How did banking begin? Professor, Doctor of Economics Valentin Katasonov tells about the civilizational roots of this phenomenon
Ivan Aivazovsky, Venice. 1844
Both in the field of theology (theology) and in the field of practical church policy, Catholicism, after separating from Orthodoxy, followed the path of minor (at first glance not very visible) reforms, concessions, and indulgences, which prepared the conditions for the Reformation.
What caused these concessions and indulgences?
Firstly, by the pressure of real life: capitalism appeared and strengthened in Europe without delay (for example, the emergence of capitalist city-states in southern Italy).
Secondly, the fact that the Catholic Church, especially large monasteries, was forced to engage in farming, and too strict restrictions and prohibitions prevented it from carrying out economic activities. First of all, bans or restrictions on private property, income from the lease of land and other property, the use of hired labor, the issuance and receipt of loans.
Thirdly, the desire of the Roman throne to increase its political influence over kings and princes. This required money, and considerable money. You can't earn that kind of money by running an ordinary monastic economy. The big money all the more demanded the removal of church restrictions (or a blind eye to the violation of these restrictions). The Church could receive (and received) a lot of money using mainly two means: usury and trade in indulgences.
The most striking discrepancy between what the Western Church preached and what happened in the real life of Christian Europe is seen in the example of usury. The official position of the Church in relation to usury is the most irreconcilable, harsh and sometimes even cruel. Despite the differences between the Eastern and Western Churches in the dogmatic sphere, there were no fundamental differences on the issue of usury. The Eastern and Western Churches were guided by the decisions of the Ecumenical Councils. The first Council of Nicaea in 325 forbade clergy to engage in usury. Later, the ban was extended to lay people.
IN THE WESTERN CHURCH GROWTH EQUALIZED WITH THE SIN OF SODOMIA
In the Western Church, the issue of usury, perhaps, was given even more attention than in the Eastern. There usury was equated with the sin of sodomy. In the West, even in the early Middle Ages, the proverb “Money does not give rise to money” appeared. Catholic scholastics explained: the receipt of interest, which is calculated taking into account the term of the loan, is in fact "trading in time", and time belongs only to God, therefore, usury is an encroachment on God. The usurer sins continuously, because even during his sleep, interest increases. In 1139 the Second Lateran Council decreed: “Whoever takes interest must be excommunicated and accepted back only after the strictest repentance and with the greatest caution. Interest collectors cannot be buried according to Christian tradition. " In 1179, Pope Alexander III forbids interest on pain of deprivation of the sacrament. In 1274, Pope Gregory X establishes a more severe punishment - expulsion from the state. In 1311, Pope Clement V introduced a punishment in the form of complete excommunication.
However, other processes were taking place in parallel. The crusades, which began in 1095, gave a powerful impetus to the enrichment of the church elite at the expense of the booty received by the crusaders. In this sense, the Fourth Crusade is especially significant, the apogee of which was the sack of the Byzantine capital of Constantinople in 1204. According to various estimates, the cost of mining was from 1 to 2 million marks in silver, which exceeded the then annual income of all European states.
The sharp increase in the income of the Church has led to the fact that it has the opportunity to give money for growth. It should also be borne in mind that such incomes taught the priesthood to high standards of consumption (in other words, to a luxurious life), therefore, in those cases when incomes fell, it sought to compensate for these drops by borrowing.
King of Aragon Alphonse bequeathed to the Templars part of his estates
A particularly sharp contrast against the background of the church prohibition of usury was the financial and usury activity of the Order of the Templars, or Templars. It is noteworthy that originally this order was called "The Beggar Knights" (1119). After the papal blessing and exemption from taxes in 1128, the knights of the order began to be called templars. Historians claim that the knights of the order did not stay in poverty for long. One of the sources of their wealth was the loot obtained as a result of the sack of Constantinople in 1204 (by the way, the Templars managed to plunder the city again in 1306). Another source of income for the order came from voluntary donations. For example, Alphonse I the Wrangler, the warlike king of Navarre and Aragon, bequeathed part of his estates to the Templars. Finally, leaving for the Crusades, the feudal knights transferred their property under the supervision (as they would say now, to the trust office) of the Templar brothers. But only one out of ten took back the property: some knights died, others remained to live in the Holy Land, and still others joined the order (their property, according to the charter, became common). The order had an extensive network of strong points (more than 9 thousand commanders) throughout Europe. There were also several headquarters - the Temple. The two main headquarters were in London and Paris.
