The formation of credit relationships

This chapter examines the investigating techniques employed by the borrowers for identifying and selecting lenders and vice versa in creating credit relationships and transactions. It examines the terms and conditions agreed upon by creditors and lenders in their credit transactions. It discusses the quantity of the credit extended in the fourteenth-century in terms of its overall value and the average size of individual credit. It also discusses the exploitation and expropriation of the debtors through high levels of interest, loss of land, and pledging of properties in connection with the debts. The chapter also tackles the formation of credit contracts and their terms and conditions, including their effects on mobilization of capital within the creditors, the debtors, and the community as a whole.

Conclusion

This book began by describing the transformation that occurred in the 1990s in the impression and ideas of credit systems in the medieval countryside. Through this change in attitude on the medieval credit system, the sophistication of rural credit mechanisms and their positive effects within the traditional economies were established. Before this time, the consensus on medieval credit mechanism was of a vehicle of poverty and stagnation. By changing the perspective of credit as a framework of crisis to focusing on credit as mere credit itself, the mechanism of lending and borrowing during the medieval period was not constantly borne out of crisis. It has been found out that credit supply did not always fail in problem periods, that debtors were not always worse off than their lenders, and that leasing of land by debtors was an effective strategy compatible with individual prosperity and not an indication of economic failure. In sum, the credit system of medieval Europe had bearings on the economy of the country. Although rural credit had little effect on the overall contours of the economic change of Europe, it nonetheless shaped other significant forces. In the earlier part of the century, the rural credit system was there to reinforce wealth, and influenced in such a way to separate the peasants from the upper strata. In the second half of the century, market opportunities were exploited by the means of credit mechanisms. However, when economic contraction happened at the end of the century due to the sustained demographic collapse and monetary difficulties, rural credit mechanisms fell into abeyance.

Credit and social relations

In the previous chapters, the dominant view of the creditor-debtor relationship was exploitative – where lenders capitalize on the dependence of the poor borrowers. In this view, the creditors profited while the debtors become poorer as a consequence of their borrowing. This chapter discusses the nature and consequences of the relationships between creditors and debtors, both for the individuals involved and the village society as a whole. It seeks to rebut the above-mentioned observations. In this chapter, it is assumed that the acquisitive behaviour of the lenders has limits and that the exploitative nature of the credit system has boundaries. Although the idea of debt as a malign force has a long tradition within the history of European agrarian societies, this chapter presents a rather different picture of the credit-debtor relationship during the medieval period. Undeniably, the creditors generally profited from the credit system. However, most credit relationships did not result in negative consequences for the borrower. In the villages studied in this chapter, most people who were involved in credit did not experience serious long-term economic problems or exploitation from the creditors. This scenario suggests that many of the borrowers during the period were relatively wealthy with almost the same economic characteristics as those of the lenders. It also established that debtors generally are lessors wherein they lease their parts of land to pay for their debts instead of formally pledging their lands as collateral.

The credit supply

Credit in medieval England was obtained in various ways, either through a deferred payment or through cash loans. All these transactions were efforts to maintain production and consumption at its previous level or for investment purposes. During this period, the majority of the transactions arose from the need to obtain goods or services or to discharge an obligation at a time when immediate full cash payments from that individual's own resources were impossible or inadvisable. In the medieval period, full payment in cash was impossible as societies during this period did not have regular monetary income. Thus, in such societies, debtors accrue their needs through credit and they were not obliged to make immediate cash payments from their own resources whenever they obtained goods or services. This chapter examines credit supply during this period with emphasis on the willingness of the creditors to lend or sell goods and services on credit. It examines the effects of dearth and high prices, coin shortage or money supply, and crisis mortality on the credit supply of medieval Europe.

Creditors and debtors

In the previous studies about medieval creditors and debtors, two main points were constant: 1) creditors tended to be richer than the debtors; and 2) creditors and debtors tended not to overlap; an individual is generally a borrower or a lender but not both. This chapter aims to evaluate these propositions by focusing on the creditors and debtors of fourteenth-century English villages. It discusses the distinct traits and characteristics of creditors and debtors as groups, including the overall traits of the credit network participants. In this chapter and the next chapter, two approaches were used to study the villages. The first approach sought to determine generalizations about individuals in the aggregate and the second approach used court rolls to add nuance and qualification to the generalizations. The pre-plague decades of medieval Europe form the focus of this chapter. However the latter periods are also considered to determine the changes in the composition of creditor and debtor groups after the fourteenth century crisis had passed. The chapter also compares the village credit system to other regions of Europe, such as in the regions where urban lenders existed in a rural setting.

Introduction: rural credit

This book focuses on the credit dealings of medieval Europe. In medieval Europe, manor courts served as private jurisdictions by the landlords which were attended by the peasants to hear and settle their private lawsuits, many of which were concerned about debts. The long lists of manorial court rolls which were predominantly concerned with debt disputes prove the existence of large numbers of credit relationships within the medieval villages of Europe. Yet, despite the abundance of materials and the recent growth in research on this material, no extensive studies have been conducted on medieval credit relationships. This book is the first extensive and detailed investigation of credit in the countryside of medieval Europe. Rural credit is a subject matter that demands closer attention as it gives a glimpse of the function of credit in an agrarian economy. It also sheds light on the socio-economic conditions of the medieval villages which were predominantly battered by poverty. It also has contemporary relevance as it provides insight on the provision of microcredit as a tool for eradicating, if not alleviating, poverty, and for giving gains to those in less developed countries. Addressed in this book are: who were the people, creditors, and debtors involved in the credit relationships of Europe; and why the debts came about. The book also evaluates the changing availability of village credit in various forms, analyses the role of credit in relations between families and individuals, and tackles the terms and conditions attached to credit transactions.

The forms of credit and their uses

Interactions and exchanges in medieval Europe were dominated by the involvement of credit. In the broad sense, it means allowing someone a benefit or granting them a service on the premise and understanding that one would be able to make claim upon that person or their family in the future. Although credit in medieval Europe has the potential for diversity, most credit in medieval villages took a number of similar and familiar forms. This chapter aims to determine which forms of credit transaction were in use in England in the period and to establish which was the most important. The chapter also assesses the uses of credit and the amount and quantities of credit extended to the villages. In addition to determining the meaning of debt in the fourteenth-century context, the chapter also addresses the strengths and weaknesses of the English rural credit system compared with the contemporary regions of Europe. It also tackles two propositions concerning the credit system of medieval England. The first proposition assumes that the credit transactions in this period were generally small-scale and tended towards providing essentials on a short-term basis. The second proposition addressed herein assumes that borrowing during this period was large-scale, a reflection of the orientation of the transactions to enhance the borrower's future as well as the lender's.