FENUS (τόκος), interest of money.
1. Greek. At Athens, Solon, among other reforms, abolished the law by which a creditor was empowered to sell or enslave a debtor, and prohibited the lending of money upon a person's own body (ἐπὶ τοῖς σώμασι μηδένα δανείζειν, Plut. Sol. c15). No other restriction, we are told, was introduced by him, and the rate of interest was left to the discretion of the lender (τὸ ἀργύριον στάσιμον εἶναι ἐφ’ ὁπόσῳ ἂν βούληται ὁ δανείζων, Lys. in Theom. p117). The only case in which the rate was prescribed by law, was in the event of a man separating from his lawful wife, and not refunding the dowry he had received with her. Her trustees or guardians (οἳ κύριοι) could in that case proceed against him for the principal, with lawful interest at the rate of 18 per cent. [Dos (Greek).]
Any rate might be expressed or represented in two different ways: (1) by the number of oboli or drachmae paid by the month for every mina; (2) by the part of the principal (τὸ ἀρχαῖον or κεφάλαιον) paid as interest either annually or for the whole period of the loan. According to the former method, which was generally used when money was lent upon real security (τόκοι ἔγγυοι or ἔγγειοι), different rates were expressed as follows:— 10 per cent by ἐπὶ πέντε ὀβολοῖς, i.e. 5 oboli per month for every mina, or 60 oboli a year = 10 drachmae = 1⁄10 of a mina. Similarly,
|12 per cent||by ἐπὶ δραχμῇ||per month|
|16 per cent||by ἐπ’ ὀκτὼ ὀβολοῖς||"|
|18 per cent||by ἐπ’ ἐννέα ὀβολοῖς||"|
|24 per cent||by ἐπὶ δυσὶ δραχμαῖς||"|
|36 per cent||by ἐπὶ τρισὶ δραχμαῖς||"|
|5 per cent||by ἐπὶ τρίτῳ ἡμιοβολίῷ,||probably.|
Another method was generally adopted in cases of bottomry, where money was lent upon the ship's cargo or freightage (ἐπὶ τῷ ναύλῶ) or the ship itself, for a specified time, commonly that of the voyage. By this method the following rates were thus represented.
10 per cent by τόκοι ἐπιδέκατοι, i.e. interest at the rate of a tenth; 12½, 16-⅔, 20, 33-⅓, by τόκοι ἐπόγδοοι, ἔφεκτοι, ἐπίπεμπτοι, and ἐπίτριτοι, respectively. So that, as Böckh (Publ. Economy of Athens, pp123, 124, 2nd ed.) remarks, the τόκος ἐπιδέκατος is equal to the ἐπὶ πέντε ὀβολοις
|p525 the τόκος||ἐπογδοος||= the ἐπὶ δραχμῇ||nearly.|
|the τόκος||ἔφεκτος||= the ἐπ’ ὀκτὼ ὀβολοῖς||nearly.|
|the τόκος||ἐπίπεμπτος||= the ἐπ’ ἐννέα ὀβολοῖς||nearly.|
|the τόκος||ἐπίτριτος||= the ἐπὶ τρισὶ δραχμαῖς||nearly.|
These nearly corresponding expressions are not to be considered as identical, however closely the rates indicated by them may approach each other in value; although in the age of Justinian, as Salmasius (de M. U.) observes, the τόκος ἐπόγδοος or 12½ per cent was confounded with the centesimae, which is exactly equal to the interest at a drachma or 12 per cent.
