Give Me Credit, Please!

Some believe capitalism is God’s favorite economic system. It would follow that God also endorses the sophisticated financial system that makes capitalism work. However, when we open the bible, we read in Deuteronomy:

“You shall not charge interest on loans to your brother, interest on money, interest on provisions, interest on anything that is lent.”

Deuteronomy 23:19

You have to be a really creative capitalist to make God’s law and God’s favorite economic system work together. Or you need to carefully cherry pick those of God’s laws that you think are more binding than others. Namely, those laws you agree with are binding, those you don’t agree with, less so. That would explain why many who insist God’s law to be the basis of our communities strongly oppose LGBTQ people, but they would never picket a bank. 

In the Middle Ages the church in Europe enforced the prohibition on taking interest on loans. For most of that period economy meant subsistence farming. Then trade became a major driver of change. Every economy of scale needs access to credit, or it can’t expand. That was as true for the merchant republics of the Mediterranean as it was for the Hanseatic league in Northern Europe. Providing merchants with a reliable source of credit is difficult when the church opposes it. But thankfully, God gave us lawyers and theologians. They found a loop hole. Jews are bound by the same law of God. They can’t take interest on loans either, but that was interpreted to apply only to other Jews. Banking was born and an extremely tiny minority of Jews was able to prosper in an environment that otherwise had only persecution and bloodshed in store for them. 

Jakob Fugger, “the Rich” (1459–1525), by Albrecht Dürer

As Europe journeyed toward modernity the prohibition on taking interest on loans was reinterpreted, – ignored would be the better word. The liquid assets that merchants, kings and even the Popes needed, were provided by the biggest bank of the Middle Ages, the Fugger bank in Augsburg. They were Christians with a keen sense for big business. They became the biggest creditor in Europe. Everyone who was somebody owed them money. Money that the Fuggers wanted back with interest.

In some sense the Reformation is the result of one loan of 20,000 guilders the Fuggers made to Albert of Brandenburg. Albert was a second son and so he would not inherit the title of Grand Elector.

The electors are those territorial princes who elect the Emperor of the Holy Roman Empire. They expect huge bribes to elect the right Emperor. And the money for the bribes comes from -, you guessed it, the Fuggers. 

Albert bought the title of Arch Bishop of Mainz. Buying offices was a common practice at the time. Albert was not more or less corrupt than his contemporaries. He was a liberal reformer in his own right, a patron of the arts and he lived in concubinage with a couple women with whom he fathered several children that he publicly acknowledged and cared for. That’s not really covered by canon law, but if the Pope does it too… – To pay the Fuggers back, Albert needed new potent sources of revenue. He found a veritable cash cow in the sale of indulgences. These are church documents that set souls free from purgatory, a state of limbo where you burn like in hell, but only for a time. Purgatory is not mentioned in the bible, but release from it made the money roll in from all directions.

Albert of Brandenburg, by Lucas Cranach the Elder

Albert’s salesmen scared the bejesus out of people with visions of hellfire and even the poorest people bought indulgences as if there was no tomorrow.

These abuses angered a monk called Martin Luther, who asked in 95 theses which he nailed to the church door in Wittenberg; “if the church can release people from purgatory, why wouldn’t they do so for free?” – They couldn’t, they owed their souls to the Fugger store. If the church had taken the law of God seriously, Martin Luther might have never felt the need to reform the church. But our need for credit took us on a different path.

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Olaf Baumann

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