Something for nothing? — a very timely book on the evils of usury
By Alan Fimister | 16 October 2024
The earth and all it contains was given by God at the creation of the world to the human race as a whole to provide for themselves. Because of the loss of original justice, man is unable without painful toil to make this provision. One of the effects of this toil is to confer to the labourer stewardship over that part of the earth to which the toil is applied, so that he can draw from it in order to provide for his spouse and his offspring.
It is not enough for man merely to subsist upon his capital; he needs also to provide against future contingencies: subsistence and security. At a certain point, however — either in some region of the earth or ultimately in every land — all the means of production will be already owned and therefore those without existing property will have either to rent the surplus property of another or hire out his labour to him.
This rent or these wages must be so calibrated that it is possible eventually for the propertyless to purchase for themselves the means of production: subsistence, security and saving. If the former be too exorbitant or the latter too meagre to sustain this prospect then there is an injustice. If the labour of some person, his inherited wealth or his brilliance is such that, for him, the needs of subsistence, security and savings are swallowed up in surplus then, in itself, there is no injustice, but if anyone else lacks subsistence, security or savings and the owner of surplus forbears to let out his property at reasonable rates, pay just wages or give it away then the purpose for which God gave the earth in the beginning is violated and the vengeance of the Lord of Heaven and Earth is called down.
“Come now, you rich, weep and howl for the miseries that are coming upon you. Your riches have rotted and your garments are moth-eaten. Your gold and silver have rusted, and their rust will be evidence against you and will eat your flesh like fire. You have laid up treasure for the last days. Behold, the wages of the labourers who mowed your fields, which you kept back by fraud, cry out; and the cries of the harvesters have reached the ears of the Lord of hosts. You have lived on the earth in luxury and in pleasure; you have fattened your hearts in a day of slaughter.” (Jm 5:5)
This is not to say that the free settlement of contracts is a poor means of approximating justice between men or that the power of the rulers should be brought in to direct the division of property or reapportion it. If individuals and families, owners and labourers are fallible and corruptible, orators, administrators and lawyers are not less so. Rulers, however, will be held to account for their preservation of justice.
“Woe to those who decree iniquitous decrees, and the writers who keep writing oppression, to turn aside the needy from justice and to rob the poor of my people of their right, that widows may be their spoil, and that they may make the fatherless their prey! What will you do on the day of punishment, in the storm which will come from afar? To whom will you flee for help, and where will you leave your wealth?” (Is 10:1–3)
If the Lord of Hosts will avenge himself upon the rich man who hoards his possessions and denies the poor man the means of subsistence no less will He punish the ruler who perverts justice and is a respecter of persons.
“Give ear, you that rule the people, and that please yourselves in multitudes of nations: For power is given you by the Lord, and strength by the most High, who will examine your works, and search out your thoughts: Because being ministers of his kingdom, you have not judged rightly, nor kept the law of justice, nor walked according to the will of God. Horribly and speedily will he appear to you: for a most severe judgment shall be for them that bear rule. For to him that is little, mercy is granted: but the mighty shall be mightily tormented.” (Wis 6:3–7)
In his historic 1891 encyclical Rerum novarum, Leo XIII explains the origins of socialism: labour and capital have been driven apart to the point that the negotiating power of labour is eviscerated, and ordinary people are surrendered powerless into the hands of capital. Desperate for himself and his dependants, and impatient of the vengeance of Providence, the labourer seeks redress from the governing power in a fashion which distorts the functions of the state and places the temporal sword into the hands of lawless men, transforming the ruler into the idlest rich man of all, neither diligent nor brilliant nor fortunate but blood-soaked, envious and paranoid.
The upshot of such false remedies is written in blood across the history of the twentieth century; but how does the imbalance arise in the first place, which leads to the despair of which the revolution is born?
“[B]y degrees it has come to pass that working men have been surrendered, isolated and helpless, to the hardheartedness of employers and the greed of unchecked competition. The mischief has been increased by rapacious usury, which, although more than once condemned by the Church, is nevertheless, under a different guise, but with like injustice, still practiced by covetous and grasping men. To this must be added that the hiring of labour and the conduct of trade are concentrated in the hands of comparatively few; so that a small number of very rich men have been able to lay upon the teeming masses of the labouring poor a yoke little better than that of slavery itself.” (Leo XIII, Rerum novarum, 3)
Central to this calamity is usury. The sinfulness of usury was solemnly defined in 1312 by the Council of Vienne:
“If indeed someone has fallen into the error of presuming to affirm pertinaciously that the practice of usury is not sinful, we decree that he is to be punished as a heretic; and we strictly enjoin on local ordinaries and inquisitors of heresy to proceed against those they find suspect of such error as they would against those suspected of heresy.”
