptuous life, to do no good
to their country; they must also do it positive harm. They
leave no ground to be tilled; they enclose every bit of land for
pasture; they pull down houses and destroy towns, leaving
only the Church to pen the sheep in. And, as if enough
English land were not wasted on ranges and preserves of
game, those good fellows turn all human habitations and all
cultivated land into a wilderness.
Consequently, in order that one insatiable glutton and
accursed plague of his native land may join field to field and
surround many thousand acres with one fence, tenants are
evicted. Some of them, either circumvented by fraud or
overwhelmed by violence, are stripped even of their own
property, or else, wearied by unjust acts, are driven to sell. By
hook or by crook the poor wretches are compelled to leave
their homes men and women, husbands and wives,
orphans and widows, parents with little children and a
household not rich but numerous, since farm work requires
many hands. Away they must go, I say, from the only homes
familiar and known to them, and they find no shelter to go to.
All their household goods which would not fetch a great price
if they could wait for a purchaser, since they must be thrust
out, they sell for a trifle.
After they have soon spent that trifle in wandering from
place to place, what remains for them but to steal and be
hanged justly, you may say! or to wander and beg. And
yet even in the latter case they are cast into prison as vagrants
for going about idle when, though they most eagerly offer
their labor, there is no one to hire them. For there is no farm
work, to which they have been trained, to be had, when there
is no land for plowing left. A single shepherd or herdsman is
sufficient for grazing livestock on that land for whose
4 Reading 2-6

Humanist Issues in Commercial Practice

cultivation many hands were once required to make it raise


crops.
A result of this situation is that the price of food has risen
steeply in many localities. Indeed, the price of raw wools has
climbed so high that the English poor who used to make
cloth cannot possibly buy them, and so great numbers are
driven from work into idleness. One reason is that, after the
great increase in pasture land, a plague carried off a vast
multitude of sheep as though God were punishing greed by
sending upon the sheep a murrain [plague] which should
have fallen on the owners heads more justly! But, however
much the number of sheep increases, their price does not
decrease a farthing because, though you cannot brand that a
monopoly which is a sale by more than one person, yet their
sale is certainly an oligopoly, for all sheep have come into the
hands of a few men, and those already rich, who are not
obligated to sell before they wish and who do not wish until
they get the price they ask.3
Oligopoly is control of a market by a few sellers the sellers here being the
politically powerful, which Plato called an oligarchy (see Topic 1.3). This is
the political and economic dystopia that More saw prevailing in England.

Distributive justice in Utopia


England is the place that More still has in mind when, in Book II, he has
Raphael ask (notice the inclusion of usurers),
What brand of justice is it that 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,
should attain a life of luxury and grandeur on the basis of his
idleness or his nonessential work? In the meantime, the
common laborer, the carter, the carpenter, and the farmer
perform work so hard and continuous that beasts of burden
could scarcely endure it, and work so essential that no
commonwealth could last even one year without it. Yet they
earn such scanty fare and lead such a miserable life that the
condition of beasts of burden might seem far preferable.4
On the island of Utopia, however everything is otherwise, because
distributive justice (Topic 2.2) is the norm:
On the other hand, in Utopia, where everything belongs to
everybody, no one doubts, provided only that the public
granaries are well filled, that the individual will lack nothing
for his private use. The reason is that the distribution of
goods is not niggardly. In Utopia there is no poor man and
no beggar. Though no man has [that is, owns] anything, yet
all are rich.5
Humanist Issues in Commercial Practice

Reading 2-6 5

Obviously, in Book II More is idealizing: we cant quite say advocating or


proposing, because Utopia is a nowhere, a dream or wish list of Platonic
and Christian communism, an alternative to
[a] society where we make money the standard of
everything, [where] it is [thus] necessary to practice many
crafts which are quite vain and superfluous, ministering only
to luxury and licentiousness.6
The Utopians wonderthat gold, which by its very nature is
so useless, is now everywhere in the world valued so highly
that man himself, through whose agency and for whose use it
got this value, is priced much cheaper than gold itself. This is
true to such an extent that a blockhead who has no more
intelligence than a log and who is as dishonest as he is foolish
keeps in bondage many wise men and good men merely for
the reason that a great heap of gold coins happens to be his.7
The Utopians also scoff at hoarders, who negate moneys only useful
function, which is to circulate:
What can be said of those who keep superfluous wealth to
please themselves, not with putting the heap to any use but
merely with looking at it? Do they feel true pleasure, or are
they not rather cheated by false pleasure? Or, what of those
who have the opposite feeling and hide the gold, which they
will never use and perhaps never see again, and who, in their
anxiety not to lose it, thereby do lose it? What else but loss is
it to deprive yourself of its use, and perhaps all other men
too, and to put it back in the ground? And yet you joyfully
exult over your hidden treasure as though your mind were
now free from all anxiety. Suppose that someone removed it
by stealing it and that you died ten years afterwards knowing
nothing of the theft. During the whole decade which you
lived after the money was stolen, what did it matter to you
whether it was stolen or safe? In either case it was of just as
little use to you.8
[Those] who, in their anxiety not to lose [their heap of gold], thereby do
lose it are typified in Death and the Miser, an altarpiece painting executed
around 1490 by the Flemish painter Hieronymus Bosch, who died in 1516
the year of Utopias publication.
The miser is depicted in his way of life and at the hour of his death. In the
pictures foreground he drops a gold coin into the strongbox at the foot of
his bed; the full bag into which the coin falls is held by a rat-like devil. At the
misers waist hang a rosary and his strongbox key. In the background, on the
bed, the miser is dying. An angel exhorts him to repent as Death with his
dart comes in the door, while at the same time the devil hands a bag of

6 Reading 2-6

Humanist Issues in Commercial Practice

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

Life in a Utopia beyond money and greed


Utopias climax Raphaels summing-up is a kind of economic
equivalent to the New Testament mystical Revelation of St. John (perhaps all
economic schemes are mystical), in which the narrator recounts his vision of
a new heaven and a new earth [Revelation 21:1]:
In Utopia all greed for money was entirely removed [when]
the use of money [was removed]. What a mass of troubles
was then cut away! What a crop of crimes was then pulled up
by the roots! Who does not know that fraud, theft, rapine,
quarrels, disorders, brawls, seditions, murders, treasons,
poisonings, which are avenged rather than restrained by daily
executions, die out with the destruction of money? Who does
not know that fear, anxiety, worries, toils, and sleepless nights
will also perish at the same time as money? What is more,
poverty, which money alone seemed to make poor, forthwith
would itself dwindle and disappear if money were entirely
done away with everywhere.
Even the rich, I doubt not, feel that it would be a much better
state of affairs to lack no necessity than to have abundance of
superfluities to be snatched from such numerous troubles
rather than to be hemmed in by great riches.11
And More is still posing as merely the detached reporter of Raphaels satiric
comparisons of what is with what might be or purportedly what is in
Humanist Issues in Commercial Practice

Reading 2-6 7

Macaria and especially in Utopia. He even pretends to be skeptical, for who


could possibly imagine that such a perfect society could be achieved?
When Raphael had finished his story, many things came to
my mind which seemed very absurdly established in the customs
and laws of the people described most of all in that
feature which is the principal foundation of their whole
structure. I mean their common life and subsistence
without any exchange of money.
I knew, however, that he was wearied with his tale, and I was
not quite certain that he could brook any opposition to his
views. Though in other respects he is a man of the most
undoubted learning as well as of the greatest knowledge of
human affairs, I cannot agree with all that he said. But I
readily admit that there are many features in the Utopian
commonwealth which it is easier for me to wish for in our
countries than to have any hope of seeing realized. [emphasis
added]12

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., page 97.

Ibid., pages 65-69.

Ibid., Book II, page 239.

Ibid.

Ibid., Book II, page 131.

Ibid., Book II, page 157.

Ibid., Book II, pages 169-171.

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

Ibid., pages 241-243.

12

Ibid., pages 245-247.

Humanist Issues in Commercial Practice

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.

Creating money by fiat


After nearly 25 years in the Orient, doing business and government
administration, Polos memory is still full of the excitement and surprise of
his first impressions of strange places and customs. For example, in a section
headed Of the Multitude of Persons who continually Resort to and Depart
from the City of Kanbalu and of the Commerce of the Place, he writes,
The vast concourse of merchants and other strangers
drawn thither by the court, are continually arriving and
departing. To this city everything that is most rare and
valuable in all parts of the world finds its way; and more
especially does this apply to India, which furnishes precious
stones, pearls, and various drugs and spices. From the
provinces of Cathay itself, as well as from the other provinces
of the empire, whatever there is of value is carried thither, to
supply the demands of those multitudes who are induced to
establish their residence in the vicinity of the court. The
quantity of merchandise sold there exceeds also the traffic of
any other place; for no fewer than a thousand carriages and
Humanist Issues in Commercial Practice

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

Humanist Issues in Commercial Practice

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.

A controlled market and an unusual currency


When foreign merchants bring their wares, which Chapter 17 of Polos
accounts lists as precious stones, pearls, various drugs and spices from India,
and silks and gold tissues from other parts of the Orient, they have to accept
the prices and profit set by the Khans twelve controllers and take the paper
currency. The merchants leaving the Khans empire then turn the paper into
local products. Through these procedures, and through the stiff three percent
replacement fee for worn-out notes, the Khan as Polo delicately puts it
has a more extensive command of treasure than any other sovereign in the
universe. As with Josephs grain dealings on Pharaohs behalf (Topic 1.2),
this is a tightly controlled economy and state monopoly that draws to the
royal treasury all the precious metals, while also collecting the three percent
replacement tax on the paper tender. The procedure obviously was working
during Polos time in Cathay, but shortly after he left China the Khan was
forced to reform this monetary system and re-introduce silver coinage.3
You may have noticed that the price-control system described by Polo has a
parallel in the method advocated by Martin Luther. Here again is Luthers
recommendation, which you read in Topic 2.3:
In order not to leave the question [of fair pricing, of trade
goods] 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.
Now turn to Reading 2-9, Polos account of salt used as money.
As the salt currency excerpt tells, the citizens of the Khans far-western
province of Kain-du (now known as Szechuan) are still using gold and, for
small denomination exchanges, salt-cake coins which can be broken into
even smaller change. An explanation for United States 25 coins being called
two bits is that nineteenth-century dollars were grooved crosswise and
could be broken into eight 12 pieces (or bits) for small purchases. This
explanation may be apocryphal.
Kain-du came late into the Mongol empire and so appears to have been
allowed to retain its traditional currency, which developed from the presence
of the salt lake. The salt currency is still strictly regulated by the Khans
treasury officers. The English word salary has its root in the Latin salarium:
a Roman soldiers or officials pay. Far from being primitive, this practice of
turning a natural resource into an agreed-upon currency is testimony not only
Humanist Issues in Commercial Practice

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.

Humanist Issues in Commercial Practice

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

Humanist Issues in Commercial Practice

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.

Humanist Issues in Commercial Practice

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

Humanist Issues in Commercial Practice

In short, Kempe, anxious to do well in business, chooses in turn two


promising lines, and operates in scale. The unexplainable setbacks appear to
come less from poor business practice, or from her being a woman, than
from what might be called an emotional predisposition to failure. She calls
the brewing failure Gods punishment for a former sin, and she notes that
the milling business ran into trouble on the eve of a religious holiday, Corpus
Christi Day. And so she listens to some wise men, whose minds were
grounded in the love of our Lord, [who] said it was the high mercy of our
Lord Jesus Christ that called her from the pride and vanity of this wretched
world.5 These wise men were not exactly business consultants! Thus, she
gives up the call of business for another, more spiritual vocation.

Life after disinvestment


The spiritual vocation eventually leads Margery Kempe to voluntary
disinvestment, literally following the provocative counsels of Jesus recorded
in Lukes gospel (Topic 1.5):
Afterwards, while this creature was in Rome, our Lord bade
her give away all her money and make herself destitute for his
love. And she immediately, with a fervent desire to please
God, gave away such money as she had, and such also as she
had borrowed.6
Impoverished, she re-enacts the story of the widows mite related in Marks
gospel:
Then this creature had neither penny nor halfpenny in her
purse, and so they happened to meet up with other pilgrims,
who gave her three halfpence because she had, in
conversation, told them some holy tales. And then she was
very glad and cheerful, for she had some money with which
she could make an offering in reverence to the [Holy Trinity]
when she came to NorwichAnd so when she got there she
very gladly made an offering.7
Even after her business failures and her disinvestment, Margery Kempe still
acquires considerable financial means through an inheritance from her father.
It appears that the fathers will must have had a clause protecting at least part
of Margerys inheritance from being controlled by her husband. Therefore,
this money is hers, and her husband has no right or access to it, as becomes
clear when she actually buys out his claim to conjugal rights. At the time, she
is trying to keep a vow of chastity, and also is fasting. Her husband is
complaining that on certain days she will not eat with him or prepare meals,
and will not sleep with him at all. In an atmosphere of great tension, and in a
state of mind that combines intense piety with business acuity, she negotiates
a way out for them both:
Sir, if you please, you shall grant me my desire, and you shall
have your desire. Grant me that you will not come into my
bed, and I grant you that I will pay your debts before I go to
Jerusalem. And make my body free to God, so that you never
Humanist Issues in Commercial Practice

Reading 2-11 3

make any claim on me requesting any conjugal debt after this


day as long as you live and I shall eat and drink on Fridays
at your bidding. Then her husband replied to her, May your
body be as freely available to God as it has been to me.8
This incident from The Book of Margery Kempe appears to encapsulate the
continual negotiation between faith and economics in medieval and earlier
times. The historian Eileen Power wrote that in the later Middle
Agesyoung people had begun to enter monastic houses [monasteries and
nunneries] as a profession rather than as a vocation [religious calling].9

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.

Ibid., page 35.

Margery Kempe, The Book of Margery Kempe, tr. B.A. Windeatt (Harmondsworth: Penguin
Books, 1985), pages 44-45.

Geoffrey Chaucer, Canterbury Tales, page 18.

Margery Kempe, The Book of Margery Kempe, page 45.

Ibid., page 128.

Ibid., pages 139-140.

Ibid., page 60.

Eileen Power, Medieval People (New York: Barnes & Noble, Inc., 1966), page 81.

Humanist Issues in Commercial Practice

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.

Humanist Issues in Commercial Practice

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.

Humanist Issues in Commercial Practice

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.

Reflections and implications


As Montaigne relates, gold in the Indies was being used solely for display
an object for show and parade [and for] the adornment of their palaces and
temples, and for giving aesthetic satisfaction, as in the kings garden in
which all the trees and fruit, and all the plants were exquisitely fashioned of
gold. Yet, with all this bullion, the use of coin was unknown to the people.
By shaping the bullion into vegetative and animal forms, the Indians were
celebrating nature in their palaces and temples.
Montaigne implies not only the aesthetic but also the mythic quality of this
usage. The golden garden recalls the Greek legend of the twelve labours of
Hercules, the last labour being to pluck the golden apples that grew in the
garden of the Hesperides and were guarded by a dragon; it might also be
regarded as an Eden, a garden ruined by the deadly sin of greed: Lpez de
Gmaras History may have more than a touch of mythology in it.
Displayed in this way, the Mexican gold was not precisely being hoarded
(though it would be helpful to know how open the garden was to the kings
subjects). You may remember from Topic 2.4 that Thomas More asked what
can be said of those who keep superfluous wealth to please themselves, not
with putting the heap to any use but merely with looking at? Do they feel
true pleasure?2 Montaigne implies that the golden artifacts gave pleasure.
They also were an inheritance: preserved from father to son by many
powerful kings as, say, Sarahs gravesite meant more than silver to
Abraham (Topic 1.1).
When the extorted wealth was transported to Spain much of it being lost
at sea or used up by the plunderers fighting one another it was coined,
spreadabroad, and dispersed. Montaigne ironically implies that Philip II
dissipated the money like the thrifty and careful Prince he was. (Irony
consists in saying a thing and meaning its opposite.) And so this Indian
heritage and its beautiful creations vanished. Montaignes suggestion is that
after it was coined, it did not go into an economically positive circulation, but
simply was dissipated. He may even be implying that money with so much
blood on it should have been, like Judas thirty pieces, thrown away.
Montaignes verdict on this terrible and one-sided transaction between the
two cultures is summed up in the contrast between the conserving Indian
kings and the avaricious yet spendthrift European ones: Imagine our kings
amassing all the gold they could find for several centuries, and keeping it in
idleness! The European kings have neither the fiscal prudence to
productively employ the gold as circulatable wealth, nor the aesthetic sense to
appreciate it as art. Montaignes humanism expresses moral outrage and
controlled contempt for such lethal vacuousness: naughts had, alls spent.
And the essays final paragraph, ostensibly returning to vehicles,
2 Reading 3-2

Humanist Issues in Commercial Practice

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

Michel de Montaigne, Of Vehicles, in Essays, trans. J.M. Cohen (Harmondsworth: Penguin


Books, 1993), page 266.

Thomas More, Utopia, Book II, page 171.

Humanist Issues in Commercial Practice

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.

Humanist Issues in Commercial Practice

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.

