Jews and Moneylending: A Contemporary Case File, Part 1 of 3
“Interest on debts grows without rain.”-Yiddish Proverb
Some things never change, and one of these things seems to be the Jewish connection to usury. During a recent conversation with a good friend who now finds himself at the sharp end of the financial downturn, he mentioned having been forced to turn to the ‘services” of what has become known as a “payday loan” company. The relatively small, short-term, unsecured loans offered by these companies, to those struggling to hold onto the socio-economic ladder, very often come with eye-watering rates of interest. As the conversation continued, my friend despondently informed me that because of the rate of interest on his current loan, when the end of the month came he was in all likelihood going to be facing the prospect of paying off his loan only to have to immediately take out another.
He was trapped. Looking at this younger man, who also has a baby on the way, I offered to cover the totality of the interest on this particular loan on one condition: that he avoids at all costs taking out another loan. He gratefully accepted my offer, but I couldn’t help but feel that it won’t be long before the allure of quick (but expensive) cash begins to tug at him once more.
Cicero once remarked on “how large an income is thrift,” and I would also echo the sentiment that thrift is a matter of character more than of economics. But more immediately pressing to me in this case was the fact that although my young friend believed he was dealing with a fairly small-scale operation, with a “down-home” feel, he was in fact becoming ensnared in an international web that thrives and feeds on people just like him — the hard-working but economically weak victims of “the system.” The small storefront instant loan operations in your hometown, or the comforting names of the seemingly small-scale online lender, are simply the extremities of this web. Sitting at the feast table of this feeding frenzy on the working poor are a large number of businessmen who hail from an ethnic community which has a long, rich, and unbroken history in precisely this line of work. Regardless of those screeching cries of ‘stereotype,” this history is a well-documented one, and with the publication of this article I hope it will be documented better still. Moreover, I might add, despite the obfuscations of those with obvious bias, this particular tribe has more often than not engaged in this trade out of choice. After all, unlike crops which require toil, sweat, rootedness and, yes, rain, interest grows simply and incessantly with the tick of the clock.
Nevertheless, in order to counter any allegations of “prejudice” which this article may attract, I draw attention to the painstaking research which I have undertaken into the companies and individuals detailed below, and I ask simply that the facts I am about to adduce be left to speak for themselves. I aim, primarily, to explode the idea that the link between Jews and exploitative finance is a myth or a stereotype. With a historical survey, as well as detailed factual evidence on a large number of contemporary individuals, companies and business practices I hope to establish the premise that there is occurring in our midst a vast and detrimental transfer of wealth and resources from non-Jews to Jews, and that this is occurring via the employment of age-old methods. I will detail, and provide evidence for, the typical features of these methods, the most starkly apparent of which is financial fraud. In the third part of this essay. I will offer my thoughts on what might be done, as well as broader reflections on the nature of economic contact between Jews and non-Jewish over historical time.
Historical Context
In Separation and Its Discontents Kevin MacDonald notes that a common situation resulting in accusations of economic domination “was the tendency for Jews to be involved in moneylending to gentiles.”[1] MacDonald states that moneylending was “a very potent source of anti-Semitic writing in traditional societies.”[2] Seen as inherently exploitative, moneylending evoked an even more negative reaction when pursued by “an ethnic group whose separation from the borrowing class was obvious and many members of which were engaged in this profession.”[3] The ethnocentric nature of Jewish communities and their position as alien agents of the elite contributed to perceptions that moneylending was itself a form of inter-tribal warfare. In fact, Jewish historian Robert Chazan has argued that the perception was rife during the medieval period in Europe that “Jewish moneylending was a vehicle through which Jews carried on their never-ending struggle against Christianity and Christians.”[4]
Moneylending became, in several respects, the focal point of non-Jewish protests against Jewish successes in resource competition. Haim Hillel Ben-Sassoon remarks in Economic History of the Jews that from the twelfth to the fifteenth centuries “usury became the main source of livelihood” for Jews across Europe, and that as a result “anti-Jewish persecutions acquired an economic as well as religious character.”[5] Acts of violence which had an outwardly religious motivation, such as the so-called “Blood Libel,” were in fact much more closely linked to extortionate local Jewish moneylending operations, and the desire of the peasantry both to escape debt and to receive some sort of absolution by doing it in the name of piety. The period did, however, witness a growing literary and artistic link between Jews, blood and money, as artists, writers and public figures drew allegories depicting money as the “life blood” of society which was being drained exclusively for Jewish benefit. A great example of the confluences involved in an artistic expression is a six-part praedella by Paolo Ucello. The image depicts a Jewish pawnbroker’s home. There is blood emanating in the background, and seeping under the door, where the moneylender has evidently attempted to cook the Host — the body of Jesus in Catholic theology. Angry citizens attempt to beat down the door, presumably to protect the Host and exact their revenge.
