7 Exchanging for bills of exchange.
Exchanging for bills of exchange is licit. How to do it and the reason for its name ... 21
It is a contract but without a name ... 22
It is an innominate contract: Sometimes I give to you so that you give me something back; other times I give to you so that you do something for me ... 22
Contracts with a name and that are to receive a name are all similar in that they require equality ... 23
Exchanging for bills of exchange is illicit when more than the fair salary is taken or less than the fair salary is given for lending on credit or advancing, and restitution is required ... 24
Worse is the contract that is feigned for a later date and is really for today ... 25
Contracts where there is no equality, or more is given or taken for lending on credit or advancing, are unjust ... 24
Exchanging for bills of exchange from one city in the kingdom to another is licit by human natural and common law ... 28
They say that [this kind of contract] is real in these kingdoms, but, to the author's mind, they are not very useful ... 30
Exchanging for bills of exchange has been well instituted in these kingdoms if these rules are followed ... 30
21. It is also licit, according to everyone, to practice the third type of exchange, which is to exchange for bills of exchange. This is a virtual transference of money by which if someone wants an amount of money in another land, he gives it in this one or does something that is worth that amount, or partly does and partly gives to the exchanger or to anyone else who has money or credit in the other place. He then receives bills of exchange for which an amount of money is given to him over there that is equal to the amount he gave or what he did over here. He will also give a sum as profit for arranging that the money be given over there in exchange for the bills of exchange.
This is called "exchange for bills of exchange" because it is usually carried out with these certificates, although it is also practiced through a messenger or the person himself who goes to that other place and gives the amount.
This contract is just and much praised by Baldo, (1) although he does not give a special name to it, nor do we believe it has one, as it greatly conforms to Calderino's, (2) and to that of the wisest jurists' opinions. However, if we had to come up with a name for this type of exchange, it would be that of a purchase or sale agreement; exchange or barter; loan or rent of work, labor, industry; and credit to or from another in order to hand over the money where it is needed. However, it is none of these properly and purely. First, none of the substantial things of any of these is completely or by itself included in this type of exchange [we are referring to]. Second, out of one hundred people who exchange in this way, there are not four who think they are buying or selling, lending or borrowing money, bartering, or renting work and labor from the exchanger in order to receive it someplace else. Contracts, after all, depend on the contracting parties' intention. (3)
22. If it were any of the above-mentioned [kinds of contracts], it would be that of [a contract] renting the work and industry of transferring something from one place to another from another [person]. This, however, is not so. In this case, the ownership of the thing to be transferred (4) is not passed on to the person who is to transfer it, and in this one [the new type of exchange we are referring to] it is--the ownership of the money that is to be transferred and is given to the exchanger is bestowed on him. However, it is the kind of contract that does not have a special name, which the jurisconsults call (5) innominate. It can consist of (1) giving so that you give to me, (2) giving so that you do something for me, and (3) giving so that you give and do (6) [for me]. In other cases, (1) I do so that you give or do, or (2) I do and give so that you give and do, and so forth. I give you the money here so that you give me bills of exchange or do something so that they give them to me, or you yourself give me the same amount [of money] in that other place, for which I pay you a just salary on account of your work, (7) industry, and credit, which you have already offered and now will offer again and make others offer so that I receive in that other place.
23. When contracts with a special name differ in other things from contracts without a specific name, (8) they do agree with them in that in order [for both types of contract] to be just, they also require that what is given or done by one of the parties is worth as much as what is given or done by the other party. According to Scoto's solemn rule: (9) In every contract that is properly such where one party gives to another and there is not an intention to do it for free, there must be equality between what one party gives or does and what the other gives or does. Consequently, in order for this contract to be licit, it is necessary that what is given to the exchanger for conferring a document that makes someone else give money to its holder in another place is a just salary, and he not take more than what is due. (10) In order to know which salary is just and which one is unjust for being too great or too small, one must appeal to the law, and if there is none and then to custom if there is one. If both are lacking, then to the good and prudent man's free will. (11)
24. Consequently, in the first place, unjust exchanges that are mortally evil are those where the exchanger takes more than his fair salary, even if he sells on credit to the person who does not have any money and will give it back at a later date. The more he takes for having to wait for longer periods of repayment, the worse [these exchanges] are. Also [unjust and evil] are those [exchanges] where the exchanger takes more than his fair salary if he orders that the money be given right away in that other place for where it is required, even if he is satisfied with him for having the money returned three or four months later.