The rates, above explained, frequently occur in the orators; the lowest in ordinary use at Athens being the τόκος ἐπιδέκατος or 10 per cent, the highest the τόκος ἐπίτριτος or 33-⅓ per cent. The latter, however, was chiefly confined to cases of bottomry, and denotes more than it appears to do, as the time of a ship's voyage was generally less than a year. Its near equivalent, the ἐπὶ τρισὶ δραχμαῖς or 36 per cent, was sometimes exacted by bankers at Athens (Lys. Frag. B). The ἐπὶ δραχμῇ, or rate of 12 per cent, was common in the time of Demosthenes (c. Aph. p820.16), but appears to have been thought low. The interest of eight oboli or 16 per cent occurs in that orator (c. Nicos. p1250.18); and even in the age of Lysias (B.C. 440) and Isaeus (B.C. 400), nine oboli for the mina, or 18 per cent, appears to have been a common rate (Isaeus, de Hagn. Hered. p293). Aeschines also (c. Timarch. p15) speaks of money both borrowed on the same terms; so that on the whole we may conclude, that the usual rates of interest at Athens about the time of Demosthenes varied from 12 to 18 per cent. That they were nearly the same in range, and similarly expressed, throughout the rest of Greece, appears from the authorities quoted by Böckh. No conclusions on the subject of the general rate of interest can be drawn from what we are told of the exorbitant rates exacted by common usurers (τοκογλύφοι, toculliones, ἡμρεοδανεισταί). Some of these (Theophr. Charact. 6) exacted as much as an obolus and a half per day for each drachma; and money-lenders and bankers in general, from the high profits which they realised, and the severity with which they exacted their dues, seem to have been as unpopular amongst their fellow-citizens as Jews and usurers in more modern times. Demosthenes (c. Pant. p981), indeed, intimates that the fact of man being a money-lender was enough to prejudice him, even in a court of law, amongst the Athenians (Μισοῦσιν οἳ Ἀθηναῖοι τοὺς δανείζοντας). It is curious also to observe that Aristotle (Pol. I.3 §23) objects, on principle, to putting money out to interest (εὐλογώτατα μισεῖται ἡ ὀβολοστατική), as being a perversion of it from its proper use, as a medium of exchange, to an unnatural purpose, viz. the reproduction or increase of itself; whence, he adds, comes the name of interest or τόκος, as being the offspring (τὸ γιγνόμενον) of a parent like itself.
The arrangement of a loan would of course depend upon the relation between the borrower and the lender, and the confidence placed by one in the other. Sometimes money was lent, e.g. by the banker Pasion at Athens, without a security, or written bond, or witnesses (Dem. c. Timoth. p1185). But generally either a simple acknowledgement (χειρόγραφον) was given by the borrower to the lender [Chirographum]; or a regular instrument (συγγραφή), executed by both parties and attested by witnesses, was deposited with a third party, usually a banker (Dem. c. Lacr. p927, c. Phorm. p908. 22). Witnesses, as we might expect, were also present at the payment of the money borrowed (id c. Phorm. p915. 27). The security for a loan was either a ὑποθήκη or an ἐνέχυρον: the latter was put into the possession of the lender, the former was merely assured to him, and generally, though not always, consisted of real or immovable property. The ἐνέχυρα, on the contrary, generally consisted of movable property, such as goods or slaves (Böckh, ibid. p128). At Athens, when land was given as security, or mortgaged (οὐσία ὑπόχρεως), pillars (ὅροι or στῆλαι) were set upon it, with the debt and the mortgagee's name inscribed. Hence an unencumbered estate was called an ἄστικτον χωρίον (Harpocrat. s.v.). In the rest of Greece there were public books of debt, like the German and Scotch registers of mortgages; but they are not mentioned as having existed at Athens.
Bottomry (τὸ ναυτικόν, τόκοι ναυτικοί, or ἔκδοσις) was considered a matter of so much importance at Athens, that fraud or breach of contract in transactions connected with it was sometimes punished with death (Dem. c. Phorm. p922. 3). In these cases the loans were generally made upon the cargo shipped, sometimes on the vessel itself, and sometimes on the money received or due for passengers and freightage (ἐπὶ τῷ ναύλῳ). The principal (ἔκδοσις, οἱονεὶ ἔξω δόσις, Harpocrat.) as well as the interest, could only be recovered in case the ship met with no disaster on her voyage (σωθείσης τῆς νεώς, Dem. c. Zenoth. 883. 16); a clause to this effect being generally inserted in all agreements of bottomry of ναυτικαὶ συγγραφαί. The additional risk incurred in loans of this description was compensated for by a high rate of interest, and the lenders took every precaution against negligence or deception on the part of the borrowers; the latter also were careful to have witnesses present when the cargo was put on board, for the purpose of deposing, if necessary, to a bona fide shipping of the required amount of goods (Dem c. Phorm. p915. 13). The loan itself was either a δάνεισμα ἑτερόπλουν, i.e. for a voyage out, or it was a δάνεισμα ἀμφοτερόπλουν, i.e. for a voyage out and home. In the former case the principal and interest were paid at the place of destination, either to the creditor himself, if he sailed in the ship, or to an authorised agent (Dem. c. Phorm. p909. 24, and p914. 28). In the latter case the payment was made on the return of the ship and it was specially provided in the agreement between the contracting parties, that she should sail to some specified places only. A deviation from the terms of the agreement, in this or other respects, was, according to a clause usually inserted in the agreement, punishable by a fine of twice the amount of the money lent (Dem. c. Dionys. p1294). Moreover, if the goods which formed the original security were sold, fresh articles of the same value were to be shipped in their place (Dem. c. Phorm. p909. 26). Sometimes also the trader (ὁ ἔμπορος) was himself the owner of the vessel (ὁ ναύκληρος), which in that case might serve as a security for the money borrowed (id. c. Dionys. p1284. 11).
