More numbskull medieval finance

February 2, 2015 § 16 Comments

Since everyone knows that St. Thomas Aquinas – while he was probably pretty wise as an expositor of important airy fairy theology up in the clouds that doesn’t actually affect everyday life in the Real World [tm] in any important way – was a medieval financial troglodyte who didn’t understand modern money and commerce and economies and entrepreneurship, whose ideas if implemented would make business and profit impossible (leading to mass global starvation and even dogs and cats living together), who just didn’t get it that money has a time value such that people as a matter of justice owe interest payments on emotional distress and regrets regarding roads not taken in mutually voluntary commercial contracts, and whose understanding of currency and economics is based on earth, air, fire, and water, it is important to expose his ridiculous naivete in black and white for the world to see.

Here he is discussing why the kind of currency used in a mutuum loan is irrelevant to the question of usury.  He also affirms that making a profit by posting assets as security – selling insurance – is morally licit.  (What a dumb ox!)

As the Philosopher says in the Politics, things can have two uses: one specific and primary; the other general and secondary. For example, the specific and primary use of shoes is to wear them, and their secondary use is to exchange them for something else. And conversely, the specific and primary use of money is as a means of exchange, since money was instituted for this purpose, and the secondary use of money can be for anything else, for example, as security or for display.  And exchange is a use consuming, as it were, the substance of the thing exchanged insofar as the exchange alienates the thing from the one who exchanges it.  And so if persons should lend their money to others for use as a means of exchange, which is the specific use of money, and seek a return for this use over and above the principal, this will be contrary to justice.  But if persons lend their money to others for another use in which the money is not consumed, there will be the same consideration as regarding the things that are not consumed in their very use, things that are licitly rented and hired out.  And so if one gives money sealed in a purse to post it as security and then receives recompense, this is not interest-taking, since it involves renting or hiring out, not a contract for a loan.  And the reasoning is the same if a person gives money to another to use it for display, just as, conversely, if one gives shoes to another as a means of exchange and on that account were to seek a recompense over and above the value of the shoes, there would be interest-taking.

— St. Thomas Aquinas, De Malo, Oxford University Press, translated by Brian Davies and Richard Regan.  (Emphasis mine)

§ 16 Responses to More numbskull medieval finance

  • Mark Citadel says:

    Trust Aquinas to ruin all our Modern luxury with his antediluvian economic ideas!

    *shakes fist*

  • […] or of property against which he has claims. But a borrower’s promise to repay principal which has been consumed is not property. A mere promise of apples is not itself actually apples. And the historical fact […]

  • […] a usurious loan – a personally guaranteed loan charging interest – is always immoral no matter what is lent or borrowed: securities, commodities, or any other […]

  • semioticanimal says:

    For those interested in the works of Aquinas in English there is a source here at the Dominican House of Studies:
    Unfortunately the De Malo is not included. However, Google has a new Latin translation program and the Latin version is available here:
    It is of course a terrible translation, but one can get a general understanding and those minimally Latinate may correct it further.

  • […] or of property against which he has claims. But a borrower’s promise to repay principal which has been consumed is not property. A mere promise of apples is not itself actually apples. And the historical fact […]

  • […] property, or of property against which he has claims. But a borrower’s promise to repay principal which has been consumed is not property. A mere promise of apples is not itself actually apples. And the historical fact […]

  • buckyinky says:

    To the modern mind, it appears there is something mystical, inexplicable at least, about agreement on a price between two parties – Where two or more are gathered in the name of agreeing in good faith upon a fair price between them, there am I putting my stamp of justice on the whole arrangement.

    It’s not difficult to think of two separate sets of two parties, both sets haggling over the sale of a bushel of apples from one party to the other. The one set agrees between them on one price; the other set independently agrees to a price that is 5% greater than the former set.

    The modern mind will say that there is nothing occurring differently here than if the apples were sold for the same price in both sets, the first set settled at delivery, the apples were consumed in both sets, and the second set settled the account a year later with 5% interest.

    I don’t exonerate myself of the charge of having a modern mind, but I do understand that there is something intrinsically different between the two sets that I am describing. I wonder however, whether St. Thomas, or any other source, goes into more detail behind the justice and fairness involved with two parties agreeing in good faith on a price.

  • Zippy says:


    I think a lot of people like to hear their own ignorant opinions – or, conversely, easy-to-destroy straw men – spoken in Aquinas’ voice. That certainly seems to be the case when it comes to usury.

    For myself, I am quite certain that justice in pricing cannot be reduced to nothing but the subjective agreement of consenting parties to a price. This is distantly related to usury only in the sense that charging any price at all for literally nothing, for no objectively real thing (usury is one way of doing this), is unjust. The just price for literally nothing, no actual real thing, is itself nothing. And (as I explain in the Usury FAQ and elsewhere) sometimes people attempt to charge ‘hidden usury’ by mutuum-lending cheap apples and insisting on expensive oranges as ‘repayment’ for a personally guaranteed loan.

    But I don’t have a sufficiently concrete theory of just prices in general myself, nor have I done the due diligence necessary on what Aquinas himself actually claimed (versus what various parties claim that he claimed) to be confident that I can accurately paraphrase his views. Knowing that the just price for nothing is itself nothing is intuitive enough when you think about it, and price gouging in an emergency or crisis seems obviously wrong; but beyond that I don’t have much in the way of concrete insights to offer.

  • […] New generations of ‘conservatives’ start to engage in Aquinas revisionism: rather than rejecting the progressive principles which have taken hold (e.g. that “the nature of money has changed” – which is another way of saying that money has no nature – and therefore charging a ‘reasonable’ amount of contractual profit on a mutuum loan is acceptable in most circumstances today), — rather than rejecting progressive error they argue that the Novus Ordo Pecunia brought into being by modernity was compatible with Aquinas all along, and anyway at worst Aquinas was not infallible so it really just takes a few tweaks of his views here and there to morally justify (e.g.) contractual profits on mutuum loans, whether of money or of shoes. […]

  • […] absent is Aquinas’ unequivocal condemnation of profit on mutuum loans — loans of any kind of property whatsoever, not just […]

  • […] bills, and the like — can be displayed or put to other uses than exchange.  This was all perfectly obvious to Aquinas, but modern people are frequently incapable of seeing the obvious when it comes to the subject of […]

  • […] we’ll get the simultaneous assertions that the nature of money has changed (as if that were even relevant), that simple mutuum (personally guaranteed) loans are no longer trivially distinguishable from […]

  • […] people were very ignorant about property, contracts, and finance.  They simple didn’t see all the holes in their […]

  • […] Scholastics – unlike Aquinas himself – tend to approach usury as having something to do with the nature of the property lent, qua fungible thing.  But a mutuum loan is not, strictly speaking, a loan of a fungible thing: it is a loan of a thing which the contract treats as fungible.  Aquinas explains this in his discussions of usury; here he is in de Malo: […]

  • […] could buy an insurance bond from Joe against falling pianos, with some of your mower rent proceeds, secured by the product of […]

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