[Unjust and mortally evil are] also those exchanges where, on the contrary, those who give the money a year or half a year before [do it] under agreement that the exchanger will not take a fair salary later for giving it to them over there. We see many religious and wise men making mistakes on this issue, and there is proof of such contracts. In all these cases, either the just salary is not paid, or too much is paid, or for giving or taking the money sooner or later more or less is taken from the just price. The reason they are wrong is because of the already (12) stated rule: All contracts that are unequal are unjust. This is also true because of another stated (13) rule in this commentary as well as in another: (14) All contracts where more than the highest fair price is taken in ready money, or less than the lowest fair price is taken in ready money are formally or visually usurious.
25. In the second place, there is another evil type of exchange according to everyone and especially unjust, according to Caietano. (15) It is those exchanges that we see every day carried out with kings, noblemen, dealers, and others who take money from the exchangers and give them documents so that they are paid in Rome, Lisbon, Leon, Flanders, Venice, or other places in a certain amount of time or at a certain fair. Both parties know that the person who is taking it does not have, in that other place, the money, credit, agent, nor intention to pay over there but rather here, where they take it for the price that it is worth in that other fair for which they supposedly took it. The exchanges are worse if the person who takes the money here promises to pay for the exchange in the other place, and then for a new exchange back here if the documents are not valid over there, whereupon the exchanger sends his documents over there, and they return back here notified to whom they are sent with their response that they ignore who is sending the documents, or that they do not want to fulfill their obligations. In the first type of these two exchanges a usury is paid; in the second, two usuries are paid.
26. Also [illicit] are the exchanges where someone gives money to another party who promises to pay when the fairs of Flanders or of someplace else take place at the rate of what the money is worth there. Carrying out these types of exchanges, looking for ways to deceive God, and showing unfaithfulness is forgetting or not remembering that the divine wisdom sees all our acts with our good and bad thoughts much more clearly than we ourselves. Only in one of these types of the three exchanges can the person be saved from mortal sin and the obligation to restitute. That is when the exchanger finds someone who wants to take his money for a true exchange, and, because he wants to help someone else, he does not give the money to the first person, thus depriving himself from gaining for the just exchange as much as he gains for reasons of the feigned (16) exchange. The reason being is that it is not for his own personal gain. (17)
27. It is worth noting that even if there is a statute where the documents of exchange are naturally enforceable, the documents of feigned exchanges are not, as Anania (18) said it was stated in Bononia. If instead, the exchange contained in the document were partly true and partly feigned, only the part that is real could be enforced, and the adversary would have to confess what was true regarding the document. (19)
In the third place, it is also illict if I give you one thousand ducats right now under agreement that you will have them given to me in Rome in a year's time, unchanged in their amount, for the advantage you took of them in the time you had them. It is usury on my part if for giving the payment in advance I earn the salary that I should have given you if you had had them given to me immediately. (20)
28. In the fourth place, even if Doctor Soto (21) determined in some place that nothing could be taken for this type of exchange when the bills of exchange were given in one city of the kingdom for another in the same kingdom, such as from Medina to Toledo or Seville, in another place (22) he approved and said it was allowed. Soto had two reasons. First, because of the reasons we talked about earlier that justify this contract from here to Rome, also justify the contract from here to Leon, and from here to Pamplona, Burgos, Seville, and Toledo--as long as the exchange is carried out sincerely and without fraud and as long as one takes less when there is a shorter distance and fewer dangers, work, and coastlines involved through which to pass, take, keep, and safeguard the money than when farther places are involved. Second, because the motives that determine that documents for another kingdom that are feigned usuries are illicit conclude, on the contrary, that documents that are destined to another city in this kingdom are licit if they are genuinely, without fraud or deception, given for an honest salary. (23)
Some say, however, that exchanges from one part of the kingdom to another
are banned by new prohibitions both here as well as in Portugal because these were generally carried out to cover usuries. However, we consider that they should be limited and not [be banned] if the exchanger receives before giving or having someone else give. The first reason is because it is difficult to feign usury when the exchanger receives before giving, as it is commonly done with this type of exchange. Usuries are feigned when it is the other way around and the exchanger gives first and receives later, a type of exchange that the Bononienses call dry, as was said earlier, (24) invoking Laurencio. (25)
The second reason is because this type of exchange has a law unto itself and respects the divine, canon, and civil law; and laws should not be changed unless the usefulness and goodness sought after are evident. (26) This does not seem to be the case with this prohibition. Moreover, if it were banned, students, pilgrims, and many other dealers would be bereft of a good way to transfer (almost without expenses and danger) the supplies and money from Seville and other similar cities to Salamanca, Burgos, and other parts; and from Burgos and other such cities to Seville and other far away places between which there are dangerous roads.