Coasting the shore in search of their mines, certain Spaniards landed in a


fertile, pleasant, and well-populated country, and made their accustomed
professions to the inhabitants. [They said] that they were peaceable men who
had sailed from far away, and were sent by the King of Castile, the greatest
prince of the habitable world, to whom the Pope, Gods representative on
earth, had given dominion over all the Indies; and that if these people would
become his tributaries [subjects], they would be most kindly treated. The
Spaniards demanded provisions for their sustenance, and some gold to use
for some kind of medicine. In addition, they urged on them a belief in one

2 Reading 3-3

Humanist Issues in Commercial Practice

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

obtaining information by inflicting the severest tortures they could devise


upon the prisoners in their hands.... [After] an indiscriminate butchery, as of
so many wild beasts, and as universal as fire and sword would permit,... they
deliberately kept alive only so many as they wanted to make into miserable
slaves for labour and service in their mines.
As a result of these hideous crimes, several of the Spanish captains were put
to death on the scene of their conquests by order of the Kings of Castile,
who were justly outraged; and almost all of them were loathed and despised.
God deservedly ordained that [much] of this vast booty should be swallowed
up by the sea in course of transport, or by the internal wars in which they
destroyed one another; and the majority of the conquerors were buried in
that country, without enjoying the fruits of their victory.

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

Humanist Issues in Commercial Practice

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.

Proposals for regulating usury


The following excerpt from Bacons essay gives a sense of the competing
monetary needs and interests in evidence during his time. As you read this
passage, notice how Bacon proposes to keep the state out of the money
market except for regulating the ceilings on interest and licensing lenders
where licensing applies. Also observe how he thinks of the differing needs of
city and rural borrowers, of variable rates for different sorts of loans, and
how he wants banks to stay out of this market. By banks he means groups
or syndicates of lenders as distinct from individuals such as Mr. Simpson
Bacon obviously felt more comfortable knowing his creditors personally.
Banks as we now know them had not yet been established in England at this
time (Bacon simply ran an overdraft with Simpson). Bacon writes:

Humanist Issues in Commercial Practice

Reading 3-4 1

To speak now of the reformation and [regulation] of usury;


how the discommodities of it may be best avoided, and the
commodities retained. It appears by the balance of
commodities and discommodities of usury, two things are to
be reconciled. The one, that the tooth of usury be grinded,
that it bite not too much; the other, that there be left open a
means to invite monied men to lend to the merchants, for the
[stimulating] and quickening of trade. This cannot be done,
except you introduce two several sorts of usury [rates], a less
and a greater. For if you reduce usury to one low rate, it will
ease the common borrower, but the merchant will be [hard
pressed to find] money. And it is to be noted, that the trade
of merchandize, being the most lucrative, may bear usury at a
good rate: other [types of business] not so.
To serve both intentions, the way would be briefly thus. That
there be two rates of usury; the one free, and [universal] for
all; the other under licence only, to certain persons and in
certain places of merchandizing.
First therefore, let usury in general be reduced to five in the
hundred [five percent]; and let that rate be proclaimed to be
free and current; and let the state [refrain from taking any part
of the interest as tax] for the same. This will preserve
borrowing from any general stop or [shortage of loan
money]. This will ease infinite borrowers in the country. This
will, in good part, raise the price of land, because land
purchased at sixteen years purchase [the traditional purchase
price, calculated as lands value yielded over 16 years] will
yield six in the hundred, and somewhat more; whereas this
rate of interest yields but five. This by like reason will
encourage and [stimulate] industrious and profitable
improvements; because many will rather venture in that
[sector] than take five in the hundred, especially having been
used to greater profit.
Secondly, let there be certain persons licensed to lend to
known merchants upon usury at a higher rate; and let it be
with the [caveats] following. Let the rate be, even with the
merchant himself, somewhat [less] than that he used formerly
to pay; for by that means all borrowers shall have some
[relief] by this reformation, be he merchant, or whosoever.
Let it be no bank or common stock, but every man be master
of his own money. Not that I altogether [dislike] banks, but
they will hardly be [tolerated], in regard of certain suspicions.
Let the state be answered some small matter [granted a small
fee] for the licence, and the rest left to the lender; for if the
[states fee] be but small, it will [not at all] discourage the
lender. For he, for example, that took before ten or nine in
the hundred, will sooner descend to eight in the hundred,
2 Reading 3-4

Humanist Issues in Commercial Practice

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.

Negative stereotype of the Jewish moneylender


Intensifying the stereotype of the moneylender as devilish or at best irreligious was
the matter of Old Testament Jews being permitted to take interest from non-Jews
but not from their coreligionists: remember (Topic 1.3) the famous passage: you may
exact interest on a loan to a foreigner, but not on a loan to a fellow-countryman
[Deuteronomy 23:19-20].
Humanist Issues in Commercial Practice

Reading 3-4 3

The stereotype connection of moneylenders with Jewishness, even in modern


times, still dies hard. There is ample evidence from early medieval times that
there were plenty of Christian moneylenders in England, and that the
Catholic Church in England engaged in the practice. In addition to regular
taxes, English Jews had to pay special taxes, called tallages, to the Crown.
These taxes specifically were on the interest they received on loans, so that
the Jews [were], in effect, indirect tax collectors for the king.4 Eventually,
this royal revenue fell off, likely because the Jews resources were depleted by
the tallages. In 1290, Edward I expelled all Jews from England and seized
their property. They would not be officially allowed back again until the
1640s.
Somehow, in England, Jews still were included in the stereotypical picture of
the moneylender. Even Bacon begins Of Usury by repeating one of the
many witty invectives he says are made against the practice: that usurers
should have orange-tawny bonnets [a reference to the distinctive dress,
including reddish turbans, that Jews in the ghetto of Venice were required to
wear], because they do Judaize.

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.

Ibid., pages 422-424.

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.

Humanist Issues in Commercial Practice

READING 3-5
Marlowes The Jew of Malta and Shakespeares

The Merchant of Venice

To understand some of the commercial connotations in The Merchant of Venice


in Topic 3.4, you need to first know something about this play of Marlowes
on a similar theme. As well, Marlowes plot brings to the surface some
interesting aspects of commercial transactions and attitudes, and some
comment on the political-economic role of the state in Early-Modern times.
As you study this topic, look for contemporary descriptions of the practices
and economic returns of two particular aspects of commerce merchantventuring and marriage-venturing.

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

Bags of fiery opals, sapphires, amethysts,


Jacinths, hard topaz, grass-green emeralds,
Beauteous rubies, sparkling diamonds,
And seld- [seldom-] seen costly stones of so great
price,
As one of them, indifferently rated [priced],
And of a carat of this quantity,
May serve, in peril of calamity,
To ransom great kings from captivity.
This is the ware wherein consists my wealth;
And thus methinks should men of judgment frame
Their means of traffic from the vulgar trade,
And, as their wealth increaseth, so inclose
Infinite riches in a little room.1
Clearly, Barabas aspires to be a kind of legendary Croesus and Midas rolled
into one. (Remember the references to these icons of wealth in Module 1.)
Marlowe himself had been reading the kinds of histories and explorers
accounts that Montaigne read, and was equally impressed by the reports of
golden worlds in Africa and the Indies East and West. Marlowe makes
romance out of commercial life, as Marco Polo did with his description of
the trading in the city of Kanbalu (Topic 2.5). Today, Barabas inventory of
rich things reads almost like the Christmas catalogue of a New York Fifth
Avenue store; the heaps of stage-gold in front of him are merely the window
display. They are the returns from merchant-venturing, and both Marlowes
and Shakespeares plays tell a great deal about the glamour and risks of this
line of commerce.
Barabas has capital, ships, and cargoes, which for the late sixteenth century
was an unusual state of vertical integration of holdings because ships
themselves often were pledged to lenders in return for loans that financed
the expenses of the voyages and the purchase of the trading cargoes. This
process, or variations on it, was called bottomry, which the Oxford English
Dictionary defines as
a species of contract of the nature of a mortgage, whereby the
owner of a ship, or the [captain] as his agent, borrows money
to enable him to carry on or complete a voyage, and pledges
the ship as security for repayment of the money. If the ship is
lost, the lender loses his money; but if it arrives safe, he
receives the principal together with the interest or premium
stipulated, however it may exceed the usual or legal rate of
interest.2
The term comes from the ships holds being referred to as bottoms.
Notice that the practice described in the definition is a way of getting around
(or above) ceilings imposed on interest by using the term premium.
Barabas has been a usurer and now is a shipowner and merchant. However,
Marlowe probably doesnt intend us to connect the three functions of usurer,
shipowner, and merchant and thereby recognize that Barabas doesnt have to
get into bottomry contracts.
2 Reading 3-5

Humanist Issues in Commercial Practice

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:

Will you, then, steal my goods?


Is theft the ground of your religion?

Governor: No, Jew, we take particularly thine,


To save the ruin of a multitude.
And better one want for a common good,
Than many perish for a private man.
Yet, Barabas, we will not banish thee,
But here in Malta, where thou gottst thy wealth
Live still, and if thou canst, get more.
Barabas:

Humanist Issues in Commercial Practice

Christians, what or how can I multiply?


Of naught is nothing made.

Reading 3-5 3

Knight:

From naught at first thou camst to little wealth,


From little unto more, from more to most.5

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

Humanist Issues in Commercial Practice

Which I have bettered rather than decreased.


Then tell me, if I get your daughters love,
What dowry shall I have with her to wife?
Baptista:

After my death the one half of my lands,


And in possession [immediately] twenty
thousand crowns.

Petruchio: And for that dowry Ill assure her of


Her widowhood [security as a widow] be it
that she survive me
In all my lands and leases whatsoever.
Let specialties [binding agreements] be kept on
either hand.8

The loan agreement


The major story line of The Merchant of Venice is familiar even to many who
have never seen or read the play. Antonio, a respected merchant in Venice,
agrees to underwrite his young friend Bassanios venture to Belmont, the
home of the rich heiress Portia whom Bassanio hopes to marry. All of
Antonios ready money is invested (like Barabas) in ships and cargoes, but,
confident that one or more of his ships will come home (the phrase in its
monetary application is coined in this play), Antonio undertakes to stand as
personal security for a loan. The loan itself is for three thousand ducats for
three months, advanced to Bassanio by a Jewish moneylender, Shylock,
whom Antonio despises and frequently has humiliated. Because Shylock
knows that Antonio is conscientiously opposed to taking or paying interest,
Shylock proposes that the loan be interest-free, but with a pledge or forfeit
for non-payment by the due date.
Agreeing on a set forfeit for late payment was one of the ways by which
creditor and debtor could avoid the stigma of practicing usury. In such
arrangements, the debtor would pay the principal and the forfeit a day late,
saving face for both parties.
The sensational forfeiture, which Shylock claims is so worthless and bizarre
that he suggests it only as a joke (a merry bond), is to be an equal [exact
by weight] pound of your fair flesh. The bond or contract is notarized.
Through a twist of fate, Antonio is unable to pay on the due date and
Shylock sues for the pound of flesh, but Portia finds a loophole in the bond
and Shylock is foiled.
Now that you have read this brief plot summary, you should view a video or
DVD of The Merchant of Venice. Use Reading 3-6 to help you identify specific
scenes discussed in the video notes, also found in Reading 3-6. While
watching this play is not required, it will assist you in understanding the
context of the commercial aspects being discussed here.

Humanist Issues in Commercial Practice

Reading 3-5 5

Portia, Bassanio, and the materialist tale of the three caskets


The Merchant of Venice illustrates the economic reality that middle- and upperclass young men, with more style and good looks than cash, seek to make
money the old-fashioned way by marrying into it.
When Bassanio receives the loan from Shylock, he proceeds to hire servants,
for whom he orders a special livery, or uniform. Why? Because one cannot
show up in Belmont just by oneself. Bassanio knows he has competition: he
says,
Nor is the wide world ignorant of her worth,
For the four winds blow in from every coast
Renowned suitors9
Portias other suitors display their wealth by bringing trains of servants.
Bassanio needs the loan to acquire the entourage he needs for his amorous,
and commercial, enterprise.
And it is commercial. His romantic venture is depicted as a materialist
fairytale of a lady and three caskets. The emphasis here is on material. When
Bassanio first mentions Portia, he describes her as
a lady richly left,
And she is fair, and, fairer than that word;
Of wondrous virtues
And her sunny locks
Hang on her temples like a golden fleece,
And many Jasons come in quest of her.10
The order in which Bassanio names Portias attributes first rich, then
beautiful, then virtuous strengthens the suggestion of materialism, and he
does go on to develop his golden fleece comparison.
In Greek mythology, Jason, the hero, and his Argonauts are on a quest for
the fabulous golden fleece kept by the King of Colchis, who will give up the
fleece only to someone who passes a triple test.
Myth and money are blended in The Merchant of Venice: the King of Colchis
will not give up the golden fleece unless riddles are solved, and Portias dead
father also has tied up her future in a riddle-solving test. Portia cannot
choose her own husband; instead she is obliged to marry whichever man
chooses the correct one of three caskets a gold, a silver, and a lead her
portrait being in only one of these:

6 Reading 3-5

Portia:

I may neither choose [the husband] I would nor


refuse who I dislike, so is the will [desire] of a
living daughter curbed by the will [wishes and
testamentary directions] of a dead father.

Nerissa:

The lottery that [your father] hath devised in these


three chests of gold, silver, and lead, whereof who
Humanist Issues in Commercial Practice

chooses his meaning chooses you, will no doubt


never be chosen by any rightly but one who you
shall rightly love.11
Thus, the prospective husband has to fulfil the terms of the fathers will
which is to negotiate with, and satisfy, the dead father. The lottery condition
in the will is a combination of fairy tale and inheritance law: fantasy written in
commercial, financial, and legal language. Marriageable womens inherited
property could be tied up by conditions in patriarchal wills. Though this case
from The Merchant of Venice is admittedly an extreme and dramatic one,
property laws fostered a commercial marriage market in which women with
expectations of an inheritance were regarded as prizes.
What Nerissa calls chests are referred to in the rest of the play as
caskets. Portias picture and a scroll are in the lead casket; the silver casket
has a fools head (in the video, Arragon finds a mirror and in it sees the
reflection of his own fools head) and a message that the chooser will get
as much as he deserves; the gold casket has deaths head and a scroll with
the memorable phrase and material moral principle (coined here) All that
glisters is not gold. By the terms of his will, Portias father has written her
into one of these caskets.
The purpose of wills is to dispose of property after death, and Portias father
has, so to speak, placed a lien or encumbrance or document of security on
her from his grave. Indeed, the most familiar document of security is a
mortgage.
The word mortgage comes from medieval French mort gage, meaning a dead
pledge. A gage was a glove placed or thrown down to affirm a pledge. It is a
dead pledge because the deal dies, either when the debt is paid or when
payment fails.
By this process, the father has confined his otherwise rich and golden
daughter, holding her, as it were, in or to a bond and keeping her out of
circulation. A condition of entering the casket competition is that the
contestants must pledge never to marry if they choose wrong so they too
are taken out of circulation. Patriarchal considerations (positive or negative)
aside, this myth-like situation of the woman in the casket is an illustration of
the power of documents, especially those that pertain to wealth, property,
and marriage: and Bassanio set out to marry for wealth and property.
The message on the lead casket is Who chooses me must give and hazard
[risk] all he has. This is a pretty strong challenge for Bassanio, even though
he essentially is giving and hazarding all the borrowed cash that Antonio has.
But with a bit of help from Portia (she calls for music while he is choosing,
and the music accompanies a song whose opening lines rhyme
bredheadnourishd), he selects lead. In that casket he finds her
picture she told him, I am locked in one of them; If you do love me, you
will find me out12 and a scroll telling him to claim her. By directing
Bassanio to the right casket, Portia effectively has chosen, rather than the
Humanist Issues in Commercial Practice

Reading 3-5 7

other way around, thereby freeing herself from her dead fathers
encumbrance.

Portia balances the accounts


And so, holding the scroll, he says, Fair lady, I come by note to give, and
to receive.13 By note means with a bill of dues, an invoice. This
commercial term is only the first of a run of law and accounting terms that
the lovers now exchange. He tells her that he cannot be certain that what he
sees is true, Until [it is] confirmed, signed, ratified by you.
To these three legal verbs, Portia responds with arithmetical multipliers and
repetitions of account and sum (how many can you find in the speech?):
You see me, Lord Bassanio, where I stand,
Such as I am. Though for myself alone
I would not be ambitious in my wish
To wish myself much better, yet for you
I would be trebled twenty times myself,
A thousand times more fair, ten thousand times
More rich, that only to stand high in your account,
I might in virtues, beauties, livings [possessions], friends,
Exceed account; but the full sum of me
Is sum of something.
Then she speaks in the terms of property conveyancing:
Myself and what is mine to you and yours
Is now converted [transferred]. But now I was the lord
Of this fair mansion, master of my servants,
Queen oer myself; and even now, but now,
This house, these servants, and this same myself
Are yours, my lords. I give them with this ring.14
Her formal declarations are purposely spoken in front of witnesses: it is
implied that the paperwork, and physical consummation of the marriage, will
follow in due course. If the marriage is not consummated, the verbal
declarations, and even the church ceremony, can be voided. This point is
crucial to the events that follow, events showing that, despite her verbal
commitment of her wealth to Bassanio, Portia is, in the interim, still in
control of her money.
Before anything can proceed further, Lorenzo, Jessica, and another of
Antonios friends arrive from Venice with a letter from Antonio telling that
he has defaulted, and that Shylock is suing for the pound of flesh. Bassanio
promptly sets off for Venice to redeem Antonio with of course
somebody elses money. This time, its Portias:
Pay [Shylock] six thousand, and deface [cancel] the bond.
Double six thousand and then treble that.
You shall have gold
To pay the petty debt twenty times over.15
8 Reading 3-5

Humanist Issues in Commercial Practice

As it turns out, Bassanio offers, in court, to repay Shylock six thousand


ducats, then ten times the original three thousand16 and Shylock refuses. As
we will see, from first to last, only Shylocks money circulates in Venice.

