Debt: The First 5000 Years Part 9

Islamic legal precept.

For most of the Middle Ages, the economic nerve center of the world economy and the source of its most dramatic financial innovations was neither China nor India, but the West, which, from the perspective of the rest of the world, meant the world of Islam. During most of this period, Christendom, lodged in the declining empire of Byzantium and the obscure semi-barbarous princ.i.p.alities of Europe, was largely insignificant.

Since people who live in Western Europe have so long been in the habit of thinking of Islam as the very definition of "the East," it's easy to forget that, from the perspective of any other great tradition, the difference between Christianity and Islam is almost negligible. One need only pick up a book on, say, Medieval Islamic philosophy to discover disputes between the Baghdad Aristoteleans and the neo-Pythagoreans in Basra, or Persian Neo-Platonists-essentially, scholars doing the same work of trying to square the revealed religion tradition beginning with Abraham and Moses with the categories of Greek philosophy, and doing so in a larger context of mercantile capitalism, universalistic missionary religion, scientific rationalism, poetic celebrations of romantic love, and periodic waves of fascination with mystical wisdom from the East.

From a world-historical perspective, it seems much more sensible to see Judaism, Christianity, and Islam as three different manifestations of the same great Western intellectual tradition, which for most of human history has centered on Mesopotamia and the Levant, extending into Europe as far as Greece and into Africa as far as Egypt, and sometimes farther west across the Mediterranean or down the Nile. Economically, most of Europe was until perhaps the High Middle Ages in exactly the same situation as most of Africa: plugged into the larger world economy, if at all, largely as an exporter of slaves, raw materials, and the occasional exotica (amber, elephant tusks ...), and importer of manufactured goods (Chinese silks and porcelain, Indian calicoes, Arab steel). To get a sense of comparative economic development (even if the examples are somewhat scattered over time), consider the following table:58 Populations and Tax Revenue, 350 BC1200 AD.

What's more, for most of the Middle Ages, Islam was not only the core of Western civilization; it was its expansive edge, working its way into India, expanding in Africa and Europe, sending missionaries and winning converts across the Indian Ocean.

The prevailing Islamic att.i.tude toward law, government, and economic matters was the exact opposite of that prevalent in China. Confucians were suspicious of governance through strict codes of law, preferring to rely on the inherent sense of justice of the cultivated scholar-a scholar who was simply a.s.sumed to also be a government official. Medieval Islam, on the other hand, enthusiastically embraced law, which was seen as a religious inst.i.tution derived from the Prophet, but tended to view government, more often than not, as an unfortunate necessity, an inst.i.tution that the truly pious would do better to avoid.59 In part this was because of the peculiar nature of Islamic government. The Arab military leaders who, after Mohammed's death in 632 ad, conquered the Sa.s.sanian empire and established the Abbasid Caliphate, always continued to see themselves as people of the desert, and never felt entirely part of the urban civilizations they had come to rule. This discomfort was never quite overcome-on either side. It took the bulk of the population several centuries to convert to the conqueror's religion, and even when they did, they never seem to have really identified with their rulers. Government was seen as military power-necessary, perhaps, defend the faith, but fundamentally exterior to society.

In part, too, it was because of the peculiar alliance between merchants and common folk that came to be aligned against them. After Caliph al-Ma'mum's abortive attempt to set up a theocracy in 832 ad, the government took a hands-off position on questions of religion. The various schools of Islamic law were free to create their own educational inst.i.tutions and maintain their own separate system of religious justice. Crucially, it was the ulema, the legal scholars, who were the princ.i.p.al agents in the conversion of the bulk of the empire's population to Islam in Mesopotamia, Syria, Egypt, and North Africa in those same years.60 But-like the elders in charge of guilds, civic a.s.sociations, commercial sodalities, and religious brotherhoods-they did their best to keep the government, with its armies and ostentation, at arm's length.61 "The best princes are those who visit religious teachers," one proverb put it, "the worst religious teachers are the those who allow themselves to be visited by princes."62 A Medieval Turkish story brings it home even more pointedly: The king once summoned Nasruddin to court.

"Tell me," said the king, "you are a mystic, a philosopher, a man of unconventional understandings. I have become interested in the issue of value. It's an interesting philosophical question. How does one establish the true worth of a person, or an object? Take me for example. If I were to ask you to estimate my value, what would you say?"

"Oh," Nasruddin said, "I'd say about two hundred dinars."

The emperor was flabbergasted. "What?! But this belt I'm wearing is worth two hundred dinars!"

"I know," said Nasruddin. "Actually, I was taking the value of the belt into consideration."

This disjuncture had profound economic effects. It meant that the Caliphate, and later Muslim empires, could operate in many ways much like the old Axial Age empires-creating professional armies, waging wars of conquest, capturing slaves, melting down loot and distributing it in the form of coins to soldiers and officials, demanding that those coins be rendered back as taxes-but at the same time, without having nearly the same effects on ordinary people's lives.

Over the course of the wars of expansion, for example, enormous quant.i.ties of gold and silver were indeed looted from palaces, temples, and monasteries and stamped into coinage, allowing the Caliphate to produce gold dinars and silver dirhams of remarkable purity-that is, with next to no fiduciary element, the value of each coin corresponding almost precisely to its weight in precious metal.63 As a result, they were able to pay their troops extraordinarily well. A soldier in the Caliph's army, for example, received almost four times the wages once received by a Roman legionary.64 We can, perhaps, speak of a kind of "military-coinage-slavery" complex here-but it existed in a kind of bubble. Wars of expansion, and trade with Europe and Africa, did produce a fairly constant flow of slaves, but in dramatic contrast to the ancient world, very few of them ended up laboring in farms or workshops. Most ended up as decoration in the houses of the rich, or, increasingly over time, as soldiers. Over the course of the Abbasid dynasty (7501258 ad) in fact, the empire came to rely, for its military forces, almost exclusively on Mamluks, highly trained military slaves captured or purchased from the Turkish steppes. The policy of employing slaves as soldiers was maintained by all of the Islamic successor states, including the Mughals, and culminated in the famous Mamluk sultanate in Egypt in the thirteenth century, but historically, it was unprecedented.65 In most times and places slaves are, for obvious reasons, the very last people to be allowed anywhere near weapons. Here it was systematic. But in a strange way, it also made perfect sense: if slaves are, by definition, people who have been severed from society, this was the logical consequence of the wall created between society and the Medieval Islamic state.66 Religious teachers appear to have done everything they could to prop up the wall. One reason for the recourse to slave soldiers was their tendency to discourage the faithful from serving in the military (since it might mean fighting fellow believers). The legal system that they created also ensured that it was effectively impossible for Muslims-or for that matter Christian or Jewish subjects of the Caliphate-to be reduced to slavery. Here al-Wahid seems to have been largely correct. Islamic law took aim at just about all the most notorious abuses of earlier, Axial Age societies. Slavery through kidnapping, judicial punishment, debt, and the exposure or sale of children, even through the voluntary sale of one's own person-all were forbidden, or rendered unenforceable.67 Likewise with all the other forms of debt peonage that had loomed over the heads of poor Middle Eastern farmers and their families since the dawn of recorded history. Finally, Islam strictly forbade usury, which it interpreted to mean any arrangement in which money or a commodity was lent at interest, for any purpose whatsoever.68 In a way, one can see the establishment of Islamic courts as the ultimate triumph of the patriarchal rebellion that had begun so many thousands of years before: of the ethos of the desert or the steppe, real or imagined, even as the faithful did their best to keep the heavily armed descendants of actual nomads confined to their camps and palaces. It was made possible by a profound s.h.i.+ft in cla.s.s alliances. The great urban civilizations of the Middle East had always been dominated by a de facto alliance between administrators and merchants, both of whom kept the rest of the population either in debt peonage or in constant peril of falling into it. In converting to Islam, the commercial cla.s.ses, so long the arch-villains in the eyes of ordinary farmers and townsfolk, effectively agreed to change sides, abandon all their most hated practices, and become instead the leaders of a society that now defined itself against the state.

