What’s Wrong with the Usury?

March 2, 2009 § 51 Comments

Paul Cella started an interesting discussion on the connection between the current crisis and usury. I continue the discussion here.

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§ 51 Responses to What’s Wrong with the Usury?

  • Tony says:

    While I think Paul’s analysis is pretty darn good, I don’t quite think that calling it usury is the correct terminology. Usury happens when the lender hits the lendee hard on the amount of interest that he must agree to pay to get a loan. It thus becomes a promise of excessive future wealth transfer from the lendee to the lender. What happened here is something else. The lendee did NOT have to promise exorbitant interest in order to get a loan – indeed, through much of the period rates were unusually low. The wealth transfer is actually in the form of artificial property “values”, that forced the next buyer into much higher prices than were real – but this wealth transfer goes as much to the seller as to the banks. It seems to me much more of a giant Ponzi scheme, disguised as increased wealth overall. All of the early players get their share, at the expense of all of the late-comers to the party. Probably there is more than a little bit of semantics in where you decide to identify the “root” wrong in the arrangement. There is plenty of blame to go around. But for a guy who bought property that he really could afford before the bubble (1995), and who merely re-financed (without changing the debt or the property in any way) in 2005 to get a much lower interest rate, it is hard to see usury involved at all.

  • Rodak says:

    It is pretty clear that the New Testament condemns “usury” (as simple lending at interest) as a sin. This discussion will be just one more example of cherry-picking the Gospels to make the faith conform to the world.

  • RUs says:

    I can appreciate your concern and your unwillingness to allow the meaning of scripture to erode, but it just doesn’t seem true to me. In Deuteronomy 23:20 it specifically says that you <>can<> charge interest in certain cases. (In this case of a foreigner.)In Ezekial 18:8 it says of “…a righteous man who does what is just and right.” (18:5) that “He does not lend at usury or take excessive interest.”If “excessive interest” is something he does not do, then a righteous man clearly might take interest that was <>not<> excessive.Therefore, it seems that the scriptural use of the word is closer to the modern one that means “charging <>exorbitant<> interest.”Your interpretation also flies in the face of the parable in Matthew 25, where the lord says: “So you ought to have deposited my money with the bankers, and at my coming I would have received back my own with interest.” (25:27) See also Luke 19:23Surely Jesus (not to be mistaken for the lord in the parable) wouldn’t encourage lending money for interest through this example if it was condemned, as you say.Whatever the case–your interpretation isn’t nearly as clear as you seem to think. So your claim seems to be just the usual gratuitous assertion that you somehow have superior interpretation over everyone else.

  • Rodak says:

    The last time I looked, Deuteronomy and Ezekiel were both in the Old Testament. Guess who were allowed to work as money lenders in Europe, when Christian still weren’t?<>So your claim seems to be just the usual gratuitous assertion that you somehow have superior interpretation over everyone else.<>Why does it always have to immediately descend to ad hominem with you, friend? Can’t you just discuss the issue at hand as basis for an interesting discussion? What’s your problem?

  • Rodak says:

    Okay. Here are the verses of Matthew to which you refer:25:26 “But his lord answered him, ‘You wicked and slothful servant. You knew that I reap where I didn’t sow, and gather where I didn’t scatter. 25:27 You ought therefore to have deposited my money with the bankers, and at my coming I should have received back my own with interest. 25:28 Take away therefore the talent from him, and give it to him who has the ten talents. 25:29 For to everyone who has will be given, and he will have abundance, but from him who doesn’t have, even that which he has will be taken away. 25:30 Throw out the unprofitable servant into the outer darkness, where there will be weeping and gnashing of teeth.’ Now, do you really read that parable as a justification of usury? Do you even really think that the lesson of the parable has anything to do with money, other than on the literal level? I’m sure that you don’t, if you think about it. The “money” in the parable is the Word of God, which was brought to the Jews, but which they squandered. The “interest” is like measure of yeast that, once introduced to the “dough” in another parable, just keeps on leavening; and the “yeast” is, again, the Word of God. If this parable were really about earning interest on money, then it would be commanding us to do so, at the risk of hellfire for non-compliance. Is that how you interpret it?