The work was commissioned by the local Confraternity of the Holy Sacrament, but its religious element was likely to have been of only tangential significance to everyday people. As Jay Berkovitz concedes, the charge of Host desecration, and the related charge of ritual murder, were very often just convenient “excuses for popular anti-Jewish uprisings.”[6] However, I should myself concede that some of these incidents may well have been solely provoked by accusations of Host desecration, although I should further add that at least some of the accusations are likely to have had some factual foundation. For example, as late as 1908 a Jewish professor from Austria named Feilbogen, along with his wife and sister-in-law, received international notoriety when, during a visit to Rome, they received communion from the Pope only for all three to immediately spit the wafer onto the floor. (See the Washington Herald’s coverage of the story here).[7] The incident prompted a major damage-limitation effort by Jews internationally. Authorities at Felibogen’s university immediately took steps to remove him from his academic post, at which point the undoubtedly insincere Jew expressed his desire to convert to Catholicism in order to atone for his behavior.
Real incidents of Host desecration aside, most acts of violence against Jews in the period were the direct result of economic factors, and ethnic rivalry in resource competition. Despite the relative frequency of non-Jewish reactions against exploitation by Jews and the non-Jewish elite, the practice of usury remained attractive to Europe’s Jews throughout that period, suggesting that the benefits of the Jewish strategy and position in European society considerably outweighed potential negative outcomes. On the most basic level, moneylending enabled Jews to acquire sufficient resources for population growth — a key marker of success in any evolutionary strategy. As Chazan expresses it:
To be sure this specialization [moneylending] was costly in multiple ways. … On the other hand, the moneylending speciality did permit the eventual growth of the Jewish population of medieval western Christendom, which was a major positive development in medieval Jewish history.[8]
Rather than small-scale, localized, acts of violence, the biggest threat appended to moneylending was the threat of expulsion in the event of a failure of the alliance with native European elites. Since elite protection was crucial to compensate for the socially odious position in which Jews plied their widely despised trade, the removal of state protection normally marked the cessation of Jewish activity and habitation in that location. This normally occurred in the form of rapid and complete expulsion. In England, for example, Jews persisted in moneylending until the tension among the peasantry (and later the nobility) reached such an unbearable level that Edward III was forced to pass severe anti-usury laws in 1275. When Italians were called in by the English to fill the position of moneylender, the Jews finally turned to coin-clipping. This was the practice of trimming small amounts of precious metal from coins and then returning them to circulation, before melting down the trimmings to make new coins and thereby creating money from nothing.[9] It was the discovery of large-scale Jewish coin-clipping operations, and the now economically useless position of the Jews, that led to a Royal edict of expulsion in 1290.
In Regensburg, probably typical of Rhenish and south German cities, Jews had been gradually expanding moneylending operations from 1250 to 1400. This lending was mainly provided for the municipality, the nobility and the clergy. After 1400, lending switched for the first time to the lower orders of society, as it had in England much earlier. Ben-Sassoon remarks that “knights, burghers and artisans pawned objects for short terms, and borrowed small sums at high rates of interest.”[10] As in England, tension slowly increased until all Jews were expelled from the city in 1519. Elsewhere in Germany, where Jewish communities were permitted to settle, surviving municipal charters from the 13th to 15th centuries show that “articles regulating moneylending” were implemented in all localities in which Jews came to dwell.[11] Concern at restricting Jewish lending practices is evident across Europe in the same period. In Italy, the activities of Jewish moneylenders were regulated by the condotta, conditions set out in charter treaties between municipalities or rulers and Jewish lenders. They fixed interest rates and set down as law the principle that the charge of interest was never to exceed the value of the pledge. The first privilege granted to Jews in Poland in 1264 contained similar restrictions.[12]
With the rise of conventional banking in the eighteenth and nineteenth centuries, and the drift of the wealthiest Jewish moneylenders into that sphere of economic activity, the importance of “traditional” Jewish moneylending declined in importance. It also began to diversify in its expression, as Jewish innovations in trade such as payment for goods “on credit” provided Jews with a means of remaining in the loan business but this time less obviously because of the involvement of goods. In Eastern Europe, where trade was less developed, moneylending and the deriving of income from credit were most often practised by the ubiquitous Jewish tavern owner. Since the late fifteenth century elites in many Eastern European states had given Jews “an exclusive monopoly on the production and sale of alcohol.”[13]
