The gain taken for the loan of money or wares. The Jews were allowed to lend money upon usury to strangers, Deu 23:20; but were prohibited to take usury from their brethren of Israel, at least, if they were poor, Exo 22:25. Lev 25:35; Lev 25:37. From the Scriptures speaking against the practice of usury, some have thought it unlawful, Psa 15:5. Pro 28:8. Eze 18:8. But it is replied, that usury there only means immoderate interest, or oppression, by taking advantage of the indigent circumstances of our neighbour; and that it seems as lawful for a man to receive interest for money, which another takes pain with, improves, and ruins the hazard of in trade, as it is to receive rent for our land which another takes pain with, improves, but runs the hazard of in husbandry.
profit or gain from lending money or goods. Moses enacted a law to the effect that interest should not be taken from a poor person, neither for borrowed money, nor for articles of consumption, for instance, grain, which was borrowed with the expectation of being returned, Exo 22:25; Lev 25:35-37. A difficulty arose in determining who was to be considered a poor person in a case of this kind; and the law was accordingly altered in Deu 23:20-21, and extended in its operation to all the Hebrews, whether they had more or less property; so that interest could be lawfully taken only of foreigners. As the system of the Jews went to secure every man’s paternal inheritance to his own family, they could not exact it from their brethren, but only from strangers. As the law of nature does not forbid the receipt of moderate interest in the shape of rent, for the use of lands or houses, neither does it prohibit it for the loan of money or goods. When one man trades with the capital of another, and obtains a profit from it, he is bound in justice to return a part of it to his benefactor, who, in the hands of God, has been a second cause of “giving him power to get wealth.” But should Divine Providence not favour the endeavours of some who have borrowed money, the duty of the lenders is to deal gently with them, and to be content with sharing in their losses, as they have been sharers in their gains. The Hebrews were therefore exhorted to lend money, &c, as a deed of mercy and brotherly kindness, Deu 15:7-11; Deu 24:13. And hence it happens that we find encomiums every where bestowed upon those who were willing to lend without insisting upon interest for the use of the thing lent, Psalm 15:15; 37:21, 26; 112:5; Pro 19:17; Eze 18:8. This regulation in regard to taking interest was very well stated to the condition of a state that had been recently founded, and which had but very little mercantile dealings; and its principle, though not capable of being generally introduced into communities that are much engaged in commerce, may still be exercised toward those who stand toward us in the relation of brethren.
Usury, an unlawful contract for the loan of money, to be returned again with exorbitant increase. By the laws of Moses the Israelites were forbidden to take usury from their brethren upon the loan of money, victuals, or anything else, not, it has been observed by Michaelis, as if he absolutely and in all cases condemned the practice, for he expressly permitted interest to be taken from strangers, and from the Canaanites, but only out of favor to the poorer classes. After the return of the Jews from captivity, they were required by Nehemiah to ’leave off this usury,’ and to restore to their brethren what they had exacted from them—’their lands, their vineyards, their olive-yards, and their houses; also the hundredth part of the money, and of the corn, the wine, and the oil’ (Neh 5:10-11). Our Savior denounced all extortion, and promulgated a new law of love and forbearance:—’Give to every man that asketh of thee, and of him that taketh away thy goods, ask them not again.’ ’Love ye your enemies, and do good, and lend, hoping for nothing again’ (Luk 6:30; Luk 6:35).
As employed in our version of the Bible, means only interest. When our translation was made, the word usury had not assumed the bad sense which it now has. The Jews might require interest of foreigners, Deu 23:19-20, but were forbidden to receive it from each other, Exo 22:25 Psa 15:5 ; being instructed to lend money, etc., in a spirit of brotherly kindness, "hoping for nothing again," Deu 15:7-11 Luk 6:33-35 . The exacting of usury is often rebuked, Neh 5:7,10 Pro 28:8 Eze 22:12-14 . The Mosaic code was adapted to a non-commercial people, but its principles of equity and charity are of perpetual and universal obligation.\par
Usury. (The word usury has come in modern English to mean excessive interest upon money loaned, either formally illegal or at least oppressive. In the Scriptures, however, the word did not bear this sense, but meant simply, interest of any kind upon money. The Jews were forbidden by the law of Moses to take interest from their brethren, but were permitted to take it from foreigners. The prohibition grew out of the agricultural status of the people, in which ordinary business loans were not needed. And loans as were required should be made only as to friends and brothers in need. -- Editor).
The practice of mortgaging land, sometimes at exorbitant interest, grew up among the Jews during the captivity, in direct violation of the law. Lev 25:36-37; Eze 18:8; Eze 18:13; Eze 18:17. We find the rate reaching 1 in 100 per month, corresponding to the Roman centisimae usurae, or 12 per cent per annum.