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

Christopher Marlowe, The Jew of Malta, in Christopher Marlowe: The


Complete Plays, ed. J.B. Steane (Harmondsworth: Penguin Books Ltd.,
1969), Act 1, Scene 1, lines 1-37.

The Compact Edition of the Oxford English Dictionary (New York: Oxford
University Press, 1977), Volume 1, page 1017.

William Shakespeare, The Merchant of Venice, ed. W.M. Merchant


(Harmondsworth: Penguin Books Ltd., 1967), Act 1, Scene 1, line 42.

Christopher Marlowe, The Jew of Malta, Act 1, Scene 2, lines 71-80.

Ibid., Act 1, Scene 2, lines 98-110.

Ibid., lines 100-101.

William Shakespeare, The Taming of the Shrew, ed. G.R. Hibbard


(Harmondsworth: Penguin Books Ltd., 1968), Act 1, Scene 2, lines 74-75.

Ibid., Act 2, Scene 1, lines 114-127.

William Shakespeare, The Merchant of Venice, Act 1, Scene 1, lines 167-169.

10

Ibid., Act 1, Scene 1, lines 161-172.

11

Ibid., Scene 2, lines 22-31.

12

Ibid., Act 3, Scene 2, lines 40-41.

13

Ibid., Scene 2, lines 139-140.

14

Ibid., Scene 2, lines 149-171.

15

Ibid., Scene 2, lines 299-307.

16

Ibid., Act 4, Scene 1, lines 108-109.

Humanist Issues in Commercial Practice

Reading 3-5 9

READING 3-6

The Merchant of Venice Video scene plot


Act/Scene

Location

Initial characters

Tape location
[minutes (')
and
seconds (")]

Act 1
Scene 1
Scene 2
Scene 3

Venice restaurant or club


Belmont, Portias house
Venice, Shylocks Office

Antonio, Salarino, Solanio


Portia, Nerissa
Shylock, Bassanio

2'00"
12'24"
18'55"

Act 2
Scene 1
Scene 2
Scene 3
Scene 4

Not in video version


Venice, a street
Venice, Shylocks house
Venice, a street

Scene 5
Scene 6
Scenes 7 & 9
Scene 8

Venice, Shylocks house


Not in video version
Belmont, in Portias house
Not in video version

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"

Venice, court of justice


Venice, outside court room

Antonio, Bassanio, Gratiano,


Duke
Portia, Nerissa

80'44"
110'00"

Belmont, outside Portias house

Jessica, Lorenzo

111'00"

Act 4
Scene 1
Scene 2

Act 5
Scene 1

Humanist Issues in Commercial Practice

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.

Act 1, Scenes 1 and 3, in Venice


As you begin to watch the video, you will see at once that Jonathan Miller
has set the play in the late nineteenth century. The older male characters such
as Antonio, Shylock, and the Duke wear Victorian frock coats and top hats.
At Shylocks first appearance, notice how he wears a traditional Jewish
yarmulke (a skullcap) as a sign of his religious faith; but he is otherwise
dressed like the other professional businessmen, and especially like Antonio.
Shylock is thus shown as trying to assimilate at least outwardly. In 1868
and 1874-1880, Britain had a Jewish Prime Minister, Benjamin Disraeli
(whom you will be reading in Topic 8.2); Oliviers Shylock looks as if the
actor and director have looked at portraits of Disraeli. As you watch the
3000-ducat loan being arranged, notice how Antonio and Bassanio treat
Shylock as an outsider. When Shylock proposes flesh instead of interest, does
he appear to be suggesting only a merry bond?

Act 1, Scene 2, in Belmont


Portia and her lady-in-waiting Nerissa briefly explain the caskets contest, and
Portias preference for Bassanio.

Act 2, Scene 4, in Venice


Lorenzo, one of Antonios young friends and lover of Shylocks daughter
Jessica, plots to elope with Jessica while Shylock is dining with (and
delivering the loan money to) Bassanio and Antonio. You will not actually
see Jessica until she and Lorenzo arrive at Portias house in Belmont, for the
actual elopement scene is not in the filmed version. Notice here that Lorenzo
expects Jessica to bring gold and jewels from her fathers house.

Act 3, Scene 1, in Venice


Solanio and Salerio, two other young friends of Antonios, speak of rumours
that Antonios ships have been lost. Shylock enters: he has just discovered
that Jessica has run away, taking valuables (including a ring of sentimental
value). Hes not sure who has collaborated with her, but as the two young
Christian men mock at his grief and mention Antonio, Shylocks mind begins
to focus on revenge and on Antonio. When his friend Tubal arrives to tell
2 Reading 3-6

Humanist Issues in Commercial Practice

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.

Act 3, Scene 2, in Belmont


Here, where Bassanio is to make his choice of casket, you will clearly see how
Portia has rigged the contest in his favour. Two flamboyant female Victorian
singers, wearing lead-coloured dresses, place themselves by the lead casket,
fix their eyes on it and emphasize the bred, head, nourishd rhymes in
their song. After choosing correctly (how could he miss?), Bassanio and
Portia speak the property transfer dialogue explained in your lesson notes.
Then the mood changes when Lorenzo, Jessica, and Salario arrive and
Bassanio reads Antonios letter. Notice here how Portia begins to see that
she has a rival for Bassanios affection.

Act 3, Scene 2, in Venice


Shylock has placed Antonio under arrest, and refuses to compromise in any
way.

Act 3, Scene 4, in Belmont


Portia sends to Dr. Bellario for notes and garments and proposes that
she and Nerissa go to Venice. She doesnt say just what they will do there.

Act 4, Scene 1, in Venice


In this trial scene, notice how the judge (the Duke of Venice) is on Antonios
side from the very beginning: Antonio is a Venetian insider. In the scene,
Shylock is addressed curtly and contemptuously even when he is being asked
to show mercy (Duke: We all expect a gentle answer, Jew). Look and listen
for Portias reaction when Bassanio says he loves Antonio more than he
loves his wife, and for how Shylock names Jessica as one of his reasons for
pressing this case. Are the Venetians attitudes provoking Shylock rather than
placating him? Count the number of times the sum owed, and multiples of it,
are offered, and the number of times Shylock insists on having the precise
terms of his bond.
Notice also that when Portia (disguised as Balthasar) is accredited as judge,
she progressively analyzes the matter in Shylocks favour (this is dramatic
build-up), and then does what the Duke has been afraid to do awards
Shylock the forfeit. As Shylock approaches Antonio to cut the pound of
flesh, watch and listen closely (the production delivers this climatic moment
quite weakly) as Portia says Tarry [wait] a little and then makes her famous
distinction between flesh and blood. His bond is flawed, and he has lost.
Then pay close attention to how Portia, with legalistic remorselessness, lists
the criminal penalties which Shylock has drawn on himself (including
Antonios demand that he become a Christian), and to how Gratiano mocks
and jeers at Shylocks distress. Notice, too, how Portia protects her money.
There is no need to direct you to note Shylocks devastation, for Olivier gives
Humanist Issues in Commercial Practice

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.

Act 5, Scene 1, in Belmont


In this brief excerpt, the director Jonathan Miller has altered Shakespeares
original ending, in which, back in Belmont and with all dangers and marital
misunderstandings cleared, the three married couples and Antonio troop off
happily. Miller retains Antonio (Shylocks antagonist and also his
counterpart) on-stage, with Jessica in the foreground. In this production,
Portia clearly treats the young Jewish woman as an outsider, and Jessica feels
the exclusion. As she stands looking at a document shes just been given
its either a letter from her father, or a copy of the will he has been forced to
make Kaddish, the Jewish prayer of mourning, is recited on the
soundtrack.

4 Reading 3-6

Humanist Issues in Commercial Practice

READING 3-7
Emotions and commerce in The Merchant of

Venice

Shylocks money in circulation


With Antonio in cash flow difficulties, the only serious money in circulation
in Venice is Shylocks. Shylock first supplies the venture capital that finances
Bassanios marriage quest. Then, he involuntarily stakes his daughter Jessicas
elopement with her Christian lover Lorenzo. This marriage-venture of
Jessicas is a double loss of daughter and wealth to Shylock, and stirs in
him the profound emotions mentioned in the first of the five themes.
In the elopement scene of the play (Act 2, Scene 6 in the text of the play),
Jessica appears at an upper stage window of Shylocks house and throws
down a casket of her fathers valuables to Lorenzo in the street below. She
then says she will gild [herself] With some more ducats1 before joining
Lorenzo and following Bassanios ship to Belmont. When Shylock finds
Jessica gone, he funds an expensive and useless search I know not whats
spent in the search. The thief gone with so much, and so much to find the
thief!2 Lorenzo and Jessica set off to follow Bassanios ship to Belmont, and
Shylock hears that his daughter spent in Genoaone night fourscore
ducats and gave a ring (her dead mothers) for a monkey.3 When they turn
up later in Belmont, they have spent everything. Lorenzo later hears that they
will inherit half of Shylocks estate and he is immensely relieved. As was
customary, Shylock also has to pay an officer to arrest Antonio when he
defaults. And when Shylock loses his case and instead is found guilty of
intent to kill a Venetian, half of his estate is confiscated as a fine. He is
forced to make a will or deed of a gift of all he dies possessed [of] unto his
son Lorenzo and his daughter.4
Thus Shylocks wealth, so thriftily acquired, is being spent in Venice,
Belmont, Genoa, and elsewhere, out of his control. Shakespeare puts
Shylocks money in circulation as visibly as if every one of the ducats was
marked.
In the text of the play Antonio is innocently implicated in the elopement, for
he has been seen near Shylocks house close to the elopement time, and
Shylock believes he collaborated with the runaway. Seeking an outlet for his
grief and rage, Shylock targets Antonio. By doing so he brings a human issue
his personal loss into what had been the commercial loan arrangement.

Antonio, Shylock, and the ancient grudge


Even before Jessicas elopement, the AntonioShylock relationship
condenses the anxieties of centuries of theorizing about usury not only
the financial controversies, but also the religious and cultural divisions that
stereotyping had fostered. As mentioned in the outline of the plot, Antonio
Humanist Issues in Commercial Practice

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

Humanist Issues in Commercial Practice

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.7
Shylock seems to merge the Old Testament story with the Aristotelian
argument just as early monetary theory so often does. The result is his
answer: I cannot tell [whether or not my money is ewes and rams], I make it
breed as fast.8
This also is the first connection in the play between flesh (albeit mutton) and
money. When Shylock comes round to waiving interest and proposing the
pledging of a pound of Antonios flesh, he says, quite reasonably,
Pray you tell me this,
If [Antonio] should break his day [of repayment], what
should I gain
By the exaction of the forfeiture?
A pound of mans flesh taken from a man
Is not so estimable, profitable neither,
As flesh of muttons, beefs, or goats. I say [that]
To buy his favour I extend this friendship.9

Antonio, Shylock, and the bond agreement


Why does Antonio agree to the equal [exact] pound offlesh pledge?
Even Bassanio says you shall not seal to such a bond for me; Ill rather
dwell in my necessity.10 There are a number of answers.
First, Shakespeare is writing a monetary fable, whose action, as with many
mythic stories, turns on romantic places (Venice and Belmont), ancient
grievances, strange documents such as the Belmont will and the Venice
bond, a contest with a golden girl (Portia) as the prize, another golden girl
(Jessica, who gilded herself with her fathers ducats before eloping), a story
from the Old Testament and possibly even an echo of the New Testament in
Shylocks loaned ducats being a multiple of thirty Judass blood money
(Topic 1.5) and, of course, this magic bond that can turn money into
flesh.
Second, Antonio is certain that because he has spread his risks at sea (My
ventures are not in one bottom trusted,11 he says), one or more of his ships
will come home a month before the repayment is due.
Third, Antonio is so contemptuous of Shylock that he simply refuses to
negotiate with him. Bassanio has made the initial contact with Shylock,
named the amount and term, and proposed Antonio as guarantor. Antonio
and Shylock are to settle the security and interest details, but Antonio will not

Humanist Issues in Commercial Practice

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

Humanist Issues in Commercial Practice

Notice that in this last reason, Shylock is explaining a variation of the


technique that Thomas Lodge (Topic 3.2) alleges: that usurers employ
persons to rob their clients of the loan money, thereby ensuring forfeiture of
pledges. The strategy is even older than Lodges or Shakespeares time, and is
explained by Plato, as you may recall from Topic 1.2:
The aim of life in an oligarchy is to become as rich as
possible. Since the power of the ruling class is due to its
wealth, they will not want to have laws restraining prodigal
young men from ruining themselves by extravagance. They
will hope to lend these spendthrifts money on their property
and buy it up, so as to become richer and more influential
than ever.18
Antonio directing the notary on the bonds terms is precisely what the Koran
prescribes in its chapter 12: Let the scribe write [the particulars of the debt];
and let the debtor dictate.

Antonio and Shylock both incur grievous losses


Antonios ships do not arrive in time, but Shylock could not have anticipated
this. Nor does he anticipate Jessicas elopement. As mentioned previously,
Antonio is innocently implicated in the elopement, for he has been seen near
Shylocks house close to the elopement time, and Shylock believes he
collaborated with the runaway.
Therefore, with the (blood) bond between himself and his daughter broken,
and Antonio associated with this break, Shylock falls back on the bond (the
supposed merry bond) that binds Antonio to him. In Shylocks mind, the
connection between blood-bond and debt-bond is strengthened when
Salerio, one of Antonios friends, grossly mocks the grieving father and
stupidly mentions Antonio in almost the same breath.
Shylock: My own flesh and blood to rebel!
I say my daughter is my flesh and my blood.
Salerio:

There is more difference between[Jessicas and]


your bloods than there is between red wine and
Rhenish [white wine]
But tell us, do you hear whether Antonio have had
any loss
by sea or no?

Shylock: Let him look to his bond.


Salerio:

Why, I am sure if he forfeit thou wilt not take his


flesh. Whats that good for?

Shylock: To bait fish withal. If it will feed nothing else, it


will feed my revenge.19

Humanist Issues in Commercial Practice

Reading 3-7 5

Shylocks desire for revenge is understandable. But revenge is a radical form


of self-interest the self-interested drive that the Covenant Law in Exodus
aims to curb when it tempers the lex talionis by prescribing monetary
indemnifications (see Topic 1.3). In his desire for revenge, Shylock is blind to
consideration consideration here meaning not only logical thinking but
also the multiplied value that will be offered him in court by Bassanio. By
refusing the monetary offers, he forgets or ignores the cash substitute
prescribed in the Old Testament [Exodus 21:32, again see Topic 1.3]. In this
state, Shylock is like someone who wrecks a good business through indulging
in a passion or addiction.

Breaking the bond


As you view The Merchant of Venices climactic courtroom scene, where
Shylocks contractual right to a pound of flesh is both confirmed and denied,
you need to know how Portia becomes an officer of the court. No sooner
has Bassanio chosen the correct casket and won Portia as his bride than he
learns about Antonios danger his ships have not come home, he has
defaulted, and Shylock is demanding the forfeit. When Bassanio explains this
to Portia, she says he should quickly marry her and then, even before the
marriage is consummated, pay Shylock 36,000 ducats: Pay him six thousand,
and deface [cancel] the bond. Double six thousand and then treble that.20
When Bassanio has left, Portia follows him to Venice where, dressed as a
male barrister and with case notes and a letter of reference from her cousin
Doctor [of Laws] Bellario,21 she will obtain standing in Antonios case.
As you view the video, you will see that when Bassanio learns of Antonios
danger, and in the courtroom where Portia watches him plead for Antonio
(and then, as he thinks, takes his last leave of him), she clearly notes that
Bassanio is strongly attached to his friend. She does not want her new
husband to bring this emotional baggage the guilt over having been
responsible for Antonios death into the marriage. So her aim in turning
up at Venice is to rescue Antonio and Bassanio and her marriage.
When Shylock takes Antonio to court, the Venetian judges are faced with a
conundrum. The case itself is, of course, more theatrical than legally
plausible. No legal system anywhere permits someone to endanger his or her
own life, let alone ratify the endangerment by a contract. The pound of flesh
constitutes what was regarded in law as an intolerable forfeiture. As well,
Shylock brings a civil suit against Antonio, for non-payment of a debt, but
when Portia finds the loophole and accuses Shylock, as an alien, of the
offence of conspiring against the life of a Venetian, the issue becomes a
criminal one.
The courts initial dilemma is that, because Antonio is one of them and
Shylock a barely tolerated outsider, the judges want the case withdrawn, and
they try to persuade Shylock to do this. Bassanios offers to repay Shylock in
multiples are a potential godsend to the court, but Shylock metaphorically
and literally has lost his flesh and blood (that is, Jessica). He wants payment

6 Reading 3-7

Humanist Issues in Commercial Practice

literally in kind. To deny Shylock the terms of a bond would be a commercial


embarrassment, as Shylock knows and Antonio has explained:
The Duke cannot deny the course of law,
For the commodity [commercial relations] that strangers have
With us in Venice, if it be denied,
Will much impeach the justice of the state,
Since that the trade and profit of the city
Consisteth of all nations.22
That is, no foreigners would afterward do business in Venice.
But Portias finding is that, though the bond entitles Shylock to claim the
forfeit,
This bond doth give thee here no jot of blood;
The words expressly are a pound of flesh.23
This finding has been foreshadowed in Shylocks lamentations over Jessica,
where he referred to her as my own flesh and blood and my flesh and my
blood. Flesh and blood being normally inseparable (do you say flesh and
blood is or flesh and blood are?), Shylock thus is given a fable-like yet
physiologically understandable conundrum. And, as he hesitates, Portia adds
another condition:
Therefore prepare thee to cut off the flesh.
Shed thou no blood, nor cut thou less nor more
But just a pound of flesh. If thou takst more
Or less than a just [exact] pound, be it but so much
As makes it light or heavy in the substance
Or the division of the twentieth part
Of one poor scruple, nay, if the scale do turn
But in the estimation of a hair,
Thou diest, and all thy goods are confiscate.24
Portia demands accuracy to the twentieth part of onescruple. A scruple
was a weight of 1.295 grams, one twentieth of which would be 0.065 grams.
A scruple is also a moral or ethical consideration that restrains ones actions.
You should notice that the Old Testament practice of weighing out metal at
the merchants rate of exchange (Topic 1.1) is associated with this theatrical
moment. In the play, Shylock has a balance; Portia reminds him that he must
take only true weight.

