The magistrate and the rate: five per cent and the Zurich credit market

Five per cent as the just rate

The practical expression of the moderate doctrine was a maximum rate. The figure of 5 per cent had been customary for long-term credit since the fifteenth century. The Historical Dictionary’s article on the capital market states that the Reformers regarded the 5 per cent usual from the fifteenth century for long-term credit as a just rate of interest. The same article notes that in the early modern period the authorities often determined the rate.¹ The article on interest is more specific: when the Confederate authorities took over supervision of the market in Gülten in the sixteenth century, they prohibited rents in kind and fixed the rate for money rents at 5 per cent in order to protect borrowers.² The article on usury confirms that, in order to protect debtors, rates for money interest, particularly for land rents, were set at 5 per cent.³

The prohibition of rents in kind deserves emphasis. A rent payable in grain or wine shifted the risk of price fluctuations onto the debtor in years of scarcity, when grain prices rose and the value of the rent in money multiplied. By converting rents into money and capping the money rate, the authorities gave the debtor predictability and protected him against the most oppressive consequences of bad harvests. At the same time, the fixed rate provided creditors, among them the city’s own foundations and offices, with a stable and legally secure return. The 5 per cent cap was thus both a measure of social protection and a guarantee of the credit market’s legitimacy.

The Historical Dictionary also records the limits of the policy. From the seventeenth century, as capital accumulated and entrepreneurial funds flowed into the Gülten market, market rates fell to 3 per cent or lower. Mandates of the authorities insisting on 5 per cent proved ineffective.⁴ This later development, which belongs to Part C, shows that the 5 per cent rate functioned as a ceiling in the sixteenth century and became something closer to a conventional reference point once capital was abundant. It also shows that Zurich’s moral economy of credit framed the market while leaving room for its movement.

The persistence of the figure is remarkable. After 1800 the cantons at first maintained the old rules against usury and the maximum of 5 per cent for interest rates. The Historical Dictionary adds that Switzerland retained historical maximums of 5 per cent for Gülten and 6 per cent for commercial credit.⁵ Even today, the Swiss Code of Obligations fixes at 5 per cent both the rate of contractual interest in the absence of agreement and the rate of default interest.⁶ The figure that Zwingli’s and Bullinger’s contemporaries regarded as just survives in the statutory default rate of the Swiss law of obligations.

Bullinger before the council: usury as a public question

Bullinger did not leave the regulation of interest to abstract teaching. Among his formal addresses to the Zurich councils, the so-called Fürträge, are texts that raise the problem of usury as a socio-economic issue, in 1534 and again in 1558. They were edited in 2006 by Hans Ulrich Bächtold, Ruth Jörg and Christian Moser in a volume of twenty-six writings entitled Schriften zum Tage. The volume also contains addresses on poverty and begging (1558 and 1572), on the implementation and extension of the morals mandates (1560 and 1566) and on the foundation of Latin and German schools (1537 and 1556).⁷ The standard study of this activity remains Bächtold’s monograph Heinrich Bullinger vor dem Rat, which examines the shaping and administration of the Zurich state between 1531 and 1575 through Bullinger’s interventions.⁸

The chronology is significant. The first address on usury came in 1534, only two years after Bullinger had taken office in the difficult aftermath of Kappel, when the church’s standing with the council and the countryside was still fragile. That Bullinger chose usury as one of the subjects of his early interventions shows that he regarded the credit relations of the rural population as a pastoral question of the first rank. The second address, in 1558, fell into a period of rising prices and population pressure across Europe, in which the burden of debt on the rural poor and the practices of speculative traders in grain and credit again became acute. In the same year Bullinger addressed the council on poverty and begging.⁹

The form of these interventions is as important as their content. A Fürtrag was a formal address in which the leading minister, often accompanied by colleagues, laid before the council the concerns of the church. It was an institutionalised channel of consultation between church and state, distinct from the sermon and the private letter. The council was free to act or not, but it received the ministers’ admonitions as part of its deliberations. In the field of credit, the result was a characteristic Zurich pattern in which the church defined the moral limits, the council translated them into mandates and rates and the courts enforced the mandates. The separation of roles corresponds exactly to Zwingli’s two righteousnesses: the preacher speaks for divine righteousness and calls to conscience, the magistrate administers human righteousness and sets enforceable rules.

This pattern of consultation between moral authority and public regulator, with a strong preference for rules that are moderate, stable and administrable, is one of the deepest continuities in Zurich’s financial history. It anticipates, in the language of the sixteenth century, the modern relationship between self-regulating professional bodies, supervisory authorities and legislators, in which ethical expectations are formulated in dialogue and then transformed into binding norms.

