Beggar Thy Neighbor: A History of Usury and Debt

by Charles R. Geisst

The practice of charging interest on loans has been controversial since it was first mentioned in early recorded history. Lending is a powerful economic tool, vital to the development of society but it can also lead to disaster if left unregulated. Prohibitions against excessive interest, or usury, have been found in almost all societies since antiquity. Whether loans were made in kind or in cash, creditors often were accused of beggar-thy-neighbor exploitation when their lending terms put borrowers at risk of ruin. While the concept of usury reflects transcendent notions of fairness, its definition has varied over time and Roman law distinguished between simple and compound interest, the medieval church banned interest altogether, and even Adam Smith favored a ceiling on interest. But in spite of these limits, the advantages and temptations of lending prompted financial innovations from margin investing and adjustable-rate mortgages to credit cards and microlending. In Beggar Thy Neighbor , financial historian Charles R. Geisst tracks the changing perceptions of usury and debt from the time of Cicero to the most recent financial crises. This comprehensive economic history looks at humanity's attempts to curb the abuse of debt while reaping the benefits of credit. Beggar Thy Neighbor examines the major debt revolutions of the past, demonstrating that extensive leverage and debt were behind most financial market crashes from the Renaissance to the present day. Geisst argues that usury prohibitions, as part of the natural law tradition in Western and Islamic societies, continue to play a key role in banking regulation despite modern advances in finance. From the Roman Empire to the recent Dodd-Frank financial reforms, usury ceilings still occupy a central place in notions of free markets and economic justice.

Genres: History, Economics, Nonfiction, Finance

400 pages, Hardcover

First published February 15, 2013

Reviews

[Colin · Rating 2 out of 5]

A broad (and unfortunately a little disorganized) history of interest-based lending and (high-interest / extortionate) usury, and how the two came to be legally distinguished from each other and prohibitions against usury gradually chipped away at in the United States and Britain. There’s considerable discussion in the early chapters on the origins of the major European cultural and religious sanctions against usury, although it also appears that these were routinely violated and irregularly enforced over the decades. The chapter on Islamic finance and microlending was helpful as an introduction to those practices, but both would need books of their own to fully grapple with; I found Debtor Nation to be more accessible on the subject of American borrowing practices and the 2008 financial crisis. I have no real background in finance or medieval European history, so while I learned a bit from this, some of it assumed knowledge I don’t have, and some was difficult to sync up with any reference points, so overall it didn’t rate highly for me.

[Erika · Rating 3 out of 5]

This book is a mixed bag. On one hand, it contains an astonishing amount of accumulated erudition about financial history (admittedly somewhat superficial and mostly about post-Bretton Woods). On the other hand, it suffers from a lack of clear focus. In part, this is because of the very fluidity of the term "usury" - which has various legal meanings, but then also has social and cultural significance that exceeds the law. So the book often finds itself explaining the history of *all* debt and credit - sovereign debt, consumer debt, commercial debt - just to get back at something that could be defined as usury, which is sometimes just interest itself (true to some definitions of the meaning of usury). Also, it is largely a history of usury in the US and England, with some reference to the broader Western tradition, and then a fascinating but poorly integrated, chapter on Islamic finance. The vast majority of the world's people appear only in passing in terms of sovereign debt or microlending. In part, this reflects the dearth of literature and/or the lack of an appropriate comparison, but still leads for an odd narrative trajectory.

[Lauren Albert · Rating 3 out of 5]

I would have thought that this was a book for non-specialists but it seems not. A lot of finance terms were used without any explanation. So, while Geisst explains Usury in all its permutations throughout history, I found a lot of the other concepts hard to follow.

[Dylan · Rating 5 out of 5]

A quite readable and well organized book. Not really a comprehensive history of debt but a pretty comprehensive history of legal/moral prohibitions on (excessive) interest. My only criticism is that it largely omits Africa and East Asia. Europe, the Arab world, and the Americas are well treated however.

[Nick Harriss · Rating 5 out of 5]

An excellent book that gives a great history of banking. Well worth reading for anyone interested in teh subject.

[Mashooq Nasser · Rating 3 out of 5]

lots of good information. very dense book (not a bad thing) but the contents are very mismatched chronologically.