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In general, leaving aside the prejudice attributable to religious interest or practical motive, it is clear that almost all historical errors about the scholastic usury theory arise from a single failure: a failure to consider the theory broadly enough, to take into account either the multiple character of its foundations, theological, economic, and legal, or the multiple aspects it presented in practice, particularly the aspects under which it encouraged the growth of interest titles and above all the use of alternative methods of credit besides the loan.1
Has the history of the Church's teaching on usury been one of error, change or development? Once the Church prohibited usury as any return (profit) taken on a loan which exceeded the original amount of the loan. Today interest is taken on loans as a normal part of daily finances, with no condemnation by the Church. How did this reversal occur? Judge Noonan's conclusion summarizes my own: usury is a multifaceted issue which can only be understood after careful examination. Let us now review and highlight the many different positions we have seen on the subject.
In Chapter one, we saw those who think that when the Church prohibited usury, it was prohibiting any interest on loans, and since it apparently taught this infallibly, it must have contradicted itself in allowing interest on loans today. As we have seen, it is a grave mistake to say that when the Church prohibited usury, the Church infallibly taught that all interest on all loans is prohibited. Nevertheless, the issue becomes a chance for all critics of the Church to attack her. Both non-Christians and other Christian denominations suggest that the Church can not be a source of true teaching because of her error in the prohibiting of usury.
Another group, while not always claiming the Church erred in its teaching, sees usury as an example of Church changing its teaching. Thus they hope to show that all doctrine is changeable and evolving. This claim is often made by dissenting theologians who wish to attack the existence of universal moral prohibitions. Pope John Paul II has clearly and consistently addressed these issues, defending the teaching authority of the Church against these positions. Legitimate development in the Church's teaching is possible - even its moral teaching; but new teaching would never contradict prior Church teaching.
Chapter two introduces several positions which try to explain this apparent contradiction in the Church's teaching. First is the claim that the teaching was never infallibly taught. In examining the different ways in which the Church teaches, there is strong evidence that it was taught infallibly by different Popes, Ecumenical Councils, and the ordinary Magisterium. Thus, this argument is found inconclusive at best, and so we must continue to examine the issue as if the usury prohibition was taught infallibly by the Church.
Some then argue that the usury prohibition was only a disciplinary teaching, something the Church could change at any time. Yet why then was it taught so strongly and by so many? And why would bankers be treated as outcasts from society over a discipline? This position runs contrary to the primary reasons behind the prohibition, which is clearly based on a natural law argument, not an ecclesiastical discipline. Usury was prohibited because it was considered to already be a sin, not because the Church made it into a sin.
An interesting proposal then asks if the usury prohibition could have been phrased as a hypothetical teaching, one in which certain conditions must be true in order for it to apply. However, this also does not coincide with the Church's teaching on usury, for though it may have some exceptions to the rule, the rule still applied in all loans that were made throughout the changing circumstances of 1400 years. While the Church does present some moral teachings in an abstract or conditional manner which then must be applied to particular situations, this was not the case with usury.
John Noonan then argues that only the "spirit of the law" must be followed, and thus the law could change as long as it protected the same goods. Yet is the good being protected just the Church's love and concern for the poor, or is usury prohibited to encourage the following of the virtue of justice? The scholastic arguments based the usury prohibition on commutative justice, which binds all to never take more than their just due. Many claim today that only the intention of the Church's moral law has to be followed, not the letter of the law; but is not the intention of a lawgiver normally revealed by reading the law itself?
Chapter three introduced a fundamental distinction that must be recognized in examining these claims that Church teaching changed. Usury is not simply "gain from a loan," but rather "gain from a loan sought directly by lenders without a just title."2 This is especially the interpretation we can plainly see in the writings of the Scholastic Theologians and Canonists, which is approved by the later teachings of the Popes and Canon Law. The recognition of just titles is an authentic development of the prohibition, as it is interpreted by the Church, particularly as the economic circumstances began to change.
Based on the principles of justice, it is usury to make a charge for a loan, unless one has a just reason for such a charge. At one time, the only cost to the lender was the loan itself, and so the Church taught in the situation of that particular time: nothing above the principal could be taken on such loans. Yet this did not outlaw the possibility of legitimate interest in the future, nor did it prohibit rentals or partnerships. Any extrinsic title (loss) had to be proven, and such a title was called interest, not usury. As seen, the primary title which developed was the cost incurred by the lender, which came to include any lost profit, and the later development of several other legitimate extrinsic titles. It is here that we see the possibility of a "change" in the teaching of the Church.
As the economic system changed, the circumstances under which an injustice was committed also changed. An increase in the number of legitimate claims becomes a development of justice, not a reversal of the prohibition. This not contrary to the Church's original teaching, for the church never condemned interest on loans, but rather the taking of interest on loans without a just title to compensation. One cannot hope for profit on a loan, but one can expect and demand the interest that is due according to the principle of justice.
Particularly in examining the encyclical of Pope Benedict XIV, we see that the Church's basic teaching on the subject still remains: anything charged beyond a valid claim made for just and legitimate reasons is sinful usury, while the charge beyond the principal made for a just reason is legitimate interest. (Notice that this is actually not all that different from the modern definition of usury as excessive or undue interest.) When these extrinsic reasons began to become more common, the Church could only be consistent if it maintained the principles of commutative justice which allowed for these extrinsic titles.