The Jewish alcohol monopoly was associated with Jewish credit and loan facilitation, forming an almost inescapable social web in which the peasants were entangled. A report from Minsk to the Czar in 1797 explained peasant poverty as the fault of “landowners who keep Jews under leases in taverns in their villages. … By selling liquor to the peasants on credit … the Jews lead them into squalor.”[14] The monopoly was also widely associated with fraud. In Hungary, for example, a commonly held stereotype was that of a Jewish tavern owner who entices the local peasantry to drink on credit. The drunken peasant quickly loses count of how many drinks he has had, and is forced, along with enduring a hangover the following morning, to accept the Jew’s tally as legitimate. Tension over the sale of alcohol on credit, as well as Jewish financial malpractice, reached such a fever pitch in the 1780s that at one point Joseph II, Holy Roman Emperor, proposed cancelling all Jewish-held tavern permits across the nation.[15]
When many of these tavern-owning Jews emigrated west from Russia and the surrounding countries in the nineteenth century, they brought with them this extensive experience in credit and loans. Although no longer able to corner the market in alcohol production and sale, the same financial skills were applied to retail, in the form of payment for goods on the instalment system, and the trade in cash (pawn-broking and conventional moneylending). Pawn-broking in particular had a long history among the Jews of Europe, and especially in Italy where Raymond Scheindlin states it “often provided the entire raison d’être for a Jewish community.”[16] Jewish involvement in moneylending and pawn broking was also accompanied by a strong strategic drive to achieve Jewish monopoly in these economic areas. Indeed, the famous humanist Antonio Ferrari, known as Galateo (1444–1517), pointed out that Neapolitan Jews engaged in trade and free professions but “enjoyed an actual monopoly in the lending business.”[17]
It was also, thanks to Jewish lobbying, a legally enforced monopoly. Leon Poliakov traces the monopoly in fifteenth-century Italy to efforts where Jewish communities successfully lobbied local elites for exclusive rights to conduct these businesses, with the result that “to start with, pawn-broker’s licenses for Christians were no longer renewed. Then at the end of 1437 the monopoly of lending was granted to a Jewish group.”[18]
Likewise, when mass Jewish emigration to the United States occurred, beginning in the 1850s, pawn-broking very quickly became dominated by Jewish immigrants as family networks and interest-free loans between Jews facilitated the buying up of the industry. A New York Times report in 1866 on the trade in stolen goods observed that Jews had “a monopoly of the pawnbroking business in this City.”[19] Wendy Woloson notes in her excellent history of pawning in America that in the United States, by 1860, “pawnbrokers and resale traders in most cities were predominantly Jewish, and extended inter- and infra-familial involvement in various sectors of the used goods business was fairly common.”[20]
One such family operation was the early twentieth-century Sam’s Loans, once located on Michigan Avenue in Detroit. Today you can watch Sam’s grandson, Les Gold, operate his own store, American Jewelry and Loan, on truTV’s Hardcore Pawn. Still in the family business, Les and his children can be witnessed charging high levels of interest to an overwhelmingly poor, African-American clientele. Even cursory searches for information on the show turn up a high number of articles and comments on the allegedly racist picture it conveys. But since the show is apparently unscripted one must accept that the financial practices of the Gold’s and the low-IQ and high level of aggression of their clients should be accepted at face value. Having watched a few episodes now, I can state that it’s a bizarre mix of trash TV and enlightening racial anthropology.
As in the past, money-orientated Jews have been eager to take new opportunities to diversify and complicate the way in which they persist in the business of creating money from nothing. From coin-clipping to offering poor quality loans on the goods of their customers they have rarely spurned innovation, and this has been apparent with both the boom in storefront lending, and in the relatively new online moneylending model. It is with these new “business models” in mind that we now turn our attention to Jewish moneylending today.
End of Part 1 of 3.
Go to Part 2 of 3.
____________________________________
[1] K. MacDonald, Separation and Its Discontents: Toward and Evolutionary Theory of Anti-Semitism (1st Books, 2004), 46.
[2] Ibid.
[3] Ibid., 47.
[4] R. Chazan, Reassessing Jewish Life in Medieval Europe (Cambridge University Press, 2010 )132.
[5] N. Gross (ed), Economic History of the Jews (Shocken, 1976), 258.
[6] Jay Berkovitz, The Shaping of Jewish Identity in Nineteenth-Century France (Wayne State University Press, 1989), 26.
[7] See “Rabbi condemns sacrilege,” The Washington Herald, April 24, 1908.
http://chroniclingamerica.loc.gov/lccn/sn83045433/1908-04-24/ed-1/seq-1/#
[8] Chazan, 130.
[9] Ibid., 258.
[10] Ibid.
[11] Ibid., 259.
[13] M. Davis, Jews and Booze: Becoming American in the Age of Prohibition (New York University Press, 2012), 73.
[14] R. Kobrin, Chosen Capital: The Jewish Encounter with American Capitalism (Rutgers University Press, 2012), 122.
[15] Z. S. Stessel, Jewish Life in Hungary (Associated University Presses, 1995), 49.
[16] R. Scheindlin, A Short History of the Jewish People: From Legendary Times to Modern Statehood (Oxford University Press, 1998), 157.
[17] M. Shulvass, The Jews in the World of the Renaissance (Chicago, 1973), 120.
[18] L. Poliakov, Jewish Bankers and the Holy See: From the Thirteenth to the Seventeenth Century (Routledge, 2012), 59.
[19] C. Zimring, Cash for your Trash: Scrap Recycling in America (Rutgers University Press, 2005), 50.
[20] W. Woloson, In Hock: Pawning in America from Independent Through the Great Depression (University of Chicago Press, 2009), 72.
Comments are closed.