Tuesday, March 23, 2010

Popes & Bankers, A Cultural History of Credit & Debt, From Aristotle to AIG

Amidst The Wreckage of FINANCIAL RUIN, People Are Left Puzzling About HOW IT HAPPENED. Where Did All The PROBLEMS BEGIN? For the answer, Jack Cashill, a journalist as shrewd as he is seasoned, looks past the headlines and deep into pages of history and comes back with the goods. From Plato to payday loans, from Aristotle to AIG, from Shakespeare to the Salomon Brothers, from the Medici to Bernie Madoff - in Popes and Bankers Jack Cashill unfurls a fascinating story of credit and debt, usury and "the sordid love of gain. With a dizzying cast of characters, including church officials, gutter loan sharks, and even the Knights Templar, Cashill traces the creative tension between "pious restraint" and "economic ambition" through the annals of human history and illuminates both the dark corners of our past and the dusty corners of our billfolds. (taken from the back cover)

Journalist Jack Cashill creates a highly readable and timely book about the current financial crisis. That he does so in an engaging manner is to his credit. His approach is unique and the writing insightful. He chronicles our economic woes by “tracing the history of credit and debt, and usury (as lending at interest was widely called until at least AD 1800). Usury is a word that is used frequently by the author as he explores the events that brought us to this moment....

The Review
The Bible it seems is quite clear about lending money to neighbors and loved ones: “if thou lend money to any of my people that is poor by thee, thou shalt not be to him as an usurer, neither shalt thou lay upon him usury (Exodus 22:25). Strangers however, are fair game … “Unto a stranger thou mayest lend upon usury… (Deuteronomy 23:19-20). The Hebrew word for usury is neshek and by the 15th century Gentiles were borrowing money and paying neshek to their Jewish brothers.

While the Old Testament has a lot to say about the subject, Jesus Christ it turns out had little to say beyond the parable of the talents and the pounds. Oh, and the time Jesus threw the money changers out of the temple. But we really don’t know how Jesus, the son of small business owner felt about making an earthly profit now and again. Instead, Jesus preached about a different type of ROI for those who accepted his offer … the promise of a heavenly reward.

The practice of usury however, continued to be a hot topic prompting Pope Innocent II to define usury as “detestable and disgraceful rapacity condemned by human and divine law alike.” A mere thirty years later Pope Alexander III “expanded the definition of usury to include any sale on credit in which the accumulative price was higher than the cash price.” Later he would argue “that usurers should not only be excommunicated but also be denied a Christian burial.”

Enter the knights … The Knights Templar “a unique monastic order” a.k.a. “warrior monks” who were created by church and secular leaders when 300 cheerful Christians were killed by a swarm of Saracens. The monks lived by the Rule, (“silent meals, coarse clothing, daily prayers, and perpetual celibacy”) while serving the church. They would also “create the first great international banking enterprise.”

These “fighting monks” had the “equivalent of branch offices stretching from one end of the Mediterranean to the other. They also had major complexes in Paris and London, cities in which decisions about war and peace were often made. Even more usefully, the Templars interacted with kings and popes, and they did so precisely when those leaders needed money, namely, on the way to the battlefield.” The Knights Templar, whose reputation preceded them, “did not need to hire security to protect their money transfers” which was also useful.

In their spare time, the Knights “raised taxes for the king, paid bills, minted money, collected tariffs, chased down deadbeats, provisioned the army, supported diplomatic missions, and advanced loans to the kings’ friends and relatives – even Grandma, literally.” They also charged interest. Apparently, a practice now sanctioned by the church. Their demise forty years later had nothing to do with usury, but everything to do with scandal, power, timing, money and debt.

Today, despite the best efforts of government, church and man the need to finance the good life has nearly brought America to its knees once again. Standing in front of the 1933 inaugural crowd FRD railed against the “self-seekers” who proposed “the lending of more money” as a solution to their and the nation’s problems. “To drive the point home about the evils of such wanton usury, he continued with an analogy that America’s biblically literate population surely understood, “The money changers have fled their high seats in the temple of our civilization. We may now restore that temple to the ancient truths.”

Despite the charming fireside chats, “the New Deal did not deliver.” Secretary of the Treasury Henry Morgenthau Jr. told a Congressional hearing … “We are spending more money than we have ever spent before and it does not work. … I want to see this country prosperous. I want to see people get jobs. We have never made good on our promises. I say after eight years of the administration we have just as much unemployment as when we started and an enormous debt to boot.”

The answer to this mess is not blame but accepting personal responsibility for debt and living within (or below our means), saving and investing. Living debt free.

Popes & Bankers is a striking book full of amazing characters and history and will surely capture the mind and attention of those interested in our economic past and present. This book is for readers who agree with philosopher George Santayana’s prediction, “Those who cannot remember the past are condemned to repeat it.”

Note to writers: Who was it that said there are no dull stories, only dull writers.

This book was provided by Thomas Nelson for review.


King of the Paupers said...

Ezekiel condemned both excessive interest (on grain or livestock) and usury (on sterile money creating a mort-gage musical chairs death-gamble where not everyone can repay both the principal and Interest when borrowers only received the principal and losers are forced into foreclosure causing the same money chasing less goods, Shift B inflation, not more money chasing the goods, Shift A inflation.

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