It was possible because from the beginning, Islam had a positive view toward commerce. Mohammed himself had begun his adult life as a merchant; and no Islamic thinker ever treated the honest pursuit of profit as itself intrinsically immoral or inimical to faith. Neither did the prohibitions against usury-which for the most part were scrupulously enforced, even in the case of commercial loans-in any sense mitigate against the growth of commerce, or even the development of complex credit instruments.69 To the contrary, the early centuries of the Caliphate saw an immediate efflorescence in both.

Profits were still possible because Islamic jurists were careful to allow for certain service fees, and other considerations-notably, allowing goods bought on credit to be priced slightly higher than those bought for cash-that ensured that bankers and traders still had an incentive to provide credit services.70 Still, these incentives were never enough to allow banking to become a full-time occupation: instead, almost any merchant operating on a sufficiently large scale could be expected to combine banking with a host of other moneymaking activities. As a result, credit instruments soon became so essential to trade that almost anyone of prominence was expected to keep most of his or her wealth on deposit, and to make everyday transactions, not by counting out coins, but by inkpot and paper. Promissory notes were called sakk, "checks", or ruq'a, "notes." Checks could bounce. One German historian, picking through a mult.i.tude of old Arabic literary sources, recounts that: About 900 a great man paid a poet in this way, only the banker refused the check, so that the disappointed poet composed a verse to the effect that he would gladly pay a million on the same plan. A patron of the same poet and singer (936) during a concert wrote a check in his favor on a banker for five hundred dinars. When paying, the banker gave the poet to understand that it was customary to charge one dirham discount on each dinar, i.e., about ten per cent. Only if the poet would spend the afternoon and evening with him, he would make no deduction ...

By about 1000 the banker had made himself indispensable in Basra: every trader had his banking account, and paid only in checks on his bank in the bazaar....71 Checks could be countersigned and transferred, and letters of credit (suftaja) could travel across the Indian Ocean or the Sahara.72 If they did not turn into de facto paper money, it was because, since they operated completely independent of the state (they could not be used to pay taxes, for instance), their value was based almost entirely on trust and reputation.73 Appeal to the Islamic courts was generally voluntary or mediated by merchant guilds and civic a.s.sociations. In such a context, having a famous poet compose verses making fun of you for bouncing a check was probably the ultimate disaster.

When it came to finance, instead of interest-bearing investments, the preferred approach was partners.h.i.+ps, where (often) one party would supply the capital, the other carry out the enterprise. Instead of fixed return, the investor would receive a share of the profits. Even labor arrangements were often organized on a profit-sharing basis.74 In all such matters, reputation was crucial-in fact, one lively debate in early commercial law was over the question of whether reputation could (like land, labor, money, or other resources) itself be considered a form of capital. It sometimes happened that merchants would form partners.h.i.+ps with no capital at all, but only their good names. This was called "partners.h.i.+p of good reputation." As one legal scholar explained: As for the credit partners.h.i.+p, it is also called the "partners.h.i.+p of the penniless" (sharika al-mafalis). It comes about when two people form a partners.h.i.+p without any capital in order to buy on credit and then sell. It is designated by this name partners.h.i.+p of good reputations because their capital consists of their status and good reputations; for credit is extended only to him who has a good reputation among people.75 Some legal scholars objected to the idea that such a contract could be considered legally binding, since it was not based on an initial outlay of material capital; others considered it legitimate, provided the partners make an equitable part.i.tion of the profits-since reputation cannot be quantified. The remarkable thing here is the tacit recognition that, in a credit economy that operates largely without state mechanisms of enforcement (without police to arrest those who commit fraud, or bailiffs to seize a debtor's property), a significant part of the value of a promissory note is indeed the good name of the signatory. As Pierre Bourdieu was later to point out in describing a similar economy of trust in contemporary Algeria: it's quite possible to turn honor into money, almost impossible to convert money into honor.76 These networks of trust, in turn, were largely responsible for the spread of Islam over the caravan routes of Central Asia and the Sahara, and especially across the Indian Ocean, the main conduit of Medieval world trade. Over the course of the Middle Ages, the Indian Ocean effectively became a Muslim lake. Muslim traders appear to have played a key role in establis.h.i.+ng the principle that kings and their armies should keep their quarrels on dry land; the seas were to be a zone of peaceful commerce. At the same time, Islam gained a toehold in trade emporia from Aden to the Moluccas because Islamic courts were so perfectly suited to provide those functions that made such ports attractive: means of establis.h.i.+ng contracts, recovering debts, creating a banking sector capable of redeeming or transferring letters of credit.77 The level of trust thereby created between merchants in the great Malay entrepot Malacca, gateway to the spice islands of Indonesia, was legendary. The city had Swahili, Arab, Egyptian, Ethiopian, and Armenian quarters, as well as quarters for merchants from different regions of India, China, and Southeast Asia. Yet it was said that its merchants shunned enforceable contracts, preferring to seal transactions "with a handshake and a glance at heaven."78 In Islamic society, the merchant became not just a respected figure, but a kind of paragon: like the warrior, a man of honor able to pursue far-flung adventures; unlike him, able to do so in a fas.h.i.+on damaging to no one. The French historian Maurice Lombard draws a striking, if perhaps rather idealized, picture of him "in his stately town-house, surrounded by slaves and hangers-on, in the midst of his collections of books, travel souvenirs, and rare ornaments," along with his ledgers, correspondence, and letters of credit, skilled in the arts of double-entry book-keeping along with secret codes and ciphers, giving alms to the poor, supporting places of wors.h.i.+p, perhaps, dedicating himself to the writing of poetry, while still able to translate his general creditworthiness into great capital reserves by appealing to family and partners.79 Lombard's picture is to some degree inspired by the famous Thousand and One Nights description of Sindbad, who, having spent his youth in perilous mercantile ventures to faraway lands, finally retired, rich beyond dreams, to spend the rest of his life amidst gardens and dancing girls, telling tall tales of his adventures. Here's a glimpse, from the eyes of a humble porter (also named Sindbad) when first summoned to see him by the master's page: He found it to be a goodly mansion, radiant and full of majesty, till he brought him to a grand sitting room wherein he saw a company of n.o.bles and great lords seated at tables garnished with all manner of flowers and sweet-scented herbs, besides great plenty of dainty viands and fruits dried and fresh and confections and wines of the choicest vintages. There also were instruments of music and mirth and lovely slave girls playing and singing. All the company was ranged according to rank, and in the highest place sat a man of wors.h.i.+pful and n.o.ble aspect whose bearded sides h.o.a.riness had stricken, and he was stately of stature and fair of favor, agreeable of aspect and full of gravity and dignity and majesty. So Sindbad the Porter was confounded at that which he beheld and said in himself, "By Allah, this must be either some king's palace, or a piece of Paradise!"80 It's worth quoting not only because it represents a certain ideal, a picture of the perfect life, but because there's no real Christian parallel. It would be impossible conceive of such an image appearing in, say, a Medieval French romance.

