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Kings initially borrowed from churches who, in the Arpadian age, also lent to other churches and to individuals. The increasing demand for money necessitated some compromises in the church’s prohibition of interest. In Hungary, King Coloman (1095-1116) passed a law prohibiting men of the church from being‘usurers’ (feneratores) (Decreta online, pp. 140,151) but this only applied, in accordance with canon law, to collecting interest and not to lending money. There are several 13th-century records of church loans granted to private individuals who, in most cases, paid their debts by transferring title to an estate (1229: DF 200 627; 1256: AUO VII, p. 433) but there is no record whether it was the mortgaged estate itself or was used to redeem the mortgaged estate. The churches certainly started to take mortgages against loans of money in the 13th century, and this practice became universal in the 14th century (1256: PRT II, p. 305; 1301: ZO I, p. 120; 1346: DF 210 167; 1351: AO V, pp. 509-10). In addition to landowners, townsmen (1378: CD IX/5, p. 285) also appeared among the borrowers, and loans were also provided to clergymen who provided collateral in the form of valuables, religious objects or land (1307: DF 200 084).
Starting in the Arpadian age, landowners lent money to other landowners, taking mortgages on their estates. Mortgaging usually took place before a place of authentication (loca credibilia) (1261: AUO VIII, pp. 13-4), a county authority (1298: HO VII, pp. 267-8, 1338: CD VIII/4, pp. 367-8), or even the king (1301: CD VII/4, p. 262; 1346: HO II, pp. 84-6), and these institutions made out the associated documents. The documents concerning the mortgaged estate were also taken by the mortgagee as security.The estate remained in the lender’s possession until it was redeemed by repayment of the principal (debitum principale), an act performed before the same office that had overseen the mortgage. Upon repayment of the loan, the lender was required to return the estate and its documents together with the mortgage deed, which thus lapsed (1358: DL 94 081). In most cases, the mortgage was given for a fixed term (anything from a few months to 20 years), and at the end date, the amount borrowed had to be repaid. If the borrower was unable to pay, the amount was increased, indeed doubled (1334: DL 2804), or the parties could agree that the unredeemed estate (or a part equivalent in value to the loan) became the property of the mortgagee (1334: DL2804; 1351: DL 68 898). There were also cases where the mortgage was made for an indefinite period (1351: AO V, pp. 425-6; 1365: DL 5380). The amount repayable did not increase with the passage of time but the mortgagee took the estate’s income, providing the borrower with a motive to repay the loan whenever he could. The assignment of the mortgaged estate’s revenue was therefore equivalent to payment of interest on an interest-free loan. The lender sometimes retained the revenue from the mortgaged estate until the end of the term even if the loan was repaid early (1269: UB I, p. 352; 1352: UGDS II, pp. 88-9). The revenue did not count as repayment of the loan (1338: MES III, p. 327), and many mortgage deeds expressly prohibited redemption before time. If the loan agreement provided for the original owner to retain the estate revenues, the borrower was obliged to pay the mortgagee a fixed annual sum (1351: DL 101 904), and thus paid interest. We know of mortgage deeds that provided for the reverse: revenue from the mortgaged estate had to be offset against the amount repayable (1352: DF 253 444; 1358: Teleki I, pp. 106-7) but this had to be explicitly stated for it to be enforced. In that case, the lender received no interest on his money. The terms of the mortgage could also state which of the estate revenues were not due to the lender. These were, for example, taxes, tolls, and revenue in kind (1346: DF 263 089). There was even a case where the borrower, upon redemption, had to pay half the costs of the new buildings put up by the lender on the mortgaged estate, failing which the lender could remove half of the buildings he had built (1365: CDCr XIII, pp. 487-8) or half of them would remain in his ownership (1351: DF 252 706).
