of law courts in resolving financial disputes without recourse to violence; but above all the vulnerability of minority creditors to a backlash by hostile debtors who belong to the ethnic majority. For in the end, of course, Shylock is thwarted. Although the court recognizes his right to insist on his bond - to claim his pound of flesh - the law also prohibits him from shedding Antonio's blood. And, because he is an alien, the law requires the loss of his goods and life for plotting the death of a Christian. He escapes only by submitting to baptism. Everyone lives happily ever after - except Shylock.
The Merchant of Venice raises profound questions about economics as well as anti-Semitism. Why don't debtors always default on their creditors - especially when the creditors belong to unpopular ethnic minorities? Why don't the Shylocks always lose out?
Loan sharks, like the poor on whom they prey, are always with us. They thrive in East Africa, for example. But there is no need to travel to the developing world to understand the workings of primitive money-lending. According to a 2007 report by the Department of Trade and Industry, approximately 165,000 households in the UK use illegal moneylenders, borrowing in aggregate up to £40 million a year, but repaying three times
that amount. To see just why one-man moneylenders are nearly always unpopular, regardless of their ethnicity, all you need do is pay a visit to my home town, Glasgow. The deprived housing estates of the city's East End have long been fertile breeding grounds for loan sharks. In districts like Shettleston, where my grandparents lived, there are steel shutters over the windows of derelict tenements and sectarian graffiti on the bus shelters. Once, Shettleston's economic life revolved around the pay packets of the workers employed at Boyd's ironworks. Now it revolves around the benefit payments made into the Post Office accounts of the unemployed. Male life expectancy in Shettleston is around 64, thirteen years less than the UK average and the same as in Pakistan, which means that a newborn boy there typically will not live long enough to collect his state pension.
Such deprived areas of Glasgow are perfect hunting grounds for loan sharks. In the district of Hillington, Gerard Law was for twenty years the number one loan shark. He used the Argosy pub on Paisley Road West as his office, spending most working days there, despite himself being a teetotaller. Law's system was
simple. Borrowers would hand over their benefit books or Post Office cashcards to him in return for a loan, the terms of which he recorded in his loan book. When a benefit cheque was due, Law would give the borrower back his card and wait to collect his interest. The loan book itself was strikingly crude: a haphazard
compilation of transactions in which the same twenty or thirty names and nicknames feature again and again alongside sums of varying sizes: 'Beardy Al 15 ' , 'Jibber 100', 'Bernadett 150', 'Wee Caffy 1210'. The standard rate of interest Law charged his clients was a staggering 25 per cent a week. Typically, the likes of Beardy Al borrowed ten pounds and paid back £12.50 (principal plus interest) a week later. Often, however, Law's clients could not afford to make their scheduled repayments; hardly surprising when some people in the area have to live on as little as £5.90 a day. So they borrowed some more. Soon some clients owed him hundreds, even thousands, of pounds. The speed with which they became entirely trapped by their debts is scarcely surprising. Twenty-five per cent a week works out at over 11 million per cent compound interest a year.
Over the very long run, interest rates in Europe have tended to decline. So why do some people in Britain today pay eightdigit interest rates on trivial loans? These, surely, are loans you would be mad not to default on. Some of Law's clients were in fact mentally subnormal. Yet there were evidently reasons why his sane clients felt it would be inadvisable to renege on their commitments to him, no matter how extortionate. As the
Scotsman newspaper put it: 'many of his victims were terrified to risk missing a payment due to his reputation' - though it is not clear that Law ever actually resorted to violence. Behind every loan shark, as the case of Shylock also shows, there lurks an implicit threat.
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