Did the Church Change Its Doctrine on Usury?

Quentin_Massys_The Moneylender and his wife (1514)

Orthodox Catholics say that discipline can change and doctrine can develop—in the sense that elements present in the early form of a doctrine can emerge more fully over time—but doctrine in its essence cannot change.

In the 1950s and 1960s, Catholic advocates of contraception cited the Church’s teaching on usury as a counterexample to this dictum. The Magisterium’s doctrinal authority covers faith and morals, which surely includes its teaching on usury. And yet its teaching on usury obviously changed. If doctrine could change with respect to usury, the argument went, why could it not change with respect to contraception?

During the recent Extraordinary Synod on the Family in Rome, we heard the same argument applied to communion for the divorced and remarried, and for homosexuality. Reporting on the Synod in The Daily Beast, Barbie Latza Nadeau wrote: “Doctrine, the traditionalist fathers said, cannot be changed, even though there are exceptions: doctrine on slavery has changed over the years; so, arguably, has doctrine on ‘usury,’ the payment of interest.”

This argument has achieved a place in the pantheon of conventional wisdom. But is it correct? Did the Church’s change of teaching on usury constitute a doctrinal change?

No. What changed was our understanding of the nature and function of money, neither of which has doctrinal status. Once the understanding of money changed, the sin of usury ceased to be identified in any simple way with charging interest on money. This is development, not substantial change.

Unfortunately, the issue is complex. And its complexity provides fertile ground to plant the seeds of doubt about the stability of doctrine. We need to lay this mistake to rest.

The Traditional View
These days, we think of usury as charging an astronomical interest rate on a loan, but for most of the last 2,000 years, usury referred to any interest charged on a loan—that is, usury was more or less identified with charging interest on a money loan.

Far from being a trivial moral peccadillo, it was seen as a damnable offense. In his Divine Comedy, Dante puts usurers in the inner ring of the seventh circle of hell. Hatred of usury was not unique to Christianity, however. The Greek philosophers Plato and Aristotle—along with such Roman thinkers as Cicero, Seneca, and Cato—also disdained it, with the latter comparing it to murder. And it wasn’t just a Western hang-up. Buddha denounced it, and Islam still follows Muhammad in condemning it.

While Greek and Roman thinkers shaped the Church’s view of usury throughout the Middle Ages, the other influence, of course, was Scripture. The Old Testament seemed to prohibit charging interest on money loans. In Leviticus, for instance, God forbids the Hebrews from charging each other interest on loans after they have entered the Promised Land.

But if the Hebrew Bible condemns usury, how did Jews come to be associated with usury in the Middle Ages? The short answer is that the Old Testament allows Jews to charge interest to non-Jews.

Christians had to grapple with an additional passage from the New Testament book of Luke, where Jesus admonishes his followers to “lend, expecting nothing in return.” Because of admonitions like this, for centuries Christians were officially forbidden from charging interest while Jews were free to make interest-bearing loans to Christians. Since Jews were often prohibited by laws and prejudice from pursuing other lines of work, many ended up working as moneylenders to Christians.

From Sterility to Fertility
Although profound developments in culture and technology took place in the intervening 2,000 years, in terms of their economies, most classical and medieval Europeans were not all that different from the ancient Israelites. Most people lived and worked in the country or in villages and traded mainly within their extended families, clans, or tribes. By modern standards, almost everyone was dirt poor, and banks as we know them didn’t exist. Moneylending, then, involved rich people lending to their poor neighbors, probably their kin or longtime employees, for a basic need such as food or winter clothing. Such borrowers would not have been able to shop around for the best interest rate.

The early Christian world, like the Roman world before it, saw money as sterile, functioning only as a means of exchange but without value in itself. This was Aristotle’s view. The Greek philosopher had argued that money, unlike monkeys and monkey trees, did not produce after its own kind. (The Greek word for usury, tokos, translates as “offspring.”) Quarters do not sprout quarters, and if you plant a dollar in your garden, you won’t get a money tree. What followed from this, Aristotle thought, was that while charging interest on money might enrich the banker, it is ill-gotten gain because it’s based on a fact “contrary to nature.” It’s treating something as fertile that is in fact sterile.

In the Middle Ages Thomas Aquinas, along with many others, adopted Aristotle’s thinking on the subject (though St. Thomas showed that he was aware of contrary arguments even then). Money, they noted, doesn’t wear out like clothing or a house. If somebody wears your clothes for a year, you can’t get your original clothes back. At best, you’ll get used clothes. So you can rightly charge rent for your clothes. When coins get too shabby-looking, however, they are simply removed from circulation and replaced with freshly minted coins of the same worth. Also, a borrowed sum of money can be repaid exactly, even if repaid with different coins or bills. Charging for money seems different from charging rent on, say, a horse and cart or a three-bedroom apartment with a carport.

These arguments led most people to conclude that charging interest on money was more or less charging for nothing. As such, it was wrong. What changed their minds? In the West, Christian scholars slowly began to recognize the changing nature of money. Around the twelfth century, the growth of trade and banking exposed the problems. This created several dilemmas. First, growth in trade led to a shortage of gold and silver coins—the common form of currency. Second, it’s hard to make large exchanges of money over hundreds or thousands of miles when money is made of gold and silver and easily stolen by roadside bandits or lost in a shipwreck. Finally, the different coins used in Bruges, Milan, and Rome were often reminted and debased with less valuable metals, so the ordinary person could easily get ripped off by unscrupulous merchants or conniving kings.

From these exigencies, the bank as we know it emerged. Moneychangers, who could tell real coins from counterfeits, were crucial to the new system. They began keeping deposits for various clients so that when two clients made an exchange, all the moneychanger had to do was credit one account and subtract from the other. Simple arithmetic had replaced a risky and cumbersome movement of coins.

Eventually banks emerged with branches in different cities. This gave merchants a way to transfer payment safely over large distances, since bank notes now stood in for the money stored safely in a bank vault.

This process became so common that not only merchants but also governments and even the Pope used bank notes to pay bills. In fact, some banks had such large deposits that they could lend money to kings. What was fit for a king was soon fit for the commoner. Individuals and firms with extra money began depositing their money in banks, to be withdrawn as needed. This could only happen once people were convinced that their money was safer in a bank than hidden in a mattress or a hole in the ground. Thus banking grew only as ties of trust grew beyond family and ethnic lines to connect larger and larger groups of people.

Interest was still identified with usury, however, so instead of talking about interest on money, bankers spoke of a fee for service. This fix fell short of a robust theological defense, but the result was that the use of business credit and insurance spread. Soon the surplus money of a privileged few was no longer hoarded and unproductive but set free for others to use creatively in launching new enterprises. People began to create more wealth than they consumed, and, with the accumulated wealth, banks could create yet more wealth by functioning as brokers between depositors and investors.

It slowly became clear that money, at least in certain settings, is fertile, and has what economists call a “time value.” If I lend my neighbor $1,000 for a year, I forgo the opportunity to invest the money in some wealth-creating enterprise for a year, while you gain the same opportunity. That’s worth something.

Notice that charging interest for money need no longer be a rich man bilking his destitute brother or cousin. Now banks were making capital loans, that is, loans that could be used to start or fund business ventures. When a bank lends money at interest, it isn’t charging for nothing. Strictly speaking, it isn’t charging for the money itself, as a butcher would charge for a ham that will be smoked and eaten. It’s charging for the “opportunity cost” that the lender bears by not having the money for a while. To lend the money, the lender has to forgo all other uses he might have for the money. And for the borrower, getting the money now rather than a year from now is a benefit. It’s no surprise, then, that people will pay a premium for that benefit, since it self-evidently has value to the borrower. That’s why if you lend someone $1,000 today, he will be paying you for something if, a year from now, he repays you $1,000 plus interest. Whatever this is, it isn’t usury as the ancients envisioned it.

Besides the time value of the money lent, a banker charges for the risk that he won’t get his money back on time, or ever. So what is the right price to offset that risk? That depends on the situation. If only one bank can lend, and lots of people want to borrow money, the bank can charge a relatively high interest rate, though it would still be limited by what potential borrowers are willing to pay. But in a market with lots of banks competing for customers, interest rates will be much lower as the rates reflect the underlying supply and demand for credit—along with the perceived riskiness of a given loan. A wealthy tech executive with a perfect credit rating can get a much lower interest rate than the guy who just graduated from college and has never had a checking account or a credit card.

These days, few Christians—whether Protestant, Catholic, or Orthodox—offer a blanket opposition to charging interest, the Vatican participates in modern banking, and Canon Law assumes its legitimacy. As it was said toward the long conclusion of the scholastic debates, “When the reasons for the law ceases, the law itself ceases.”

What Do the Scriptures Really Say?
But did the Church, as some have charged, simply ignore inconvenient biblical passages against usury and change her teaching? No. What happened was that once scholars had cleared away certain assumptions about money they had brought to such biblical passages, the Church could draw some key distinctions that had been overlooked.

Of the three passages forbidding interest-charging in the Hebrew Torah, two refer to the rich Israelite lending money to a poor “brother” in dire straits; the lender should not take advantage of the situation by charging interest. The third passage, in Deuteronomy, repeats this ban but allows Hebrews to charge interest to people outside the community. So the practice must not have been seen as intrinsically evil. Ancient Israelites were simply forbidden from confusing family relationships with commercial ones.

Look at the passage in the New Testament book of Luke, which I referred to earlier. “If you lend to those from whom you hope to receive,” Jesus said, “what credit is that to you? Even sinners lend to sinners to receive as much again. But love your enemies, do good, and lend, expecting nothing in return.” Historically, many readers have thought that Jesus was prohibiting the charging of interest. But in context, things look quite different.

In the first part of this sermon, Jesus has given his famous “beatitudes,” such as “Blessed are you who are poor” and “Woe to you who are laughing now, for you will mourn and weep.” Then, he says, among other things: “If anyone takes away your coat, do not withhold even your shirt.” Does Jesus mean we should hope for everyone to be poor, so that they can be blessed? Is he commanding us not to laugh? Are Christians not allowed to sell shirts and coats? Is Jesus forbidding society from enforcing laws against theft? Of course not.

Jesus is using a rhetorical device common in first-century Judaism: hyperbole. Even sinners lend money, he observes, and they expect to receive back the same amount. Jesus says nothing about interest. And Aristotle’s argument is nowhere in sight. Instead, Jesus says we should lend expecting nothing in return. Jesus is encouraging his followers to be generous toward friends in need; he is not denouncing banks for charging interest on loans. Similarly, when Jesus drives the moneychangers out of the Temple, he also drives out everyone selling sheep, cattle, and doves. Nobody concludes from this that Jesus issued a blanket ban on livestock auctions. He did not denounce commerce or money-changing in general, but rather the misuse of a house of worship.

Jesus also condemned hoarding and stinginess. “Do not store up for yourselves treasures on earth,” he told his disciples, “where moth and rust consume and where thieves break in and steal; but store up for yourselves treasure in heaven.” Here he’s reminding his disciples that their ultimate loyalty is not in wealth or possessions, but in God’s kingdom. He’s denouncing selfish hoarding, not pensions.

In the parable of the talents, Jesus even draws a distinction between the sterile hoarding of money on the one hand and, on the other hand, the interest-bearing savings of money placed in a bank; and he approves of the latter. In the parable, a man calls three servants and entrusts each with huge sums of money, and goes away. When he returns, he rewards the first two servants for investing the money they were given—for putting it at risk, where it can bear fruit. He condemns the third servant for playing it safe and burying the money. The master expected the servant to invest, to put the money at risk. At the very least, the master tells the servant, he should have put it in a bank where it could bear interest. Jesus isn’t giving an economics lesson—the parable is about the kingdom of God—but he treats prudent risk, investment, and interest in a positive light. So we can say that our more modern understanding of money and of interest is not just doctrinal development, but also resourcement: a recovery of something embedded already in the tradition—indeed, in the canon—but long overlooked.

Not a Doctrinal Change
Still, wouldn’t it have been better if the Church had understood all this from the beginning? Perhaps. But John T. Noonan, in his distinguished Scholastic Analysis of Usury, argues that “the scholastic theory of usury … is the first attempt at a science of economics known to the West.” The centuries-long debate over usury just may have given the West an economic head start. (Noonan, incidentally, stumped for contraception during the 1960s, but that doesn’t sully his point here.)

