Tony K. Moore

Cambium non est mutuum: exchange and interest rates in medieval Europe

A major gap in our understanding of the medieval economy concerns interest rates, especially relating to commercial credit. Although direct evidence about interest rates is scattered and anecdotal, there is much more surviving information about exchange rates. Since both contemporaries and historians have suggested that exchange and rechange transactions could be used to disguise the charging of interest in order to circumvent the usury prohibition, it should be possible to back out implied interest rates from exchange rates. The analysis presented in this article is based on a new dataset of medieval exchange rates collected from commercial correspondence in the archive of Francesco di Marco Datini of Prato, c. 1383–1411. It demonstrates that the time value of money was consistently incorporated into market exchange rates. Moreover, these implicit interest rates are broadly comparable to those received from other types of commercial loan and investment. Although on average profitable, the return on any individual exchange and rechange transaction did involve a degree of uncertainty that may have justified their non-usurious nature. However, there were also practical reasons why medieval merchants may have used foreign exchange transactions as a means of extending credit.

Digitising the Middle Ages: The experience of the ‘Lands of the Normans’ project

A year-long project to investigate the use of digital technologies in prosopographical research resulted in the creation of intermediary objects (called ‘factoids’) within the database to model the multiple relationships possible among elite medieval landholders. These factoids facilitated a modular approach to database development, whereas a Virtual Research Environment (VRE) allowed flexible and speedy data entry. GIS provided a mapping function via Web Map Services.

Did Purchasing Power Parity Hold in Medieval Europe

This paper employs a unique, hand-collected dataset of exchange rates for five major currencies (the lira of Barcelona, the pound sterling of England, the pond groot of Flanders, the florin of Florence and the livre tournois of France) to consider whether the law of one price and purchasing power parity held in Europe during the late fourteenth and early fifteenth centuries. Using single series and panel unit root and stationarity tests on ten real exchange rates between 1383 and 1411, we show that the parity relationship held for the pound sterling and some of the Florentine florin series individually and for almost all of the groups that we investigate. Our findings add to the weight of evidence that trading and arbitrage activities stopped currencies deviating permanently from fair values and that the medieval financial markets were well functioning. This supports the results reported in other recent studies which indicate that many elements of modern economic theories can be traced back over 700 years in Europe.

The ‘Buying and Selling of Money for Time’: Foreign Exchange and Interest Rates in Medieval Europe

This paper will show how the relatively voluminous surviving records about exchange rates in the middle ages can help to illuminate the much murkier question of medieval interest rates. We will first explain how the medieval FX market operated and its links to the money market. Next, we will set out the sources of our data on medieval exchange rates, the methodology for calculating interest rates from these exchange rates and provide our results for some key financial centres. These will be used to answer two fundamental questions: first, did the relationship between exchange rates include an element of interest and could FX transactions therefore be used to circumvent the usury prohibition? Second, what were the levels of interest charged on commercial loans in the Middle Ages and how did these compare to rates on government debt and consumer credit? We will also explore some distinctive seasonal patterns in these interest rates at different financial centres and show how these relate to wider trade flows. Finally, we will consider the significance of our findings for the current debate over whether there was a long-term halving of the risk-free interest rate after c.1350.