[FOUNTAIN]Historical pound of flesh"If your friend Bassanio fails to repay the loan in three months, you must forfeit a pound of your flesh to me," said Shylock, a money-obsessed usurer, to his opposite, the generous, faithful Antonio, who was acting as a guarantor for his close friend. The well-known speech is in the play, "The Merchant of Venice," written by William Shakespeare sometime between 1596 and 1598. In the play, the greedy moneylender was depicted as an incarnation of mercantile villainy.
How much interest did the usurer charge? According to "The Cash Nexus: Money and Power in the Modern World," written by the historian Niall Ferguson, professor of political and financial history at Oxford University, the level of interest rates varied between 6.75 and 9.62 percent per year in 16th century Venice. That of Genoa hovered between 1.88 and 4.38 percent per year.
Past and present, east and west, usury, or loans at vicious rates of interest, is a final but risky resort of the poor Bassanios who need money immediately. But there is no guideline that teaches us how much interest is "vicious." The trigger level of interest rates has varied from time to time based on the demand for private loans. Shylock charged 10 percent interest for his money more than four 400 years ago, but we can easily find greedier Shylocks in Korea a hundred years ago. In 1898, Gojong, the second-last king of the Joseon Dynasty, issued a regulation that the legal rate of interest for small loans should be capped at 5 percent per month, or 60 percent per year, to protect his subjects from usury.
The Ministry of Finance and Economy said recently that interest rates would be capped at 66 percent. It might be a coincidence that the legal rate is similar to that of the Gojong era a hundred years ago, the twilight years of the dynasty. Of course a 66 percent cap will not suffice to quell the bad effects of usury. About 7 in 10 consumers seeking cash from private lenders were still charged more than 100 percent annual interest as of May, according to the Financial Supervisory Service. Legal rate caps bow to demand, but they still serve a purpose.
In Shakespeare's play, Portia, a wealthy heiress and the lover of Bassanio, saved Antonio's life in the name of justice. Disguised as a lawyer, she agreed at a trial to the extraction of a pound of flesh, demanding that it be exactly one pound, no more or less, and without a drop of blood being shed.
Law is the last man-made hope of salvation. I hope the 66 percent cap will help contemporary Korean Bassanios and Antonios.
The writer is an editorial writer of the JoongAng Ilbo.
by Sohn Byoung-soo