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A Brief Look at the Origins of Lending |
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When trying to discover the origins of lending you might find yourself looking at a lot of unrelated information that doesn't really tell you what it is that you want to know. The origins of lending go back to at least biblical times, with mentions of lending even being mentioned in certain places in the Bible. Even with modern banking and lending, the origins of lending can go back several hundred years… all the way to the Middle Ages and before. The Middle Ages and the Renaissance are likely the best places to begin looking for information on this subject, as these times were when financial records were beginning to be kept in earnest and lending in its modern form was beginning to truly develop. Lending in the early Middle Ages If you look at the early Middle Ages to try to discover the origins of lending, you'll find that loans were often more or less one-sided and always afforded a large benefit to the lender. Landowners and the wealthy would make loans to poorer individuals while charging high interest rates or making the borrower work to pay off the debt… in many cases, the lender would even increase the terms of the loan once is was nearly repaid so that the borrower would have to continue to make payments or work without pay for the lender. If a borrower was unable to repay their loan they could even be thrown into a debtor's prison, held without fair trial until someone was able to pay off their debt or other arrangements for their release were made. Lending during the Renaissance During the Renaissance and late Middle Ages, the origins of lending began to take a turn more toward what lending is today. Individuals known as moneylenders would ply their trade in market squares and other business and merchant venues, setting up a bench known as a “banca” (from which we get the modern English word, “bank”) on which they would conduct their transactions. Several moneylenders might work in the same area, and the competition tended to reduce some of the extravagant interest rates that were created by landowners and other officials in previous centuries… this didn't, however, mean that the trade of the moneylender was completely fair or righteous. The moneylenders would still strive to make as much of a profit as they could from borrowers, and might go so far as to falsify their records of payments and transactions so as to scam more money out of the less fortunate or uneducated. Debtor's prisons were popular, and in some areas were very crowded with people who had barely been getting by in the outside world and had little hope of release. Lending in the modern world As time has progressed, so have the methods of making and receiving loans… it's easy to see how far things have come since the early origins of lending. The predecessors of modern banks developed in conjunction with the Industrial Revolution, and in the decades and centuries that followed most major countries worldwide have abolished most types of unfair lending as well as debtor's prisons. Interest rates at banks, finance companies, and online lenders are controlled by both local and national factors, and modern lenders strive to provide a valuable service to both the public and businesses by providing reasonable interest rates and definite terms. Lending has grown from a practice of a few individuals looking for profits to a major industry on which the basis of the modern world is built… an example of how from simple origins can come great things. |
| John Mussi is the founder of Direct Online Loans who help homeowners find the best available loans via the www.directonlineloans.co.uk website |
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