Legal entitlements and moral dues


When Shylock concedes defeat and asks for his three thousand ducats, Portia
instantly points out that he already has renounced his entitlement:
He hath refused [the ducats] in the open court.
He shall have merely [exactly] justice and his bond
[entitlement].25
Humanist Issues in Commercial Practice

Reading 3-7 7

At this point of the court proceedings, Portia as judge-advocate has worked


to free Antonio from his contractual bond to Shylock, and Bassanio from his
emotional bond to Antonio. Now she speaks in her own interest. If Shylock
were to be repaid his principal, he would receive three thousand ducats of
hers. Like Ischomachus wife in Xenophons Oeconomicus (Topic 1.6), Portia
knows that economy begins at home. Her withholding here emphasizes that,
in the course of the play, the only money that circulates in Venice is
Shylocks.
Because Shylock demonstrably has sought to take the life of a Venetian
citizen, the court fines him by confiscating half of his wealth and awarding
the other half to Antonio. Antonio in turn asks that the confiscated part be
returned to Shylock, and that he (Antonio) simply be made trustee of the
other half to ensure that it will go to Lorenzo and Jessica on Shylocks death.
Shylock is required to sign a deed of gift (essentially, a will) ratifying this
trusteeship and the proposed legacy. So he retains half his wealth, but must
also become a Christian. The latter requirement is a great imposition upon
someone so genuinely proud of his religion as Shylock is the Christian
court is lacking in the quality of mercy.

Coming to terms with circulation


This reading of The Merchant of Venice as a play about the circulation of
money, and specifically of Shylocks money, has so far not mentioned the
fact that Shakespeares mercantilist age was coming to terms with what was
for it a new concept of circulation: the circulation of blood in the body.
After decades of research, the English physician William Harvey would
publish Movement of the Heart and Blood in Animals in 1628, and question the
ancient idea that the heart is the source of body heat and blood. Instead, he
argued that rather the blood, as being the warmest part of all the body, gives
to the heart (as to all the other parts) the heat which it has received, and that
the hearts one role is the transmission of the blood, and its propulsion, by
means of the arteries to the extremities elsewhere.26
Harvey was simply explaining a physiological process, but at the time, his
medical discovery was thought to have subversive political implications. The
central authority of monarchical government traditionally had been
represented as the heart of the body politic; now Harvey appeared to be
positing a more democratic model, where the heart was a partner, not a
sovereign organ, and warmed like all the other body parts by blood
circulating to and from the extremities.
Just so, in Shakespeares presentation of money as both a thing of fable and a
fact of life, Shylock is permitted to live only on the extremity of Venetian
culture, politics, and commerce. When he furnishes cash to Antonio and
Bassanio, who are at Venices heart, the extremity is supplying the centre
and generating circulation. As the play shows by its concentration on the
flow of Shylocks cash, he is performing a healthy circulating function in this
political and economic body until he becomes blinded by rage and revenge.
8 Reading 3-7

Humanist Issues in Commercial Practice

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

William Shakespeare, The Merchant of Venice, Act 2, Scene 6, lines 49-50.

Ibid., Act 3, Scene 1, lines 83-85.

Ibid., line 99.

Ibid., Act 4, Scene 1, lines 385-387.

Ibid., Act 1, Scene 3, lines 38-49.

Ibid., Act 1, Scene 3, lines 91-93.

Aristotle, Politics, Book 1, Chapter 9, 1258b.

William Shakespeare, The Merchant of Venice, Act 1, Scene 3, line 93.

Ibid., Act 1, Scene 3, lines 159-165.

10

Ibid., lines 151-152.

11

Ibid., Scene 1, line 42.

12

Ibid., Act 1, Scene 3, lines 58-67.

13

Ibid., lines 129-131.

14

Ibid., line 176.

15

Ibid., lines 141-142.

16

Ibid., lines 169-174.

17

Ibid., Act 2, Scene 5, lines 44-49.

18

Plato, The Republic, Chapter XXX1, VIII.555B, page 280.

19

William Shakespeare, The Merchant of Venice, Act 3, Scene 1, lines 34-39.

Humanist Issues in Commercial Practice

Reading 3-7 9

10 Reading 3-7

20

Ibid., Act 3, Scene 2, lines 299-306.

21

Ibid., Scene 4, lines 49-52.

22

Ibid., Scene 3, lines 26-31.

23

Ibid., Act 4, Scene 1, lines 304-305.

24

Ibid., lines 321-329.

25

Ibid., lines 335-336.

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.

Humanist Issues in Commercial Practice

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

Humanist Issues in Commercial Practice

Did something for the common Good.


This was the States Craft, that maintaind
The Whole, of which each Part complaind:
This, as in Musick Harmony,
Made [discords] in the Main agree;
Parties directly opposite
Assist each other, as twere for Spite;
And Temprance with Sobriety
Serve Drunkenness and Gluttony.6
Of the poems 434 lines, the first 204 describe this utopia of vice, or virtueagreeing-with-vice, where every underhand trick of every trade is accepted
and rewarded. But then the grumbling Brutes that is, the less successful
cheats and those who reckoned they had enough ill-gotten gains to be
comfortable for life begin to moralize; the god Jove takes notice, and
abolishes fraud; the whole hive turns honest, and the bottom falls out of the
economy:
But, Oh ye Gods! What Consternation
How vast and sudden was th Alteration!
In half an Hour, the Nation round,
Meat fell a Penny in the Pound.7
The Moral is, in part:
Then leave Complaints: Fools only strive
To make a Great an honest hive.
TEnjoy the Worlds Conveniencies,
[And] Be famd in War, yet live in Ease
Without great Vices, is a vain
Eutopia seated in the Brain.8
The theme itself is not original: in Topic 3.2, you read Francis Bacons
argument that usury may be wrong, but to speak of the abolishing of usury is
idle. All states have ever had it, in one kind or rate, or other. Sothat
opinion must be sent to Utopia. And in Shakespeares play, Measure for
Measure, a woman pleads for her condemned husbands life; he has been very
corrupt, and she unswervingly ethical, but she loves him; she has to find
some kind of argument, and so she anticipates the Mandevillian paradox by
about a century:
They say best men are moulded out of faults,
And, for the most, become much more the better,
For being a little bad.9
Go back a little further in time. In Topic 2.3, you read how Aquinas argued
that charging interest to foreigners is wrong, but generates income so that
business people do not need to commit a greater wrong by taking interest
from coreligionists. From Mandeville and the Shakespeare character just
quoted we have the same theory of inoculation.

Humanist Issues in Commercial Practice

Reading 3-8 3

Mandevilles theme, that the worlds conveniences cannot be acquired


without great vices, appears at first to advocate moral and social anarchy. But
having, as it were, attracted everybodys attention with the 1705 publication
of the poem, he explained his position in a preface to the 1714 version, in
which he also included an essay, Enquiry Into the Origin of Moral Virtue.
The preface states that rather than encouraging anarchy, the Fable was
intended only to show the vileness of the ingredients that all together
compose the wholesome mixture of a well-ordered society.:
For the main design of the fable (as it is briefly explained in
the moral) is to show the impossibility of enjoying all the
most elegant comforts of life that are to be met with in an
industrious, wealthy and powerful nation, and at the same
time be blessed with all the virtue and innocence that can be
wished for in a Golden Age; [and] from thence to expose the
unreasonableness and folly of those, that desirous of being an
opulent and flourishing people, and wonderfully greedy [for]
all the benefits they can receive as such, are yet always
murmuring at and exclaiming against those vices and
inconveniences that from the beginning of the world to the
present day have been inseparable from all kingdoms and
states that ever were famed for strength, riches, and
politeness at the same time.
To do this, I first slightly touch upon some of the faults and
corruptions the several professions and callings are generally
charged with. After that I show that those very vices of every
particular person were by skilful management made
subservient to the grandeur and worldly happiness of the
whole. Lastly, by setting forth what of necessity must be the
consequence of general honesty and virtue, and national
temperance, innocence and content, I demonstrate that if
mankind could [emphasis added] be cured of the failings they
are naturally guilty of, they would cease to be capable of being
raised into such vast, potent and polite societies as they have
been under the several great commonwealths and monarchies
that have flourished since the Creation.10
Skilful management definitely suggests that Mandeville visualizes worldly
happiness as a product of organized vice. Not organized crime, however, for
he adds:
When I assert that vices are inseparable from great and
potent societies, and that it is impossible their wealth and
grandeur should subsist without [vices], I do not say that the
particular members of them who are guilty of any should not
be continually reproved, or not be punished for them when
they grow into crimes.11

4 Reading 3-8

Humanist Issues in Commercial Practice

The utopian ideal and the actual state of things


In the sixth of the Dialogues that he includes in the 1714 edition as
throughout the Fable and his commentaries Mandeville contrasts the ideal
with the actual state of things:
The disagreement between the words and actions of men is at
no time more conspicuous than when we would learn from
[churchmen] their sentiments concerning the real worth of
things. Virtue is without doubt the most valuable treasure
which man can be possessed of; it has everybodys good
word. But where is the country in which it is heartily
embraced?
Money, on the other hand, is deservedly called the root of all
evil: there has not been a moralist nor a satirist of note that
has not had a fling [attack] at it; yet what pains are taken and
what hazards are run to acquire it, under various pretences of
designing to do good with it! I verily believe that as an
accessory cause [money] has done more mischief in the world
than any one thing besides. Yet it is impossible to name
another [commodity] that is so absolutely necessary to the
order, economy, and the very existence of civil society; for as
[society] is entirely built upon the variety of our wants, so the
whole superstructure is made up of the reciprocal services
which men do to each other. How to get these services
performed by others, when we have occasion for them is the
grand and almost constant [requirement] in life of every
individual person.
To expect that others should serve us for nothing is
unreasonable; therefore all commerce that men can have
together must be a continual bartering of one thing for
another. The seller, who transfers the property of a thing, has
his own interest as much at heart as the buyer; and if you
want or like a thing, the owner of it, whatever stock or
provision he may have of [it], or how greatly soever you may
stand in need of it, 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? A physician [as Mandeville was] can [exchange]
nothing [with] a man whose family is in perfect health. Money
obviates and takes away all those difficulties by being an
acceptable reward for all the services men can do [for] one
another.12

Humanist Issues in Commercial Practice

Reading 3-8 5

Private vice may be turned to public benefit


If you look back to Topic 1.4 at Aristotles opinion of coin (see Coinage
a trading convenience, but an ethical threat), you will see much the same
pragmatism as here: money facilitates service and commodity exchange. You
may recall that, to Aristotle, money itself is neutral, merely a token of
exchange. By contrast, in Chaucers Pardoners sermon-tale, the love of
money is the root of all evil the New Testament phrase in 1 Timothy 6:10
had given it a sinister non-neutrality. Moreover, Aristotle suggests that the
pursuit of surplus wealth, as with Midas, is merely irrational; religious texts
began to condemn it as sinful.
Mandevilles contribution to the ongoing philosophical evaluation of money
is that, while regarding it with Aristotelian pragmatism, he also dismisses
moralists equivocal views of it. In his view, there is not any thing so entirely
evil, but it may prove beneficial to some part or other of the creation,13 and
hence he writes at the end of the fable, repeating the seeming paradox, the
substance of which is That private vices, by the dextrous management of a
skilful politician, may be turned into public benefits.14
Self-interest is the vice that Mandeville is (mistakenly) most often seen as
tolerating or even promoting, especially as his poem depicts a successful
society based on the principle and practice of selfishness, and his
commentary argues that altruism is merely a disguised form of selfishness:
It is impossible to [be] judge of a mans performance unless
we are thoroughly acquainted with the principle and motive
from which he acts. Such men [who], without complying
with any weakness of their own, can part from what they
value themselves, and, from no other motive but their love
[of] goodness, perform a worthy action in silence such
men, I confess, have acquired more refined notions of virtue
than those I have hitherto spoke of. Yet even in these
[virtuous examples] (with which the world has [so far] never
swarmed) we may discover no small symptoms of pride, and
the humblest man alive must confess that the reward of a
virtuous action, which is the satisfaction that ensues upon it,
consists in a certain pleasure he procures to himself by
contemplating on his own worth: which pleasure, together
with the occasion of it, are as certain signs of pride as looking
pale and trembling at any imminent danger are the symptoms
of fear.15
Here Mandeville makes a careful distinction between actions that are
altruistic totally unselfish and those that we may call donative, in the
sense that the giver feels or expects to feel a sense of well-being, or qualifies
for a public service award, or simply receives an income tax receipt.
Mandeville anticipates the era of charitable fund drives and of the personal
and corporate donation, and leads us to the open question: Can charity itself
be entirely disengaged from self-interest?

6 Reading 3-8

Humanist Issues in Commercial Practice

Hobbes and the need for a common power


Mandeville had adopted an apparently whimsical but actually serious view of
the world as it is and as it runs politically and economically. This view is
frequently seen as anticipating the economic theory of laissez faire (literally let
people do as they choose), which will be considered in Module 6. His view
of human nature actually is impressively tolerant, particularly when it is
compared with that held by the political philosopher Thomas Hobbes (15881679), whose Leviathan, or The Matter, Form and Power of a Commonwealth
Ecclesiastical and Civil (1651) also is an analysis of human inclinations,
concluding that they are predominantly selfish.
Mandeville was strongly influenced by Hobbes for example, on the matter
of being virtuous for basically selfish reasons such as doing good works to
win recognition.16 Under the heading Love of virtue from love of praise,
Hobbes writes that
Desire of praise disposeth [men] to laudable actions, such as
please [those] whose judgement they value. Desire of fame
after death does the same; yet is not such fame vain,
because men have a present delight therein, from the
foresight of it, and of the benefit that may redound [accrue]
thereby to their posterity: which though they now see not, yet
they imagine; and any thing that is pleasure in the sense, the
same also is pleasure in the imagination.17
Mandeville proposes to deal with vice by treating it as a perpetually
renewable resource and organizing it by the dextrous management of a
skilful politician into a veritable public utility. Hobbes had also argued that
humans, with their conflicting self-interests, could not be left to live without
a common power to keep them all in awe, but must be organized into a
commonwealth. Without this ruling authority, individuals would pursue a
general inclination of all mankind, a perpetual and restless desire of power
after power, that ceaseth only in death.18 Where Machiavelli saw power
exercised by an astute Prince, and Mandeville saw an equally skilled politician
running the state, Hobbes envisioned a commonwealth: an agreed-upon
authority all citizens would obey. The contrast between Mandevilles
whimsical touch and Hobbes gravity can be seen in Hobbes powerful,
famous warning:
During the time men live without a common power to keep
them all in awe, they are in that condition which is called war;
and such a war, as is of every man against every man. For war
consisteth not in battle only, or the act of fighting, but in a
tract of time wherein the will to contend by battle is
sufficiently known. So the nature of war consists not in
actual fighting, but in the known disposition thereto, during
all the time there is no assurance to the contrary.
Whatsoever therefore is consequent to a time of war, where
every man is enemy to every man, the same is consequent to
the time wherein men live without other security than what
Humanist Issues in Commercial Practice

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

Humanist Issues in Commercial Practice

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

Niccolo Machiavelli, The Prince, in The Portable Machiavelli, eds. P.


Bondanella and M. Musa (New York: Viking Penguin, 1988), pages 126-127.

Ibid., Chapter 17, pages 131-132.

Ibid., Chapter 16, page 128.

Ibid., pages 128-130.

Bernard Mandeville, The Fable of the Bees, ed. F.B. Kaye. (Oxford:
Clarendon Press, 1947), Volume I, page 18.

Ibid., pages 24-25.

Ibid., page 28.

Ibid., page 36.

William Shakespeare, Measure for Measure, ed. J.M. Nosworthy


(Harmondsworth: Penguin Books Ltd., 1972), Act 5, Scene 1, lines 436-438.

10

Bernard Mandeville, The Fable of the Bees, Volume I, pages 7-8.

11

Ibid., page 10.

12

Ibid., Volume II, pages 348-349.

13

Ibid., Volume I, page 367.

14

Ibid., page 369.

15

Ibid., pages 56-57.

16

Ibid.

17

Thomas Hobbes, Leviathan, ed. W.G. Pogson Smith (Oxford: Clarendon


Press, 1958), Part I, Chapter 11, page 76.

18

Ibid., page 75.

19

Ibid., Chapter 13, pages 96-97.

20

Ibid., Chapter 15, page 112.

21

Plato, The Republic, Chapter I, I.331, page 7.

