Riba in Fez

“[R. Le Tourneau*] quotes a report by the British vice-consul** in Fez, dated 1893:

Interest being forbidden by Muslim law causes usury to be a profitable business, particularly in a capital like this, where country farmers, besides Kaids and Governors, frequently resort and have need of funds wherewith to meet Governmental and other demands upon them. An easy way out of the difficulty has been found by such borrowers. They buy a quantity of staple merchandise, such as sugar or cottons, on a long credit and at an absurdly high price, say thirty to fifty per cent over the market value. A notorial document is made for the debt, and the borrower then auctions off the goods or (more often) sells them back to the lender, the loss difference amounting thus to the interest forbidden nominally by the Muslim law. The harmful effects of such transactions are self-evident. Many merchants get eager to buy any staple article which they can get on a long credit***; glut in the market and ruinously low prices to legitimate traders result***, and when a bad agricultural year occurs the notarial documents are quite impossible to realize and the lenders cannot pay their own obligations. This kind of transaction has been, I am told, more or less prevalent all over Morocco for a long time, but it would appear… to be more general here than in other Moorish towns.”

(Source: Maxime Rodinson, Islam and Capitalism, Chapter 3)

*Fes avant le protectorat, Casablanca, Societe marocaine de librairie et d’edition, 1949, p288

**Diplomatic and Consular Reports on Trade and Finance, No. 1476 (Morocco: Report for the Year 1893 on the Trade of Tangier), Foreign Office Annual Series, London, H.M.S.O., 1894, p27

***Presumably only if this happens largely at the same time and outweighs actions that would have the opposite price effect.