Origin and Progress of Hostility to Loans at Interest

Among questions on which the supporters of right reason in political and social science have only conquered theological opposition after centuries of war, is the taking of interest on loans. In hardly any struggle has rigid adherence to the letter of our sacred books been more prolonged and injurious.

Certainly, if the criterion of truth, as regards any doctrine, be that of St. Vincent of Lerins - that it has been held in the Church "always, everywhere, and by all" - then on no point may a Christian of these days be more sure than that every savings institution, every loan and trust company, every bank, every loan of capital by an individual, every means by which accumulated capital has been lawfully lent even at the most moderate interest, to make men workers rather than paupers, is based on deadly sin.

The early evolution of the belief that taking interest for money is sinful presents a curious working together of metaphysical, theological, and humanitarian ideas.

In the main centre of ancient Greek civilization, the loaning of money at interest came to be accepted at an early period as a condition of productive industry, and no legal restriction was imposed. In Rome there was a long process of development: the greed of creditors in early times led to laws against the taking of interest; but, though these lasted long, that strong practical sense which gave Rome the empire of the world substituted finally, for this absolute prohibition, the establishment of rates by law. Yet many of the leading Greek and Roman thinkers opposed this practical settlement of the question, and, foremost of all, Aristotle. In a metaphysical way he declared that money is by nature "barren"; that the birth of money from money is therefore "unnatural"; and hence that the taking of interest is to be censured and hated. Plato, Plutarch, both the Catos, Cicero, Seneca, and various other leaders of ancient thought, arrived at much the same conclusion - sometimes from sympathy with oppressed debtors; sometimes from dislike of usurers; sometimes from simple contempt of trade.

From these sources there came into the early Church the germ of a theological theory upon the subject.

But far greater was the stream of influence from the Jewish and Christian sacred books. In the Old Testament stood various texts condemning usury - the term usury meaning any taking of interest: the law of Moses, while it allowed usury in dealing with strangers, forbade it in dealing with Jews. In the New Testament, in the Sermon on the Mount, as given by St. Luke, stood the text "Lend, hoping for nothing again." These texts seemed to harmonize with the most beautiful characteristic of primnitive Christianity; its tender care for the poor and oppressed: hence we find, from the earliest period, the whole weight of the Church brought to bear against the taking of interest for money.

The great fathers of the Eastern Church, and among them St. Basil, St. Chrysostom, and St. Gregory of Nyssa, - the fathers of the Western Church, and among them Tertullian, St. Ambrose, St. Augustine, and St. Jerome, joined most earnestly in this condemnation. St. Basil denounces money at interest as a "fecund monster," and says, "The divine law declares expressly, 'Thou shalt not lend on usury to thy brother or thy neighbour.' " St. Gregory of Nyssa calls down on him who lends money at interest the vengeance of the Almighty. St. Chrysostom says: "What can be more unreasonable than to sow without land, without rain, without ploughs? All those who give themselves up to this damnable culture shall reap only tares. Let us cut off these monstrous births of gold and silver; let us stop this execrable fecundity." Lactantius called the taking of interest "robbery." St. Ambrose declared it as bad as murder, St. Jerome threw the argument into the form of a dilemma, which was used as a weapon against money-lenders for centuries. Pope Leo the Great solemnly adjudged it a sin worthy of severe punishment.

This unanimity of the fathers of the Church brought about a crystallization of hostility to interest-bearing loans into numberless decrees of popes and councils and kings and legislatures throughout Christendom during more than fifteen hundred years, and the canon law was shaped in accordance with these. At first these were more especially directed against the clergy, but we soon find them extending to the laity. These prohibitions were enforced by the Council of Arles in 314, and a modern Church apologist insists that every great assembly of the Church, from the Council of Elvira in 306 to that of Vienne in 1311, inclusive, solemnly condemned lending money at interest. The greatest rulers under the sway of the Church - Justinian, in the Empire of the East; Charlemagne, in the Empire of the West; Alfred, in England; St. Louis, in France - yielded fully to this dogma. In the ninth century Alfred went so far as to confiscate the estates of money-lenders, denying them burial in Consecrated ground; and similar decrees were made in other parts of Europe. In the twelfth century the Greek Church seems to have relaxed its strictness somewhat, but the Roman Church grew more severe. St. Anselm proved from the Scriptures that the taking of interest is a breach of the Ten Commandments. Peter Lombard, in his Sentences, made the taking of interest purely and simply theft. St. Bernard, reviving religious earnestness in the Church, took the same view. In 1179 the Third Council of the Lateran decreed that impenitent money-lenders should be excluded from the altar, from absolution in the hour of death, and from Christian burial. Pope Urban III reiterated the declaration that the passage in St. Luke forbade the taking of any interest whatever. Pope Alexander III declared that the prohibition in this matter could never be suspended by dispensation.