The Templars were engaged in a variety of financial transactions: settlements, currency exchange, transfer of funds, trust storage of property, deposit operations and others. However, in the first place were lending operations. Loans were issued to both agricultural producers and (primarily) princes and even monarchs. The Templars were more competitive than the Jewish usurers. They issued loans to "respectable borrowers" at 10% per annum. Jewish usurers served mainly small clients, and the price of their loans was about 40%.
As you know, the Order of the Knights Templar was defeated at the beginning of the XIV century by the French king Philip IV the Beautiful. In this he was assisted by Pope Clement V. More than 1 million full-weight livres were seized from the Templars (for comparison: the construction of a medium-sized knight's castle then cost 1–2 thousand livres). And this is not counting the fact that a significant part of the order's funds were evacuated outside France before its defeat.
TAMPLERS GIVEN LOANS TO "SOLID" CLIENTS AT 10% ANNUAL
Usury in medieval Europe was carried out not only by the Templars, but also by many other persons who formally belonged to the Catholic Church. We are talking primarily about the usurers, whose offices were located in such Italian cities as Milan, Venice and Genoa. Some historians believe that the Italian bankers of the Middle Ages are the descendants of those usurers who lived in these places in the era of the Roman Empire and belonged to the Latins. In ancient Rome, it was not Roman citizens who were engaged in usury, but Latins, who had truncated rights and obligations. In particular, they were not subject to Roman usury laws.
Already in the 13th century, banks were in any major Italian city. The entrepreneurs managed to earn the capital necessary for usury on international trade. Speaking about medieval Venice, the historian Andrei Vajra emphasizes that the merchants were able to accumulate the initial capital thanks to their unique position between Byzantium and the Western Roman Empire: “Politically maneuvering between the Byzantine and Western Roman empires, she [Venice. - VK] seized control of the main commodity and cash flows of that time. Many merchants turned into bankers, although they did not leave their former trade business.
Gabriel Metsu, The Usurer and the Weeping Woman. 1654
A very businesslike, "creative" relationship developed between the Italian bankers and the Holy See. Bankers actively lent to the Pope and his entourage, and the Roman throne "covered" these bankers. First of all, he turned a blind eye to the violation of the ban on usury. Over time, bankers began to lend to the priesthood throughout Europe, and the Roman See used "administrative resources", forcing their subordinates to fully fulfill their obligations to bankers. In addition, he put pressure on the debtor feudal lords, threatening them with excommunication from the Church if they did not fulfill their obligations to creditors. Among the bankers who lent to the throne were the Florentine houses of Mozzi, Bardi and Peruzzi. However, in 1345 they went bankrupt, and the consequences of the bankruptcy spread far beyond the borders of Italy. In fact, it was the first global banking and financial crisis. It is noteworthy that it erupted in Catholic Europe long before the Reformation and the emergence of Protestantism with its "spirit of capitalism."
AFTER THE ENGLISH KING'S REFUSAL OF PAYMENTS TO FLORENTIAN DEVELOPERS, EUROPE HAS BEEN STAGGED BY THE FINANCIAL CRISIS
The English king Edward III ran into large debts to the Florentine banking houses due to the fact that he needed to pay the costs of the war with Scotland (in fact, this was the beginning of the Hundred Years War). Edward III lost the war and was forced to pay indemnities. Payments were made again at the expense of loans received from Italian bankers. The crisis arose as a result of the fact that in 1340 the king refused to repay his debt to the bankers. First, the banking houses of Bardi and Peruzzi burst, and then another 30 related companies went bankrupt. The crisis spread to all of Europe. This was not just a banking crisis. "Defaults" were announced by the Papal Curia, the Kingdom of Naples, Cyprus, and a number of other states and kingdoms. After this crisis, the famous banking houses of Cosimo Medici (Florence) and Francesco Datini (Prato) took the place of the bankrupt creditors of the Holy See.
