The Church and Usury: Error, Change or Development?

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Chapter Two

The scholastic theory of usury by means of the Thomistic argument shows clearly and consistently the natural injustice of usury in money loans. The theory is formally perfect.1

Many Catholics attempt to defend their faith and respond to the various attacks being made on the Church. Several different arguments can be made which seem to uphold the teaching authority of the Church. One way this is often done, especially when faced with such a large body of evidence, is to admit that the the Church changed its teaching, but then respond by saying that there was something about the nature of this teaching which allowed it to change.

To properly examine these arguments, we must understand the different ways in which the Church teaches, and one of the best summaries is Canon 749 of the current Code of Canon Law:

§1. The Supreme Pontiff, in virtue of his office, possesses infallible teaching authority when, as supreme pastor and teacher of all the faithful... he proclaims with a definitive act that a doctrine of faith or morals is to be held as such.

§2. The college of bishops also possesses infallible teaching authority when the bishops exercise their teaching office gathered together in an ecumenical council when... they declare that for the universal Church a doctrine of faith or morals must be definitively held; they also exercise it scattered throughout the world but united in a bond of communion among themselves and with the successor of Peter when together with that same Roman Pontiff... they agree on an opinion to be held as definitive.

§3. No doctrine is understood to be infallibly defined unless it is clearly established as such.2

Thus we see that the official teaching magisterium, composed of the Pope and bishops united with him, can be exercised in two ways: ordinary and extraordinary. The ordinary magisterium is the common teaching of the college of bishops throughout the world in union with the Pope. The extraordinary magisterium is a formal declaration which defines a teaching, done only by the Pope or an ecumenical council of bishops that is approved by the Pope.

Opinion among theologians is divided as to when the Pope speaks with infallible authority. The definition of Vatican Council I defines it as only when the Pope "in the exercise of his office as shepherd and teacher of all Christians... defines a doctrine concerning faith or morals to be held by the whole church."3 One of the strongest papal teachings on usury that could be argued to meet these criteria are the decrees of Gregory IX, which had 19 canons on usury. These legislative teachings were promulgated as binding for the universal Church, and thus they would seem to meet the criteria needed for papal infallibility.4

Yet some theologians interpret paragraph three of Canon 749 as saying that any infallible declaration must use a solemn formula such as: "We declare, pronounce, and define... to be doctrine revealed by God."5 The decretals of Gregory make no such statement, and neither does the encyclical of Pope Benedict XIV, Vix Pervenit. In addition, Benedict's letter is only addressed to the bishops and clergy of Italy, so it could be objected that it was not intended for the whole Church. As theologians are divided on these issues, perhaps the most we can say is that the Popes taught strongly and with a high decree of authority that the taking of usury was sinful.

Regardless of the level of papal teaching, we have seen that at least three ecumenical councils prohibited usury, and there is no doubt that their teaching is for the universal Church. Yet some might claim that the intrinsic sinfulness of usury was never taught infallibly by the ecumenical councils of the Church, thus it could be changed. "It might have been said that each council action was only disciplinary. Lateran II excommunicated usurers, Lateran III denied them sepulture, Vienne prescribed a method of punishment for defenders of usury."6

Describing the Church's teaching on usury as a disciplinary teaching puts it on the level of the prohibition of eating meat on Fridays, making a claim such as this:

In analyzing this concept, we must also distinguish between any early canonical bans on interest-taking, and the intrinsic immorality of usury. The Church assumes the right to make reasonable rules for its faithful, who then sin by disobedience if they break such rules, even though what is forbidden is not per se evil.7

Thus, Rupert Ederer argues that the Church has always taught that excessive interest is immoral per se (the modern definition of usury); yet when it also taught that all interest-taking was immoral, it was only as a disciplinary teaching. This theory that usury was a disciplinary teaching follows the thought of Cardinal de la Luzerne who, in trying to justify the decisions of the Holy Office, said in 1822, "this prohibition is a purely penal, prudential enactment of positive law: the natural law itself dictates no such general prohibition."8