In the thirteenth century Pope Gregory IX dealt an especially severe blow at commerce by his declaration that even to advance on interest the money necessary in maritime trade was damnable usury; and this was fitly followed by Gregory X, who forbade Christian burial to those guilty of this practice; the Council of Lyons meted out the same penalty. This idea was still more firmly fastened upon the world by the two greatest thinkers of the time: first, by St. Thomas Aquinas, who knit it into the mind of the Church by the use of the Scriptures and of Aristotle; and next by Dante, who pictured money-lenders in one of the worst regions of hell.

About the beginning of the fourteenth century the "Subtile Doctor" of the Middle Ages, Duns Scotus, gave to the world an exquisite piece of reasoning in evasion of the accepted doctrine; but all to no purpose: the Council of Vienne, presided over by Pope Clement V, declared that if any one "shall pertinaciously presume to affirm that the taking of interest for money is not a sin, we decree him to be a heretic, fit for punishment." This infallible utterance bound the dogma with additional force on the conscience of the universal Church.

Nor was this a doctrine enforced by rulers only; the people were no less strenuous. In 1390 the city authorities of London enacted that, "if any person shall lend or put into the hands of any person gold or silver to receive gain thereby, such person shall have the punishment for usurers." And in the same year the Commons prayed the king that the laws of London against usury might have the force of statutes throughout the realm.

In the fifteenth century the Council of the Church at Salzburg excluded from communion and burial any who took interest for money, and this was a very general rule throughout Germany.

An exception was, indeed, sometimes made: some canonists held that Jews might be allowed to take interest, since they were to be damned in any case, and their monopoly of money-lending might prevent Christians from losing their souls by going into the business. Yet even the Jews were from time to time punished for the crime of usury; and, as regards Christians, punishment was bestowed on the dead as well as the living - the bodies of dead money-lenders being here and there dug up and cast out of consecrated ground.

The popular preachers constantly declaimed against all who took interest. The medieval anecdote books for pulpit use are especially full on this point. Jacques de Vitry tells us that demons on one occasion filled a dead money-lender's mouth with red-hot coins; Cesarius of Heisterbach declared that a toad was found thrusting a piece of money into a dead usurer's heart; in another case, a devil was seen pouring molten gold down a dead money-lender's throat.

This theological hostility to the taking of interest was imbedded firmly in the canon law. Again and again it defined usury to be the taking of anything of value beyond the exact original amount of a loan; and under sanction of the universal Church it denounced this as a crime and declared all persons defending it to be guilty of heresy. What this meant the world knows but too well.

The whole evolution of European civilization was greatly hindered by this conscientious policy. Money could only be loaned in most countries at the risk of incurring odium in this world and damnation in the next; hence there was but little capital and few lenders. The rates of interest became at times enormous; as high as forty per cent in England, and ten per cent a month in Italy and Spain. Commerce, manufactures, and general enterprise were dwarfed, while pauperism flourished.

Yet worse than these were the moral results. Doing what one holds to be evil is only second in bad consequences to doing what is really evil; hence, all lending and borrowing, even for the most legitimate purposes and at the most reasonable rates, tended to debase both borrower and lender. The prohibition of lending at interest in continental Europe promoted luxury and discouraged economy; the rich, who were not engaged in business, finding no easy way of employing their incomes productively, spent them largely in ostentation and riotous living.

One evil effect is felt in all parts of the world to this hour. The Jews, so acute in intellect and strong in will, were virtually drawn or driven out of all other industries or professions by the theory that their race, being accursed, was only fitted for the abhorred profession of money-lending.