  • ePonyMous says:

    Dr. Carson, a Protestant convert to Catholicism, has already elaborated on the topic of Usury as it concerns the Catholic Church herself < HREF="http://examinelife.blogspot.com/2009/02/some-notes-on-explanations-and.html" REL="nofollow">here<>:EXCERPT:“[L]et’s look instead at one that is often cited in polemical contexts: the teaching on usury. This is a nice example because most Catholics can agree that God is a Trinity, and that the Spirit proceeds from the Son, but there are some Catholics who think that the teaching on usury has substantially changed over time, and in this they disagree with their own Church, which maintains rather that the teaching on usury has developed over time…This is where the real arguing starts. The Church used to say that charging any interest whatsoever on a loan was usurious and, hence, sinful. Now the Church says that there are certain forms of lending in which it would not be usurious to charge interest, just so long as the interest rate meets certain criteria, hence not all lending at interest is sinful. The critics who claim that the teaching has changed say that the Church went from saying “All lending at interest is sinful” to saying “It is not the case that all lending at interest is sinful”, and that is indeed a formal contradiction…The defender of doctrinal development says that the Church now teaches, and has always taught, that “All usurious lending is sinful”, but the prudential understanding (not the formal, de fide, teaching) of what the definition of “usurious lending” is has developed in response to the rise of a capital economy beginning in the 17th century. Hence there is no formal contradiction at all, only an explicit recognition of new historical conditions under which usuriousness is present only under certain empirically testable conditions, not all of which include the presence of interest on a loan…Lending at interest is only usurious if the interest rate represents an unfair burden on the debtor. Prior to the advent of a capital economy, any interest rate could reasonably be regarded as “unfair”, in the sense of placing an insurmountable burden on the debtor. This was true because, in a feudal economy, there were very few, if indeed there were any, means by which a borrower could hope to make some sort of a return on money he had borrowed. This is because money was not itself the kind of commodity that it has become. Since the advent of capital economies in the 16th-17th centuries, the function of money itself in the economy has substantially changed. The sin of usury, by contrast, is no different than it has ever been: just as in feudal times, so too today there is still such a thing as a sinfully large rate of interest, and it is still possible to make loans that are usurious: all you have to do is charge a rate of interest that nobody could reasonably hope to pay. This is something that I believe the mob is rather famous for. However, there are certain rates of interest that do not represent anything like that kind of unfair burden, at least in certain kinds of cases, hence it is not by definition usurious to lend money at interest.The point of the development is precisely this: historical conditions, including the intentions of lenders and economic viability of debtors, determines the conditions under which a particular rate of interest is to be regarded as “usurious”. Prior to the advent of a capital economy in the 16th-17th centuries, any lending at interest could be counted as usurious (sinful); but after the advent of a capital economy not all lending at interest was usurious because someone who borrowed money could treat his loan as a commodity and invest it for a return. In short, the burden on the debtor is not at all what it had been under a feudal economy. The sin of usury is not defined as a sin of charging a person a fee for giving him something (namely, money), it is rather a sin of placing an undue economic burden on another person. What has changed is not the sin of usury, but the economic conditions under which money is loaned.So what appears to be a contradiction turns out to be merely an appearance. Hence the content of the teaching did not change (there is now, and always has been, such a thing as sinful, usurious lending [namely, charging an unfair fee for a loan], and the Church opposes it), but historical conditions have arisen under which the application of that content will be affected (if, in a capital economy, you lend money to someone who is going to be able to invest that money and earn more, then it is not, in fact, unfair to charge a certain level of interest).This does not strike me as a particularly difficult problem (indeed, I have never understood why the Church’s critics have so often chosen this particular example to work with, when the explanation is so obvious). Indeed, it is true of many other sorts of cases. Take, for example, something as straightforward as the commandment that we are not to kill. Scripture itself makes it clear that historical conditions determine the application of this commandment, since Scripture itself commands the Hebrews to kill certain people who have committed certain crimes, and the Church has always accepted the legitimacy of killing in defense of the common good when serving in a duly appointed military capacity. Do we say that the teaching on “not killing” has changed, or that it changes from time to time based on what seems expedient? Not at all. We say that the meaning of the commandment depends upon certain empirically observable conditions, including intent, the nature of the threat, etc.”

