Study III of How those Christians fight!

Usury

The controversy

Usurers and hatred of usurers almost certainly precede money and money-lending. Some foresighted farmer set aside grain for a rainy day and when famine struck, his neighbor asked for a loan. The foresighted farmer was not only foresighted, he was shrewd — and greedy. “All right,” he said, “I’ll give you 20 bags now if you’ll give me 30 bags in the fall.” His neighbor had no choice but to agree — and hate.

When money arrived, with it came money-lenders and 10% or 50% on the drachma or shekel. We are told that Joseph lent grain to the people of Egypt in time of famine and when they could not repay, first he took their land and then he took the people themselves as slaves for the Pharaoh. Joseph is looked on as a savior of his fellow Israelites, but he must have been hated by the common Egyptian!

When, concerning borrowing and lending, the God of Israel gave commandments to his people and Greek thinkers thought, there was already a long history of usury and of hatred for the usurer. The God of Sinai expressed strong disapproval, and so did Aristotle.

That was a very different world from ours. We take interest so for granted, we are so accustomed to the kind of world in which interest is the norm, that to understand our forbears’ disapproval, we will have to do some concentrated imagining and thinking.

First, we have to be clear that usury does not involve how much interest lenders may morally or legally charge, but whether it is right to take any interest at all. For us today usury is the taking of excessive interest. For our ancestors usury was the taking of any value at all over and above the value of the money or item loaned. The question for them was whether or not usury in any form — whether 50% or ½% — was moral or legal.

To many of us their attitude will seem strange. What was the problem? Why didn’t they just settle on a reasonable rate and let it go at that? But, be assured, however strange the controversy may seem, it is of great significance to our enquiry, for here we find overturned an almost unanimous tradition of many centuries. How did it happen, we will want to know, that a moral view of such antiquity and such consensus — pagan, Christian, Jewish, and Muslim — was replaced by a new one that has in its turn achieved almost universal acceptance? What were the forces that brought about this change? What was the thinking involved? And what does this example say to us now?

The ancient Christian understanding of usury stems from everyday experience of usurers (such as that described above), from Greek thought (especially Aristotle) concerning the nature of money, from biblical texts, and from Christian vision concerning the proper relation of human beings to one another.

For Aristotle the purpose of money is to serve as a medium of exchange. It is contrary to its purpose for it to increase at interest. He calls such increase the “breeding of money” and says that “of all modes of getting wealth this is the most unnatural.”ⁱ This teaching flowed down through the Western world almost as self-evident truth.

In the law of Moses interest-taking is forbidden from fellow Israelites, but not from the foreigner.

You shall not charge interest on loans to another Israelite, interest on money, interest on provisions, interest on anything that is lent. On loans to a foreigner you may charge interest, but on loans to another Israelite you may not charge interest. (Deuteronomy 23:19–20)

And especially you must not make a profit from the poor.

If you lend money to my people, to the poor among you, you shall not deal with them as a creditor; you shall not exact interest from them. (Exodus 22:25)

The situation is one Benjamin Nelson calls “tribal brotherhood”ⁱⁱ. Borrowing is usually by the poor in their need. Members of the tribe are brothers and sisters. Brothers and sisters help one another, but have no such obligation towards the outsider. The rules about borrowing and lending are part of the solidarity of the tribe.

In the ethic of Jesus this tradition is expanded to include even the enemy, not just the sister or brother. “Love your enemies, do good, and lend, expecting nothing in return.” (Luke 6:35a nrsv) During the usury debates of the 16^th century and following, when reformers and others press for “moderate usury” (i.e., moderate interest), this passage is quoted again and again in rebuttal by conservatives.

The Fathers of the Church saw usury and the usurer as despicable. They saw the problem as one of human relations, and painted it in such terms in their sermons. Here is Basil the Great depicting a usurer in tragi-comic colors —

The miser sees someone in need kneeling in front of him and entreating him for money … He is not moved by the other’s tears. He continues to maintain that he does not have any money. … By contrast, when the beggar talks to him about interest and pledges, at once his eyebrows go up and he smiles, he recalls the friendship that linked their parents, he regards the other almost as one of the family, to be treated as a friend. He says: “Let’s see if by any chance I have a little money. Yes, I have some money belonging to another friend. He lent it to me for a bit of business. Unfortunately, he is asking for a very high rate of interest on it. For you, I will make a discount.”ⁱⁱⁱ

According to the Fathers the only “usury” justified — indeed, commanded — by scripture is a “spiritual usury” paid by God to the benefactors of the poor or of virtues paid by believers to God.