29. However, there is great cause to forbid the exchange within the kingdom when the exchanger gives before in order to receive more now or some other time because it is probable that many usuries would be covered with this [type of exchange]. To my weak understanding, however, there is little usefulness in this, because it does not remove from the usurers who want to go ahead with veiled exchanges the instruments to veil their profit. In fact, it gives them the opportunity to do what they did before with fear and shame and less profit for one of the kingdom's cities, now without fear and much more profit for another city outside the kingdom. It would be a much better solution to have honest judges examine the past and present exchanges and, if they were to find from the people's situations that they are veiled, punish those who did them for wherever it was, carrying out the old laws that have not been revoked by this new ban, (27) which is not contrary to them.
Another reason [why there is little usefulness in forbidding this type of exchange] is because it conceals and almost forgives past actions, which is an unjust mercy, (28) because, when past actions are concealed and future actions are banned, there is opportunity of doing what is banned, in hopes that the actions are once again concealed, and going against clement justice, which by means of punishing past actions stops evil people from [commiting] future ones. (29) However, it makes it easier to learn about the feigned exchanges because it is easier to see that this Spanish person who takes money to pay it in Flanders does not have money there, as it was possible to see that he does not have it in Seville. Although we have already seen frauds against this in Lisbon, where a gentleman who needed money did not take it himself for Medina but asked a dealer to take it for himself, promising to pay them there with the exchange. So true is what the Italian said: Fata la lege trobata la fraude. (30)
30. In the fifth place, His Majesty's past intention to prevent the disorder caused by taking an exorbitant profit for this type of exchange was a holy one, and he ordered that for the exchange from these kingdoms to Rome no more than four hundred maravedis per Chamber ducat (31) could be taken, nor from Rome to here more than four hundred twenty. Nor from these kingdoms to Naples could be taken per long ducat more than four hundred, nor for Besancon for the mark's (32) escudo (33) more than three hundred seventy-five. Nor could be taken from Besancon to here for escudo more than three hundred ninety, nor from here to Flanders for an escudo of six salaries (34) of sixty maravedis, more than three hundred seventy, nor from Flanders to here for escudo, less than seventy great ones. Nor could be taken from here to Valencia for a gold Castilian, more than three hundred eighty, nor from Valencia to here, more than five hundred ten for Castilian. Nor could be taken from here to Zaragoza for an escudo, more than another ducat over there, nor from Zaragoza to here more than four hundred. Nor could be taken from here to Barcelona but what has been given up to here, nor from here to Portugal for ducat more than three hundred seventy, which are worth over there four hundred reales, nor from Portugal to here for ducat more than three hundred eighty-five. (35)
After this moderating provision, His Royal Majesty forbade exchanges in all Spain. That is, it was forbidden from the kingdoms of Castile to those of Aragon, Cataluna, and Valencia, and even to those of Castile, (36) with some small limitations that would make the exchanges possible, and those are that the exchanger receive the money before giving it for the reasons already mentioned. (37)
Let us hope everything is carried out with as much watchfulness, integrity, and perseverance as the good intentions that have been displayed. Although I fear this will not be so, at least as far as exchanges are concerned, I hope this will be so from the kingdoms where money is worth more and there is more merchandise to these here. Those who have money there will not want to give their money before, so that they are paid less here than what it is worth in those other parts, as we have noted down below in the exchange from Flanders and Portugal to here.
(1) In cap. de plus petitionibus [Decretales 3, 3] num. 9 dicens eum esse iustum et iuris gentium.
(2) In consilium 11, de usuris [Rubrica].
(3) Quia actus agentium non operantur ultra fines eorum: lex Non omnis, ff. de rebus creditis [Digesto 12, I, 19] et. Cum super, de officio delegati [Decretales I, 19, 23].
(4) Argumentum lex 2, s. finalis, ff. locato et conducto [Digesto 19, I, 2]; Institut. De locato, per totum [Instit. 4, 65, I-35].
(5) Lex Naturalis, ff. de praescriptis [Digesto 19, 5, 5] adiuncta lex si, [Digesto 19, 5, 7] cum glossa et ei annotatis, ff. De conditione causa data [Digesto 12, 4].
(6) Iuxta doctrinam Bartholi in dicta lege Naturalis, s. sed si facio [Digesto 19, 5, 5, 4] sub finem [n. 6].
(7) Argumentum: lex Periculi, ff. de nautico foenore [Digesto 22, 2, 5], et lex Traiectitiae, ff. De actionibus et obligationibus [Digesto 44, 7, 23] lex Qui Romae, s. I, ff. De verborum obligationibus [Digesto 45, I, 122, I].
(8) Iuxta notata in lege Si pecuniam, cum glossa verbi Poenitere, ff. De conditione causa data [Digesto 13, 4, 5], et lex Ex placito, C. De rerum permutatione [Cod. 4, 64, 3].
