April 5, 2010 § 12 Comments
So, after the last year or so of looking into the matter I think I understand what the moral species usury is.
Contrary to my expectations I find myself largely in agreement with St. Thomas Aquinas on the subject, assuming I understand him correctly. I fully expected to disagree with Aquinas when I first started reading about usury during the financial crisis of 2008; but that has turned out not to be the case. I think Aquinas was right: that to at least some extent the folks who think they disagree with him, who think that history has gone against his view, are disagreeing with a caricature. The one place where my view may differ slightly from his is in my understanding of altruistic lending, and just titles to actual costs which may arise in the case of altruistic lending. But even so that distinction makes no difference whatsoever in evaluating present-day commercial activities, since commercial activities by definition are not altruistic. (Curiously the distinction between a credit union and a commercial bank may make all the difference between Heaven and Hell).
I do not view changes in circumstances or changes in the nature of money as at all pertinent to the question. I view Belloc’s summary as substantially correct but incomplete.
Usury consists in lending money to a person, with recourse to the person for return of principal and profitable interest on the loan. It is always and without exception morally wrong to do this.
Non-usurious lending for profit consists in lending money to a person or organization, with recourse to specified assets and only those specified assets for return of principal, charging rent for the use of the portion of those assets represented by the loan, where the borrower has the option to pay off the principal and be quit of all obligation to pay interest. Non-usurious lending for profit, in short, involves mutual ownership of some specific asset or assets, where one party pays the other for the use of the other’s share of those assets, not for the use of money: in a case of default the lender can recover his principal from the assets only, not the borrower. There isn’t anything morally wrong with non-usurious lending for profit, and most business lending falls into this category.
Non-usurious altruistic lending consists of lending money to a person, with recourse to the person for return of principal and possibly also some actual costs incurred by the lender, provided that no profit motive is involved in making the loan. If there is any profit motive involved in making this kind of loan, it is usury. Therefore by definition it is not a business which can be justly entered into for profit.
I think we (or at least I) now have enough of an understanding to be able to look at the terms of many or most specific loans and say definitely whether those loans are or are not usurious. Unfortunately, a great many modern credit instruments – credit cards come immediately to mind, but that is just the most obvious in a vast sea of consumer credit instruments – seem to be both formally (in their contractual terms) and materially (in what actually occurs over the course of the loan) usurious.
There are other unjust acts which involve selling what doesn’t exist; this post specifically addresses the species usury, not those other generic acts. Acts of government in issuing currency and that sort of thing are outside the scope of these conclusions. And of course it is eminently possible that I’ll have to modify this view in light of some new information or argument of which I am currently unaware. But there is enough now in my view to warrant this definite conclusion, including definite criteria based on Magisterial sources for determining when the sin of usury specifically is being committed.