The precise definition of usury and what practices do and do not constitute usury was laid out with great lucidity by the brilliant eighteenth century pontiff Benedict XIV in his 1745 encyclical letter Vix pervenit. And yet many many people, including those charged with the propagation and defence of the Church’s teaching, treat her irreformable teaching concerning usury as if it were a dead letter. Indeed, persons keen to set aside some other aspect of the Church’s teaching — both those seeking to fall away to the left and those seeking to fall away to the right — habitually appeal to the supposedly self-evidently discarded condemnation of usury as a cherished precedent for their own favoured innovation. The complexity, scale and vast distances involved in modern economic life conceal the nature of the problem and distract us from the simplicity of the Church’s teaching. The rage of the oppressed remains nonetheless, as does the misguided yearning for the state to “do something” that does not belong to it and so becomes a tyranny. As Pius XI observed, “Liberalism is the father of this Socialism that is pervading morality and culture and that Bolshevism will be its heir.” (Quadragesima anno, 122)
Into this void has stepped the mathematician and philosopher David Hunt with his brilliant treatise, Something for Nothing? — An Explanation and Defence of the Scholastic Position on Usury.
Usury, Hunt explains, is found in a particular type of loan contract — a mutuum. A mutuum is a loan in which the liability of the borrower is not limited by any collateral he might offer as part of the loan. A mutuum contract could include collateral but it would not by definition be limited by it. In a mutuum, the borrower is personally liable for the full amount borrowed regardless of any collateral. Such loans are morally licit but the lender cannot charge interest on them. Why not? When we own some valuable thing, we may sell it to another entirely or we may sell its use for a certain period. There are, however, some goods which have no use that does not entail complete ownership. Food has no use other than consumption and money is used up by being transferred to another. To charge for its use is to charge for something that does not exist.
If the liability of the borrower is limited to some specified collateral then it is as if the collateral had been sold to the lender and the borrower is paying for its use in the meantime until a point is reached where the rent redeems the item in question and dominion returns to the borrower. When there is no such limit, the borrower has effectively sold himself to the lender. Usury is, therefore, as Leo XIII implies, concealed slavery.
Loan contracts between artificial persons (corporations) can never be usurious because the corporation has no existence independent of its legal assets and so the loan is always limited to some specified collateral. Usury therefore works its evil at the frontier between concentrated surplus wealth and the individual and the family.
Hunt is modest in his claims. Usury is a specific evil which can be identified by means of certain distinctions and definitions and which could be eliminated relatively easily without disrupting the operation of the global economy. It would suffice merely that courts no longer upheld the right of interest in unlimited recourse loans. I suspect Hunt is correct about the relative ease with which this restoration of justice could be accomplished, but too modest in his expectations about the result. A distinguishing feature of the earthly city in the Book of Revelation is its pretended ability to trade in human souls (Rev 18:13) and to stamp the name of Caesar upon the very flesh of his subjects, transforming them into units of exchange (Rev 13:17). Before usury has transformed the structure of the state into a bloated tyranny, it is already making blasphemous claims for it. Usury is, as the name of Hunt’s (wonderfully slim and readable) treatise suggests, a claim by the civil authority to be able to do what only God can do and make something out of nothing.
This is why Our Lord Himself compares usury to grace in the parable of the talents (Mt 25:14–30). In the spiritual life, simply to maintain one’s ground is to progress because “he who makes no progress loses ground”. This is because sanctifying grace is a participation in the divine nature itself, “an inexhaustible treasure for men” (Wis 7:14).
In Holy Week, when Our Lord points out that Caesar’s name and image are borne upon his coins and instructs us to render to Caesar that which is Caesar’s and to God that which is God’s (Mt 22:19–21), He is reminding us that we bear God’s image (reason) and His name (grace) and that we must consequently love Him with all our heart and soul and mind and strength. When Caesar seeks to stamp us with his name and make us bow before his image (Rev 13:16–17), he is claiming our heart and soul, and mind and strength for himself.
In Dante’s Inferno, the usurers and the sodomites are tormented together because the sodomites made sterile that which was naturally fertile, and the usurers made fertile that which was naturally sterile. Usury has created for us a society which is at one and the same time saturated with a corrupting luxury and so structured that almost all mothers are obliged by economic necessity to engage in labour to the neglect of their duties in the home. That is, usury has given us a society inherently hostile to natural social relations and rewarding of voluntary sterility — an abomination of desolation.
In one of his Sermons for every Sunday of the year, St Alphonsus Liguori invites us to consider the threefold remorse of the damned, focused upon:
- The very little he needed to do to save his soul
- The triviality of the “goods” for which he forfeited his soul, and
- The magnitude of the good which he has lost through his own fault
David Hunt is right that the Church’s teaching on usury is neither so impenetrable that we cannot be expected to understand it nor so demanding that we ought to despair of its application, and yet the stakes remain irreducibly apocalyptic.
“[A]s it was in the days of Lot — they ate, they drank, they bought, they sold, they planted, they built, but on the day when Lot went out from Sodom fire and sulphur rained from heaven and destroyed them all — so will it be on the day when the Son of man is revealed.” (Lk 17:28-30)