1. If the state is a republic, the government of which is in its own nature consistent with its entering into projects of a long duration, the capital of the sinking-fund may be inconsiderable; but it is necessary in a monarchy for the capital to be much greater.
2. The regulations ought to be so ordered that all the sub- jects of the state may support the weight of the establishment of these funds, because they have all the weight of the estab- lishment of the debt; thus the creditor of the state, by the sums he contributes, pays himself.
3. There are four classes of men who pay the debts of the state: the proprietors of the land, those engaged in trade, the laborers and artificers, and, in fine, the annuitants either of the state or of private people. Of these four classes the last, in a case of necessity one would imagine, ought least to be spared, because it is a class entirely passive, while the state is t England.
396 MONTESQUIEU supported by the active vigor of the other three. But as it can- not be higher taxed, without destroying the pubHc confidence, of which the state in general and these three classes in particular have the utmost need; as a breach in the public faith cannot be made on a certain number of subjects without seeming to be made on all; as the class of creditors is always the most ex- posed to the projects of ministers, and always in their eye, and under their immediate inspection, the state is obliged to give them a singular protection, that the part which is indebted may never have the least advantage over that which is the creditor.
19. — Of lending upon Interest Specie is the sign of value. It is evident that he who has occasion for this sign ought to pay for the use of it as well as for everything else that he has occasion for. All the difference is, that other things may be either hired or bought; whilst money, which is the price of things, can only be hired, and not bought./ To lend money without interest is certainly an action laud- able and extremely good; but it is obvious that it is only a counsel of religion, and not a civil law.
In order that trade may be successfully carried on, it is neces- sary that a price be fixed on the use of specie; but this should be very inconsiderable. If it be too high, the merchant who sees that it will cost him more in interest than he can gain by commerce will undertake nothing; if there is no considera- tion to be paid for the use of specie, nobody will lend it; and here too the merchant will undertake nothing.
I am mistaken when I say nobody will lend; the affairs of society will ever make it necessary. Usury will be established, but with all the disorders with which it has been constantly attended.
The laws of Mahomet confound usury with lending upon in- terest. Usury increases in Mahommedan countries in propor- tion to the severity of the prohibition. The lender indemnifies himself for the danger he undergoes of suffering the penalty.
In those Eastern countries, the greater part of the people are secure in nothing; there is hardly any proportion between the actual possession of a sum and the hopes of receiving it again j We do not speak here of gold and silver considered as a merchandise.
THE SPIRIT OF LAWS after having lent it: usury, then, must be raised in proportion to the danger of insolvency.
20. — Of Maritime Usury The greatness of maritime usury is founded on two things: the danger of the sea, which makes it proper that those who expose their specie should not do it without considerable ad- vantage, and the ease with which the borrower, by means of commerce, speedily accomplishes a variety of great affairs. But usury, with respect to landmen, not being founded on either of these two reasons, is either prohibited by the legislators, or, what is more rational, reduced to proper bounds.
21. — Of Lending by Contract, and the State of Usury among the Romans Besides the loans made for the advantage of commerce, there is still a kind of lending by a civil contract, whence results in- terest or usury.
As the people of Rome increased every day in power, the magistrates sought to insinuate themselves in their favor by enacting such laws as were most agreeable to them. They re- trenched capitals; they first lowered, and at length prohibited, interest; they took away the power of confining the debtor's body; in fine, the abolition of debts was contended for when- ever a tribune was disposed to render himself popular.
These continual changes, whether made by the laws or by the plebiscita, naturalized usury at Rome; for the creditors, seeing the people their debtor, their legislator, and their judge, had no longer any confidence in their agreements: the people, like a debtor who has lost his credit, could only tempt them to lend by allowing an exorbitant interest,^ especially as the laws applied a remedy to the evil only from time to time, while the complaints of the people were continual, and constantly intimi- dated the creditors. This was the cause that all honest means of borrowing and lending were abolished at Rome, and that the most monstrous usury established itself in that city, not- withstanding the strict prohibition and severity of the law./ This evil was a consequence of the severity of the laws against k Cicero assures us that in his day per cent., and forty-eight per cent, in money was lent at Rome at thirty-four the country.— Ed.
/ Tacit. " Annal." lib. VI.
398 MONTESQUIEU usury. Laws excessively good are the source of excessive evil. The borrower found himself under the necessity of paying for the interest of the money, and for the danger the creditor under- went of suffering the penalty of the law.
22. — The same Subject continued The primitive Romans had not any laws to regulate the rate of usury.w In the contests which arose on this subject be- tween the plebeians and the patricians, even in the sedition on the Mons Sacer, nothing was alleged, on the one hand, but justice, and on the other, the severity of contracts.^ They then only followed private agreements, which, I be- lieve, were most commonly at twelve per cent, per annum. My reason is, that in the ancient language of the Romans, in- terest at six per cent, was called half-usury, and interest at three per cent, quarter-usury.o Total usury must, therefore, have been interest at twelve per cent.