The difficulty with evaluating such a claim is that the magisterial teachings themselves made no such distinction. However, we can look to the arguments and analysis made by the scholastics as representative of the reasoning behind the prohibition.9 From even a brief reading, it is obvious that the usury prohibition was never taught just to correct the problem of excessive interest; rather, the taking of usury was prohibited by the fact that that it was considered unjust to take any interest just because one has made a loan. Thus, while this argument sounds appealing, it does not seem to match the historical teaching. Usury was taught as much more than a disciplinary teaching. As Noonan argues, "the laws would not be made, the penalties would not be given, if it were not believed that the acts condemned were sinful."10

Finally, what about the teaching of the ordinary magisterium, the teaching of the Bishops dispersed throughout the world? No matter how one argues about the level of teaching of the popes and councils, it seems irrefutable to say that the usury teaching was taught by the ordinary magisterium of the Church. Bishops, theologians, councils, and popes were united in teaching that usury is sinful, an extraordinary unity which spans across time and place. If it is possible for the ordinary magisterium to teach infallibly, usury would seem to be such a case.

So how could such a widespread, seemingly infallible teaching be changed without destroying the teaching authority of the Church? When responding to Noonan on this issue, Patrick O'Neil makes an interesting argument that should be read in full:

The Church may err in falsos testes - because of inaccurate testimony (whether that inaccuracy be willful or inadvertent). This includes expert testimony in the literal sense of the sworn statements of laymen and scholars alike, as well as general scholarly opinion, or even the general popular opinion, in an area outside of faith and morals, but related to those judgments made regarding issues of faith and morals.11

O'Neil then applies this argument to the case of usury:

The error concerning the charging of interest is an example of correct moral principles (against economic exploitation and so forth) mistakenly applied on account of the inadequacies of early economic theory. When better economic theory became available (along with the lessons of practical experience), the Church could change its position because the fundamental form of her judgment was: "If W is the economic function involved in the charging of interest, then the charging of interest is immoral, because economic activities must adhere to rule X (or rules X, Y, & Z)." Changes under these circumstances do not threaten the claims of the magisterium of the Church in any way. The discovery that the charging of interest does not (necessarily) involve exploitation, but represents instead legitimate payment for the time-value of money and for the risk factors endured by the lender, denies the antecedent of the hypothetical.12

O'Neil's argument is very thought provoking, for he presents the possibility of saying: we can admit that the Church's position (conclusion) on usury changed, but the Church never actually changed its teaching, for it remained consistent throughout because it maintained a conditional teaching. When the economics changed, so did the conclusion, but not the teaching. This would also make the usury teaching something like an application of general principles to a particular situation, very similar to the Church's teaching on just war.

Can the Church teach a conditional moral teaching as O'Neil described: as long as X, Y, and Z are true, you can or can not do a particular action? It would seem the Church has taught in such a conditional manner in its teachings on just war, self-defense, and double effect.13 As an example, the Church's just war teaching would say that there are certain conditions which must be met before a war is just and one can participate. Some of the conditions for a just war include: the enemy is committing injustices which should be stopped; it is a last resort and no nonviolent alternatives are possible; no cruel, wantonly destructive, or unnecessary means are used; and today Pius XII adds the condition that the war should be defensive and not aggressive. "If all the conditions are met, war can be just."14

The obvious implication is that the Church's teaching of these general principles can be a definitive and unchanging teaching on a matter of morals, but the Church's declaration that a particular war is or is not just could be in error. The Church must rely on "expert" testimony and might not have full knowledge regarding the intent, means, etc. behind a particular war. O'Neil essentially says the Church always taught that one cannot economically exploit others, and for a while, it saw charging interest on loans to be such an exploitation, until the economy later changed. The Church never changed its principle, the injustice of economic exploitation; it only changed its application of this principle to a particular situation.