p526 The rate of interest would of course vary with the risks and duration of the voyage, and therefore we cannot expect to find that it was at all fixed. Xenophon (de Vectig. III.7‑14) speaks of the fifth and third parts of the capital lent as being commonly given in bottomry, referring of course to voyages out and home. The interest of an eighth or 12-⅔ per cent,º mentioned by Demosthenes (c. Polycl. p1212), was for money lent on a trireme, during a passage from Sestos to Athens, but upon condition that she should first go to Hierum to convoy vessels laden with corn;º the principal and interest were to be paid at Athens on her arrival there.
The best illustration of the facts mentioned above, is found in a ναυτικὴ συγγραφή, given in the speech of Demosthenes against Lacritus. It contains the following statement and conditions.
Two Athenians lent two Phaselitans 3000 drachmae upon a cargo of 3000 casks of Mendean wine, on which the latter were not to owe anything else, or raise any additional loan (οὐδ’ ἐπιδανείσονται). They were to sail from Athens to Mende or Scione, where the wine was to be shipped, and thence to the Bosporus, with liberty, if they preferred it, to continue their voyage on the left side of the Black Sea as far as the Borysthenes, and then to return to Athens; the rate of interest being fixed at 225 drachmae in 1000, or 25 percent,º for the whole time of absence. If, however, they did not return to Hierum, a port in Bithynia close to the Thracian Bosporus (Wolf, ad Lept. p259), before the early rising of Arcturus, i.e. before the 20th of September or thereabouts, when navigation began to be dangerous, they had to pay a higher rate of 30 per cent on account of the additional risk. The agreement further specified that there should be no change of vessel for the return cargo, and that if it arrived safe at Athens, the loan was to be repaid within twenty days afterwards, without any deductions except for loss by payments made to enemies, and for jettisons (ἐντελὲς πλὴν ἐκβολῆς, κ.τ.λ.) made with the consent of all on board (οἳ σύμπλοι); that till the money was repaid, the goods pledged (τὰ ὑποκείμενα) should be under the control of the lenders, and be sold by them, if payment was not made within the appointed time; that if the sale of the goods did not realise the required amount, the lender might raise the remainder by making a levy (πρᾶξις) upon the property of both or either of the traders, just as if they had been cast in a suit, became ὑπερήμεροι, i.e. had not complied with a judgment given against them within the time appointed. Another clause in the agreement provides for the contingency of their not entering the Pontus; in that case they were to remain in the Hellespont, at the end of July, for ten days after the early rising of the dog-star (ἐπὶ κυνις), discharge their cargo (ἐξέλεσθαι) in some place where the Athenians had no right of reprisals (ὅπον ἂν μὴ σῦλαι ὧσι τοῖς Ἀθηνίοις), (which might be executed unfairly, and would lead to retaliations), and then, on their return to Athens, they were to pay the lower rate of interest, or 25 per cent. Lastly, if the vessel were to be wrecked, the cargo was, if possible, to be saved; and the agreement was to be conclusive on all points.
From the preceding investigation, it appears that the rate of interest amongst the ancient Greeks was higher than in modern Europe, and at Rome in the age of Cicero. This high rate does not appear to have been caused by any scarcity of money, for the rent of land and houses in Athens and its neighbourhood was not at all proportional to it. Thus Isaeus (de Hagn. Hered. p88) says that a house at Thriae was let for only 8 per cent of its value, and some houses at Melite and Eleusis for a fraction more. We should therefore rather refer it to a low state of credit, occasioned by a variety of causes, such as the division of Greece into a number of petty states, and the constitution and regulation of the courts of law, which do not seem to have been at all favourable to money-lenders in enforcing their rights. Böckh assigns as an additional cause "the want of moral principles" (Böckh, ibid. pp123‑139, 2nd ed.)