Humanist Issues in Commercial Practice

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.

Lockes theory of labour earning entitlement


The concept that human labour applied to land yielded economic value may
not have been new to seventeenth-century thinkers. But the idea that labour
itself was what generated the value is generally attributed to the political
philosopher John Locke (1632-1704). Living in a time of intellectual and
political change in Europe in the Age of Reason, or the Enlightenment
Locke set down many of the principles of modern empirical (verifiable by
experience) thought in his Essay Concerning Human Understanding (1690), with
its famous argument that each human is born a tabula rasa or blank page, to
be written upon in various ways and to acquire different talents by
upbringing and education.
The Enlightenment was so called because all social and cultural institutions in
the Western heritage including religion, law, moral codes, politics, and
economics were being re-examined for their correspondence or
agreement with reason. Whereas the Renaissance was characterized by great
creativity in the arts and sciences, the Enlightenment was notable for this
application of reason as well as for advances in science.
Enlightenment figures you will encounter in Modules 4 through 6 are
Locke, Newton, Hume, Leibniz, Adam Smith, and Franklin. In France, this
period of the late seventeenth and eighteenth centuries became known as
Le Sicle des lumires, and in Germany, Aufklrung.
When Locke, the great reasoner, wrote on economic theory in his Second
Treatise of Government (1690), he begins with an echo of the theological
philosophers you have read in this course. Whereas Thomas Hobbes
envisioned a state or condition of nature in which every mans hand [is]
against every man,3 Locke writes that
The state of nature has a law of nature to govern it, which
obliges every one; and reason, which is that law, teaches all
mankind who will but consult it that, being all equal and
independent, no one ought to harm another in his life, health,
liberty, or possessions; for men being all the workmanship of
one omnipotent and infinitely wise Maker all the servants
of one sovereign master, sent into the world by his order, and
about his business they are his property whose
workmanship they are, made to last during his, not one
anothers pleasure; and being furnished with like faculties,
sharing all in one community of nature.4
While going about the business of this wise maker, humans would assent to a
divinely ordered contract by whose terms they would or should live by the
rule of reason and common equity, which is that measure God has set to
the actions of men for their mutual security.5

2 Reading 4-1

Humanist Issues in Commercial Practice

When Locke, in The Second Treatise of Government, comes to the subject of


property rights and entitlements, he applies both natural reason and biblical
revelation to the passage that opens Reading 4-2 (paragraph 25). Natural
reason, which Locke also calls right reason, is dictated by natural law.
Today, this very important concept of natural law is defined as practical
universal judgements which [every human being arrives at and] which express
necessary and obligatory rules of human conduct.6
An example of a Lockean judgment by natural reason is the assertion that
begins Chapter 5 of The Second Treatise of Government: [Humans], being once
born, have a right to their preservation, and consequently to meat and drink
and other such things as nature affords for their subsistence.7
Locke at all times strives to synthesize this natural or right reason with
reasoning, which he defines as the analytic process of advancing from things
known to things unknown and [arguing] from one thing to another in a
definite and fixed order of propositions.8
As distinct from reason, but not necessarily contrary to or differing from it,
revelation is the disclosure of a divine will or plan, as expressed in the
Wisdom books of a culture. Locke writes that a biblical passage is the voice
of reason confirmed by inspiration, and by inspiration he means divine
revelation (Reading 4-2, paragraph 31).
Read the excerpt from Lockes The Second Treatise of Government in Reading 42. The excerpt is an important analysis of human economic practices from
Bible times to Lockes time, and beyond. As you read, note how Locke, like
Aquinas (though not so frequently), employs revelation by citing the Old and
New Testaments, and also uses the analytic method of reasoning.

Reflections on Lockes Treatise


Because he is explaining the evolution of title rights from earliest times,
Lockes encapsulated history starts, as the Bible itself does, with a reminder
of those grants God made of the world to Adam. Notice in Reading 4-2
how many times Locke uses the phrase in the beginning the Old
Testaments opening words. Lockes progressive economic argument is
structured rather like an Old Testament narrative. And, looking for a parallel
with the Creation storys Eden, over which God gave humankind dominion
on condition that they till and tend it [Genesis 1:28-29, 2:15], Locke finds
that parallel in the New World: Thus in the beginning all the world was
America (paragraph 49).
In the seventeenth century, America was still relatively sparsely populated by
Europeans. But the great expanses of unsettled America were not the
unpopulated world given to Adam and Eve as lands that they had a divinely
given right and duty to appropriate, improve, and thereby win title to.
America had its native peoples, and the colonizing Europeans were
latecomers.
According to Montaigne and his sources, the first sixteenth-century waves of
European colonizers had robbed and slaughtered hospitable and cultured
Humanist Issues in Commercial Practice

Reading 4-1 3

South American peoples (Topic 3.1). Enlightenment reasoning would, like


Montaigne, have found that pillage and violence abhorrent. But it is hard to
see where indigenous populations are factored into Lockes grand vision
here. Perhaps they are acknowledged in paragraph 26, where he writes that
the fruits the earth naturally produces and the beasts it feeds belong to
humankind in common. This suggests a view of humankind as huntergatherers. But the rest of this important chapter emphasizes what Europeans
saw as wiser use for land, namely agriculture and the manufacturing and
trading that agriculture inspires and supports the industry celebrated in
paragraph 43, where Locke catalogues the elements that go into making a
loaf of bread.
But to be fair to Locke, his central intention is to explain how the concept or
accepted fact of private title to land developed and how the economic
disadvantage of those without land might be alleviated. His thesis is stated in
paragraph 27: 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.
Locke considers the divine gift of the earth as given to humankind to be held
in communal ownership insofar as
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 [title] exclusive of the rest of mankind, in
any of them.(paragraph 26)
But Lockes argument (following the Creation story pattern) is that the initial
divine injunction in Genesis 1 to tend the land was not a penalty but a
vocation. In Genesis 3, after Adam and Eve have eaten the one fruit that
God had forbidden them to eat, work appears to be assigned as a
punishment: By the sweat of your face shall you earn your bread. Locke
essentially gives the Creation and Fall story the interpretation that a number
of modern biblical commentators give it, in that before the Fall and after it,
humankind is commanded to work: after the Fall the work becomes harder
and the product less spontaneous. Alan Richardson, one of these
theologians, argues that the Genesis stories
do not represent work as coming into being as a result of sin
but as part of the very intention of God in making the world
and man Apart altogether from sin and the Fall, man has
work to do; he has a function to perform within the created
order.9
Observe how Lockes theme, that humankind are all the servants of one
sovereign master, sent into the world by his order, and about his business,
anticipates this modern interpretation of the Genesis story. Notice also the
intertwining of theological and economic thinking. Locke, a seventeenthcentury economic theorist and one of the exemplars of secular
Enlightenment thought, begins his exploration of the grounds of property

4 Reading 4-1

Humanist Issues in Commercial Practice

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.

Implications of Lockes theory


Lockes phrase enclose it [land] from the common should remind you of
the definition of and protest against enclosure in Thomas Mores Utopia
(Topic 2.4). Enclosure was the process of driving peasant farmers and
villagers off common lands and dedicating those lands to grazing or other
agribusiness requiring minimal labour. Enclosure was still being carried out in
Europe through the eighteenth century. (Soviet collective farming, with its
quotas set by bureaucrats, was a twentieth-century parallel.) Is Locke
advocating this system, and its attendant monopolization of agricultural
resources? Refer to paragraph 37 of Reading 4-2, where he argues that title
properly earned through judicious cultivation more than offsets the
consequent reduction of common land, for
he who appropriates land to himself by his labour does not
lessen but increase the common stock of mankind [land]; for
the provisions produced by one acre of enclosed and
cultivated land are to speak [without exaggeration] 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
Humanist Issues in Commercial Practice

Reading 4-1 5

The improvement of land in England and America


Take another look at Reading 4-2 and notice how fond Locke is of the word
improve: he has a form of improve in at least seven of the 27
paragraphs. In Lockes age, and throughout the eighteenth century,
confidence in human reason tended to create a (not always justified)
confidence in science, in progress, in improvement. For example, Lockes
Essay Concerning Human Understanding with its conception that all humans are
born equal, with their minds a tabula rasa, was an optimistic call to selfimprovement, to be up and doing, writing understanding on to the page of
ones mind. The Second Treatise of Government represents unimproved land as a
blank page waiting for the first human to write title on it. Humans and land
are always potentially improvable.
Hence, the enclosing and improvement of a parcel of land is to Locke an
incentive to improve other land: there was still enough [land] and as good
left (paragraph 33). And if land in Europe is in short supply, then let [a
man] plant in some inland, vacant places of America, [where a reasonable
annexation of land] would notprejudice the rest of mankind, or give them
reason to complain, or think themselves injured by this mans
encroachment. In America, Locke suggests there is room, 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 (paragraph
36).

Justification for large landholdings


Why had land become scarce, and monopolized, in the Old World? Lockes
answer is that 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 possession and a right
to them (paragraph 36). And since money was a non-perishable token of
value, while the produce of the land was perishable, it then follows that
46.

6 Reading 4-1

He that gathered a hundred bushels of acorns or


apples had thereby a property in them; they were his
goods as soon as gathered. He was only to look that
he used them before they spoiled, else he took more
than his share and robbed others. And indeed it was a
foolish thing, as well as dishonest, to hoard up more
than he could make use of. If he gave away a part to
anybody else so that it perished not uselessly in his
possession, these he also made use of. And if he also
bartered away plums that would have rotted in a week
for nuts that would last good for his eating a whole
year, he did no injury; he wasted not the common
stock, destroyed no part of the portion of the goods
that belonged to others, so long as nothing perished
uselessly in his hands. Again, if he would give his nuts
for a piece of metal, pleased with its color, or
exchange his sheep for shells, or wool for a sparkling
Humanist Issues in Commercial Practice

pebble or a diamond, and keep those by him all his


life, he invaded not the right of others; he might heap
as much of these durable things as he pleased; the
exceeding of the bounds of his just property not lying
in the largeness of his possession, but the perishing of
anything uselessly in it.
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

49.

Find out something that has the use and value of


money amongst his neighbours, you shall see the
same man will begin presently to enlarge his
possessions.

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.

Value for labour a remedy for inequities


Even with America, however, there is never enough common or available
land to mix ones labour with and thereby acquire. What then would Locke
suggest to the worker displaced by enclosure? From the Utopia excerpt in
Topic 2.4, you may recall the description of how redundant workers are
reduced to begging and are cast into prison as vagrants for going about idle
when, though they most eagerly offer their labor, there is no one to hire
them.11 Lockes answer evolves from a theory of labour earning entitlement
to property toward a theory of value for labour that is, the theory that
labour earns the worker an entitlement to wages paid in money.
Locke, like Aristotle (Reading 1-6), blames the invention of money for the
rise of hoarding, which is seen by Locke as monopolistic land acquisition.
But Locke recognizes that money also is a solution to the problems it creates.
Because, in Lockes theory, once it is admitted that human labour has value
It is labour, then, which puts the greatest part of the value upon land
[adds the greatest value], without which it would scarcely be worth anything
(paragraph 43) it also is evident that labour adds value at every stage of
production, including the making of the very means of production (the
following excerpts are taken from Reading 4-2):
43.

For it is not [merely] the ploughmans pains, the


reapers and threshers toil, and the bakers sweat
[that] is to be counted into the bread we eat; the

Humanist Issues in Commercial Practice

Reading 4-1 7

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.

In moving on from just land entitlement to wage entitlement, Locke is now


claiming an economic value for labour. Perhaps over-optimistically, he also
envisions a perpetual market for that labour. His optimism is based on what
he sees as the endless list of necessary products that require labour for
development and use you should carefully reread his clever sentence, in
paragraph 43, listing some of the necessaries that go into the making of an
everyday loaf of bread: It would be a strange catalogue
Locke is already envisioning an industrial age and is fascinated by the
processes of technology and trade processes that he sometimes imagines
working together, like the parts of a reasoned argument, to inevitable and
satisfactory outcomes. Because labour adds value and deserves to be
rewarded with title rights to the land it improves, so it continues to add value
to other economic goods to which it is applied. And since land is no longer
labours sole workplace, and money has agreed-upon value, then labour has
another form of entitlement to economic value.

Wages for labour a new concept?


This concept of payment for labour, of wages, is now so familiar that it is
difficult to imagine that it once had to be argued philosophically. After all,
isnt it an ancient concept? As Jesus said (and Luther quoted), The labourer
8 Reading 4-1

Humanist Issues in Commercial Practice

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.

Thomas Aquinas, Summa Theologica, 2-2, Question 57, Article 3.

Aristotle, Politics, Book 2, Chapter 5, 11263a.

Thomas Hobbes, Leviathan, Part I, Chapter 13, page 96.

Humanist Issues in Commercial Practice

Reading 4-1 9

10 Reading 4-1

John Locke, The Second Treatise of Government, ed. Thomas P. Peardon


(New York: Macmillan Publishing Co., 1989), Chapter 2, Paragraph 6.

Ibid., Paragraph 8.

H.C. Black, Blacks Law Dictionary (St. Paul, Minnesota: West Publishing
Co., 1990), page 1026.

John Locke, The Second Treatise of Government, Chapter 5, Paragraph 24.

John Locke, Essays on the Law of Nature, ed. W. von Leyden (Oxford:
Clarendon Press, 1958), page 149.

99

Alan Richardson, The Biblical Doctrine of Work (London: S.C.M. Press,


1958), pages 25-26.

10

Richard Cantillon, Essai sur la nature du commerce, tr. Henry Higgs (New
York: Augustus M. Kelley, 1964), page 3.

11

Thomas More, Utopia, Book I, pages 65-69.

12

Bernard Mandeville, The Fable of the Bees, Volume II, pages 348-349.

Humanist Issues in Commercial Practice

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.

Humanist Issues in Commercial Practice

Reading 4-2 1

28. He that is nourished by the acorns he picked up under an oak, or


the apples he gathered from the trees in the wood, has certainly appropriated
them to himself. Nobody can deny but the nourishment is his. I ask, then,
When did they begin to be his? When he digested or when he ate or when he
boiled or when he brought them home? Or when he picked them up? And it
is plain, if the first gathering made them not his, nothing else could. That
labour put a distinction between them and common; that added something
to them more than nature, the common mother of all, had done; and so they
became his private right. And will anyone say he had no right to those acorns
or apples he thus appropriated because he had not the consent of all
mankind to make them his? Was it a robbery thus to assume to himself what
belonged to all in common? If such a consent as that was necessary, man had
starved, notwithstanding the plenty God had given him. We see in commons
[common lands], which remain so by compact, that it is the taking any part of
what is common and removing it out of the state nature leaves it in which
begins the property, without which the common is of no use. And the taking
of this or that part does not depend on the express consent of all the
commoners. Thus the grass my horse has bit, the turfs my servant has cut,
and the ore I have digged in any place where I have a right to them in
common with others, become my property without the assignation or
consent of anybody. The labour that was mine, removing them out of that
common state they were in, has fixed my property in them.

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

Humanist Issues in Commercial Practice

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

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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.

38. The same measures governed the possession of land, too:


whatsoever he tilled and reaped, laid up and made use of before it spoiled,
that was his peculiar right; whatsoever he enclosed and could feed and make
use of, the cattle and product was also his. But if either the grass of his
enclosure rotted on the ground, or the fruit of his planting perished without
gathering and laying up, this part of the earth, notwithstanding his enclosure,
was still to be looked on as waste and might be the possession of any other.
Thus, at the beginning, Cain might take as much ground as he could till and
make it his own land, and yet leave enough to Abels sheep to feed on; a few
acres would serve for both their possessions. [Cain and Abel were Adams
and Eves sons.] But as families increased and industry enlarged their stocks,
Humanist Issues in Commercial Practice

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.

41. There cannot be a clearer demonstration of anything than several


nations of the Americans are of this, who are rich in land and poor in all the
comforts of life; whom nature having furnished as liberally as any other
people with the materials of plenty, i.e., a fruitful soil, apt to produce in
abundance what might serve for food, raiment, and delight, yet for want of
improving it by labour have not one-hundredth part of the conveniences we
enjoy. And a king of a large and fruitful territory there feeds, lodges, and is
clad worse than a day-labourer in England.
42. This shows how much numbers of men are to be preferred to
largeness of dominions; and that the increase of lands and the right
employing of them is the great art of government; and that prince who shall
be so wise and godlike as by established laws of liberty to secure protection
and encouragement to the honest industry of mankind, against the
oppression of power and narrowness of party, will quickly be too hard for his
neighbors; but this by the bye.
To return to the argument in hand.

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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.