This makes another appealing argument, except for two problems. It allows some to claim that the Church was mistaken and erroneous in prohibiting usury; and second, the Church never phrased the usury teaching in such a way. It seems that there are some economists today who claim that it was not economic exploitation to charge interest on loans during this time of the Church's prohibition. In fact, several think the scholastic economic analysis was fundamentally flawed, thus there is some support for a claim that the experts and scholars gave inaccurate testimony. Some have even argued that the usury doctrine was "especially backward." "The scholastics missed the entire interest rate problem in treating usury."15 However, the scholastic doctrine of usury also has several defenders among modern economists.

In particular, Lord John Maynard Keynes, one of the great pioneers in economics this century, "reassessed the Scholastics' theological economics... as valuable contributors to economic philosophy."16 In addition, Bernard Dempsey, trained as both a theologian and economist, used a "Thomistic account of economic life" which took the usury proscription seriously.17 On a practical level, whether it followed modern economic principles or not, it seems that in the medieval economy the usury rule was good for the society, it did not choke commerce; rather, it regulated the course of credit and may have even encouraged business. It might even be argued that "the action of the Church tended to encourage rather than to retard commercial progress"18

The second problem with O'Neil's argument is that the Church never phrased its teaching on usury as a conditional teaching, one where it is only seen as a particular application of the principle of justice. Usury was prohibited because it was part of the very definition of injustice, taking more than what one is due. Like the claim that is was merely a disciplinary teaching, the claim that the usury prohibition was a conditional teaching does not seem to match the historical evidence.

One last argument, very similar to O'Neil's, also says that the Church's teaching changed but retained its same meaning. This argument examines the "spirit of the law" - what was its purpose and goal, why was usury prohibited? This is the crux of Noonan's own argument: the Church constantly teaches the message of justice and charity as Christ taught in his "new commandment" to "love one another; even as I have loved you" (John 13:34). Yet what actions are actually just and charitable depend on concrete circumstances, thus "they are not beyond reexamination and revision to preserve their purpose and to protect the permanent goods they safeguard."19

What goods was the Church attempting to protect? Noonan answers that the Church sought "protection of the poor from exploitation, the encouragement of the avaricious to share their wealth, and the proper distribution of capital for the life of the community."20 This is in agreement with the teaching of the Fathers of the Church, who in reiterating the scriptural precepts prohibit usury primarily because it is contrary to the charity and mercy which is due to the poor. Yet Noonan should be the first to realize that the Fathers had not yet developed the analysis of usury, for they only saw that "its origin was avarice and greed in the heart of the usurer [who is] heedless of the gospel precepts of charity, mercy, generosity and humanity towards one's neighbor."21

So what was the basis of the scholastic prohibition? Among the scholastic writers "the position was almost universal that usury was forbidden by the natural law, and by this alone."22 "The usury doctrine, dating mainly from 1150 to 1350, appeals not to authority and charity, but to 'natural law', therefore to reason and commutative justice."23 Noonan himself recognizes that for the scholastics of the middle ages, the "fundamental notions of law, property, justice and intention furnished the general shape of the scholastic doctrine of usury."24

The Church prohibited the taking of interest for several other reasons than just trying to avoid economic exploitation of the poor. The scholastic arguments and canon law behind the Church's position do not even see it based solely on the Scriptures and divine authority. The loan was a private exchange (a commutation), and thus was governed by the commutative justice which says one should never take more or receive less than their due. Thus their arguments are based on this: money is something barren and unfruitful, and something which has a fixed value; thus it is unjust and contrary to the nature of money to try to sell it for a higher value, or to make it grow by itself. In addition, usury is the selling of time, something common to all men and which no single man possesses, thus it is again unnatural, for no one has a right to sell what he does not own. "The social case against usury is not absent from scholastic thought.... But, on the whole, this kind of argument is subordinated to the juristic formulae."25 (See chapter three for further development of these scholastic arguments and teachings.)