  • RUs says:

    You make me laugh, Rodak. There is no ad hominem in anything I said. I don’t think you know what it means. (Hint: the statement about it being a “gratuitous assertion” is the conclusion, not the evidence.) There was no insult either. Considering the things you have said to me in the past, I find this ultra-sensitivity of yours quite comical.I was merely pointing out that you were, once again, begging the question that your interpretation of scripture was the correct one–and it is necessary to address that for the purpose of the discussion. You simply aren’t the self-appointed authority you wish you were.<>Now, do you really read that parable as a justification of usury? Do you even really think that the lesson of the parable has anything to do with money, other than on the literal level?<>I didn’t say that, did I? The example was obviously used to illustrate the bigger point, so you don’t have to go into that. I merely pointed out that using an example of gaining interest seems to indicate no objection to it. Notice that I *didn’t* beg the question and say that interpretation was correct. I said what it *seems* to show–and that interpretation is just as reasonable as your interpretation.All the other verses I found in both the New and Old Testament were unclear in the matter–and you have yet to show one that seems to be clear in your favor.<>If this parable were really about earning interest on money, then it would be commanding us to do so, at the risk of hellfire for non-compliance. Is that how you interpret it?<>Obviously not. But it doesn’t surprise me at all that you aren’t paying attention to what I actually said.We have two possible interpretations now. Both are reasonable taken from the text. What now?

  • Rodak says:

    So, RUs-How does your interpretation jibe with the historical fact that the Christian church forbade its members to practice usury (in its original definition–“charging a fee for the use of money”–for centuries? What was that proscription based on?

  • Rodak says:

    Btw–The fee charged by the money changers in the temple would also have been considered “usury” under the original definition. And how did Jesus characterize those fellows, as He was dumping over their tables and driving them off the premises?As they were there performing a necessary function, and doing so with the approval of the temple authorities, why did He drive them out and call them robbers?

  • ePonyMous says:

    “How does your interpretation jibe with the historical fact that the Christian church forbade its members to practice usury (in its original definition–“charging a fee for the use of money”–for centuries?”Did you even read Dr. Carson’s own writings?Or are you simply too simple-minded to comprehend it?If you actually believe that usury is “charging a fee for the use of money”, then I hope you do not have a savings account or anything similar.For you, too, are guilty of such an incredible sin!

  • Rodak says:

    <>Or are you simply too simple-minded to comprehend it?<>I understand it well enough. It is simply a very articulate example of what I predicted the discussion would amount to in my first comment.I’m not saying that it’s wrong; I’m just being descriptive about it.

  • ePonyMous says:

    Rodak,Again, I ask you, do you have a savings account? A mutual fund? A Money Market account? Or any number of financial instruments?Do you actually know why you are earning an interest rate on those?Or are you some sort of “special case” that your own definition of usury isn’t supposed to be asserted against you?

  • Rodak says:

    What part of “I’m not saying that it’s wrong; I’m just being descriptive about it.” did you not understand? I’ll try to clarify it for you.

  • RUs says:

    <>How does your interpretation jibe with the historical fact that the Christian church forbade its members to practice usury...<>I am actually open to education on that–which is what Zippy’s thread was supposed to be about. But I wasn’t making any statements about usury, per se. I was making a statement about your preferred bludgeoning instrument for these kinds of conversations–your personal interpretation of scripture. To accept your tactics would be to stop all conversation and reject any pursuit of truth. You would halt my education before it even got started. I’m not willing to do that.And, btw–still no actual text from the Bible from you.

  • Rodak says:

    RUs–You could spend a few minutes on google and discover that none of my “personal interpretations” are “personal” at all. But I’m here to comment, not to teach.<>And, btw--still no actual text from the Bible from you.<>I cited the incident of the cleansing of the temple. Do I really need to go and clip the verses and paste them here? I think that the story is pretty much common knowledge.That said, I judge that the condemnation of usury was actually more a function of Church tradition and the teachings of Church fathers than it was the result of any particular biblical verses.I could go get a bunch of those and paste them here, but is that necessary?

  • RUs says:

    The incident in the temple does not make your understanding of usury “clear” at all. Are you going to back up your statement with some rigor, or not?