Speaking about banking in medieval Europe, one must not forget that, along with active (credit) operations, banks began to more and more powerfully deploy passive operations - raising funds to deposit accounts. The holders of such accounts were paid interest. This additionally corrupted Christians, forming in them the consciousness of a bourgeois-rentier who, like a usurer, wants not to work, but to live on interest.
Quentin Massys, Money Changer with Wife. About 1510-1515
In modern terms, Italian city-states acted as a kind of offshore company in medieval Catholic Europe. And not only in the financial and economic sense (special taxation regime, etc.), but also in the religious and spiritual sense. These were "islands" where the norms of the economic ethics of Catholicism did not work or acted in a very truncated form. In fact, these were already "islands of capitalism" that in various ways infected the whole of Catholic Europe with the "spirit of capitalism".
The famous German historian, founder of geopolitics Karl Schmitt wrote about the political, economic, spiritual and religious uniqueness of Venice (against the background of medieval Europe) as follows: “For almost half a millennium, the Republic of Venice was considered a symbol of maritime domination and wealth that grew on sea trade. She achieved brilliant results in the field of big politics, she was called "the most outlandish creature in the history of the economy of all time." Everything that prompted fanatical Anglomaniacs to admire England in the eighteenth and twentieth centuries had previously been the reason for admiration for Venice: enormous riches; advantage in the diplomatic arts; tolerance for religious and philosophical views; the refuge of freedom-loving ideas and political emigration”.
The Italian city-states with their "spirit of capitalism" gave impetus to the well-known Renaissance, which manifested itself in both art and philosophy. As they say in all textbooks and dictionaries, the Renaissance is a system of secular humanistic views of the world based on a return to the culture and philosophy of the ancient world. Hence we can conclude that this is the revival of ancient paganism and a departure from Christianity. The Renaissance made a significant contribution to preparing the conditions for the Reformation. As Oswald Spengler aptly noted, "Luther can only be explained by the Renaissance."
UNDER THE OFFICIAL PERCENTAGE BAN, THE LAST WAS TURNED INTO THE MAIN ROD OF THE WHOLE FINANCIAL SYSTEM OF CATHOLICISM
It is difficult to overestimate the corrupting influence of usury on the Christian consciousness of a medieval European. Here is what Olga Chetverikova, a researcher of Catholicism, writes about this: “Thus, having firmly connected itself with usury, the Roman Curia became, in essence, the personification and hostage of commercial transactions, in whose interests both law and law were violated. With the official ban on interest, the latter turned into the main pivot of the entire financial system of Catholicism, and this double approach had a fatal effect not only on the development of the economy, but also, most importantly, on the consciousness of Western people. Under the conditions of complete divergence between teaching and practice, a bifurcation of social consciousness took place, in which adherence to moral norms assumed a purely formal character."
However, usury was not the only sinful deed that Catholics were semi-legally (or half-openly) engaged in in the Middle Ages. Both privates and those belonging to the church hierarchy. The latter actively practiced simony - the trade in church positions. One of Fleur's bishops described the mechanism of enrichment with the help of simony as follows: “The archbishop ordered me to transfer 100 golden sous to receive the episcopal office; if I had not passed it on to him, I would not have become a bishop … I gave gold, received a bishopric, and at the same time, if I did not die, I would soon compensate my money. I ordain priests, ordain deacons and receive the gold that has gone from there … In the Church, which is the property of God alone, there is almost nothing that would not be given for money: episcopacy, priesthood, deaconhood, lower titles … baptism. The spirit of love of money, acquisitiveness and covetousness has penetrated and firmly established itself within the church fence in Western Europe. Obviously, cases like the one described by Bishop Fleur were not isolated, but massive. They helped spread this spirit throughout Western European society. At the same time, they undermined confidence in the Catholic Church, aroused discontent among the parishioners and part of the ordinary priesthood. In Catholicism, a crisis was ripening, which ended with the Reformation.