Moreover, the development of the Church’s teaching on usury has helped clarify both the extent and the limits of magisterial authority. In hindsight, it seems commonsensical that refined details about the nature and function of money in an economy would not be the natural domain of doctrine per se, any more than would the precise geometry of the solar system. Nevertheless, the Magisterium can speak about the moral implications of financial engagements in light of its current understanding of money. But that distinction, that limitation, is vital to keep in mind.

And if we do keep it in mind, it should be clear that doctrine, as Catholics define it, has not changed. Put simply, usury is charging someone for something that has no value, in short, for defrauding someone, especially the poor and dependent, in a financial transaction. The Church is right to condemn it, as Pope Benedict XVI did in his 2009 encyclical Caritas in Veritate. Our thicker understanding of money simply leads us to recognize that most ordinary bank loans exact a cost on the lender and have value to the borrower, and so are not usurious. Perhaps there are other examples of the Church changing doctrine—though I doubt it—but her teaching on usury is not one of them.

Editor’s note: The image above titled “The Moneylender and His Wife” was painted by Quentin Massys in 1514.

Jay W. Richards


Jay W. Richards is an Assistant Research Professor in the School of Business and Economics at The Catholic University of America, a Senior Fellow at the Discovery Institute, and executive editor of The Stream. He is the author of many books, including Money, Greed, and God which received a 2010 Templeton Enterprise Award. Most recently, he wrote, with co-author Jonathan Witt, The Hobbit Party: The Vision of Freedom that J.R.R. Tolkien Got and the West Forgot. He has a Ph.D., with honors, in philosophy and theology from Princeton Theological Seminary.

  • fredx2

    Thanks for this. The silly notion that the church has changed on usury and slavery is pretty much an out and out lie, a lie kept alive only because it is a meme that progressives need to press their desire for change. All of this was rebutted in Cardinal Avery Dulles essay in First Things called “Development or Reversal”

    The same applies to slavery. As near as I can tell, the church has never really changed on slavery either. From the beginning, it believed that slavery was of two types: Just title slavery and unjust title slavery. Just title slavery included things where a person had been legitimately ensleved, such as criminals who were made to work, prisoners of war, (who, if they had net been allowed to be used as slaves, would have been killed because primitive sociieties simply could not feed thousands of extra mouths all at once) and indentured servants, who had chosen to be slaves for a time. Often, in Roman days, poor people would voluntarily become slaves to increase their lot in life. As a slave in a roman manor, for example, you would get three meals a day rather than starve as a peasant. So the church allowed these types of “slavery” since the alternatives were much worse.

    Furthermore, the church insisted that all people in these just title slavery positions be treated well. No beatings, no deprivations, they must be treated kindly and as a full human being. This requirement alone put a crimp in the whole idea of slavery and mollified its worst aspects. So in many senses, slavery no longer became as “useful” to the slave owner if the slave must be treated pretty much the same as everyone else.

    Unjust title slavery was the kind that we think of as slavery. The church was always against this. From the start of racial slavery, Popes denounced it. They continued denouncing it, time and time again. But just as they are ignored now when they denounce abortion, people pretty much ignored them

    But there was a difference between church doctrine and actual practice in the real world. During the Spanish conquest of the Americas,the King was the one appointing most of the bishops, so the church in the New World was a group of the King’s men, not the Pope’s and so slavery was practiced extensively,because the King wanted to make money, and slavery was the way to do that.. Later, in the US, the US bishops pretty much ignored the Pope on this issue. Apparently, in the beginning, they tried to start a school to educate slaves, and that was promptly burned down and the slaves attending it beaten. So that was pretty much the end of their anti slavery activities, much to their shame. But regardless of the failures of people to implement the doctrine, the doctrine still remained.

    People sometimes quote the church as saying that slavery is not against the natural law. But this is a perversion of what she taught. She taught that slavery per se, which included just title slavery, was not therefore against the natural law. She was always against unjust title slavery.

    • Mark

      I find it hard to believe that this author is a Catholic Professor with a knowledge of history. Without citing the changing conditions that primarily resulted from
      #1 “the invention of the printing press” and the wider spread of personal interpretation of Scripture
      #2 The post fuedal era of representative government in it’s infancy
      in the formation of descent from the Papal states due to the disintegration of the theocracy and monarchy with national and royal family lines blurring further each decade
      #3 The pre- protestant reformation era (no years mentioned in your article for reference) and then driven home by protestant social teachings with a “very reluctant” and opposing strong Catholic Cardinals base that eventually acquiesced

      “under protest” as it did to the separation of Church and State in the US

      which it opposed throughout the US Revolution

      And this is a professor ?!

      Mark in NY

  • Chris Cloutier

    Thanks for the excellent clarification regarding usury. This is a topic that doesn’t come up often, but one in which having a proper understanding is vital for when it does.

  • Bro AJK

    I think I agree with the principal of the article, but usury still exists today. For example, the interest rates charged at payday lending groups can easily fall into this. In some cases, the interest is 6 times the original amount:


    • How much is the risk?

      • Paddy

        With a $300 paycheck over 7 days? You’re kidding, I hope.

        • A contrived incredulous question is not an answer.

          • His Advent is Here

            Ultimately, Capitalism is an evil (no matter how much DE wishes to the contrary & spouts off). Socialism/Communism is also ultimately an evil. In the new Heavens and the new Earth, there will be no Money, greed, profits, interests, banks, etc. Thanks be to God. In the Infinity of our Lord, we all shall rejoice as one though many.

            • Ultimately, you should use a real DISQUS ID, so as to remain attached to whatever prior ID you have despoiled.

              • His Advent is Here

                Are you done making irrelevant, non-sensical statements, DE?
                “True believer” of what exactly? Your version of Militant libertarianism? No thanks, DE, you can keep your ideology. I prefer to believe & worship Christ.

                • There’s nothing more irrelevant and nonsensical then wasting bytes here repeating yourself.

                  I am not a libertraian; and since you are apparently dedicated to stalking me, dig a little deeper so you don’t make a colossal posterior of yourself in posting such an assertion. I’m using a real DISQUS ID here, you can review posted my criticisms of libertrarians and one of my deepest concerns is that like the Pseudo-Hyper-Orthodox, they live in a puritanical fantasy world that doesn’t account for reality.

                  As for final declaration, I’m not convinced. You are a garden variety troll.

                  • His Advent is Here

                    Ad hominem attacks? Clever, DE. “Economic illiterates”? Because you’re so wise, DE. I guess you forgot your own Hayek quote about how little we know? “Pseudo-hyper”, “garden troll”? Ad hominem is a sign of despair & lack of reason.

                    DE, you seem to have a Paranoia complex. Nobody is “stalking” you. It’s my great joy reading Crisis articles & the intelligent posts by Crisis readers, but, unfortunately, I come across your posts shoving militant libertarianism down our throats with clever little ad hominem’s sprinkled throughout. Good bye.

                    • I didn’t use the term “ad hominem” attacks, you did. I’ll take it as a freudian slip, since you made me the unsolicited subject of your gratutitous comment. Everybody here did seventh grade a long time ago, we all recognize the new kid picking a clique and itchin’ for a fight.

                      Buy a real ID and try to understand what you are accusing others of before doing it. Try to make your charge cohere to facts, rather than whatever nightmare fantasy you live in and be less of a hypocrite. “shoving militant libertarianism”, is no less your neologism than my “PHO” characterization is a neologism.

                      And until you post something more economically coherent and theologically sound than your ipso facto “”Ultimately, Capitalism is evil”, then I’m going to regard you as economically ignorant and evil.

                    • His Advent is Here

                      So now I’m “Evil” & “Economically Ignorant” for choosing Catholicism & Christ’s Gospel over your version of Militant Libertarianism (you can call your unrealistic ideology whatever makes you feel better)? Cool.
                      DE, I never said you said the words Ad hominem, I said you USE Ad hominem attacks instead of reason. DE, whatever happened to your beloved Hayek quote? Stick with it.
                      As to a Disqus account, free country- if I don’t want to get social media accounts, I won’t. If anybody needs to communicate more with me, I got an phone, E-mail, & home address; I don’t need electronic “social media”. Free Nation, deal with it.

                    • When you issue a vacant broadside, with specification, explanation, or definition, not once but twice, there’s no evidence that you are anything but ignorant.

                      When confronted that you are issuing a calumnious charge, you write “you can call your unrealistic ideology whatever makes you feel better” Cool.”

                      If you can’t adopt a consistent identity, so people can evaluate (or contort, as you do) your comment history. you’ll be though evasive and a coward. Free nation, deal with it.

                    • Catholic pilgrim

                      Okay, now I’m a “George Soros paid agitator”? Sure, that makes no sense whatsoever but okay. If it helps you sleep better at night to think that people who disagree with you (no matter how Catholic & Pro-life they are) are “Soros paid agitators”, whatever. DE, this is going nowhere. Let’s just agree to disagree on economics. I look to Chesterton’s Distributism & Catholic social doctrine, you look to the Austrian school or whatever. Free nation, we can agree to disagree.

                    • Okay, now I’m a “George Soros paid agitator”?

                      You have three separate names in just this thread, either you intend to be deceptive by appearing to be different people or you have dissociative personality disorder. Soros is indeed pouring money into overt and covert attempts to corrupt Catholics, often with front organizations that purport to be authentically Catholic.

                      And now we have the exhibition of how the PHO mind operates. “I follow Chesterton”. Last I checked, Chesterton couldn’t speak ex Cathedra or infallibly.

                      We don’t disagree on economics. To disagree, you have to know something about the topic and you don’t.

                      I picked the moniker DE-173 to remind myself that there is a group of people that insist their fantasies are real.

                      Distributionists are the religious equivalent of Philadelphia Experiment believers. They simply arch their back no matter how the onerous the factual or theoretical evidence weighs against the existence or the possibility of their fantasy.

                    • His Advent is Here

                      DE-173, what the heck are you talking about? In this thread I only have ONE name (His Advent); I used no other names for this article. Thank you for YOUR calumny. I’ve consistently used Catholic Pilgrim in previous articles, but I’m now using an Advent-themed name to remind me of His Advent in everything I do (when Advent is over, I will go back to my Catholic Pilgrim name).

                      Austrian Economists, Ayn Randians, & Militant Libertarians are the ones that insist on their fantasies. The Ayn Randian/Libertarian/Austrian utopia has never occurred in history because their fantasies are just that- fantasies. DE, it’s you alone who thinks you’re the pope of economics. Reality Check: pride is a sin. Only because people disagree with your ideology does not mean they don’t know about economics. Stick with your beloved Hayek quote, DE, not with prideful lies & false accusations. You’re not the pope of economics to go around saying who is economic illiterate & who is not. I passed 3 economic courses (Macro, Micro, & elective) in college with A’s. Occasionally I’ll even read sources of economic theory (from Austrian school to Paul Krugman to everything in between- even if I disagree). I’m NOT economically illiterate.

                    • “His Advent is Here.”
                      “Advent is Here.”
                      “Catholic Pilgrim.”

                      Liar, and a particularly brazen one since your record is on display.

                    • His Advent is Here

                      Yes, it’s very Christian of you to wrongly accuse others of lying. (Go to confession, DE.) I just explained to you my name in an easy-to-understand fashion. If you don’t understand elementary logic & 1st grade reading skills, that’s your problem.

                      Where in this article about usury, did I use my other name (Catholic Pilgrim)? Don’t be dishonest. One article, one user name only. Find the comment & copy/paste it. “His Advent is here” = “Advent is here” is the same darn thing; you don’t need a college degree to know that. I’m fallible; occasionally my fingers slip into typing errors, sue me. So I accidentally forgot the possessive determiner “his”, put me in jail. When Advent is over, I’ll return to my Catholic Pilgrim name. But I have never used more than one name per article. Sorry for wanting to do everything possible to remind forgetful me of His Advent; I’ll consult you next time.

                    • Everybody can see that you used three names. Get lost.

          • tom

            Now, you’re making things up.

            • Asking for an answer to a question is making things up?

  • Harry

    Church doctrine on lending money at interest has indeed developed over time as Jay Richards points out. Usury always has been and still is an extremely grave sin.

