Understanding the Social Sin of Usury

 The iniquity of money-lending must absolutely be abjured, and the gain which lacks all humanity must be shunned. A man’s possessions are indeed multiplied by these unrighteous and sorry means, but the mind’s wealth decays because usury of money is the death of the soul.

—Saint Pope Leo the Great, Sermon 17

Many today have been taught that “usury” refers only to “unusually high or predatory interest on a loan.” However, for most of human history, usury referred to any amount of interest on a loan. Alongside other forms of exploitation, this evil of ‘money making money’ is the most wicked and unnatural. Under capitalism, usury is considered normal and has become absolutely necessary to the global economy.

The Scriptures (cf. Exodus 22:25), the Church Fathers (cf. St. Basil), the Councils (Lateran III § 25), the Scholastics (cf. ST II-II Q78), and the Popes (cf. Vix Pervenit) have been unanimous in their condemnation of usury. But usury is not only in defiance of God’s law. It is opposed to natural law; this is why almost every human civilization, until modernity, heavily regulated usury or banned it entirely. 

For example, the Chinese Empire habitually provided interest-free loans of grain to peasants to undercut the social unrest caused by usurers. Muslims call usury riba, and also consider it immoral. In the words of the Greek Philosopher, Aristotle: ‘to make money by usury is exceedingly unnatural.’ (Politics 1, 1258b) In the words of anthropologist David Graeber: “Looking over world literature, it is almost impossible to find a single sympathetic representation of a moneylender—or anyway, a professional moneylender, which means by definition one who charges interest.” (Debt, page 10)

As in all societies, sin and disorder always creeps in. Throughout the Middle Ages, “The Catholic Church had always forbidden the practice of lending money at interest, but the rules often fell into [disuse], causing the Church hierarchy to authorize preaching campaigns, sending mendicant friars to travel from town to town warning usurers that unless they repented and made full restitution of all interest extracted from their victims, they would surely go to Hell.” (ibid.)

But something changed in the 16th century. 

First, corruption in the Church allowed usury to creep into the cities of Renaissance Italy under disguises like the contractum trinius and lucrum cessans. Later on, these errors became popularized by the ‘School of Salamanca,’ who “on moral defenses of usury and profit… were eager to reform Catholic doctrine to bring it more in line with current practice, to ease their efforts to overcome the resistance of Protestant towns to re-catholicization” (Source). 

Second, nearly all Protestant denominations, led by Luther, Calvin, and Zwingli, declared that usury was lawful (cf. Debt, pages 321-323). All of this was good news for the worldly rulers and merchants of northwestern Europe.

Third, the modern system of central banking and national debt was created, in which the state itself takes usurious loans (‘bonds’) from banks and other creditors. The Dutch Republic became the first nation to do so, and in 1534 allowed “interest payments of up to 12 per cent per annum on all debts and commercial bills” (Source). The ability to trade profitable debt allowed for the opening of the first stock market in Amsterdam in 1602. From here, usury-based governments and corporations spread throughout the globe. Now, both poor individuals and entire nations are perpetually extorted by the powerful through usurious debt. The entire capitalist economy, from housing to education, businesses to banks, runs on usury.

Debt relief is urgent…. We have to ask, however, why progress in resolving the debt problem is still so slow. Why so many hesitations? Why the difficulty in providing the funds needed even for the already agreed initiatives? It is the poor who pay the cost of indecision and delay… I appeal to all those involved, especially the most powerful nations, not to let this opportunity of the Jubilee Year pass, without taking a decisive step towards definitively resolving the debt crisis…

—Saint John Paul II, Message to the Jubilee 2000 Debt Campaign