Nehemiah (Neh 5:3-13) denounces the usurious exactions of some after the return from Babylon; he put a stop to the practice. They took one percent per month, i.e. 12 percent per annum (the Roman centesimae usurae). The spirit of the law still is obligatory, that we should give timely help in need and not take advantage of our brother’s distress to lend at interest ruinous to him; but the letter is abrogated, as commerce requires the accommodation of loans at interest, and a loan at moderate interest is often of great service to the poor. Hence it is referred to by our Lord in parables, apparently as a lawful as well as recognized usage (Mat 25:27; Luk 19:23).
Usury, by modern usage, means exorbitant or unlawful interest, but in the Scriptures it means simply interest. The law of Moses prohibited the Jews from taking any interest of each other for the loan of money or of anything else, though they were allowed to take it of foreigners. The exchangers of money were in the habit of receiving it at low interest and loaning it at high interest, taking the difference for their gain. Eze 22:12. The practice of usury is severely denounced in the Scriptures. Neh 5:7; Neh 5:10; Psa 15:5; Pro 28:8.
This word does not in scripture signify, as now, undue interest, but simply interest of any kind. The Israelites were forbidden to require interest from their brethren, always supposing the person having the loan to be poor, otherwise he would not need to borrow; to strangers, however, they were allowed to lend on interest. Exo 22:25; Lev 25:35-38; Deu 23:19-20. On the return of the Jews, Nehemiah sharply rebuked the nobles and the rulers for taking interest of their poorer brethren. Neh 5:3-13. Scripture strictly enjoins the rich to help the poor. The only mention of usury in the N.T. is in the parables of the Talents and the Pounds, where the master blamed the servant for not putting the gifts into use, so that he might have received his own with interest, or increase. Mat 25:27; Luk 19:23.
Not Laying Usury Upon Your Brother
Exo_22:25; Lev_25:35-38; Deu_23:19-20.
Those That Do Not Lay Usury Upon Others
Psa_15:1-5; Eze_18:5-9.
USURY.—See Interest.
By: Executive Committee of the Editorial Board., Lewis N. Dembitz, Joseph Jacobs
In modern language this term denotes a rate of interest greater than that which the law or public opinion permits; but the Biblical law, in all dealings among Israelites, forbids all "increase" of the debt by reason of lapse of time or forbearance, be the rate of interest high or low, while it does not impose any limit in dealings between Israelites and Gentiles. Hence in discussing Jewish law the words "interest" and "usury" may be used indiscriminately.
There are three Biblical passages which forbid the taking of interest in the case of "brothers," but which permit, or seemingly enjoin, it when the borrower is a Gentile, namely, Ex. xxii. 24; Lev. xxv. 36, 37; Deut. xxiii. 20, 21.
The Hebrew word for "usury" is "neshek," meaning literally "a bite," from its painfulness to the debtor; while in Lev. xxv. 36, 37 "increase" is the rendering of the Hebrew "marbit" or "tarbit" which denotes the gain on the creditor's side, and which in the later Hebrew becomes "ribbit." Lending on usury or increase is classed by Ezekiel (xviii. 13, 17) among the worst of sins. See also Ps. xv., in which among the attributes of the righteous man is reckoned the fact that he does not lend on usury.
The Talmud (B. M. 61b) dwells on Ezek. xviii. 13 (Hebr.): "He has lent on usury; he has taken interest; he shall surely not live, having done all these abominations"; on the words with which the prohibition of usury in Lev. xxv. 36 closes: "Thou shalt be afraid of thy God"; and on the further words in which Ezekiel (l.c.) refers to the usurer: "He shall surely suffer death; his blood is upon him"; hence the lender on interest is compared to the shedder of blood.
Loss on a Debt.
The sages of the Mishnah knew full well that the forbearance of a debt causes a measurable loss. Thus the following case is put: A holds a demand on B for 1,000 zuzim payable by agreement in ten years; but two witnesses testify that B had agreed to pay in thirty days. An alibi is proved against the witnesses; and they are condemned as "plotting witnesses" to pay the difference between 1,000 zuzim payable in ten years and the same sum payable in thirty days (Mak. i. 1). It often happens that money is paid to a husband in right of his wife, in which right he has an estate for life or during coverture. In modern times the money might be invested, and the husband would draw the interest or dividends; but in all such cases the Mishnah says: "Let ground be bought and the husband receive the income!" The Babylonians, from whom the post-exilic Jews learned much in the way of legal terms and forms, were accustomed to charge interest at the rate of 20 per cent per annum. Nearly, if not quite, all of their contract tablets show this rate of increase. (The first allusion in the Babylonian Talmud to a rate of interest [B. B. 60a] is to one of 20 per cent.) Yet with this knowledge, that the use of capital has a measurable value, and with the example of the Babylonians before them, the sages of the Mishnah not only do not mitigate the Scriptural injunction against interest, but carefully close many avenues of evasion, and forbid even all kinds of "moral usury."
Usury and Increase.
