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Legal regulation of the credit market in Bohemia and Moravia


As Urfus (1975, p. 45) has already pointed out, the need to regulate the credit markets in the countries of Central Europe most likely became necessary during the 14th century in the context of economic development and outgoing political and social transformation. While the ideas of medieval scholastics regarding the credit market were often far removed from economic reality, increasing business and monetary relations generated the demand for a legal framework. At that time, the law in the countries of Central Europe operated under the principle of legal particularism where different laws applied to different social groups of feudal society, such as nobility, burghers, peasants, clerics, etc., and even to different territorial units (Gabris 2018, p. 54).

Besides the canon law of the Catholic Church, the law of the land consisted of the laws of nobility, the peasant laws that defined the particular rights and obligations of landlords and peasants, the constitutional laws that contained the relationship between the nobles, the monarchs, and the leadership of the state, and the municipal laws that governed the inhabitants of the so-called royal and dowry towns. With this system legal unity did not exist, even within a particular section of law. The body of valid law was formed partly by legal books, by the legislation, and by court judgments in various jurisdictions (Slavickova 2012). Although there had been several attempts to unify these laws within the countries of Central Europe since medieval times, the process was completed no earlier than the very end of the early modern period. Regulating the credit market was only one part of a long process of codification.

Based on this background, this chapter discusses how the legislature treated the credit market, what the attitude of the law was regarding interest on loans, and how legal opinion evolved during the medieval and early modern periods. Moreover, this chapter describes the differences between particular rights in the Czech lands, it compares the findings with the opinions of the most influential personalities of economic thought of the time and, finally,

it considers the influence of foreign law on Czech rights and, vice versa, the influence of Czech law on the legal regulation of the credit market in other countries in Central Europe.

Early opinions on the credit market

The body of law used in the countries of Central Europe during the Middle Ages was chiefly unwritten. It was based on the legal customs that had been settled upon within a community and were universally recognized, sanctioned, and respected (Gabris 2018, pp. 53-61). References to the regulation of interest rates on loans can be found in even the oldest of texts such as legends and chronicles. Almost without exception, these ancient sources condemned lending money for interest and considered it a form of usury (Slavi'ckova 2015, p. 896). In contrast, the later theoretical treatises of the 14th century from the Czech lands made it possible to lend money for profit. This was most likely through the influential thoughts of Thomas Aquinas (1223-1274), as can be seen in the works of Stepan of Roudnice (around 1300-1365). In the treatise known as Quaestiunculae he declared an understanding of trade and associated loans. According to Svoboda (2008, pp. 379-84), these opinions formed the basis for a liberal approach to the credit market that was typical of the High Middle Ages.

The Maiestas Carolina, the legal code proposed by the Roman Emperor and Czech King Charles IV in 1350, also allowed cash loans, but only in connection with playing dice, and prohibited all other types of loan, especially those connected with a pledge of personal property (Maiestas Carolina, art. XXXI, p. 190). This code was based both on previous legal customs as well as the Liber Augustalis of 1231, the legal code for the Kingdom of Sicily promulgated by Emperor Frederick II. However, due to strong resistance from the nobility, King Charles IV had to withdraw the code and it never came into effect.

Several mixed views of the credit market were included in many early legal texts. The oldest preserved text from the Czech lands is the so-called Book of Rosenberg (Brandl 1872). It was written by an unknown author and is a body of noble law that most likely comes from the 13th century. As a reflection of traditional Czech law, it also included the earliest regulation of the credit market; although only in the form of a few brief references. The book mainly describes procedural law as used in the Territorial Court (Zemsky soud), similar to the Ordo iudicii terrae (Palacky 1842), a legal book from the second half of the 14th century. Articles 159 and 210 of the Book of Rosenberg, and article 61 of Ordo iudicii terrae contained instructions on how to judge the repayment of loans (Brandl 1872, pp. 78-9,156; Palacky 1842, pp. 108-9). The peak in the evolution of law in the pre-Hussite era featured the Czech Territorial Law (Cada 1930) written by Ondrej of Dube (around 1320-1412/13). As Mareckova points out, his perfect knowledge of Czech procedural law was supplemented by extensive practical experience (Mareckova 2006, p. 27). In several articles, Ondrej of Dube declared that the creditor had the right to recover not only the loan, but also interest from the debtor, and defined the procedures for doing this in court (Cada 1930, art. 5, 9, 39, 69, 72, 74, and 144, pp. 118-19, 120-2, 138, 148, 149, 150, and 177-8). The articles also included the situation where a debtor could not pay a debt even after the term had been extended three times. In this case, the court could order the seizure of property (Cada 1930, art. 73, pp. 149-50).

Later, Jan Hus (1369-1415), Czech theologian, philosopher, church reformer, and key predecessor to Czech Protestantism, turned to a more conservative concept of the credit market that was viewed though strong moralism. He relied on the argument that time belongs to God and therefore does not deserve to be sold (Erben 1865, p. 214). He identified many types of trade as usury, not only placing interest on loans, but also pledges of property, adding penalties for delay, and even the resale of goods at increased prices and the sale of unnecessary goods. The only ‘proper’ business was when a farmer or craftsman sold the goods he produced without profit. According to Jan Hus, this was good business that could be described as pleasing to God (Erben 1865, pp. 127-8).

Thomas Stitny (1333-1401/9) was already urging buyers to run their business with respect to both the common good and the benefit of the people. Those who traded for profit were committing the ‘sin of covetousness’. Based on this presumption, he considered money to be sterile; interest should not be taken on a loan (Slavickova 2015, p. 899). Other adherents of the Hussite movement were of the same opinion, such as Mikulas of Dresden (d. 1417) and Jakoubek of Stfibro (1371/3-1429). Their treatises known as De usura argued for the rule of sola spes facit usuram, which is contrary to the later attitudes of other church reformers such as Luther, Calvin, or Zwingli (Urfus 1975, pp. 49-51).

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