Chapter IX — On the triple contract, and other contracts

I. QUESTION I. What is the triple contract? ANSWER. It is called triple because it consists of a threefold contract: first of partnership, second of assurance, third of sale. The contract of partnership is a convention of two or more concerning the contributing of something appraisable at a price into a common stock, and concerning the gain and loss in proportion. By the consent of all this contract is lawful. It demands four conditions. First, he who puts in the stake ought to undergo the danger. Second, the trade or art in which the stake is to be placed must be honourable. Third, let equity be preserved. Fourth, the stake or capital is to be delivered to an industrious man — money to a merchant, animals to husbandmen, and so forth. In this first contract Caius puts in the money, Maevius the trader his industry, and both are partakers of the gain and loss in proportion. The second contract is called of the assurance of the capital. Caius, who contributed the money, bargains with Maevius that he restore his capital immune from every danger; and for this assurance he remits a part of the gain. He gave 100. The gain to be perceived from the trade is, as is presumed, twelve. He remits four for the security of the capital to be furnished by Maevius. The third is of the sale of a greater uncertain gain for a lesser certain gain. The uncertain gain hoped for is thereabouts twelve in 100, as has been said. This Caius sells for a certain gain of four. And so Caius from his assured capital receives four or five, more or less, in the hundred, all trouble, labour, and danger being removed.

II. The simple and clear exposition alone of the question thrusts the usury into your eyes. If Caius should say in simple speech to Maevius: I give you, Maevius, a hundred on loan, that you may pay me four or five every year, he is a usurer. If he use the aforesaid crafty wrapping of words and circumlocution, he has declined the usury.

III. The invention of this triple contract Fr. Tamburini, Book IX, chapter 5, § 3, nos. 1 and 2, attributes to the acumen of the younger casuists, writing thus: “That by force of the contract of partnership alone the whole danger cannot be thrown back upon a partner is too clearly plain. … But INGENIOUS THEOLOGIANS, perhaps admonished by the merchants themselves, whose interest it is, have found a way of thus throwing back the whole danger upon one of the partners WITHOUT INJUSTICE.”

IV. Ingenious theologians, he says, admonished by the merchants themselves, have found a way of gaining from a loan without usury. But that way lay hidden from the Fathers and the theologians, who learned theology not from merchants but from the evangelical law and the sacred canons. But Fr. Joseph Gibalinus, a most keen champion of the triple contract, Book 6 On Usuries, chapter 8, article 2, page 383, no. 5, replies with this admonition: “I would only admonish for the present that very many opinions, when first they were brought into the schools against received and common opinions, were brought forward by their authors only very timidly, lest they should offend the vulgar of the Doctors. … But when opinions of this kind have been for some time weighed and examined, and the cloud being dispelled, by the light of truth at last poured upon them, they are received with great consent — opinions which when newly born scarcely dared to betray their parent. … The same thing happens in our case. For since partnership constitutes an equality among partners, these obligations of a certain gain, though a lesser one, and of the security of the principal to be furnished by the other partner, seemed rightly to wise men to fight with the nature of partnership. But when they observed that these burdens are not imposed upon the partner by force of the contract of partnership, but by new agreements,” and so forth.

V. Marvellous is the force of that new manner of opining. Formerly the countenance of the Doctors — namely of the holy Fathers, of Sts. Thomas, Raymond, Bonaventure, Antoninus, Bernardine, and their disciples — was offended at the novelty of the triple contract. At the outset the new opiners were afraid, and scarcely dared to bring forth the parents of such a contract. But afterwards, the cloud being dispelled under which the most holy Fathers were in darkness, the light of truth appeared to the younger authors. And their opinions are received with great consent, because they favour cupidity.

