Pecuniary Mutuum

579. Notions. Money is the principal object around which today the contract of mutuum turns; but because of the nature of money, very diverse from other things which are customarily given by mutuum, this species of mutuum deserves particular consideration.

1. Pecuniary mutuum (Gelddarlehen) is a contract by which money is handed over to another with the obligation of returning other money of the same value at the established time.

a. Money which is given by mutuum is usually called in the schools the principal, but now commonly capital.

b. Pecuniary mutuum is a gratuitous contract if money is handed over to another gratuitously, and it is an onerous contract if it is handed over to another with the burden of paying interest.

2. By reason of the end which the borrower intends, pecuniary mutuum is divided into consumptive mutuum, which is handed over to another for procuring for himself things necessary for his use; and productive mutuum, which is handed over to another for making gain, as if it is given to a merchant for trading, or to a rich man for increasing his goods, or to a farmer for improving his fields.

¹ Van Roey, De iusto auctario ex contractu crediti (Louvain: Van Linthout, 1903).

580. Nature of money. In the proper sense money is sterile; but improperly it is potentially fruitful, and in present times per accidens can simply be called actually fruitful.

a. Since a fruitful thing in the proper sense is said to be that which produces fruits from itself by internal fertility, as a tree, vine, field, money cannot properly be called a fruitful thing, but in the proper sense it is sterile, since money does not beget money.

b. In the improper sense a thing is called fruitful which is equivalent to fruitful things, because it can be exchanged for fruitful things, or which serves as a means and instrument for procuring gain for oneself; but money can be exchanged with any other things whatsoever and substituted for them. Therefore money itself, insofar as it can be substituted for things fruitful in themselves, is equivalent to fruitful things; moreover, by the aid of industry and commerce, it serves as a means and instrument for procuring gain for oneself.

c. Although money was always of itself apt to be exchanged with fruitful things or to be employed as the means of a lucrative business, nevertheless in ancient times the economic conditions were not such that this could have been done easily and frequently; but now, both because of the very easy communication among diverse regions and because of the very great extension of industry and commerce, economic conditions are such that everywhere money can easily be substituted for fruitful things or employed as the means of lucrative trade. Wherefore money, which in ancient times was not held as a fruitful thing and could not be held as such except potentially, must now be called an actually fruitful thing.

581. Gain from pecuniary mutuum. In the economic conditions which now exist, it is licit for each person to accept payment for pecuniary mutuum, unless by the law of charity he is bound to lend gratuitously.

a. There exist many responses of the Holy See by which today permission is positively conceded to all, both ecclesiastics and laymen, independently of the existence of an external title, to receive moderate gain from mutuum, as will be said below.

b. Since money from the conditions of our time is a fruitful thing, by the common estimate of all there belongs to it a special value, on account of which it can bring profit and utility to its possessor. Therefore he who concedes a mutuum to another deprives himself, together with the money, also of this value which now inheres in money; but it is permitted to require compensation for a special value. The circumstances of the time today are such that money commonly has for all the value of a fruitful thing: for all to whom even a modest sum of money is available easily find occasion of procuring gain and utility for themselves from it. Therefore it is licit for all to accept interest, and indeed from any mutuum, even from consumptive mutuum.

c. Just as charity requires that we assist a neighbor constituted in grave necessity through alms, so the same charity can require that to a neighbor who needs a mutuum we not only furnish it, but also furnish it gratuitously, if he is unable to pay compensation, provided this can be done by us without grave inconvenience: From him who wishes to borrow from you, do not turn away.¹

Ordinarily, however, this very inconvenience excuses the rich from furnishing mutuum to the poor where there is question of a larger sum: for ordinarily they expose themselves to the danger of losing the principal, which certainly is a grave inconvenience. Practically therefore the rich in this case satisfy their obligation by bestowing a small alms on the one seeking a mutuum.

¹ Matt. 5:42.

S. Th. II-II, q. 78; I-II, q. 105, a. 3, ad 3; III Sent., d. 37, a. 6; Q. D. de Malo 13, a. 4.

574. Mutuum¹ (pret de consommation, simple pret; verbruikleening, leening tot verbruiking of in verbruiksartikelen) is the concession for a time of a fungible thing or of a thing consumable by first use (a. 1892); whence three things are required for its essence:

¹ There is an immense literature on mutuum and usury among theologians, philosophers, jurists, and economists; among Catholics, Protestants, Jansenists, rationalists, socialists, etc. We indicate only certain special writings which can be more useful to priests: Alb. Weiss, Soziale Frage und soziale Ordnung; Pesch, Zinsgrund und Zinsgrenze; A. Vermeersch, in Quaestiones de Iustitia; E. Van Roey, De iusto auctario ex contractu crediti; A. Rijcken, De Leer en de Praktijk der Kerk in zake leenrente; J. De Wit, Het Renteverbod in de middeleeuwsche economie.

