Usury is a concept often associated more with religiously based financial ethics, whether Christian or Islamic, than with the secular world of contemporary finance. The problem is compounded by a tendency to interpret riba, prohibited within Islam, as both usury and interest, without adequately distinguishing these concepts. This paper argues that in Christian tradition usury has always evoked the notion of money demanded in excess of what is owed on a loan, disrupting a relationship of equality between (...) people, whereas interest was seen as referring to just compensation to the lender. Although it is often claimed that hostility towards ‘usury’ has been in retreat in the West since the protestant Reformation, we would argue that the crucial break came not with Calvin, but with Jeremy Bentham, whose critique of the arguments of Adam Smith, upholding the reasonableness of the laws against usury, led to the abolition of the usury laws in England in 1854. There has to be a role for law, whether Islamic or secular, in regulating financial relationships. We argue that by retrieving the necessary distinction between demanding usury as illegitimate predatory lending and interest as legitimate compensation, we can discover common ground behind the driving principles of financial ethics within both Islamic and Christian tradition that may still be of relevance today. By re-examining past ethical discussions of the distinction between usury and just compensation, we argue that the world’s religious traditions can make significant contributions to contemporary debate. (shrink)

This paper examines Thomas Aquinas’s condemnation of usury. In the first section, the details of Thomas’s teaching are examined with special attention to the so-called “extrinsic titles” discussed in the Middle Ages as qualifications of the moral and legal strictures concerning moneylending. The reminder of the paper examines the particular extrinsic title of Lucrum Cessans (compensation for lost profit), which Thomas rejects, and attempts to square that rejection with other texts implying that compensation for lost profit is a requirement (...) of justice when taken outside the context of moneylending. The paper concludes with some possible modern applications of Thomas’s position. (shrink)

Usury originally and simply meant the practice of charging interest on loans. This practice was forcefully condemned and generally banned in both Ancient and Medieval times. Indeed, prohibitions against interest can be found in the traditions of all the major religions: Hinduism, Buddhism, Judaism, Islam, and Christianity – compare, for instance, the commandments of the Hindu lawmaker Vasishtha, and the biblical story of how Jesus cast the moneylenders out of the temple (Matthew 21:12). As interest started to become socially (...) acceptable, however, usury came to mean the charging of (legally or morally) excessive or exorbitant rates of interest, and this is also how it is commonly used today. Thus, although many people now may regard as usurious so-called payday loans – which sometimes come with up to 1,000 percent interest – we do not generally regard as usurious the normal bank practice of charging for loans at regulated interest rates. Modern Islam still contains a general prohibition against interest, however, and many countries still have at least partial usury laws – most often setting an upper limit on acceptable interest rates. (shrink)

Historians of medieval England have devoted little sustained attention to the law of usury, and what attention they have paid to the subject has not been focused on the law's enforcement in court practice. A common assumption has been that one could not go much beyond academic treatises and legislative enactments in studying the subject. This has left an undeniable gap, one which English historians have not made as much progress in filling as have Continental historians. In dealing with (...) enforcement of the law of usury in medieval England, therefore, most general treatments have had either to make reasonable guesses from secondary evidence or to be silent. (shrink)

The primary focus of this volume is on justice and morality, the author supplying intellectual tools for distinguishing between morally acceptable and morally unacceptable forms of money lending and reserving the term ‘usury’ for its unacceptable variants. On this account, some forms of lending should be prohibited. Use is made of both historical material from debates on the immorality of usury and modern analytic political philosophy.

This paper examines Thomas Aquinas’s condemnation of usury. In the first section, the details of Thomas’s teaching are examined with special attention to the so-called “extrinsic titles” discussed in the Middle Ages as qualifications of the moral and legal strictures concerning moneylending. The reminder of the paper examines the particular extrinsic title of Lucrum Cessans (compensation for lost profit), which Thomas rejects, and attempts to square that rejection with other texts implying that compensation for lost profit is a requirement (...) of justice when taken outside the context of moneylending. The paper concludes with some possible modern applications of Thomas’s position. (shrink)

Robert Mayer argues that certain kinds of high-interest payday loans should be legally prohibited. His reasoning is that such lending practices compel more solvent borrowers to cross-subsidize less solvent ones, and thus involve a kind of negative externality. But even if such cross-subsidization exists, I argue, this does not necessarily provide a ground for legal prohibition. Such behavior might be a necessary component of a competitive market that provides opportunities for mutually beneficial transactions to willing customers. And the alternative of (...) a government-mandated interest rate faces severe problems of its own. (shrink)

Usury ceilings seem indefensible. Their opponents insist these caps harm the consumers they are intended to help. Low ceilings are said to prevent the least advantaged agents from accessing legal credit and drive them into the black market, where prices are higher and collection methods are harsher. But in this paper, I challenge these arguments and show that the benefits of interest-rate limitations in the most expensive credit markets clearly outweigh the costs. The test case is payday lending. Deregulated (...) pricing in this market produces negative externalities that justify usury restrictions. Unless prices are capped, the more solvent majority of borrowers is compelled to cross-subsidize the least solvent debtors, who have a high rate of default. Rationing the riskiest debtors out of this market by means of a moderate usury cap puts an end to this unfairness and produces fewer bad consequences than the advocates of deregulated pricing recognize. I argue that only an extreme principle like maximizing the minimum could justify a free market in payday credit. (shrink)