    Catechism of the Council of Trent on Usury – 1545-1563

    Various Forms of Robbery

    To this class also belong usurers, the most cruel and relentless of extortioners, who by their exorbitant rates of interest, plunder and destroy the poor. Whatever is received above the capital and principal, be it money, or anything else that may be purchased or estimated by money, is usury; for it is written in Ezechiel: He hath not lent upon usury, nor taken an increase; and in Luke our Lord says: Lend, hoping for nothing thereby. Even among the pagans usury was always considered a most grievous and odious crime. Hence the question, ‘What is usury ?’ was answered: ‘What is murder?’ And, indeed, he who lends at usury sells the same thing twice, or sells that which has no real existence.

    Catholic Encyclopedia – 1912

    The change in the attitude of the Church is due entirely to a change in economic matters that require the present system. The Holy See itself puts its funds out at interest, and requires ecclesiastical administrators to do the same. One writer, Father Belliot of the friars minor, denounces in loans for interest “the principal economic scourge of civilization”, though the accumulation of wealth in the hands of a few capitalists, which he deplores so much, does not arise so much from lending money at proper interest as from industrial investments, banking operations, and speculations, which have never been condemned as unjust in principle. There has never been at any time any prohibition against the investment of capital in commercial or industrial undertakings or in the public funds.

    Lending money at interest gives us the opportunity to exploit the passions or necessities of other men by compelling them to submit to ruinous conditions; men are robbed and left destitute under the pretext of charity. Such is the usury against which the Fathers of the Church have always protested, and which is universally condemned at the present day.

    Cathechism of the Catholic Church – 1992

    2269 The fifth commandment forbids doing anything with the intention of indirectly bringing about a person’s death. The moral law prohibits exposing someone to mortal danger without grave reason, as well as refusing assistance to a person in danger.

    The acceptance by human society of murderous famines, without efforts to remedy them, is a scandalous injustice and a grave offense. Those whose usurious and avaricious dealings lead to the hunger and death of their brethren in the human family indirectly commit homicide, which is imputable to them. (Cf. Amos 8:4-10) …

    2438 Various causes of a religious, political, economic, and financial nature today give ‘the social question a worldwide dimension.’ There must be solidarity among nations which are already politically interdependent. It is even more essential when it is a question of dismantling the ‘perverse mechanisms’ that impede the development of the less advanced countries. In place of abusive if not usurious financial systems, iniquitous commercial relations among nations, and the arms race, there must be substituted a common effort to mobilize resources toward objectives of moral, cultural, and economic development, ‘redefining the priorities and hierarchies of values.’

    • Maybe after Cardinal Pell gets done updating the Vatican Bank, he can lead an effort to update this topic.

  • Daniel P

    A very helpful article, from a perspective I hadn’t really considered. An interesting follow-up question: how does the Luke passage apply to the practice of modern-day capitalism? Can one morally work for a bank that capitalizes on the poor? Do any modern banks NOT unfairly capitalize on the poor?

    • JP

      There is an excellent book on the History of Money one can find on Amazon. I read it years ago and the part that stuck with me the most was how Spain and the Netherlands treated credit. The Kingdom of Spain either forbade it, and the wealth of Spain was measured in the amount of gold and silver it accumulated via its New World colonies. The Netherlands was the first nation that allowed commercial credit. This practice spread to Great Britain. Both The Netherlands and Great Britain saw their economies flourish despite having very small gold holdings in comparison toe Spain and the Italian merchant cities. Eventually Spain would be forced to use its vast treasures to fund its wars and the extravagant life styles of its aristocracy. The peasants remained destitute regardless, while many a Dutch and English peasant rose to the level of the bourgeoisie. And it was Dutch banks that lent the struggling Continental Army money to fight the British. In this limited sense, credit did life all boats. The aged old problem of rapid expansion of credit plagues us to this day.

      Today’s banks seem to be nothing more than sub-directorates of the US Central bank. Currently, there is the addition of $4 trillion of credit (Quantitative Easing, who sole function is not to be available for loans, but to keep our consumer based economy liquid) floating around our banking systems. From what I read, all of this liquidity is not intended to make its way from Wall St to Main St. I wonder how much more complicated things can get before we are forced to revisit the entire project of modern economies.

      • JP, if you can get a copy of “For Good and Evil” with a substitle about the impact of taxes on history I can’t quite quote right now by Charles Adams, you might enjoy. He makes the case that absent bad tax policy, the Dutch, not the English might have had the empire upon which the sun never set.

    • “Do any modern banks NOT unfairly capitalize on the poor?”

      Explain. Define “modern”, “unfairly capitalize” and “poor”.

      • Note for Record: No Response.

    • Paddy

      The vig our banksters extract is criminal…but not if they finance a crooked pols election!

  • s;vbkr0boc,klos;

    The Parable of the Stewards clinches it neatly.

  • Dan

    If oranges were forbidden to be eaten, both in theory and in practice, and one even went so far as to release an encyclical discussing the evils of oranges, but then centuries later declared that oranges were allowed to be eaten, and are potentially even a good, can it really be said that the doctrine on oranges has not changed? Even though it is clearly true that our understanding of fruit has evolved, the teaching has materially reversed itself, no?

    • I agree. I had a similar comment.

  • Zippy

    Both (1) the muddled understanding of usury expressed in this article and (2) the assertion that the doctrine condemning usury has ‘developed’ to allow charging for opportunity costs (presumably under a proposed title of lucrum cessans) are incorrect.


    • CradleRevert

      Your article goes astray in the very first question. Although the terms usury and interest were used synonymously in centuries past, they have different definitions. The specific definition of usury is, generally speaking, “to charge for the use of something in addition to the thing itself” (hence the term “usury”, which literally stems from the word “use”). It does not mean merely to charge any interest on something. As economic understanding developed, it was eventually realized that the charging of interest was not actually to “sell what does not exist”, as St. Thomas said, but was an actual charge for something which DID exist (opportunity costs, risks, etc.). Usury, properly defined, is still a sin, but the modern-day charging of interest is not usury.

      • Zippy

        Usury, properly defined, is still a sin, but the modern-day charging of interest is not usury.

        Some “interest” is usury is and some is not. Charging interest on a mutuum loan is always usury. Nonrecourse loans are not usury. All of that is explained in much more detail in my FAQ, which you obviously did not read.

        • Dan

          I read your FAQ and agree with CradleRevert. I think you’ve developed a commendable explanation of the issue according to your first premises, but unfortunately I think your first premises are wrong. Usury is not defined as you claim it to be. And you are also subjectively ascribing some sort of primacy to real assets, when I see no reason to do so, and arguable would challenge that by saying that intangible assets, particularly in the information age, have just as much value as tangible ones.

          • Zippy

            And you are also subjectively ascribing some sort of primacy to real assets, when I see no reason to do so …

            No reason other than the multiple Magisterial citations?

            …by saying that intangible assets, particularly in the information age…

            You must have skipped over reading Question 10. “Real assets” does not mean “physical objects”.

            • miliukov

              Zippy is winning the thread. I don’t accept his premise (because I don’t accept the authority of Catholic doctrine.) But his logic is impeccable if you do accept those things.

              • Dan

                As I said, he did a commendable job of explaining things according to his first premises, but I still assert that his first premises are wrong. Money is a dimensional object, and one cannot properly discuss usury and economics without placing them into the context of labour and productivity.

                • tom

                  When the Fed orders $100 billion created out of thin air and then gives it to its banking friends ( all fellow thieves by the way) to loan to others at ANY interest rate, it should violate Church Doctrine if stealing is still relatively objectionable. Add to all of it, the banks’ money laundering, tranche fixing, illegal tax shelters and fixed bidding on EVERYTHING. it’s all a global criminal conspiracy, the definition of usury notwithstanding. To its credit, Islam finds all of it immoral, preferring charity to theft, fraud, embezzlement and conversion.

                  • Knock it off with the Islamophilia.

                    • tom

                      I’ll wait for Islam to come here, as it has to the EU. Aside from a basic agreement in the “natural law”, the FIRST positive characteristic of Islam is it’s opposition to usury. Judaism and Christianity have collapsed in this important moral aspect. in contrast, the Church follows the usurious bankers’ elephant in the parade with a shovel to try to clean up. It’s agreed to be the charity that alleviates the symptoms while ignoring the disease.

                      N.B. When students carry over a trillion dollars in debt ( Often from “Catholic” schools) are offered relief through a Sharia compromise, how many will refuse? How many should?

                    • Zippy

                      Islam’s take on usury is like Islam’s take on all moral and religious questions: they take it very seriously, and their concept of it is deeply flawed.

                    • tom

                      The Judeo-Christian and even Aristotelian societies once shared Islam’s views and prospered. Today, “Christian” nations are in the grip of interest mongers, not Muslim countries. Is it good for America’s total debt to be approaching $60 TRILLION dollars? Is that not flawed? Is not the $1.2 trillion debt of students flawed? The only question is when the bubble will burst and the least among us suffer the most.

                    • Zippy

                      The Judeo-Christian and even Aristotelian societies once shared Islam’s views and prospered.

                      There have been many different understandings of usury over the millennia. The current Sharia understanding is one of them, and is, as I mentioned, deeply flawed. Its flaws are typically Muslim flaws: lacking the clarifications of the Catholic Magisterium, Sharia condemns a number of kinds of contracts which are perfectly licit — typically based on a brittle ‘literalist’ interpretation of words like “loan” and “interest”. Sharia (AFAIK, though I’m only passingly familiar with it) doesn’t really allow census contracts, for example, especially if the investment is labeled a “loan” and the rents are labeled “interest”.

                      I am passingly familiar with at least one company with a (formerly) majority Muslim shareholder which had difficulty obtaining new financing for precisely this reason, despite the fact that the proposed bond issue was non recourse (that is, was not backed by any personal guarantees).

                    • Apparently the useful idiots of the post war era that were so attracted to the counterfeit of Communism and its false promises, have now moved to being seduced by Islam’s shiny baubles.

                  • Dan

                    The system is corrupt, for sure. But it’s not so black and white. If you don’t create said money, the economy collapses and you woudln’t be typing on this computer right now, you’d be looking for ammunition and food. So yes, the rich get richer, but there are worse alternatives.

                • miliukov

                  You’ve made a good come back since yesterday! I don’t agree with either of you, but I enjoy a well-reasoned argument by people acting in good faith discussing complex points

                  • Daniel S Krynicki

                    On Dec 13, 2014, at 4:45 PM, Strife wrote:
                    Apparently you adhere to the fallacy of Sola scriptura as if scripture is capable of fully interpreting itself. Well it doesn’t. And it doesn’t claim to. Which means the basis of your scriptural extrapolations is….. very un-scriptural.

                    Daniel’s reply:

                    Does your statement issue forth from one who has never included daily Bible reading even if just for educational purposes? From Apostolic times the church fathers taught against usury, all the way up to 1515 AD. What changed their minds? It certainly wasn’t a command directly from the LORD. Could it have been disobedience?

                    The commandments, statutes and judgments of Moses were confirmed by our LORD in the New Testament and are therefore God’s law which will never be nullified by men. I now see among the church’s hierarchy the fulfillment of Paul’s analogy in 2 Corinthians 11:13,14 – from a Literal Translation:
                    “For such ones are false apostles, deceitful workers transforming themselves into apostles of Christ. Did not Satan marvelously transform himself into an angel of light?”

                    Matthew 15:9 “But in vain they do worship me, teaching for doctrines the commandments of men.”

                    Mark 7:7 “Howbeit in vain do they worship me, teaching for doctrines the commandments of men.”

                    Colossians 2:22 “Which all are to perish with the using; after the commandments and doctrines of men?”

                    1 Timothy 4:1 “Now the Spirit speaketh expressly, that in the latter times some shall depart from the faith, giving heed to seducing spirits, and doctrines of devils;”

                    1 John 5:3 “For this is the love of God, that we keep his commandments: and his commandments are not grievous.”

                    Finally, as bad as this reluctance to discuss the real motives behind your departarture from historic, Apostolic Christianity, there is also this reluctance of yours refusing to enlighten the readers of your column about precisely what bank credit is: that new money is created with every bank loan. It did not exist as money before the bank loan was agreed to by two parties. It acts as money while in the currency stream. It is not currency which is legal tender. The principal of the loan inflates the currency stream until the loan is retired at which time the principal vanishes from existence. The deflationary feature of all loans is that along with the disappearance of principal inherent in this system, the interest paid to the banks remains with the banks. Oh, a little of the interest may trickle back into the currency stream through the bank employees ; but the lion’s share of the interest goes to the parasites who are in control of the usurious system.

                    I think Mr. Richards needs to re-examine his entire raison d’être.