These evils were so manifest, when trade began to revive throughout Europe in the fifteenth century, that most earnest exertions were put forth to induce the Church to change its position.

The first important effort of this kind was made by John Gerson. His general learning made him Chancellor of the University of Paris; his sacred learning made him the leading orator at the Council of Constance; his piety led men to attribute to him The Imitation of Christ. Shaking off theological shackles, he declared, "Better is it to lend money at reasonable interest, and thus to give aid to the poor, than to see them reduced by poverty to steal, waste their goods, and sell at a low price their personal and real property."

But this idea was at once buried beneath citations from the Scriptures, the fathers, councils, popes, and the canon law. Even in the most active countries there seemed to be no hope. In England, under Henry VII, Cardinal Morton, the lord chancellor, addressed Parliament, asking it to take into consideration loans of money at interest. The result was a law which imposed on lenders at interest a fine of a hundred pounds besides the annulment of the loan; and, to show that there was an offence against religion involved, there was added a clause "reserving to the Church, notwithstanding this punishment, the correction of their souls according to the laws of the same."

Similar enactments were made by civil authority in various parts of Europe; and just when the trade, commerce, and manufactures of the modern epoch had received an immense impulse from the great series of voyages of discovery by such men as Columbus, Vasco da Gama, Magellan, and the Cabots, this barrier against enterprise was strengthened by a decree from no less enlightened a pontiff than Leo X.

The popular feeling warranted such decrees. As late as the end of the Middle Ages we find the people of Piacenza dragging the body of a money-lender out of his grave in consecrated ground and throwing it into the river Po, in order to stop a prolonged rainstorm; and outbreaks of the same spirit were frequent in other countries.

Another mode of obtaining relief was tried. Subtle theologians devised evasions of various sorts. Two among these inventions of the schoolmen obtained much notoriety.

The first was the doctrine of " damnum emergens": if a lender suffered loss by the failure of the borrower to return a loan at a date named, compensation might be made. Thus it was that, if the nominal date of payment was made to follow quickly after the real date of the loan, the compensation for the anticipated delay in payment had a very strong resemblance to interest. Equally cogent was the doctrine of "lucrum cessans": if a man, in order to lend money, was obliged to diminish his income from productive enterprises, it was claimed that he might receive in return, in addition to his money, an amount exactly equal to this diminution in his income.

But such evasions were looked upon with little favour by the great body of theologians, and the name of St. Thomas Aquinas was triumphantly cited against them.

Opposition on scriptural grounds to the taking of interest was not confined to the older Church. Protestantism was led by Luther and several of his associates into the same line of thought and practice. Said Luther. "To exchange anything with any one and gain by the exchange is not to do a charity; but to steal. Every usurer is a thief worthy of the gibbet. I call those usurers who lend money at five or six per cent." But it is only just to say that at a later period Luther took a much more moderate view. Melanchthon, defining usury as any interest whatever, condemned it again and again; and the Goldberg Catechism of 1558, for which he wrote a preface and recommendation, declares every person taking interest for money a thief. From generation to generation this doctrine was upheld by the more eminent divines of the Lutheran Church in all parts of Germany.

The English reformers showed the same hostility to interest-bearing loans. Under Henry VIII the law of Henry VII against taking interest had been modified for the better; but the revival of religious feeling under Edward VI caused in 1552 the passage of the "Bill of Usury." In this it is said, "Forasmuch as usury is by the word of God utterly prohibited, as a vice most odious and detestable, as in divers places of the Holy Scriptures it is evident to be seen, which thing by no godly teachings and persuasions can sink into the hearts of divers greedy, uncharitable, and covetous persons of this realm, nor yet, by any terrible threatenings of God's wrath and vengeance," etc., it is enacted that whosoever shall thereafter lend money "for any manner of usury, increase, lucre, gain, or interest, to be had, received, or hoped for," shall forfeit principal and interest, and suffer imprisonment and fine at the king's pleasure.