The chapter on usury and increase (B. M. v.) commences thus: "What is usury ["neshek"] and what is increase ["tarbit"]?"; but by the latter word it seems to refer only to the rabbinical enlargement of the antiusury law. The former mode of dealing is easily illustrated; e.g., "where one lends 4 denarii on a promise of the return of 5; or 2 bushels of wheat when 3 are to be returned"; but the latter, an increase in "fruits" (i.e., provisions which pass by quantity), is more complex and is put thus: "A has bought from B a kor of wheat for 25 denarii (= zuzim), which is the market price; afterward, when wheat has gone up to 30 denarii, A says: 'Deliver to me the wheat which I bought from you, as I wish to sell it and buy wine with the proceeds.' B answers: 'Very well, your wheat is sold to me for 30 zuzim, and you have wine [as much as 30 zuzim will buy at the ruling market price] in my hands'; when in fact B has no wine in his possession." Now the first deal, i.e., B's buying the wheat back at a higher price than he had sold it for, is not objectionable as usury but his agreeing to deliver a named quantity of wine which is then worth 30 zuzim, but which he does not own, at some future time, when he might have to buy it in the open market at a higher price, is not indeed Scriptural but is rabbinical usury. The reason is given: B, who owes A 30 zuzim, takes the risk of having to pay it later on in wine, which may cost him more than 30 zuzim, in order to gain forbearance for his debt. This rule forbids, on the ground ofusury, the sale of futures, made when the market price has not yet been fixed.
Case of Partnership.
Some kinds of partnership dealings also are forbidden, because the partner without means is made to incur the risk of his time and labor besides that of loss by accidents or depreciation, in consideration of the capital furnished by the other. For instance, one may not give one's corn to a shopkeeper to sell at retail on half the profit over the wholesale price with which he is charged, nor may one give the shopkeeper money wherewith he may buy at wholesale and then sell on half the profits—because he runs the risk of fire and flood and robbery and of fall in price—unless he is paid wages for selling. And so with the breeding of chickens or the feeding of calves or colts on half profit; though the rule does not apply to cows or other grown beasts which "earn their keep." Commenting on B. M. v. 4, R. Judah (tanna of the 2d cent., pupil of Akiba) says (ib. 68b) that a nominal compensation, say a single dry fig, given to the working member of the special partnership is sufficient to exempt it from the usury laws. In modern Jewish practise this view has been followed. The contract between the moneyed man and the small trader is known as "sheṭar 'isḳa"; and in the well-known scrivener's handbook "Naḥalat Shib'ah" (Amsterdam, 1667) two forms of such an instrument are printed, which the compiler (Samuel ben David ha-Levi) follows up with an extract from an eminent rabbi of Lublin to this effect: "A man may say to his friend: 'Here are a hundred florins for thee in business [
], half profit and half loss. If thou shouldest say, "I have lost" or "I have not earned any money," thou must take a solemn oath to clear thyself.' But he must give him wages for his trouble; however, anything [
] is enough for the purpose." Such special partnerships date back a very considerable time; for 4,000 years ago they were fully regulated by King Hammurabi in sections 100-107 of his code of laws for Babylon, and it seems that in quite modern times they have been common.
One may not give to an Israelite (money wherewith) to buy a certain quantity of corn before the market price ("sha'ar") is known; this restriction also is made in order that the man without means may not incur the risk of loss by higher prices in return for capital furnished. A landlord may lend to his metayers (tenants on shares) wheat for seed to be returned in kind, but not wheat for food. A man should not say to his neighbor, "Give me a kor of wheat and I will return it at thrashing-time"; but he may request such a loan "till my son comes home," or "till I find the key" (B. M. 75a). The reason is, that wheat might rise and the lender would profit. However, the Talmud abrogates this prohibition by allowing such a loan to be made when the borrower has some wheat of his own, though it be a much smaller quantity than that which he borrows. The Mishnah goes even so far as to forbid an exchange of work between neighboring farmers, where the later work is more laborious than the earlier. All these prohibitions are rabbinical only: that against a loan in kind might be called anti-Scriptural; for the Bible, when it speaks of "usury of victuals" (Deut. xxiii. 29), contemplates a loan to be returned in kind, and forbids only the return of a greater quantity than that which was lent.
Possible Evasions.
The lender should not lodge in the borrower's house free of rent, nor at less than the usual rent. The purchase-price must not be increased on account of delay in payment, such as an offer to sell a field at 1,000 zuzim if paid now, but at 1,200 zuzim in a year's time; but in charging rent the landlord may charge more when payable at the end of the year than when the rent is paid every month. It is improper for the seller of a field, after receiving part of the price, to say, "Bring me the rest of the money whenever you will and then take possession of your own"; for the income on the field would be interest on the deferred payment, and the purchaser is already a partial owner. But, what may turn out to be much more oppressive, a man may lend a sum of money upon a field on the terms "If you do not return me the money in three years, the field is mine"; and it actually becomes his. "Once Boethos, son of Zenon, did so under the advice of the learned" (B. M. 63a). It may thus be seen that the legal ban upon interest led to forfeitures which might give to the moneyed man more gain than even a high rate of interest. The mortgage in the English and American form is just such a contract as Boethos used to impose on borrowers. This form was contrived because the English law forbade loans upon interest; and in early times it was literally carried out, the land becoming the property of the mortgagee at once if the bond was not paid on the day appointed.