VI. This contract Sixtus V condemned in clear words by the peculiar constitution Detestabilis avaritia in the year 1586, from which I cull the following. “Many, weaving the specious and honourable name of partnership before their usurious contracts, under this colour and paint bargain in diverse manners with merchants, craftsmen, and traders upon this condition, that the principal itself, or the capital, both of moneys and of animals and of things, always remain safe and entire for him who contributes not industry or labour, but moneys, animals, or things of this kind into the partnership, so that every danger and loss be sustained by the other partner receiving, against the equality and justice of partnership; and lastly, that they bind by an agreement and obligation those partners with whom they contract, who are for the most part poor and needy and living by their own labour and industry, whatever chance and outcome of things may follow, and at the same time also prescribe and appoint beforehand a fixed and definite quantity of gain, so much for every hundred, to be paid every year, or every month, by the other partner, during the partnership. … Wherefore we … desiring to remove, so far as with God's favour we can, the contagion of this disease before it creep to the common ruin of the faithful, of the fullness of the apostolic power attributed to us, by this our constitution to be valid in perpetuity, condemn and reprobate all and singular contracts, conventions, and agreements hereafter to be entered upon, by which or in which it shall be provided for persons delivering moneys, animals, or any other things whatsoever under the name of partnership, that even if any loss or amission whatsoever should chance to follow by fortuitous accident, the principal itself, or the capital, always remain safe and entire, and be restored by the partner; or that a certain sum, or a definite quantity, be answered for either yearly or monthly during the partnership: and we determine that contracts, conventions, and agreements of this kind are henceforth to be reckoned usurious and unlawful; and that it is not lawful hereafter for those who deliver money, or animals, or other things into partnership, to bargain and agree among themselves concerning a certain gain, as aforesaid, to be received; nor, even if they have agreed upon either a certain or an uncertain gain, to oblige the partners who receive them, by any agreement or promise, to the principal or capital safe and entire, when it shall have perished by fortuitous accident or been lost. And lest for the future partnerships be entered upon under agreements and conditions of this kind, which savour of usurious depravity, we directly interdict and prohibit.”

VII. The most holy Pontiff BENEDICT XIV, Book VII On the Synod, chapter 1, declares that Sixtus V condemned the triple contract as usurious, in these words: “This moreover is that triple contract which the discord arisen between Dominic Soto and Martin Navarrus made celebrated. Navarrus thought, namely, that the three aforesaid contracts could be entered upon at once and with the same person with a safe conscience, and immune from usurious depravity, for the reasons which he adduces in his Manual, chapter 17, no. 254 and following. Soto on the contrary asserted that the conjunction of those three contracts degenerates into a usurious loan, and overturns the laws of partnership, which demand a community of gain and loss; and he maintained his own opinion with many arguments, which may be seen in his work On Justice, Book VI, question 6, article 2. … The cause was brought to Sixtus V, Supreme Pontiff, who, the question being diligently discussed, PRONOUNCED THE AGREEMENT OF A TWOFOLD SECURITY ATTACHED TO PARTNERSHIP USURIOUS, and FORBADE it thenceforth to be made, by his constitution 68 which begins Detestabilis, published in the year 1586, Vol. IV of the Bullarium, page 163.”

VIII. Fr. Leonard Lessius undertook beyond the rest to render the Sixtine constitution void, and, it being promulgated, to defend the triple contract. Very many of his comments being passed over, he writes these things, Book II, chapter 25, doubt 3, no. 178: Nor is it an objection that Sixtus V in the constitution published in the year 1586, on the twelfth of the Kalends of November, condemns and reprobates all contracts hereafter to be entered upon by which it shall be provided, and so forth. … For notwithstanding this constitution, in Italy especially this form of contracting has flourished and always flourished.

IX. Is not this a charming manner of arguing! The Gospel having been promulgated, thefts, perjuries, frauds, and adulteries range abroad. Therefore these crimes are not contrary to the Gospel! After the pontifical constitutions against the Baian, Jansenist, and Quesnellian propositions, and the Chinese and Malabar superstitions, the Baian, Jansenist, and Quesnellian errors and the Chinese and Malabar superstitions flourish. What of it? Have the pontifical constitutions therefore grown obsolete?

X. Fr. Lessius replies in the same place that the Sixtine constitution was never received in Italy. Much less, he says, was it received here in Belgium, where it was neither ever promulgated nor known. In a like manner Pius V in the year 1569 laid down many things concerning rent-charges, for example that they be constituted upon an immovable and fruit-bearing thing, and so forth. … Yet because here in Belgium that constitution is not received, no one makes a scruple for himself, even if he does not observe it.