The borrower/mortgagor guaranteed that the estate would remain in mortgage, meaning that the lender could take and retain possession of the land without hindrance for the term of the mortgage, failing which the lender would have to provide another estate of equal value. This stipulation arose from the need to obtain the consent of the neighbours and relatives, who had a right of pre-emption that extended to taking a mortgage on the estate. If the original owner died, a mortgaged estate could pass to his heirs and be divided among them, but only together with the loan which meant that they had to pay it back and the mortgagee had the right of pre-emption over the estate. The mortgagee could also pass on mortgage on the estate but only in such a way that the new owner of the mortgage provided the right of redemption. In many cases, debtors repaid the loan by assignment of the estate (1346: DL 90 653) or payment with another estate (1365: Zichy III, p. 276). If the value of the assigned estate was higher than the amount of the loan, the lender had to pay the difference (1346: CDCr XI, p. 297). Several mortgage deeds, however, expressly prohibited redemption in land, meaning that the lender demanded to be repaid in cash. One mortgage deed concerning a loan given in golden florins even stipulated repayment in golden florins (1363: DL 5253). Stipulations of redemption in cash (1304: AO I, p. 88) and payment in the debtor’s his own money (1364: Hedervary I, pp. 59-60), meaning that he could not mortgage the estate to another lender, appear in the 14th century. Moreover, there were cases where the mortgagor could not re-mortgage the estate even after redemption to someone other than the previous mortgagee. Nonetheless, as we have already seen, even some 14th-century borrowers repaid their loans by assigning the mortgaged estate, re-mortgaging the property, or mortgaging another property. Mortgages were not confined to estates and could be given on property such as a mill (1364: DL 89 371) or a vineyard (1358: CD IX/2, pp. 705-7). Movable property could also be pledged as collateral, such as expensive clothes (1364: Krasso III, pp. 67-8), as could a source of income, such as a toll (1362: CD IX/3, pp. 315-16; 1376: DL 26 868) or‘vineyard duty’ (tributum montis, Bergrecht, 1370: DL 58 587). The mortgagor/pledger and the mortgagee/pledgee could be either a man or a woman.
Some of the loans did not involve the direct provision of collateral. In some cases, the borrowers undertook to provide a mortgage of an estate if they could not repay the loan within the time limit (1341: DL 87 119), and in others, there was no such stipulation concerning the debt (1364: Sopron vm I, pp. 354-5) and the borrower merely undertook to pay it back by the due date (1329: DL 50 879). In such cases, however, especially where large amounts or tenant peasants were concerned, a guarantor was provided (1330: CD VIII/ 3, p. 509) or the peasant’s lord gave a guarantee (1374: DL 103 337). There was also a case where someone became in sudden need of a loan when abroad which he repaid upon his return by assigning an estate
(1304: AO I, pp. 90-2) or the lender had to pursue his debt (1360: DL 38 831).
Private landowners also lent money to the churches against mortgages. In most of these cases, the date of redemption was not given (1346: Zichy II, pp. 186-7). Loans to churches did not always involve a mortgage, and the mode of repayment also varied. In interesting example, the archbishop of Esztergom borrowed money from Tamas Bedey to renovate the cathedral. Bedey subsequently purchased a piece of land that the archdiocese wanted but could not afford it and waived repayment of the loan on the sole condition that the archdiocese did not later challenge the purchase (CD VIII/1, pp. 175-7). Landowners also sold commodities - most commonly wine -on credit (1341: AO IV, pp. 118-9) but commercial credit was much more common among townsmen.
The first record of lending by a townsman dates from the late 13th century. A citizen of Esztergom lent money to a non-townsman, taking a mortgage on a meadow (1275: AUO IX, pp. 132-3). Such loans become more common in the 14th century but always much less common than loans between landowners. Townsmen also lent to churches, but somewhat rarely. In the 14th century, towns as municipal bodies, as well as individual townsmen, provided mortgage credit to persons from outside the town (1352: UGDS II, pp. 88-9). These cases were similar to mortgage transactions between landowners, involving places of authentication which made out the documents for the transactions. Townsmen provided loans to foreigners as well as Hungarians. In these cases, the mortgaged estate was also in a foreign land (1364: DF 241 339).
Townsmen most often lent to citizens of, or persons owning property in, the same town, in exchange for which they took a mortgage on a property in the town. If the mortgagee made any improvements during the term of the mortgage (erecting new buildings, for example), the borrower was obliged to reimburse him for it upon redemption (1352: DL 87 265). The mortgagee could also extend the loan against an annuity (purgrecht/Burgrecht) connected with the property, usually three times a year. The borrower made his repayments by paying the annuity until he had paid as much as the loan, whereupon the property was returned to him (1346: DF 238 714). In this case, he repaid the loan without interest. The annuity could be sold - for ten times the amount - and the seller undertook to pay the rent to the buyer in future (usually in three instalments a year, in all towns) and his obligation persisted even after the amount of the loan had been repaid (1363: DF 238 808). Although this concerned a purchase, it may have involved a hidden loan, one that was disadvantageous to the seller, because the amount invested could be recovered several times over. If the property was of sufficiently high value, it could be encumbered with several mortgages, and there were even cases where it was re-mortgaged together with the annuity obligation, so that the lender was paying the annuity to the beneficiary of the annuity (who did not own the building), while the borrower undertook to repay the loan by the due date (1358: Zichy III, pp. 119-20). In this case, the annuity was smaller than the loan, so that interest was due on the loan but the borrower was relieved from paying the annuity at least for a while. The transaction was attested before the town judge in accordance with the particular customs of the town (secundum usum et consuetudinem nostre civitatis ab antique approbatam).