                    Daniel S. Krynicki

            • Dan

              I don’t think I understand what you mean by real asset then; it seems to be different from modern GAAP. In question 16 you say that the future labor of a worker does not constitute a ‘real asset’. Yet productivity is precisely that which separates a usurious loan from a non-usurious one according to your definition, or have I misunderstood your argument?

              • Zippy

                In question 16 you say that the future labor of a worker does not constitute a ‘real asset’.

                Correct. Ontologically real assets are particular things the ownership of which can be transferred from one owner to another through purchase, sale, etc right now. A corporation for example is a bundle of ontologically real assets which exist right now and can change ownership right now. So is a farm, a car, a house, a dentist’s practice, a portfolio of patents, etc etc.

                Bob’s future labor doesn’t exist right now as something the ownership of which can be transferred (unless Bob himself is property which can be transferred — usury and chattel slavery have been understood for millennia to be closely linked). Usury is at bottom selling what does not actually exist, and Bob’s future labor is – by definition – not something which actually exists at the time of ‘sale’.

                I discussed this (linked from the appropriate parts of the FAQ) here:

                Risk and time are also not ontologically real assets. I explain why in the FAQ — in short, if time were a salable asset then slackers would be entitled to wages, and if risk were a real asset then gamblers would be entitled to profits.

                productivity is precisely that which separates a usurious loan from a non-usurious one according to your definition

                Incorrect. That was Belloc’s view, but he was wrong. See question 25.

                Usury is when interest (any interest) is charged on mutuum loans — contracts under which a person is on the hook to repay the principal amount of the loan. Usury is interest (any interest at all) charged on full recourse loans, in modern terminology.

                • Dan

                  If I acquire a company, I acquire the employment contracts, ergo future value of the labour that my workers produce. It is absolutely an asset.

                  In a similar way, time is an asset. You cannot divorce money from time, as they are linked in their nature. In fact, money is nothing but the perceived stored value of labour; the medium is irrelevant.

                  That is what is missing from your argument. It is made manifest clearly in your Question 7:

                  “Imagine that Bob lends Harry $100, Harry lends Fred $100, and Fred lends Bob $100. They each spend the money on beer, and charge 10% interest in the form of a deferred fee. The contracts attempt to entitle each of them to an additional $10 – for a total of $30. This $30 worth of new financial entitlements on the books is not connected to anything ontologically real.”

                  This is deceptively logical, but incorrect, because it omits what money represents, which in this case is the labour of the beermaker. To keep things simple, let’s assume that beer can be made for free. The beermaker has a decision to make. He needs to eat, so he can either invest his time into gathering food from the woods, or he can decide to make beer, which he knows he can trade for more food from the farmer, because the farmer is more efficient at making food than he is. So, his time is more wisely invested in making beer.

                  Therefore, rather than invest his equity (time) into gathering food, the beermaker invests his equity (time) into making beer. Now he has produced something – beer – which did not previously exist in the economy, and is introduced into the economy. He ascribes a value for his beer, in this case $100 a bottle, which Harry, Bob, and Fred purchase. But here is the crux – before Harry, Bob, and Fred consume the beer, there already existed $300 in money in the market, plus the food that the beermaker needs to buy (let’s arbitrarily ascribe a value of $100 to the food), which means that the beer, which he created, is worth $300, plus the $300 in money, plus the $100 for the farmer’s food, means that the economy now has $700 worth of assets in it. Remember, prior to the beermaker’s beermaking, the economy only had $400 of assets. $300 of real assets was created out of the equity (time) of the beermaker; essentially out of nothing according to your definition.

                  So, when Harry, Bob, and Fred purchase the beer and consume it, the assets reduce by $300, but the $400 which was previously in the economy is still there, so there is enough asset value to cover the $30 in interest. Now, Bob, Fred, and Harry are broke, so in order to pay the interest, they decide to work for the beermaker, who now has $300. With four employees, the beermaker can now make sixteen bottles of beer, which he sells to the next town for $1600. He then pays his employees $250 each, and still has $850 left over. Harry, Bob, and Fred can not only pay their $100 loan + $10 interest, but they have $140 left over (and since they’re paying the interest to each other, they technically have $250 each anyway).

                  There is no deficit in the economy. In fact, everyone is richer for it.

                  • Zippy

                    It is true enough that usurious contracts – and other kinds of immoral contracts – can be a part of the bundle of assets that make up a corporation. I am not sure what that is suppose to prove though. The fact that what for millennia was called a societas (again the notion that modernity invented the basic concepts involved in commerce and finance is risible) can in principle be a morally licit arrangement of course does not imply that all subcontracts are licit. A corporation can own a stock of pornography too, or slaves, or what have you. Raising that as if it were an objection misses the point entirely.

                    As for the rest, no amount of assertion that (e.g.) time or risk or future labor are ontologically real things which may be licitly bought and sold actually turns them into ontologically real assets. There is no way to actually claim those things without recourse to particular persons; thus they are not ontologically real assets in themselves.

                    Sodomites similarly (that is, similarly to the usurer’s claim that e.g. time or risk inherently deserve compensation) propose a unitive purpose to their defining unreality; and no amount of reason can convince them otherwise.

                    • Dan

                      I think you misunderstood me. Employment contracts are not usurious. Consider an example – I might be interested in acquiring a marketing company whose tangible assets and goodwill are worth $50,000. But if I believe the employees are talented enough that I have a high probability of earning $500,000 in the next 5 years, then I would offer the owner of the company $250,000 for his company, based purely on the assets that I perceive value in (i.e. the employment contracts), and based on future profit potential. If those employment contracts aren’t there, I would not purchase the company. Ergo, the are an asset that I would be acquiring.

                      Your second statement seems to be merely a re-assertion of your existing statement that intangible assets are not real assets and have no intrinsic value. I presented a counter-example which you did not address. I will go further and suggest that value is intrinsically subjective and that NO asset, whether ontologically real or not, has objective intrinsic value.

                    • Zippy

                      Employment contracts are not usurious.

                      That depends on the employment contract. Any contract which attempts to sell what does not exist is in the same genus as usury and is immoral, though it may not be usury strictly speaking.

                      Your second statement seems to be merely a re-assertion of your existing statement that intangible assets are not real assets and have no intrinsic value.

                      You keep saying that I said that, when in fact I’ve said the opposite. An operating business is a real asset and includes all sorts of intangibles — existing customer base, employees, etc. Many real assets are intangible.

                      However, time, risk, and ‘Bob’s future labor’ are not ontologically real assets. If they were ontologically real assets it would be possible to buy and sell them independent of recourse to particular individuals. (Question 10, again).

                      Discussing usury is like discussing contraception and homosexuality. People go down all sorts of rat holes of putative confusion when it comes to moral theology in general. But in the end it is pretty easy to understand how to avoid engaging in contraception: don’t perform unnatural or mutilated sexual acts. And it is pretty easy to understand how to avoid engaging in usury: don’t charge interest (any interest) on a full recourse loan.

                    • Dan

                      “However, time, risk, and ‘Bob’s future labor’ are not ontologically real
                      assets. If they were ontologically real assets it would be possible to
                      buy and sell them independent of recourse to particular individuals.
                      (Question 10, again).”

                      It is possible to buy and sell them independent of recourse to particular individuals. That is EXACTLY what money is – the value of labour (time).

                    • Zippy

                      It is possible to buy and sell [Bob’s future labor] independent of recourse to particular individuals.

                      No it isn’t. You can’t sell Bob’s future labor without recourse to Bob.

                    • Dan

                      Okay, well now you changed your argument. You said “time, risk, and ‘Bob’s future labour'”. But above you’re just claiming “Bob’s future labour”, which is very different. Regardless, the argument is still erroneous.

                      The value of Bob’s past labour is converted into money. The value of Bob’s future labour is the perceived value of his employment contract, minus the risk that Bob gets injured or quits his job. All of these things are, and can be, considered assets.

                      Do you know how money is created? It doesn’t just pop into existence out of nothing. In your Bob, Fred, and Harry argument above, you assume they all start with $100. But that $100 had to come from somewhere. My suggestion is to really try and understand how money is created, and you’ll see very quickly what is missing from your otherwise logical argument.

                    • Zippy

                      Okay, well now you changed your argument.

                      No I haven’t. Clearly neither time, nor risk, nor Bob’s future labor can be sold independent of recourse to particular individuals (or particular ontologically real assets; but recourse to assets is not what is controversial). That was my specific claim, and the noise you are continuing to make has not addressed or refuted that claim.

                      Do you know how money is created?

                      I probably understand it more than most, yes, and likely better than you do (not that I know you, but just general odds are that I understand it better than “you” for almost any given “you” encountered on the net). Some people think I am a financial expert of sorts. I don’t know how seriously you should take their views, but I did start a few companies and retire at age 35 after making more money than I will likely ever need. Catholic uber-blogger Mark Shea got to ride in my airplane once, and stayed at my house a couple of times; and I’ve met a number of other St Blog’s types in person; so this isn’t an unverifiable claim.

                      But why are you making my economic and financial expertise the issue?

                    • Dan

                      “But why are you making my economic and financial expertise the issue?”

                      It isn’t the issue at all. It just seems to me that you’ve created a very commendable argument that is well reasoned, but ultimately flawed. Much like a brilliant scientist who comes up with a beautiful theory that ends up empirically being proven false because the first premises of the theory were incomplete.

                      The reason I ask about the nature of money is that I used to hold views very similar to yours. We are much in the same boat – I have started companies and made investments in startups. I see a lot of parallel viewpoints that I used to hold in your arguments, but ones that I grudgingly had to admit were false in light of a proper understanding of money and economics that I developed over the course of time by arguing with men much smarter than myself on those matters.

                      The key, for me, was that I did not understand what money actually was and how it is created. Once I came to realize the true nature of money, all of the arguments resembling the ones you are making crumble to the ground. I know because I held them myself.

                    • Zippy

                      I see a lot of parallel viewpoints that I used to hold in your arguments, but ones that I grudgingly had to admit were false in light of a proper understanding of money and economics that I developed over the course of time by arguing with men much smarter than myself on those matters.

                      That’s the thing about the Internet: I’m always encountering people who used to hold naive views like mine until they found the Deeper Wisdom.

                      I guess that leaves readers in the unenviable position of having to judge the various arguments on their merits.

                    • Dan

                      I’m sorry that offended you. I didn’t mean offense by it. It’s just as accusatory to me as it is to you.

                    • Dan

                      Consider an example. Would you say a gold coin has objective ontologically real value? Most people would. However, it is not objective at all. If an apocalypse were to hit, and food was scarce and starvation rampant, I doubt anyone would trade their sack of rice for your gold coin. Your gold coin, which once had value in one type of economy, now has absolutely no value in a different economy. It is the fulfillment of Ezekiel 7:19 – “They will cast their gold and silver into the streets”.

                      So while gold is objectively real, it’s value as an asset is purely subjective.

                      It is the purest economic principle there is – nothing has value if nobody is willing to trade for it.

                      And if that is the case – that value is merely the solution to the logical statement “I am willing trade my X for your Y”, then anything can be X and Y. Whether ontologically real or not really doesn’t matter, does it?

                    • Zippy

                      If an apocalypse were to hit, and food was scarce and starvation rampant, …

                      Demonstrating that the value of various things frequently depends on circumstances is not the same thing as demonstrating that value is purely subjective.

                    • Dan

                      “Demonstrating that the value of various things frequently depends on circumstances is not the same thing as demonstrating that value is purely subjective.”

                      I’m sorry, but I must be misreading you. Aren’t those equivalent statements? If the subtlety is in “purely subjective”, then can you provide me some explanation of what “objective value” is?

                    • Zippy

                      Aren’t those equivalent statements?

                      Are circumstances (say, a hurricane) purely subjective?

                    • Zippy

                      Or let me ask it this way: is a hurricane a subjective occurrence in someone’s mind, or an objective occurrence in objective reality? If objective occurrences affect the value of things, does it not follow that value is not purely subjective?

                    • Dan

                      No, because objective and subjective are not mutually exclusive. Consider an example, let’s say you love a particular painting, and want to purchase it from the artist for $100. Contrarily, I hate the painting, and would not take it even if it were given to me for free. The same object has two perceived values – $100 and $0. Now let’s say a hurricane damages the painting. The value to you now is certainly < $100, but the value to me remains $0. So the subjective value to you has been affected by the objective occurrence of the hurricane, but the subjective value to me has not.

