www.byzcath.org Forums Faith & Christian Life Faith & Theology Usury Question

Does usury (interest) violate Canon 17 of Nic�a, not to mention Lateran (Canon 13) and Vienne (Canon 29) for the Latins?

In these canons usury/interest was certainly condemned. However, the world has changed from the subsistence agarian economy that gave rise to these laws. Money was borrowed just to survive.

There certainly is a scriptural (OT) condemnation against usury as well(eg Leviticus 25:35-37). The Israelites were allowed to charge interest when dealing with non-Israelites (cf. Deut. 23:20).

In simple terms, capitalists borrow money to make money. The lender does not share in the financial success (or failure) of the borrower's venture. Aquinas had argued that the lender should be a "venture partner" with the borrower and share in the borrower's success (or failure). Aquinas further argued that when goods were sold on credit, the seller was already realizing a financial gain on the goods sold, so charging interest was akin to "doubling-dipping" (my term not Aquinas').

Scholastic thought could not imagine a financial gain unless someone actually shared the work. One could certainly argue against this. If the borrower's venture goes bust, the lender certainly is risking to lose the capital he acquired through his previous labors. There is certainly nothing evil in the borrower paying the lender for the use of his capital.

Father Deacon,

How does one go about explaining (or at least refuting this) to someone who brings this example up as "how the Church changes doctrine"?

I am neither an expert on moral theology nor an expert on finance. But as C. S. Lewis pointed out several decades ago, the prohibition of usury is as clear in the Bible as anything can be. It is at least possible that the violation of that commandment has a lot to do with the unfortunate state of the world today.

Fr. Serge

Fr. Serge,

The problem is, that this person is using the "change in doctrine" to state that the Church is infact not infallible and free to change doctrine.

As Fr Serge has noted, the situation of the world has changed, yet Holy Tradition (the Holy Spirit's speaking to believers of every age) continues to bear witness to the message of the Gospel. What has changed is the context in which money is lent. The Church certainly does not set interest rates. The Church has not changed doctrine, the context which the teaching addressed has changed.

Jesus spoke about the interest.

I don't know exactly where in the Gospel. But there was an account of three men saving his master's money while he's gone. Two of the men went out and invest money with interest and one guy buried money in the ground but earns no interest.

So, I wonder what's the deal with interest being unlawful or "sinful"? What is it about that makes interest that? (forgive my ignorance)

SPDundas
Deaf Byzantine

Father Deacon,

While the Church does not set interest rates, the institutions of the Church do infact make use of the interest they garner - many institutions are *required* by papal mandate to use interest-bearing accounts, etc.

That's true... but that's hardly an example that the Church is changing doctrine.

I'll return to my earlier post- the economies of most countries are not based on subsistence farming or herding, ie, one lives off the land. The Mosaic code condemned the practice of lending money with interest to those farmers or herders who "lived off" the land. These were not involved in commercial enterprise.

As farming and herding did become commercial enterprises, lending capital with interest did not take advantage of the subsistence farmer or herder.

"Usury" and "interest" are not precisely the same thing. "Usurious" interest generally refers to interest above the legal maximum.

Charging interest on loans is a pretty old practice, indeed. Ratcheting the interest up on a loan to a person desperate for "cash now" has long been considered illegal and/or immoral. We still have "usury" laws in many countries.

It is also considered illegal and/or immoral to "defraud the worker of his wages." That expression and variants of it come up a lot in old Catholic tomes.

Anyway, I'd conclude there is nothing sinful about a fair interest rate charged or earned on an account.

Remember that when you deposit money in an interest-bearing account for a term, like a CD, the interest paid is in exchange for your money being put to work - instead of stuffed in a mattress or buried in the ground. The financial institution is also making money off of your time deposit and you are sharing in that wealth through the interest you receive.

A usurious rate on a loan, though, is a no-no. Most of the time, that's taking advantage of a person when he's down - and that is most un-Christianlike.

