What is usury?


The Church's traditional condemnation of usury has faded away of late despite its increasing contemporary relevance. Simon Heans looks at the Church's teaching on the subject and how it applies to today's situation


I was at an Archdeaconry Clergy Day recently and got talking to a member of General Synod who, as they all do, receives New Directions for free. He did not appreciate the privilege. 'One long whinge', he opined. He was referring of course to the policy of this journal on the ordination of women, which he favours. But then we got talking about the Credit Crunch and he expressed regret that the Church no longer condemns usury. 'So', I said, 'you are a traditionalist after all!'

But that little confrontation set me thinking. What has happened to the Church's censure of usury? After all, it was regularly reprobated from the patristic period through the Reformation (Calvin and Luther both fulminated against it) and on into the modern age. But not today. Is this a case of the Church's teaching changing to accommodate modern society?

In the last New Directions Geoffrey Kirk wrote of the important role played by 'the improbable analogy between slavery and an all-male priesthood in the campaign to ordain women. Leaving aside the grotesque lumping of them together under the heading 'oppression, the liberal proposal is that the Church 'changed its mind', and if it can do this once, then why not again and yet again.

Traditional view

In a previous piece for ND [Mar 2007] I drew on, inter alia, chapter 4 of Professor Rodney Stark's For the Glory of God to show that the Christian opposition to slavery down the ages was consistent and coherent. There was no such 'change of mind' of the kind liberals allege. But usury seems to be different. Despite the wish of my liberal colleague, we don't hear bishops inveighing against the taking of interest on a loan. For let us be clear that is how usury is defined in the tradition. Yet lending money for a profit is the foundation of the Western banking system. So where should traditional Christians stand on this issue now? Should Forward in Faith and Reform be making common cause with the Taliban on this issue?

Readers will perhaps be relieved to hear that the traditional Christian doctrine on usury is not quite the same as Islamic teaching on the subject. There is a major difference, despite sharing the definition of usury above. These can both be studied in the encyclical Vix Pervenit (1745). Its author was a previous Pope Benedict (the XIV), who wrote it in response to the spread of modern banking practices throughout Europe.


Moral motivation

It begins by reiterating the Church's opposition to usury. Benedict is clear that the contract between lender and borrower is 'by its very nature, that one return to another only as much as he has received.' To take more is to be guilty of we don't hear bishops inveighing against the taking of interest on a loan usury But wherein lies usury's sinfulness? It consists in 'the fact that sometimes the creditor desires more than he has received.' So usury is the action whose motive is covetousness. If analysed in this fashion, in terms of moral motivation, the recent actions of banks and building societies look to be more than a little dubious. That ill-starred couple Fanny Mac and Freddie Mae were motivated by covetousness in offering those sub-prime mortgages. They desired more than they were receiving from the loans they had already made and so took the risk.

The doctrine of usury focuses attention on the lender, but now that credit is ubiquitous it should surely be extended to borrowers too. I remember reading last year a letter from the Principal of St Stephen's House in the Daily Telegraph recounting how he went into his local bank to sort out a problem with his Switch card, only to be offered a loan of 25k, which is more than his annual stipend. He of course resisted the temptation to sin. But then not everyone has Canon Ward's strength of character, as is evident from the monstrous levels of current consumer indebtedness.
Keeping in mind the analysis of modern financial arrangements according to the fifth of the Deadly Sins, we might suggest rebranding the Churches Together Live Simply campaign as Live Non- Usuriously.

It's not very catchy, but it does make the point that the way in which Christians have always thought about economic life remains relevant today.

However, in that same encyclical Benedict goes on to introduce a concept which is absent from Islamic teaching on usury. He refers to 'other titles' which are not 'intrinsic to the contract' between lender and borrower and which make it legitimate 'to demand something over and above the amount due on the contract.'

Opportunity cost

Now it would be quite wrong to think that Benedict here is making a concession to the spirit of the age. He is not changing doctrine in order to accommodate new economic conditions because the idea of 'other titles' is not something he invented. It is found in Thomas Aquinas, who was himself summarizing a tradition. He argued that a lender could charge interest, not because of the loan itself but for the loss incurred due to the circumstances in which the loan was made. He cites, as an example of a circumstance creating an 'other title', the cost to the lender of hiring a courier to transport his money to the borrower.

From this sort of situation there emerged a debate around what economists now call 'opportunity cost'. Its conclusion was that as long as proof could be given that one could have made a profit with one's money instead of loaning it, a legitimate title to interest existed. This outcome of the scholastic debate is reflected in Benedict's statement in Vix Pervenit that 'to spend and invest money legitimately either to provide oneself with an annual income or to engage in legitimate trade and business' constitute 'honest gain and not usury.

To sum up: usury is as sinful now as it has always been. Its root is covetousness and its fruit injustice. But the reason we don't find lending at interest condemned as once it was is that the 'opportunity cost' principle anticipated by Aquinas and the Schoolmen applies to economic life now in an unprecedented way. This has changed, but Christian teaching has not. I don't want to be accused of whingeing, so I'll leave my liberal colleague to make the connection between this and women's ordination.

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