"If You Can't Repay, One Pound of Flesh"…The History of Usury [Seungseop Song's Financial Light]

Debt and Interest Recorded for 3,000 Years
In Roma, Moneylenders Were the Wealthiest

A scene from the 2004 film "The Merchant of Venice," based on the play by William Shakespeare. Shylock, a Jewish moneylender living in Venice, attempts to cut a pound of flesh from the protagonist Antonio to collect interest.

The political sphere's criticism of banks continues. On the 30th of last month, President Yoon Suk-yeol mentioned at a Cabinet meeting that the loan burden on small business owners and self-employed individuals has increased, saying, "It feels like banks are acting as servants, taking the money earned from working to death and handing it over entirely to repay loan principal and interest." Financial Services Commission Chairman Kim Ju-hyun also chimed in on the 7th, stating, "The reason why there is talk about banks needing to make social contributions in contrast to the suffering of ordinary people is because banks only make profits from interest rates, and the windfall tax is in that context."

This is not the first time banks have been the target of criticism. Lending money and collecting interest has been condemned since the dawn of human civilization. Before the concept of finance was established, so-called 'usurers' were attacked by many countries, politicians, religions, and literature. Korea is no exception. How did usury start in history?

Records of debt and interest date back to 3000 BCE. At that time, the average interest rate in the Mesopotamian region was about 20%. The Mesopotamians wrote down what was borrowed on clay tablets, stamped them, and even recorded witnesses. These were a kind of loan document recording the principal and guarantors. When the debt was repaid, the clay tablet was destroyed. There is also a record from the 24th century BCE of a person borrowing 13 years' worth of food.

In 18th century BCE ancient Babylonia, there was also a maximum interest rate clause. It appears in the Code of Hammurabi, known to have been created by the king of the time. The law allowed interest to be charged but set an upper limit on interest rates. When borrowing silver, the rate was limited to 20%, and when borrowing grain, it was limited to 33%. Historians speculate that returning grain was more difficult by the standards of the time, so the interest rate was higher. This also implies that there were people lending capital and charging fees, assessing risk and setting different interest rates accordingly.

Despite these regulations, people who amassed enormous wealth through usury began to appear. Crassus, a politician who led the First Triumvirate with Caesar during the Roman era, became the richest man in Rome through usury. Brutus, who is said to have led Caesar's assassination, was similar. Brutus accumulated wealth by charging an annual interest rate of 48% in the province of Cyprus. Therefore, Caesar, who held power, also implemented interest rate limits and debt relief policies.

At that time, lending was not welcomed but was not prohibited by law. However, in the Middle Ages, lending was considered a sin. This was because the Bible strictly forbade usury itself. The Old Testament contains passages such as: "You shall not lend to your brother with interest, whether on money or food or anything else," and "Lend without expecting anything in return."

At the Third Lateran Council in 1179 and the Second Council of Lyon in 1274, Christianity completely prohibited the act of charging interest. Usurers who died without repentance were denied Christian burial. Existing usurers had to return all the interest they had received before death to receive the last rites, burial, and to write a will. At the Council of Vienne in 1311, the claim that "usury is not a sin" was declared heresy.

Woodblock print "On Usury," presumed to have been created by Albrecht D?rer in 1494.

However, Jews continued to engage in lending to make a living. Shakespeare's play "The Merchant of Venice" depicts the ruthless usurer Shylock, active in the Middle Ages. He is famous for the line, "If you do not repay the money, I will take a pound of your flesh." Although Judaism also prohibits charging interest, the Book of Deuteronomy in the Old Testament states, "You may charge interest to foreigners, but not to your brothers," which was interpreted to allow charging interest to non-Jews. Based on this, Jews accumulated vast wealth and formed a massive capital controlling global finance.

Korea also had conflicts over interest in the past. During the Three Kingdoms period, it was customary to lend grain in spring and receive 50% interest in autumn. Especially during the Goryeo Dynasty, monks who secured large amounts of land lent rice and charged high interest rates. In response, laws such as the 'Jamojungsik Law' were enacted to prevent interest collection after a certain period. In the Joseon Dynasty, the 'Ilbon Ilri Law' was codified, which prohibited collecting interest exceeding the principal regardless of how old the debt was.

Lending money and charging interest is no longer a sin in modern society. It is no longer called usury but finance. It is difficult to deny the value of finance, which has become a pillar of capitalist society. Of course, many people still feel burdened by interest, and no one knows what constitutes a reasonable interest rate. However, it remains the role of our politics to regulate so that people borrow money appropriately according to their ability, prevent monopolies and oligopolies in the financial industry, and ensure that reasonable interest rates are set through competition and market principles.

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