                      I am really quite curious – can you tell me what your definition of objective value is with an example?

                    • Zippy

                      objective and subjective are not mutually exclusive.

                      I would be content for you to concede that economic value, rather than being ‘purely subjective’ as you have contended, is as objective (and as subjective, one supposes) as a hurricane.

                    • Dan

                      I will if I can get clarity on what you mean by objective value, and agree with it. At this point I have absolutely no idea what objective value means. Can you produce an example? Without a proper example, it’s like trying to understand “audible eyesight”. I can’t wrap my head around it.

                    • Zippy

                      At this point I have absolutely no idea what objective value means. Can you produce an example?

                      I already did upthread. A productive factory (say one which produces microprocessors) is objectively valuable.

                      If value were completely subjective, as you propose, then arsonists burning down a productive factory would involve the creation of value, not the destruction of value, since that activity is what those arsonists prefer subjectively.

                      Anyone who understands that burning down a productive microprocessor factory destroys value – independent of the subjective preferences of arsonists, even if the arsonists happen to own the factory – can see that economic value is not completely subjective. That may leave them puzzling over their own thoughts on the matter, because subjectivity-of-value is ingrained in the modern mind — not least because of the lex orandi of usury.

                      But that puzzlement is not really relevant. Once we’ve acknowledged that, contra modernism, value is not completely subjective, we’ve acknowledged what we are and are just haggling over the price. Welcome to the middle ages.

                    • Dan

                      I think I see what you’re trying to say. What I would call “universally perceived as valuable”, you are choosing to call “objectively valuable”. I think that’s a fair statement, even though I don’t necessarily agree that the two are synonymous, and I certainly don’t agree with your proof by contradiction (subjectivism cannot be extended to call something its opposite; that is irrationality, not subjectivity).

                      However, let me propose a question to see if we agree on the distinction between “objectively valuable” and “universally perceived as valuable”:

                      Let’s say Bob wants to start a business. If Bob is an honest guy, and I believe Bob when he tells me that he’ll pay me back $110 if I loan him $100 to start a business, Bob’s guarantee is subjectively valuable to me. And if everyone else knows that Bob is an honest guy, with such a good track record of paying back loans, that everyone believes that Bob’s guarantee is as good as gold, then Bob’s guarantee is “universally perceived as valuable”.

                      Given that 100% of people believe that Bob’s guarantee is valuable, is it then objectively valuable?

                    • Zippy


                      I will go further and suggest that value is intrinsically subjective and that NO asset, whether ontologically real or not, has objective intrinsic value.

                      I understand the position, and it is indeed relativism about value which leads usurers and their apologists to believe that usury is actually a kind of investment, as opposed to thievery and destruction. As I’ve pointed out any number of times now, the triumph of relativism in economics predates the triumph of relativism in sexuality by centuries.

                      It is odd because the ‘pure subjectivity’ of economic value is so easily refuted. A bunch of arsonists who subjectively value watching cities burn do not create economic value when they burn cities (even if they ‘own’ the cities they are burning). They destroy economic value — objectively.

                      Value-relativism in general always leads to ‘neutrality’ between creation and destruction; between good and evil. And since there really is no such thing as neutrality, this amounts to at least material support of evil:


                    • Dan

                      No, they destroy economic value subjectively. An arsonist who burns down a productive factory has destroyed the subjective value of that asset for those who use it. An arsonist who burns down a derelict factory is destroying something of no value, and arguable could be adding value by reclaiming the land for something more productive.

                      I think we have a fundamental disagreement here in terms of how economics operate.

                    • Zippy

                      I think we have a fundamental disagreement here in terms of how economics operate.


                      More generally, modern subjectivists in general are at war with reality, so they have to try to (e.g.) spin burning down a productive factory as just as much a ‘creation of value’ as building a factory. To modernity, value is just whatever I want and is not objective.

                    • Dan

                      I would caution against suggesting that others than yourself are at war with reality. You are doing precisely what you are arguing against, namely defining yourself what is objective and what it not. That is subjectivism at its finest.

                      Nobody would suggest that burning down a factory creates as much value as building one. That’s a straw man. But are you actually claiming that removing an obstacle to productivity, in this case burning down a derelict factory that is taking up space on fertile land, which could subsequently be used productively, is a worthless endeavor with no value? And consequently that the labourers who remove the debris are adding no value to society?

                    • tom

                      How does any of this address our national debt ( public and private) that stands at a tad under Sixty Trillion Dollars, this 9th day of December, 2014 A. D.?

                    • Dan

                      It doesn’t. The country is screwed on paper. But luckily the other countries of the world are currently less productive, so while productivity outpaces other markets, the US will be fine, no matter what the paper says. However, once the relative productivity changes (i.e. China gets their act together), it’s gonna get messy.

                    • tom

                      Well, we agree on that, Dan. Each of us will have his own rice bowl, I suspect.

                    • Strife

                      A bunch of arsonists who subjectively value watching cities burn do not create economic value when they burn cities (even if they ‘own’ the cities they are burning). They destroy economic value — objectively.

                      Well, first of all, if the arsonists are merely pyromaniacs who burn things for the thrill of it all, then yes, they are seeking a subjective value formed of their own neurosis.

                      However, if the arsonists are burning down their own factory (as cited in your own example on your blog) then the value of the insurance payoff is most accurately described as value transferred.

          • Zippy

            There are multiple Magisterial citations to the effect that mutuum loans for interest are usury, and others affirming that asset-recourse (nonrecourse) “loans” are not usury. Here is one:


            See also my citation of the bull Cum Onus in the FAQ (Question 31).

    • former atheist

      1. I cannot agree with you. I invite to re-read the article carefully.

      2. Does God condone SLAVERY? NO!

      Skeptics are fond of telling the world that the God of the Bible approves of and encourages slavery.

      What they “carefully omit” to tell you is that as early as the Old Testament the buying or selling of a person into slavery was actually grounds for nothing less than the death penalty:

      “He who kidnaps a man, whether he sells him or he is
      found in his possession, shall surely be put to death.” (Exodus 21:16)

    • Strife

      According to Wikepedia your assumptions of Aquinas’ thoughts on usury do not apply to modern economic models. So says The Roman Catholic Church itself:

      “Firstly, economics in the Middle Ages worked very differently from how they operate in the modern age. The Fifth Lateran Council defined usury as “from its use, a thing which produces nothing is applied to the acquiring of gain and profit without any work, any expense or any risk”,[2] and that the modern idea of what the usury is cannot be applied to Thomasian thought.”

      • Zippy

        If it is in Wikipedia, it must be true.

        • Strife

          Wikipedia actually cites the individual sources. Feel free to check them out.

          Or perhaps this source will be more to your liking.

          From The Catholic Encyclopedia:

          “The Holy See admits practically the lawfulness of interest on loans, even for ecclesiastical property, though it has not promulgated any doctrinal decree on the subject. See the replies of the Holy Office dated 18 August, 1830, 31 August, 1831, 17 January, 1838, 26 March, 1840, and 28 February, 1871; and that of the Sacred Penitentiary of 11 February, 1832. These replies will be found collected in “Collectio Lacensis” (Acta et decreta s. conciliorum recentiorum), VI, col. 677, Appendix to the Council of Pondicherry; and in the “Enchiridion” of Father Bucceroni.

          Everyone admits that a duty of charity may command us to lend gratuitously, just as it commands us to give freely. The point in question is one of justice: Is it contrary to the equity required in mutual contracts to ask from the borrower interest in addition to the money lent? It may be remarked that the best authors have long since recognized the lawfulness of interest to compensate a lender for the risk of losing his capital, or for positive loss, such as the privation of the profit which he might otherwise have made, if he had not advanced the loan. They also admit that the lender is justified in exacting a fine of some kind (a conventional penalty) in case of any delay in payment arising from the fault of the borrower.

          These are what are called extrinsic grounds, admitted without dispute since the end of the sixteenth century, and justifying the stipulation for reasonable interest, proportionate to the risk involved in the loan. Another discussion, which has not been closed, but only suspended, relates to the question whether the civil law creates a new and real title, whether the State can, in order to extend and promote credit for the good of the community, permit interest on loans. We think it can. But there will scarcely be any need for such a law except in circumstance which already justify the general practice of lending for interest. (On these extrinsic rights see: Funk, “Geschichte des kirchlichen Zinsverbotes”; Lehmkuhl, “Theologia moralis”, I, n. 1306 sqq., 11th ed.)”

          • Zippy

            Since you are now cross-posting in multiple threads I’ll just cross post the pertinent part of my reply:

            (By the way the decrees in question are removals of ecclesiastical penalties – and the CE itself, written by a couple of New York entrepreneurs with no more authority than you and I, affirms that they had no doctrinal significance. For example it used to be that usurers had to make an accounting of and return all of the gains they had made through usury, before they could be granted sacramental absolution. That is no longer the case. But that obviously doesn’t translate into magisterial approval of usury).

            • Strife

              To which I reply with this citation again:

              The Holy See admits practically the lawfulness of interest on loans,
              even for ecclesiastical property, though it has not promulgated any
              doctrinal decree on the subject.

              So tell me, does the Church not allow itself sacramental absolution as long as it is collecting interest for its ecclesiastical property?

              • Zippy

                Again, citing what a couple of New York publishers said isn’t citing the Magisterium. And your question is malformed on really too many levels to get into in this already overripe thread. In the first place, you don’t know whether the loans in question are full recourse or not. I haven’t been able to find out myself definitively, but as institutional loans they most likely are not. In the second, that the Church engages in certain secular practices does not constitute evidence of their morality: see the history of torture and slavery as two examples, including where the Catechism makes precisely that point w.r.t. torture. In the third place, it actually is a doctrine of the Church that doctrinal silence on a particular practice does not constitute evidence of approval.

                In short, your excursions with Google and Wikipedia notwithstanding, you really don’t have enough understanding of the subject to discuss it at the level you are attempting to discuss it.

                • Strife

                  I find your unjustified arrogance quite amusing. Especially given the fact that on the Creative Minority Report blog I clearly exposed your obvious ignorance of the elementary precepts of Full Recourse loans. You erroneously thought that such loans cease to exist when the borrow dies. But they do not. Depending on the terms of agreement, Full Recourse loans for which the deceased would have been personally liable, most often become an obligation of the deceased’s estate. So there’s that.

                  But please, cite for me in the Catholic Catechism, the Church’s complete and final definition of usury and the terms of its prohibition. And then we can discuss and silence on this supposed doctrine.

                  • Zippy

                    I clearly exposed your obvious ignorance of the elementary precepts of Full Recourse loans.

                    I was happy to give you your first introduction to the distinction between full recourse and non recourse debt ( http://www.creativeminorityreport.com/2014/12/usury-and-currency.html#comment-1733751566 ) , so you are welcome for that.

                    • Strife

                      And yet you didn’t even understand the basic precepts of Full Recourse loans.

                      And you’re welcome for that.

                    • Zippy

                      That has to be the explanation: obviously I’m a crypto socialist who doesn’t understand debt contracts as well as a newbie armed with Google. It can’t possibly be that the substantive point sailed right over your head.

                    • Strife

                      Says the clown who thought the Full Recourse Loan ceased to exist when the borrower did.

                      How’s that citation of the Church’s finalized doctrine of usury coming along Mr Bernanke?

                      I’m still waiting to see the Magisterium’s official final say. Or have they yet to contact the spirit of Aquinas on the matter?

      • Daniel S Krynicki

        A few more notes about Richards’ article could be passed on for general consumption. He is obviously not an economist even though he has the credentials ; and this type of analysis is generally handled by a real economist. It should be, however, something that Richards learns. Nowhere in the article does he identify what bank credit is ; and that new money is created in all bank loans.

        In this sense a banker does have some risk if a borrower defaults in loan payments. But what if the borrower already paid into the loan an amount equivalent or more than the original principal and then defaulted in payment? The lender forecloses the property and takes possession of it along with the processing fees and the banker keeps the amount the borrower paid back. These people who write about bank loans should first teach what bank ledgers are and that the bankers are money creators when they issue bank credit.

