Lending And Its History

Today, the lending of money is not only commonplace, but (at least for Americans) something nearly everyone does on practically a daily basis. Yet, there was a time when lending money, being a money-lender, charging interest for money was not only frowned upon, but considered a sin! It was called usury, and came from Medieval Latin usuria, meaning ?interest? or ?excessive interest,? which, in turn, came from the Latin usura, meaning just ?interest.?

Looking back over the long history of western civilization, it is interesting to note that all the major religions: Hebrew, Islam and Christianity took a dim view of charging interest for just money. Most societies looked upon inanimate objects as being living beings, and hence could reproduce: fish, cattle, fruit etc. So, if someone lent a person money to buy a herd of goats, it was acceptable to charge interest. However, if it was money for no specific purpose, interest was forbidden. The Torah criticized it, and Islam forbid it. Charging interest was denounced by a large number of spiritual and social leaders of the ancient world. Among them: Aristotle, Aquinas, Cicero, Gautama Budda, Mohammad, Moses Plato and Plutarch.

This attitude prevailed for centuries, although people were very good at finding ways around it. As an example, the Di Medici?s, creators of a massive banking system across Europe, managed to get the blessing of the church for their business practices. How? They gave huge amounts of their profits to the church. And just how much power did they have? In one of the family?s homes in Florence, Italy, they had their own chapel! This might not seem like a lot to us, today; but back then, that was the sign of power. That was equivalent to having Prince William?s phone number saved in your cellphone.

The critical change, at least for Europe, came in 1545, when King Henry VIII passed the ?Act in Restraint of Usury.? It allowed the charging of interest on any monies lent to a person or business. The chief criticism of lending has to do with that word: excessive.

Most governments recognize the usefulness of lending, but also see the danger associated with excessively high interest rates. As a result, most countries set caps on the maximum legal interest rate at which loans can be made. In the case of the United States, Congress has not put a limit on the interest that can be charged on private loans.

When you consider the powerful lobby the banking and credit card industry has, that fact is understandable. They make huge profits by lending money at interest rates that can only be called usury!

frank j vanderlugt owns and operates http://www.amplelending.com 2 Amplelendingcom