I think the problem comes from the assumption that

Usury = Interest.

I'd say Usury is the charge of abusive interest.

I'd say an interest slightly over inflation rates would not constitute usury.

The Code of Canon Law of the Latin Church deals with the possibility of interest payments by churches, institutes, etc. in Canons 639 and 1284. Canon 1284 has a virtually direct counterpart in Canon 1028 of the Code of Canons of Oriental Churches.


Shalom,
Memo

Usury as excessive interest is a relatively modern concept. The Latin term usura is defined as "interest." The term usura may also be defined as the fee charged by money-changers. Usury as noted in the canons may denote the fees related to exchanging one currency for another. I'm not familiar with exchange rates in the ancient world, but given that currencies were made of precious metals (gold, silver, copper) and based upon weight, the fees charged to interchange copper, silver, and gold currencies may have been unjustified.

Father Deacon,

I thought something to this affect, but the documents that were cited Vix Pervenit and the Council of Vienne (1311). Vienne declared that "if any person obstinately maintained that there was no sin in the practice of demanding interest, he should be punished as a heretic" (see c. "Ex gravi", unic. Clem., "De usuris", V, 5).

That above statement falls under 'faith and morals' does it not (and it is binding at least to Latins?)?

Hi,

The Catechism of the Catholic Church does not define Usury, however, it does use the word as follows:

(Bold effect added for emphasis)

The impression I get is that the article places an Usurious system as a greater evil than an Abusive system.

That is, that Usury is even beyond Financial Abuse.

This seems to be in line with my previous statement about usury as excesive interest.

Now, the Council of Vienna is a local council of the Latin Church and, therefore, would not be infallible (it would be binding only until a more recent teaching of a similar or higher authority reformed or revoked its decrees).

Shalom,
Memo

Now you are in may neighborhood!

The condemmnation against usrury was based upon several assumptions of economics common in the ancient world, and still common today unless one looks carefuly into the nature of exchange.
The assumptions operating were grounded upon the idea that economic value is intrinsic to the nature of a material good (i.e. a pound of gold is worth more than a pound of water to anyone anywhere at anytime, whether in a Milan marketplace or in the middle of the sahara). People tended to think of money lenders as people who a) Earned something for nothing (sloth) or forced undue payment from the debtor, having lost nothing in the repayment of the principal (theft).
The first revision of this line of thought, or in other words, the creation of the concept that made possible us living in something other than mud huts began with the scholastics, but not with Aquinas. Hugh of St.Victor and St. Bernadino of Siena both considered the question of usury from the standpoint of risk, but it was Albert the Great who first touched upon the true heart of the question, the question of time.
The role of subjective value was further explored by the Spanish scholastics when, in the wake of the Spanish conquest of the new world, and the subsequent inrush of gold and precious metals into royal coffers, that mysteriously, the mere existence of the gold itself did not make peasants in Spain as rich as royalty elsewhere in Europe. It was these Spanish thinkers who realized the economic concept of subjective value, that is, the value of any object of ecnomic exchange is precisely what the putative buyer will assign it relative to his other wants, ergo, the gold a man would deem priceles in Milan is galdy exchanged for water in the sahara. Not having a brain tumor, I would not pay even 5 dollars for brain surgery, but having one, I would pay six figures. The other idea first brought forward by Albert was of time sensitivity. Which simply said, is the idea that five dollars in my hand now is more valuable than five dollars given to me tomorrow, as I may not even live to see tommorrow. Hence the moneylender rightly charges a fee and collects a profit for the inconvenience of not having his money on hand to otherwise use as he would see fit, and for shouldering the risk that he will never see this money again (even today, repayment is not a foregone conclusion). Hense, short-term mortages are cheaper than long-term, paying your credit cards off every month is cheaper than carrying a balance, etc.
Put simply, the ancient canons on usury describe not economic lending, but rather a form of extortion where one party is forced to render his money to the lender who has no moral claim to it. Today this is called the Income Tax.