Perugia friars split loan from upkeep to dodge usury

Canon law forbade any return on a loan as sinful usury, so the only Christian-approved way to lend to the poor was completely free of charge. In practice, Jewish moneylenders operating under civil license filled the resulting credit gap for the urban poor, commonly charging 25–40% annual interest in the early sixteenth century -- rates Observant Franciscan preachers campaigned against, without offering a workable alternative.

Existing charity loan funds that tried to lend entirely gratis kept failing: running costs, spoiled or stolen pledges, and unrecovered loans steadily consumed the principal until the fund had nothing left to lend. Several Monti di Pietà, even in cities as large as Bologna and Genoa, collapsed this way in their early years and had to be refounded -- so a charity bound to zero price could not stay open long enough to keep serving the poor it was meant to protect.

The Monte di Pietà founded at Perugia in 1462, and the movement of Franciscan-backed pawn-loan charities that followed it across Italy, resolved the deadlock with a distinction rather than an exception: the loan itself remained free -- 'the community or Monte has nothing save the bare principal, lent out of charity' -- but borrowers paid a modest fee tied to the size and duration of the loan, justified explicitly as covering the concrete costs of running the operation: rent for the premises, paper and ink for record-keeping, and above all the labour and risk of storing and guarding the pledged