Legalism for the Lender

A couple of weeks ago (10/23) we had this reading from Exodus:

"If you lend money to one of your poor neighbors among my people,you shall not act like an extortioner toward himby demanding interest from him. If you take your neighbor's cloak as a pledge,you shall return it to him before sunset;for this cloak of his is the only covering he has for his body. What else has he to sleep in?If he cries out to me, I will hear him; for I am compassionate."

Clearly this is a prohibition of usury in Israel. I believe in the Advent of Christ, through whom membership in the Chosen People is offered to all, this prohibition against usury is made universal. Clearly there are elements in the Christian tradition which universally and categorically condemn usury. St. Thomas Aquinas says:

"…it is by its very nature unlawful to take payment for the use of money lent, which payment is known as usury: and just as a man is bound to restore other ill-gotten goods, so is he obliged to restore the money which he has taken in usury."

Now, on October 23rd, the Oblates who serve Holy Ghost were at a national meeting, so we were blessed to have the Most Reverend James Moreno celebrate mass for us. Fr. Moreno, in addition to being a man of great piety and devotion is an adjunct faculty member of the St. John Vianney Seminary in Denver, and more notable, is the Judicial Vicar for the Archdiocese of Denver. He is a very learned man. So, even though his homily dealt more with the Gospel readings about the two great commandments, and not usury, I thought I would take the opportunity of his visit to Holy Ghost and ask him to recommend some further reading, written more recently, about the Catholic understanding of usury.

Fr. Moreno recommended that I take a look at Germain Gabriel Grisez’ theology manual. I finally had time yesterday afternoon to go the Archbishop Vehr Theological Library and look it up.

I have to say I was disappointed. I was able to find only one page of text in Grisez that dealt directly with usury, and the gist of his appraisal was that the Church had never condemned all forms of interest, but merely excessive interest. Basically, he said that interest was acceptable if it compensated for this like administrative costs, the risk of non-repayment and inflation, all of which seems logical to me, for such items seem to have to do with the genuine equity of exchange. However, he went on to say that some of the condemnations of usury in the past had been rooted in an earlier concept of money, where money that was not in use simply sat idle, and the wealthy man had an obligation to keep his goods in circulation. However, the nature of money has changed, and surplus money can now be invested in productive enterprises that yield the investor a legitimate return (e.g. stock ownership). It seems that according to Grisez, this changes the game, because interest can be charged on the money because the original owner will miss out on the possibilities of using his money for other, more productive endeavors. I think some economists would call this opportunity cost. There is opportunity cost in lending money, and interest may be charged to account for this cost.

To me this sounds suspiciously like the "hierarchy of goods" talk people use to try and justify contraception. They talk of the good of having time and resources to spend on your children, and suppose that is the thing chosen, instead of the pill--because going off the pill would involve some sort of opportunity cost in being a responsible parent to the children you already have.

Besides, it seems to me that this “new development” in the nature of money was already addressed in 1745 by Pope Benedict XIV , in his encyclical Vix Pervenit he said:

"One cannot condone the sin of usury by arguing that the gain is not great or excessive, but rather moderate or small; neither can it be condoned by arguing that the borrower is rich; nor even by arguing that the money borrowed is not left idle, but is spent usefully, either to increase one's fortune, to purchase new estates, or to engage in business transactions. The law governing loans consists necessarily in the equality of what is given and returned; once the equality has been established, whoever demands more than that violates the terms of the loan."

Benedict XIV obviously had this “opportunity cost” objection in mind because he later went on to clarify:

"We do not deny … that it is very often possible for someone, by means of contracts differing entirely from loans, to spend and invest money legitimately either to provide oneself with an annual income or to engage in legitimate trade and business. From these types of contracts honest gain may be made."

This all seems very clear to me; but the apologists for bankers will answer immediately, even in the venerable Catholic Encyclopedia that the words of Benedict XIV are not infallible pronouncements, indeed; he may not even have intended them to have broad application, for he addressed his letter only to the Italian Bishops.