mercredi 2 avril 2008

Usury, definition of

Quoting a blog, The Red Herring of Usury*: Originally printed in This Rock, September 1997:

"In the face of this change, the Church defined what is meant by usury. Session X of the Fifth Lateran Council (1515) gave its exact meaning: 'For that is the real meaning of usury: when, from its use, a thing which produces nothing is applied to the acquiring of gain and profit without any work, any expense or any risk.'

"So too, Pope Benedict XIV in his encyclical Vix Pervenit, says: 'The nature of the sin called usury has its proper place and origin in a loan contract [mutuum]. This financial contract between consenting parties demands, by its very nature, that one return to another only as much as he has received. The sin rests on the fact that sometimes the creditor desires more than he has given. Therefore he contends some gain is owed him beyond that which he loaned, but any gain which exceeds the amount he gave is illicit and usurious.'

"Note again that a mutuum is 'a loan of a fungible, i.e., perishable, nonspecific good, whose use consisted of its consumption' (New Catholic Encyclopedia). But at present the choice for one's money in our world-economy is never simply between spending and hoarding, for money can always been invested in any number of genuinely profitable ('fruitful') enterprises."


One of the enterprises is lending at interest. Which has always existed, but not been considered licit.

The second is investing in a limited responsability company or similar joint venture: which is indeed often profitable, but means exchanging money for a moral kind of ownership. Even if the share held by a share-holder is marked or named as a share for so and so many dollars, the share differs from the dollars in nature, and therefore the money has been exchanged for something which is not initself money. Nor is it exchanged without risk. Limited responsability means you have paid your fair share of the company's debts in buying the share, you do not need to spend more on the company's debts if it gets broke. The company's material belongings are different from yours. This is as distinct from the usual kind of company in which the company is a person or a family which responds to debts without limits either than those imposed by law for private debts, like not confiscating one's clothes. Even so, limited responsability runs a risk, which the lender for interest does not: he depends juridically on the good luck and business sense of those running the company. A lender may sue the borrower for not paying, even interest, but a shareholder may not sue the company for going broke, at the most the directors for making it go broke by incompetence.

The third is buying material and starting a company which you run yourself and take all the risks. That possibility has always been there. That has always been one of the alternatives for a rich man as against hoarding or borrowing.

Is the second option fair? Doubtful, since it makes the real decision takers mere stewards with the one goal of giving value in money for investments. If it is fair, does this possibility change the nature of the first possibility? I think not.

The second group of texts is illustrated by Deuteronomy 23:19-21: "You shall not charge interest to your countrymen: interest on money, food, or anything that may be loaned at interest. You may charge interest to a foreigner, but to yourcountryman you shall not charge interest, so that the Lord your God may bless you in all that you undertake in the land which you are about to enter to possess." Here the principle of interest-free loans is extended to embrace all of Israel (and would include those non-Jews who are living under Israel's protection). But notice that the Scripture also says, "You may charge interest to a foreigner," indicating that interest-taking is not presented as inherently evil or sinful.

Except that King James Version - and Douay Rheims - says "brother", where you say "countryman". And except that the relations between Israelites in Old Testament hold good for Christians in New Covenant as well. If through Christ every man is my brother - from whom shall I take usury (sorry, "interest", but you see the Greek would have tokos for either English word) without sinning?

And if there is something one may not do to countrymen, but to strangers only, does it not strike you as that thing being at least unpatriotic to do with your countrymen? If you decide in a city to impose a toll on visiting strangers, is it not possible that this may be because one has less solidarity with them and wants to spare the citizens a consumption tax at the same time as wanting to limit the competition for indigenous traders, but harden it for foreign traders?

Aquinas explains** that the Jews could licitly take usury from Canaaneans, because they were like public enemies to God as well as to Israel, they were people who had publicly worshipped gods who demanded human sacrifice as well as kinky rites in honour of fertility gods. St Ambrose, on the question of taking interest on loans given to Goths says: "whoever you may licitly kill, from him you may licitly take usury". There he spoke about enemies of the Roman Empire and future persecutors of the Orthodox Faith, in Spain as well as in Italy.

Money itself was considered primarily a medium of private and not commercial exchange. As Joseph Rickaby says of the Middle Ages (and his comments apply to much of antiquity as well): "In those days land was hard to buy, agriculture backward, roads bad, seas unnavigable, carrying-trade precarious, messages slow, raids and marauders frequent, population sparse, commerce confined to a few centers, mines unworked, manufactures mostly domestic, capital as yet unformed. Men kept their money in their cellars or deposited it for safety in religious houses. . .-They took out coin as they wanted it to spend on housekeeping, or on war, or on feasting. It was very hard, next to impossible, to lay out money so as to make more money by it. Money was in those days really barren" (Moral Philosophy, 261).

His comments do not even apply to all of the Middle Ages, not even the period of the scholastics. Or rather: especially not. When they called money barren, it is because the investor, not the lender is the one who makes, not the money, but the money's worth yield fruit.

Hans Lundahl
Aix en Provence
20 March/2 April 2008

PS: I quote:

Money is no longer a barren thing in itself, and thus the loan of money at interest is not usurious.


Rickaby sums up the correct view of usury nicely: "[I]t is usury to take any interest at all upon the loan of a piece of property, which (a) is of no use except to be used up, spent, consumed; (b) is not wanted for the lender's own consumption within the period of the load; (c) is lent upon security that obviates risk; (d) is so lent that the lender forgoes no occasion of lawful gain by lending it"

I do not see how money is of other use than being spent, nor that a lender would lend money he needed for own consumption, nor that he usually foregoes securities, as for condition d, that would make every loan in history a licit source for usury. How can a man loan without foregoing any occasions for licit gain? Even in the parable, the one asked "why did you not give it to a money-lender so as to take usury" was the same who had foregone willfully the lawful gains, like the trade made by the other servants.

PS2: I notified the author, he and I have exchanged arguments on comments part here.

PS3: Distributism blog has a take on this.

*by David J. Palm
** click here and scroll down to Answer to Objection 2.

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