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Published online by Cambridge University Press: 03 June 2009
While Professor Habib's main concern is to indicate the extent to which the monetization of the Mughal Empire was accompanied by the development of large-scale money-lending and credit, his discussion suggests three propositions which might be subjected to comparative analysis. These propositions are: (1) A demand for credit tends to emerge as a society's economy becomes at all differentiated, be it literate or not. (2) Demand almost invariably generates supply in the sense that necessity generates invention. (3) How this demand is met is conditioned by the extent to which a population is nonhomogeneous and differentially subject to credit-restricting constraints.
1 Darling, M.L., in The Punjab Peasant in Prosperity and Debt, Bombay (1925,Google Scholar 1947), shows how indebtedness tended to persist in rural areas.
2 E.g., see Herskovits, M., Economic Anthropology, 2d. ed., New York (1952), pp. 225–30.Google Scholar
3 Qureshi, A.I., Islam and the Theory of Interest, Lahore (1946), pp. 71–72.Google Scholar
4 See Merton, R.K., Social Theory and Social Structure, Glencoe (1949), pp. 52, 73, 79–80.Google Scholar
5 Noonan, J.T., Jr., The Scholastic Analysis of Usury, Cambridge, 1957, pp. 34–35,Google Scholar 102, 294–96. See also Nelson, B.N., The Idea of Usury, Princeton, 1949, pp. 6,Google Scholar 11, 16–22, 71, 99–100, 112; Coulton, C.G., Medieval Panorama, New York, 1955, pp. 245,Google Scholar 337–38, 343, 350–51, 357; The Cambridge Economic History of Europe, III, Cambridge, 1963, pp. 430–32,Google Scholar 531, 564–69; Sapori, A., Studi di Storia Economica, 3rd ed. (Florence, 1955), I, pp. 223–43,Google Scholar cites rates of 5 to 10% among early 14th century Italian business circles, on loans made by methods circumventing canon law restrictions.
6 Noonan, op. cit. See note 8 below.
7 Cambridge Economic History of Europe, II, Cambridge, 1952, pp. 286–88.Google Scholar Hindu lenders were not entirely free of constraints. In general, Manu's prescriptions continued to be endorsed, according to which the monthly interest rate (1¼ per cent on pledged loans) might not exceed 2, 3, 4, and 5 per cent, respectively, on unpledged loans made to the four castes (varnas), ranging from the highest (Brahmanas) to the lowest (Sudras). Moreover, a limit was set upon the maximum repayable, a limit conditioned by the type of loan and ranging from two to eight times the principal. E.g., see The Institutes of Vishnu (the text of which was approved by a seventeenth-century author, though it was originally composed in the third or fourth century A.D. or somewhat later), translated by J. Jolly, Oxford, 1900, VI, 2–15. See also Kane, P.V., History of Dharmassastra, III, Poona, 1946, pp. 418–27,Google Scholar 458.
8 Account must be taken of (among other factors) legal means whereby anti-usury regulations might be bypassed, at least in respect of commercial if not also of consumer credit, the demand for which, however, was quite large and a cause of the support given anti-usury regulations in both the Christian and the Muslim world. For example, the Churchmen did not disapprove of recourse to bills of exchange which, though theyreflected or concealed interest, were subject to the uncertainties associated with fluctuation in their prices. See de Roover, Raymond, Money, Banking, and Credit in Mediaeval Bruges, Cambridge (1948), pp. 54,Google Scholar 66, 353, also p. 305 on interest rates and recourse to credit fees, pp. 150–52,165, 348, on consumer credit, and pp. 130–31, 150–51, 348 on the expensiveness and inefficiency of monts-de-piete operations. Account must be taken also of the impact of increasing monetization upon the cost of credit, a task rendered difficult by the frequent lack of adequate indicators of monetization, especially in countries such as India where, according to some, the monetization of the economy proceeded much less rapidly than Habib seems to suggest. See Homer, Sidney, A History of Interest Rates, New Brunswick, 1963,Google Scholar Part Two.