The only controversy about usury among the Fathers and during the first 500 to 1000 years of the church’s life concerned “neighbor” and “foreigner.” For many of the Fathers the Deuteronomic distinction between neighbor and foreigner began to vanish in favor of a Christian universalism, in which all human beings are my neighbor, all are my brother and sister. But Ambrose taught that you may take interest of your enemy. “From him … demand usury whom you rightly desire to harm. … Where there is the right of war, there also is the right of usury.”^iv The Ambrosian view and the universalistic view contended until the 12^th and 13^th centuries in the West until universalism finally attained consensus.

Beginning from about 1200 we can trace an evolution of thought in which gradually a significant number of exceptions to the prohibition of usury became widely recognized. The major exceptions were of two sorts — damnum emergens and lucrum cessans. You may licitly demand usury when you have had some sort of emergency loss — e.g., when you have been forced to borrow money at usury to back up a loan you have guaranteed; or when the repayment of a loan has been delayed. You may also demand usury when the loan you have made causes you to lose a profit you might otherwise have gained.

Significant also was the rise of the societas, a business partnership in which the partners contributed either money or skill or both. The money in a societas became recognized as capital rather than a loan because the partner risked his money. Usury was not involved because of the risk. Lack of risk was a distinguishing characteristic of usury.

In the 14^th century merchants began to insure their maritime ventures and both moralists and canonists raised no objection. Then insurance was applied to the societas. One partner insured the capital of the other. This step struck a fatal blow to risk as the distinction between capital and loan. The capital in such a societas was no longer at risk; yet it was not regarded as a loan.

A further evolution occurred through what was called the Triple or Five Percent Contract. This involved a societas in which one partner insured the capital of the other, and, in addition, guaranteed that partner a 5% profit. One partner, in other words, took all the risk and guaranteed lucrum cessans to the other, in return for the other’s investment of money. Here the investment, though technically capital, was in effect a loan at usury. This contract was hotly debated, but widely accepted.

We have now arrived at a situation in which a teaching intended for protection of the poor and concerning loans used for consumption is overlaid with exceptions intended to serve the needs of commerce and loans for production. The teaching is cumbersome and confusing. Two powerful forces now sweep it away and redefine usury — the Reformation and the rise of capitalism.

By the 16^th century two economic events were occurring. A surplus of money was becoming available and with it an expansion of enterprises. More money, in other words, was available as capital. In England, for example, lands were being drained and enclosed, the iron and cloth industries were being rapidly expanded, and the government was encouraging production of munitions. The expansion of the cloth industry, to take one example, required capital at each stage of production, distribution, and sale. The sheep herder needed capital for buying sheep, for the interval between sale and payment of wool, and for bad seasons. The weaver needed to be supplied with materials. The clothier needed a large supply of various types of wools, etc.

The Reformation supplied a new interpretation of Scripture to support this new economy. Martin Luther at first took a conservative stance, but in his later years began to make room for moderate interest on loans. He advised John Frederick of Saxony that interest of four or five percent would not be unjust. Of great importance is his attitude towards the relation of church and world. He was alarmed by radical reformers who wished to reform society in accordance with the Mosaic law and the gospel. He stood staunchly against social revolution. The Gospels were not intended to take the place of civil law.

The world needs a strict, hard temporal government that will compel and constrain the wicked not to steal and rob and to return what they borrow. … Let no one think that the world can be ruled without blood; the sword of the ruler must be wet and bloody.^v

The tip point came, however, with a letter written^vi in 1545 by John Calvin in which he challenges Aristotle’s dictum that money is barren, reinterprets the various passages of Scripture that had been used to support the traditional teaching, denies that there is a bond of brotherhood among the people of his time as there had been among the Jews, and concludes that usury (i.e., interest) is allowable, provided it is kept within the bounds of justice and charity.

Calvin’s redefinition of usury takes advantage of the literal meaning of the Hebrew word for usury in Deuteronomy 23:19–20 and in other places in the Old Testament. The word is neshek, which literally means to bite. Thus usury becomes interest that bites, excessive interest that devours. Usury is no longer taking anything beyond the principal but taking too much beyond the principal.^vii

Calvin added restrictions. One must not charge an excessive rate. One must not take interest from the poor. Interest is permissible only if it does not harm one’s neighbor.

John Noonan neatly summarizes what has happened to the church’s teaching, “The scholastics begin with a general prohibition and find exceptions; their opponents begin with a general permission and make restrictions.”^viii But there is also an advance in economic theory. A new understanding of money has emerged and with it the concept of capital.

When the economic world is viewed as a world of consumption, money is viewed as a medium of exchange. Money makes it possible for persons to exchange their excess goods with one another. The goods are consumed. They are used in the process of living. Money produces nothing. Money is not fruitful.

But when the world is viewed as a world of production, all this changes. Here money is used, not for consumption, not for living, but for the goods and labor needed for production of further goods. Without money the new goods are not possible. Money is more than a medium of exchange. It is a means of production. It is fruitful. This kind of money is capital.