1. A fungible thing, consumable by first use, which someone cannot use except by consuming it, either naturally, namely, by destroying it, for example, food and drink; or morally, namely, by alienating it, for example, money, which, if you pay it, perishes for you;

2. The handing over of that thing: for it is a real contract;

3. The obligation of restoring it in the same species, quality, and quantity after some time.

Hence mutuum differs:

1. From commodatum, letting, and deposit: a) because in mutuum the thing must be fungible, otherwise in the others; b) because the thing is not to be returned in individual; c) because in mutuum the dominion of the thing is transferred, and not in the others; and therefore d) in mutuum the thing perishes for the one receiving, in the others for the one handing it over (a. 1893);

2. From donation, in which a thing is handed over to another without any obligation of restoring it;

3. From sale and exchange, in which the thing is to be returned not in the same but in another genus;

4. From exchange, in which one money is immediately given for another diverse money, for example, gold for silver.

575. Obligations arising from mutuum are:

A. For the lender:

1. To hand over a good and whole thing; but if the thing labors under a harmful defect, he must manifest it; otherwise, if he knew it, he is held concerning damages, for example, if he hands over wine which soon turns sour;

2. Not to demand the thing back before the established time, or the time defined by the judgment of prudent men;

3. In itself and with special circumstances excluded, not to demand more than the borrowed thing was worth (a. 1898-1901).

B. For the borrower:

1. To return the thing received in mutuum, at the established place and time or at the place and time defined by the judgment of prudent men, in the same species, quality, and quantity, whether the price has increased or decreased; and therefore, for money, it suffices to give the same numerical sum (a. 1895);

2. But if it is impossible to return in the same species, he must restore the value for the time and place in which the thing is to be returned;

3. If he does not return the thing or its value at the due time, he is held to pay the rate of legal interest from the day of summons or juridical demand (a. 1895-97; 1902-04).

Mutuum is said from this, that what is mine becomes yours, l. Mutuum, ff. si certum petatur. And thus it is defined: A loan (mutuum) is the transfer of a thing as to dominion, whereby it at once becomes the recipient's, with the obligation of returning at a future time another thing of the same kind.

It is gathered from D. Bonaventure in 6 Luke at those words: Et si mutuum dederitis. It is given by Caspens. tract. 19, disp. 3; Bassaeus v. mutuum; and the others ex l. 1, 2, ff. si certum petatur.

But it differs from the Commodatum: for in the latter only the use of the thing lent is transferred, not dominion, as is found in the Institutes, Quibus modis re contrahitur obligatio. Hence if the thing borrowed perishes, it perishes to the borrower; but the thing lent for use, if it perishes without the fault of the one who borrowed it, perishes to the lender.

Next, in the commodatum the same thing is returned, say the same horse, etc. But in the mutuum another is returned, say other wheat, etc., of the same price, the same kind, and quality. By which means it differs from sale, exchange, and other contracts, in which there is not returned a thing of the same quality and kind, but a thing altogether different, as money for wheat. This difference is to be noted gravely, because where there is no mutuum, Usury cannot subsist.

Usura is said from usu aeris, as the holy Doctor says in speculo animae, chap. 2, §. the third of the principal fruit of injustice, etc.; for there are certain things whose use is the consumption of the thing, and whose dominion is transferred to the recipient, as money, and grain, and wine. Whence he who sells the use of such things is called a usurer, and has the character of mortal sin against justice, because he sells to others what is not his own, the dominion having been transferred.

Thus usury is defined by the holy Doctor in the Explanation of the Terms of Theology: It is avarice acquiring something from a loan beyond the principal. This definition is followed commonly, as is seen in Valencia disp. 5, question 21, puncto 1. But this word is taken by Theologians and Jurists for the action itself which is called the sin of Usury.