XI. What handle this manner of opining affords to the Jansenists for resisting pontifical constitutions, let wiser men than I judge. At last Fr. Lessius concludes in the same place: These things I have pursued more fully than is my custom, because I see this contract still condemned by some on account of certain SHADOWS of usury, whose prohibition at this time I should not doubt would be with public loss. Shadows therefore of usury, and not usuries themselves, did the pontifical constitutions condemn! Can this contract not be disapproved without public loss? Did the Sixtine constitution therefore bring in a public loss? For it so clearly rejects and condemns the triple contract as usurious, that even Fr. Lessius himself, a theologian otherwise celebrated and most learned, does not dare to deny this condemnation; and therefore he betakes himself to the non-acceptance of Italy and of Belgium: as if pontifical constitutions which interpret the evangelical law depended upon the acceptance of the peoples. In Vol. VII, Book 3, dissertation 3, chapter 21, I have transcribed the acceptances of bishops and of synods, and more fully in the volume On the Usury of the Triple Contract. By arguments the usury of the triple contract is proved.

XII. The triple contract, coalescing out of three contracts diverse in species and mutually fighting with one another, is a pure and mere figment conceived in the mind alone: which I thus prove. The nature and essence of a contract of partnership is that the partners be partakers of the loss and of the gain. The second contract, of assurance, undertakes the danger of another's thing, and excludes all that community of loss and gain necessary to a partnership. The essence of the third contract, of the selling and buying of a greater uncertain hoped-for gain, transfers the dominion of such gain from the seller to the buyer. But this dominion in a partnership must necessarily be common. Therefore that triple contract, coalescing out of three things mutually fighting, is a pure and mere figment; a figment, namely, that it may be a mask for usury.

XIII. Further, a partnership which throws all the dangers back upon one of the partners betrays an injustice. It is true, you say, unless the dangers be compensated by an agreed price. What price is that? The diminution of a future uncertain gain. But that gain is uncertain. And this uncertain gain, though greater, cannot equal a principal certainly to be restored and a price certainly to be paid. I declare the monstrousness of the inequality by an example. Sempronius contributes a capital of a thousand crowns to be traded with by Caius a merchant, with whom he enters upon a partnership for ten years. Caius puts in his industry, which equals the principal. Together they bargain that Caius, the decade having elapsed, ought to render back the principal, and to pay each year four in the hundred as a certain price, deducting it from the uncertain gain of the trade. Caius, a year having elapsed, loses the principal either by shipwreck, or by theft, or by fire. What then? He must pay forty crowns every year, and the decade having elapsed he will have to restore the principal. Although the trade should succeed with a prosperous outcome, it cannot equal one of those cases which probably come about in trade.

XIV. Besides, that an agreement of security may be just, the price to be paid ought to be proportioned to the danger of the principal to be rendered. Further, the assurance which ingenious theologians have devised for the triple contract is so … … singular and outlandish that no law of trade approves it. The contract of assurance which the laws approve frees from this or that danger — say from the incursion of pirates, from shipwreck by tempest, or from fire. But the assurance attached to the triple contract guards against all possible dangers of land and sea, of the diminution of price, of difficult sale, of the corruption of wares, from the dangers of the faithlessness of servants or of buyers who become bankrupt. Where, I ask, is there a like spectre of assurance? Men most expert in mercantile affairs observe that a trade would have to yield forty in the hundred for that gain to equal the assurance of the triple contract. For one part of that gain is to be deducted for assuring the industry and labours of the merchant partner; another part of the gain is to be deducted for assuring the principal of the money. Lastly another portion is to be deducted for assuring the greater uncertain gain bought for a lesser uncertain one. These three heads alone absorb the whole gain of any trade whatsoever, even the most fruitful. And yet two portions would still have to remain over: one for paying the certain and lesser gain bought, four in the hundred; and at last another for assuring the partner trader. These things are obvious and fall under sense, says Cardinal de Luca, whose authority in this matter is certainly to be reckoned not small. He writes thus, On Usury, discourse 1, doubt 16: But this seems impracticable in the drawing back of gain from money counted down. Since, that the effect may follow that the creditor or lender, assured both as to the principal and as to the gain, may obtain five per hundred, it would be necessary to give a gain of more than forty per hundred, since from the gain there must first be deducted a portion in some manner tenant-like, owed to the borrower himself as to a partner putting in his labours, by a congruous and proportioned remuneration. And then indeed, of that which would be left over for the creditor's advantage, as a species of the portion of right, a great and notable quantity is to be deducted, which would probably be the congruous price of the said twofold assurance, to be made even by any third trader — which seems impracticable. This same thing two celebrated Sicilian theologians observe, Minutolo and Genatus.