"Fixed" and Other Increase.
The Talmud and the codes distinguish between "fixed increase" ("ribbit ḳeẓuẓah") and the mere "dust ["abaḳ"] of increase." The Mishnah gives some instances of the latter; e.g., a man sends presents to a well-to-do neighbor, expecting to obtain a loan from him. This is interest in advance. Or after he has repaid his loans, he sends presents, "because your money was idle in my hands." Again, if A had not been in the habit of greeting B first, he should not do him this honor after he had obtained a loan from him; and, as the later authorities put it, if he was not in the habit of teaching B the Torah before the loan, he should not do it thereafter.
One difference between usury under the letter of the Law and rabbinical increase is this: the former, when collected by the creditor, may be reclaimed by action, while the latter may not. R. Johanan, one of the Palestinian amoraim, insists that even "definite usury," such as is forbidden by the written law, can not be recovered legally. In this view he is supported (B. M. 61b) by others on the grounds that in the Scriptural words quoted above the vengeance of Heaven is invoked upon the usurer, and that the rule that he who incurs the pain of death is not held to payment in a civil suit. The upshot of the dispute as laid down in the codes is this (Shulḥan 'Aruk, Yoreh De'ah, 161, 2): The rabbinical court will render judgment for the repayment of definite usury that has been collected, and will not enforce the judgment by levy on the lands or goods of theusurer's property, but only by force against his body.
Case of a Gentile.
When an Israelite lends money to a Gentile or to an "indwelling stranger" (a half-convert of foreign blood), he may and should charge him interest; and when he borrows from such a person he should allow him interest. It is the opinion of Maimonides that for Jews to charge Gentiles interest is a positive command of the written law. [The reason for the non-prohibition of the receipt by a Jew of interest from a Gentile, and vice versa, is held by modern rabbis to lie in the fact that the Gentiles had at that time no law forbidding them to practise usury; and that as they took interest from Jews, the Torah considered it equitable that Jews should take interest from Gentiles. Conditions changed when Gentile laws were enacted forbidding usury; and the modern Jew is not allowed by the Jewish religion to charge a Gentile a higher rate of interest than that fixed by the law of the land.—E. C.] The intervention of a Gentile may lead to an evasion of the law between Israelites. For example, one not standing in need of it has borrowed the money of a Gentile; the borrower lends it to another Israelite, he to pay the interest thereafter; this the first borrower may do only with the consent of the Gentile, if he will accept the other Israelite as his debtor, but not on his own responsibility, although the first borrower would pay to the Gentile the same interest which he should receive from his brother Israelite (B. M. v. 6).In a baraita (ib. 71a) the other case is also put: "A lends money to a Gentile; the latter needs it no longer, but meets an Israelite who does. If the Gentile is willing to lend him the money on interest, he may do so, remaining bound to A; but A must not be a party to the change of debtor." However, it must have been easy to evade the usury law through the Gentile intermediary, even while maintaining these distinctions.
The guilt of breaking a Scriptural command falls not on the lender alone, but on the borrower as well (on the supposition that the verb referring to usury in Deut. xxiii. 20, "tashshik," stands in the causative form); also on the surety for the borrower, the witnesses, and, according to some opinions, the scrivener. The latter participants violate the precept "thou shalt not put a stumbling-block before the blind" (Lev. xix. 14).
Maimonides treats of interest in his "Yad" (Malweh, ch. v.), following the Gemara and the responsa of the Geonim. He to a certain extent mitigates the usury law; mitigation had indeed become a necessity in his time, as the Jews no longer dwelt in compact farming settlements like those of Palestine and Babylonia in the days of the Mishnah and the Talmud, but had been forced to become traders, brokers, and money-lenders. He says (ib. ch. xiv.): "There are things resembling interest that are allowed; e.g., a man may buy at a discount bonds belonging to his neighbor; a man may give his neighbor a denarius, on condition that he lends 100 denarii to a third person. A may give B a denarius to induce C to lend him (A) 100 denarii" (ib. ch. xv.). Some things are allowed by law, but have been forbidden by the Rabbis as a cunning evasion. A says to B, "Lend me 100 zuzim." B says, "I have no money, but I have wheat worth that sum, which I can lend you." Then he buys the same wheat from him for 90 zuzim. He may afterward by law recover 100 zuzim because it is not even "dust of interest." Thus a man who has taken a field in pledge should not rent it back to the owner. But if such evasions are forbidden only by an appeal to the lender's conscience, very little is left of the enforceable law against usury.