The new teaching spread quickly. The rising capitalism welcomed it with open arms. New laws were passed in various German states to allow the charging of interest. Geneva adopted an ordinance in 1547 limiting interest to 5%. The English parliament passed legislation allowing interest and limiting it to 10%.

A fierce debate continued, however, for many years. Many books and pamphlets appeared pro and con. Stage plays caricatured the miserly usurer who grinds the poor and fleeces profligate young gentlemen. The sides were not Catholic versus Protestant. Advocates of the new teaching and conservatives in favor of the old were to be found among both Catholic and Protestant.^ix

One of these works, consisting of a dialogue among a preacher, a lawyer, a merchant, and a civilian, became a classic exposition of the various views.^x In it we find the standard opposing arguments.

The Preacher’s Oration

My neighbor … commeth to a rich man to borrow for his relief, either for compassing his necessary affairs, or else for maintenance of his family. … This I say is against charity, that any man should be so far from love as he will not lend but for an assured gain and most sufficient pawn. …

There is no love, where free lending is not, and where love is not, there is not God. …

In Exodus the xxii, if thou lend money to any of my people, that is poor by thee, thou shalt not be an usurer unto him, neither shalt thou oppress him with usury. … Lend, saith Christ … looking for nothing thereby, or of the gain. … Saint Jerome saith there is no difference betwixt usury, fraud and violent robbings. [Here the Preacher gives a long series of the teachings of the Fathers against usury.] …

The poor man, the more he dealeth with usury, the more he is wrapped in … bands … and at length utterly undone. And this is the occasion of diverse bankrupts, of many decayed gentlemen, that are compelled for little to sell their lands away, and of a number of honest occupiers that by those means are utterly undone, both they, their wives, and their children. …

I know a gentleman born to five hundred pound land, and entering upon pawn of his land. … He did owe to master usurer five thousand pound at the last, borrowing but one thousand pound at first. …

Either the Bible is not God’s word, or else we are not of God, such contrariety is between our lives and our lessons.

The Lawyer’s Oration

I do lend money to him that hath need, and can prove that for want of the same money I have sustained great loss, or if my debtor do break day with me, when I look to have it at the time appointed … it were good reason that my debtor bear my loss. …

You have heaped a number of scriptures together … but better you should have done … if you had weighed usury more straightly by the rule of charity. …

Circumstances ought to be considered. … Neither ought I to deal with all men in one sort. … There are three sorts of men, the stark beggar, the poor householder, and the rich merchant or gentleman. To the first I ought to give freely, not only to lend freely; to the second I ought to lend, either freely or mercifully; with the third I may deal straightly, and ask mine own with gain. …

Where no biting is, there is no usury. …

Some there be that say: all usury is against nature. … [But] if usury were against nature, it should be universally evil, but God hath said that to a stranger a man may put out his money for usury. …

Moreover … even in God’s law … usury is not forbidden. For is it not in S. Luke’s gospel that God said He would come and ask the money lent with the usury, blaming him that did not put it forth for gain? …

I would you weighed all causes … by the rule of charity … by judgment and discretion. … Usury only being forbidden that breaketh charity and decayeth the love of my neighbor by extreme cutting and excessive taking. … Where charity is not broken … there is no offence committed. …

Usury in the Hebrew tongue … is called a biting, as a dog useth to bite or gnaw upon a bone; so that he that biteth not, doth not commit usury. …

I think you divines do not well observe circumstances when you will that the very bare letter shall be plainly taken as it lieth, and in one sort or manner to be applied to all men, without regard of circumstances, degree, estate or condition of any one.

The Merchant’s Oration

What trade or bargaining can there be among merchants, or what lending or borrowing among all men, if you take away the assurance and the hope of gain? … If you forbid gain, you destroy intercourse of merchandise, you overthrow bargaining. … Hope of gain maketh men industrious, and, where no gain is to be had, men will not take pains. … Merchants’ doings must not thus be overthwarted by preachers.

The Preacher’s Replication

Your distinction of three sorts of men … is rather politic than Christian, rather worldly than divine. … For you ought to lend freely unto all men, rich and poor, lord and gentlemen, king and caesar.

The Civilian’s Oration

The causes that have moved wise and godly men to detest usury … First, the usurer is an idle man. … He bringeth a dearth also of all things through his excessive dealing. For when he taketh so dear for his money, it must needs follow that, as others do buy, so they must sell. … Hereof commeth decay of good houses and wracking of the people. … And, I pray you, what is more against nature, than that money should beget or bring forth money. …

The difference betwixt interest and usury … Interest is demanded when I have sustained loss through another man’s cause. … It is reason, that I be answered all losses and damages that I have sustained through another man’s cause, as well for the gain that else I might have had. …Interest is lawful, as the which seeketh only equality: whereas the name of usury is odious, ungodly, and wicked, as that which seeketh all inequality.^xi

This debate between conservatives and innovators continued past the Reformation into more recent times. As late as 1745 the Roman Catholic Church was maintaining the old tradition; in that year Benedict xiv issued the conservative bull Vix Pervenit. And it was not until well into the nineteenth century that the Holy Office began to recognize and permit the charging of interest in commercial transactions. But the changes in the economic system swept forward relentlessly, paying little attention to the debate. Capitalism based on loans at interest became the economic system of our world without waiting for the church’s authoritative teaching to catch up.

