Interest charges upon money lending

[Ryan&Amber2013]

So we read this Psalm this morning, and this verse stuck out.

who does not put out his money at interest and does not take a bribe against the innocent. He who does these things shall never be moved.
Psalms 15:5

I read some commentaries but I'm not really satisfied. It seems that they basically try to say that making money off the poor for their own gain is wrong, not charging interest in itself. But that's what charging interest is in general, because those who are in need have to borrow and don't have the money on their own. So it seems that there is always the richer making money off the poorer when interest is involved.

My in-laws offered to help us with a nice down payment for a house, so we wouldn't get stuck with mortgage insurance. They said we wouldn't have to pay them back interest, just the money of the loan. To me this is honorable.

On the other hand, you have members in churches who lend money to the church so they can buy their own building, and they expect to be paid back in full and charge 4.5 percent interest. I don't really understand this to be honest.

 

[arapahoepark]

It was also Mosaic code not to lend money at interest to fellow Jews. Strangers and those non covenant people it was fine.

 

[Adam Olive]

The charging of interest is always spoken of as exploitive to the poor. Instead there should be generosity toward the poor.

I am a little puzzled that you can charge a foreigner interest whereas usually they are protected from exploitation i.e. Sabbath rests; receive justice, cities of refuge, provision made to be supported – although foreigners can also be slaves for life unlike Israelites/Hebrews.

I guess 'politically' slavery and interest place one in a position of subservience which is inappropriate for fellow Israelites but acceptable for foreigners not part of the Abrahamic/Mosaic covenant. Perhaps slavery and interest are relatable in this way.

 

[RamistThomist]

Charging interest on loans was a weapon that God's people were to use against the Canaanites.

The Larger Catechism condemns usury in the 8th commandment. It's easy (and correct) to say that charging interest on money loans is wrong. God says so, so there's that. The tougher question concerns stuff like rent, land, etc.
https://cocceius.wordpress.com/the-usury-review/

https://cocceius.wordpress.com/2018/07/24/review-morality-after-calvin/

https://cocceius.wordpress.com/2018/07/28/bonds-of-imperfection-odonovan-and-odonovan/

Medieval Theories on Usury

medieval economics: A Christo-centric ethic of perfection that drew heavily upon the Stoic-Platonist tradition.

• drew upon the Patristic vision of polarity of opposing loves of spiritual and earthly riches, “viewed avarice as the root of all evil,” property right as morally tainted (Lockwood O’Donovan, 99).
• Not fully Aristotelian, though. The Patristic vision viewed community primarily in terms of a common participation in invisible goods and a charitable sharing of divisible goods by its members.

Canonical Development of the Usury Prohibition

The church recognized two intrinsic titles to interest (indemnity) on loans in the case of delayed repayment: the title of damages sustained and that of profit foregone. Further, contracts are distinguished from loans.

• The locatio: a rental contract on a piece of property
• The societas: partnership where profit and risk were shared
• The Census: sale or purchase for life of a rent-charge (the return varied on the productivity)

The church in fact gave moral license to limited opportunities for investment and credit that favored the welfare of the poor but did not serve an expanding commercial economy (101-102). However, as contracts became more complex over time, it was really hard to not engage in some form of usury.

The Earlier Medieval Treatments of Usury

God’s original will for human community:

• its members make common use of the goods of creation to relieve material want (104).
• air, sun, rain, sea, seasons (divinely created as koinonia, unable to be monopolized; cf. modern American government attacking those who store rainwater)
• Gratian argues this did not mean private ownership and amassing wealth. It’s hard to see how this squares with Proverbs injunction that a godly man leaves an inheritance. And if the wealth is to be distributed by the church, it’s hard to see how the church can make any claim to poverty and non-possessorship.

The usurer sells time: time originally belongs to God, and secondarily belongs to all creatures. Thus, to sell time is to injure all. Further, time is a koinon, indivisibly shared by all creatures.

Roman contract of loan (mutuum): a fungible good is transferred from owner to borrower. Ownership is transferred because the borrower is not expected to repay the exact same item. The borrower assumes the risk of loss and is bound to repay it. Thefore, Lockwood O’Donovan argues, “The medieval theologians and canonists could argue, in the first place, that the usurer charges the debtor for what the debtor already owns” (107).

The Thomistic Treatment of Usury

Commutative justice (ST 2a2ae. 78)

Usury sins against justice in the exchange, a violation against equality in the exchange

Thomas does presuppose property right

• sterility of money theory
  • Money is a means of measuring equivalence in an exchange. It can only establish equivalence if it is formally equal to the thing itself in exchange (
  • the usurer inflicts on the needy borrower a moral violence of making him repay more than he was lent.
  • Thomas also argues that human industry, not money is the cause of profit.
• to charge separately for a thing

 

[Ryan&Amber2013]

Charging interest on loans was a weapon that God's people were to use against the Canaanites.

The Larger Catechism condemns usury in the 8th commandment. It's easy (and correct) to say that charging interest on money loans is wrong. God says so, so there's that. The tougher question concerns stuff like rent, land, etc.
https://cocceius.wordpress.com/the-usury-review/

https://cocceius.wordpress.com/2018/07/24/review-morality-after-calvin/

https://cocceius.wordpress.com/2018/07/28/bonds-of-imperfection-odonovan-and-odonovan/

Medieval Theories on Usury

medieval economics: A Christo-centric ethic of perfection that drew heavily upon the Stoic-Platonist tradition.

