The Catalan Principle: A Forgotten Standard for Financial Crimes

Medieval Catalonia—a principality within the Crown of Aragon, governed by its own Cortes and its own body of law—developed one of Europe’s most exacting systems for regulating bankers. This severe and unforgiving regime was born not of vengeance, but of a sober understanding of where real civic danger, and indeed real violence, actually lay. The legislators knew that a banker held the community’s life in his hands. A single failure of trust could ruin families, wipe out savings, and collapse the economic life of a city, indeed, a region. They therefore placed the full burden of responsibility on the man seated at the banker’s bench—the banca, the literal table or counter from which he conducted his trade and at which depositors entrusted him with their funds (the same bench that, when broken, gave us the word bankrupt).

Beginning in 1300, a banker was personally liable for every entry in his sworn journal, his entire estate pledged to his depositors. Should he fail, he was immediately proclaimed bankrupt and disgraced, then confined on bread and water until he made every injured party whole. In 1321, the Cortes went further: a banker who failed to repay his depositors—within one year for past failures, or immediately thereafter—was to be proclaimed bankrupt throughout Catalonia, beheaded, and his property liquidated for restitution. Most strikingly, the law added:

The sovereign may not pardon him unless his creditors have been fully satisfied.

No royal favoritism.

No political clemency.

No early counterpart to the corrupt presidential or gubernatorial pardons used to absolve wealthy offenders in the present era for their financial and other crimes.

This was not theoretical. In 1360, the banker Francesch Castello was beheaded in front of his own bench—the very table at which he had accepted deposits—after failing to repay those whose savings he held in trust. The medieval world understood that economic destruction is a form of violence, and that the most consequential harms are often inflicted by those with power, not by those without it.

Which brings us to idea voiced recently by billionaire Joe Lonsdale for a return to public hangings as a display of “masculine leadership.” His proposed spectacle targets the familiar objects of elite contempt: the poor, the desperate, the socially marginal. Crime, in his imagination, flows upward from the street, not downward from the boardroom.

But consider what a medieval-style code would demand today. If we applied the Catalan principle—that those who hold the wealth of others in trust bear the highest responsibility—we would direct our harshest penalties not at the powerless, but at:

executives who obliterate pensions through financial engineering,

bank officers whose decisions wipe out depositors,

corporate officers whose malfeasances and misfeasances devastate multitudes, in some instances, entire communities,

institutional leaders who destroy livelihoods while shielding their officers through legal artifice.

Would Lonsdale applaud that as “masculine leadership”? Or is his appetite for the gallows limited to those who possess nothing worth stealing?

The Catalan legislators understood something our own era too often obscures: the powerful commit the greatest harms, and justice serves the common good only when it restrains them first.

What Lonsdale demands is not justice but hierarchy—punishment downward, indulgence upward. The medieval world, in this case, was the more virtuous, the more honest. It placed the noose (or lowered the axe, as the case may be) where the damage was greatest: at the bench of the wealthy who had destroyed the lives of others, and it did not permit them to purchase their way out of accountability.

Source: Usher, A. Payson. (1943). The early history of deposit banking in Mediterranean Europe. Cambridge, Mass.: Harvard university press, 239-242.