Medieval currency was not only small in amount but also
faulty in character. Many great nobles enjoyed the privilege of keeping a mint
and issuing coins. Since this feudal money passed at its full value only in the
locality where it was minted, a merchant had to be constantly changing his
money, as he went from one fief to another, and always at a loss. Kings and
nobles for their own profit would often debase the currency by putting silver
into the gold coins and copper into the silver coins. Every debasement, as it
left the coins with less pure metal, lowered their purchasing power and so
raised prices unexpectedly. Even in countries like England, where debasement
was exceptional, much counterfeit money circulated, to the constant impediment
of trade.
"USURY" LAWS
The prejudice against "usury," as any lending of
money at interest was called, made another hindrance to business enterprise. It
seemed wrong for a person to receive interest, since he lost nothing by the
loan of his money. Numerous Church laws condemned the receipt of interest as
unchristian. If, however, the lender could show that he had suffered any loss,
or had been prevented from making any gain, through not having his money, he
might charge something for its use. In time people began to distinguish between
interest moderate in amount and an excessive charge for the use of money. The
latter alone was henceforth prohibited as usurious. Most modern states still
have usury laws which fix the legal rate of interest.