Views of Maimonides and the Shulḥan 'Aruk.
The Shulḥan 'Aruk treats of usury not in the fourth or juridical part, but in the Yoreh De'ah, among moral and religious duties (§§ 159-177). While Maimonides would restrict the lending of money to Gentiles within narrow limits, lest the lender should acquire a passion for taking usury, and practise it on his fellow Israel ites, this later standard declares it "allowable nowadays in all cases" (ib. § 159). It allows also the money of orphans or of a poor-or a school-fund to be lent on terms which would be "rabbinical increase"; and if a guardian has improperly lent the money of his wards even at a fixed interest, the wards who have had the enjoyment of the income are not bound to restore it when they come of age. To save oneself in great need, however, one may borrow on interest (ib. § 160). The relaxation on behalf of infants and charities was unavoidable; for in numerous countries the Jews were precluded from the old plan of investing funds in land, which alone was permitted by the Talmud.
As a matter of jurisprudence it is found here (ib. § 160; Ḥoshen Mishpaṭ, § 52) that when a bond provides for principal and interest separately, it is enforceable as to the former, but not as to the latter; but if both are cast up into one sum, the bond is void in toto. When interest, even such as is forbidden by the written law, is once paid, it is said (Yoreh De'ah, § 161) that the courts may compel its restoration only by process of contempt (flogging until the defendant is willing to pay). When this power no longer rested with the Jewish courts, there was no remedy. If the lender died after he collected unlawful interest, it is here expressly said that his heirs are not even morally bound to make restitution.
—Medieval Doctrine:
The Church, basing itself upon a mistranslation of the text Luke vi. 35 interpreted by the Vulgate "Mutuum date, nihil inde sperantes," but really meaning "lend, never despairing" (see T. Reinach in "R. E. J." xx. 147), declared any extra return upon a loan as against the divine law, and this prevented any mercantile use of capital by pious Christians. As the canon law did not apply to Jews, these were not liable to the ecclesiastical punishments which were placed upon usurers by the popes, Alexander III. in 1179 having excommunicated all manifest usurers. Christian rulers gradually saw the advantage of having a class of men like the Jews who could supply capital for their use without being liable to excommunication, and the money trade of western Europe by this means fell into the hands of the Jews. They were freed from all competition,and could therefore charge very high interest, and, indeed, were obliged to do so owing to the insecure tenure of their property. In almost every instance where large amounts were acquired by Jews through usurious transactions the property thus acquired fell either during their life or upon their death into the hands of the king. This happened to Aaron of Lincoln in England, Ezmel de Ablitas in Navarre, Heliot de Vesoul in Provence, Benveniste de Porta in Aragon, etc. It was for this reason indeed that the kings supported the Jews, and even objected to their becoming Christians, because in that case they could not have forced from them money won by usury. Thus both in England and in France the kings demanded to be compensated for every Jew converted. In the former country only in 1281 would the king give up his right to half the property of Jews who were converted. There was a continual conflict between the papal and the royal authority on this subject, and thus as early as 1146 the pope Eugenius declared all usury null and void, while the debtor was on a crusade, and Innocent XIII. made an indignant protest against usury, calling on all Christian princes to demand the return of the interest. Clement V. in 1311 protested against all civil law which permitted any form of usury by Christians.
It was impossible to carry out the canonical restrictions without stopping all progress in commerce, and numerous expedients were adopted to avoid the canonical laws. Especially the Cahorsins and Lombards invented methods by which usury was disguised in the form of payment for possible loss and injury, payment for delay, and so on. The competition of these Italian usurers—they were called the "pope's usurers"—rendered Jews less necessary to the kings in France and England in the middle of the thirteenth century, and both Louis IX. (1254) and Edward I. (1275) attempted to influence the Jews to avoid usury, but without effect (see England). No other means of livelihood was open to them.
Amount of Interest.
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.
The enormously rapid increase of indebtedness due to this large interest caused ordinances to be passed to prevent interest being counted on interest, but without avail. As an instance of the extent to which interest could grow, the abbot of St. Edmund in 1173 borrowed about 40 marks from Benedict the Jew, and this had grown to £880 in seven years, though not entirely through interest (see Jacobs, "Jews of Angevin England," p. 60).
The loans were generally made upon Pledges, which could not be sacred vessels of the Church, to pledge which was punished as early as 814 by confiscation of goods. Almost all other objects could be pledged, and it became a problem whether when a Jew had the pledge he could claim usury as well. This applied when lands were pledged for loans, when it was claimed the land or the produce thereof was sufficient to compensate for any loss of use of capital without further payment. Notwithstanding this the Jews claimed interest until both capital and interest were repaid.