  • RUs says:

    For example, this:<>The fee charged by the money changers in the temple would also have been considered "usury" under the original definition.<>Is an unsupported premise. Due rigor requires that you make the case of what usury is before that statement can be evaluated–you jumped way ahead of the game, since the question at hand is what a proper understanding of the word is. How am I supposed to see that it relates to the cleansing of the temple? How do you know?But, of course, getting to the Christian understanding of the meaning of usury is not going to be easy for you, and I’m sure the conversation hashing it out would be long and difficult. I’ve already seen a number of Christian sources that don’t seem to support your view–so you need to put up if you want me (or anyone else) to consider you in the slightest bit credible or worth paying attention to in the matter.

  • RUs says:

    And, btw:<>Do I really need to go and clip the verses and paste them here?<>I wasn’t referring to the cleansing of the temple. I was referring to your first claim:<>It is pretty clear that the New Testament condemns "usury" (as simple lending at interest) as a sin.<>And, yes, I would expect someone who said such a thing and emphasized that it was <>clear<> to be able to back it up with the text. Can you back up what you said, or not?I especially expect it when you use the statement to say unkind things about people who are seeking truth, such as this:<>This discussion will be just one more example of cherry-picking the Gospels to make the faith conform to the world.<>Which is an insult to those seeking answers in good faith.And this:<>That said, I judge that the condemnation of usury was actually more a function of Church tradition and the teachings of Church fathers than it was the result of any particular biblical verses.<>Does not support the statement of it being “clear” in the New Testament at all, so are you retracting the original statement?By the way, it’s good to see your recognition of the necessity of tradition for the understanding of scripture. (Or do I understand that correctly?)

  • Rodak says:

    <>Does not support the statement of it being “clear” in the New Testament at all, so are you retracting the original statement?<>I think that it’s clear from the incident in the temple. The money changers were engaged in an otherwise licit business, as I said. I am willing to hear alternative interpretations, of course.

  • zippy says:

    If consistency is the hobgoblin of small minds, then Rodak is a mental giant. Still, I have an affection for him that goes way back to those good old days at Disputations and CAEI. He may act the troll (and you shouldn’t feed trolls by the way), but he’s one of <>my<> trolls.

  • zippy says:

    <>I am willing to hear alternative interpretations, of course.<>Oh, you mean like “He threw them out because they were engaged in commercial haggling in the house of God?”

  • Rodak says:

    Look–it’s obvious that in the modern era it would be virtually impossible for a person live anything but a very marginal life without borrowing at interest, and collecting interest on various kinds of accounts.Therefore, the attitudes of the churches changed with the times. It would have been virtually impossible for a bourgeois class which was also Christian to exist otherwise. We can argue which is the chicken and which is the egg, if you like.

  • Rodak says:

    <>Oh, you mean like "He threw them out because they were engaged in commercial haggling in the house of God?"<>They were performing a necessary task, with the permission of, or at the instigation of, the temple authorities. Are we to understand that ALL of them were doing so in an objectionable manner? I assume that the temple was getting its share of the vig. I’m waiting, anyhow, for somebody to tell me where the Church’s objection to usury came from, if not from this incident. Did it have no biblical foundation at all? Loaning at interest was proscribed per se, after all. It was not merely insisted upon that it be fair or affordable.And yet you call ME inconsistent?Oh–and thank you for the ringing endorsement. I’m touched. Really. ;-)

  • zippy says:

    <>I'm waiting, anyhow, for somebody to tell me where the Church's objection to usury came from, if not from this incident.<>No, now you are changing the subject, backing down from your claim that:<>'It is pretty clear that the New Testament condemns "usury" (as simple lending at interest) as a sin.'<>Cuz in reality that just ain’t clear at all, is it?

  • Rodak says:

    It’s clear to me from the cleansing of the temple and from the other verses in Luke where He teaches that when one lends one should do so without the expectation of any return.Neither specifically addresses usury as the Church banned it, that’s true. But I must assume that the Church banned it because the Church fathers understood that Jesus would have wanted it that way. If they did not get that idea from those places that I cite, where did they get it?

  • zippy says:

    <>Neither specifically addresses usury as the Church banned it, that's true.<>Well, there you go.

