Trade and Credit - Religious Views of Old

The Middle Ages was a lively period of disease, chaos, and lending practices as unpredictable as mediaeval hairstyles. Cultures navigated a delicate balance between compassion, fairness, and social justice, often striking compromises to facilitate trade. Amidst this upheaval, Mongol horsemen forged the world’s largest contiguous empire, bringing devastation before the Pax Mongolica—a time of relative peace, religious tolerance, and thriving trade across Eurasia (with occasional plagues and plunder). Religious freedom in this era enabled diverse lending and credit practices, as reflected in Judaism, Christianity, Confucianism/Buddhism, and Hinduism—traditions whose influence continues today. In all cases, they aimed to provide ethical guidelines that met religious prescripts while supporting economic activity and community welfare.

Judaism: Lending with a Side of Schmaltz

Jewish lending evolved like a recipe passed down for generations: take one part Torah, add a pinch of Leviticus, and stir in rabbinic ingenuity. Shaped by religious teachings, socio-economic conditions, and interactions with surrounding cultures, these practices adapted to the ever-changing circumstances of Jewish communities, particularly in medieval Europe.

The Hebrew Bible (Torah) addresses lending and interest, emphasising ethical conduct. Deuteronomy 23:19-20 prohibits charging interest on loans to fellow Israelites but gives a wink and a nod to doing so with foreigners, as if to say, "Love thy neighbour—unless they’re just visiting." Leviticus 25:35-37 doubles down on community support, encouraging loans to struggling neighbours with terms so generous they’d make a medieval banker weep. Every seventh year, debts were forgiven (Deuteronomy 15:1-2), creating the world’s first financial reset button and giving borrowers a chance to celebrate their newfound solvency with, presumably, a party they couldn’t afford.

Rabbinic authorities expanded on these principles to aid business ventures. They invented the heter iska—a clever legal instrument that felt like divine loophole bingo. By rebranding loans as profit-sharing agreements, they sidestepped the interest prohibition with the finesse of a Talmudic scholar moonlighting as a financial advisor. This creative workaround was so impressive that it practically begged for applause—or at least a 10% return.

When lending to foreigners, Jewish lenders adapted to local laws and practices. They became essential players in funding traders and royalty, often turning profits that made kings jealous enough to say, “Nice assets—mind if I confiscate them?” Success, however, came with a side portion of social and political hostility, leading to periodic pogroms and expulsions—the era’s version of getting evicted for being too good at your job. Jewish communities sometimes hedged their risks by pooling resources, effectively creating a medieval lending co-op that doubled as a survival strategy and a masterclass in collective resilience.

Christianity: Thou Shalt Not Profit Too Much

Christian views on lending sprouted from the same roots but had a remix courtesy of the New Testament. Matthew 25:14-30 (the Parable of the Talents) and Luke 6:34-35 emphasise generosity, stewardship, and wise investing, making Jesus sound less like a stern preacher and more like a motivational speaker for ancient financial advisors. His message wasn’t anti-lending; it was more, “Handle wealth with integrity, and please, for the love of heaven, stop exploiting the poor!”—a slogan that probably didn’t fit on first-century coinage.

The Catholic church, however, took a hard stance on usury, with heavyweights like St Augustine of Hippo (354–430 AD), St Thomas Aquinas (c1225–1274), and the rediscovered writings of Aristotle. Islamic scholars had preserved Aristotle's works, and their rediscovery in medieval Europe provided a general refresher course on ethics and a more specific and polite reminder to avoid charging interest, particularly to the poor. Usury became a sin, so vile it probably had its own pew in hell. This moral clampdown persisted until the Renaissance, when the rise of banking made theologians squirm. Suddenly, charging “reasonable interest” started sounding less like heresy and more like progress—provided it wasn’t a gateway to greed.

Enter Protestant reformers like Martin Luther and John Calvin, who gave lending a much-needed rebrand. Their message: “Lend, but don’t be a jerk about it.” Fairness and avoiding exploitation became the holy grail of economic dealings, shifting the focus from outright bans to ethical practices.

Still, the church’s anti-usury stance made formal financial institutions about as rare as a Renaissance selfie. Communities leaned on informal credit networks instead, relying on neighbours and relatives to bankroll everything from weddings to wars. In hindsight, it was a surprisingly grassroots system—less “Wall Street” and more “Hey, can I borrow a chicken until payday?”

Islam: No Interest, Just Interesting Solutions

Many books are shared among the Torah, Bible, and Qur'an, but Deuteronomy and Leviticus didn’t make the cut. Irrespective, the ethical guidelines surrounding the prohibition of interest and the promotion of fair lending were still passed down across the Peoples of the Book. The major difference? In Islam, the prohibition on interest isn’t just a suggestion—it's like the sacred "no trespassing" sign of financial dealings. It is haram (forbidden); hence, halaal (allowed) means were developed for trade.

In Islam, Muhammed emphasised compassion, fairness, and the prevention of harm to others in economic dealings. Surah Al-Baqarah (2:275-279) forbids riba (“to increase/exceed”, but synonymous with usury or interest), considering it exploitative and unjust. Lending is promoted as an act of charity, focusing instead on the welfare of others and strengthening social bonds. So, in essence, Islam invented “social lending” before it was cool.

Of course, Islam recognised the need for commerce and industry, so creative alternatives to loans were invented that would make any project finance lawyer nod in approval. One is Mudarabah (??????), or “trustee finance,” a partnership where one party provides the capital, and the others offer expertise and sweat equity. Think of it like a very generous bake sale, where profits are shared based on an agreed-upon recipe. The other option, Musharakah (?????? or ?????), was a joint venture where everyone pitched in and shared profits or losses, like a co-op without the mandatory tie-dye shirts.

