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Regulation of the credit market in the first codifications

The process of legal codification achieved success throughout Central Europe in the 15th and 16th centuries (Slavickova 2012, pp. 31-3). This happened in the Czech lands after the Hussite Revolution, under the strong influence of the Estate, various especially powerful social groups with different kinds of political rights (Mareckova 2006, p. 38). After a long period of resistance, the nobility used the codification of territorial law as a tool to consolidate power under the rule of Vladislav II (1471-1516). The Territorial Constitution (Kreuz & Martinovsky 2007), approved by the Estates in 1500 and signed by the king two years later, collected constitutional, procedural, administrative, criminal property, and family law provisions. However, it had a non-exclusive character and an inconsistent structure. Even in this legal codification, the regulation of the credit market was not comprehensive. In article 431, the codification explicitly prohibited usury which was defined as an amount in excess of ten out of one hundred borrowed. The usurer was to be punished and the money to go to the state (Kreuz & Martinovsky 2007, p. 222). More often, loans and interest were treated in the context of procedural law (art. 117,118, 167, 315). While the creditor could have asked the court for support in cases when the debtor had not paid the debt properly and in time, the usurer was not entitled to judicial protection (Kreuz & Martinovsky 2007, art. 402, p. 213). This article referred to the Czech Territorial Law by Ondrej of Dube, which may be considered a continuation of the content of the private legal books.

The quality and importance of the private legal books can be seen in the books of Viktorin Kornel of Vsehrdy (1460-1520). The author was a famous lawyer and humanist, and his book known as the Nine Books on the Laws of the Czech Lands (Jirecek 1874) represents the most comprehensive publication on Czech territorial law at the end of the 15th and the beginning of the 16th century. Kornel’s legal book is a critical discourse of Czech territorial law, supported by exact citations of not only the Czech common and territorial laws, but also the Bible and various works of ancient and medieval philosophers (Mareckova 2006, pp. 29-31). It defined the basic requirements for business contracts, ordered the registration of real estate sold as debt, and determined rules for repayment and possible recovery of debt (Jirecek 1874, art. 16, 17, pp. 60-7). The increase of debt by interest was considered a matter of course (Jirecek 1874, art. 24, pp. 87-91).

The territorial law of the Moravian nobility was included in the legal book written by Ctibor Tovacovsky of Cimburk (around 1438-1494) and its amendment by Ctibor Drnovsky of Drnovice (d. 1543). The works known as the Tovacovsky Book (Brandl 1868a) and the Drnovsky Book (Brandl 1868b) were used in practise at the Moravian territorial court during the 16th century despite the official release of the codification of Moravian territorial law in 1535 and 1562 (Slavickova 2012, p. 32). Compared to Czech territorial law, the Moravian legal books also contained the full wording of a loan agreement, which, if observed, had the certainty of legal enforceability at the Moravian territorial court (Brandl 1868b, pp. 96-8; Brandl 1868a, pp. 84-5). Significant parts of these books were incorporated in the official codification of Moravian territorial law from 1535 and 1562 (Cada 1937), together with the older resolution of the territorial parliament and judgments of the territorial court. According to Cada (1937, p. XXXIII), the resolution of the territorial parliament from 1500 mainly concerned Jews and usury. Based on previous arrangements, the Moravian territorial law accepted loans provided by Jews with a maximum interest of Two coins out of ten coins' per year (Cada 1937, art. Ill, p. 123). All such loans had to be made under the supervision and knowledge of the municipal authorities.

Credit business performed by Jews outside of towns was forbidden (Cada 1937, art. Ill, p. 126).

The highlight of the evolution of law in the Czech lands in the early modern period was the Renewed Territorial Constitution of 1627 for Bohemia, and 1628 for Moravia (Obnovene zrizeni zemske, 1890). This constitution was issued by the Habsburg king Ferdinand II after his victory over the Protestant opposition and brought many fundamental changes to build a bureaucratic and centralized state (Mareckova 2006, pp. 66-71). Compared to previous codes and legal books, the Renewed Territorial Constitution treated the legal relations of the credit market in a very detailed and systematic way. It ordered forms of procedure for lending money and all its consequences, including protections for the creditor as well as the debtor (Obnoveni zfi'zenl zemske, part LXX, and LXXI, pp. 265-73, 273-7). All disputes over debt were to be settled in court. According to article 317, those who did not pay the loan were to be imprisoned; on the other hand, those who falsely accused someone were to be sentenced to death. In the case of several borrowers, they all guaranteed the loan equally. Debts were to be paid in a quality coin and, last but not least, if the creditor lost the contract, he had to witness the existence of the debt (Jirecek 1890, pp. 265-73). According to article 349, usury, whether conscious or subconscious, was forbidden. The constitution set 6% as the maximum interest rate. However, usury was defined more broadly. Examples were when someone entered into a contract for a different amount than what was lent, selling goods with undue profit, or lending goods for sale instead of cash (Jirecek 1890, pp. 279-89).

The Renewed Territorial Constitution reflected the interests of the Catholic monarch and remained valid until 1848. All members of Protestant churches were forced to emigrate and their property was confiscated by the state. This included, among others, John Amos Comenius (1592-1670), who was a philosopher and pedagogue, led several schools, and advised governments across Protestant Europe (Polisensky 1996). His views on the credit market reflected the attitudes of Protestant society and suitably complemented the legislative dimension of the issue. One example is the work called Letters to Heaven (Listove do nebe, 1970) from 1619 which was published before Comenius was forced to depart and was intended for the Czech audience. It is a dialogue of Christ with poor people on one side and rich people on the other. The poor complained, inter alia, about a lack of money, high interest rates, and injustice in borrowing money from the rich. According to Comenius, this social inequality should never occur because it is not desirable and the poor should be satisfied with their situation. Moreover, he criticized them for their complaints; they should work hard instead. He encouraged the rich to care for and be kind to the poor (Imrysek 1970). In his later book General Consultation on an Improvement of All Things Human (De rerum humanarum emendatione consultatio catholica) published abroad in

Latin in 1666 (Sedlacek 2008), Comenius openly condemned borrowing money, especially from Jews. He claimed that this is not the solution; one was supposed to save rather than lend and to take care of the family rather than property. However, if necessary, lending money had to follow rules and fairness as guaranteed by the state (Sedlacek 2008, chapter V). This is an obvious reference to the existing legislative background and a significant advancement compared to the works of medieval authors.

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