Foolish ‘nice’ and Sub-prime Monarchs!

I would be very happy if you said after reading this article that it is a ‘nice’ article as it would mean a compliment. But if I wrote some article few centuries ago and you said it’s a ‘nice’ article, it would be not be compliment; it would be an insult to me! Why?

Well few centuries ago, ‘nice’ did not mean ‘nice’ or good but it meant ‘foolish’ or ‘ignorant’! Surprised. Don’t be. Look carefully at the word ‘nice’. The word comes from Latin word nescius. Travelling through the old French nescius reached English and ended up as nice. Nescius is derived from nescre which means to be ignorant. In root of nescius is scire that means ‘to know’ and gives us so many words related to knowledge such as science, omniscient (all knowing), conscience, conscious and prescient. However, over centuries the meaning and the form of nescience has changed from foolish or ignorant to nice. But nescient is still usable adjective which means ignorant. Isn’t this a ‘nice’ story about journey of word ‘nice’? Bye the way there is also a nice town called Nice in southeast France! Let’s move from Nice to Venice and Florence in Italy the hotbed of commerce and banking in middle ages.

Venicians and Florentians contributed a lot to modern banking development. The word bank comes from banca meaning a bench on which the money lenders and exchangers sat and did the lending, borrowing and guaranteeing payments for facilitating trade. However, if a banker incurred losses and was unable to honour the agreements, he would be taken out of the business and his bank (bench) would be literally broken. Latin word rupta means broken. Combine bench+rupta and you get bankrupt that we use today to describe a business enterprise or individuals who have more to pay than what they own.

Everyone reading this, I am sure by now knows that some American and European banks collapsed in 2007-08 after their borrowers, particularly the US house-owners failed to pay their housing loan instalments. These banks went bankrupt or were taken over by the governments with tax payers’ money. In this case the cause of bankruptcy of some of the banks was poor business judgement and or greed to make quick money. But in the middle ages (roughly 5th century to 16th century AD) the biggest risk of bankruptcy for European banks came from the kings and the queens. The monarchs used to borrow very heavily from banks to finance the innumerable wars which went on. Some monarchs paid as high as 45% interest rate. However, if the monarchs could not return the loan, the bankers could not do much, they simply went bankrupt. Lending to monarchs was as big a gamble (or unavoidable risk if they were forced to lend) by those middle ages’ banks as some of the contemporary banks took by lending to poor quality borrowers in the US housing markets. Many monarchs of middle ages in Europe and the humble households of the present day US thus share a poor creditworthiness, an equality not very welcome. Sub-prime loans are not new!