XV. Finally, that contract of partnership hedged about with those two others falls back into a mere loan: since indeed money delivered into partnership, two other contracts acceding, passes into the dominion of the merchant, because it either stands or perishes to him. But any thing perishes to its lord. The examples of a thing lent for use, of depositaries, of hirers, which our adversaries oppose, are evidently false. For if it be granted that money can be let out just as a house, a field, and so forth, there is no usury in the world. If you desire to see the other sophisms overthrown, read Vol. VII, dissertation 3, chapter 16, § 8, and the other volume On the Usury of the Triple Contract.

XVI. QUESTION II. Is the twofold contract of partnership lawful, in which either the capital or the gain is assured? ANSWER. Many affirm it, even of those who assail the triple contract. Since, they say, although a partner assure the principal, he cannot nevertheless dispose of it at his pleasure, but ought to lay it out in trade. If he assure the gain, the principal not being assured, the matter is more evident.

XVII. This opinion is to me false as regards the first part, which regards the assurance of the principal, because a principal assured from every danger cannot be a gainful capital, neither by reason of industry nor by reason of danger. But these are the two titles alone by which money is rendered gainful in merchandise. There is added that in fact a price is never paid which equals all the dangers, both extrinsic and intrinsic. There is a danger, they say, of gaining nothing. But this danger is not that which renders money fruitful. That danger is truly redeemed by a price, and not feignedly, as in the triple contract. And I reply that this assurance in the twofold contract is no less feigned than in the triple contract. For who can constitute a just price for an assurance from every danger, to be paid? A price for assurance from this or that danger extrinsically occurring the usage of the marketplaces has introduced, and the laws approve it. But no law, no custom of the forum or of trade, has approved or prescribed a fixing of the price at which the principal may be assured from every danger, both of right and of fact: and it has been shown above from Cardinal de Luca and others that no trade, however abundant, at least in Europe, brings forth so great a gain that the principal could be assured from every possible danger of right and of fact, as it is in the triple and twofold contract.

XVIII. Concerning the second part, namely concerning the assurance of a certain gain, it can be disputed. The principal exposed to danger brings forth gain. This gain is uncertain. Why then cannot a contract be entered upon between the capitalist partner and the other concerning the quantity of this gain? That gain is now greater, now less: for the most part it is eight or ten in the hundred. This the capitalist, or he who puts in the principal, buys for four or five. Here, absolutely speaking, no injustice seems present: for the principal exposed to danger truly brings forth a gain now greater, now less. It is therefore a true contract of hazard, and indeed an equal one for both parties. But because Sixtus V absolutely forbids these agreements, therefore I abstain from approving it.

XIX. But, you will say, if that contract betrays no injustice, why ought it not to be entered upon? Because the Supreme Pontiff disapproves it. Because doctrine revealed by Christ Jesus, whether in the matter of faith or of morals, ought not to lie under the petty opinions of private men; but one must stand, and indeed with a simple heart, by the decisions of the Roman Pontiffs, who are judges constituted by God. Would not, if men were faithful and sincere, all deliver on loan to one another for gaining? Those who abounded in moneys but lacked industry and the art of trading would deliver the same to those who are destitute of money but are strong in industry and talent for making the same fruitful. And in truth this is the order of divine Providence. But because men are guileful, cunning, unjust, and fraudulent, therefore ingenious theologians cannot by exquisite interpretations elude, or bend, or soften the rigour of the evangelical law and the pontifical oracles, by filing away that these have not been received.

