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According to a video course I have been listening to about the high middle ages, Christians could not lend money with interest to other Christians according to the Catholic Church. Otherwise, they would get excommunicated from the church

The Jews were not under that stipulation because they could care less about being excommunicated from the Catholic Church. Therefore, they could lend money and an economy could operate.

Now, if the Jews were not there to loan money (who really loans money without interest - a couple of bucks to your friend maybe). how could the economy even operate? Basically, would Europe have been much more backward economically speaking if not for the Jews?

Now, if the Jews were not there to loan money (who really loans money without interest - a couple of bucks to your friend maybe). how could the economy even operate?

Ever heard about "no-usury" islamic banks?

THere was still plenty of bartering if I recall.

And the Knight Templars were known to have loaned money. So I'm not sure how true the canon law was.

Also, the Venicians were known to have indulged in Banking as well.

The demand for investment credit in Middle Ages europe wasn't particularly high, so it's unlikely you would've even seen the difference. Amusingly enough, it's the kings who borrowed money most often to pay for their extravagance.

Eventually, people would start ignoring this rule, as they did with many others . Demand for credit started rising during the Reneissance, and by this time Europeans mostly ignored the ban.

Going a little off what PeZook said the only reason to need lenders is if there is a need for loans. Through the early and high middle ages and really into most of the late middle ages you just don't have economies growing fast enough to truly demand investment capital. The kind of inter-linked and rapidly growing economies of the Renissance and later needed credit to fuel their expansion. Conversely in the earlier periods growth was minimal at best 9keeping pace with the slow but steady populaiton increases) and thus could be locally funded from available capital or by raising taxes (as anyone who would be a user of capital was also able to raise it directly). Would it have slowed things down not to have loans available? Sure but not so much that it would be obvious.

Fingolfin_Noldor wrote:And the Knight Templars were known to have loaned money. So I'm not sure how true the canon law was.

A recent documentry I saw on History channel stated that the Templars had a system of basic 'Traveler's Checks'. A man in one part of France could deposit an amount with the Templars and receive a receipt for that amount. He could then travel unburdened to another city or even another country, present the receipt to another Templars center, and the money would be given him (minus a 'small fee').

[quote="CmdrWilkens"Conversely in the earlier periods growth was minimal at best 9keeping pace with the slow but steady populaiton increases) and thus could be locally funded from available capital or by raising taxes (as anyone who would be a user of capital was also able to raise it directly). Would it have slowed things down not to have loans available? Sure but not so much that it would be obvious.[/quote]

Also, the shift towards capital in production only occured well after the Middle Ages were over: For literally thousands of years work was a matter of gathering enough manpower, with technology rarely applied even to complicated processes like steelmaking.

So you could do a lot with manpower, but little with money ; This is why taxes were actually more often collected in resources and labor rather than money.

However, as the need for sophisticated technology rised (most evident in the Great Discoveries, which required advances in shipbuilding. Also, warfare required more and more materiel and less cannon fodder), more and more economic power was described by organization and capital rather than pure workforce.

So, in the early middle ages, if you wanted to be rich, you either became a warrior, established a village for a lord or used arcane skills. Later on, you could become rich if you organized an enterprise like a trade company or a manufacture, rather than directly making something by yourself. Physical goods were also more available, so you could organize say a manufacture if you had money, buying what you needed, whereas peasants had to make a lot of things themselves.

I hope I didn't ramble too much