Mirror of Justice

A blog dedicated to the development of Catholic legal theory.
Affiliated with the Program on Church, State & Society at Notre Dame Law School.

Wednesday, November 30, 2005

Benedict(s) on Usury

Andrew Sullivan is beating up on Pope Benedict, as he is wont to do:

Benedict XVI's latest enthusiasm is, apparently, the "infamy of usury". The original formal condemnation of usury - i.e. interest-bearing loans - emerged at roughly the time the Church also created the formal doctrines condemning Jews and "sodomites" in the early medieval era, so it is not surprising Benedict would seek to re-emphasize it. He recently honored the National Anti-Usury Consultancy, and described interest-bearing accounts as a "social plague," and all financial interest as something that "annihilates the life of the poor." If you are versed in the ancient anti-Semitic tropes of the medieval Church, you will be unsurprised by this language. Just so all you Catholics with 401ks and interest-bearing bank accounts: according to this pope, you are enmeshed in evil. Welcome to the club. By the way, does the Vatican earn interest?

And Mark Shea is beating up on Sullivan, as he is wont to do:

Sullivan, like so many cradle Catholics, is of course largely ignorant of Scripture and it's repeated condemnation of lending money at interest. He is also ignorant of the facts pointed out by C.S. Lewis:

There is one bit of advice given to us by the ancient heathen Greeks, and by the Jews in the Old Testament, and by the great Christian teachers of the Middle Ages, which the modern economic system has completely disobeyed. All these people told us not to lend money at interest: and lending money at interest - what we call investment - is the basis of our whole system. Now it may not absolutely follow that we are wrong. Some people say that when Moses and Aristotle and the Christians agreed in forbidding interest (or 'usury' as they called it), they could not foresee the joint stock company, and were only thinking of the private moneylender, and that, therefore, we need not bother about what they said. That is a question I cannot decide on. I am not an economist and I simply do not know whether the investment system is responsible for the state we are in or not. That is where we want the Christian economist. But I should not have been honest if I had not told you that three great civilizations had agreed (or so it seems at first sight) in condemning the very thing on which we have based our whole life. (Mere Christianity)

Sullivan could, of course, have bothered to find that out before making such an ignorant comment. But that would have interfered with his flat-footed portrayal of Benedict as a conspiracy theorist at war with International Jewish Bankers. And, of course, it would get in the way of his rhetorical linkage of "sodomites" and the Jew who (we all know) the evil FuhrerPope seeks to persecute.

In the interests of promoting light rather than heat, let me suggest that what both parties could use is a recognition of the highly nuanced and contextual history of the treatment of usury in Catholic theology.

To begin with, to answer Andrew's question "does the Vatican earn interest," we turn to the venerable Catholic Encyclopedia, where we learn:

The Holy See admits practically the lawfulness of interest on loans, even for ecclesiastical property, though it has not promulgated any doctrinal decree on the subject. See the replies of the Holy Office dated 18 August, 1830, 31 August, 1831, 17 January, 1838, 26 March, 1840, and 28 February, 1871; and that of the Sacred Penitentiary of 11 February, 1832. These replies will be found collected in "Collectio Lacensis" (Acta et decreta s. conciliorum recentiorum), VI, col. 677, Appendix to the Council of Pondicherry; and in the "Enchiridion" of Father Bucceroni.

Interestingly, that article also instructs that while an earlier pope of Benedict's name (i.e., Benedict XIV) issued an encyclical against usury, which "was promulgated after thorough examination,' that encyclical was "addressed only to the bishops of Italy, and therefore not an infallible Decree."

Some scholars contend that the Church's teaching on usury evolved over time in response to the demands of a modern capitalist economy. The section on usury in Judge John Noonan's A Church That Can and Cannot Change: The Development of Catholic Moral Teaching is a good example of this line of argument.

In a review of Noonan's book, however, Avery Cardinal Dulles cogently argues that:

The biblical strictures on usury were evidently motivated by a concern to prevent the rich from exploiting the destitution of the poor. But when capitalists of early modern times began to supply funds for ventures of industry and commerce, the situation became different. Moralists gradually learned to place limits on the ancient prohibition, so as to allow lenders fair compensation for the time and expenses of the banking business, the risks of loss, and the lenders’ inability to use for their own advantage what they had loaned out to others.

These concessions do not seem to me to be a reversal of the original teaching but rather a nuancing of it. The development, while real, may be seen as homogeneous. In view of the changed economic system the magisterium clarified rather than overturned its previous teaching. Catholic moral teaching, like contemporary criminal law, still condemns usury in the sense of the exaction of unjust or exorbitant interest.

Likewise, David Palm observes:

On what specific principles is interest-taking moral or immoral? This was at the heart of the question of usury. Eventually the morality of interest-taking came to be understood as intrinsically bound up in the nature of the thing lent and the impact (or lack thereof) on the person lending it. It is immoral to take interest on the loan of a thing that is completely consumed by its use, for which one has no other use, and for which one incurs no loss by lending it.  ...

... it became clear that money in more modern economies—with competitive markets and almost unlimited opportunities for profitable ("fruitful") investment—did not suffer from the same tendency to be "unfruitful" as it had before. In the face of this change, the Church defined what is meant by usury. Session X of the Fifth Lateran Council (1515) gave its exact meaning: "For that is the real meaning of usury: when, from its use, a thing which produces nothing is applied to the acquiring of gain and profit without any work, any expense or any risk."

... A loan that was usurious at one point in history, due to the unfruitfulness of money, is not usurious later, when the development of competitive markets has changed the nature of money itself. But this is not a change of the Church's teaching on usury. Today nearly all commercial transactions, including monetary loans at interest, do not qualify as usury. This constitutes a change only in the nature of the financial transaction itself, not in the teaching of the Church on usury. "Still she maintains dogmatically that there is such a sin as usury, and what it is, as defined in the Fifth Council of Lateran "(ibid., 263).

In sum, Benedict XVI likely was not condemning all lending of money at interest, but rather simply unjust or inequitable interest charges.


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