The Two Types of Usury

{22:25} If you lend money to the poor of my people who live among you, you shall not coerce them like a collector, nor oppress them with usury.

[Psalm 14] (15)
{14:1} A Psalm of David. O Lord, who will dwell in your tabernacle? Or who will rest on your holy mountain?
{14:2} He who walks without blemish and who works justice.
{14:3} He who speaks the truth in his heart, who has not acted deceitfully with his tongue, and has not done evil to his neighbor, and has not taken up a reproach against his neighbors.
{14:4} In his sight, the malicious one has been reduced to nothing, but he glorifies those who fear the Lord. He who swears to his neighbor and does not deceive.
{14:5} He who has not given his money in usury, nor accepted bribes against the innocent. He who does these things will be undisturbed for eternity.

Usury can be divided into two types, one of which is intrinsically evil, and the other of which is not intrinsically evil, but is immoral because of the circumstances.

First, when usury is excessive interest charged when goods or money are loaned, the morality of the act depends on the degree of interest, which is a circumstance. It is immoral to charge excessive interest on goods or money loaned, even if the amount of interest is legal. The moral law may require you to lend money without interest to a family member or to another person, as an act of charity, in certain circumstances. But charging interest is not intrinsically evil, for Sacred Scripture permits lending at interest.

{23:19} You shall not lend money, or grain, or anything else at all, to your brother at interest,
{23:20} but only to a foreigner. For you shall lend to your brother whatever he needs without interest, so that the Lord your God may bless you in all your works in the land, which you shall enter so as to possess it.

The Israelites were not permitted to charge interest on money or goods lent to their fellow Israelites. The act of lending, in such a case, is an act of charity, or a type of almsgiving; the eternal moral law requires acts of charity and almsgiving. However, the Israelites were permitted to charge interest on money or goods lent to foreigners (i.e. to non-Jews). Sacred Scripture specifically permits this type of interest; therefore, charging interest cannot be intrinsically evil. Thus, usury does not refer to any type of interest charged against what is loaned, but to excessive interest.

Charging interest is moral because the person loaning the money or goods lacks the use of these until they are returned, and the money or goods may decrease in value (due to inflation, or wear and tear), and the lender assumes a degree of risk in making the loan. Therefore, it is just to compensate the lender (or creditor) for the time period of the use, for any loss in value of what is borrowed, and for the assumed risk. When the interest charged is excessive, then the act is immoral, but only because of degree (which is in the circumstances). Intrinsically evil acts are not moral in one degree and immoral in another degree. And so usury by excessive interest is immoral, but not intrinsically evil. A reduction in the degree of interest would make the very same act moral.

Second, when usury is a type of theft, then the act is intrinsically evil and always immoral, regardless of intention or circumstances. In this case, the lender (or creditor) requires both a payment for the goods, in an amount which meets or exceeds the value of the goods, and also the return of the goods. For example, a wealthy merchant would give a measure of wheat in exchange for a fee, and also require the return of the same amount of wheat at a later time (after the harvest). Since the price for the wheat was sufficient for its purchase, the wheat has been sold, and its ownership has been transferred to the buyer. The additional requirement to return the same amount of wheat constitutes a type of theft. In the past times, in some places, some secular laws supported this type of usury. But even when it is entirely legal, this type of usury is an act of theft, and is intrinsically evil and always immoral.

Ronald L. Conte Jr.
Roman Catholic theologian and translator of the Catholic Public Domain Version of the Bible.

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2 Responses to The Two Types of Usury

  1. Mark P. says:

    Thank you for the post, Ron. It is becoming more common for many bloggers and theologians to select relatively obscure Church teachings of the distant past, fail to differentiate them as 1) either infallible or non-infallible and 2) intrinsically evil or not, and then claim that these teachings have changed over time; and after that, they make the connection (falsely) that if “this former teaching changed,” then “this present teaching [insert contraception, abortion, female ordination, homosexual marriage, fornication]” can, should, and will also change.

  2. Francisco says:

    Apparently some rich countries have done the second type of usury (the intrinsically evil one) with poor countries, making the poor countries even poorer. I can’t verify this, but this is what some third world countries claim.

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