(9) In 4 [librum sententiarum], dist. 15 quaest. 2, art. 2 [fol. 95] quod probatur 5 Ethica [4, 10 ss.: Didot II, 57], et per scripta Thomae Secunda secundae [summae], quaest. 58, art. 6 et quaest. 59, art. 2.
(10) Salicetus, In authentico, Ad haec, quaest. II, De usuris [Rubrica].
(11) Argumentum: c. I, de constitutionibus [Decreto I, I, I], et c. consuetudo [Decreto Ij, I, 5] et dicta lex I, ff. de iure deliberandi [Digesto 28, 8, I], et c. De causis, de officio [et potestate iudicis] delegati [Decretales I, 29, 4].
(12) In commentario c. I, 14 quaest. 3 [Decreto II, 14, 3, I], num. 26 [p. 15-16], et supra eodem, num. 14 [II].
(13) Supra eodem, n. 14 [60-61].
(14) C. I, 14, quaest. 3 [Decreto II, 14, 3, I], num. 4  cum hoc retro excuso, et tent Thomas, Secunda secundae [summae], quaest. 78, art. 2.
(15) In tractatu De cambiis, cap. I . Quod omnium soptime resolvit Sylvester, verbo usura 4, quaest. 9, et cambium siccum secundum omnes.
(16) Caietanus in tractatu De cambiis, cap. I .
(17) Quod licere, infra eodem dicemus num. 34 [74-75].
(18) In praesenti [Decretales 5, 19, 10], no. 46, De usuris [Rubrica].
(19) Quod late deducit Laurentius in dicto capite Consuluit [Decretales 5, 19, 10], 2 parte, quaest., 135.
(20) Per dicta supra num. 14 et 24 [60s. et 69].
(21) Lib. 7, quaest. 3, art. 2, sub finem, De iustitia et iure [lib. 6, quaest. 10 art. 2, 589].
(22) In eodem libro 7, quaest. 6, art. I [lib. 6 quaest. 3, art. I, 60].
(23) Add. R.: Argumentum c. tua [Decretales 4, I, 26] et c. is qui [Decretales 4, I, 30].
(24) Supra eodem n. 10 [56 s].
(25) In c. consuluit [Decretales 5, 19, 10], 3 parte, quaest. I.
(26) Lex 2, ff. de constitutionibus principum [Digesto I, 4, 2], Thomas, Prima secundae [summae], quaest. 97, art. I.
(27) Argumentum: Lex Praecipimus, C. de appellationibus [Cod. 7, 72, 32], et c. I, de constitutionibus lib. 6.
(28) Canon: Est iniusta misericordia, in principio; et in fine ibi: facilitas enim veniae, incentivum tribuit delinqueni [Decreto II, 23, 4, 33].
(29) C. Factae, 4 dist. Facit [Decreto I, 4, I]; c. Non putes, cum multis sequentibus, 23, quaest. 5 [Decreto 2, 23, 5, 36 ss.].
(30) Contra legem Non dubium, C. de legibus [Cod. I, 14, 5], et c. Certum, de regulis iuris lib. 6.
(31) Ducado de Camara: The papal ducat, gold coin that weighed and was worth what the venetian ducat minted by the Apostolic Chamber, from whence its name.
(32) Weighing measure for coins. In Castille it weighed 230, 0465 grams for silver. It was divided into eight ounces; for gold into fifty Castilians. The mark from the Casa de Moneda was used to weigh officially minted coins.
(33) Generic name given in the Middle and Modern Ages to diverse gold and silver coins, with a shield on one of its faces. Also Castilian gold coin introduced in 1535 as a consequence of the casting of coins for the Tunez army. It was equivalent to 10.68 gold pesetas.
(34) Created by Charlemagne as a counting unit. The salary for the people from Burgos consisted of twelve vellum money notes carved in Burgos.
(35) Add. R.: Addo nunc quarto esse necessariumj, ut locus in quo est solvenda pecunias longe distet a loco in quo dentur litterae. Alioqui enim esset cambium de tempore ad tempus, quod non licet, et non de loco ad locum, quod licet, ut ex eodem commentario num. 67 colligitur, et satis probatur praedicta extravagante.
(36) Add. R.: Lex bona memoria Caroli V qui praescripsit pretium moderatum quo campsores suorum Regnorum cambirent.
(37) Supra eodem commentario, no. 18 [64 s.].
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|Title Annotation:||Commentary on the Resolution of Money|
|Publication:||Journal of Markets & Morality|
|Date:||Mar 22, 2004|
|Previous Article:||6 Exchange for small coinage.|
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