Later on in the Middle Ages the doctrine of Aristotle that "money does not breed" was referred to usury, and forms the basis of Shylock's and Antonio's contention in "The Merchant of Venice," I., iii., and the casuists of Roman law drew a distinction between things consumable and fungible; that is, the use of which is exhausted by one using, and things which can be used over and over again. Interest or usury was allowed for the latter, but not for the former class, to which money was supposed to belong, because every passing of coin was regarded as a separate use. The lending of money with the expectation of any further return was still regarded as unnatural and disreputable, but in the later Middle Ages the Jews had been bereft of all capital, so that from the fifteenth century onward they are found mostly as dealers in second-hand clothing, rather than as usurers. Moreover a class of Christian merchants arose which evaded the canon law and lent money on interest without any opposition.
Notwithstanding this, the reputation of usurers has clung to the Jews even to modern times, though there is little evidence of their being more addicted to it than other persons who trade in money. In Russia the Christian "kulak" is regarded as being much more stringent in his demands than the Jewish money-lender, though in Bukowina the latter has proved to be somewhat of a plague. The poverty of the majority of Jews prevents them from any extensive addiction to this practise (see Poverty).
Bibliography:
Endemann, Die Nationalökonomischen Grundsätze der Kanonischen Lehre, 1863, pp. 8 et seq., 20 et seq.;
Ashley, English Commerce, i. 152-154;
Scherer, Rechtsverhältnisse der Juden, pp. 185-196.
Location in the print edition Volume: 12 Pages: 388-391
In the article INTEREST we have reserved the question of the lawfulness of taking interest on money lent; we have here to consider first, usury as condemned by all honest men.Plato (Laws, v. 742) and Aristotle (Politics, I, x,xi) considered interest as contrary to the nature of things; Aristophanes expressed his disapproval of it, in the "Clouds" (1283 sqq.); Cato condemned it (see Cicero, "De officiis, II, xxv), comparing it to homicide, as also did Seneca (De beneficiis, VII, x) and Plutarch in his treatise against incurring debts. So much for Greek and Roman writers, who, it is true, knew little of economic science. Aristotle disapproved of the money trader’s profit; and the ruinous rates at which money was lent explain his severity. On the other hand, the Roman and Greek laws, while considering the mutuum, or loan for consumption, as a contract gratuitous in principle, allowed a clause, stipulating for the payment of interest, to be added to the bond. The Law of the Twelve Tables allowed only unciarium fenus, probably one-twelfth of the capital, or 8.33 per cent. A plebiscitum, lex Ganucia, 412 a.u.c. went so far as to forbid all interest whatever, but, at a later period, the Roman law allowed interest at 1 per cent monthly, or 12 per cent per annum. Justinian laid down as a general rule that this maximum should be reduced by half (L. 26, I, c. De usuris, IV, 32). Chaldea allowed interest on loans (cf. Law of Hammurabi, 48 sqq.). No absolute prohibition can be found in the Old Testament; at most, Exod., xxii, 25, and Deut., xxiii, 19, 20, forbid the taking of interest by one Jew from another.In the Christian era, the New Testament is silent on the subject; the passage in St. Luke (vi, 34, 35), which some persons interpret as a condemnation of interest, is only an exhortation to general and disinterested benevolence. A certain number of authors, among them Benedict XIV (De synodo diocesana, X., iv, n. 6), believed in the existence of a Patristic tradition which regarded the prohibitory passages of Holy Scripture as of universal application. Examination of the texts, however, leads us to the following conclusions: Until the fourth century all that can be inferred from the Fathers and ecclesiastical writers is that it is contrary to mercy and humanity to demand interest from a poor and needy man. The vehement denunciation of the Fathers of the fourth and fifth centuries were called forth by the moral decadence and avarice of the time, and we cannot find in them any expression of a general doctrine on this point; nor do the Fathers of the following centuries say anything remarkable on usury; they simply protest against the exploitation of misfortune, and such transactions as, under the pretence of rendering service to the borrower, really threw him into great distress. The question of moderate rates of interest seems scarcely to have presented itself to their minds as a matter of discussion. The texts bearing on the question are collected in Vermeersch, "Questiones morales de justitia" II, n. 359. The councils condemned in the first place clerics who lent money at interest. This is the purpose of the 44th of the Apostolic Canons; of the Council of Arles (314), and of the 17th canon the First Council of Niceaea (325). It is true that a text of the Council of Elvira (305 or 306) is quoted which, while ordering the degradation of clerics, would also have punishment inflicted on laymen, who obstinately persisted in usurious practices; but the mention of layman is of extremely doubtful authenticity. It may then be said that until the ninth century canonical decrees forbade this profit, shameful as it was considered, only to clerics.Nevertheless, the 12th canon of the First Council of Carthage (345) and the 36th canon of the Council of Aix (789) have declared it to be reprehensible even for laymen to make money by lending at interest. The canonical laws of the Middle Ages absolutely forbade the practice. This prohibition is contained in the Decree of Gratian, q. 3, C. IV, at the beginning, and c. 4, q. 4, C. IV; and in 1. 