The mortgage deed was made out by the town notary who charged a fee for the service (Ost, p. 79). The loan was entered into the municipal register and, if such was in use, the land register. Under municipal law, if the loan was not repaid after a year and a day, ownership of the collateral property passed to the lender, who could sell it freely. Besides land and buildings, chattels could be also pledged as collateral (1356: DL 51 725). The municipal body could also lend to citizens of the town, sometimes without collateral (1375: DL 105 414). The requirement for a mortgage on town property to be transacted before the municipal authority was aimed at safeguarding the authority’s rights of supervision over properties within and around the town. This ensured that rights attaching to properties in the town would be acquired only by persons the municipal authority approved of. In 1355, for example, the municipal authority of Pozsony (today Bratislava, Slovakia) extended this rule to certain wine-growing estates it held to be important for the town, when Louis I granted to the citizens and hospites of the town exclusive rights of purchase or mortgage on the Pracson estate of Heiligenkreuz Abbey and any other of its estates and vineyards in the town or within the boundaries of Pozsony (DF 238 745).
Commercial credit also appeared in the Kingdom of Hungary in the Arpadian age, although the records of these transactions are fragmentary. The number of sources increases sharply in the 15th century, probably indicating a substantial rise in the volume of commercial credit. One of the scattered records from the Arpadian age concerns the debt that a citizen of Esztergom owed to a merchant of Gent, almost certainly for the price of the Gent broadcloth he had taken receipt for. The debtor was obliged to hand over his vineyard to the merchant (MES I, p. 606). The increase in trade conducted on credit in the 14th century was due to expansion of the merchant class which consisted mostly of traders who had come to the Kingdom of Hungary from abroad and gained citizenship of a Hungarian town. It involved credit that merchants extended to their customers (DL 6728, Teke 1995, p. 134) and purchase of goods on credit by the merchants themselves. The borrower in a commercial credit transaction was liable to the extent of his entire wealth. One driver of commercial credit was the acquisition of the staple right by an increasing number of towns and the accompanying growth of wholesale trade. When a merchant who sold goods in a town that held the staple right wanted to recover a debt from beyond the municipal boundaries, he was obliged to seek the town’s permission (DF 269 235).
We find good illustrations of the spread of commercial credit in letters of exemption prohibiting repressalia and in a contract made in 1394 by which Kassa (today Kosice, Slovakia) and Cracow permitted their merchants to sell goods freely in each other’s towns. If either of these towns wished to terminate the agreement, it was obliged to give notice to the other town four months in advance, so that goods could be sent home and debts collected (DF 269 218).
Most of the information we have on Arpadian-age creditors in the Kingdom of Hungary concerns Jewish lenders, particularly the regulation of their activities (Berend 2001, pp. 116-20). The first to regulate credit transactions between Christians and Jews was King Coloman who fitted the legal constraints to the amount of the loan. If the loan was less than three pensae, collateral security had to be provided whether the loan was given by Christian to Jew or Jew to Christian, and Jewish and Christian witnesses were required for the transaction. For loans above three pensae, there were additional requirements: the amount of the loan and the names of the witnesses had to be put in writing and both parties had to apply their seals (Decreta online, pp. 132—3). This cartula sigillata guaranteed fair dealing to both parties (Kumorovitz 1960, pp. 11-2). A charter of privilege by which Bela IV regulated the rights of Jews (1251) also covers secured loans provided by Jews, and its provisions centre around the items acceptable as collateral and their redemption. There is no mention of the document and seals prescribed by Coloman. There are several possible reasons for this. Bela IV’s charter was a Hungarian adaptation of an Austrian charter of privilege issued by Prince Frederick II of Austria (1230-1246) of 1238, and a slightly revised version of 1244. It is primarily concerned with the items of collateral provided to secure loans and only in one case mentions the credit document without prescribing its form. Jews could take almost anything - including real estate -as collateral but not church vestments (although this was permitted in the case that a senior clergyman wished to pledge it as collateral) or clothes that were bloody or damp. If no action had been taken in the matter after a year and a day, the collateral came into the Jew’s ownership. Otherwise, if the item of collateral was worth less than the loan and the interest, it could be sold after one year. The Christian could redeem the pledge without paying the interest but was required to pay the interest within one month, failing which the interest was subsequently compounded (MZSO I, pp. 288-91). The Buda Synod of 1279 also prohibited the pledging of votive objects and church property (real or movable), except with the permission of a bishop, a chapter or a convent (RHMA pp. 565-602). Examples of such prohibitions also appear later, suggesting that these items were frequently pledged as collateral.
