The Cambridge History of English and American Literature in 18 Volumes (1907–21).
Volume IV. Prose and Poetry: Sir Thomas North to Michael Drayton.
§ 10. Treatises on Usury
The attempts made under Elizabeth and the early Stewarts to control all the relations of economic life in the public interest gave a new character to the morality of industrial and commercial life. It ceased to be entirely concerned with a man’s personal relations, and his personal connections, and came to be more a matter of loyal acceptance of the course projected in the public good. In its ultimate effect this change was wholly bad. The Stewarts failed to secure respect for their efforts to promote the public good; and, in the time of Adam Smith, the merchant who professed to trade in the public interest was, apparently, an object of some suspicion. When this new criterion of honourable dealing was entirely abandoned, there was neither tradition nor principle available for the maintenance of disinterested business morality, and the course of deliberately pursuing individual interest came to have defenders and, indeed, to be idealised. At least, we may see that the defenders of the old morality, who appeared to be mere pedants, were right in thinking that the new morality, which was coming in, was built on insecure foundations. The chief question of dispute was as to the terms on which capital might rightly be lent. According to the old ecclesiastical tradition, which is embodied in the 109th canon of 1604, it was wrong to bargain for any payment for certain for the use of a principal sum. The man who had borrowed it might fail to make money with it; and, therefore, though the lender was justified in requiring the return of the principal, and even in bargaining for a share of the profit if any accrued, he had no right to ask for a certain gain, or to put himself in the position of gaining at the expense of another. But in the conditions of extending business which were current in the latter part of the sixteenth, and the first half of the seventeenth, century, it was desirable, in the public interest, that hoards of money should be brought into play and used as capital in agriculture, industry or trade. In order that this might be done as easily as possible, the practice of lending money on moderate interest came into vogue, and it could be certainly argued that, in ninety-nine cases out of a hundred, or in nine hundred and ninety-nine cases out of a thousand, the merchant who borrowed at what was regarded as low interest, say, six per cent., was able to pay this interest easily and make a considerable gain for himself, while the lender got interest on money that would have been otherwise unremunerative. Henceforward, the term usury came to be applied to excessive interest, where an element of extortion might be supposed to come in; but city men generally had no scruple about the giving or taking of moderate interest as likely to land them in harsh or unneighbourly conduct. The purists, the most remarkable of whom was Thomas Wilson, whose treatise was published in 1576, and who was followed by Fenton and many of the clergy, condemned what we now call lending money on interest as a wrong bargain for a man to make, since it might render him subject to the temptation of extortion. Malynes, and the English public generally, insisted that moderate interest, which gave free play to capital, was for the public good, and that harm arose only when excessive rates were charged. This was the view which was adopted by parliament in 1624; the new commercial morality was accepted by the state, and the efforts of churchmen to maintain the old standard soon fell into abeyance.
In a somewhat similar fashion, the duty of paying a fair day’s wage for a fair day’s work had been, to a large extent a personal thing, though the obligation, doubtless, was limited by gild rules and manorial customs; but, after the statute of 1562, when an elaborate machinery was set up for regulating the proper rates of wages and providing for their necessary variation, the duty of considering what was fair and right almost ceased to be personal and became official, and the conscientious employer might be satisfied if he paid the rates as authoritatively fixed by statute. In that age, the personal kindness of an employer towards his hands took the form of continuing to give them employment at times when the markets were bad and work was unremunerative. It was to this course that clothiers, in times of interrupted trade, were urged by Wolsey, and by other statesmen who held that capitalists, since they carried on their business under the protection of the state and obtained a market through royal alliances, were not at liberty, in their own private interest, to dismiss their hands and thus to render their unemployed workmen desperate and liable to break out into riot.