The practice of charging interest on loans has been
controversial since it was first mentioned in early recorded
history. Lending is a powerful economic tool, vital to the
development of society but it can also lead to disaster if left
unregulated. Prohibitions against excessive interest, or usury,
have been found in almost all societies since antiquity. Whether
loans were made in kind or in cash, creditors often were accused of
beggar-thy-neighbor exploitation when their lending terms put
borrowers at risk of ruin. While the concept of usury reflects
transcendent notions of fairness, its definition has varied over
time and place: Roman law distinguished between simple and compound
interest, the medieval church banned interest altogether, and even
Adam Smith favored a ceiling on interest. But in spite of these
limits, the advantages and temptations of lending prompted
financial innovations from margin investing and adjustable-rate
mortgages to credit cards and microlending.
In Beggar Thy Neighbor, financial historian Charles R.
Geisst tracks the changing perceptions of usury and debt from the
time of Cicero to the most recent financial crises. This
comprehensive economic history looks at humanity's attempts to curb
the abuse of debt while reaping the benefits of credit. Beggar
Thy Neighbor examines the major debt revolutions of the past,
demonstrating that extensive leverage and debt were behind most
financial market crashes from the Renaissance to the present day.
Geisst argues that usury prohibitions, as part of the natural law
tradition in Western and Islamic societies, continue to play a key
role in banking regulation despite modern advances in finance. From
the Roman Empire to the recent Dodd-Frank financial reforms, usury
ceilings still occupy a central place in notions of free markets
and economic justice.
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