The Economy During the Enlightenment

By Phineas Upham

The Enlightenment occurred just before the Industrial Revolution, which meant that activity in Europe was experiencing a fairly steady incline. This period was when the House of Rothschild and the Barring Brothers represented the largest usurers. This was a time when railroads and factories were being built, laying the groundwork for modern infrastructure. An incredible amount of money was set to change hands, and momentous structures were being built.


Usury was recognized as important, as it had been all throughout the Middle Agesand Renaissance, but attitudes concerning usury had not changed much. Usury was still viewed as morally reprehensible, with the rich taking advantage of the poor through loans.

Three important thinkers helped to argue in favor of lenders: Claudius Salmasius, Robert Jacques Turgot and Jeremy Bentham. Salmasius was one of the first thinkers to advance the idea that competitive usury could be beneficial. He argued that more money lenders would breed competition for lower interest rates and artificially regulate the costs of borrowing money. Salmasius is part of the reason why Holland is so tolerant of usury today.

Turgot was the first to argue for money as a property right, something earned and owned and disposed of as the owner saw fit. Turgot also correctly identified inflation, recognizing that each passing year changed the value of money in real terms.

Bentham was the first to argue for higher interest rates, correctly pointing out that higher interest helped insulate a lender from the risks of lending to less-than perfect credit borrowers. Bentham also argued for contractual freedom, a critical linchpin in modern economic thinking and money lending.

About the Author: Phineas Upham is an investor at a family office/ hedgefund, where he focuses on special situation illiquid investing. Before this position, Phin Upham was working at Morgan Stanley in the Media and Telecom group. You may contact Phin on his Phineas Upham website or Facebook page.