45. Thus labour, in the beginning, gave a right of property wherever


anyone was pleased to employ it upon what was common, which remained a
long while the far greater part and is yet more than mankind makes use of.
Men, at first, for the most part contented themselves with what unassisted
nature offered to their necessities; and though afterwards, in some parts of
the world where the increase of people and stock, with the use of money,
had made land scarce and so of some value the several communities
settled the bounds of their distinct territories and, by laws within themselves
regulated the properties of the private men of their society, and so, by
compact and agreement, settled the property which labour and industry
began. And the leagues [treaties] that have been made between several states
and kingdoms either expressly or tacitly disowning all claim and right to the
land in the others possession have, by common consent, given up their
pretenses [claims] to their natural common right which originally they had to
Humanist Issues in Commercial Practice

Reading 4-2 7

those countries, and so have, by positive agreement, settled a property


amongst themselves in distinct parts and parcels of the earth; yet there are
still great tracts of ground to be found which the inhabitants thereof not
having joined with the rest of mankind in the consent of the use of their
common money lie waste, and are more than the people who dwell on it
do or can make use of, and so still lie in common; though this can scarce
happen amongst that part of mankind that have consented to the use of
money.
46. The greatest part of things really useful to the life of man, and
such as the necessity of subsisting made the first commoners of the world
look after, as it does the Americans now, are generally things of short
duration, such as, if they are not consumed by use, will decay and perish of
themselves; gold, silver, and diamonds are things that fancy or agreement has
put the value on, more than real use and the necessary support of life. Now
of those good things which nature has provided in common, every one had a
right, as has been said, to as much as he could use, and property in all that he
could effect with his labour; all that his industry could extend to, to alter
from the state nature had put it in, was his. He that gathered a hundred
bushels of acorns or apples had thereby a property in them; they were his
goods as soon as gathered. He was only to look that he used them before
they spoiled, else he took more than his share and robbed others. And indeed
it was a foolish thing, as well as dishonest, to hoard up more than he could
make use of. If he gave away a part to anybody else so that it perished not
uselessly in his possession, these he also made use of. And if he also bartered
away plums that would have rotted in a week for nuts that would last good
for his eating a whole year, he did no injury; he wasted not the common
stock, destroyed no part of the portion of the goods that belonged to others,
so long as nothing perished uselessly in his hands. Again, if he would give his
nuts for a piece of metal, pleased with its color, or exchange his sheep for
shells, or wool for a sparkling pebble or a diamond, and keep those by him
all his life, he invaded not the right of others; he might heap as much of these
durable things as he pleased; the exceeding of the bounds of his just property
not lying in the largeness of his possession, but the perishing of anything
uselessly in it.

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
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Humanist Issues in Commercial Practice

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

Humanist Issues in Commercial Practice

Reading 4-3 1

The many social roles of the goldsmith


Although Mores polemical argument lumps together goldsmith-bankers and
moneylenders among the idle and the nonessential workers, goldsmithbanking and moneylending were essential functions in all places where
formal banking had not yet taken root.
In descriptions of monetary practices in Europe during the Middle Ages and
well into the eighteenth century, the terms goldsmith, goldsmith-banker,
goldsmith-scrivener, and money-scrivener are frequently mentioned. The
labels are practically interchangeable, and indicate the close relationship
between writing (scrivener being the term for a clerk, secretary, or
professional writer) and the depositing and exchanging of money, contract
writing, accounts-keeping, and organizing.
Goldsmiths accepted deposits of money from merchants, and of portable
valuables from individuals, and gave written receipts which sometimes were
cashable in other centres: that is, cashable with another goldsmith who had a
corresponding account with the issuers of the receipt. You will recognize
here the banking aspect of the portable note. By the early 1600s, goldsmiths
notes were accepted just as readily as banknotes would be by the end of the
century. Goldsmiths also exchanged foreign coinage, offered interest on
deposits and pledges, and loaned out deposited money at a higher rate than
they themselves were paying. The rates were largely unregulated. Connect
this situation to your readings in Module 2, where you learned how Aquinas,
Luther, and Calvin contended with the issue of interest-taking, and how both
Luther and Calvin came to admit that the practice could only be regulated
through interest-rate ceilings, but not eliminated.
The range of goldsmiths business was very broad. Many were small local
dealers, hardly distinguishable from pawnbrokers. As mentioned, they took
deposits of cash and paid interest, lent cash at interest, and advanced money
on personal valuables. Where private or state banks did not exist, as in
England before 1694, goldsmiths could be lenders to royalty or to the state
itself.

Dealings of a seventeenth-century goldsmith-banker


One of these high-end goldsmiths we know about was Edward Backwell, a
member of the Goldsmiths Company in the city of London and a city
alderman, who died in 1683. In 1642, the English Parliament commenced a
civil war against King Charles I and, after defeating him in 1647 (and
executing him in 1649, for treason), ruled the country as a republican
Commonwealth. This republican Commonwealth endured until 1660, when
Parliament agreed to restore the monarchy. During the war, the goldsmith
Backwell lent money to the parliamentary side and kept accounts for it when
it governed.

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Humanist Issues in Commercial Practice

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).

Personal transactions with the goldsmith


We know about Backwells monetary dealings through the historically
famous diary of Samuel Pepys (1633-1703). Pepys (pronounced peeps)
kept a personal diary, which was not originally intended for publication it
was written in code. But when the diary was decoded and first published in
1825, Pepys soon came to be recognized as a social commentator on his
times. He was appointed secretary to the Navy Board in 1660 and became a
member of a commission, chaired by the Duke of York, that administered
Tangier from London. Pepys kept his diary every day from 1660 to 1669 (it
runs to 11 volumes in the twentieth-century definitive edition). As well as
giving a detailed picture of social, political, business, and financial life in
seventeenth-century Europe, Pepys recounts how he personally deposited
with and borrowed from Backwell, and also how he dealt with Backwell on
behalf of the king and government.
To get a taste of this aspect of commercial life, read a few of these examples
of Pepys dealings on his own account:

On 23 June 1660 Changed all my Dutch money at


Backwells for English (1.183)
On 27 and 29 December 1660, Pepys goes to Backwells,
acquires a set of silver candlesticks to give away as a gift,
then returns two days later and took a brave State-plate
and Cupp [silver presentation articles] in lieu of the
candlesticks apparently exchanging the candlesticks for
another gift (1.323-1.324)

Humanist Issues in Commercial Practice

Reading 4-3 3

On 15 April 1661, Pepys at home laid up 200 [pounds]


which I had brought this morning home from Backwells
(2.76)
On 12 September 1664, John Creed, Deputy-Treasurer to
the Navy, offered Pepys, upon Pepys request, to put out
some money for me into Backwells hand at 6 per cent
interest, which [Backwell] seldom gives which I will
consider of, being doubtful of trusting any of these great
dealers [in money] because of their mortality: but then the
convenience of having ones money at an hours call is very
great. (5.269)4

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

The goldsmith and the government


As mentioned previously, Backwell was goldsmith-banker not only to
individuals, but also to the government. He loaned money to the king and
the kings brother. Though Charles IIs reign began with an intense reaction
against practically everyone who had supported or worked for
Oliver Cromwells parliamentary Commonwealth regime, for whom Backwell
had been accountant, someone who knew the books of the previous regime
(and who had funds to lend) clearly was not a person to be dispensed with.
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Humanist Issues in Commercial Practice

Probably as a result of his trade arbitrage in foreign coinage, even in


Dutch money at a time when England was at war with the Dutch Republic,
Backwell had connections in Flanders (Belgium). Flanders, France, and some
of the German states were Englands allies. The government business in
which Backwell was engaged in Flanders while the Plague was afflicting
London was arranging the payment of subsidies to these allies. A warrant for
1,750 pounds from Englands secret service account was issued to him on
June 27, 1665, shortly before he left on his mission. The government officer
who arranged his departure was the Secretary of the Navy, Pepys, who wrote
on July 6, 1665:
Alderman Backwell is ordered abroad upon some private
score with a great sum of money wherein I was
instrumental the other day in shipping him away. It seems
some of his Creditors have taken notice of it, and he was like
to be broke [to have suffered a run on his goldsmiths
deposits] yesterday in his absence Sir G. Carteret
[Treasurer of the Navy] telling me that he [Carteret] was
forced to get 4000 [pounds] to answer Backwells peoples
[accounting staffs] occasions, or [Backwell] must have
broke.8
What Pepys is saying here is that Backwell the goldsmith-banker was so
important to the government, both as a lender to it and as a broker of
international dealings on its behalf, that the government actually stopped a
run on Backwells goldsmith bank by transferring money to it from the state
Treasury. In a number of his diary entries, Pepys describes how Backwell
would brag about his direct access to the king himself.
The government borrowed by issuing Treasury Bills, which were promises to
repay debts. By an act passed in 1665, these bills could be used to borrow
from money-market persons like Backwell. The government was supporting
a war, and had essentially voted itself a line of credit, with the loans to be
exacted on call and the creditors repaid in strict rotation. It appears that, as a
creditor, Backwell often was reluctant to wait his turn. And he and Viner
were not afraid to refuse money to the king:
Vinerand Backwell, were sent for this afternoon and [were]
before the King and his Cabinet about money; they declaring
they would advance no more it being discourse in the
House of Parliament for the King to issue out his privy-seals
to [lenders] to command them to trust him, which gives them
[lenders such as Backwell and Viner] reason to decline
trusting. But more money they are persuaded to lend, but so
little, that (with horror I speak it)after the Council
[adjourned],I did lay the state of our condition before the
Duke of York. That the fleet could not go out
withoutthings it [lacked] and [that] we could not have
without money.9

Humanist Issues in Commercial Practice

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.

Providing money for the military


While wearing his three hats as Backwells customer, Admiralty Secretary,
and Tangier Commissioner, Pepys often was the intermediary between
Backwell and the government, as on July 1, 1668: I to White-hall to
Committee of Tanger: and there vexed with the importunity and clamours of
Alderman Backwell for my acquittance [repayment] for money by him
supplied the garrison, before I have any [government] order for paying it.10
The Exchequer warrant to repay Backwell was issued on the same day. And
Backwell was soon ready to provide money for Tangier again on September
23, 1668: By water to White-hall to attend the Commissioners of the
Treasury with Alderman Backwell about 1000 [pounds] he is to lend us for
Tanger.11
Two days later on September 25, Pepys diary entry reveals one of the
perquisites the goldsmith received for his specialized or targeted lending to
Englands Tangier defence:
So with the Duke of York and some others to his [private
office], and Alderman Backwell, about a Committee of
Tanger, and there did agree upon a price for pieces-of-eight at
4 [shillings] and 6 [pence].12
The official rate of exchange for Tangier pieces-of-eight had been fixed in
January 1661 at four shillings nine pence,13 so four shillings and six pence is a
discount to Backwell of about 51/4 percent.
When Pepys became Treasurer of the Tangier Commission in 1665, he
experienced the stresses of finding money for Tangier. Four years later, on
January 14, 1669, when he was absent from a Commission meeting, he was
nearly partly replaced by a private-sector appointee none other than
Backwell. This would have been an early example of privatizing a
government service.
I to White-hall through the park, where I met the King and
Duke of York and so walked with themto White-hall,
where the Duke of Yorkdid a little business and I did give
him thanks for his favour to me yesterday at the Committee
of Tanger in my absence (Mr. Povy [Thomas Povey, a
Commission member and Pepys predecessor as Treasurer]
having given me advice of it, of the discourse there, of doing
something as toputting the payment of the garrison into
some undertakers [entrepreneurs] hand, Alderman Backwell,
[a proposal] which the Duke of York would not suffer to go
6 Reading 4-3

Humanist Issues in Commercial Practice

on without my presence, at the debate) and [the Duke]


answered me just thus: that he ought to have a care of him
[Pepys] that doth the Kings business in the manner that I
do.14
Pepys diary gives details of European social, cultural, political, and economic
life over a particular decade, including information about the dealings of a
high end seventeenth-century goldsmith. Edward Backwell exchanged
foreign money, received money from depositors, paid interest on the
deposits, and lent the money not only to individuals but also to the
government, taking and calling in promissory notes. He aimed his
government loans at the protection of sea-routes and consequently of trade.
In this context he dealt directly with highly placed public servants, and at
times even with the king and the kings successor-to-be. If Backwell had
replaced Pepys as Treasurer of the Tangier Commission, he would have been
in a position to influence Englands foreign policy. As it was, his career
illustrates the role that lending agencies play in politics and government.
Early in 1672, the English government was in debt for about a million
pounds, and its paper promises to pay were accepted only at deep discounts.
The king closed the Exchequer by an action with results not unlike a
present-day filing for protection from creditors under the Companies
Creditors Arrangement Act or Chapter 11 of the U.S. Bankruptcy Act. The
government froze its creditors principal and stopped paying interest on most
of the debt. Backwell is said to have had nearly 300,000 pounds on loan to
the government at the time. The government appears to have interceded
between Backwell and his creditors, and in 1677 goldsmith-creditors began to
receive interest again, and instalments of the principal (which was not fully
repaid until the reign of William IV in the 1830s.15 Backwell carried on a
diminished goldsmithing business until about a year before his death in 1683.
His and Viners goldsmith houses were not among the few goldsmiths who
bought into the Bank of England in 1694 (Topic 4.3).

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.

Thomas More, Utopia, Book II, page 239.

Humanist Issues in Commercial Practice

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).

Ibid., Volume 6, page 165.

Ibid., page 171.

Ibid., Volume 5, page 281, 27 September 1664.

Ibid., Volume 6, pages 149-150, Note 1.

Ibid., Volume 7, pages 330-331.

10

Ibid., Volume 9, page 253.

11

Ibid., page 315.

12

Ibid., page 316.

13

Ibid., Volume 4, page 132, note 2.

14

Ibid., Volume 9, page 415.

15

Dictionary of National Biography (London: Oxford University Press, 1950), Volume II,
pages 794-795.

Humanist Issues in Commercial Practice

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

The practical consequence was to tie banking to exchange, be


it manual exchange or exchange of bills.3
After reading de Roovers account of how Early-Modern banking worked
out procedures that kept business and businesspeople on the right side of the
church, it is worth remembering that the Medici Bank era, the 1400s, was
pre-Reformation; Martin Luthers climactic challenge to the Roman Catholic
Church came in 1517.
In Topic 2.4, you read some of Luthers descriptions and criticisms of certain
methods of disguising interest-taking, such as charges for time payments and
the arrangement known as Zinskauf. As with Luthers explanations, the de
Roover excerpt stresses the bankers care to avoid the appearance of usury and
to make their dealings technically conform to Aquinas definition of
doctrinally-tolerable trading. De Roover writes that money dealers wishing to
circumvent the usury prohibition were encouraged by the quibbles [the
philosophical hair-splitting] of the theologians themselves. One loophole
was detected in Aquinas examination of usury where he says,
The primary use of silver coinis its disbursement in
commercial transactions. It is, therefore, not legitimate both
to make a charge for its use and to expect the money lent to
be restored.
We ought, however, to note thatsilver coinage can also
have a secondary use: specially minted coins could, for
instance, be lent for exhibition or as security. A man would in
such a case be entitled to make a charge for its use.4
The loophole is in Aquinas approval or toleration of lending special (or, as
we now say, collectible) coins and recovering them or their value plus a
charge for their rental. Presumably, it could be argued that any piece of
money is special, particularly when the money is coin rather than paper.
And so, by avoiding (the word is used here in a technical sense, as in
avoiding tax) the prohibition on usury, the private banks in Christendom
were able to do business.

The spread of commercial paper


As explained at the beginning of this topic, banking activities had long
preceded the formation of private and church banks in Europe during the
Middle Ages. The most developed European country in the Middle Ages was
Italy, and private banks there probably were doing business as early as the
twelfth century. Transfers and exchanges of funds for popes, rulers, and
merchants, along with loans, were the staple business of private banks. At the
end of the thirteenth century, Italian banks were establishing branches in
northern Europe, particularly in Flanders (Belgium and Northern France).
The German rise of the Fugger banking family, who bankrolled Holy Roman
Emperors from 1519 onward, began when Johann Fugger established a
textile business at Augsburg in 1368 (Topic 2.3).5
2 Reading 4-4

Humanist Issues in Commercial Practice

Branching out and establishing offices abroad gave the bankers


representation and correspondents in other European, and Near Eastern,
countries. A correspondent is a person who has regular business relations
with another, especially in a distant place,6 that is, a representative or agent.
The Oxford English Dictionarys first example of the use of the word is from
1674, and refers to persons delegated to take Bills of Exchange from
Amsterdam upon their Correspondents in London.
This development of branch banking around 1400 was still based on the
physical transferring of money of deposits in coin or bullion between
correspondents and head offices. The inconvenience of this medieval system
would in time lead to the use of paper credit notes, or commercial paper,
instead of, or along with, cash. Modern banking is based on the circulation of
banknotes and the discounting of commercial paper, and this process
evolved in western Europe during the seventeenth century.
When the goldsmith Edward Backwell (Topic 4.2) asks Samuel Pepys on July
23, 1666, to help him get a bill or two paid by the Royal Navys paymaster,
he is asking for payment on a credit note that he holds. And he is engaging in
activity characteristic of English goldsmiths since Elizabeth Is time (15581603) and of goldsmiths in most of the other countries in Europe and the
Near East: exchange, depositing, and lending involving commercial paper. In
other words, high-end goldsmiths were doing business that banks would
eventually co-opt business that, as in Backwells case, ranged from dealing
in silver-plate and candlesticks to lending to the state. An example of highend pawnbrokering is recounted by de Roover when he tells how the Medici
Bank took a jewelled mitre from an early fifteenth-century Pope as security
for a loan; the next Pope had to redeem the pledge.7 It was the currencyexchange, deposit, and commercial paper activity that led to the
establishment of private banks and, early in the 1600s, of forms of national
banking in the Dutch Republic, followed throughout that century by similar
national banks in other European states.

State banks benefit from increase of trade and commerce


The rise of state banks was encouraged by the increase in trade routes to the
Americas and the Orient, and by the inflow of bullion from colonies in the
Americas. Spain squandered much of its share of this bullion (as Montaigne
explained in his essay Of Vehicles, in Topic 3.1) and in 1609 lost its seven
northern Netherlands provinces, which, as a Dutch republic, commenced to
thrive on trade and banking. The remaining 10 provinces retained by Spain
prospered less as Spain itself declined.
The Bank of Amsterdam was founded in 1609, and three other Dutch banks
followed soon after in Middleburg, Delft, and Rotterdam. The Bank of
Hamburg dates from 1619, and the Stockholm Bank was established in 1656.
Although these were private businesses, they also were in effect the state
banks of republics and free cities. The Stockholm bank, for example, was set
up under royal patronage. It paid half of its profits to the Crown and was
under the inspectorship of Swedens Chancellor of the Exchequer.
Humanist Issues in Commercial Practice

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.