The veneration of the merchant was matched by what can only be called the world's first popular free-market ideology. True, one should be careful not to confuse ideals with reality. Markets were ever entirely independent from the government. Islamic regimes did employ all the usual strategies of manipulating tax policy to encourage the growth of markets, and they periodically tried to intervene in commercial law.81 Still, there was a very strong popular feeling that they shouldn't. Once freed from its ancient scourges of debt and slavery, the local bazaar had become, for most, not a place of moral danger, but the very opposite: the highest expression of the human freedom and communal solidarity, and thus to be protected a.s.siduously from state intrusion.

There was a particular hostility to anything that smacked of price-fixing. One much-repeated story held that the Prophet himself had refused to force merchants to lower prices during a shortage in the city of Medina, on the grounds that doing so would be sacrilegious, since, in a free-market situation, "prices depend on the will of G.o.d."82 Most legal scholars interpreted Mohammed's decision to mean that any government interference in market mechanisms should be considered similarly sacrilegious, since markets were designed by G.o.d to regulate themselves.83 If all this bears a striking resemblance to Adam Smith's "invisible hand" (which was also the hand of Divine Providence), it might not be a complete coincidence. In fact, many of the specific arguments and examples that Smith uses appear to trace back directly to economic tracts written in Medieval Persia. For instance, not only does his argument that exchange is a natural outgrowth of human rationality and speech already appear both in both Ghazali (10581111 ad), and Tusi (12011274 ad); both use exactly the same ill.u.s.tration: that no one has ever observed two dogs exchanging bones.84 Even more dramatically, Smith's most famous example of division of labor, the pin factory, where it takes eighteen separate operations to produce one pin, already appears in Ghazali's Ihya, in which he describes a needle factory, where it takes twenty-five different operations to produce a needle.85 The differences, however, are just as significant as the similarities. One telling example: like Smith, Tusi begins his treatise on economics with a discussion of the division of labor; but where for Smith, the division of labor is actually an outgrowth of our "natural propensity to truck and barter" in pursuit of individual advantage, for Tusi, it was an extension of mutual aid: Let us suppose that each individual were required to busy himself with providing his own sustenance, clothing, dwelling-place and weapons, first acquiring the tools of carpentry and the smith's trade, then readying thereby tools and implements for sowing and reaping, grinding and kneading, spinning and weaving ... Clearly, he would not be capable of doing justice to any one of them. But when men render aid to each other, each one performing one of these important tasks that are beyond the measure of his own capacity, and observing the law of justice in transactions by giving greatly and receiving in exchange of the labor of others, then the means of livelihood are realized, and the succession of the individual and the survival of the species are a.s.sured.86 As a result, he argues, divine providence has arranged us to have different abilities, desires, and inclinations. The market is simply one manifestation of this more general principle of mutual aid, of the matching of, abilities (supply) and needs (demand)-or to translate it into my own earlier terms, it is not only founded on, but is itself an extension of the kind of baseline communism on which any society must ultimately rest.

All this is not to say that Tusi was in any sense a radical egalitarian. Quite the contrary. "If men were equal," he insists, "they would all perish." We need differences between rich and poor, he insisted, just as much as we need differences between farmers and carpenters. Still, once you start from the initial premise that markets are primarily about cooperation rather than compet.i.tion-and while Muslim economic thinkers did recognize and accept the need for market compet.i.tion, they never saw compet.i.tion as its essence87-the moral implications are very different. Nasruddin's story about the quail eggs might have been a joke, but Muslim ethicists did often enjoin merchants to drive a hard bargain with the rich so they could charge less, or pay more, when dealing with the less fortunate.88 Ghazali's take on the division of labor is similar, and his account of the origins of money is if anything even more revealing. It begins with what looks much like the myth of barter, except that, like all Middle Eastern writers, he starts not with imaginary primitive tribesmen, but with strangers meeting in an imaginary marketplace.

