§ 4. ON CERTAIN LOANS FOR CONSUMPTION IN SPECIES

Under this title we shall briefly discuss: 1. Mounts of piety; - 2. savings banks; - 3. banks.

1113. I. On Mounts of piety. A Mount of piety can be defined: an accumulation of moneys or other lendable things collected for this, that the poor, a pledge having been given, may be able to receive from it by loan those things which are necessary to themselves.⁰³

The conditions of Mounts are the following: 1. Whatever is given by loan from them must be given for a certain time, for example for a year; but nothing for an indeterminate time. 2. It is licit to furnish loan to the poor only, unless the Mount is so abundant that, without damage of the poor, others also can be satisfied. 3. The borrower must hand over an equivalent of the thing or money lent; and this, unless he returns the thing or money at the established time, must be sold at auction. Then, when the price which is owed to the Mount has been retained, the remainder is restored to the owner of the pledge, if he can be found, or to other poor persons, or even to the Mount itself, if it is poor (III, 765; H. Ap., X, 135).

It is useful to note: a) The Fifth Lateran Council approved the Mounts of piety first erected at Perugia, and the Council of Trent (Sess. 22, c. 8) committed them to the care and visitation of Bishops. It is more probable that they can also be instituted by private persons, unless civil law stands in the way, for example in France, art. 411. b) In them some increment is licitly exacted by title of the expenses and burdens which are sustained by them. Indeed, from the concession of the Holy See, from time to time something more is perceived for other pious uses; yet in such a way that this perception made from another title be made clear to borrowers, and be distinguished from usury from the loan (A. S. S., IV, p. 27-32; Can. Cont., 32, p. 592).

1114. • II. On Savings Banks. A savings bank is called a certain chest instituted in most cities, into which craftsmen, servants, and others contribute money, about to perceive thence some modest gain.

Money collected in this way is expended by a group of men who have bought shares or entered upon a society, a hypothec having been accepted on immovable goods, so that they may seek greater gain. Thus, for example, six coins for a hundred come to the curators of the Bank who give the money credited to them by loan; four are given to depositors; two being retained for expenses and any damages (Kenrick, tr. XI, n. 116).

The placements of money which are made in Banks of this kind are licit. For the societies to which those moneys are committed sell to the depositors a right to an annual redeemable pension, and sometimes also a right to be shared in indeterminate gains; therefore, under the name of loan, there is a true sale and purchase of a census. Hence, when the Sacred Penitentiary was asked about this matter, on 25 Feb. 1836, it responded: "As already at other times, nothing stands in the way."

1115. III. On Banks. Public banks of bankers exist by force of a contract of society entered upon among several persons contributing money, which they do not have power to reclaim, but from which they expect an uncertain annual census; namely that part of the fruits of the money which the directors of the Bank shall have adjudged to them every six months. - The part of the money contributed by individuals is called a share. Individuals indeed can alienate this, but the society is not for that reason taken away; for he to whom the share has been transferred occupies in the society the place of the other who withdrew. From competent authority power is given to the society of issuing chirographs (Crolly, II, 604; Bouvier, de Contr., c. 3, a. 3, § 1 and 2).

The ends of Banks are: 1. that the money of merchants and of others be deposited with them, either for the sake of security or even of a modest increment, which afterwards can be withdrawn according to the rules either of deposit or of loan for consumption; - 2. that money can be accepted from them by loan, at legal interest; 3. that exchanges be moderated.

1116. The directors of Banks (banquiers) and those cooperating with them sin: a) If they continue to accept deposits after they know that they are unequal to paying; for they deceive the trust of depositors, with grave damage to them. b) If they issue chirographs beyond the limits designated in the charter of incorporation; for thus they seek gain from monetary paper issued without legitimate authority, and cause it to become cheapened. c) If they exact excessive increment, or from bills of exchange a gain greater than that which the general consensus of money-changers bears. d) If they use deposited money for promoting their own utilities, whether because from it they buy shares in another Bank, or because they use it in any other way against the laws of the Bank; for thus they abuse the confidence of the creditors or partners of the Bank, and perhaps expose the money to risk (Konings, 931-956).

You will ask: what can BANKERS receive by occasion of loan?

Resp. They can receive at least six percent, according to the rate established for merchants; for they exercise the commerce of money. - Indeed, in several places, seven percent is legitimately conceded to them, on account of the various perils and labors which they must undergo for securing the money or transferring it elsewhere (Gury, I, 930).