  • RUs says:

    No. The question at hand is where did <>you<> get it when you said: <>It is pretty clear that the New Testament condemns “usury” (as simple lending at interest) as a sin.<>It is becoming more and more obvious by your evasive and vague responses that you didn’t get it at all.

  • RUs says:

    Hm. It <>looks<> like a retraction.

  • Rodak says:

    Here are the verses from Luke:Luke 6:34 If you lend to those from whom you hope to receive, what credit is that to you? Even sinners lend to sinners, to receive back as much. 6:35 But love your enemies, and do good, and lend, expecting nothing back; and your reward will be great, and you will be children of the Most High; for he is kind toward the unthankful and evil. Is it your contention that Jesus means you to write off the principal, but collect the vigorish?

  • Rodak says:

    Is it more profitable for you to spend all your energy in trying to prove me wrong, or more charitable rather to spend some of it instructing me on the correct reason for the Church’s proscription of usury, since mine (so you contend) is incorrect?

  • RUs says:

    The verse is pretty clear for what it intends to teach, but as for being used to prove your statement about usury was clear? Clear as <>mud<>.And I haven’t devoted any energy at all to proving you wrong. I have devoted energy to showing that your statement was a gratuitous assertion, and I surmised that you had nothing <>clear<> to back up your statement. I was obviously correct.Hopefully that leaves you as open to learning about it and seeking the truth as I am, and hopefully that will curtail the “cherry-picking” cheap shots.

  • RUs says:

    Clarification of the above:I expended no energy to prove you wrong about usury. I expended energy to show that your abuse of the New Testament had no substance to it.I think my job is done.

  • Rodak says:

    In short, you haven’t got a clue.Why don’t you just say so?

  • Rodak says:

    Gee, I didn’t realize that the topic of the thread was my abuse of the New Testament. I thought we were talking about usury. My bad!

  • Rodak says:

    <>Clear as mud.<>Okay. Let’s try one more time. “Clear as mud”–How so? He says “loan” and He says “expect nothing back.”What does this mean to you?

  • Rodak says:

    Finally, are you going to tell me what the correct basis for the Church’s prohibition agains usury was, or are you not?Since you know that I’m wrong, you must also know what the right answer is.

  • RUs says:

    <>What does this mean to you?<>It is not at all clear that he means this to apply for all people and all situations. It’s not a verse about usury as much as it is about being kind to your enemies. (And, ahem, review your <>Tuesday, March 03, 2009 1:14:00 PM<> comment for some of your own medicine.) It seems to me that he is referring to enemies in need–and that is harmonious with other verses cited above, and with other things I’ve learned about Christian tradition. (Notice that I’m open to discussion on this–I’m not shutting it down.)So–again–we have two perfectly reasonable interpretations. What we don’t have is a clear understanding of usury spelled out by the NT.And–again–I never made the claim that you are wrong. I made the claim–and it has been demonstrated here to be correct–that you had no basis for making the statement in your first post about the clarity of usury in the NT.I have further stated that I am open to education–in other words, I have been up front with you about the fact that I do not have all the answers. Clearing away your erroneous roadblock to the truth was step one. (I do, in fact, have a “clue,” but not much more. The biggest clue I now have is that you were wrong about the biblical clarity, and that you aren’t a very reliable source for this kind of thing. I certainly don’t have any authoritative answers–so I’m still learning.)But you now seem to want to find disagreement wherever you can so that you can distract from the fact that my mission <>is accomplished<>, and you have been revealed to not have anything “clear” about usury from the NT as you claimed.

  • Rodak says:

    So, you don’t know what the basis for the Church’s prohibition of usury was? Okay. I’ve had my say about usury. And you’ve had your say about my say. Basta.