Today, due to nearly unlimited investment opportunities and inflation, these legitimate claims to interest can be assumed to exist. This was the major change in the Church's 19th-century confessional practice; but still was never a reversal of Church teaching. The only change was allowing interest to be taken without explicit proof of extrinsic titles, and this change was made because money and loans have so drastically changed in modern circumstances.
In fact, in chapter four some argue that modern finance has changed so much, that there exists a very different justification for allowing interest. Many hold today that the nature of money itself has actually changed. Money is seen as no longer barren, but is now productive. This would make money the same as productive capital, something very different from what the Scholastic prohibition was concerned with. On a loan of productive capital, interest was always allowed by the Church.
Once money is viewed as productive, making a loan will automatically involve lost profit; and once a rate of inflation is established, one's money depreciates in value over time, resulting in a loss. It can be strongly argued that these two extrinsic titles to interest can now be considered an intrinsic part of every loan that is made. In fact, today there is an established market rate of interest, a common estimate of how much this loss is.
In this we see that there are two different grounds for justifiable interest: the extrinsic titles (chapter three), and the fruitfulness of money (chapter four). Yet in reality, these two arguments are actually not that different. In our economic conditions today (with many circumstances extrinsic to the money considered in itself), interest is allowed on all loans for intrinsic reasons, because in practicality the money cannot be considered apart from these conditions. While some prefer one reason or the other, it is clearly seen that both positions allows legitimate interest, and neither contradicts the Church's previous teaching on usury.
How is this possible? Because the Church never condemned the taking of all interest on all loans. This is the common mistake made by so many who criticize the Church. In chapter five, we also see this same mistake is made by several who view this teaching as a means to condemn the modern social order. Several "faithful" Catholics see interest on loans as still condemned by the Church as sinful, and thus use the usury teaching to convict the modern banking system of being the source of all economic problems today.
The problems with these positions is that they ignore the fact there has been a very real change in the economic conditions over the last few centuries. Now, not only are there legitimate extrinsic titles, but these have become so numerous and frequent we can safely assume they are present in almost all loans today. In addition, it is very difficult to argue that money is still barren in today's first world countries.
Yet these people make this argument because they do see real problems with our economic society, which often consist solely of materialism and profit hoarding with a little or no concern for the poor. There is a growing gap between the rich and poor, but does this separation mean we should promote usury if making a loan to the rich, while prohibiting any interest on a loan to the poor? While it might an interesting solution to closing the gap in social problems, it is still contrary to justice and I believe does not look at social ills that are causing today's economic problems.
These people do us a great service in raising our awareness of social ills and concern for the poor, but this awareness could be made even more profitable by then examining how to solve these problems based on the teachings of the Church in the papal encyclicals since 1891. From the popes we can learn and promote the proper understanding of man's relationship to material goods, which sees the value of the worker himself as much greater than the product which he produces. Learning the principle of solidarity, we can work to help our brother or sister who is in need, rather than just complaining about the injustices which exist. While one part of the Church's usury prohibition was always her concern for the poor, the attempts to revive this prohibition are not helpful in combating today's social ills.
This does not mean we should not retain the parts of the usury teaching that can still apply today. Many commendable practices fall under this umbrella: debt reduction for developing counties on an international level; the elimination of loans which are made at exorbitant rates of interest among private individuals and in third world countries; low-interest or interest-free loans for poor yet resourceful entrepreneurs. And this does not mean there can not be legitimate criticisms made of the banking industry under the name of usury, particularly in its practice of money creation and today's excessive credit card rates.
From the Old Testament scriptures to present-day papal teaching, the word usury evokes a great variety of definitions and reactions. While for a few a great concern even today, for most it is only a curiosity of history with little relevance for modern times. Yet it must be recognized that Judaism, Christianity, and Islam all condemned usury in some form or another (and Aristotle too). But for all Catholics, one important question must be answered: how can we account for the obvious difference between the Church's teaching which condemned usury, and its modern acceptance of interest in practice?
The answer to this question comes down to recognizing what the Church has actually taught. The Church never prohibited all interest on all loans, for this is not what usury was defined as. A similar definition claims that usury prohibited any return taken on a loan which exceeds the original principal of the loan. This is partially true, for the Church taught that one could not take a payment simply because one has made a loan. But one must recognize that because of different situations and circumstances, payments for different reasons might be legitimately taken. Thus it is true to say that usury is condemnation of profit on a loan - as long as one recognizes there may be payments which are not profit on the loan, payments made because of some just title of loss or cost to the lender.
To properly understand the Church's teaching, one must define usury as the prohibition of gain from a loan sought directly by a lender without a just title. This is the definition of the usury prohibition as it was taught, understood and interpreted by the Church for thousands of years, just as it is today. Anything charged beyond the legitimate claim is still called usury, and taking such usury is - as it always was - a sin against justice. There has been obvious change in our economic conditions, which resulted in a necessary development of how this teaching is applied. Yet the Church's basic teaching on the subject still remains in effect and unchanged, and thus usury fails to be a valid example of a reversal of Church teaching.
1 Noonan, Usury, 407.
2 Noonan, Usury, 406.
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