But if it be asked how such great interest could be established among a people almost without commerce, I answer that this people, being very often obliged to go to war without pay, were under a frequent necessity of borrowing: and as they incessantly made happy expeditions, they were commonly well able to pay. This is visible from the recital of the contests which arose on this subject; they did not then disagree con- cerning the avarice of creditors, but said that those who com- plained might have been able to pay, had they lived in a more regular manner./» They then made laws which had only an influence on the present situation of affairs: they ordained, for instance, that those who enrolled themselves for the war they were engaged in should not be molested by their creditors; that those who were in prison should be set at liberty; that the most indigent should be sent into the colonies; and sometimes they opened the public treasury. The people, being eased of their present burdens, became appeased; and as they required nothing for the future, the Senate was far from providing against it.
m Usury and interest among the Ro- digests and codes on usury, and espemans signified the same thing. cially the 17th law, with the note flf.
n See Dionysius Halicarnassus, who " de Usuris."
has described it so well. p See Appius's speech on this subject, o " Usurae semisses, trientes, quad- in Dionysius Halicarnassus. rantes." See the several titles of the THE SPIRIT OF LAWS At the time when the Senate maintained the cause of usury with so much constancy, the Romans were distinguished by an extreme love of frugaHty, poverty, and moderation: but the constitution was such that the principal citizens alone sup- ported all the expenses of government, while the common peo- ple paid nothing. How, then, was it possible to deprive the former of the liberty of pursuing their debtors, and at the same time to oblige them to execute their offices, and to support the republic amidst its most pressing necessities?
Tacitus says that the law of the Twelve Tables fixed the in- terest at one per cent. 5 It is evident that he was mistaken, and that he took another law, of which I am going to speak, for the law of the Twelve Tables. If this had been regulated in the law of the Twelve Tables, why did they not make use of its authority in the disputes which afterwards arose between the creditors and debtors? We find no vestige of this law upon lending at interest; and let us have ever so little knowledge of the history of Rome, we shall see that a law like this could not be the work of the Decemvirs.
The Licinian law, made eighty-five years after that of the Twelve Tables,^ was one of those temporary regulations of which we have spoken. It ordained that what had been paid for interest should be deducted from the principal, and the rest discharged by three equal payments.
In the year of Rome 398, the tributes Duellius and Menenius caused a law to be passed, which reduced the interest to one per cent, per annum.^ It is this law which Tacitus confounds with that of the Twelve Tables,^ and this was the first ever made by the Romans to fix the rate of interest. Ten years after m this usury was reduced one-half,^ and in the end entirely abolished; w and if we may believe some authors whom Livy had read, this was under the consulate of C. Martins Rutilius and Q. Servilius, in the year of Rome 413.-*^ It fared with this law as with all those in which the legislator carries things to excess: an infinite number of ways were q " Annal." lib. VI. to T. Liv. lib. VII. This is the law r In the year of Rome 379.— Tit, Liv. mentioned by Tacitus, " Annal." lib.
lib. VI. VI. s " Unciaria usura.** — Tit. Liv. lib. v Semiunciaria usura."
VII. See the " Defence of the Spirit of w As Tacitus says, " Annal." lib. VI.
Laws," article " Usury." x This law was passed at the instance t " Annal." lib. VI. of M. Genucius, Tribune of the people. — « Under the consulate of L. Manlius Tit. Liv. lib. VII., towards the end.
Torquatus and C. Plautius, according 400 MONTESQUIEU found to elude it. They enacted, therefore, many others to con- firm, correct, and temper it. Sometimes they quitted the laws to follow the common practice; at others, the common practice to follow the laws; but in this case, custom easily prevailed.^ When a man wanted to borrow, he found an obstacle in the very law made in his favor; this law must be evaded by the person it was made to succor, and by the person condemned. Sem- pronius Asellus, the pretor, having permitted the debtors to act in conformity to the laws,^ was slain by the creditors for attempting to revive the memory of a severity that could no longer be supported.^ I quit the city, in order to cast an eye on the provinces.
I have somewhere else observed that the Roman provinces were exhausted by a severe and arbitrary government.^ But this is not all, they were also ruined by a most shocking usury.
Cicero takes notice, that the inhabitants of Salamis wanted to borrow a sum of money at Rome, but could not, because of the Gabinian law.c We must, therefore, inquire into the nature of this law.
As soon as lending upon interest was forbidden at Rome, they contrived all sorts of means to elude the law; d and as their allies,^ and the Latins, were not subject to the civil laws of the Romans, they employed a Latin, or an ally, to lend his name, and personate the creditor. The law, therefore, had only subjected the creditors to a matter of form, and the public were not relieved.