These ingenious models are still around today, as Mudarabah and Musharakah have evolved into high-stakes finance lingo but are now less used.? By the late 20th century, finance with a halaal twist expanded further with new tricks like Muraba?ah (??????)—cost-plus financing, Ijara (???????)—leasing, Sukuk (????)—Islamic bonds, and Takaful (???????)—Islamic insurance. It’s like a financial buffet but without the hidden fees. You get the credit, the bonds, the insurance—and maybe a breath mint to make it a little more refreshing.

Confucian/Buddhist: Harmony, Harmony, Harmony

Confucianism influenced Ancient Chinese lending practices from the 6th century BC and Buddhism from the 1st century AD. They were like the original “no exploitation, no greed, just good vibes” manuals long before the hippy era. Promoting fairness and compassion avoided “I’ll loan you 5 bucks, but you owe me 20” nonsense. They shaped attitudes toward wealth and interpersonal relationships.

Confucianism laid the groundwork by prioritising social harmony and moral conduct. Values like ren (benevolence) and yi (righteousness) meant that lending wasn’t about getting rich off your neighbour’s misfortune but more about being the economic equivalent of a good Samaritan. Buddhism added a “don’t get attached to wealth; it’s a distraction from enlightenment” rule. It promoted dana (generosity) to reduce suffering and cultivate merit to advance on the path. Under the “right livelihood” ideal, being a good person and making money were not mutually exclusive, but sky-high profits were a no-no.

Hence, lending didn’t stop despite the lofty ideals, and merchants needed cash to finance their hustle. They relied on informal lenders for short-term trade financings, while wealthy families and merchant guilds formed tight-knit, “trust me, I’m good for it” lending circles for longer-term capital needs. Pawnshops (dangpu, 当铺), often run by monasteries or affluent individuals, were popular for securing quick loans backed by collateral—kind of like ancient payday loans, but with a much more serene atmosphere—and nothing says “trustworthy” like borrowing from someone who’s probably already on their way to nirvana. They were practical and accessible, providing a lifeline for those needing quick cash without selling their souls to loan sharks.

Early credit mechanisms like drafts (jiaozhi, 交子) and "flying money" (feiqian飞钱) emerged during the Tang Dynasty to facilitate trade—no more lugging around 500 pounds of coins, just pieces of lightweight mulberry paper that were easier on aching backs. These were precursors to formal promissory notes and later paper money, which developed in the Song Dynasty. It implemented state-sponsored lending programs to support agricultural production and commerce. These included grain loans to peasants during lean seasons, repaid after harvest, and state-backed merchant credit to facilitate long-distance trade and reduce reliance on private lenders. It was a perfect blend of compassion, commerce, and a tiny bit of “Hey, we’re running the show here.”

Hinduism: Karma, Dharma, and Lending with a Smile

In ancient South Asia, Hinduism shaped the practice of credit with its ethical and social principles, proving that finance wasn’t just about money—it was about balancing your books and your karma. It shared the concept of dana (generosity) with Buddhism, but Hinduism added its own twist: lending wasn’t just about helping others—it was a spiritual two-for-one deal: help your neighbour and polish your karma in one go—because nothing radiates 'good vibes' quite like a loan free of hidden fees and fine print.

Hindu texts, such as the Manusmriti and Arthashastra, outline rules for fair lending, emphasizing the importance of righteousness (dharma) and justice in financial dealings. For example, loans shouldn’t come with interest rates that make borrowers want to fake their own deaths.

In villages, loans to farmers, artisans and traders were often informal—a friendly arrangement between wealthy landowners, merchants, or temples and their communities. These rural lenders were like kind-hearted neighbours: patient, understanding, and more invested in your harvest than your plough. Lending was a handshake and a promise—no contracts, just trust, chai, and a friendly nudge to keep your karma in check. Temples and wealthy patrons often offered flexible loans, understanding that one bad harvest shouldn’t cost you your livelihood. Collateral might extend to a goat.?

In urban centres, things got a bit fancier. Relationships gave way to ledgers, ensuring that spices made it to port and beyond, all while turning a tidy profit. Merchants swapped handshakes for ledgers, seals, and the occasional witness—because nothing solidifies trust like a meticulously crafted IOU (ideally in triplicate). Collateral shifted to items more liquid than livestock—like promises of a spice shipment that could outlast a monsoon.

While Hinduism encouraged fairness in lending, it also promoted the idea of moral responsibility in debt repayment. The Arthashastra cautioned against usury, and the idea of fair lending was tied to the concept of ahimsa (non-harm), urging lenders to avoid exploiting borrowers. Collateral, such as land or goods, was sometimes required, but Hindu ethics generally discouraged debt bondage and exploitation, ensuring that credit practices were seen as tools for mutual benefit rather than personal gain.

In short, credit in ancient Hindu society wasn’t just a financial tool—it was a cosmic balancing act, aligning harvest, karma, and the universe in perfect harmony (there has to be a Beatles song in there somewhere).

Summary

During the Middle Ages, lending practices were shaped by the cultural, religious, and societal norms of various traditions, each promoting compassion, fairness, and social justice while accommodating economic activity. Judaism emphasized ethical lending, with interest prohibited among Israelites and community support for borrowers, while Christianity, initially condemning usury, later focused on ethical lending through reformed teachings. Islam strictly prohibited interest and developed creative finance models like profit-sharing and joint ventures. Confucianism and Buddhism prioritized moral conduct and social harmony, fostering informal lending networks, while Hinduism integrated lending with ethical principles of fairness and karma, encouraging both economic and spiritual growth. Across these traditions, lending was not just a financial transaction but a means of promoting community welfare and moral responsibility.