It isn’t extrinsic to the contract if you agreed to it in the contract
October 26, 2015 § 12 Comments
Two of the areas which the Usury FAQ / ebook (in its present revision) may not cover adequately for some readers are the concepts of ‘just prices’ and ‘extrinsic titles’. The reason it does not cover them in any depth is because, once you adequately grasp what usury is and is not, neither subject is directly relevant. They have however been historically conflated, casting an at least rhetorical pall of ambiguity over the subject for folks lacking an adequate grasp of the concepts involved; so it is worthwhile to at least show why ‘just prices’ and ‘extrinsic titles’ don’t in fact cast any shadow of ambiguity whatsoever over the absolute prohibition of usury.
I recently discussed the ‘just price’ head fake here, and I think that post adequately shows why various theories about ‘just pricing’ don’t introduce ambiguity into the absolute prohibition of charging interest on mutuum loans (mutuum loans of anything whatsoever — fiat money, ‘hard currency’, gold, sugar, cars, lawn mowers, glass beads, beanie babies, or anything else).
Extrinsic titles I haven’t covered in too much depth. In this post I talked about different senses of ‘owing’, and grasping the multivocity of ‘owing’ is helpful background for understanding extrinsic titles. That a thief owes the return of stolen money or other goods, even if he already spent that money or consumed those goods, seems pretty clear to well formed moral intuitions. Furthermore, the thief may have damaged his victim’s estate in ways which go beyond loss of the ‘principal’ amount stolen, in which case he may be justly found by the magistrate to owe more than the ‘principal’.
Notice, though, that what the thief owes back to his victim is extrinsic to any agreements that thief and victim may otherwise have had. A thief does not mutually agree with his victim to steal the victim’s money and then pay it back with damages. Any damages that the thief owes qua thief, again, are extrinsic to any agreements that victim and thief may have apart from the theft. Damages owed because of theft are by definition extrinsic to agreements between the parties.
It is in this extrinsic sense – and only this extrinsic sense – that just titles to something beyond the principal may arise when mutuum loans are made. Here is Vix Pervenit:
By these remarks, however, We do not deny that at times together with the loan contract certain other titles-which are not at all intrinsic to the contract-may run parallel with it. From these other titles, entirely just and legitimate reasons arise to demand something over and above the amount due on the contract. [Emphasis mine]
Recall that mutuum loans are only morally licit in the first place as acts of charity or friendship. As a matter of justice the borrower and lender may mutually agree that the borrower owes back the principal if and when he is able to pay it.
However, any agreement between the parties for the mutuum borrower to pay interest – for whatever reason – is by definition intrinsic to the contract: usury. If the mutuum borrower refuses to repay when he is able, that may well give rise to damages in excess of the principal, in the same way that when a thief steals that may well give rise to damages in excess of the principal amount stolen. When a borrower is able to repay a mutuum loan, has agreed to do so when able, and yet refuses to do so, he has engaged in a kind of theft.
But any damages a thief owes above the principal can not be pre-negotiated and made intrinsic to a contract. The very fact of making it a mutual agreement means that it cannot, by definition, be theft. Just titles to something above the principal in a mutuum loan cannot, by definition, be part of the contract.
Therefore any mutually agreed entitlement to something above the principal, under any circumstances, in a mutuum loan, is always morally wrong.