Debts Get Paid

At the Palermo fruit market that Gambetta studied, credit was given as a matter of course. The commission agents let buyers have goods for a week or a month, without papers, on their word. That suits small shopkeepers: nothing to sign, nothing to fill in. The agents insisted they only gave credit to people they trusted, and even so, nobody lent a single client more than a million and a half lire a day.

Trust, but not beyond a million and a half.

And if you don’t pay? Gambetta answers almost like a bookkeeper. If the sum is small, the debtor hardly ever has to fear for his life: nobody kills over small money. But the defaulter is cast out. Within a few days every seller in the market knows he owes, and from then on he buys only for cash.

Big debts are another matter. One of Gambetta’s informants told him what had happened in piazza Scaffa. Several million lire had been owed there, and a debt that size, as he put it, blows such a hole in your budget that it’s easy to see why they were shot; nobody likes being disrespected. On the night of 18 October 1984, in the courtyard of the slaughterhouse in piazza Scaffa in Palermo, eight men connected with the horse trade were killed. Possibly, Gambetta writes, they were killed over an unpaid debt. Possibly—he stresses the word. So do I.

The Scale of Punishments

Look at that scale. A small debt, and you lose your credit. A big one, and you lose your life. Wherever there’s lending, there has to be some way of punishing those who don’t pay back. Otherwise people stop lending.

The legitimate world has travelled the whole of that road. Two and a half thousand years ago in Athens, a man who didn’t repay a debt could become his creditor’s slave. The poorest farmers handed a sixth of their harvest to the moneylenders. Solon, with his reform, cancelled debts, freed those who had been sold into slavery for debt and banned pledging your own freedom as security. The city was shaken. But there was no other way: a city can’t live when half its citizens are in debt bondage to the other half.

More than two thousand years went by, and in London debtors were still being locked up. In February 1824 John Dickens went into the Marshalsea debtors’ prison: he owed a baker forty-odd pounds. His twelve-year-old son Charles had to go to work in a blacking factory, sticking labels on pots. The father was let out three months later, but the son never forgot it as long as he lived, and later described the debtors’ prison in his novels. England finally stopped jailing people for debt only in 1869.

Today the defaulter doesn’t lose his freedom; he loses his credit history. It’s the same Palermo market, only a computer does the counting: within a few days every bank knows you owe, and you buy for cash. For big debts there’s bankruptcy: a court divides what’s left among the creditors, and the debtor can start again. It’s more humane than shooting people in a slaughterhouse yard. And, above all, it works better: the creditor gets at least something, and the debtor stays a worker rather than a corpse.

You can’t collect from a corpse, as everyone knows.

Who Bought the Better Protection

A debt has another side, too. Who will make the debtor pay?

Here are two cases from Gambetta. A certain Felice Bruno borrowed ten million lire from an acquaintance and was in no hurry to give it back. So the acquaintance came to see him on behalf of Don Pietrino, the underboss of one of the Palermo families. Whether Bruno paid, Gambetta drily leaves it to the reader to decide.

And in 1969 a man hastily lent a large sum to three borrowers whose main asset was their connection with the Agrigento Mafia. When he asked for the money back, he was kidnapped at Palermo airport, held for a few hours and invited to reflect on his situation. He came out fully convinced that it would be better to accept the mediation of the local boss. They came to terms, and the lender got his money back. Not all of it.

See? Making someone pay a debt is a service, and it gets bought. If the creditor bought the better protection, the debtor pays. If the debtor bought better, the creditor pays—only now it’s for the chance to get back at least part. That’s exactly what courts are for: so that the outcome doesn’t depend on whose friends are scarier. And when the courts drag their feet, people go to whoever is quicker—and pay for the speed with justice.

Competition Softens Things

And one more observation of Gambetta’s. I like it best of all. Once upon a time, in Sicilian markets, credit was in the hands of the “man of respect”, and a peasant who had borrowed from him was obliged to sell his harvest to him alone. Then rural savings banks got going, and there was somewhere else to borrow. And then, Gambetta writes, lenders began to resort less often to violence against debtors who couldn’t pay—so as not to lose clients, who would go off to gentler competitors.

One lender can afford to be cruel. Many lenders, and the cruel one loses his clients. I know no better argument for competition between banks.

The Dearest Loan

Now about you. The dearest loan there is, is the debt you didn’t repay. Not because the interest runs up on it, although that too. But because it costs you your reputation, and reputation is the only collateral you always carry with you.

Once two restaurants were a month late paying Don Vincenzo. The owner of the first came to the Don himself, before the due date, sat down and told him what had happened: the head chef had died, and the restaurant had been shut for two weeks. He asked for another month. The Don gave him two and took no surcharge. The owner of the second stopped answering the phone and hid from the driver. When he did pay a month later, the Don took the money and never gave him credit again. Not for a single day.

Both paid the same. But one kept his credit and the other didn’t. “He gave the money back,” the Don said to me about the second one. “What he lost, he’ll never get back.”