What IS usury, anyway?

By Dr. Jeff Mirus ( bio - articles - email ) | Jan 30, 2014

Yesterday we reported that Pope Francis denounced usury during his Wednesday general audience. Of course, our reporter did not deign to explain what usury is, and that is just another demonstration of the wisdom of the Catholic World News team. Because in modern commercial societies, usury is a very difficult concept to grasp.

Usury has to do with lending money at interest. The condemnation of usury by the highest authorities of the Catholic Church goes back at least to the Middle Ages. For example, the Second Lateran Council under Pope Innocent II condemned “the detestable and shameful and…insatiable rapacity of money lenders” and commanded that they be separated “from all ecclesiastical consolation”, including Christian burial (Canon 13). Since money-lending was denied by law to Christians, Jews in Christian territories tended to take on this role, creating the stereotype of “Shylock”, who demanded his pound of flesh. Unfortunately, it is hard to find an authoritative document which explains precisely what it was about money-lending which the Church condemned. We understand that money lenders profit from interest on loans, and that what the Church condemns is the rapacity of this practice. But in what sense is rapacity actually built into the lending process?

This was a less complicated question in a culture possessing little or no experience with capital investments, and that is precisely why the medieval condemnations tend to make insufficient distinctions for modern ears. But within a few hundred years, beginning in the more commercial culture of the Renaissance, moral theologians began to work out the differences between legitimate investment and rapacious money-lending.

The nub of the problem lies in the disordered human desire to profit from the misery of another. After all, if someone is temporarily short of cash to cover his basic needs, then ideally someone else will step forward either to give him some money or at least to loan him some money without interest. That is what we would do for family members or friends even today, and that is obviously how Christians should treat each other as brothers and sisters in Christ. There is something about loving our neighbor that is supposed to come into play here.

But grave moral dangers arise when lending at interest becomes a business in itself. It is one thing—a morally unobjectionable thing—to share risk by putting up funds for a business venture or even a major purchase with long-term value, the costs of which the principals must clearly spread out over time. For such investments, one has every right to specify a reasonable rate of return. But it is quite another to look actively for people who are desperate so that you can loan them money at considerable profit to yourself—which they can scarcely refuse—complete with potential seizure of significant collateral. There is a strong element here of making money by exploiting the misery of others, especially given the certainty that many “customers” will be getting themselves into deeper trouble as a result of the loan.

Crossing the Moral Line

It is not always clear when the moral line is crossed, but there is a line. Consider, for example, the widespread ads on television that encourage people to use their car titles as security for loans. The ads show delighted people with big wads of cash. A lot of them are foolish, and are going to lose their cars. Somebody should be working with them to help them learn to live within their means, if possible, but in any case, it is clearly wrong to deliberately stimulate unrealistic desires in order to get another person “on the hook”. There may be some good done here, but it is a business model which preys on—that is, which tries to inflate and then benefit from—human weakness and misery.

In our massively commercial culture, we find this difficult to see. Everything is reduced to amoral transactions. For example, we take it for granted that credit card companies will routinely do the same thing, and mostly without criticism. They operate within a higher wage bracket, but they often promote a hedonist lifestyle, stimulating desires which people feel they must find more money to fulfill. Well, rack it up on the credit card! Trouble follows, but the credit card companies grow rich.

The moral disorder in this is even harder for us to see because it has a firm basis in our entire advertising culture. Too often everything from clothing to automobiles, from beer to perfume, is marketed not by calmly explaining product value but by linking products to sensual delights which become temptations. This reminds me of Pope Francis’ very contemporary cautions against such excesses in his recent Message for the 48th World Day of Communication:

Whenever communication is primarily aimed at promoting consumption or manipulating others, we are dealing with a form of violent aggression like that suffered by the man in the parable, who was beaten by robbers and left abandoned on the road. The Levite and the priest do not regard him as a neighbor, but as a stranger to be kept at a distance. In those days, it was rules of ritual purity which conditioned their response. Nowadays there is a danger that certain media so condition our responses that we fail to see our real neighbor.

Like slave owners two centuries ago, we tend to imagine that practices so deeply embedded in our economy are inescapable, and therefore acceptable.

The question of usury, then, is a little complicated; usury arises wherever a certain line is crossed. At some point—and that point varies with the lender, the borrower, the terms, and the purposes at work—a moral line can be crossed, from performing a service which includes compensation for legitimate risk to actually promoting and preying upon the weaknesses of one’s neighbors, and exploiting their real needs. It is financial predation in this specific form which constitutes usury.