Having had the questionable notoriety of maintaining a line of credit contemporaneously with every chartered bank in Canada, I am openly convinced of the utility and therefore the propriety of money lending. Life to me is all about capital and the use and expression of it. It is a conviction applied equally to matters temporal and otherwise. It’s all about using what is at hand. And enjoying it!
Lest there are those of you who are inclined to bemoan the fate of the borrower, be assured that I for one would never qualify any of the three imperatives; viz., principal, rate or time. To me they are merely features of the product, the acquisition of which is akin to buying a car or house. Indeed that is precisely what I did with the money among other things! If there is anyone for whom I cradle the slightest regret it is for the money lender himself. What an abuse having repeatedly to count and account such a taxingly minute digestion called money! It is most certainly an appetite of the select few, people devoted constantly to the elongation of their primary source of nutrition. And what guarantee have they! King Louis VIII of France died of dysentery on 8 November 1226 in the Château de Montpensier, Auvergne. It is but a doleful reminder than none of us is spared; or, speaking more proximately and pragmatically, “Don’t save it for the funeral!” As such the business matter is but a game of roulette for the initiated.
The only exception I’ve ever made to this mutual rule of conduct was the unfortunate account by O. Henry of a maid who, having used and inadvertently lost her mistress’ jewels, borrowed a fortune to restore the gems and to sanction her misconduct only to discover afterwards the gems were mere paste. I at least got what I paid for!
The curious collateral of such profligate behaviour is an uncommon distillation of matters material; namely, it reduces in the end to minimization and austere patterns of selection. Basically, less is more. I mean, really, how many rings can you wear at one time!
Carry on, my wayward sonThere’ll be peace when you are done Lay your weary head to rest Don’t you cry no more
A Catholic prohibition on profit from money without working made banking sinful. Though Pope Leo the Great forbade charging interest on loans by canon law, it was not forbidden to take collateral on loans. Pawn shops thus operate on the basis of a contract that fixes in advance the “fine” for not respecting the nominal term of the “interest free” loan, or alternatively, may structure a sale-repurchase by the “borrower”, where the interest is implicit in the repurchase price. Similar conventions exist in modern Islamic banking. Various ways around the prohibition were devised, so that the lowly pawnshop contractors could bundle their risk and investment for larger undertakings. Christianity, Judaism, and Islam generally ban usury, but allow usury towards those outside their faith. Thus Christians could lend to Jews and vice versa.
It comes as no surprise that the pawn shops of Rome were the most prosperous of all, especially in the 16th century under Popes Pius IV and Sixtus V. This Italian “Lombard” pawn shop method became famous. The use of the term “Lombard” for pawn shop grew slowly from city to city and became prevalent in Cahors, southern France, from where the Christian Cahorsins moved as far north as London and Amsterdam in the 13th century; at the latter, they were called Cahorsijnen, Cawarsini or Coarsini.
In France, the Lombards became synonymous with the Cahorsins. Most European cities still have a street named Lombard Street after the pawn shop that once resided there. In Dutch, the name for a pawn shop is still lommerd, and the same etymology persists in the names of various banks (unless named after some family). In Ukrainian, Polish and Russian, a pawn shop is called simply lombard.
The practice of Lombard credit is still commonly used in central banking, where central banks lend against marketable securities, such as government bonds. Modern repo (repurchase-sale transactions) are also forms of Lombard lending: one bank sells marketable securities to another (at a discount), with an agreement to repurchase the securities (typically at par) in a fixed period of time. Although the legal documentation of the transaction is that of a sale and subsequent repurchase, the substance of the transaction is a secured loan (and under most accounting standards, will be treated as a loan). Pawn shops in many countries and languages are often still referred to as Lombards.