This article revisits a set of classic political, theological and economic scenes in the (early) modern debate on usury from Luther to Bentham. To summarize, I argue that this theory of usury – which polemically mobilizes counter-Aristotelian tropes of the breeding, reproduction and husbandry of money – might also be read as a theory of what Foucault famously calls pastoral power. If this debate nominally concerns the ‘repeal’ of the ancient prohibition against money-lending at interest, I argue that (...) what is really at stake here is the pastoral production of a new theory of the subject as ‘human interest’: a self whose allegedly intrinsic self-interest expresses itself paradigmatically through financial interest. In conclusion, I situate this genealogy of human interest within the larger history of the self-interested, capitalist and indebted subject from Hirschman, through Foucault, to Lazzarato. (shrink)

Social attitudes toward usury (here defined using the archaic meaning as the taking of interest on loans) have changed dramatically over the centuries. From antiquity until the Protestant Reformation, usury was regarded as an inherently evil activity. Today, with few exceptions, usury is met with moral indifference. Modern objections to usury are limited to protest against "excessive" interest rates rather than interest per se. With this change in focus, the very meaning of the term "usury" (...) has also changed. Many early pronouncements against the taking of interest emphasized the plight of the poor, but ironically, the poor actually pay the highest rates of interest in the modern American economy. Despite the universality of usury, some socio-economic subcultures still manage to avoid the taking or giving of interest. Orthodox branches of both Judaism and Islam have maintained bans on usury throughout the centuries and up to the present time. This is especially interesting in the case of Judaism, given the popular cultural image of the Jew as usurer. Jewish free loan systems may actually offer a model for modern loan programs that can be designed to aid poor borrowers, who are frequently shut out of mainstream financial services. (shrink)

The Idea of a Moral Economy is the first modern edition and English translation of three questions disputed at the University of Paris in 1330 by the theologian Gerard of Siena. The questions represent the most influential late medieval formulation of the natural law argument against usury and the illicit acquisition of property. Together they offer a particularly clear example of scholastic ideas about the nature and purpose of economic activity and the medieval concept of a moral economy. In (...) his introduction, editor Lawrin Armstrong discusses Gerard's arguments and considers their significance both within the context of scholastic philosophy and law and as a critique of contemporary mainstream economics. His analysis demonstrates how Gerard's work is not only a valuable source for understanding economic thought in pre-modern Europe, but also a fertile resource for scholars of law, economics, and philosophy in medieval Europe and beyond. (shrink)

In the early seventeenth century, the beginning of Europe's commercial revolution forced reconsiderations of the use of credit in long-distance trade. Unlike their Catholic competitors, Protestant regimes depended on the exchange of paper securities and other credit instruments. Protestant moralists developed rationalizations for usury as a concerted effort to protect the Protestant interest in the context of imperial warfare and colonial settlement. By the end of the seventeenth century, these moralists had made modern, market-oriented conceptions of usury commonplace (...) in the Christian West. (shrink)

Through the sixteenth century, the Christian tradition upheld the biblical denunciation of usury as the oppression of the poor and the neighbor. The church should critically retrieve this understanding as a contribution to the public discourse about the oppressive use of interest and debt in the current worldwide fiscal crises.

Name der Zeitschrift: Journal of Ancient History Jahrgang: 5 Heft: 1 Seiten: 134-178.

A full consideration of social and economic justice would involve economics, sociology, political science, and legal theory, in addition to questions related to biblical hermeneutics and biblical ethics. This article will address what must be the fundamental question for any Christian approach: what does the Bible say?

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Usury, charging a higher interest rate than thought by some to be “fair,” has had and still has, a bad press. Historically, it was heavily punished. It was then, and all too often is now, thought to be exploitative. Yet, as even the most economically unsophisticated must realize, both sides of these transactions must necessarily gain at least in the ex ante sense, otherwise one or the other would refuse to enter into the deal in the first place. The (...) present paper is an attempt to justify the practice of charging interest on loans, at any rate agreeable to both borrowers and lenders. (shrink)

John Jewel, regarded as the principal apologist and theologian for the Elizabethan Church, was also esteemed as one of England’s most important authority on the subject of usury, and therefore was cited frequently by opponents of usury towards the end of the sixteenth century and throughout the seventeenth century. One of the most sustained interpretations of Jewel as a theologian on the subject of usury was by Christoph Jelinger, who observed that the late bishop of Sarum employed (...) the same theological method in opposing usury as he did in defending the doctrines and practices of the Church of England against its Catholic opponents, that is, by appealing to the Scriptures, the Church Fathers, Church Councils, and the example of the primitive church. This article seeks to confirm the opinion of Jelinger, and in doing so show that Jewel’s opposition to usury stemmed primarily from the conviction that it was both a vice and heresy that eroded the unifying attribute of Christian society which was love. (shrink)

Martín de Azpilcueta and his fellow Spanish Scholastics writing and teaching at the University of Salamanca during Spain’s Golden Age are rightly pointed to by historians of economic thought as being major contributors toward, if not outright founders of modern economic theory. Among these is the theory of time-preference for which Azpilcueta has repeatedly been given the credit for discovering. However, this discovery is a curious one given how the same man, Azpilcueta, condemned usury in general during his whole (...) life. If Azpilcueta did in fact discover this theory and fully understand its implications, we would reasonably expect him to have questioned his support for the ban on charging an interest on a loan. This paper, therefore, challenges the claim that Azpilcueta understood and revived time-preference theory and shows how his understanding was much more nuanced, and, at times, inconsistent. (shrink)

This essay looks at the economic and theological intersections of definitions of usury in the economic system of capitalism. It challenges seminarians and the church to examine their roles in addressing the problem of usury.