  • Tony says:

    Rodak, If you would, please do some research on the meaning of the word usury in ancient times. I don’t mean the bible, I mean in general. I have done a small amount, not a scholar’s amount, but it is totally clear from the small amount I did that the word is used ambiguously all over the place. In some cases it means interest, any interest at all. In other cases is means high interest, excessive interest, interest that is not a burden simply by being interest, but an unconscionable burden by being exorbitant. I would submit that the words used in ancient times that are today translated into “usury”, from various languages, were incapable of being unambiguous in and of themselves, because the cultures from which those words sprang were indeterminate with respect to many matters relating to borrowing and lending. As a result, they themselves were ambivalent about just exactly what they were doing when they borrowed. Not surprisingly, if you interpret ALL of the ambivalent uses of various words about interest as the English word “usury” (well, it is derived from Latin), you are going to be piling a lot more than one, simple, clear, and definitive meaning into such a word. So, as a suggestion, let’s try to not put more into translations of ancient Hebrew and Greek than there really were intended in the original. Now, it is pretty much true that The Catholic Church forbade charging any interest at all on the lending of money. One of the philosophical bases for this conclusion was this: You can charge for the use of a thing that has an independent use (i.e. a use that is separate from the thing itself, a thing that does not get consumed in use), when the thing is returned after use. You cannot charge separately for the “use” of a thing whose purpose is to be consumed by use (a consumable), as well as charge for the thing itself. When you charge for the consumable’s use, you charge the value of the thing itself, because its value lies in being consumed. To charge separately for the thing and for its use is to charge twice for the same good, clearly against justice. According to this analysis, money is a consumable – you can’t “use” it except by eradicating your ownership of it. As such, you cannot charge both for its use and for its own self separately. Since in lending you expect the basic principal amount back, you cannot charge over that as the “use”. In pre-capitalist times, it was nearly (but not quite uniformly) true that money was, in practice, a consumable. As a result, the analysis above was pretty much accurate. At least, it was true in respect of about 97% of all the people around, the farmers and serfs and servants. Under capitalism, it simply is NOT true. Money (even without involving banks) can be used to furnish stock for a production line, and generate new wealth. Under this use of money, although the money temporarily disappears as capital assets, it shows up again as profits. It is not consumed, not in the proper sense of the term as used by medieval philosophy. (But even in ancient times there were clearly cases of using money as an investment to productively generate new wealth – for instance, in shipping.) As a result, the more correct description of the meaning behind the injunctions about lending at interest is more nuanced: It appears wrong to lend money at interest merely on account of the loan of money simply as such, in an environment where the lent money is intended simply to be consumed (most clearly when the intended purchase it intended to be consumed). But it is not wrong to lend money at interest on account of other aspects of the lending arrangement, or in a different environment. Interest may be charged not for “use” but for risk of loss of the original principal amount, and for loss of opportunity, and generally when the loan is not intended for the purchase of a consumable object. Please note that the Church’s injunction “do not lend at interest” is a command, not a doctrine. And also note that the analysis of why lending at interest is wrong was a philosophical analysis, but never an explicit part of doctrine either. Certainly no doctrine ever claimed that money is a consumable. So although there was apparent support for the notion that the Church taught that lending at interest was inherently wrong in all cases, I don’t believe that can be directly established.

  • zippy says:

    <>I've had my say about usury.<>Well, yeah. Your say was:<>It is pretty clear that the New Testament condemns "usury" (as simple lending at interest) as a sin. This discussion will be just one more example of cherry-picking the Gospels to make the faith conform to the world.<>Which, it turns out, is baloney. But there was a discussion which was one more example of cherry-picking the Gospels to make the faith conform to the Rodak. (Well, not really cherry picking; more cherry-planting).

  • zippy says:

    <>It appears wrong to lend money at interest merely on account of the loan of money simply as such, in an environment where the lent money is intended simply to be consumed (most clearly when the intended purchase is intended to be consumed). But it is not wrong to lend money at interest on account of other aspects of the lending arrangement, or in a different environment. Interest may be charged not for "use" but for risk of loss of the original principal amount, and for loss of opportunity, and generally when the loan is not intended for the purchase of a consumable object.<>That’s a great summary, Tony. Very Bellocian, it seems to me.To make it concrete, suppose I buy dinner on my credit card. If I pay off the credit card during the grace period and no interest is charged, it is not usury. If I don’t, and the bank starts charging me interest, that is usury.If I buy a computer to use in my work using my credit card, and I don’t pay it off during the grace period, but rather pay interest on the loan and pay it off over time, that is <>not<> (at least not necessarily) usury. So it seems that Belloc was right to suggest, assuming I remember and paraphrase him correctly, that in our modern system usury is deeply entangled with our economy and is virtually impossible to extract or segregate from our economy.One thing that is still puzzling about it, to me, is that the dinner is what gives me strength to work tomorrow, and is in that sense an investment. Of course the benefit of that investment is completely consumed before I pay off the loan, which may be morally pertinent. So perhaps it is usury to <>continue to charge interest when the benefit has been consumed<>?