        Richards wrote:
        “These days, few Christians—whether Protestant, Catholic, or Orthodox—offer a blanket opposition to charging interest, the Vatican participates in modern banking, and Canon Law assumes its legitimacy. As it was said toward the long conclusion of the scholastic debates, “When the reasons for the law ceases, the law itself ceases.” ”

        Is there therefore no conflict between the Church’s Canon Law and the Canon of Scripture

        Richards wrote:
        “Of the three passages forbidding interest-charging in the Hebrew Torah, two refer to the rich Israelite lending money to a poor “brother” in dire straits; the lender should not take advantage of the situation by charging interest. The third passage, in Deuteronomy, repeats this ban but allows Hebrews to charge interest to people outside the community. So the practice must not have been seen as intrinsically evil. Ancient Israelites were simply forbidden from confusing family relationships with commercial ones.”

        Here he misinterprets the Scriptures. Does he also ignore Psalm 15, Ezekiel 18 and Ezekiel 22? Also, did he deliberately miss the sabbatical years, which completely release debtors from their debts in Deuteronomy?

        Richards wrote:
        “In the parable of the talents, Jesus even draws a distinction between the sterile hoarding of money on the one hand and, on the other hand, the interest-bearing savings of money placed in a bank; and he approves of the latter.”

        Now here is a stretch in interpretation, especially in light of the six Old Testament prohibitions against usury. Does this comparison by our LORD somehow make usury lawful? Here he shows us he is another escape clause artist using the comparison out of its context. He probably really believes this even as he believes bankers are lending legal tender in bank loans. Does he realize what bank credit is ; and that it is deflationary in its fundamental nature because more money is required to pay principal back than exists in the currency stream. As a result, the money supply must always be injected with more deflationary bank credit just to pay the interest.

        Richards wrote:
        “the extent and the limits of magisterial authority”

        Are heretics allowed to violate the Canon of Scripture under the disguise of magisterial authority?

        Richards wrote:
        “And if we do keep it in mind, it should be clear that doctrine, as Catholics define it, has not changed. Put simply, usury is charging someone for something that has no value, in short, for defrauding someone, especially the poor and dependent, in a financial transaction. The Church is right to condemn it, as Pope Benedict XVI did in his 2009 encyclical Caritas in Veritate. Our thicker understanding of money simply leads us to recognize that most ordinary bank loans exact a cost on the lender and have value to the borrower, and so are not usurious. Perhaps there are other examples of the Church changing doctrine—though I doubt it—but her teaching on usury is not one of them.”

        Value to the borrower is somewhat truthful ; but not usurious? Well let’s get this straight here. All money, even legal tender, is something that is created out of nothing today. Even if specie (gold) backed the currency, it would simply be something that is either printed or entered in cyberspace as an equivalent amount representing the gold. So money as legal tender or bank credit circulates in the currency stream. If usury were outlawed, and the government created the legal tender to directly fund all of the objectives enumerated in the Preamble, we could have a stable money supply along with interest free loans issued by this money creating authority. The money would thus derive its value from the goods and services it produced nationally. All taxes would thus be done away with save one to regulate the money supply. Oppression of the people would be ended with the parasites of humanity being relegated to making their own honest living. Oh, we would still have accountants and bookkeepers ; but no parasites.

        But such a vision is not shared by anyone I have thus far read in the blogs posted in follow up with Richards’ article. Tell Mr. Richards that here in Michigan last week our state legislature has just deliberated on passing a law that would allow pawnbrokers to charge 20% interest per month on all outstanding loans. How’s that for exacting a cost? This is the kind of ignorance we face today. Perhaps at a future time sufficient numbers of honest people will take an interest in studying this severe disease systemic in human nature: the love of money.

        Perhaps Richards does not grasp that a usury laden monetary system always experiences prices for goods and services that are higher than the actual cost it took to market the finished products and services. These usury laden prices therefore get skimmed first by the usurers, rather than from the honest efforts of those who toil and market them. The higher the interest rates, the higher will be prices for goods and services. Eventually, when the entire system is saturated with usury as it almost is now in the entire western world, not one individual or family will be able to afford even bare necessities. When we say services we also include professional services as the professionals mostly must borrow to pay for education, residency and equipment. Thus stability of prices is not something that can be achieved in a usurious system. Jefferson explained the rising prices phenomenon carefully enough in his bushel of wheat analogy. (Letter to John Eppes, House Ways and Means Chair, 1813.)

        As population grows and the need for more goods and services increases, a comensurate growth in the money supply is necessary for commerce to thrive. Scarcity of money in the currency stream is one of the tools the money power uses to create conditions in which they are able to acquire choice assets. Too much money in the currency stream will cause rampant price inflation. The money power is fully aware of the conditions that result from their manipulations of the money supply and use it to their advantage. This is commonly known as insider trading. But the general public is not aware of the tools they possess in their shed. If control of the money is not taken away from private interests and regulated uniformly at the national level, the five points of government’s responsibility enumerated in the Preamble will not be achieved.

        And so enters Jay W. Richards as a modern pseudo-economist and student of church history and perhaps honestly seeking the knowledge of the kingdom of Jesus Christ. But he is lacking worldly-wise economic training. He sees some good going on in the western world. But he has not studied the down sides resulting in usury based economics. Perhaps he studied at Randolph-Macon College under Dr. David Brat.

        Daniel Krynicki



        • Strife

          First of all, I resent comments that are long drawn-out overly complicated extrapolations of multiple and questionable premises.

          The problem with this entire topic is that it has already become unnecessarily complicated with endless parsings of a collection of disjointed and antiquated definitions of “usury” that were relative to the context of the historic periods in which they were developing.

          So, there needs to be a few SIMPLE premises established in our current historical context:

          1) The ancient definition of “Slavery” no longer exists in the modern Western economic system. Not even close.

          2) High interest loans do not cause starvation and death in our modern socialist welfare states. I have yet to encounter anyone actually starving to death in our increasingly obese society. Especially the so-called “poor”.

          3) Can someone prove to me that borrowers are forced into any loans?

          4) Can someone show me the current, final, and complete Canon Law definition of “Usury”?

          5) Can someone cite for me the current, final, and complete Canon Law definition of this entire concept of “new money created” out of nothingness and based on nothingness?

          These are relatively simple straight forward points. And they require simple straight forward responses. Anything more, is simply a fog of unsustainable rationalizations and mental gymnastics.

          • Daniel S Krynicki

            Dear Sir,

            There are several points I covered for which you did not respond. But I will do the reply to your post step by step according to your numbering scheme:
            1) I never used the word slavery once in my post. But since you brought it up I will offer you a quote by Horace Greeley, a journalist from 1872, “We have stricken the shackles from four million human beings and brought all laborers to a common level, not so much by the elevation of the former slaves as by practically reducing the whole working population, white and black, to a condition of serfdom. While boasting of our noble deeds, we are careful to conceal the ugly fact that by our iniquitous money system we have nationalized a system of oppression which, though more refined, is not less cruel than the old system of chattel slavery.”
            2) I do read local a newspaper. Just about every year it reports about some homeless soul who has frozen to death in the affluent county where I reside. I suspect within the City of Detroit near where I live, the problem is indeed more prevalent. You should go with me to a professional baseball or football game in the inner city. The streets are lined with panhandlers who must scramble for a warm bed in winter.
            3) The money creators issue all our currency and credit. All people arrive on planet earth subject to the unilateral monetary control of bankers. They either conform to these unjust laws in this unjust monetary system or choose homelessness, unless they are born with money.
            But more importantly, I have called you out on the definition of a loan. Is a modern loan the process of lending a fungible good, or does it simply represent modernly, in as simple terms as possible, the creation of new money by a bank based upon collateral for which the bank collects usury?
            4) Does the word magisterium automatically validate edicts from on high that violate the Canon of Scripture? If you had read my reply thoroughly, you would have noticed three additional Scriptural locations in which usury is very plainly prohibited. They are again, Psalm 15:1-5; Ezekiel 18:5-13; Ezekiel 22:12. These three, along with those in Leviticus 25, Deuteronomy 15 and Luke 6:35 form a very solid basis for making it unlawful to collect usury on any loans. If the heretics who review Canon Law do not recognize this, woe are they. At the same time, woe is me if I do not proclaim the truth as the Canon of Scripture plainly teaches. And woe to you also, unless you begin to teach that they do indeed create our currency and credit in clear violation of God’s everlasting moral law. They then lend it out at interest. But it is not out of nothing as I hastily wrote in my first post ; it’s basis is the collateral that the prospective borrower puts at risk. The
            ?lender? has comparatively little at risk.
            5) Why should I care about anything contained in Canon Law, especially if Canon Law violates the Canon of Scripture. When you go to Sunday Mass don’t you hear the lector at the end of every Scripture reading, “This is the Word of the LORD”. I choose the LORD. Whom do you choose, usury capitalism? While you live, it is not too late to see the magnitude of error in the love of money. Paul mentioned this love of money twice in his epistles. He also wrote the following twice in his epistles: “A little leaven leavens the whole lump”. These are the sad facts about usury. Usury is like leaven. And many are pierced through the heart with their love of money.

            Daniel Krynicki

            • Strife

              1) An archaic and overly rhetorical definition of “slavery” and “serfdom” is laughable in the 21st Century. Especially in our current socialist culture.

              2) The so-called “homeless” problem truly began in earnest in the early 70’s when it became illegal to institutionalize the mentally ill.

              3) No one is forced to sign any loans. But point of fact, the origins of the 2008 housing bubble collapse began back in the Carter Admin with the development of the “Community Reinvestment Act”. In short, this socialist executive prompting was later reinforced during the Clinton Admin in the form of force mortgages (under the threat of racial lawsuits) to “minority” borrowers regardless of their ability to afford the loans in the first place. Then. this risky investments were bundled as derivatives and the risk was intentionally launched onto the world financial market at the behest of the Clinton Admin. And ALL of this was enable and fostered under the administration of the Govt housing entities Fannie Mae and Freddie Mac.

              4) Your scriptural references are only valid within the context of the socio/economic realities in which they were written. For starters, the paradigm of the modern economic/trading/banking system did not exist. Not to mention the modern concept of a Constitutional Republic. So again – you’re simply farting in the wind with your obvious political motives here.

              5) The fact that you see a false dichotomy between Scripture and Canon Law speaks volumes. Apparently you adhere to the fallacy of Sola scriptura as if scripture is capable of fully interpreting itself. Well it doesn’t. And it doesn’t claim to. Which means the basis of your scriptural extrapolations is….. very un-scriptural.

              6) You’re a blowhard.

              7) You’re welcome.

            • Daniel S Krynicki

              The most important question for you, which you again ignored, is simple and straightforward enough for even a high school student to understand, “Is a modern loan the process of lending a fungible good, or does it simply represent modernly, in as simple terms as possible, the creation of new money by a bank based upon collateral of the borrower for which the bank collects usury?”

    • Zippy

      I’ve made significant updates to my usury FAQ, linked in my comment above. My thanks to discussion participants for their feedback.

  • ColdStanding

    Look, you can have your cake and eat it too. Simply eat your piece and take someone else’s. Problem solved.

  • Tony

    The matter of usury is the only one for which the revisers have at least the appearance of an argument, and it is weak, as you show.

    On the matter of slavery:

    1. The Church NEVER HAD a defined “doctrine” regarding it.
    2. It is one thing to PROHIBIT definitively what you had once refrained from prohibiting. That does not require a change of doctrine. It may show a sharper understanding of the doctrine you already have, and a more courageous application of it. It is another thing to PERMIT what you have PROHIBITED definitively, and that is what our current revisers want to do.
    3. The entire thrust of the Scriptures is against slavery, as Christians have recognized since the earliest times.

    I would very much like the Church to return to its examination of usury and come up with fresh analyses of what is morally illicit …

  • Paddy

    Due to our banksters, and a band of thieves called politicians, our great grandchildren will be paying money interest on the trilions stolen well into the 22nd century. The Church is strangely mute on the subject, aside from warning against consumerism. To their credit ( pun intended), Muslims decry these shakedowns and afford a preferential option for our working poor now drowning in debt. So, this academic study hardly addresses the profound immorality of modern finance.

    • “To their credit ( pun intended), Muslims decry these shakedowns and afford a preferential option for our working poor now drowning in debt.”

      You really have to be a special kind of fool to believe that Islam- which offers such bargains as the jizya or “convert or die” to be against shakedowns.

      All of Islamic finance is a matter of structuring the arrangements of exhange to be style over substance.

      • tom

        Hardly a fool, but our bankster “elites” need to face Justice and could benefit from Church condemnation. If one can’t grasp the scheme of the Federal Reserve where money is created out of thin air and then lent at a cost, you are lost. Everything else about Islam may be up for debate, but not its condemnation of economic slavery that now envelops most Americans and almost all Catholics. .