Sometimes a person needs what he does not own and he owns what he does not need. For example, a person has saffron but needs a camel for transportation and one who owns a camel does not presently need that camel but he wants saffron. Thus, there is the need for an exchange. However, for there to be an exchange, there must be a way to measure the two objects, for the camel-owner cannot give the whole camel for a quant.i.ty of saffron. There is no similarity between saffron and camel so that equal amount of that weight and form can be given. Likewise is the case of one who desires a house but owns some cloth or desires a slave but owns socks, or desires flour but possesses a donkey. These goods have no direct proportionality so one cannot know how much saffron will equal a camel's worth. Such barter transactions would be very difficult.89 Ghazali also notes that there might also be a problem of one person not even needing what the other has to offer, but this is almost an afterthought; for him, the real problem is conceptual. How do you compare two things with no common qualities? His conclusion: it can only be done by comparing both to a third thing with no qualities at all. For this reason, he explains, G.o.d created dinars and dirhams, coins made out of gold and silver, two metals that are otherwise no good for anything: Dirhams and dinars are not created for any particular purpose; they are useless by themselves; they are just like stones. They are created to circulate from hand to hand, to govern and to facilitate transactions. They are symbols to know the value and grades of goods.90 They can be symbols, units of measure, because of this very lack of usefulness, indeed lack of any particular feature other than value: A thing can only be exactly linked to other things if it has no particular special form or feature of its own-for example, a mirror that has no color can reflect all colors. The same is the case with money-it has no purpose of its own, but it serves as medium for the purpose of exchanging goods.91 From this it also follows that lending money at interest must be illegitimate, since it means using money as an end in itself: "Money is not created to earn money." In fact, he says, "in relation to other goods, dirhams and dinars are like prepositions in a sentence," words that, as the grammarians inform us, are used to give meaning to other words, but can only do because they have no meaning in themselves. Money is a thus a unit of measure that provides a means of a.s.sessing the value of goods, but also one that operates as such only if it stays in constant motion. To enter in monetary transactions in order to obtain even more money, even if it's a matter of M-C-M', let alone M-M', would be, according to Ghazali, the equivalent of kidnapping a postman.92 Whereas Ghazali speaks only of gold and silver, what he describes-money as symbol, as abstract measure, having no qualities of its own, whose value is only maintained by constant motion-is something that would never have occurred to anyone were it not in an age when it was perfectly normal for money to be employed in purely virtual form.

Much of our free-market doctrine, then, appears to have been originally borrowed piecemeal from a very different social and moral universe.93 The mercantile cla.s.ses of the Medieval Near West had pulled off an extraordinary feat. By abandoning the usurious practices that had made them so obnoxious to their neighbors for untold centuries before, they were able to become-alongside religious teachers-the effective leaders of their communities: communities that are still seen as organized, to a large extent, around the twin poles of mosque and bazaar.94 The spread of Islam allowed the market to become a global phenomenon, operating largely independent of governments, according to its own internal laws. But the very fact that this was, in a certain way, a genuine free market, not one created by the government and backed by its police and prisons-a world of handshake deals and paper promises backed only by the integrity of the signer-meant that it could never really become the world imagined by those who later adopted many of the same ideas and arguments: one of purely self-interested individuals vying for material advantage by any means at hand.

The Far West:.

Christendom (Commerce, Lending, and War).

Where there is justice in war, there is also justice in usury.

-Saint Ambrose.

Europe, as I mentioned, came rather late to the Middle Ages and for most of it was something of a hinterland. Still, the period began much as it did elsewhere, with the disappearance of coinage. Money retreated into virtuality. Everyone continued to calculate costs in Roman currency, then, later, in Carolingian "imaginary money"-the purely conceptual system of pounds, s.h.i.+llings, and pence used across Western Europe to keep accounts well into the seventeenth century.

Local mints did gradually come back into operation, producing coins in an endless variety of weight, purity, and denominations. How these related to the pan-European system, though, was a matter of manipulation. Kings regularly issued decrees revaluing their own coins in relation to the money of account, "crying up" the currency by, say, declaring that henceforth, one of their ecus or escudos would no longer be worth 1/12 but now 1/8 of a s.h.i.+lling (thus effectively raising taxes) or "crying down" the value of their coins by doing the reverse (thus effectively reducing their debts).95 The real gold or silver content of coins was endlessly readjusted, and currencies were frequently called in for re-minting. Meanwhile, most everyday transactions dispensed with cash entirely, operating through tallies, tokens, ledgers, or transactions in kind. As a result, when the Scholastics came to address such matters in the thirteenth century, they quickly adopted Aristotle's position that money was a mere social convention: that it was, basically, whatever human beings decided that it was.96 All this fit the broader Medieval pattern: actual gold and silver, such of it as was still around, was increasingly laid up in sacred places; as centralized states disappeared, the regulation of markets was increasingly in the hands of the Church.

At first, the Catholic att.i.tudes toward usury were just as harsh as Muslim ones, and att.i.tudes toward merchants, considerably harsher. In the first case, they had little choice, as many Biblical texts were quite explicit. Consider Exodus 22:25: If you lend money to My people, to the poor among you, you are not to act as a creditor to him; you shall not charge him interest.

Both the Psalms (15:5, 54:12) and Prophets (Jeremiah 9.6, Nehemiah 5:11) were explicit in a.s.signing usurers to death and h.e.l.lfire. What's more, the early Christian Fathers, who laid the foundation of Church teachings on social issues in the waning years of the Roman empire, were writing amidst the ancient world's last great debt crisis, one that was effectively in the process of destroying the empire's remaining free peasantry.97 While few were willing to condemn slavery, all condemned usury.

Usury was seen above all as an a.s.sault on Christian charity, on Jesus's injunction to treat the poor as they would treat the Christ himself, giving without expectation of return and allowing the borrower to decide on recompense (Luke 6:3435). In 365 ad, for instance, St. Basil delivered a sermon on usury in Cappadocia that set the standard for such issues: The Lord gave His own injunction quite plainly in the words, "from him that would borrow of thee turn not thou away."98 But what of the money lover? He sees before him a man under stress of necessity bent to the ground in supplication. He sees him hesitating at no act, no words, of humiliation. He sees him suffering undeserved misfortune, but he is merciless. He does not reckon that he is a fellow-creature. He does not give in to his entreaties. He stands stiff and sour. He is moved by no prayers; his resolution is broken by no tears. He persists in refusal ...99 That is, until the suppliant mentions "interest."

Basil was particularly offended by the cra.s.s dishonesty by which moneylenders operated; their abuse of Christian fellows.h.i.+p. The man in need comes seeking a friend, the rich man pretends to be one. In fact he's a secret enemy, and everything he says is a lie. Witness, St. Basil said, how the rich man will always at first swear mighty oaths that he has no money to his name: Then the suppliant mentions interest, and utters the word security. All is changed. The frown is relaxed; with a genial smile he recalls old family connection. Now it is "my friend."