The people complained of this artifice; and Marius Sem« pronius, tribune of the people, by the authority of the Senate, caused a plebiscitum to be enacted to this purport, that in re- gard to loans the laws prohibiting usury between Roman citi- zens should equally take place between a citizen and an ally, or a citizen and a Latin./ At that time they gave the name of allies to the people of Italy properly so called, which extended as far as the Arno and the Rubicon, and was not governed in the form of a Roman province.
y •' Verteri jam more foenus receptum a In the year of Rome 663.
erat."— Appian " on the Civil War," b Book XI. chap. 19.
lib. I. c " Letters to Atticus," lib. V. ep. 21.
2 " Permislt eos legibus agere." — Ap- d Livy.
pian " on the Civil War," lib. I.; and e Ibid, the " Epitome " of Livy, lib. LXIV. / In the year 559 of Rome. See Livy.
THE SPIRIT OF LAWS 401 It is an observation of Tacitus,g that new frauds were con- stantly committed, whenever any laws were passed for the pre- venting of usury. Finding themselves debarred from lending or borrowing in the name of an ally, they soon contrived to bor- row of some inhabitant of the provinces.
To remedy this abuse they were obliged to enact a new law; and Gabinius h upon the passing of that famous law, which was intended to prevent the corruption of suffrages, must naturally have reflected that the best way to attain his end was to discourage the lending upon interest: these were two ob- jects naturally connected; for usury always increased at the time of elections,* because they stood in need of money to bribe the voters. It is plain that the Gabinian law had extended the senatus-consultum of Marcus Sempronius to the provinces, since the people of Salamis could not borrow money at Rome because of that very law. Brutus, under fictitious names, lent them some money / at four per cent, a month,^ and obtained for that purpose two senatus-consultums; in the former of which it was expressly mentioned that this loan should not be considered as an evasion of the law,^ and that the Governor of Sicily should determine according to the stipulations men- tioned in the bond of the Salaminians.
As lending upon interest was forbidden by the Gabinian law between provincials and Roman citizens, and the latter at that time had all the money of the globe in their hands, there was a necessity for tempting them with the bait of extravagant in- terest, to the end that the avaricious might thus lose sight of the danger of losing their money. And as they were men of great power in Rome, who awed the magistrates and over- ruled the laws, they were emboldened to lend and to extort great usury. Hence the provinces were successively ravaged by everyone who had any credit in Rome: and as each gov- ernor, at entering upon his province, published his edicts f" Annal." lib. VI. / " Ut neque Salaminiis, neque cui eis In the year 615 of Rome. dedisset, fraudi asset."— Ibid.
» See " Cicero to Atticus," lib. IV. ep. m Cicero's edict fixed it to one per 15 and 16. cent, a month, with interest upon interj " Cicero to Atticus," lib. VI. ep. 10. est at the expiration of the year. With k Pompey having lent 600 talents to regard to the farmers of the republic, King Ariobarzanes, made that prince he engaged them to grant a respite to pay nim thirty Attic talents every thirty their debtors; if the latter did not pay days.—" Cic. ad Att." lib. III. ep. 21, at the time fixed, he awarded the interest lib, VI. ep. II.. mentioned in the bond. — " Cic. ad Att."
lib. VI. ep. I.
402 MONTESQUIEU wherein he fixed the rate of interest in what manner he pleased, the legislature played into the hands of avarice, and the latter served the mean purposes of the legislator.
But the public business must be carried on; and wherever a total inaction obtains, the state is undone. On some occasions the towns, the corporate bodies and societies, as well as private people, were under the necessity of borrowing — a necessity but too urgent, were it only to repair the ravages of armies, the rapacity of magistrates, the extortions of collectors, and the corrupt practices daily introduced; for never was there at one period so much poverty and opulence. The Senate, being pos- sessed of the executive power, granted, through necessity, and oftentimes through favor, a permission of borrowing from Roman citizens, so as to enact decrees for that particular pur- pose. But even these decrees were discredited by the law; for they might give occasion to the people's insisting upon new rates of interest, which would augment the danger of losing the capital, while they made a further extension of usury.M I shall ever repeat it, that mankind are governed not by extremes, but by principles of moderation.
He pays least, says Ulpian, who pays latest.^ This decides the question whether interest be lawful; that is, whether the creditor can sell time, and the debtor buy it.
n See what Lucretius says, in the to fix the rate of interest at one per cent. " 2ist letter to Atticus," lib. V. There per month. See the same letter. was even a general senatus-consultum, o Leg. 12 ff. " de verb, signif."
Th2^SD?ri?"Af^';'^'"ies Louis I lie opirit of law<;