  • Tony says:

    Well, when the credit company makes a credit line available to you, they do not precisely intend that you use the credit for consumables. They don’t really care whether it is consumables or business stock. Now that we live in a capitalist system, it is nearly always the case that the lender gives up an opportunity (to invest in a wealth-generating company) by lending, so he will always be able to claim a charge of interest for his loss of opportunity. And generally credit companies will charge higher interest for bad credit risks, so at least part of the charges are on account of risk of loss. I don’t think this justifies their 24% rates, though. I do think that is usury. If the person is that much of risk, maybe the best thing to do is simply not lend him money, rather than offer him still more rope to further destroy his life. But it is possible that this would be the result even without interest being the problem: if a person borrows money from an uncle at 0 percent interest to go to dentist school, and upon finishing finds that being a dentist destroys her back (true story), she is never going to be able to pay that loan off, and it isn’t because of interest. The benefit of the lent money was used, as an investment, but the investment turned bad. I think that our consumer credit system is a pretty bad tangle, but I don’t feel confident in saying that it is just plain immoral all around.

  • Rodak says:

    This comment has been removed by the author.

  • Rodak says:

    The stark, historical fact remains that the Church originally forbade all lending at interest, not merely lending at exhorbitant rates of interest. It remains to be shown–especially at this time–how the evolutionary relaxation of this non-doctrinal “command,” on the basis of creative hermeneutics, has served to improve the overall morality of the faithful conducting business-as-usual in Christendom.

  • zippy says:

    <>Well, when the credit company makes a credit line available to you, they do not precisely intend that you use the credit for consumables. They don't really care whether it is consumables or business stock.<>IOW, they are requiring the money to throw off interest qua money. That is just what Belloc would have called usury, and if Aquinas was right about what <>makes<> usury usury, then consumer credit is usury.<>Now that we live in a capitalist system, it is nearly always the case that the lender gives up an opportunity (to invest in a wealth-generating company) by lending, so he will always be able to claim a charge of interest for his loss of opportunity.<>I’ve not seen anything in my cursory look that made it licit to charge for “loss of opportunity”. In general it strikes me as unjust to charge business partners for “loss of opportunity”. A share of profits in what we actually choose to do together is one thing; a claim on my business partner above and beyond any profits we make together on the basis that I could have chosen to do something else strikes me as unjust. If I didn’t want to do <>this<> thing, I shouldn’t have done <>this<> thing. <>And generally credit companies will charge higher interest for bad credit risks, so at least part of the charges are on account of risk of loss.<>That might be a fair point; but a counter would be that the “risk” which is morally pertinent is investment risk, not collection risk. That certainly seems to be more in line with a genuine development of doctrine from the starting point of (say) the encyclical <>Vix Pervenit<>.

  • Anonymous says:

    “The stark, historical fact remains that the Church originally forbade all lending at interest, not merely lending at exhorbitant rates of interest. It remains to be shown–especially at this time–how the evolutionary relaxation of this non-doctrinal “command,” on the basis of creative hermeneutics, has served to improve the overall morality of the faithful conducting business-as-usual in Christendom.”And Rodak has yet to answer as to whether or not he has a savings account or any such financial product/instrument that earns an interest rate.Again, Rodak, I find it repugnant that a person who himself is guilty of usury is accusing another the same.Talk about ‘motes in the eye’.

  • Tony says:

    <> IOW, they are requiring the money to throw off interest qua money. That is just what Belloc would have called usury, and if Aquinas was right about what makes usury usury, then consumer credit is usury. <> I think this gets to the real heart of the matter (leaving aside Rodak’s unrealistic complaints). Some people say that the capitalist system we have now gets rid of the problem of charging interest merely on account of the loan itself, because money in a capitalist system isn’t the same kind of animal as it is in a feudal or agrarian system. Therefore, with the nature of money being different, the moral problem with charging interest (merely on account of the loan) goes away. The interest is <> never <> merely on account of the loan itself, and so it side-steps the moral problem. I am not confident that this argument is entirely solid, but I do not feel my counterarguments are quite solid either. For one thing, it sounds awfully facile, as if making up premises to create the conclusion you want. <> “risk” which is morally pertinent is investment risk, not collection risk. That certainly seems to be more in line with a genuine development of doctrine from the starting point of (say) the encyclical Vix Pervenit. <> I am not quite sure why you would say it is “investment risk” as distinct from “collection risk” Can you clarify? Certainly company financials track accounts receivable in different ways, including tracking the costs of collecting overdue payments, and the write-off of uncollectable debts, as separate line-items. If a (not-for-profit) company made 100 loans and only expected payment of the principal, they would gradually lose money on account of the small percentage of bad loans. Isn’t this simply risk of loss of the original principal? You can <> also <> feed that loss into the total picture, in order to generate an overall rate of return, but such a rate of return smears true interest (in my example 0, but not in general) together with other types of return. A company with several divisions (like GM, selling cars on one hand, with insurance, and GMAC loans on other hands) could create some supposed “rate of return” on overall gross assets, but that would not make the car production units guilty of charging interest that is earned in the GMAC line.

  • zippy says:

    <>I am not confident that this argument is entirely solid, but I do not feel my counterarguments are quite solid either.<>I agree! I’m still feeling around on the floor in the dark myself.<>I am not quite sure why you would say it is "investment risk" as distinct from "collection risk" Can you clarify?<>Sure. Collection risk is attached to a person: that is, it is the risk that a <>person<> will not pay the principal and interest on a loan. Investment risk is attached to an investment: that is, it is the risk that the <>investment<> will be unable to produce the necessary returns to pay the principal and interest on the loan.In medieval times they were dealing with collection risk, both for principal and interest. They didn’t send companies to debtors prison, they sent individuals and their families to debtors prison. My notion here – just a notion – is that it may be morally licit to attach liability for principal to a <>person<>, but that, at least under the kind of understanding of usury we are discussing, it is not morally licit to attach liability for interest payments to a <>person<>. Licit liability for interest payments (on this possible understanding) attaches only to the success or failure of the actual investment in which the money was deployed, not to a person.Basically, on this understanding all morally licit loans would be non-recourse – that is, could licitly collect only from the business enterprise in which they were invested, not individuals – with respect to the <>interest on the loan<>, though they might have recourse to the borrower himself with respect to the <>principal<>. Does that make sense (as in, is that understandable)?

  • Rodak says:

    Anonymous–Your reading comprehension leaves something to be desired. But why do you sound so very angry?Have I poked my finger in the eye of Mammon, and does that somehow horrify you?

  • Rodak says:

    Oh, and btw, Anon, my friend–although, as I think I said somewhere above, contemporary life makes it all but impossible to function outside of an economic system of which interest is a central feature, rest assured that any interaction I have with interest is far and away to my personal disadvantage, once the bottom line has been computed.

  • Rodak says:

    Here is an interesting take on usury from critic, Frank Kermode, reviewing “Frozen Desire: An Inquiry into the Meaning of Money” by James Buchan:“Schopenhauer observed that ‘other goods can satisfy only one wish and one need – food satisfies hunger, sex the needs of youth; these are goods which serve a specific purpose. But money ‘confronts not just one concrete need, but Need itself in the abstract’. Thus it becomes a universal, inhuman answer to what Sartre called besoin; or it may even have created that generalized need, which makes it even more hateful. One ancient way of demonizing money was to accuse it of breeding like a sentient being. Aristotle in the Politics noted this indecency, the birth of money from money. His word for ‘interest’ is tokos, which means offspring – money out at interest offers a demonic parody of natural reproduction. A couple of millennia later Shakespeare is writing harsh speeches about the breed of barren metal. Usury was condemned throughout the intervening centuries, and often compared to homosexuality, also regarded as a perversion of the act of breeding; but it was practiced, as it had to be, under other names. Some methods of money-making were called virtuous, for instance adventuring, which entailed genuine risk; Shylock, who made money breed, and Antonio, who risked his wealth in cargo vessels, argue quite schematically about this in “The Merchant of Venice.” The Church, knowing that credit is necessary and that it cannot be had without interest, made the necessary accommodations.”

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