Catholic Apologetics #21
“Thou shalt not lend to thy brother money to usury, nor corn, nor any other thing” (Deuteronomy 23:19).
The Ancient World Condemned Usury
In the not-too distant past, the act of charging interest on loans and profiting from the misfortune of others would have been universally viewed with abhorrence. But drive down most major roads in the country and you will find institutions seeking to make you a loan ranging from payday loan companies to large banks seeking to make personal loans. Mortgages, credit cards, personal loans, automobile loans, and more have become cornerstones of the worldwide financial system. Alas, usury is alive and well.
The contempt for usury predates the Church and a simple study of ancient Greece and Rome would illustrate that anti-usury teachings did not originate in the early Church. Cato the Elder, the first person to write history in Latin, famously remarked, “And what do you think of usury? — What do you think of murder?”
The Church Unequivocally Condemns Usury
Sacred Scripture explicitly condemns usury, in Deuteronomy 23:19, Exodus 22:25, Leviticus 25:36-37, 2 Esdras 5:7, Psalm 14:5, and Ezechiel 18:8-13.
The First Council of Nicaea (Canon 17), in 325 AD, forbade clergy from engaging in usury. In fact, the Council forbade clergy to lend money at interest rates even as low as 1 percent per year. Later ecumenical Councils applied this prohibition to the laity.
The Third Lateran Council in 1179 decreed that persons who accepted interest on loans were excommunicated and could receive neither the Sacraments nor Christian burial unless they repented. In 1311, Pope Clement V condemned as heretical the belief in the right to usury and abolished all secular legislation which allowed it.[i] And Pope Sixtus V, who reigned from 1585 to 1590, condemned the practice of charging interest as “detestable to God and man, damned by the sacred canons, and contrary to Christian charity.”
In the Middle Ages, laws were enacted in Catholic countries against usury. And surprising to some, usury is forbidden in Islam as well. Yet, whereas Arab nations generally still retain strict provisions against usury, the formerly great Catholic nations of Europe no longer retain them as they have sold out their Catholic heritage to European bankers and the financially elite.
The Poor Man’s Catechism, published in 1815, in its section on the Commandment against theft, states, “This commandment is also broken by open robbery; by invading other men’s right, and seizing up on it, whether by an unjust war, or forcing them to yield it up, or overcoming them at law by bribery: or by an extortion and usury.”
St. Thomas Aquinas concurs in the Summa when he writes, “To take usury for money lent is unjust in itself, because this is to sell what does not exist, and this evidently leads to inequality which is contrary to justice.”[ii]
Vix Perveni – The Encyclical Against Usury
On November 1, 1745, Pope Benedict XIV promulgated the encyclical Vix perveni (On Usury and Other Dishonest Profit) to the Italian bishops, which unambiguously and authoritatively condemned usury:
“The nature of the sin called usury has its proper place and origin in a loan contract. This financial contract between consenting parties demands, by its very nature, that one return to another only as much as he has received. The sin rests on the fact that sometimes the creditor desires more than he has given. Therefore, he contends some gain is owed him beyond that which he loaned, but any gain which exceeds the amount he gave is illicit and usurious.”
As was the case with the First Council of Nicaea, the condemnation of usury in Vix perveni rejected interest of any amounts – even modest interest rates. In fact, the encyclical went further than mere loan contracts and condemned those who “falsely and rashly persuade themselves” that “other just contracts exist, for which it is permissible to receive a moderate amount of interest. Should anyone think like this, he will oppose not only the judgment of the Catholic Church on usury, but also common human sense and natural reason.”[iii]
Yet Benedict went on to clarify that “entirely just and legitimate reasons arise to demand something over and above the amount due on the contract. Nor is it denied that it is very often possible for someone, by means of contracts differing entirely from loans, to spend and invest money legitimately either to provide oneself with an annual income or to engage in legitimate trade and business. From these types of contracts honest gain may be made.” In so doing, the Church underscores the virtue of justice and restitution. Usury, far from making a transaction balanced, harms the good of another by robbing him and taking more than one’s share.
If I were to make a loan to a person, I would expect back from him an amount – or combination of items – that would be equal and just. A lender has the right to be made whole (i.e. to be compensated for services, fees for late payments, and the effects of inflation), but he is not allowed to make a direct profit upon the loan itself. Lenders have the right by the virtue of justice to be made whole for their expenses including inflation, but interest – of even a modest amount – may not be part of the contract.
Practical Applications in Our Times
However, St. Thomas further made clear that the borrower is not the one in the state of sin: “It is lawful to make use of another’s sin [the usurer’s] for a good end, since even God uses all sin for some good, since He draws some good from every evil.” While we may consider divesting of bonds we own or selling the stock of publicly traded banks, holding onto them does not place us in the state of sin. Likewise, while obtaining a loan for a good reason is not sinful, borrowing for frivolous reasons or running into debt beyond our ability to repay could be sinful. Furthermore, investments in profit-making ventures that result in the sharing of losses or gains of the productive assets acquired is not usury and are permitted.
Moreover, with providential wisdom which we can still use today, Benedict continued by recommending that all agreements be committed to writing for the benefit and transparency to each party:
“Those who desire to keep themselves free and untouched by the contamination of usury and to give their money to another in such a manner that they may receive only legitimate gain should be admonished to make a contract beforehand. In the contract they should explain the conditions and what gain they expect from their money. This will not only greatly help to avoid concern and anxiety but will also confirm the contract in the realm of public business. This approach also closes the door on controversies – which have arisen more than once – since it clarifies whether the money, which has been loaned without apparent interest, may actually contain concealed usury.”
Alas, in Vix perveni, Pope Benedict XIV remarked what our nations may certainly be experiencing when he said, “We learn from Divine Revelation that justice raises up nations; sin, however, makes nations miserable.” Like abortion, divorce, euthanasia, homosexual marriage, and other flagrant sins crying out for vengeance, usury too demands justice. And even among Traditional Catholics who seek to live holy lives amid so much sin, how many of us are speaking out against the payday loan companies, the charging of interest to friends or family, or the greed which have no place in a Catholic culture?
Kyrie eleison!
[i] Moehlman, Conrad H., “The Christianization of Interest,” Church History, 1934, Issue 3, p. 6.
[ii] http://www.newadvent.org/summa/3078.htm
[iii] http://www.papalencyclicals.net/ben14/b14vixpe.htm
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