5, t. 19 of the Decretals, for example in chapters 2, 5, 7, 9, 10, and 13. These chapters order the profit so obtained to be restored; and Alexander III (c. 4, "Super eo", eodem) declares that he has no power to dispense from the obligation. Chapters 1, 2, and 6, eodem, condemns the strategems to which even clerics resorted to evade the law of the general councils, and the Third of the Lateran (1179) and the Second of Lyons (1274) condemn usurers. In the Council of Vienne (1311) it was 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).It is a curious fact that for a long time impunity in such matters was granted to jews. The Fourth Council of the Lateran (1215), c. 27, only forbids them to exact excessive interest. Urban III, c. 12, "De usuris" (V. 19) and St. Louis in twenty-three of his regulations extended the prohibition to the Jews. With the exception of c. 27 of the Fourth Council of the Lateran, we know of no canon law which takes into consideration the question of moderate interest; and canon law nowhere states distinctly that interest is, under any circumstances whatsoever, contrary to justice.Theologians and canonists of the Middle Ages constructed a rational theory of the loan for consumption, which contains this fundamental statement: The mutuum, or loan of things meant for immediate consumption, does not legalize, as such, any stipulation to pay interest; and interest exacted on such a loan must be returned, as having been unjustly claimed. This was the doctrine of St. Thomas and Scotus; of Molina, Lessius, and de Lugo. Canonists adopted it as well as the theologians; and Benedict XIV made it his own in his famous Encyclical "Vix pervenit" of 1 November, 1745, which was promulgated after thorough examination, but addressed only to the bishops of Italy, and therefore not an infallible Decree. On 29, July, 1836, the Holy Office incidentally declared that this Encyclical applied to the whole Church; but such a declaration could not give to a document an infallible character which it did not otherwise possess. The schismatic Greeks, at least since the sixteenth century, do not consider the taking of interest on loans as intrinsically bad.While Luther, Melanchthon, and Zwingle condemned loaning for interest, Calvin permitted interest on money advanced to rich persons; his disciple Salmasius gave effect to this opinion by a systematic code of rules. By degrees a certain number of Catholic writers relaxed their severity. Scipio Maffei, a friend of Benedict XIV, wrote a celebrated treatise, "Dell’ impiego del danaro", to justify an opinion which in this matter resembles that of Calvin. Economists generally uphold the theoretical lawfulness of interest on loans. For a long time civil law was in agreement with canon law; but as early as the sixteenth century, Germany allowed interest at 5 percent; in France, on the contrary, interest on loans was forbidden until the Decree of 2 and 3 October, 1789. Contemporary laws always consider the loan for consumption as gratuitous in principle, but allow a stipulation for the payment of interest to be added. In modern legislation two questions remain to be decided: whether it is desirable to establish a maximum legal rate; and by what means usurious exactions may be prevented. 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.)The precise question then is this: if we consider justice only, without reference to extrinsic circumstances, can the loan of money, or any chattel which is not destroyed by use, entitle the lender to a gain or profit which is called interest? To this question some persons, namely the economists of the classic school, and some Catholic writers, answer "yes, and always"; others, namely Socialists and some Catholic writers, answer, "no, never"; and lastly some Catholics give a less unconditional answer, "sometimes, but not always"; and they explain the different attitudes of he Church in condemning at one time, and at another authorizing, the practice of taking interest on loans, by the difference of circumstances and the state of society.The principal argument in favour of the first opinion is that the lender does the borrower a service which should be paid for. This is, of course, a materialistic view of human service, which when rendered in a spirit of active benevolence is repaid by gratitude: only onerous service, which costs or represents some trouble or privation, is sold or hired for money. Now, at times when opportunities for investing money in commercial undertakings or converting it into revenue-producing property were comparatively rare, a loan made to a solvent person, instead of being onerous to the lender, was rather an advantage, in giving him full security for his money, for the borrower insured him against its accidental loss. And we have just shown that the loan of things for immediate consumption was not, as such, a source of revenue. Father Ballarini, (Opus morale, III, pt. III, ii) thought that the justice or injustice of taking interest depends on one’s intention; thus, we may give credit gratuitously, or we may give the use of our money for a consideration. In the first case the contract is essentially gratuitous; and as formerly this gratuitous contract was the ordinary practice, the Church was opposed to all claim of interest. However, as the use of money has its value, like the use of anything else, the Church on this ground at the present day permits the lending of money for interest. In spite of the assent of many authors to this explanation, we do not approve it. In Roman Law, gratuitousness was not essential to the mutuum, but only presumed in the absence of any stipulation to the contrary. Persons who openly or secretly demanded interest proved conclusively that they were not actuated by motives of benevolence; and the Church, in condemning them, did not raise the question of their intention. The answer to Ballerini is that rent is a price paid for the use of a thing not destroyed by use. The expenditure of money may be productive, and the person lending money and so depriving himself of profit may claim a compensation for that privation; but this is a question of extrinsic circumstances, not of justice itself.Others with Claudio-Jannet (Le capital, la spéculation et la finance, iii, II and III) distinguish