Commentary

The overturning of a unanimous tradition

Where a teaching has been held unanimously the presumption is certainly in favor of that tradition. But it cannot be held totally beyond question. If the tradition is attacked a simple appeal to its antiquity and unanimity will not do. We must find further grounds in its defense.

In this controversy we find a tradition that enjoyed a unanimity as full as any teaching of the church has ever held. Yet it was overturned — and overturned, moreover, to the point that it is difficult for us today to conceive how it could ever have been held at all. But it was.

Here is a clear case of the overturning of a unanimous tradition.

One may argue that behind the words and concepts of the first teaching lay a Christian view of love of neighbor that has not changed. Only the circumstances of its application have changed, and it is these circumstances which have caused a reformulation. The fundamental sense of the tradition, in that sense, has not changed.

I believe this response to be essentially correct, but for now we need to see the implications for the way in which we carry on our present controversies. We need to be aware that the conservative position will seldom be well served by simply asserting the universality of a tradition. More is needed and we will be considering what that “more” consists of.

Changes in the world bring about changes in teaching

Throughout this history we see a continuing pattern of change in circumstances followed by an adjustment in teaching. Hard cases stretch theory. If I teach that it is wrong to receive back more than one has loaned, what do I say when a lender protests that the borrower has not repaid him on the agreed date and he has lost money as a consequence? The lender says it is only right that he be compensated for his loss. I hear justice in this claim. So I adjust my teaching to allow for an exception to my teaching. I have become aware of a circumstance I had not originally considered that causes me to make a change in my teaching.

We can see this cycle of hard case-adjustment in teaching over and over again in this controversy — and in many others.

Indeed, we can lay it down as a fundamental law of change in teaching and theory that awareness of difference in circumstances bearing upon a theory precedes and tends to bring about change in that theory. Or, more simply, changes in the world bring about changes in teaching.

To change one’s teaching is to change one’s world

The converse of the preceding conclusion is also true. When 16^th century Germans, Swiss, and English changed their teachings about usury, they also changed their laws and their view of the world. The change in teaching and law signified a choice of world. They chose a world of commerce. They moved from a world viewed principally as stable and as the consumer of goods, to a world viewed as productive and changing. The new belief about usury signified the birth of a new world.

As I pursued this study it gradually became clear to me that the new definition of usury involved far more than loans and interest, that a new world was involved, and far more than a new economy. I knew that the change in teaching about usury had occurred, and I guessed it had something to do with the rise of capitalism, but I was not prepared for the conservative teaching of the brother- and sisterhood of all human beings. This conservative vision of a Christian village, of a world of personal relations in which everyone is neighbor, in which all are to be treated by the rule of love appeals to me powerfully. And standing today in an impersonal world of impersonal relations, a capitalistic world of economic laws compelling human behavior, I look back at this Christian vision of my ancestors and feel an acute sense of longing and loss. Would that we lived in a village of neighbors! Our cities of strangers dehumanize. Is there no way in which we can recapture this medieval ideal?

I look at the debate and I see that the disputants were only minimally aware of the implications of their decisions. They knew the world was changing. They knew they were being required to choose for or against change. But they were blind to the scope of the change. They were blind to the loss of the neighbor, to the alienation of persons implied in their decision.

I cannot expect us in our controversies to be more aware than our of the scope of the changes involved. We are no more transcendent than our forbears. But perhaps we can make a few small steps in that direction by seeking in our controversies to describe our vision. When we argue for or against a teaching, what world do we see on either side?

If we look, for example, at the world assumed by the Preacher in Wilson’s book, we see very clearly a world of personal relations. When he describes a loan it is from one person to another, from a rich person to a poor one in need. He does not describe the world of commerce. But when the merchant speaks, or the lawyer, they perceive a different world. They talk about business loans.

I am suggesting that in our debates we look at these assumptions and try to make them conscious and to fill them out, to describe the worlds more completely. Since choosing a teaching involves not only the teaching by itself, but the world it assumes, it should help us in our choice if we can explicitly see the worlds implied.

I look at the world of the usury controversy and our world today. I look at the mass of consumer debt being built up by Americans and I wonder where it is all going. The profit motive seems out of control. The drive to spend and the drive to persuade us to consume more and more seem to have a law of their own. The forces of the market seem to rule human life. Is this the world our forbears meant to choose? Perhaps once again dwe need to choose a different world — and a modified view of loans and interest!