What Benedict XVI, Francis and Other Popes and Councils Say About Usury

The 2004 Compendium of the Social Doctrine of the Church makes it clear: ‘Recourse to usury is to be morally condemned’

Pedestrians walk past a branch of Payday Loans on Jan. 11, 2011, in London.
Pedestrians walk past a branch of Payday Loans on Jan. 11, 2011, in London. (photo: Oli Scarff / Getty Images)

There is a common misconception in the modern world that the Catholic Church no longer considers usury a sin. Partly this is due to the modern definition of usury, which sees it as charging a high or unjust amount of interest — a rather ambiguous definition. However, this is not how the Church defines usury.

The Fifth Lateran Council (1512-17) states that “the crime of usury or injustice, that is to say a clearly defined evil,” is to be avoided, for the Lord “has bound us by a clear command that we ought not to expect any addition to the capital sum when we grant a loan. 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.”

Pope Benedict XIV’s 1745 encyclical Vix pervenit likewise defined and condemned usury:

The nature of the sin called usury has its proper place and origin in a loan contract. This financial contract between consenting parties demands, by its very nature, that one return to another only as much as he has received. The sin rests on the fact that sometimes the creditor desires more than he has given. Therefore he contends some gain is owed him beyond that which he loaned, but any gain which exceeds the amount he gave is illicit and usurious.

The perception of usury as evil did not originate with the Church. Aristotle gave a concise explanation on why usury was despised in antiquity:

The most hated sort [of wealth-getting], and with the greatest reason, is usury, which makes a gain out of money itself, and not from the natural object of it. For money was intended to be used in exchange, but not to increase at interest. And this term interest, which means the birth of money from money, is applied to the breeding of money because the offspring resembles the parent. Wherefore of [all] modes of getting wealth this is the most unnatural.

The medieval theologian William of Auxerre explained another angle of the immorality of usury: “The usurer acts contrary to natural law, for he sells time, which is common to all creatures.” For William, because interest is accrued over time, the usurer essentially is selling time in order to acquire a surplus of money, even though money is meant to be sterile. Shakespeare commented on the barrenness of money in The Merchant of Venice, where he has a character boasting of how his “gold and silver” can “breed as fast” as “ewes and rams.”

The Church needed to address the issue of usury in a systematic way as commerce and trade increased in the beginning of the second millennium. Montes Pietatis, or Mountains of Piety, were medieval financial institutions that gave out interest-free loans to aid the needy. The aforementioned Fifth Lateran Council forbade the practice of these institutions resorting to usury, only allowing for the issuance of fees to defray the expenses of maintaining the institutions (although many would still operate contrary to this decree):

[These] credit organizations, established by states and hitherto approved and confirmed by the authority of the apostolic see, do not introduce any kind of evil or provide any incentive to sin if they receive, in addition to the capital, a moderate sum for their expenses and by way of compensation, provided it is intended exclusively to defray the expenses of those employed and of other things pertaining (as mentioned) to the upkeep of the organizations, and provided that no profit is made therefrom. They ought not, indeed, to be condemned in any way. Rather, such a type of lending is meritorious and should be praised and approved. It certainly should not be considered as usurious.

Pope Francis has voiced support for ethical banking, specifically citing montes:

May the Lord inspire and support public authorities, so that people and families can enjoy the benefits of law like any other economic reality; inspire and support the leaders of the banking system, so that they may monitor the ethical quality of the activities of banks. It is worth pointing out that many banks were born and spread throughout the world precisely to lift the poor out of usury with loans without a pledge and without interest.

His predecessor Pope Emeritus Benedict XVI has also mentioned montes in his 2009 encyclical Caritas in veritate, something missed by most because of a poor choice in translating montes pietatis as “pawnbroking,” as pointed out by Thomas Stork:

Both the regulation of the financial sector, so as to safeguard weaker parties and discourage scandalous speculation, and experimentation with new forms of finance, designed to support development projects, are positive experiences that should be further explored and encouraged, highlighting the responsibility of the investor. Furthermore, the experience of micro-finance, which has its roots in the thinking and activity of the civil humanists — I am thinking especially of the birth of pawnbroking [de Montibus Pietatis constitutis] — should be strengthened and fine-tuned. This is all the more necessary in these days when financial difficulties can become severe for many of the more vulnerable sectors of the population, who should be protected from the risk of usury and from despair. The weakest members of society should be helped to defend themselves against usury, just as poor peoples should be helped to derive real benefit from micro-credit, in order to discourage the exploitation that is possible in these two areas. Since rich countries are also experiencing new forms of poverty, micro-finance can give practical assistance by launching new initiatives and opening up new sectors for the benefit of the weaker elements in society, even at a time of general economic downturn.

Modern Catholic teaching has not swayed in its understanding of usury. The Compendium of the Social Doctrine of the Church makes it clear: “Although the quest for equitable profit is acceptable in economic and financial activity, recourse to usury is to be morally condemned.” It also cites Pope St. John Paul II, who speaks of usury as “a scourge that is also a reality in our time and that has a stranglehold on many peoples’ lives.”

Pope Francis has spoken bluntly on the deadly nature of usury:

Usury is a serious sin: it kills life, tramples on the dignity of people, is a vehicle for corruption and hampers the common good. It also weakens the social and economic foundations of a country. In fact, with so many poor people, many indebted families, so many victims of serious crimes and so many corrupt people, no country can plan a serious economic recovery or even feel safe.

It is very easy in our capitalist-centered society to stress about the means to attain financial stability. But an obsession with wealth is condemned by St. Paul: “For the love of money is a root of all kinds of evil, and in their eagerness to be rich some have wandered away from the faith and pierced themselves with many pains.” We should also take heed of the wisdom in Proverbs: “The rich rule over the poor, and the borrower is the slave of the lender.”

We must instead focus on honest work and charity, for as Christ said, “Do good, and lend, expecting nothing in return. Your reward will be great, and you will be children of the Most High.”

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