Thoughts on Usury / Morality of Finance Today?

[Ezekiel]

Ok so to the webmaster I saw you commented over on NOW’s usury article. I was wondering if somehow they saw I mentioned Michael Hoffman’s writing over here or it bounced around the internet and NOW was responding to it, but I doubt that happened – although they might be responding to Hoffman (his blogspot is revisionistreview if you want to sift through it). One comment did mention, as Hoffman has, that a string of popes were related to usurious banking families, I think. I was under the impression that while they may not have sinned or at least been heretics on the morality of usury, it seemed like concessions were made and like a “spirit of usury” might have prevailed. It’s been alleged the Church has “flip flopped” on this topic as it changed a stance on slavery. I don’t think they changed the teaching, but either sin or impropriety might have gained an upper hand. With slavery there was seemingly a kind of change from tolerance of the practice to abolitionism.

I didn’t necessarily find much clarity in that article; I did like the usury definition of “profit exacted on a loan of money just because it is a loan” because it’s simple and makes sense.

I do think maybe you could qualify this by saying it’s ok to charge a fee for a transaction because there can be real costs to transactions, but even that makes me a bit cautious of a slippery slope because then people could just add in whatever interest they want and call it a “transaction fee”. It’s mostly this slippery slope that concerns me, as I do want to admit of certain “distinctions” but in practice I feel they are open to be abused to the point where it makes it pointless to consider anything as usury if they can just use loopholes and exceptions to get the same amount of money as a wrong interest on a loan.

One of the comments said they were privately loaning a mortgage to a friend and collecting interest because of lost monies on investments. I believe this is literally usury and a problem, but other commenters seemed to think this was just “sensible finance”, so I don’t actually know what is correct there – I would not accuse them of sin necessarily but I think that arrangement is to be avoided. It’s the same modern argument for justifying any loan at interest (that money has a “time value” and if it isn’t being invested in a stock then it is just to charge for what is being lost from that potential investment with interest on a loan).

I am open to the Church being able to legitimately adapt teachings to the times when things change, but I have been concerned some of these modern views of usury are modernist rather than legitimately updating. Another person suggested rents were “in the spirit of usury”. There are other political ideologies that feel this way as well. While rent has been defended by Aquinas as morally legitimate, I think the modern landlord arrangement can be usurious in spirit – at least people should probably have caution there.

The article also correctly quoted the ideal which is in the Bible, of loaning without expecting to be paid back (Luke 6:35). Then it seems reasonable to loan and get back what you loaned. Again anything beyond this I would want to be cautious of. It may not be usury, but some things seem to be in a “spirit of usury”. I feel like the Christian ideal is to liberate a person financially, while interests on loans can enslave: “Owe no man any thing, but to love one another” Romans 13:8.

Of further concern is the implications for how Catholics are to manage finances today, not mentioned in the NOW article. For instance, many bank loans will be for loans at interest, so it would seem like someone should be cautious of savings accounts – yet they’re not good to have as the gains aren’t keeping pace with inflation anyway. Church Militant had a piece on how Catholics shouldn’t invest in immoral companies – so that would seem to exclude investment in index funds, and a lot of companies. So if you whittle things down then, it seems maybe a lot of “trads” are making immoral investments ignorantly or apathetically; or perhaps I am misunderstanding how Catholics might aim to make other financial gains.

One of the obvious problems with usury is that it forces people to produce things that don’t exist, which is different from the profit on an investment. If someone is loaned $5, then told they need to pay back $6, they need to produce $1 of value that doesn’t exist. This is frequently done by adding new labor to the use of capital (like using a machine) to produce $1 worth of new material. So like our national “debt”, which frequently means interest on the debt, forces the whole country to make all kinds of things that don’t exist, in order to have new value to pay for the interest on the national “debt”.

I think the socialists frequently observe that a lot of value is created through labor. Not all labor is equal; an hour doing one job may not have the same economic value as an hour doing another. However we get in to weird situations where a person who is enslaved to interest on a debt, might be constantly laboring and producing all kinds of value, while the lender is not laboring at all but simply in effect taking what the laborer produces. Investment seems to have this kind of “usurious spirit” sometimes as well, when a person just buys a company and does no labor, while laborers actually produce value which goes to the stock holder or owners of the company. While investments that have ownership and risk have been defended as lawful I believe, to me this also seems like a point of concern like landlords making money from rents. It’s kind of anti-distributist, anyway, as distributists often want the laborer to own the means of production (rather than a capitalist own the means of production so that they simply “exploit” the laborer by taking value from him that the laborer would take home if they owned the means of production).

A “just economy” frequently is supposed to have wages for a family breadwinner sufficient for providing for the family, the “family wage” (rather than living wage debates): https://infogalactic.com/info/Family_wage

Arguably there simply material things and labor, with “material things” further being subdivided in to goods and capital. Labor is often the major thing traded for value, especially for the poor, which is why wage rates in a “just economy” should be at that level. Capitalists make money with “material things” or rather goods or labor are transformed in to capital. Capital is like a machine for example, while a good might be like a food like pumpkin which is often simply consumed. So genuine wealth seems to be created by more productive labor or a greater quantity of labor (as well as reducing losses of wealth). Simply investing does improve the value of the labor by increasing the capital put in, but it can seem extractive as it’s still the laborer producing the value. I’ve suggested a lack of distinction between goods and capital by lumping them together as “material things”, as for example if a person has a car they just like to drive around for fun (used as a good), they could also use that to deliver food (used as capital). So the distinction seems a bit blurry at times; then of course there are “intellectual property” items, which to me are a kind of fiction as ideas aren’t ownable, but I recognize that currently people want to observe this kind of “legal fiction” of sorts.

But anyway, I have discussed some of what I think is “usury”, which is a dishonest way of making wealth, and in contrast tried to discuss what I think does produce genuine wealth.

What do you think – do you have anything to add or correct?

Thanks for the discussion.

[Robert Robbins]

The way I see it, if you are going to say that there has been a change on the moral teaching of usury, then you are going to have to say the popes who oversaw such change were not popes. Usury as evil is de fide. Rather, what moral theologians say regarding this issue is that the markets have changed, and so money has changed as well.

As the Catholic Encyclopedia on Interest explains:

“Legitimacy of lending at interest

“Is it permitted to lend at interest? Formerly (see USURY) the Church rigorously condemned the exacting of anything over and above capital, except when, by reason of some special circumstance, the lender was in danger of losing his capital or could not advance his loan of money without exposing himself to a loss or to deprivation of a gain. These special reasons, which authorise the charging of interest, are called extrinsic titles.

“Besides these compensatory interests, the Church has likewise admitted moratory interest. In our day, she permits the general practice of lending at interest, that is to say, she authorizes the impost, without one’s having to enquire if, on lending his money, he has suffered a loss or deprived himself of a gain, provided he demand a moderate interest for the money he lends. This demand is never unjust. Charity alone, not justice, can oblige anyone to make a gratuitous loan (see the replies of the Penitentiary and of the Holy Office since 1830).

“What is the reason for this change in the attitude of the Church towards the exaction of interest? As may be more fully seen in the article USURY, this difference is due to economical circumstances. The price of goods is regulated by common valuation, and the latter by the utility that their possession ordinarily brings in a given centre. Now, today, otherwise than formerly, one can commonly employ one’s money fruitfully, at least by putting it into a syndicate. Hence, today, the mere possession of money means a certain value. Whoever hands over this possession can claim in return this value. Thus it is that one acts in demanding an interest.”

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