If there was any "spirit of the law" in the usury prohibition, it is perhaps the fact that the law always focused on the intention of the usurer. Any intention of desiring dishonest profit was the primary cause of and vitiating factor in almost all usurious transactions. As Luke 6:35 was so commonly quoted by the Church, "mutuum date, nihil inde sperantes" - make a loan, hoping for nothing from that loan. A usurious intention, simply hoping to profit on a loan, was enough to make one a usurer. As the decrees of Gratian say, it is this love of gain that is found in those "who loan for usury... or who in any contract receive more than they give."26 All the authors wrote vehemently against any intention to make profit on a loan, for it is considered dishonest gain and encouraged reprehensible avarice and greed. Note that one can licitly receive more than was loaned as a gift, if it is given due to the borrower's gratitude; but one could not make a loan hoping to receive such a gift.

Several arguments have been made that the Church's teaching on usury was able to change: it was disciplinary, it was conditional, only the intention behind the law is important. While these are all legitimate possibilities, a historical examination shows that usury was never taught in any of these ways. But this does raise an important question, was there anything about this teaching that was based upon conditions and assumptions which could change? The next chapters will examine how the changing economic conditions would affect the Church's teaching, and this becomes the basis for the Church's "change" in no longer prohibiting usury. First, a change in the external circumstances surrounding the making of a loan, as will be discussed in chapter three; second, a change in the very nature of money itself, as will be examined in chapter four.

1 Noonan, Usury, 360.

2 Code of Canon Law: Latin-English Edition (Washington, D.C.: Canon Law Society of America, 1983), c. 749.

3 First Vatican Council, Session 4 (18 July 1870), "First Dogmatic Constitution on the Church of Christ," Decrees, Chapter 4. This is also known as teaching ex cathedra (from the Chair of Peter).

4 Noonan, "Authority," 63-64.

5 Pope Pius IX, "On the Dogma of the Immaculate Conception," Ineffabilis Deus (8 December 1854); [ONLINE]. Available from [accessed 24 April 1998]

6 Noonan, "Authority," 61.

7 Rupert J. Ederer, "Is usury still a problem?" Homiletic and Pastoral Review 84 (Aug-Sept 1984), 13.

8 William Cardinal César de la Luzerne, Dissetations sur le pret-de-commerce (1822) Vol. III, Part 2, p.731; quoted by Noonan, Usury, 383.

9 The scholastics are philosophers and theologians of the medieval European schools, commonly dated from 1060 to 1440, who built upon the writings of the Fathers by incorporating human philosophy together with their writings on divine revelation. Cf. Hardon, "Scholasticism," 398.

10 Noonan, "Authority," 61.

11 O'Neil, 11.

12 Ibid, 12-13.

13 Double effect is a teaching of theologians, not an official Church teaching; but it is in agreement with the Church's magisterium, as it is the principle behind self-defense and just war.

14 Germain Grisez, Living a Christian Life, vol. 2 of The Way of the Lord Jesus (Quincy, IL: Franciscan Press, 1993), 902; hereafter cited as Living.

15 Jacques Melitz, "Some Further Reassessment of the Scholastic Doctrine of Usury," Kyklos: International Review for Social Services 24 (n. 3,1971), 489.

16 Stephen D. Long, "Bernard Dempsey's Theological Economics: Usury, Profit, and Human Fulfillment," Theological Studies v54 (Dec 1996), 690.

17 Ibid.

18 Patrick Cleary, The Church and Usury: An Essay on Some Historical and Theological Aspects of Money-Lending (Dublin: M.H. Gill & Son, Ltd., 1914), 203. Cf. Noonan, Usury, 195, and chapter three on partnerships which fostered commerce.

19 Noonan, "Authority," 73. If true, this argument would have obvious implications for other Church teachings. "If these goods could be protected without an absolute rule on contraception, then the rule might be revised." Noonan, "Authority," 74.

20 Ibid., 72.

21 Divine, Interest, 32.

22 Bernard W. Dempsey, Interest and Usury (Washington D.C.: American Council on Public Affairs, 1943), 165; hereafter cited as Interest.

23 Melitz, 476. St. Thomas and the Scholastics always treat usury as a sin against justice, not charity.

24 Noonan, Usury, 37.

25 Noonan, Usury, 81.

26 McLauglin, 95.

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