        • If you think I have any love for the Fed, you are sorely mistaken. It was one of those intuitional chancres of the so-called Progressive Era, that has fundamentally failed in its mandates, and has introduced iatrogenic pathologies with regularity.
          I note that the Fed’s principal weapon in the creation of ex nihilo currency has been the reduction of interest rates; something some posters apparently find agreeable
          Of course we are now going from Zero

          • tom

            It’s not “heresy” to condemn usury. When Islam spread across the Ummah, many non-Muslims were delighted to escape the usurious contracts that tied their futures into knots by simply converting. It’s worth pointing out that it could happen again given our gravely corrupt financial system.

            • Islam is heresy and you are woefully ignorant of the operation of Islamic finance if any way you think it is liberating. It’s all style of substance.

              “In an Islamic mortgage, for instance, a bank does not lend money to an individual who buys a property; instead, it buys the property itself. The customer can then either buy it back from the bank at a higher price paid in instalments (murabahah) or make monthly payments to the bank comprising both a repayment of the purchase price and rent until he owns the property outright (ijara).”


              • tom

                Beats tranche schemes where ratings agencies are paid handsomely to over-value property and sell it to suckers for an immoral profit. That’s Western finance in a nutshell.

                • tom

                  Every large banking house on Earthis guilty of criminal felonies, repeatedly, and we seriously debate the definition of usury? Hah!

                  • Oh give it up Dhimmi.

                    • tom

                      If interest doesn’t kill the former West on its own with our massive debt structure, our failure to corral our banksters will open the doors to Muslim control this century. We’re screwed regardless of how one defines usury.

                    • Oh give it up, Dhimmi.

  • Advent is here

    Ultimately, Capitalism is an evil (no matter what DE says). Socialism/Communism is also ultimately an evil. In the new Heavens and the new Earth, there will be no Money, greed, profits, interests, banks, etc. Thanks be to God. In the Infinity of our Lord we shall rejoice.

    • NO, DE says two things:

      1.) Capitalism is a manufactured Marxist term of derision, coined by one of the great misanthropes of history, who was so evil he caused the paramour he impregnated in the house he shared with his wife to put the child to death, and who was so lazy that he refused to bath and when his poor hygiene (even in 19th century standards) caused him “boils”, blamed no his own sloth, but a vast conspiracy to silence his voice. He who uses the term shows the pedigree of his ideas and fealty to Marx.

      2.) “Advent is here” is poster who should get a real DISQUS ID.

      On the other hand, I will not fall prey to the temptation to be flattered by being followed so closely as to be cited by name.

  • Why not be generous?

    Thank you for your article, but I still don’t see why charging for “opportunity cost” or “time value” is good. If a lender had something “valuable” to do with his extra money besides lend it to someone with the ability to use it well, then he would do it. His decision to allow another person to benefit from use of his money, a loan, should be out of the goodness and generosity of his charitable heart. Any risk he decides to take should be out of his “store” of charity also, I would think. This is a pure act, a pure loan. To take advantage of the borrower’s need or hope for future profit, is rather mercenary and lazy isn’t it? It’s really saying, “You can make better use of this money than I can, but because I have the money, I’m going to demand a portion of your ability to profit by it, while I sit back idle.” That seems to be taking advantage of the more enterprising borrower. If the lender is so enterprising, he should do something useful and good with his money, to render good stewardship of his “talents”. This pure giving, pure risk, and pure receiving and return payment seem like real brotherly love to me.

    • Somehow, I rather figured this article would bring out the economic illiterates.

      • Why not be generous?

        Exactly! We are “to give expecting NOTHING in return”! The borrower, out of gratitude and charity should likely volunteer to “benefit” the lender in some way upon repayment. This way both benefit from charitable giving, and the good work is done with the money. What about “Neither a borrower nor a lender be”? What about “Thou shalt love thy neighbor as thyself”? Don’t we all want to receive real gifts freely given out of pure love? What if Christ charged for Baptism….since it confers a rather profitable gain for the miserable sinner…? God asks only for true love.

        • I take it then you disgorge yourself of all your filthy lucre and the device you are on is the result of a gift?

          • Nick_Palmer3

            I truly enjoy people who seek to “make” more charitable. Using the force of the State if necessary!

            • I truly enjoy people who confuse literature with Scripture.

            • tom

              it’s worse when the Church gets handouts from the state to run an immigration center or a college. There goes Freedom of Religion!

        • Daniel P

          Shakespeare put the words “neither a borrower nor a lender be” in the mouth of a conventionalist buffoon. It’s not necessarily good advice, and Shakespeare didn’t think it was good advice.

  • Michael B Rooke

    Any article on usury should include the etymology of the word and given the dual meanings of the word throughout European history ie interest and excessive interest what should be explored is who meant what and when. References to Hebrew,
    Greek and Roman use would also seem to be appropriate.

    In older translations of the Bible, KJV and Douai-Rheims the word usury is used in

    Mt 25:27 “Thou oughtest therefore to have put my money to the exchangers, and then at my coming I should have received mine own with usury.”

    Lk 19:22-23 “…Out of thine own mouth will I judge thee, thou wicked servant. Thou knewest that I was an austere man, taking up that I laid not down, and reaping that
    I did not sow. Wherefore then gavest not thou my money into the bank, that at my coming I might have required mine own with usury?”

    In modern translations the word “interest” is used. From the context it is clear that the
    servant who ought to have invested the money with the bank had a passive action and would take what the bankers offered hence usury used in that context meant what we now call interest. The Latin Vulgate uses the word usura which translates as use or enjoy.

    There may be a connection there with problems that arose Biblical times as identified in the 1906 Jewish Encyclopaedia (JE) which arose when someone borrowed a quantity of
    grain but when they came to pay back the grain the market price for wheat had altered.

    It also suggests that Medieval mistranslation of the Latin Vulgate changed the meaning of Luke 6:35
    ( Douai-Rhiems)

    “and lend, hoping for nothing
    thereby:” “et mutuum date, nihil inde sperantes :”

    should have translated “Mutuum
    date, nihil inde sperantes,” as “lend, never despairing”

    The JE also quotes historical cases of high rates of interest that we might regard as usury in the modern sense but approved by secular rulers.

    “Very high interest was permitted the Jews in France under Philip Augustus, two deniers on the pound per week, or 43.3 per cent per annum, and King John in 1360 allowed this
    even to be doubled. In Sicily Frederick II. allowed 10 per cent in 1231. In Castile Alfonso X. allowed 25 per cent, while in Aragon the Cortes of Tarragona put 20 per cent as the maximum, and this was reduced to 12 per cent in the year 1231. In Navarre Philip III.
    established 20 per cent (“5 for 6”) in 1330, while in Portugal Alfonso IV. (1350) fixed the maximum at 33⅓ per cent.”

    Throughout history the Catholic Church has endorsed interest as spoken of by Jesus but has condemned excessive charges that we now call usury.

  • This is an excellent history, and i’m going to save this page. But I have to disagree at the end. Perhaps technically the Church didn’t change doctrine. They just redefined the problem, which I think violates the spirit of the doctrine. Let’s not gloss over mistakes. The change is the correct way to understand lending at interest. It was an honest mistake, and the correction is based on better understanding scripture. Glossing over mistakes only undermines the church in the long run.

    • Zippy

      The last Magisterial statement on usury was made centuries ago. There has been no change of doctrine. Just change in ‘pastoral practice’, in effect just ignoring the problem and not talking about it anymore. By now most people have interpreted the Church’s centuries-long silence on usury to imply a change in doctrine (or a rather radical ‘development’ of doctrine — so radical as to make the idea of development of doctrine as something distinct from radical change risible). This ‘development’ is now defended by people with ostensibly conservative dispositions — as per Chesterton, the job of radicals is to make errors and the job of conservatives is to prevent those errors from being corrected.

      If this all sounds eerily familiar, it should. Humanae Vitae could easily become the next Vix Pervenit.

  • hombre111

    “Universal truths” are the most dangerous statements one can make, because they are precarious. All that is needed is, 1) Better logic 2) New facts 3) a better perspective 4) a more adequate solution. With usury, new facts and a new perspective appeared. In biblical days, when there was little hard money and much commerce was based on barter, charging interest was cruel. But when money assumed its own reality and began to underpin the economy, interest was practical, except in the case of the title loan and payday loan people who can charge astonishing interest, even beyond 100% Because these vultures prey on the desperation of the poor, their sin is one of those that cries out to God for judgment. Usury is still immoral. But it has been redefined.

    The moral teaching on birth control suffers from the same flaw. It is a deduction three or four steps down from a natural law that nobody questions: Do the good. But because it is down the chain, the teaching falls if 1) There is better logic, Opponents of birth control reduce the question to an argument about biology, ignoring the much more complex reality of love between a husband and wife. 2) There are new facts (For instance, until thirty or forty years ago, it was assumed that there was a one to one relation between intercourse and the possibility of conception. Not we know the probability of conception is much, much lower than that. That is what underlines NFP: restrict intercourse to those days when conception is very low risk or not even possible. But statistically, the risk is always quite low. 3) There is a better perspective. Old celibates like Pius XI, Paul XI, and John Paul II have a very, very limited perspective about a reality they don’t live and can never completely understand. An educated, prayerful couple dedicated to live out their sacrament with the help of the Holy Spirit are the only ones who know the wholes story. 4) There is a more adequate solution. I watched my parents’ marriage dissolve over the issue of too many children. No way my uneducated blue collar father was able to grasp the intricacies of NFP. In those days, the outmoded “rhythm method” was famously labeld “Vatican roulette.” Pope Paul’s encyclical left millions of good Catholics in a desperate crisis of conscience. A teaching based on pastoral compassion could have done better.

    • Zippy

      With usury, new facts and a new perspective appeared.

      No they didn’t. It was just a ‘pastoral’ victory for the progressives of the time, wherein the Magisterium just stopped talking about usury as moral doctrine and started ignoring it ‘pastorally’ – a progressive victory now defended by loyal ‘conservatives’, whose main function seems to be to prevent the errors of progressives from ever being corrected.

      And so it goes.

      • hombre111

        Interesting argument!

    • Catholic123

      “So, contraception usually restricts nothing.”

      Then chastity would work just as well. Better to make yourself a saint then make your spouse a hole.

      “I watched my parents’ marriage dissolve over the issue of too many children. No way my uneducated blue collar father was able to grasp the intricacies of NFP.”

      I am sorry about that, but a moral failure is not an argument for a new morality. No one disagrees that taking up the cross is difficult, but there is no contraception for it. Today, we see MOST Catholics using contraception, and this has been no panacea for marriage.

      • “I watched my parents’ marriage dissolve over the issue of too many children. ”

        I wonder if there was just ONE child too many in their brood.

        I’m always suspicious of people who don’t outgrow the impulse to denigrate their parents decades after adolescent rebellion should have subsided.

    • Fides_et_Ratio

      Compassion does not overrule justice. Jesus Christ, the personification of Mercy, taught a doctrine of family values so radical and demanding that his disciples commented “If the relationship of the man with his wife is like this, it is better not to marry.” Jesus did not say “I’m sorry, I lacked compassion, I take back all I said.” Instead, he said “Not all men can accept this statement, but only those to whom it has been given.”

      Also, Jesus Himself was celibate. According to your theory, this means that He has a “very, very limited perspective about a reality He doesn’t live and can never completely understand”.

      And finally, don’t reduce Catholic teaching to “Pope Paul’s encyclical”. This is as misleading as those misinformed anti-Catholics who say that “Catholics created papal infallibility in 1870”. It completely ignores the past Tradition that was only confirmed by the document in question.

      The understanding that artificial contraception is immoral was universal among Christians until the Anglicans changed it in 1930. Pope Paul VI job was to confirm his brethren and conserve Revelation. He did it. Popes have no right to change neither the Faith, neither natural law. The Pope only legislates canon law. Regarding Faith and morals, he did the only thing a bishop can do: he transmitted what he had received.

  • Anthony Santelli

    This article contains serious flaws. First, usury has always been allowed as an act of a Just War. Deuteronomy 23 says that Jews can lend money at interest to enemies; it does not say that Jews can lend money at interest to anyone who is not of their ethnic group. The word used in the Hebrew does not mean “immigrant” it means “enemy”. Consequently, using that scripture to defend interest when lending money for commerce is simply wrong.