2. Roman. The Latin word for interest, fenus or foenus, originally meant any increase, and was thence applied, like the Greek τόκος, to denote the interest or increase of money. "Fenus," says Varro (apud Gell. XVI.12), "dictum a fetu et quasi a fetura quadam pecuniae parientis atque increscentis." The same root is found in fecundus. Fenus was also used for the principal as well as the interest (Tacit. Ann. VI.17, XIV.53. Another term for interest was usurae, generally found in the plural, and also impendium, on which Varro (de Ling. Lat. V.183, Müller) remarks, "a quo (pondere) usura quod in sorte accedebat, impendium appellatum."
Towards the close of the republic, the interest of money became due on the first of every month: hence the phrases tristes or celeres calendae and calendarium, the latter meaning a debt-book or book of accounts. The rate of interest was expressed in the time of Cicero, and afterwards by means of the as and its divisions, according to the following table:—
|Asses usurae, or one as per month for the use of one hundred =||12||per cent|
|Deunces usurae||11||per cent|
|Dextantes usurae||10||per cent|
|Dodrantes usurae||9||per cent|
|Besses usurae||8||per cent|
|Septunces usurae||7||per cent|
|Semisses usurae||6||per cent|
|Quincunces usurae||5||per cent|
|Trientes usurae||4||per cent|
|Quadrantes usurae||3||per cent|
|Sextantes usurae||2||per cent|
|Unciae usurae||1||per cent|
Instead of the phrase asses usurae, a synonyme was used, viz. centesimae usurae, inasmuch as at this rate of interest there was paid in a hundred months a sum equal to the whole principal. Hence binae centesimae = 24 per cent, and quaternae centesimae = 48 per cent. So also in the line of Horace (Sat. I.2.14), "Quinas hic capiti mercedes exsecat," we must understand quinas centesimas, or 60 per cent, as the sum taken from the capital. Niebuhr (Hist. of Rom. vol. III p57) is of opinion that the monthly rate of the centesimae was of foreign origin, and first adopted at Rome in the time of Sulla. The old yearly rate established by the Twelve Tables (B.C. 450) was the unciarium fenus. This has been variously interpreted to mean, (1) one-twelfth of the centesima paid monthly, i.e. one per cent per annum; and (2) one-twelfth of the principal paid monthly, or a hundred per cent per annum. Niebuhr(l.c.) refutes p527 at length the two opinions; but it may be sufficient to observe that one is inconsistent with common sense, and the other with the early history of the republic. A third and satisfactory opinion is as follows:— The uncia was the twelfth part of the as, and since the full (12 oz.) copper coinage was still in use at Rome when the Twelve Tables became law, the phrase unciarium fenus would be a natural expression for interest of one ounce in the pound; i.e. a twelfth part of the sum borrowed, or 8⅓ per cent, not per month, but per year. This rate, if calculated for the old Roman year of ten months, would give 10 per cent for the civil year of twelve months, which was in common use in the time of the decemvirs. The analogy of the Greek terms τόκος, ἐπίτριτος, &c., confirms this view, which, as Niebuhr observes, is not invalidated by the admission, that it supposes a yearly and not a monthly payment of interest; for though in the later times of the republic interest became due every month, there is no trace of this having been the case formerly (Rein, Römische Privatrecht, p304). Nor is it difficult to account for the change; it probably was connected with the modifications made from time to time in the Roman law of debtor and creditor (such as the abolition of personal slavery for debt), the natural effect of which would be to make creditors more scrupulous in lending money, and more vigilant in exacting the interest due upon it.
If a debtor could not pay the principal and interest at the end of the year, he used to borrow money from a fresh creditor, to pay off his old debt. This proceeding was very frequent, and called a versura (compare Ter. Phorm. V.2.16), a word which Festus, (s.v.) thus explains: "Versuram facere, mutuam pecuniam sumere, ex eo dictum est, quod initio qui mutuabantur ab aliis, ut aliis solverent, velut verterent creditorem." It amounted to little short of paying compound interest, or an Anatocismus anniversarius, another phrase for which was usurae renovatae; e.g. centesimae renovatae is twelve per cent compound interest, to which Cicero (ad Att. V.21) opposes centesimae perpetuo fenore = 12 per cent simple interest. The following phrases are of common occurrence in connection with borrowing and lending money at interest:— Pecuniam apud aliquem collocare, to lend money at interest; relegere, to call it in again; cavere, to give security for it; opponere or opponere pignori, to give as a pledge or mortgage: hence the pun in Catullus (Car. 26),
The word nomen is also of extensive use in money transactions. Properly it denoted the name of a debtor, registered in a banker's or any other account-book; hence it came to signify the articles of an account, a debtor, or a debt itself. Thus we have bonum nomen, a good debt; nomina facere, to lend moneys (Cic. ad Fam. VII.23), and also to borrow money (id. de Off. III.14). Moreover, the Romans generally discharged debts through the agency of a banker (in foro et de mensae scriptura) rather than by a direct personal payment (ex arca domoque); and as an order or undertaking for payment was given by writing down the sum to be paid, with the receiver's name underneath or alongside it (see Dem. c. Callip. p1236), hence came the phrases scribere nummos alicui, to promise to pay (Plaut. Asin. II.4.34); rescribere, to pay back, of a debtor (Ter. Phorm. V.7.29). So also perscribere, to give a bill or draft (perscriptio) on a banker for payment, in opposition to payment by ready money (Cic. ad Att. XII.51, XVI.2).