There is good evidence from 1371 that in Pozsony (and possibly other towns with large Jewish communities), a ‘Jewish register’ (Judenpuech) was in use in the late 14th century. This recorded every loan, whatever the amount, and even the interest, which amounted to two pfennigs (or less) weekly on each font, and for amounts of less than one font, one pfennig a week on sixty pfennigs or three schillings (MZSO I, pp. 82-3). The use of the Jewish register also required Christian and Jewish witnesses and the seals of the witnesses. The Buda Statute Book also regulated Jews’ credit transactions, prohibiting the charging of interest but without specifying a penalty, leaving that to ‘Judgement Day’ (Ost, p. 126). The ban on interest therefore cannot be regarded as real. It also covered items of collateral (banning the pledge of church items) and the deed of pledge (phanntt prieff). The latter had to be presented at the city hall once a year and the judge notified those affected (Ost, pp. 127-8). Thus, Buda also applied the rule that after the passage of a year and a day, the item of collateral passed into the ownership of the pledgee if the pledger did not make a statement concerning the collateral within this time. In Buda, such a statement could be made via the city judge. If a pledge nonetheless passed into the Jew’s ownership, it could be offered for sale in the street of the Jews (in der juden gassen) on one day of the week (Ost, pp. 126-7). The deed of pledge was, in Buda, drafted by the city notary, who could charge Jews twice as much for the service as he did Christians (Ost, p. 79).
Louis I ordered the expulsion of the Jews from Hungary in 1360 and they were able to return only after 1367. The Christians who owed money to Jews saw their chance to get rid of their debts simply by not repaying them. In 1365, the municipal authority of Sopron approached Prince Rudolph IV of Austria (1358-1365) in the matter. The prince declared the credit documents concerning debts owed by citizens of Sopron to Jews who had fled into his country null and void unless the Jews could obtain a charter to the contrary from the Hungarian king (Hazi 1/1, p. 132). The Jews naturally made some effort to recover their money and those who had fled from Pozsony to Haimburg requested the aid of the Haimburg municipal authority in settling their affairs. An agreement was eventually reached with the Pozsony judge that those who presented their credit documents within one year could press their claim to recover the debt (1368: MZSO I, pp. 76-7). After the return of Jews, Louis I intervened several in the matter of Jewish loans. In 1378, for example, he informed the municipal authority of Pozsony that the Jews could demand repayment only in the currency in which they had made the loan, with an exception being made for interest. In the same year, however, he ordered that interest on loans be waived (MZSO I, p. 96). The Jews’ clients included Hungarian and foreign subjects, clergy and laity, and towns.
The lease system, greatly favoured by monarchs, was also used by the churches. A lease could be granted on an estate or a house and involved all of its revenues. The lease period was usually between two and ten years. The rent had to be paid at specified times, usually once or twice a year for a long-term lease, and if payment was not made in time, twice the amount became payable (1352: DL 87 266; 1358: MES IV, pp. 205-6). Leases were also granted on sources of permanent revenue, most frequently tolls or tithes (1367: CD IX/7, p. 260; 1366: DF 238 833), or even on the total revenue of a church. In 1384, for example, Palatine Miklos Garai took a lease on the revenue of the archdiocese of Kalocsa for five years and had to pay the rent in three instalments to a Florentine merchant based in Buda, Maruccio di Paolo (Lederer 1932, pp. 258-9, DL 7350). The lease system also became common on townsmen’s urban property in the second half of the 14th century.