    Second, the Church of the Middle Ages did not allow Jews (or anyone else) to lend money at interest to Christians, nor vice versa. The Church did not consider herself to be at war with Jews.

    Third, Vix Pervenit specifically rejects the arguments made in this article. That encyclical was written in the year 1745, not 0745. By 1745, finance was quite advanced.

    The argument of charging interest for time or for opportunity cost has been soundly rejected by the best scholars of the Church throughout the ages.

    Fees are not the same as interest; fees were allowed for anything that would make the lender whole, such as origination fees and a fee (but not interest) for risk. The basic distinction between a fee and interest is that a fee does not increase with time; it’s a one-time flat fee. Interest compounds over time. Nothing in nature grows like compound interest, and so no opportunity forgone could ever be considered to allow the charging of compound interest (even if the Church allowed lenders to chage a fee for lucrum cessans, or opportunity cost, which she did not.)

    Finally, the reason why the Church has been silent on the subject since 1745 — no dogmatic statement has been issued since that point in time, only pastoral comments — is because from a practical standpoint it is impossible to avoid suffering from usury at the hands of others: we pay higher taxes because the government borrows money at interest; we pay more for everything we buy because businesses borrow at interest. Justice demands that each be given what they are due, and we are each due back the excess of what we have paid that is covering usury. Since the law does not allow us to recover this through lawsuits — the law does the opposite by allowing usury — to get back what is justly ours, we must also resort to charging interest to government and big businesses to recover what they took from us unjustly.

    Stating this outright, without having an alternative to propose, would not be a wise move on the part of the Church. And so she hasn’t explicitly stated it. In essence, it means that we live within an economic system that is a war of all against all. The unbridled Capitalist system that we live in is a war of all against all, and so it makes it legitimate to charge interest to those who are playing the economic game of Capitalism. But it does not make it legitimate to charge your brother interest if he asks to borrow money from you, nor from your friend, business associate, or other members of your community.

    • Zippy

      The basic distinction between a fee and interest is that a fee does not increase with time; it’s a one-time flat fee.

      This is an unnecessary complication. Mutuum loans (loans where an actual person is on the hook to return the original loaned amount in-kind) are never morally licit as business transactions intended to produce a profit, period. The ‘extrinsic titles’ on mutuum loans only apply in the first place when the loan is made for charity.

      All full-recourse loans for profit are usury, period.

      Nonrecourse debt is an entirely different matter: norecourse debt is in effect what the medievals called a census. See Question 31 here:

      • Anthony Santelli

        Dear Zippy,

        You are correct about mutuum loans in that it is always immoral to charge interest on a mutuum loan.

        That being said, you seem to think that a loan to a government or a business is not a mutuum loan.

        In question 6 on your blog, You say: What if the borrower is an institution like a government or corporation rather than an individual? “Lending” to an institution is not a mutuum loan, as long as the lender cannot go after individuals for recovery of the principal. An institution is a collection of assets and can act as security on nonrecourse debt.

        Well, first of all, a loan to a government is backed by the taxes the government can take from its citizens, so a loan to a government is indeed backed by individual assets. And don’t think for a microsecond that governments don’t raise taxes to pay off debts because they have done that all the time.

        So, using your own logic, you must separate business loans from government loans because governments hold their citizens on the hook for what they borrow. Worse, us citizens don’t even have the choice as to whether the government is going to borrow money at interest. In other words, government borrowing forces us to suffer from the evil of usury.

        Even worse, governments last beyond the lifetime of individuals, and so lending to governments is the way to get interest to compound indefinitely. This can be mathematically shown to concentrate wealth into the hands of the rich lenders at the expense of the middle class taxpayer. Usury from government borrowing is the primary reason why the disparity of wealth between the rich and the rest of us is growing larger and larger.

        So, it is also wrong to lend money at interest to government. (This does not prevent, however, lenders from structuring loan contracts to governments such that they are hedged against inflation. That isn’t interest/usury; I have written about this elsewhere and don’t have the space here to repeat it all.)

        Now, let’s get to loans to businesses.

        Loans to businesses contain some risk of default, and so a fee for risk can legitimately be charged, along with a hedge against inflation, and an origination fee.

        But all that being said, interest is still immoral.

        The census is equivalent to a rent. It is indeed legitimate to rent things to a business and to charge a rental fee for whatever is being rented. So, instead of lending money, you can purchase whatever capital product the business needs (computers, a factory, whatever) and then lease that equipment to the business. The lease rate can look a lot like interest on the amount of money used to purchase the equipment. Nevertheless, if the business stops paying the rent, all you have recourse to is the equipment itself. Further, you are at risk of the equipment depreciating in value.

        This isn’t lending at interest; it’s a rent. But the contract needs to be structured in that manner.

        If, on the other hand, you simply buy a bond from a company, that’s not the same as a rent. Because if the company stops paying interest on the bond, you can force the company into bankruptcy and take whatever assets are needed to recover your loan. If the capital structure of the company is such that it contains, say 50% stock and 50% bonds, then the bondhonders will suffer not and the equity holders will be on the hook for all the losses. That’s usury.

        Basically, lenders have the right to be made whole and no more.

        Using the census or a rental contract, you must recognize that such contracts are only licit to the extent that there is risk to the owner of the product being rented. A loan to a business at a fixed interest rate is the same as a rent ONLY when the loan is collateralized by a specific asset that is worth the same as the loan in question. The moment you are collateralizing that loan by far more assets than the loan’s value (as is the case with the vast majority of loans to businesses), then it’s no longer the equivalent to a census.

        Please think about this Zippy.


        Anthony Santelli, Ph.D.

        • Zippy

          Just to hit on one point, you are mistaken in thinking that someone is entitled to compensation because of taking on risk qua risk. If risk qua risk were compensible (that is, a real asset which could be sold) gamblers would be entitled to profits.

          Risk is real in a sense, but financial risk is only real as a mode or property of some actual ontologically real asset(s).

          As for the differences between sovereign securities and personal loans, I would think it would be obvious at least that they are different in kind, not merely degree. The subject is really too large to take on in a comment, but suffice to say that I have yet to read what I consider to be a coherent take on the subject, anywhere.

    • “Fees are not the same as interest; fees were allowed for anything that would make the lender whole, such as origination fees and a fee (but not interest) for risk. The basic distinction between a fee and interest is that a fee does not increase with time; it’s a one-time flat fee. Interest compounds over time. Nothing in nature grows like compound interest”

      An origination fee is interest; it’s easily demonstrable through simple math that it is equivalent in magnitude to some imputed rate of compound interest, but in one respect it’s worse than interest, it is charged up front and it is unavoidable by repayment. The earlier the repayment the higher the imputed interest.

      It literally is payment for nothing, the equivalent of paying multiple years worth of rent when you only need the place for a year. It’s no accident there fees were common feature of places like HFC and other “consumer discount companies”, who were the lenders of last resort to individuals, through inadequate collateral capacity or character, were distress buyers of credit.

      • Anthony Santelli

        Dear DE-173,

        An origination fee is not the same as interest. Let’s use an example.

        Suppose you takeout a loan of $1000 and are charged an origination fee of $20. What happens is that you are only given $980. The fee is taken out when the loan is given. Therefore, it does not compound over time.

        The borrower simply owes $1000. It does not grow over time. If it did, that would be usury.

        Origination fees are not payment for nothing. Pope Leo X, issued a bull, intermultiplices, on May 4, 1515, that was approved by the 5th Lateran Council (and so is part of the dogma of the faith. In that bull, he allowed the charging of origination fees by banks that would cover the cost of making the loans but no profits beyond that. In general, he did not allow fees beyond 5% of the size of the loan. That’s not 5% per year, but 5% once. It’s too lengthy of a subject to get into all of the nuances here.

        Anthony Santelli, Ph.D.

        • “An origination fee is not the same as interest. Let’s use an example.

          Suppose you takeout a loan of $1000 and are charged an origination fee of $20. What happens is that you are only given $980. The fee is taken out when the loan is given. Therefore, it does not compound over time.”

          Well, that’s creative, but not convincing. It doesn’t compound because it becomes due and payable @ time =0.

          More importantly, if you employed that reasoning and did not treat origination fees as interest using the effective interest method, in your financial statements and I was your auditor, you’d be getting a qualified opinion.

          ASC 310-20 dictates the US GAAP accounting for loan origination fees and requires that they be netted (income less cost) and deferred and amortized as an adjustment to the yield over the life of the loan.
          Maybe I should check with Dr. Williams to see what he thinks of your idea that origination fees are not interest.

          DE-173, CPA.

          • Anthony Santelli

            I grant you that standard accounting principles consider origination fees as interest. But accounting principles and moral principles are not the same.

            We are discussing what is morally licit to charge and what is not; we are not discussing how accountants or the tax man classifies something.

            By the way, it’s not my idea that origination fees are not interest; it’s the position of the Church and was declared so by Pope Leo X in 1515.

            I wrote about this more extensively in a published article that can be found in the July/August 2013 issue of Culture Wars Magazine that can be purchased for $5 here: http://www.culturewars.com. (I don’t receive any of the proceeds.)

            • You can dance around this all you want, but it is interest.

              The problem with your posturing is that you are citing the contemporaneous opinion of a man pronouncements were dictated by the lack of five centuries of subsequent knowledge; and presenting this as an ex Cathedra, infallible statement, and it is not.

              I can forgive Pope Leo’s ignorance on this matter, but not your equivocating causuistry.

  • Yankeegator

    Face it most of us are enslaved to the Banksters and their interest… It is still a sin and these human beings will have to answer to The Just Judge soon for their outrageous interest…

  • tom

    One has only to look at the greatest debtor nations. Aside from the unique Japanese situation, “Christian” nations like Ireland, Spain, France, England, Greece, Italy and the USA have the most grievous injuries from dealing with bankers and their imposed interest millstone. Communist and Muslim nations slipped this financial beat down that cripples our economies.

  • tom

    With Fr. Edward McGlynn’s excommunication over a century gone for espousing the views of Henry George, it may be safe to quote the creator of the single tax theory with respect to the Church and economic principles:

    “Even the intellectually courageous have shrunk from laying stress upon principles which might threaten great vested interests; while others, less scrupulous, have exercised their ingenuity in eliminating from the science everything which could offend those interests. …a science which…seems but to justify injustice, to canonize selfishness by throwing around it the halo of utility…”

  • Elijah fan

    . Change in the nature of money? Let’s leave apologetics and go to history. In c. 1830 ” they are not to be disturbed” went out from the Vatican in answer to dubia as to whether Catholics could take moderate interest. We said yes despite Vix Pervenit of 1745 which excluded the tiniest of interest except it didn’t if you could call it extrinsic titles. But that permission for moderate interest in 1830 was Calvin’s 1545 answer to the same question. Can we just say that we learned something from Calvin as we learned from 18 century Quakers to exclude all slavery within modern economies though primitives should still use it for criminals if they have no prisons ( the original Bible situation Lev.25:45).

  • Rosemary58

    This is a good summation. It seems, though, that if Catholics live as they say they believe, we would probably not need moneylending, or even a government. When Catholics move away from their faith, financial and governmental power become magnified.

  • tom

    In the communist EU, 40% of Italy’s tax revenue goes to servicing the massive debt.

  • entonces_99

    Quoting Judge Noonan regarding the “development” of the Church’s views on usury is a little eyebrow-raising, because he’s one of the people citing that development as illustrating how the Church can change–excuse me, “develop”–its views on contraception.

  • Mark

    I have seen mention of “what money is,” but no real acknowledgement that, in today’s fraudulent fractional reserve banking system, money is debt, a mere “fiat” ledger entry. What “extrinsic title” can be honestly justified on a mere ledger entry made by the cabal who profit massively from it? A “Federal Reserve Note” is no golden ducat. How can any practicing Catholic justify any profit on such fraud layered upon fraud?

  • vito

    this article has strongly reinforced my opinion that the doctrine on usury did indeed change. Call it “developed” if you like, that does not change anything.

  • James

    Our ever-changing understanding of the nature of things, such as the nature of money, is why Church teaching on the Natural Law cannot be infallible.

  • Jay

    The simple fact is that the only way to save the world economy is to do away with interest/debt based money and to have every nation on earth implement a “greenback” financial system. The global elites will not allow this to happen as history has shown. Any political leader who tries to defy the central banking debt based currency system in the history of mankind has been removed from power and or executed.