between the loan for consumption and the loan for production: we may ask interest from the borrower who takes money or credit in order to produce or gain money; but not from one who borrows under pressure of necessity, or for some unproductive expenditure. The increased frequency of loans for production considered in the connection with the different extrinsic circumstances would seem to justify the demand for interest on such loans at the present day. In a spirit that is not irreconcilable with the rulings of the Fathers in the matter, this system contains this element of truth, that the lender of a sum of money which is intended for productive use may refuse to lend except on condition of being made a partner in the undertaking, and may claim a fixed interest which represents that share of the profit, which he might reasonably expect to receive. The system, nevertheless, is formally condemned by the Encyclical "Vix pervenit", and contradicts the principle of the just value; it tends in fact to make the borrower pay the special advantage, while the compensation is regulated by the general advantage procured by the possession of a thing, not by the special circumstances of the borrower. Others justify the existing practice by a presumption of extrinsic circumstances, which is confirmed, according to some persons, by the permission of the civil law. This explanation appears to us to be unsatisfactory. The extrinsic circumstances do not always exist, while we can always lend at interest, without any scruple on the score of justice. And what is there to show that modern legislators pass laws merely to quiet men’s consciences?But we may correct this last opinion by the aid of the general principles of contractual justice; and we shall then more fully understand the strictness of the laws of earlier times, and the greater liberty allowed at the present day. The just price of a thing is based on the general estimate, which depends not in all cases on universal utility, but on general utility. Since the possession of an object is generally useful, I may require the price of that general utility, even when the object is of no use to me. There is much greater facility nowadays for making profitable investment of savings, and a true value, therefore, is always attached to the possession of money, as also to credit itself. A lender, during the whole time that the loan continues, deprives himself of a valuable thing, for the price of which he is compensated by the interest. It is right at the present day to permit interest on money lent, as it was not wrong to condemn the practice at a time when it was more difficult to find profitable investments for money. So long as no objection was made to the profitable investment of capital in industrial undertakings, discouragement of interest on loans acted as an encouragement of legitimate trade; it also led to the creation of new contractual associations, such as insurance companies, which give a reasonable hope of gain without risk. The action of the Church has found distinguished defenders, even outside her own pale, among the representatives of contemporary economic science. We may mention three English authors: Marshall, professor of political economy at the University of Cambridge (Principles of Economics, I, I, ii, secs. 8 etc.); Ashley, professor at the new university of Birmingham (An Introduction to English Economic History and Theory, I, I, i, sec. 17); and the celebrated historian of political economy, Professor Cunningham (Growth of English Industry and Commerce, I, II, vi, sec. 85, third edition). Even at the present day, a small number of French catholics (Abbé Morel, "Du prêt à intéret"; Modeste, "Le prêt à intérecirc;t, dernière forme de l’esclavage") see in the attitude of the Church only a tolerance justified by the fear of greater evils. This is not so. 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. Dr. Funk defined it as the abuse of a certain superiority at the expense of another man’s necessity; but in this description he points to the opportunity and the means which enable a man to commit the sin of usury, rather than the formal malice of the sin itself. It is in itself unjust extortion, or robbery. The sin is frequently committed. In some countries are found the exaction of interest at 30, 50, 100 percent and more. The evil is so great in India that we might expect legal provisions to fight against such ruinous abuse. The exorbitant charges of pawnbrokers for money lent on pledge, and, in some instances, of persons selling goods to be paid for by installments, are also instances of usury disguised under another name. As a remedy for the evil, respectable associations for mutual lending have been instituted, such as the banks known by the name of their founder, Raiffeisen, and help has been sought from legislators; but there is no general agreement as to the form which legislation on this subject should take.-----------------------------------A. VERMEERSCH Transcribed by Brendan Byrne The Catholic Encyclopedia, Volume XVCopyright © 1912 by Robert Appleton CompanyOnline Edition Copyright © 2003 by K. KnightNihil Obstat, October 1, 1912. Remy Lafort, S.T.D., CensorImprimatur. +John Cardinal Farley, Archbishop of New York
1. In the Old Testament:
The Hebrew law concerning exaction of interest upon loans was very humane. Hebrews were to lend to their brethren without interest (Exo 22:25; Lev 25:36 f; Deu 23:19 f). This, however, did not apply to a stranger (Deu 23:20). Two stems are used in the Old Testament, rendered in the King James Version “usury,” in the Revised Version (British and American) better rendered “interest”: (1) verb
2. In the New Testament:
The Greek word is
Mat 25:27 (a) The Lord gives to His children and to His servants certain gifts and talents. He expects these to be put into use so that they will increase in value and in quantity. It is this increase that is termed "usury." Many gifts are given to Christians, and they should be used for the glory of GOD in the lives of others. (See also Luk 19:23).