How a national bank was founded


A City of London Bank was a short-lived venture in 1682, and the following
year a proposed National Bank of credit came to nothing. In 1690, William
III and a Grand Alliance of European states began a new war against
France, a conflict that lasted until 1697. The costs of this war soon increased
Englands national debt to levels beyond what the private goldsmith-bankers
could supply. A committee of the House of Commons was struck, to report
on ways of raising money, and in 1693 a Scotsman, William Paterson,
represented a group of prospective investors who proposed to the committee
that a fund be created, and capitalized at a million pounds. This capital would
be subscribed.
These subscriptions essentially were long-term loans, or bonds: the bank was
funding itself by means of what would now be called an initial public offering
of shares. The state (the government) would pay six percent on the
subscriptions, thereby being seen to back the subscription-deposits. In this
way a pool of cash, or financial reserve, would be created: the implication
being that it would be there for the state itself to borrow at interest. In
recognition of their original subscriptions, the chief subscribers would be
appointed as trustees of the capital and would be ready as a Bank to
exchangeCurrent Bills. In the plan, the language moves from fund and
subscribers to trustees and bank, then on to bills a term that
appears to mean banknotes.

An Act of Parliament and a Royal Charter


The proposal was written up as an Act, went to both Houses of Parliament,
received amendments, including raising 1.5 million pounds instead of the
original million, and was passed in June 1694, subsequently confirmed by a
Royal Charter. The amendments secured certain Recompenses and
Advantagesto such Persons as shall voluntarily advance the sum of Fifteen
hundred thousand pounds towards the carrying on the War against France.8
These recompenses and advantages were the original rights and privileges of
a new corporation, the Governor and Company of the Bank of England,
who were thereby authorized to receive 1.2 million pounds.

4 Reading 4-4

Humanist Issues in Commercial Practice

The government promised to pay the subscribers (out of specified tax


accounts) 100,000 pounds interest annually, tax free: eight percent on 1.2
million pounds plus a 4000-pound management fee (as the government was
receiving credit of 1.5 million, the interest payment was slightly over the six
percent mentioned above). The attractive rate of about 6.4 percent on this
Fund for Perpetual Interest and the government guarantee offered a
combination of profit, security, and patriotic good-feeling (towards
carrying on the War). Subscribers were in effect lending to the king (the new
king, from Holland, whose national bank was a reassuring model). Interest
and deposits were backed by tax money flowing into the kings Exchequer.
In the context of the course theme of usury, you should also notice that the
Banks 1694 interest rate to long-term subscribers, approximately 6.4 percent,
was almost the same rate that Francis Bacon had calculated around the
beginning of the century as the yield of land over 16 years: six in the
hundred, and somewhat more (Topic 3.2).
The plan provided the government with its 1.5-million-pound line of credit,
and cash in hand, for, as the share subscription money came in, it was
transferred to the Exchequer. So, as the interest was being paid and
confidence in the banks solidity grew, deposits not to be confused with
subscriptions would come in, and they did. Depositors differed from
subscribers in two ways: they did not have trusteeship and their deposits and
interest were not guaranteed by the government. But depositors could
withdraw their money.
It is important to note that, by chartering the bank, the government
essentially converted its own IOUs and tallies into the banks notes. (You will
find an explanation of tallies later in this topic.) In effect, most of the
banks start-up capital was used to pay the current national debt. The banks
notes and stock were more attractive than the governments because interest
and dividends were more regularly paid by the bank. Governments in
England and Europe now made it regular practice to require loans or
outright donations from the promoters of companies applying for charters.
The East India Company, originally founded in 1600, was reorganized in
1708 to provide funds for the British government, and so was the South Sea
Company, floated in 1711, which you will read about in Topic 5.1.
The banks charter was granted on July 27, 1694, and when subscriptions
were invited, the whole [1.2 million pounds] (25 percent paid up) was
subscribed within twelve days, and paid up by January 1, 1695. By February
1695, the Bank had loaned out 1.5 million pounds to commercial,
government, and private creditors. To the actual sums of money subscribed
and deposited was added the publics faith in the concept that the bank
represented an unfailing fund of credit.9 Assets that depend on the
confidence of depositors and the general public are called fiduciary money.
The fact that King William and Queen Mary were nominally among the justunder 1300 subscribers added to confidence. (They were put down jointly for
10,000 pounds, but it is not clear whether they actually put in the money.) A
minimum subscription of 4000 pounds was required to qualify for election as

Humanist Issues in Commercial Practice

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

The Bank promises to pay the bearer


While accepting goldsmiths paper notes, the Bank of England was devising
paper of its own. These were principally bearer notes (which promised to
pay the bearer a certain sum, certified as being on deposit with the bank), and
accomptable notes. Bearer notes could be used by depositors to pay
accounts up to the value of the note. That value could be the total on deposit
in the bearers account, or it could be an exact sum owed by a depositorbearer who might, say, have a thousand pounds on deposit and ask for a note
to pay a hundred-pound debt. Examples of bearer notes surviving from the
6 Reading 4-4

Humanist Issues in Commercial Practice

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.

Humanist Issues in Commercial Practice

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.

Ibid., pages 10-11.

Thomas Aquinas, Summa Theologica, 2-2, Question 1, Article 6.

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.

Quoted in John Clapham, The Bank of England: A History (Cambridge:


Cambridge University Press, 1958), Volume I, page 17. The general
information about the Banks genesis in this topic is from Claphams Volume
I, Chapter 1.

Ibid., Volume 1, pages 18-24.

10

Ibid., page 178.

11

Ibid., page 28.

12

Raymond de Roover, Money, Banking and Credit in Mediaeval Bruges


(Cambridge, Mass: Mediaeval Academy of America, 1948), page 3.

13

Ibid.

14

Samuel Foote, The Cozeners, in The Dramatic of Works of Samuel Foote


(New York: Benjamin Blom, 1809), Volume 2, pages 53-54.

15

Jonathan Williams, Money (New York: St. Martins Press, 1997), page 185.

Humanist Issues in Commercial Practice

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

Humanist Issues in Commercial Practice

upwards or downwards as it suited him, without necessarily modifying the


fineness or weight of bullion in them. Lowndes proposal was as follows:
The value of the Silver in the coin ought to be Raised to the
foot [basic rate] of Six Shillings Three Pence in every Crown
[5-shilling coin]because the price of Standard Silver in
Bullion is risen (from [various] necessary and unnecessary
causes, producing at length a great scarcity thereof in
England) to Six Shillings Five Pence an ounce The Mint
Price since the 43rd [year] of Elizabeth being only Five
Shillings Two Pence an ounce. [For] whensoever the
Extrinsick Value [the stamped nominal value] of silver in the
coin have been or shall be less than the price of Silver in
Bullion, the coin hath been and will be melted down.
Raised Values may be lowered again by the wisdom and
authority of Parliament, when the Wealth of the Nation
shallbe re-established without Trouble or Charge of Recoining or Cutting the Silver Pieces into other Sizes.3

Coinage use and abuse in the marketplace


By re-coining or cuttinginto other sizes, Lowndes means the official
ongoing process at the Royal Mint. Tax collectors delivered bags of the coin,
in which all taxes and duties were paid, to the Exchequer. As the money was
counted, clipped coins were sent for melting and re-coinage. In daily use,
blatantly clipped coins were liable to be refused by merchants or accepted
only for less than their stamped value. Human nature being what it is, anyone
holding a clipped coin was anxious to pass it along as quickly as possible:
paying taxes with clipped money was a widespread practice. And at certain
intervals, such as when a new head of state came in or when a government
needed more revenues, a general re-coinage would take place, as with the
1662-1663 English re-coinage.
Re-coinages were profitable for the government, for existing coins were
progressively called in from the public, who were charged a minting fee. This
may remind you of Marco Polos travel account in Topic 2.5, where the
Khans paper money wore out from use and a fee had to be paid for its
renewal. When newly issued European coins were smaller in size than those
before, the bullion content was reduced and some of the precious metal
retained by the government.
Lowndes proposal was not to re-coin or re-size, but simply to revalue the
silver coinage by fiat what would now be called a devaluation. He
referred to crowns and half-crowns, the highest silver-coin denominations,
because these coins had been less subject to the practice of clipping, which
the 1663 innovation of milling coins had not eliminated. They tended to
escape clipping because they circulated less: the lower denomination coins
were used for ordinary purchases of food and drink and services; crowns and
half-crowns were popular with savers and hoarders. As Secretary of the
Treasury, Lowndes had actually carried out an extensive sampling of the bags
Humanist Issues in Commercial Practice

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.

Lockes objection to revaluation


Each proposal of Lowndes for the revaluation of silver coins is analyzed in
John Lockes Further Considerations Concerning Raising the Value of Money (1696)
in which Locke systematically analyzes and argues against Lowndes plan.
Locke had objected to tinkering with denominations five years previously, in
4 Reading 4-5

Humanist Issues in Commercial Practice

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

our Coin No body but the Hoarders will [gain] by this


Twenty per Cent
And though [prices of] Commodities (as is natural) shall be
raised in proportion to the lessening of [silver in] the money,
no body will [gain] by that, any more than they do now, when
all things are grown dearer. Only he that is bound up by
contract to receive any sum under such a denomination of
Pounds, Shillings and Pence will find his losswhen he goes
to buy Commodities The markets and the Shops will soon
convince him that his Money, which is One fifth lighter, is
also One fifth worse, when he must pay twenty per cent more
for all the Commodities he buys with the Money of the new
[rating] than if he bought it with the present Coin.5

A windfall for hoarders


Thus Locke foresees an unfair windfall for hoarders (who have helped create
or worsen the silver shortage in the first place). Of course, if the revaluation
also brought about the price inflation that Locke predicts, the hoarders
would only be as well off as they were before: the inflated nominal value of
their money would just keep them abreast of the inflated cost of goods. As
Lowndes claimed, all holders of coin would stay in the same place relative to
prices. But Lowndes (possibly deliberately) did not take into account
contracts specifying payment in money denominations. A contractor or a
renter of land, bound to a long-term agreement to receive fixed payments of,
say, 20 shillings four five-shilling crowns would receive 3.3 crowns if
the crowns denomination was raised 20 percent (Lockes calculated rate),
and even less at Lowndes proposed 25 percent adjustment. And of course,
there were all those Locke included who had given money in exchange
for the Bank of Englands paper.
Both Lowndes, who thinks about coin-holders, and Locke, who thinks about
rentiers (persons who receive a fixed income from land, stocks, or bonds),
contractors, consumers and traders, ignore a large constituency namely
those who depended on wages that, if they rose at all, might not rise in step
with the new valuation of money.
However, Locke actually did think about money in a human or microcosmic
way about the person in the street holding a coin and needing to have
confidence in its stamped value. In Further Considerations, Locke demonstrates
how Lowndes is proposing to devalue a coin that had held its intrinsic worth
through the 1600s. To back up his proposal for reducing the shillings silver
from 86 grains to 69, Lowndes presented a statistical table showing how,
from the time of Edward I (died 1307) to that of Edward IV (died 1553), the
silver in the shilling had been cut from 264 grains to 20. But from Lowndes
table Locke observed that the silver had increased again and stabilized in the
reign of Elizabeth I at 86 grains. Locke notes, And so [the shilling] has
remained from the [43rd year of Elizabeths reign, 1601] to this day nearly
a century of stability and public confidence in this coin. Then Locke appends
6 Reading 4-5

Humanist Issues in Commercial Practice

a final line to the table indicating Lowndes proposal: Mr.


Lowndes69.6
Mr Lowndes 69 is an example of the ordinary and direct Language that
Locke advocated for economists. Politically, it is lethal: it delivered the
statistic that really counts, along with the implication that Lowndes had
deliberately withheld this number to assist the passage of a plan that, as
Locke put it,
will weaken, if not totally destroy the publick Faith, when all
[those who] have trusted the [Government], and assisted our
present necessities, upon Acts of Parliament, in [supporting]
the Million Lottery, Bank [of England] Act, and other Loans,
shall be defrauded of 20 per Cent of what those Acts of
Parliament were Security for.7
In response to Lowndes proposal, an Act for Recoinage was passed in
January 1696. The Act specified that the government would accept clipped
money in payment of taxes and of certain other obligations until June 24,
1696. After that date, all clipped coins were to be removed from circulation
(demonetized). When the deadline passed, many people were still holding
clipped money, and had to pay premiums to exchange it. The re-coinage was
completed in 1698, but not as Lowndes proposed: the same denominations
of silver coins were reissued, with the silver content as before.
Maintenance of the monetary status quo did not necessarily come about
because of Lockes intervention. There were other contestants in the
monetary debate, such as Nicholas Barbon, whose Discourse Concerning Coining
the New Money Lighter, in Answer to Mr. Lockes Considerations about Raising the
Value of Money argued against Locke. Barbon makes the realistic point that
people agree to give, take, and contract for money while having regard more
to the stamp and currency [denomination] of the money, than to the quantity
of fine silver in each piece8 and that without the technology to assay coins,
merchants and customers are unable to tell how many grains of silver are in
their money, or the silvers fineness.9
William Lowndes proposed coinage was judged unacceptable to the public.
In human terms, currency is what people believe it to be worth. A
contemporary example is the unpopularity of the base-metal silver U.S. dollar
issued in the late 1980s. To make the coin acceptable to at least half the
populace, the coin bore the image of the American suffragist Susan B.
Anthony (1820-1906). But the public was attached to the paper greenback
and the Susie coin flopped. At the beginning of 2000, the U.S. Treasury
tried again, with a dollar coin bearing a likeness of Sacagawea (ca.1787-1812),
the native American woman guide and interpreter on the Lewis and Clark
expedition in 1804-1805. The Globe and Mail for January 25, 2000, reported on
a Treasury marketing strategy. In an agreement with General Mills, the
new U.S. dollar coin will be packed in every 2000th box of Cheerios before it
is available anywhere else.10

Humanist Issues in Commercial Practice

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

Thomas More, Utopia, Book 1, page 93.

Samuel Pepys, The Diary of Samuel Pepys, Volume 4, page 396.

William Lowndes, A Report Containing an Essay for the Amendment of


the Silver Coins (1695), in A Select Collection of Scarce and Valuable
Tracts on Money, ed. J.R. McCullach (New York: A.M. Kelley
Publishers, 1966), pages 206, 217.

John Locke, Some Considerations of the Consequences of the Lowering of


Interest, and Raising the Value of Money (1691), in Several Papers Relating
to Money, Interest and Trade (New York: A.M. Kelley Publishers, 1968),
pages 172-173.

John Locke, Further Considerations Concerning Raising the Value of Money


(1696), in Locke, Several Papers Relating to Money, Interest, and Trade,
pages 47-49.

Ibid., page 74.

Ibid., pages 12-13.

Nicholas Barbon, Discourse Concerning Coining the New Money Lighter, in


Answer to Mr. Lockes Considerations About Raising the Value of Money
(London: Richard Chiswell, 1696; reprinted New York: A.M. Kelley
Publishers, 1968), Contents, page 2.

Ibid., pages 20-21.

10

The Globe and Mail, January 25, 2000, page A18.


Humanist Issues in Commercial Practice

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.

Mercantilism and popular writing


At the end of the 1400s, Columbus had sailed west, looking for a sea trade
route to the Orient, and came instead to the American Indies. As you learned
in Topic 3.1, when Montaigne read accounts of the Spanish conquistadors in
the New World, his humane reaction was that they had not traded but
murdered and plundered. About seventy years after Montaignes Essais were
published, an Englishwoman, Aphra Johnson (1640-1689), spent part of
1663-1664 in the Indies in Surinam, on the north Atlantic coast of South
America, a country colonized first by the Dutch and then by England. (To
Europeans of this time, the Indies or India were South America as well as
South Asia.) After returning to Europe, she married a Dutch merchant
named Behn but soon after was separated or widowed, and from about 1670
until her last years she supported herself by writing 15 plays as well as poetry,
songs, translations, and short novels.
Behn was the first professional woman writer in English: it can be argued
that she was the first professional writer female or male anywhere. Her
best known novel is Oroonoko: or The History of the Royal Slave (1688), a story
set in Surinam, which Behn describes at first as a tropical paradise whose
people represent, to the narrator, an absolute idea of the first state of
innocence, before man knew how to sin.4 Like the natives of Peru in
Montaignes essay Of Vehicles, the Surinamese people were prepared to
trade with the newcomers; in Behns account there is no exploitation on
either side:
We live in perfect amity [with the natives of the place]
without daring to command em; but on the contrary, caress
em with all the brotherly and friendly affection in the world;
trading with them for their fish, venison, buffalo skins, and
little rarities; as marmosets, a sort of monkey, as big as a rat
or weasel, but of a marvellous and delicate shape, having face
and hands like a human creature Then for little paraketoes
[parakeets], great parrots, macaws, and a thousand other birds
and beasts of wonderful and surprising forms, shapes and
colours. For skins of prodigious snakes of which there are
some threescore yards in length, as is the skin of one that may
be seen at his Majestys [the English Kings] antiquarys,
where there are also some rare flies, of amazing forms and
colours, presented to [the antiquarys] by myself, some as big
as my fist, some less, and all of various excellencies, such as
2 Reading 4-6

Humanist Issues in Commercial Practice

art cannot imitate. Then we trade feathers, which they


[fashion] into all shapes, make themselves little short
[costumes] of em, and glorious wreaths for their heads,
necks, arms and legs, whose tinctures are unconceivable. I
had a set of these presented to me, and I gave em to the
Kings Theatre [in Drury Lane, London], and it was the dress
of the [title character in] the Indian Queen [a popular play first
produced in 1664] Besides these, a thousand little knacks
[trinkets] and rarities in nature; and some of art, as their
baskets, weapons, aprons, etc.5
In exchange for these exotic and beautiful things caught and fashioned by the
natives of Surinam, the Europeans
dealt with em with beads of all colours, knives, axes, pins and
needles; which they used only as tools to drill holes with in
their ears, noses and lips, where they hang a great many little
things, as long beads, bits of tin, brass or silver beat thin, and
any shining trinket. The beads they weave into aprons,
working themin flowers of several colours, which apron
they wear just before em, as Adam and Eve did the
fig-leaves; the men wearing a long strip of linen, which they
deal with us for.6
This is an idealized account of trading in an Eden-like setting, as in the
beginning: a place for moneyless and benign transactions. Notice how the
narrator authenticates the description by saying that the feathered
headdresses, snakeskin, and insect specimens were brought back to England
for use in the theatre (where Behns plays later were staged) and for public
display in the kings gallery. The passage is an early example of the
romanticizing of trade in the seventeenth and eighteenth centuries.