"I will see," says he, "if I have any money by me. Yes, there is that sum which a man I know has left in my hands on deposit for profit. He stipulated a very heavy rate of interest. However, I shall certainly take something off, and give it to you on better terms." With pretences of this kind and talk like this he fawns on the wretched victim, and induces him to swallow the bait. Then he binds him with a written security, adds loss of liberty to the trouble of his pressing poverty, and is off. The man who has made himself responsible for interest that he cannot pay has accepted voluntary slavery for life.100 The borrower, coming home with his newfound money, at first rejoices. But quickly, "the money slips away," interest acc.u.mulates, and his possessions are sold off. Basil grows poetic in describing the debtor's plight. It's as if time itself has become his enemy. Every day and night conspires against him, as they are the parents of interest. His life becomes a "sleepless daze of anxious uncertainty," as he is humiliated in public; while at home, he is constantly hiding under the couch at every unexpected knock on the door, and can barely sleep, startled awake by nightmare visions of his creditor standing over his pillow.101 Probably the most famous ancient homily on usury, though, was Saint Ambrose's De Tobia, p.r.o.nounced over several days in Milan in 380 bc. He reproduces the same vivid details as Basil: fathers forced to sell their children, debtors who hanged themselves out of shame. Usury, he observes, must be considered a form of violent robbery, even murder.102 Ambrose, though, added one small proviso that was later to have enormous influence. His sermon was the first to carefully examine every Biblical reference to moneylending, which meant that he had to address the one problem later authors always had to struggle with-the fact that, in the Old Testament, usury is not quite forbidden to everyone. The key sticking point is always Deuteronomy 23:1920: Thou shalt not lend upon usury to thy brother; usury of money, usury of victuals, usury of any thing that is lent upon usury.

Unto a stranger thou mayest lend upon usury; but unto thy brother thou shalt not lend upon usury.

So who then is this "stranger" or (a better translation of the Hebrew nokri, "foreigner")? Presumably, one against whom robbery and murder would have been justified as well. After all, the ancient Jews lived amidst tribes like the Amalekites, on whom G.o.d had specifically instructed them to make war. If by extracting interest one is, as he puts it, fighting without a sword, then it is only legitimate to do so from those "whom it would not be a crime to kill."103 For Ambrose, living in Milan, all this was something of a technicality. He included all Christians and all those subject to Roman law as "brothers"; there weren't, then, lot of Amalekites around.104 Later, the "Exception of St. Ambrose," as it came to be known, was to become extremely important.

All of these sermons-and there were many of them-left certain critical questions unanswered. What should the rich man do when receiving a visit from his troubled neighbor? True, Jesus had said to give without expectation of return, but it seemed unrealistic to expect most Christians to do that. And even if they did, what sort of ongoing relations.h.i.+ps would that create? St. Basil took the radical position. G.o.d had given us all things in common, and he had specifically instructed the rich to give their possessions to the poor. The communism of the Apostles-who pooled all their wealth, and took freely what they needed-was thus the only proper model for a truly Christian society.105 Few of the other Christian Fathers were willing to take things this far. Communism was the ideal, but in this fallen and temporary world, they argued, it was simply unrealistic. The Church must accept existing property arrangements, but also come up with spiritual arguments to encourage the rich to nonetheless act with Christian charity. Many of these employed distinctly commercial metaphors. Even Basil was willing to indulge in this sort of thing: Whenever you provide for the dest.i.tute on account of the Lord, it is both a gift and a loan. It is a gift because you entertain no hope in recovering it, a loan because of our Lord's munificence in paying you back on his behalf, when, having taken a small sum for the poor, he will give you back a vast sum in return. "For he who takes pity on the poor, lends to G.o.d."106 Since Christ is in the poor, a gift of charity is a loan to Jesus, to be repaid with interest inconceivable on earth.

Charity, however, is a way of maintaining hierarchy, not undermining it. What Basil is talking about here really has nothing to do with debt, and playing with such metaphors seems ultimately to serve only to underline the fact that the rich man doesn't owe the poor suppliant anything, any more than G.o.d is in any way legally bound to save the soul of anyone who feeds a beggar. "Debt" here dissolves into a pure hierarchy (hence, "the Lord") where utterly different beings provide each other utterly different kinds of benefit. Later theologians were to explicitly confirm this: human beings live in time, noted St. Thomas Aquinas, so it makes sense to say that sin is a debt of punishment we owe to G.o.d. But G.o.d lives outside of time. By definition, he cannot owe anything to anyone. His grace can therefore only be a gift given with no obligation.107 This, in turn, provides an answer to the question: What are they really asking the rich man to do? The Church opposed usury, but it had little to say about relations of feudal dependency, where the rich man provides charity and the poor suppliant shows his grat.i.tude in other ways. Neither, when these kinds of arrangements began to emerge across the Christian West, did the Church offer significant objections.108 Former debt peons were gradually transformed into serfs or va.s.sals. In some ways, the relations.h.i.+p was not much different, since va.s.salage was, in theory, a voluntary, contractual relations.h.i.+p. Just as a Christian has to be able to freely choose to submit himself to "the Lord," so did a va.s.sal have to agree to make himself someone else's man. All this proved perfectly consonant with Christianity.

Commerce, on the other hand, remained a problem. There was not much of a leap between condemning usury as the taking of "whatever exceeds the amount loaned" and condemning any form of profit-taking. Many-Saint Ambrose among them-were willing to take that leap. Where Mohammed declared that an honest merchant deserved a place by the seat of G.o.d in heaven, men like Ambrose wondered if an "honest merchant" could actually exist. Many held that one simply could not be both a merchant and a Christian.109 In the early Middle Ages, this was not a pressing issue-especially since so much commerce was conducted by foreigners. The conceptual problems, however, were never resolved. What did it mean that one could only lend to "strangers"? Was it just usury, or was even commerce tantamount to war?

Probably the most notorious, and often catastrophic, way that this problem worked itself out in the High Middle Ages was in relations between Christians and Jews. In the years since Nehemiah, Jewish att.i.tudes toward lending had themselves changed. In the time of Augustus, Rabbi Hillel had effectively rendered the sabbatical year a dead letter, by allowing two parties to place a rider on any particular loan contract agreeing that it would not apply. While both the Torah and the Talmud stand opposed to loans on interest, exceptions were made in dealing with Gentiles-particularly as, over the course of the eleventh and twelfth centuries, European Jews were excluded from almost any other line of work.110 This in turn made it harder to contain the practice, as witnessed in the common joke, current in twelfth-century ghettos to justify usury between Jews. It consisted, it is said, of reciting Deuteronomy 23:20 in interrogative tones to make it mean the opposite of its obvious sense: 'Unto a foreigner thou mayest lend upon usury, but unto thy brother thou shalt not lend upon usury?'111 On the Christian side, in 1140 ad the "Exception of Saint Ambrose" found its way into Gratian's Decretum, which came to be considered the definitive collection of canon law. At the time, economic life fell very much under the jurisdiction of the Church. While that might appear to leave Jews safely outside the system, in reality, matters were more complicated. For one thing, while both Jews and Gentiles would occasionally attempt to make recourse to the Exception, the prevailing opinion was that it only really applied to Saracens or others with whom Christendom was literally at war. After all, Jews and Christians lived in the same towns and villages. If one were to concede that the Exception allowed Jews and Christians the right to lend to each other at interest, it would also mean that they had the right to murder one another.112 No one really wanted to say that. On the other hand, real relations between Christians and Jews often did seem to skate perilously close to this unfortunate ideal-though obviously the actual murder (apart from mere economic aggression) was all on one side.

