We have seen that business in the Middle Ages was chiefly of a retail character and was conducted in markets and fairs. The artisan who manufactured the goods he sold and the peddler who carried his goods about from place to place were the leading types of medieval traders. Little wholesale business existed, and the merchant prince who owned warehouses and large stocks of goods was an exceptional figure.
LACK OF MONEY
One reason for the small scale of business enterprise is found in the inadequate supply of money. From the beginning of the Christian era to the twelfth century there seems to have been a steady decrease in the amount of specie in circulation, partly because so much moved to the Orient in payment for luxuries, and partly because the few mines in western Europe went out of use during the period of the invasions. The scarcity of money, as has been shown, [17] helped directly to build up the feudal system, since salaries, wages, and rents could be paid only in personal services or in produce. The money supply increased during the latter part of the Middle Ages, but it did not become sufficient for the needs of business till the discovery of the New World enabled the Spaniards to tap the wealth of the silver mines in Mexico and Peru. [18]
FAULTS OF MEDIEVAL CURRENCY
Medieval currency was not only small in amount but also faulty in character. Many great nobles enjoyed the privilege of keeping a mint and issuing coins. Since this feudal money passed at its full value only in the locality where it was minted, a merchant had to be constantly changing his money, as he went from one fief to another, and always at a loss. Kings and nobles for their own profit would often debase the currency by putting silver into the gold coins and copper into the silver coins. Every debasement, as it left the coins with less pure metal, lowered their purchasing power and so raised prices unexpectedly. Even in countries like England, where debasement was exceptional, much counterfeit money circulated, to the constant impediment of trade.
"USURY" LAWS
The prejudice against "usury," as any lending of money at interest was called, made another hindrance to business enterprise. It seemed wrong for a person to receive interest, since he lost nothing by the loan of his money. Numerous Church laws condemned the receipt of interest as unchristian. If, however, the lender could show that he had suffered any loss, or had been prevented from making any gain, through not having his money, he might charge something for its use. In time people began to distinguish between interest moderate in amount and an excessive charge for the use of money. The latter alone was henceforth prohibited as usurious. Most modern states still have usury laws which fix the legal rate of interest.
THE JEWS AS MONEY LENDERS
The business of money lending, denied to Christians, fell into the hands of the Jews. In nearly all European countries popular prejudice forbade the Jews to engage in agriculture, while the guild regulations barred them from industry. They turned to trade and finance for a livelihood and became the chief capitalists of medieval times. But the law gave the Jews no protection, and kings and nobles constantly extorted large sums from them. The persecutions of the Jews date from the era of the crusades, when it was as easy to excite fanatical hatred against them as against the Moslems. Edward I drove the Jews from England and Ferdinand and Isabella expelled them from Spain. They are still excluded from the Spanish peninsula, and in Russia and Austria they are not granted all the privileges which Christians enjoy.