The Roman law of debtor and creditor is given under Nexum. It is sufficient to remark here that the Licinian laws [Leges Liciniae], by which the grievances of debtors were to a certain extent redressed, did not lay any restriction on the rate of interest that might be legally demanded; and it is clear from various circumstances that the scarcity of money at Rome after the taking of the city by the Gauls had either led to the actual abolition of the old uncial rate (unciarium fenus) of the Twelve Tables, or caused it to fall into disuse. Nine years, however, after the passing of these laws (Liv. VII.16) the rate of the Twelve Tables was re-established, and any higher rate prohibited by the bill (rogatio) of the tribunes Duilius and Maenius. Still this limitation of the rate of interest did not enable debtors to pay the principal, and what Tacitus (Ann. VI.16) calls the fenebre malum became at last so serious that the government thought it necessary to interfere, and remedy, if possible, an evil so great and inveterate. Accordingly, fourteen years after the passing of the Licinian laws, five commissioners were appointed for this purpose under the title of mensarii or bankers. These opened their banks in the forum, and in the name of the treasury offered ready money to any debtor who could give security (cavere) to the state for it: moreover, they ordered that land and cattle should be received in payment of debts at a fair valuation, a regulation which Caesar adopted for a similar purpose (Suet. Jul. Caes. 42). By these means Livy (Liv. VII.21) tells us that a great amount of debt was satisfactorily liquidated. Five years afterwards, the legal rate of interest was still further lowered to the semunciarium fenus, or the twenty-fourth part of the whole sum (ad semuncias redacta usura, Tac. Ann. VI.16); and in B.C. 346 we read of several usurers being punished for a violation of the law (Liv. VII.28), by which they were subjected to a penalty of four times the amount of the loan (Cato, de Re Rust. init.). But all these enactments were merely palliatives; the termination and cure of the evil was something more decisive — neither more nor less than a species of national bankruptcy — a general abolition of debts or χρεῶν ἀποκοπή. This happened in B.C. 341, a year remarkable for political changes of great importance, and was followed up by the passing of the Genucian laws, which forbade the taking of usury altogether (Liv. VII.42). A law like this, however, was sure to be evaded, and there was a very simple way of doing so; it only affected Roman citizens, and therefore the usurers granted loans, not in the name of themselves, but of the Latins and allies who were not bound by it (Liv. XXXV.7). To prevent this evasion the Sempronian law was passed (B.C. 194), which placed the Latins and allies on the same footing in respect of lending money as the full Roman citizens. At last, after many futile attempts to prevent the exaction of interest at any rate, and in any shape, the idea was abandoned altogether, and the centesima or 12 per cent per annum became the legal and recognised rate. Niebuhr, as we have already observed, is of opinion p528 that it was first adopted at Rome in the time of Sulla; but whether it became the legal rate by any special enactment, or from general consent, does not appear. Some writers have inferred (Heinecc. III.15) that it was first legalised by the edicts of the city praetors, an inference drawn from the general resemblance between the praetorian and proconsular edicts, coupled with the fact that some proconsular edicts are extant, by which the centesima is fixed as the legal rate in proconsular provinces (In edicto tralaticio centesimas me observaturum habui, Cic. ad Att. V.21). Whether this supposition is true or not, it is admitted that the centesima or 12 per cent was the legal rate towards the close of the republic, and also under the emperors. Justinian reduced it to 6 per cent (Heinec. III.16).
In cases of fenus nauticum, however, or bottomry, as the risk was the money lender's, he might demand any interest he liked while the vessel on which the money was lent was at sea; but after she reached harbour, and while she was there, no more than the usual rate of 12 per cent on the centesima could be demanded.
Justinian made it the legal rate for fenus nauticum under all circumstances (Heinec. l.c.).
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