In part this was due to the habit of Christian princes of exploiting, for their own purposes, the fact that Jews did sit slightly outside the system. Many encouraged Jews to operate as moneylenders, under their protection, simply because they also knew that protection could be withdrawn at any time. The kings of England were notorious in this regard. They insisted that Jews be excluded from merchant and craft guilds, but granted them the right to charge extravagant rates of interest, backing up the loans by the full force of law.113 Debtors in Medieval England were regularly thrown in prisons until their families settled with the creditor.114 Yet the same regularly happened to the Jews themselves. In 1210 ad, for example, King John ordered a tallage, or emergency levy, to pay for his wars in France and Ireland. According to one contemporary chronicler "all the Jews throughout England, of both s.e.xes, were seized, imprisoned, and tortured severely, in order to do the king's will with their money." Most who where put to torture offered all they had and more-but on that occasion, one particularly wealthy merchant, a certain Abraham of Bristol, who the king decided owed him ten thousand marks of silver (a sum equivalent to about a sixth of John's total annual revenue), became famous for holding out. The king therefore ordered that one of his molars be pulled out daily, until he paid. After seven had been extracted, Abraham finally gave in.115 John's successor, Henry III (12161272 ad), was in the habit of turning over Jewish victims to his brother the Earl of Cornwall, so that, as another chronicler put it, "those whom one brother had flayed, the other might embowel."116 Such stories about the extraction of Jewish teeth, skin, and intestines are, I think, important to bear in mind when thinking about Shakespeare's imaginary Merchant of Venice demanding his "pound of flesh."117 It all seems to have been a bit of a guilty projection of terrors that Jews had never really visited on Christians, but that had been directed the other way around.

The terror inflicted by kings carried in it a peculiar element of identification: the persecutions and appropriations were an extension of the logic whereby kings effectively treated debts owed to Jews as ultimately owed to themselves, even setting up a branch of the Treasury ("the Exchequer of the Jews") to manage them.118 This was of course much in keeping with the popular English impression of their kings as themselves a group of rapacious Norman foreigners. But it also gave the kings the opportunity to periodically play the populist card, dramatically snubbing or humiliating their Jewish financiers, turning a blind eye or even encouraging pogroms by townsfolk who chose to take the Exception of Saint Ambrose literally, and treat moneylenders as enemies of Christ who could be murdered in cold blood. Particularly gruesome ma.s.sacres occurred in Norwich in 1144 ad, and in France, in Blois in 1171. Before long, as Norman Cohn put it, "what had once been a flouris.h.i.+ng Jewish culture had turned into a terrorized society locked in perpetual warfare with the greater society around it."119 One mustn't exaggerate the Jewish role in lending. Most Jews had nothing to do with the business, and those who did were typically bit players, making minor loans of grain or cloth for a return in kind. Others weren't even really Jews. Already in the 1190s, preachers were complaining about lords who would work hand in glove with Christian moneylenders claiming they were "our Jews"-and thus under their special protection.120 By the 1100s, most Jewish moneylenders had long since been displaced by Lombards (from Northern Italy) and Cahorsins (from the French town of Cahors)-who established themselves across Western Europe, and became notorious rural usurers.121 The rise of rural usury was itself a sign of a growing free peasantry (there had been no point in making loans to serfs, since they had nothing to repossess). It accompanied the rise of commercial farming, urban craft guilds, and the "commercial revolution" of the High Middle Ages, all of which finally brought Western Europe to a level of economic activity comparable to that long since considered normal in other parts of the world. The Church quickly came under considerable popular pressure to do something about the problem, and at first, it did try to tighten the clamps. Existing loopholes in the usury laws were systematically closed, particularly the use of mortgages. These latter began as an expedient: as in Medieval Islam, those determined to dodge the law could simply present the money, claim to be buying the debtor's house or field, and then "rent" it back to the debtor until the princ.i.p.al was repaid. In the case of a mortgage, the house was in theory not even purchased but pledged as security, but any income from it accrued to the lender. In the eleventh century this became a favorite trick of monasteries. In 1148 it was made illegal: henceforth, all income was to be subtracted from the princ.i.p.al. Similarly, in 1187 merchants were forbidden to charge higher prices when selling on credit-the Church thereby going much further than any school of Islamic law ever had. In 1179 usury was made a mortal sin and usurers were excommunicated and denied Christian burial.122 Before long, new orders of itinerant friars like the Franciscans and Dominicans organized preaching campaigns, traveling town to town, village to village, threatening moneylenders with the loss of their eternal souls if they did not make rest.i.tution to their victims.

All this was echoed by a heady intellectual debate in the newly founded universities, not so much as to whether usury was sinful and illegal, but precisely why. Some argued that it was theft of another's material possessions; others that it const.i.tuted a theft of time, charging others for something that belonged only to G.o.d. Some held that it embodied the sin of Sloth, since like the Confucians, Catholic thinkers usually held that a merchant's profit could only be justified as payment for his labor (i.e., in transporting goods to wherever they were needed), whereas interest accrued even if the lender did nothing at all. Soon the rediscovery of Aristotle, who returned in Arabic translation (and the influence of Muslim sources like Ghazali and Ibn Sina), added new arguments: that treating money as an end in itself defied its true purpose; that charging interest was unnatural, in that it treated mere metal as if it were a living thing that could breed or bear fruit.123 But as the Church authorities soon discovered, when one starts something like this, it's very hard to keep a lid on it. Soon, new popular religious movements were appearing everywhere, and many took up the same direction so many had in late Antiquity, not only challenging commerce but questioning the very legitimacy of private property. Most were labeled heresies and violently suppressed, but many of the same arguments were taken up amongst the mendicant orders themselves. By the thirteenth century, the great intellectual debate was between the Franciscans and the Dominicans over "apostolic poverty"-basically, over whether Christianity could be reconciled with property of any sort.