But, most fortunately, it happened that Calvin, though at times stumbling over the usual texts against the taking of interest for money, turned finally in the right direction. He cut through the metaphysical arguments of Aristotle, and characterized the subtleties devised to evade the Scriptures as "a childish game with God." In place of these subtleties there was developed among Protestants a serviceable fiction - the statement that usury means illegal or oppressive interest. Under the action of this fiction, commerce and trade revived rapidly in Protestant countries, though with occasional checks from exact interpreters of Scripture. At the same period in France, the great Protestant jurist Dumoulin brought all his legal learning and skill in casuistry to bear on the same side. A certain ferretlike acuteness and litheness seem to have enabled him to hunt down the opponents of interest-taking through the most tortuous arguments of scholasticism.

In England the struggle went on with varying fortune; statesmen on one side, and theologians on the other. We have seen how, under Henry VIII, interest was allowed at a fixed rate, and how, the development of English Protestantism having at first strengthened the old theological view, there was, under Edward VI, a temporarily successful attempt to forbid the taking of interest by law.

The Puritans, dwelling on Old Testament texts, continued for a considerable time especially hostile to the taking of any interest. Henry Smith, a noted preacher, thundered from the pulpit of St. Clement Danes in London against "the evasions of Scripture" which permitted men to lend money on interest at all. In answer to the contention that only "biting" usury was oppressive, Wilson, a noted upholder of the strict theological view in political economy, declared: "There is difference in deed between the bite of a dogge and the bite of a flea, and yet, though the flea doth lesse harm, yet the flea doth bite after hir kinde, yea, and draweth blood, too. But what a world this is, that men will make sin to be but a fleabite, when they see God's word directly against them!"

The same view found strong upholders among contemporary English Catholics. One of the most eminent of these, Nicholas Sanders, revived very vigorously the use of an old scholastic argument. He insisted that "man can not sell time," that time is not a human possession, but something which is given by God alone: he declared, "Time was not of your gift to your neighbour, but of God's gift to you both."

In the Parliament of the period, we find strong assertions of the old idea, with constant reference to Scripture and the fathers. In one debate, Wilson cited from Ezekiel and other prophets and attributed to St. Augustine the doctrine that "to take but a cup of wine is usury and damnable." Fleetwood recalled the law of King Edward the Confessor, which submitted usurers to the ordeal.

But arguments of this sort had little influence upon Elizabeth and her statesmen. Threats of damnation in the next world troubled them little if they could have their way in this. They re-established the practice of taking interest under restrictions, and this, in various forms, has remained in England ever since. Most notable in this phase of the evolution of scientific doctrine in political economy at that period is the emergence of a recognised difference between usury and interest. Between these two words, which had so long been synonymous, a distinction now appears: the former being construed to indicate oppressive interest, and the latter just rates for the use of money. This idea gradually sank into the popular mind of Protestant countries, and the scriptural texts no longer presented any difficulty to the people at large, since there grew up a general belief that the word "usury," as employed in Scripture, had always meant exorbitant interest; and this in spite of the parable of the Talents. Still, that the old Aristotelian quibble had not been entirely forgotten, is clearly seen by various passages in Shakespeare's Merchant of Venice. But this line of reasoning seems to have received its quietus from Lord Bacon. He did not, indeed, develop a strong and connected argument on the subject; but he burst the bonds of Aristotle, and based interest for money upon natural laws. How powerful the new current of thought was, is seen from the fact that James I, of all monarchs the most fettered by scholasticism and theology, sanctioned a statute dealing with interest for money as absolutely necessary. Yet, even after this, the old idea asserted itself; for the bishops utterly refused to agree to the law allowing interest until a proviso was inserted that "nothing in this law contained shall be construed or expounded to allow the practice of usury in point of religion or conscience." The old view cropped out from time to time in various public declarations. Famous among these were the Treatise of Usury, published in 1612 by Dr. Fenton, who restated the old arguments with much force, and the Usury Condemned of John Blaxton, published in 1634. Blaxton, who also was a clergyman, defined usury as the taking of any interest whatever for money, citing in support of this view six archbishops and bishops and over thirty doctors of divinity in the Anglican Church, some of their utterances being very violent and all of them running their roots down into texts of Scripture. Typical among these is a sermon of Bishop Sands, in which he declares, regarding the taking of interest: "This canker hath corrupted all England; we shall doe God and our country true service by taking away this evill; represse it by law, else the heavy hand of God hangeth over us and will strike us."