Journalism, coffee, commerce, and insurance


Another example of popular writing about commercial life is in one of
Joseph Addisons essays in the London Spectator newspaper. The essay is
about the Royal Exchange a public building in the financial centre of
London, close to the head office of the Bank of England. The Exchange had
an extensive galleried courtyard where merchants and other financial dealers
would meet and transact, in the open or under the galleries. In cold weather,
the dealers would use the coffee houses in or near the Exchange relatively
little business was transacted in offices.
Read Addisons enthusiastic account of what went on at this and similar
Exchanges all over Europe (Reading 4-7). In this reading from The Spectator,
Number 69, for May 19, 1711, high-change and Change mean the Royal
Exchange; factors are agents; the Philippic Islands are the Philippines;
our mornings draught refers to coffee or tea.
While reading the Addison excerpt, did you feel that you were reading a
column in a business booster newspaper? If so, you were right. The Spectator
Humanist Issues in Commercial Practice

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

Humanist Issues in Commercial Practice

frequented by business people in London. These sheets carried shipping


news and advertisements: arrivals and proposed departures, invitations to
deal for cargoes coming in and to invest in cargoes going out for speculative
trade. Eventually, war or political news and rumours affecting shipping
began to be added.
By the start of the 1680s, these posters had developed into rudimentary
newspapers, published weekly or so, still emphasizing reports of business
interest, with expanded advertising by storekeepers.
The names of the first English newspapers were designed to suggest the
freshness of their news (The Flying Post) or their political-religious credibility,
such as The Protestant (Domestic) Intelligence of 1681 aimed at Whig therefore
business-minded readers. The Kingston, Ontario, daily newspaper is still
called the Whig-Standard.
In the days of the early news sheets and newspaper, the papers still circulated
in places where businessmen gathered. And, as the seventeenth century
turned into the eighteenth, the venue where businesspeople were meeting
each other most often was the coffee shop. Coffee, tea, and chocolate from
cacao nuts were phenomenally popular imports to Europe, and changed not
only beverage drinking but also business habits. Coffee was introduced to
England before the Civil War; the first coffee house in London was opened
in the 1650s, and in 1708 it was estimated that the City (that is, the business
centre) of London had 3000 of them. This probably was an exaggeration, but
the proliferation of coffee shops in Canadian cities in the 1990s lends it some
credibility. There were coffee houses in cities across Europe, from London
to Vienna.9
The fledgling newspapers of the seventeenth century were placed in the
coffee houses, and attracted those who wanted to read the business news and
make business contacts and deals over coffee: the beginnings of the modern
business lunch. As coffee, tea, and chocolate grew in popularity as nonalcoholic social drinks, a corollary was the development and manufacture of
domestic utensils for making and serving the brews. The organization of the
raw materials, energy, and technology to supply table china to the domestic
market was a significant factor in the English Industrial Revolution.

The growth of insurance


The coffee house business milieu was also the nurturing place of another
important industry insurance. Edward Lloyd (died 1713), a framework
knitter by trade, opened a coffee house first in Tower Street near the London
docks around 1688, and later in Lombard Street, a business street because of
its many goldsmiths. In 1696 he tried newspaper publishing with Lloyds
News, attempting to bring together all the current information about ships
movements. The paper failed, but Lloyds coffee house was still the centre
for shipping news from both word of mouth and news sheets; Lloyd had a
niche market in information of interest to shipowners, captains, and
investors in cargoes, and a business address at which many of these people
could receive mail. Investing in cargoes was risky business: you may recall the
Humanist Issues in Commercial Practice

Reading 4-6 5

concept of bottomry in the merchant ventures related in Topic 3.3. Insurance


contracts spread the risk and, by at least the mid-1600s, ship insurance was
being practised for on November 23, 1662, Samuel Pepys went from the
Coffee-house and then to the [Royal Exchange] where he bid on a contract
of insurance on a ship bringing a cargo from the continent to the port of
Newcastle.
Turn now to Reading 4-8 for Samuel Pepys brief account of this incident,
which illustrates the impact of insider knowledge on human nature.
In this extract from Pepys diary, you probably observed Pepys chagrin at
losing an opportunity to profit from an underwriting opportunity that carried
no risk. Insurance market underwriters pledged themselves to accept risks up
to a contracted limit. Brokers, who were the agents for merchants and
shipowners (the principals), persuaded the underwriters to sign the insurance
policy, which they then turned over to the principals. If the cargo or the ship,
or both, were lost, the underwriters paid their agreed share of the loss. On
safe arrival, the underwriters received a percentage of what they had agreed
to pay (they had put no money down). So much face-to-face business was
done, and so much of the business depended on information (reliable or
otherwise), that brokers and underwriters would meet not only at the
exchange but also in establishments like Lloyds coffee house.
After Edward Lloyds death, the coffee house retained its name and clientele.
In 1717, the shipping insurance business had become so much a free-for-all
that a proposal was made to charter and regulate it. In 1720, two companies,
the Royal Exchange Assurance Corporation and London Assurance, were
given royal charters. But because these chartered companies were very
conservative, private arrangements of brokers and underwriters continued as
before, and Lloyds coffee house was still a principal information centre.
More and more, the place became frequented by underwriters, who in the
mid-1700s, began the process of forming their own society to deal in
insurance. They named this society after the coffee house. By 1775, Lloyds
underwriters were writing nine-tenths of the insurance on British shipping.10

Two faces of commerce


To return to journalism and the image of trade and commerce: Addison and
Steeles Tatler and Spectator were chiefly instrumental in expanding the
readership of news journals beyond the coffee house businessmen. By
including an essay or column of general interest in each of their numbers,
and a kind of Saturday (a business day) supplement that would be carried
home for Sunday reading, they aimed at and opened up a new market: the
woman reader at home.
Popular fiction and journalism were not the only media in which trade was
being celebrated. George Lillos successful play, The London Merchant (1731),
was recognized as a new species of tragedy, featuring a protagonists tragic
fall not from a throne or some high place in the state, but from a position
just as significant to the middle-class audiences who made the play
successful. George Barnwell, the plays protagonist, is a trusted apprentice to
6 Reading 4-6

Humanist Issues in Commercial Practice

a prosperous merchant, and throws away his prospects by letting himself be


amorously seduced into theft and murder. The professional trading life is
celebrated in the play when the merchant instructs another of his apprentices
(as an additional emphasis on trade as an honourable calling that combines
science and human improvement, the merchant is named Thorowgood and
this other apprentice is called Trueman):
Thorowgood: I would not have you only learn the method of
merchandise and practice it hereafter as a means of getting
wealth. Twill be well worth your pains to study it as a
science, see how it is founded in reason and the nature of
things, how it has promoted humanity as it has opened and
yet keeps up an intercourse between nations far remote from
one another in situation, customs, and religion; promoting
arts, industry, peace, and plenty; by mutual benefits diffusing
mutual love from pole to pole.
I have observed those countries where trade is promoted and
encouraged do not make discoveries to destroy but to
improve mankind by love and friendship to tame the
fierce and polish the most savage; to teach them the
advantages of honest traffic by taking from them, with their
own consent, their useless superfluities, and giving them in
return what, from their ignorance in manual arts, their
situation, or some other accident, they stand in need of.
It is the industrious merchants business to collect the various
blessings of each soil and climate and, with the product of the
whole, to enrich his native country.11
You will have recognized the commercial optimism of Locke and Addison
(quoted in this topic) in Thorowgoods speech. And you should compare
Thorowgoods final sentence with the short passage from St. Augustine
quoted at the beginning of Module 2: A trader said to me. Both passages
suggest a moral, and even religious function in trading. You may also
appreciate that Thorowgoods dialogue blends public-service advertising and
imperialistic ideas. The play was still part of the English theatrical repertoire
well into the nineteenth century.

The slave trade


Aphra Behns Oroonoko, quoted earlier in this topic, nevertheless does more
than celebrate cashless trade between colonizers and colonized. The novel
also shows mercantilism in a more sordid light. Immediately after the Edenlike opening, the narrator turns to the real business in Surinam the
business of sugar plantations:
We [the white settlers in Surinam being outnumbered by the
natives] find it absolutely necessary to caress em as friends,
not to treat em as slaves, nor dare we do other, their
numbers so far surpassing ours in that continent.

Humanist Issues in Commercial Practice

Reading 4-6 7

Those then whom we make use of to work in our plantations


of sugar are negroes, black slaves altogether, who are
transported thither in this manner.
Those who want slaves make a bargain with acaptain of a
ship, and contract to pay him so much apiece, a matter of
twenty pound a head, for as many as he agrees for, and to pay
for em when they shall be delivered on such a plantation: so
that when there arrives a ship laden with slaves, they who
have so contracted go abroad and receive their number by lot;
and perhaps in one lot that may be for ten, there may happen
to be three or four men, the rest women and children. Or be
there more or less of either sex, you are obliged to be
contented with your lot.
Coramantien [on the former Gold Coast, in modern Ghana],
a country of blacks so called, was one of those places in
which they found the advantageous trading for those slaves,
and thither most of our great traders in that merchandise
traffic; for that nation is very warlike and brave: and having a
continual campaign, being always in hostility with one
another, they had the fortune to take a great many captives:
for all that they took in battle were sold as slaves, at least
those common men that could not ransom themselves. Of
those slaves so taken, the general only has all the profit: and
of these generals our captains and masters of ships buy all
their freights.12
These passages from Oroonoko are authentic observations from Aphra Behns
stay in Surinam. She saw slave ships and obviously asked about the source of
their cargoes. While the rest of the novel is fiction a noble savage tale
the fictional adventures also are projections of the physical and emotional
inhumanity visited on African slaves brought to the plantations. Behns
account of the contractual arrangements with the ship captains in Surinam
and the African warlords is the first in popular writing to implicate both
Europeans and Africans in the trade.
Obviously slave trading was not an ideal aspect of seventeenth-century
international trade. Nor was it carried on only by outlaw ship captains. The
great national trading companies in the seventeenth and eighteenth centuries
were the English East India Company, founded in 1600 and reorganized in
1708, the Dutch East India Company, founded in 1602 (as previously
mentioned, India and Indies simply denoted anywhere in the Orient and
the Americas), and the English South Sea Company, founded 1711. In 1713,
the English South Sea Company contracted to supply the Spanish colonies
for thirty years with
Healthful, sound negroes of all sizes, in such condition as to
be able to go over the ships side at Jamaica. Nine-tenths
(priced at 10 pounds each) were to be over sixteen, and the
8 Reading 4-6

Humanist Issues in Commercial Practice

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.

Origins of the Hudsons Bay Company


To be fair, the trading companies also engaged in business that more nearly
fitted the descriptions of trade in the passages from Addison and Lillo
quoted above. And, for Canadians, probably the most famous image of
seventeenth-century trading is represented in the romantic terms of the
Charter, which Charles II granted on May 1, 1670, to his cousin
Prince Rupert and 17 associate investors, authorizing an
Expedicioun for Hudsons Bay in the North west part of
America for the discovery of a new Passage into the South
Sea [the Pacific Ocean] and for the finding [of] some Trade
for Furrs Mineralls and other considerable Commodityes and
by their undertakeing have already made such discoveryes as
doe encourage them to proceed further in pursuance of their
saide design by means whereof there may probably arise very
great advantage to us and our Kingdome.
[We] doe give grante ratifie and confirme unto our said
Cousin Rupert [and his associates] that they and such others
as shall bee admitted into the said [Society]shall bee one
Body Corporate and Politique in deed and in name by the
name of the Governor and Company of Adventurers of
England tradeing into Hudsons Bay.
The Hudsons Bay Company investors and agents were in the tradition of the
merchant venturers from Marco Polos time and before. But although the
words venturer and adventurer mean much the same thing, adventurer
has an added connotation of boldness and excitement. This company of
adventurers was commissioned not simply to travel charted trade routes but
Humanist Issues in Commercial Practice

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

Aristotle, Politics, Book 1, Chapter 9, 1247a-1259a.

John Locke, Some Considerations of the Consequences of the Lowering of


Interest, and Raising the Value of Money, page 127.

Ibid., page 149.

Aphra Behn, Oroonoko: or The History of the Royal Slave (New York:
W.W. Norton, 1973), page 3.

Ibid., pages 1-2.

Ibid.

Nicholas Barbon, Discourse Concerning Coining the New Money Lighter, in


Answer to Mr. Lockes Considerations About Raising the Value of Money,
page 42.
Humanist Issues in Commercial Practice

Ibid., page 48.

D.E.W. Cribb, Lloyds of London: A Study in Individualism (London:


Macmillan, 1957), page 3.

10

Ibid., page 51.

11

George Lillo, The London Merchant, ed. W.H. McBurney (Lincoln,


Nebraska: University of Nebraska Press, 1965), Act 3, Scene 1, lines 1-28.

12

Aphra Behn, Oroonoko, pages 5-6.

13

John Carswell, The South Sea Bubble (London: Cresset Press, 1960), page 65.

14

Ibid., page 65.

15

Michel de Montaigne, Of Vehicles, pages 276-283.

Humanist Issues in Commercial Practice

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

in another. The fruits of Portugal are corrected by the products of


Barbadoes; the infusion of a China plant sweetened with the pith of an
Indian cane. The Philippic Islands give a flavor to our European bowls. The
single dress of a woman of quality is often the product of an hundred
climates. The muff and the fan come together from the different ends of the
earth. The scarf is sent from the torrid zone, and the tippet from beneath the
pole. The brocade petticoat rises out of the mines of Peru, and the diamond
necklace out of the bowels of Indostan [Hindustan].
If we consider our own country in its natural prospect, without any of the
benefits and advantages of commerce, what a barren, uncomfortable spot of
earth falls to our share! Natural historians tell us that no fruit grows originally
among us besides hips and haws, acorns and pig-nuts, with other delicacies
of the like nature; that our climate of itself, and without the assistances of art,
can make no further advances towards a plum than to a sloe, and carries an
apple to no greater a perfection than a crab: that our melons, our peaches,
our figs, our apricots, and cherries are strangers among us, imported in
different ages, and naturalized in our English gardens; and that they would all
degenerate and fall away into the trash of our own country, if they were
wholly neglected by the planter, and left to the mercy of our sun and soil.
Nor has traffic more enriched our vegetable world, than it has improved the
whole face of nature among us. Our ships are laden with the harvest of every
climate: our tables are stored with spices, and oils, and wines; our rooms are
filled with pyramids of China, and adorned with the workmanship of Japan:
our mornings draught comes to us from the remotest corners of the earth;
we repair our bodies by the drugs of America, and repose ourselves under
Indian canopies. My friend Sir Andrew calls the vineyards of France our
gardens; the spice-islands our hot-beds; the Persians our silk-weavers, and
the Chinese our potters. Nature indeed furnishes us with the bare necessaries
of life, but traffic gives us a great variety of what is useful, and at the same
time supplies us with everything that is convenient and ornamental. Nor is it
the least part of this our happiness that, while we enjoy the remotest
products of the north and south, we are free from those extremities of
weather which give them birth; that our eyes are refreshed with the green
fields of Britain at the same time that our palates are feasted with fruits that
rise between the tropics.
For these reasons, there are not more useful members in a commonwealth
than merchants. They knit mankind together in a mutual intercourse of good
offices, distribute the gifts of nature, find work for the poor, and wealth to
the rich, and magnificence to the great. Our English merchant converts the
tin of his own country into gold, and exchanges his wool for rubies. The
Mahometans are clothed in our British manufacture, and the inhabitants of
the frozen zone warmed with the fleeces of our sheep.
When I have been upon the Change, I have often fancied one of our old
kings standing in person where he is represented in effigy, and looking down
upon the wealthy concourse of people with which that place is every day
filled. In this case, how would he be surprised to hear all the languages of
Europe spoken in this little spot of his former dominions, and to see so
2 Reading 4-7

Humanist Issues in Commercial Practice

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.

Humanist Issues in Commercial Practice

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.
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Reading 4-8 1