At the same time, the revival of Roman law-which, as we've seen, began from the a.s.sumption of absolute private property-put new intellectual weapons in the hands of those who wished to argue that, at least in the case of commercial loans, usury laws should be relaxed. The great discovery in this case was the notion of interesse, which is where our word "interest" originally comes from: a compensation for loss suffered because of late payment.124 The argument soon became that if a merchant made a commercial loan even for some minimal period (say, a month), it was not usurious for him to charge a percentage for each month afterward, since this was a penalty, not rental for the money, and it was justified as compensation for the profit he would have made, had he placed it in some profitable investment, as any merchant would ordinarily be expected to do.125 The reader may be wondering how it could have been possible for usury laws to move in two opposite directions simultaneously. The answer would seem to be that politically, the situation in Western Europe was remarkably chaotic. Most kings were weak, their holdings fractured and uncertain; the Continent was a checkerboard of baronies, princ.i.p.alities, urban communes, manors, and church estates. Jurisdictions were constantly being renegotiated-usually by war. Merchant capitalism of the sort long familiar in the Muslim Near West only really managed to establish itself-quite late, compared with the situation in the rest of the Medieval world-when merchant capitalists managed to secure a political foothold in the independent city-states of northern Italy-most famously, Venice, Florence, Genoa, and Milan-followed by the German cities of the Hanseatic League.126 Italian bankers ultimately managed to free themselves from the threat of expropriation by themselves taking over governments, and by doing so, acquiring their own court systems (capable of enforcing contracts) and even more critically, their own armies.127 What jumps out, in comparison with the Muslim world, are these links of finance, trade, and violence. Whereas Persian and Arab thinkers a.s.sumed that the market emerged as an extension of mutual aid, Christians never completely overcame the suspicion that commerce was really an extension of usury, a form of fraud only truly legitimate when directed against one's mortal enemies. Debt was, indeed, sin-on the part of both parties to the transaction. Compet.i.tion was essential to the nature of the market, but compet.i.tion was (usually) nonviolent warfare. There was a reason why, as I've already observed, the words for "truck and barter" in almost all European languages were derived from terms meaning "swindle," "bamboozle," or "deceive." Some disdained commerce for that reason. Others embraced it. Few would have denied that the connection was there.

One need only examine the way that Islamic credit instruments-or for that matter, the Islamic ideal of the merchant adventurer-were eventually adopted to see just how intimate this connection really was.

It is often held that the first pioneers of modern banking were the Military Order of the Knights of the Temple of Solomon, commonly known as the Knights Templar. A fighting order of monks, they played a key role in financing the Crusades. Through the Templars, a lord in southern France might take out a mortgage on one of his tenements and receive a "draft" (a bill of exchange, modeled on the Muslim suftaja, but written in a secret code) redeemable for cash from the Temple in Jerusalem. In other words, Christians appear to have first adopted Islamic financial techniques to finance attacks against Islam.

The Templars lasted from 1118 to 1307, but they finally went the way of so many Medieval trading minorities: King Phillip IV, deep in debt to the order, turned on them, accusing them of unspeakable crimes; their leaders were tortured and ultimately killed, and their wealth was expropriated.128 Much of the problem was that they lacked a powerful home base. Italian banking houses such as the Bardi, Peruzzi, and Medici did much better. In banking history, the Italians are most famous for their complex joint-stock organization and for spearheading the use of Islamic-style bills of exchange.129 At first these were simple enough: basically just a form of long-distance money-changing. A merchant could present a certain amount in florins to a banker in Italy and receive a notarized bill registering the equivalent in the international money of account (Carolingian derniers), due in, say, three months' time, and then after it came due, either he or his agent could cash it for an equivalent amount of local currency in the Champagne fairs, which were both the great yearly commercial emporia, and great financial clearing houses, of the European High Middle Ages. But they quickly morphed into a plethora of new, creative forms, mainly a way of navigating-or even profiting from-the endlessly complicated European currency situation.130 Most of the capital for these banking enterprises derived from the Mediterranean trade in Indian Ocean spices and Eastern luxuries. Yet unlike the Indian Ocean, the Mediterranean was a constant war zone. Venetian galleys doubled as both merchant vessels and wars.h.i.+ps, replete with cannon and marines, and the differences between trade, crusade, and piracy often depended on the balance of forces at any given moment.131 The same was true on land: where Asian empires tended to separate the sphere of warriors and merchants, in Europe they often overlapped: All up and down Central Europe, from Tuscany to Flanders, from Brabant to Livonia, merchants not only supplied warriors-as they did all over Europe-they sat in governments that made war and, sometimes, buckled on armor and went into battle themselves. Such places make a long list: not only Florence, Milan, Venice, and Genoa, but also Augsburg, Nuremberg, Strasbourg, and Zurich; not only Lubeck, Hamburg, Bremen, and Danzig, but also Bruges, Ghent, Leiden, and Cologne. Some of them-Florence, Nuremberg, Siena, Bern, and Ulm come to mind-built considerable territorial states.132 The Venetians were only the most famous in this regard. They created a veritable mercantile empire over the course of the eleventh century, seizing islands like Crete and Cyprus and establis.h.i.+ng sugar plantations that eventually-antic.i.p.ating a pattern eventually to become all too familiar in the New World-came to be staffed largely by African slaves.133 Genoa soon followed suit; one of their most lucrative businesses was raiding and trading along the Black Sea to acquire slaves to sell to the Mamluks in Egypt or to work mines leased from the Turks.134 The Genoese republic was also the inventor of a unique mode of military financing, which might be known as war by subscription, whereby those planning expeditions sold shares to investors in exchange for the rights to an equivalent percentage of the spoils. It was precisely the same galleys, with the same "merchant adventurers" aboard, who would eventually pa.s.s through the pillars of Hercules to follow the Atlantic coast to Flanders or the Champagne fairs, carrying cargoes of nutmeg or cayenne, silks and woolen goods-along with the inevitable bills of exchange.135 It would be instructive, I think, to pause a moment to think about this term, "merchant adventurer." Originally it just meant a merchant who operated outside his own country. It was around this same time, however, at the height of the fairs of Champagne and the Italian merchant empires, between 1160 and 1172, that the term "adventure" began to take on its contemporary meaning. The man most responsible for it was the French poet Chretien de Troyes, author of the famous Arthurian romances-most famous, perhaps, for being the first to tell the story of Sir Percival and the Holy Grail. The romances were a new sort of literature featuring a new sort of hero, the "knight-errant," a warrior who roamed the world in search of, precisely, "adventure"-in the contemporary sense of the word: perilous challenges, love, treasure, and renown. Stories of knightly adventure quickly became enormously popular, Chretein was followed by innumerable imitators, and the central characters in the stories-Arthur and Guinevere, Lancelot, Gawain, Percival, and the rest-became known to everyone, as they are still. This courtly ideal of the gallant knight, the quest, the joust, romance and adventure, remains central to our image of the Middle Ages.136 The curious thing is that it bears almost no relation to reality. Nothing remotely like a real "knight-errant" ever existed. "Knights" had originally been a term for freelance warriors, drawn from the younger or, often, b.a.s.t.a.r.d sons of the minor n.o.bility. Unable to inherit, many were forced to band together to seek their fortunes. Many became little more than roving bands of thugs, in an endless pursuit of plunder-precisely the sort of people who made merchants' lives so dangerous. Culminating in the twelfth century, there was a concerted effort to bring this dangerous population under the control of the civil authorities: not only the code of chivalry, but the tournament, the joust-all these were more than anything else ways of keeping them out of trouble, as it were, in part by setting knights against each other, in part by turning their entire existence into a kind of stylized ritual.137 The ideal of the lone wandering knight, in search of some gallant adventure, on the other hand, seems to have come out of nowhere.