XX. QUESTION III. What is to be said of a partnership of animals? ANSWER. In this contract the animals bear the part of the stake or capital, and he who delivers them is called the capitalist, and he who receives the same is called the partner. The latter ought to pasture and guard them; and the fruits are to be divided. Sixtus V prescribes that the same conditions are to be observed in this contract as in the contract of a partnership of money: namely, that the head of the animals perish to the lord, provided they perish without the fraud and negligence of the farmer partner. Wherefore those partnerships which are wont to be made in some places, and are called a capo salvo — namely, the capital being safe — are all unjust, as Sixtus V defined, and many provincial councils have declared, especially the First of Milan under St. Charles, in which it is said: In a partnership let no agreement be made that the principal be safe, but let the fruits be divided in common.

XXI. In this contract, as in the rest, equality is always to be preserved. Commonly the poorer partner succumbs to the greater burden, when the matter ought to stand the contrary way. The inconveniences, labours, pasturage, and industry of the partner are to be compared with the capital contributed by the rich man. If these two be equal, then both the fruits and the principal itself are to be divided in proportion: for the aforesaid things which the partner puts in obtain the place of the principal. But if the capitalist deliver together with the animals the pasturage also, then the division can be made at the judgment of prudent men: but then it is rather a letting than a partnership. A precise rule cannot be prescribed, and therefore equity is to be preserved according to the diversity of regions.

XXII. QUESTION IV. Are usurers lords of the gain which they acquire by usuries? ANSWER. Not a few affirm it. But St. Thomas denies it, II-II, q. 78, art. 3, to whom theologians more commonly subscribe. The reason is evident. A usurious contract is null by law both natural and divine. Therefore it is unequal to transferring dominion. Usurious goods, if they be fruit-bearing, increase to the borrowers, not to the usurer; but they perish to the usurer, because he is a possessor of bad faith. Hence it follows that a usurer cannot transfer to others the dominion of goods which he has obtained by interest. And those who receive the aforesaid goods from a usurer ought to restore the same, no otherwise than if they had bought them from robbers. For all theologians oblige usurers to restitution, whether they possess dominion or not. For those who grant them dominion teach at the same time that such dominion is burdened with the charge of restitution.

XXIII. If the goods which a usurer has acquired be barren, as money, corn, and the like, and which are consumed by use, and he trade with them and acquire other goods, he is not bound to restore these, because they are the fruits of his industry. If the goods are fruit-bearing, the fruits also are to be restored. Those who counsel usurious contracts are held to restitution. Those who deposit money with usurers to this end, that it may be lent at interest, sin, no otherwise than those who hold out to a thief the instruments for stealing. Therefore these are held to restitution. Rectors, judges, and advocates who by some statute are the cause that usuries are paid sin against justice, and are liable to restitution, the usurers not restoring. Ministers who in their masters' name perceive usuries sin, and are held, the masters failing, to restitution. Authors except ministers who exercise offices less proximate to the usuries, such as writing, counting the moneys, guarding them, and so forth. If you regard practice, these are commonly unequal to restitution. One thing is certain to me: that ministers of this kind are to be compelled to withdraw from the ministry. The other ministers who serve the usurious art more nearly, who enter upon usurious contracts, who compel borrowers to pay, sin and are subject to restitution, as even the younger authors themselves teach.

XXIV. QUESTION V. Is it lawful to seek a loan from a usurer with usuries? ANSWER. St. Thomas denies it, II-II, q. 78, art. 4, because it is not lawful to induce another to sin. Only that asking is lawful, as the Angelic there adds, by which you succour your own or another's necessity. Not therefore that you may enlarge your trade, not that you may catch greater gains, but only on account of a true and grave necessity which cannot be repaired by another way, is it lawful to seek a loan: which action is by its own nature lawful, and the usurer out of his own depravity alone compels you to pay usury. For to give a loan is an office of charity, and it is lawful to ask it. But that the lender is unwilling to impart it without usury is his own wickedness. Wherefore you cannot offer usuries, but only ask a loan, and, being compelled, you can give, that you may provide for your necessity.