The state as creditor

The Reformation transformed the structure of the credit market in Zurich by bringing large portfolios of rents into public hands. With the Reformation, all monasteries and foundations on Zurich territory except the Grossmünster were dissolved, while the ecclesiastical rights of the Bishop of Constance in the Zurich territory passed to the council. The local church properties remained with the parishes to pay pastors’ salaries and fund schools and poor relief.¹⁰ The monasteries had been among the largest holders of Gülten and tithes. Their revenues, administered by new public offices, financed poor relief, schools and the church (see Chapter B.II). The city thereby became one of the largest creditors in its own territory.

This development had two consequences for the ethics of interest. On the one hand, the state now had a direct interest in the enforcement of rent obligations, which reinforced the Zwinglian insistence that debts be paid. On the other hand, the state as creditor was bound by the same moral limits it imposed on private creditors: it could not credibly demand moderation from others while exploiting its own debtors. The 5 per cent ceiling, applied to public and private rents alike, served both purposes. More broadly, the Historical Dictionary observes that the Swiss cantons moved in the sixteenth and seventeenth centuries into a creditor position on the capital market.¹¹ The Reformed cities, the Historical Dictionary adds, developed credit systems without the canonical restrictions, while Catholic cities pragmatically circumvented the prohibition through state treasuries and exchange offices.¹²

Zurich’s transformation from a debtor to a creditor state began with the purchase of lordships in the late Middle Ages (see Part A) and was consolidated through the absorption of ecclesiastical wealth in the Reformation. It laid the foundations for the investment activities of the eighteenth century, when the state’s surplus funds would be invested abroad through a public body that later became the bank Leu & Co. (see Part C).¹³ The moral tradition that restrained interest and the fiscal practice that accumulated public capital grew up together.

Notes

1. Altorfer and Mazbouri, “Kapitalmarkt”, HLS (as cited above). ↩
2. Dubler, “Zinsen”, HLS (as cited above), section “Zinssätze”. ↩
3. Gilomen and Dubler, “Usura”, DSS (as cited above): “Per tutelare i debitori, i tassi per gli interessi in denaro, spec. per le rendite fondiarie, vennero fissati al 5%.” ↩
4. Dubler, “Zinsen”, HLS (as cited above), section “Zinssätze”. ↩
5. Gilomen and Dubler, “Usura”, DSS (as cited above); Dubler, “Zinsen”, HLS (as cited above), section “Zinssätze”. ↩
6. Dubler, “Zinsen”, HLS (as cited above), referring to Articles 73 and 104 of the Code of Obligations. ↩
7. Daniel Timmerman, review of Heinrich Bullinger, Schriften zum Tage, ed. Hans Ulrich Bächtold, Ruth Jörg and Christian Moser (Studien und Texte zur Bullingerzeit 3), Zug: Achius, 2006, in Theologische Literaturzeitung 133 (2008), no. 5, http://www.thlz.com/artikel/8914/?inhalt=heft%3D2008%23r231. ↩
8. Hans Ulrich Bächtold, Heinrich Bullinger vor dem Rat. Zur Gestaltung und Verwaltung des Zürcher Staatswesens in den Jahren 1531 bis 1575 (Zürcher Beiträge zur Reformationsgeschichte 12), Bern: Peter Lang, 1982; bibliographic data as listed in the publication list of Hans Ulrich Bächtold, Institut für Schweizerische Reformationsgeschichte, University of Zurich, https://www.uzh.ch/cmsssl/irg/dam/jcr:196fae8d-2678-4ed8-b9ee-0af09395b11f/Hans%20Ulrich%20B%C3%A4chtold.pdf. ↩
9. Timmerman, review of Schriften zum Tage (as cited above). ↩
10. Meinrad Suter, section “Reformation und Staatskirche”, in “Zürich (Kanton)”, HLS, version of 24 August 2017, https://hls-dhs-dss.ch/de/articles/007381/2017-08-24/. ↩
11. Altorfer and Mazbouri, “Kapitalmarkt”, HLS (as cited above). ↩
12. Dubler, “Zinsen”, HLS (as cited above). ↩
13. The Zinskommission established by the Zurich authorities in 1755 to invest public funds, later known as Leu & Co., is treated in Part C of this volume. On the foundation in 1755 as a state bank of the city state of Zurich, named after its first president, Burgomaster Johann Jacob Leu, see Finanzmuseum (Zurich), blog series on the transatlantic slave trade, part 3, https://www.finanzmuseum.ch/en/home/blog/transatlantic-slavetrade-part3.html. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of September 2025.