This is important, since it lies at the very heart of our image of the Middle Ages-and the explanation, I think, is revealing. We have to recall that merchants had begun to achieve unprecedented social and even political power around this time, but that, in dramatic contrast to Islam, where a figure like Sindbad-the successful merchant adventurer-could serve as a fictional exemplar of the perfect life, merchants, unlike warriors, were never seen as paragons of much of anything.

It's likely no coincidence that Chretien was living in Troyes, at the very heartland of the Champagne fairs that had become, in turn, the commercial hub of Western Europe.138 While he appears to have modeled his vision of Camelot on the elaborate court life under his patron Henri the Liberal (11521181), Count of Champagne, and his wife Marie, daughter of Eleanor of Aquitaine, the real court was staffed by low-born commercants, who served as serjeants of the fairs-leaving most real knights in the role of onlookers, guards, or-at tournaments-entertainers.

This is not to say that tournaments did not become a kind of economic focus in their own right, according to one early twentieth-century Medievalist, Amy Kelly: The biographer of Guillaume le Marechal gives an idea of how this rabble of courtly routiers amused itself on the jousting fields of western Europe. To the tournaments, occurring in a brisk season about twice a month from Pentecost to the feast of St John, flocked the young bloods, sometimes three thousand strong, taking possession of the nearest town. Thither also flocked horse dealers from Lombardy and Spain, from Brittany and the Low Countries, as well as armorers, haberdashers for man and beast, usurers, mimes and story-tellers, acrobats, necromancers, and other gentlemen of the lists, the field, the road. Entertainers of every stripe found liberal patronage ... There were feasts in upper chambers, and forges rang in the smithies all night long. Brawls with grisly incidents-a cracked skull, a gouged eye-occurred as the betting progressed and the dice flew. To cry up their champions in the field came ladies of fair name and others of no name at all.

The hazards, the concourse, the prizes, keyed men to the pitch of war. The stakes were magnificent, for the victor held his prize, horse and man, for ransom. And for these ransoms fiefs went in gage or the hapless victim fell into the hands of usurers, giving his men, and in extremity, himself, as hostages. Fortunes were made and lost on the point of a lance and many a mother's son failed to ride home.139 So, it was not only that the merchants supplied the materials that made the fairs possible; Since vanquished knights technically owed their lives to the victors, merchants ended up, in their capacity as moneylenders, making good business out of liquidating their a.s.sets. Alternately, a knight might borrow vast sums to outfit himself in magnificence, hoping to impress some fair lady (with handsome dowry) with his victories; others, to take part in the continual whoring and gambling that always surrounded such events. Losers would end up having to sell their armor and horses, and this created the danger that they would go back to being highwaymen, foment pogroms (if their creditors were Jews) or, if they had lands, make new fiscal demands on those unfortunate enough to live on them.

Others turned to war, which itself tended to drive the creation of new markets.140 In one of the most dramatic of such incidents, in November 1199, a large number of knights at a tournament at the castle of ecry in Champagne, sponsored by Henry's son, Theobald, were seized by a great religious pa.s.sion, abandoned their games, and swore a vow to instead retake the Holy Land. The crusader army then proceeded to commission the Venetian fleet for transport in exchange for a promise of a 50-percent share in all resulting profits. In the end, rather than proceeding to the Holy Land, they ended up sacking the (much wealthier, Orthodox) Christian city of Constantinople after a prolonged and b.l.o.o.d.y siege. A Flemish count named Baldwin was installed as "Latin Emperor of Constantinople," but attempting to govern a city that had been largely destroyed and stripped of everything of value ensured that he and his barons soon ended up in great financial difficulties. In a gigantic version of what was happening on the small scale in so many tournaments, they were ultimately reduced to stripping the metal off the church roofs and auctioning holy relics to pay back their Venetian creditors. By 1259, Baldwin had sunk to the point of taking out a mortgage on his own son, who was taken back to Venice as security for a loan.141 All this does not really answer the question: Whence, then, this image of the solitary knight-errant, wandering the forests of a mythic Albion, challenging rivals, confronting ogres, fairies, wizards, and mysterious beasts? The answer should be clear by now. Really, this is just a sublimated, romanticized image of the traveling merchants themselves: men who did, after all, set off on lonely ventures through wilds and forests, whose outcome was anything but certain.142 And what of the Grail, that mysterious object that all the knights-errant were ultimately seeking? Oddly enough, Richard Wagner, composer of the opera Parzifal, first suggested that the Grail was a symbol inspired by the new forms of finance.143 Where earlier epic heroes sought after, and fought over, piles of real, concrete gold and silver-the Nibelung's h.o.a.rd-these new ones, born of the new commercial economy, pursued purely abstract forms of value. No one, after all, knew precisely what the Grail was. Even the epics disagree: sometimes it's a plate, sometimes a cup, sometimes a stone. (Wolfram von Eschenbach imagined it to be a jewel knocked from Lucifer's helmet in a battle at the dawn of time.) In a way it doesn't matter. The point is that it's invisible, intangible, but at the same time of infinite, inexhaustible value, containing everything, capable of making the wasteland flower, feeding the world, providing spiritual sustenance, and healing wounded bodies. Marc Sh.e.l.l even suggested that it would best be conceived as a blank check, the ultimate financial abstraction.144

What, Then, Were the Middle Ages?

Each of us is a mere symbolon of a man, the result of bisection, like the flat fish, two out of one, and each of us is constantly searching for his corresponding symbolon.

-Plato, The Symposium.

There is one way that Wagner got it wrong: the introduction of financial abstraction was not a sign that Europe was leaving the Middle Ages, but that it was finally, belatedly, entering it.

Wagner's not really to blame here. Almost everyone gets this wrong, because the most characteristic Medieval inst.i.tutions and ideas arrived so late in Europe that we tend to mistake them for the first stirrings of modernity. We've already seen this with bills of exchange, already in use in