• drew upon the Patristic vision of polarity of opposing loves of spiritual and earthly riches, “viewed avarice as the root of all evil,” property right as morally tainted (Lockwood O’Donovan, 99).
• Not fully Aristotelian, though. The Patristic vision viewed community primarily in terms of a common participation in invisible goods and a charitable sharing of divisible goods by its members.

Canonical Development of the Usury Prohibition

The church recognized two intrinsic titles to interest (indemnity) on loans in the case of delayed repayment: the title of damages sustained and that of profit foregone. Further, contracts are distinguished from loans.

• The locatio: a rental contract on a piece of property
• The societas: partnership where profit and risk were shared
• The Census: sale or purchase for life of a rent-charge (the return varied on the productivity)

The church in fact gave moral license to limited opportunities for investment and credit that favored the welfare of the poor but did not serve an expanding commercial economy (101-102). However, as contracts became more complex over time, it was really hard to not engage in some form of usury.

The Earlier Medieval Treatments of Usury

God’s original will for human community:

• its members make common use of the goods of creation to relieve material want (104).
• air, sun, rain, sea, seasons (divinely created as koinonia, unable to be monopolized; cf. modern American government attacking those who store rainwater)
• Gratian argues this did not mean private ownership and amassing wealth. It’s hard to see how this squares with Proverbs injunction that a godly man leaves an inheritance. And if the wealth is to be distributed by the church, it’s hard to see how the church can make any claim to poverty and non-possessorship.

The usurer sells time: time originally belongs to God, and secondarily belongs to all creatures. Thus, to sell time is to injure all. Further, time is a koinon, indivisibly shared by all creatures.

Roman contract of loan (mutuum): a fungible good is transferred from owner to borrower. Ownership is transferred because the borrower is not expected to repay the exact same item. The borrower assumes the risk of loss and is bound to repay it. Thefore, Lockwood O’Donovan argues, “The medieval theologians and canonists could argue, in the first place, that the usurer charges the debtor for what the debtor already owns” (107).

The Thomistic Treatment of Usury

Commutative justice (ST 2a2ae. 78)

Usury sins against justice in the exchange, a violation against equality in the exchange

Thomas does presuppose property right

• sterility of money theory
  • Money is a means of measuring equivalence in an exchange. It can only establish equivalence if it is formally equal to the thing itself in exchange (
  • the usurer inflicts on the needy borrower a moral violence of making him repay more than he was lent.
  • Thomas also argues that human industry, not money is the cause of profit.
• to charge separately for a thing

Wow, really informative. Thank you so much!

 

[Adam Olive]

Charging interest on loans was a weapon that God's people were to use against the Canaanites.

How do you get that? I think it is unlikely that the aliens (coming from distant nations) are Cannaanites (in the land). And I don't see any 'weapon' kind of language.

Nevertheless I think as I said earlier:

I guess 'politically' slavery and interest place one in a position of subservience which is inappropriate for fellow Israelites but acceptable for foreigners not part of the Abrahamic/Mosaic covenant. Perhaps slavery and interest are relatable in this way.

 

[Contra_Mundum]

Israel was a state, and a church. It was a church-state. Many positive laws God imposed on Israel partook of the unique hybrid nature of their commonwealth. If your family-brother is in need, should you make him your slave by an interest-bearing loan?

If it seems not-very brotherly to do so, now extend the principle to your brother-in-the-church. Should you be aiding you poor brother by a loan-plus-interest? Not too kind, if you ask me.

Now, your brother wants you to loan him money so he can buy a boat. Maybe, you shouldn't loan your brother any money at all--money troubles tomorrow could put your brotherhood at risk, regardless of whether he's agreed to pay you an agreed time-value for the money. A less-personal business arrangement might be a wiser contractual arrangement, than tying your relationship up in pecuniary complications.

A business-type of loan contract should have limits on the personal liabilities attached. There's something vaguely unscrupulous about being willing to give a loan to someone who puts up his family's only house, or his daughter's dowry, as collateral.

While it is not generally a good idea to draw too liberally from parable-teaching, speaking of the details; nevertheless, Jesus portrayed a king full of righteous indignation, Mt.25:27, who was angry that his lazy, mendacious servant didn't at least give his money to the bankers, so that he might have "received [his] own back with interest." I think it's instructive.

We should distinguish between need, and the proper distribution of the cost of risk (a function of interest), and who is able to bear those costs.

 

[Jack K]

The situation matters. Not all interest is exploitative. Much of the interest charged in our economy is simply fair payment for the use of another's money for a time. As such, it encourages investments and makes capital available for business ventures. This is good, and appropriate.

When it comes to helping a brother in need, our approach should be different. For starters, not charging interest on a loan is a good principle. Our chief concern in such cases is not the protection of our own wealth nor the growth of the economy, but rather the needs of our brother.

 

[RamistThomist]

How do you get that? I think it is unlikely that the aliens (coming from distant nations) are Cannaanites (in the land). And I don't see any 'weapon' kind of language.

I am operating on the tentative assumption that not every single Canaanite would have been immediately driven from the land. I won't die on that hill, though, so I could be wrong.