Already, Henry de Bracton knew the mutuum and depositum (bailment) contracts and described them as part of English law:
“An obligation is contracted by a thing, as by the giving of a mutuum, a loan for consumption, which consists of things reckoned by weight, number or measure. By weight, as in things which are weighed, copper, silver or gold; in number, as in coined money; in measure, as in wine, oil or grain. Such things, [ascertained] by weighing, counting or measuring, are given so that they at once become the property of those who take them, for that is properly termed a mutuum which, being meum becomes tuum [that is, “my property becomes yours” – LK], and whenever not the very things but others of the same kind are returned to the creditor, or their value if they are consumed or lost by fire, earthquake or shipwreck, or stolen or carried away by thieves or enemies. He to whom a thing is given for use is also bound by the thing lent him. But there is a great difference between a loan for consumption and a loan for use, for he who has taken a loan for use is bound to restore the very thing, and, [though] he is not excused if he shows as much care in its safekeeping as he ordinarily bestows on his own goods if another could have safeguarded the thing with greater care, is not held liable for force majeure or accidents unless there has been culpa, as where he takes on a journey a thing lent him for use at home and loses it in an attack of enemies or thieves or by shipwreck; he is then clearly liable. A thing lent for use is said to be given ad commodum, as an accommodation, and is properly understood to be lent when it is given without recompense. For a loan for use ought to be gratuitous and if payment is involved the transaction ought rather to be called a letting and hiring than a loan. He with whom a thing is deposited is [also] bound re and held to the restoration of the very object he accepted, [or its value if it is lost and] he has committed some wrongful act. For culpa, that is, carelessness or negligence, he is not liable, for he who entrusts a thing to the care of a negligent friend can only blame himself and his own lack of caution.” (Bracton 1968: 284).The fundamental elements of the mutuum contract here go right back to ancient Roman law, and the mutuum contract is the basis of both money loans and banking.
Nor did Bracton introduce these concepts into English law: they were already known by Ranulf de Glanvill in his Tractatus de Legibus et Consuetudinibus Regni Angliae (c. 1188) and described in language and ideas taken from Roman law:
“Debt* may arise either upon a Lending [mutuum], or a Sale [venditio], or a Borrowing [commodatum], or a Letting out [locatio], or a Deposit [depositum], or from some other just cause inducing a Debt.Both mutuum and depositum (bailment), then, were known and well defined in English law from the 12th and 13th centuries. Mutuum was already described as the basis of money loans even in the 13th century, despite Rothbardian myths about English law.
A Debt of the first description arises, when one person entrusts another with any such thing as consists in Number, or Weight, or Measure. When one person so entrusts another, if he should receive back more than he lent, he commits Usury;” (Glanville 1900: 199–200).
* Glanvill seems to be using the word “debt” here in a broader legal sense of “obligation,” not just its narrow sense – LK.
Through the following centuries mutuum was known and described in the same terms as Bracton in English and Scottish law (which was influenced by English and civil law).
For example, about four hundred years later in the legal treatise The Institutions of the Law of Scotland, the Scottish lawyer James Dalrymple (Viscount of Stair) describes the mutuum as follows:
Loan, or Mutuum & Commodatum ….
“Having thus treated of Contracts in general in the preceeding Title, we come now to particular Contracts, according to the order proposed. Loan comprehendeth both the Contracts in the Law called Mutuum and Commodatum, by the former, a thing Fungible is freely given, for the like to be restored in the same kind and quantity, though not the same individual. A Fungible is that which is estimate according to the quantity and is not easily decernable nor noticed in the individual or particular body, but only in the like quantity of the same kind, the chief of which is Money, where ordinarily the extrinsick value and common rate is regarded, without respect to the matter, and so what is borrowed in Gold may be payed in Silver, according to the common rate of the place, unless it be otherways contracted: such also are Wine, Oyl and Grain, wherein the quantity is ever respected in the same kind, as in the loan of Wines, payment must be had, not only by the Wine of the same Countrey, but if there be any difference by the Wine of the same place of the Countrey, and so of all the rest, for it is never accompted a quantity, where there can be other differences remarked. These Fungibles have no fruit or use, if they be retained, and therefore, the end of the Contract, and purpose of the Contracter is, that the property thereof shall pass to the Borrower from the Lender, and may be by him alienat, and thence is its name, for Mutuum est quasi de meo tuum, l, 2 ff. de rebus creditis: Salmasius alone denys this, holding that the intent of this Contract, non est transferre dominium, but to give the use, & that the alienation falls of accident, because Law makes no difference of quantities of the same kind, so that if Money be found, Restitution may be made Without any Contract, though not in the same Money, but in the like, wherein there is no consent, and so can be no alienation.
2. Yet the common opinion holds, that the purpose of the Contracters is to alienat, because they know without it there can be no use: And if a Fungible be not lent to that purpose, but only to be detained, as in some cases it may, as Mony to make a show with, to appear rich, or to make a simulat Consignation, there the Borrower without injury, could not alienate, neither is there Mutuum in that case, but Commodatum … .” (Dalrymple 1693: 102–103).
Bracton, Henry de. 1968. Bracton on the Laws and Customs of England (vol. 2; trans. Samuel E. Thorne). Belknap Press, Cambridge, Mass.
Dalrymple, James [James, Viscount of Stair]. 1693. The Institutions of the Law of Scotland, Deduced from its Originals, and Collated with the Civil, Canon, and Feudal Laws, and with the Customs of Neighboring Nations. In IV. Books (rev. and corr. 2nd edn.). Heir of Andrew Anderson, Edinburgh.
Glanville, Ranulf de. 1900. A Translation of Glanville (trans. John Beames). J. Byrne & Co., Washington, D.C.