But the word Usury is also accustomed to be taken for the proper object of the usurious transaction itself, and thus usury is nothing other than that gain which one receives above the principal in the use, namely for the use of the money which he gives in loan. This gain is also called Foenus from foetura (bringing forth), because, as Aristotle says, in the first Politics, chap. 7, in usury money begets money, and in this sense usury is wont to be said to be restorable. See Valencia above; Molina tract. 2, disput. 303.

Therefore Usury is gain proceeding from a contract which is called mutuum, not from elsewhere, nor under another title, but as the cause of the loan. But he who gives the loan is called the Mutuans; he who receives it, the Mutuatary; the thing given in loan is called Sors (principal), in which sense it is taken in 14. quaest. 3, cap. Plerique, and often elsewhere in Canonical law; which name is derived from the contract of Partnership, in which each of the partners casts in his sors, or share, and draws it out at the time of partition, and then receives the part of the gain which beyond the sors pertains to him. The sors is also wont to be called Capitale or Principale; but the gain or access above the sors is called Usura, if it accrues by force of the mutuum, as Caspensis notes tract. 19, disput. 3, sect. 1, n. 4; Bassaeus V. Usura.

But Usury is divided commonly by the Doctors after D. Bonaventure in the cited place of the Speculum, into Real and Mental, or Exterior and Interior (others call it conventional and non-conventional). Real or conventional usury is that in which there intervenes some pact or convention concerning gain beyond the Sors by reason of the loan. But this pact is twofold: one express; the other tacit or implicit.

Express, when the lender agrees with the borrower in express words to give him something beyond the sors, and on this pact lends to him.

Tacit, however, when a convention is made not in express words, but in veiled and palliated ones, by which he hints that he wishes something beyond his sors; as if he should say: I will lend you a hundred, but you know the custom. Or: I entrust my money to you in the confidence that it will not return to me empty. Or: I know you to be a grateful man, etc.; and the borrower is silent, or hints that he consents.

Mental usury is when, no pact intervening, neither explicit nor implicit, concerning the returning of something beyond the sors, one lends with that mind and intention that he may receive gain from the loan, not from the gratitude or liberality of the borrower, but from fear lest the loan be otherwise denied him; which intention, however, he does not express, and it is said to be in hope. Of this usury the text is understood in cap. consuluit, de usuris, where the consultor puts the question: Whether he who, every convention ceasing, gives a loan with that mind that he may receive gain from it, is to be judged a usurer in the judgment of conscience. And he answers that in the forum of the soul he is to be judged a usurer and compelled to restitution.

Others divide usury into open and palliated: Open, when the mutuum is formal, and gain is intended from it, whether an express or tacit pact intervenes. But when the mutuum is not formal, but only virtual, lying hidden under another species of contract, the gain intended is called palliated usury, as happens when one sells a thing dearer on account of the postponement of the payment of the price, as the holy Doctor says. These things posited:

I ASSERT first, that Usury is a sin forbidden by natural, divine, and human law. So with D. Thom. question 78, art. 1; S. Bonaventure in the places to be cited; it is the common consensus of Theologians, as Valencia relates question 21, puncto 1; Molina Tract. 2, disp. 304; Tanner. disp. 4, question 7, n. 75, contra Molinaeum, tract. de commerc.

That it is against natural law is proved by D. Bonaventure in the cited place of the Speculum, and in the passage adduced to 6 Luke, because it is against Commutative Justice, to which it belongs to establish an equality between what is given and what is received: But injustice is forbidden by natural law. The antecedent is proved, because it is against commutative justice in any contract whatever to exact more than is given; but he who receives gain for a loan exacts more than the thing is worth: Therefore. The assumption is proved by the holy Doctor, because money lent is not deteriorated by the accommodation: Therefore it ought not, according to commutative justice, to owe something beyond itself. Next, because that money of itself bears no fruit, but the whole reason of fructification is from the industry of the user. Why, then, is more owed? Finally, rather it devastates and consumes, without affording from itself anything that replenishes.

Moreover, the dominion of the thing lent passes to the borrower. Therefore the lender exacts gain from a thing not his own. Finally, because the borrower bears the whole risk of the thing; but the advantage accrues to the lender; from which the holy Doctor also draws the further inference, that money is loved more than one's neighbor.

Another argument the holy Doctor brings in the cited place of the Speculum, by which D. Thomas strives. By natural law it is forbidden to sell the same thing twice, or to sell what is not, or for what is not, what is one's own; to exact fruit; but he who receives gain from a loan sells the same thing twice, because he receives an equal value and further gain; or he sells what is not, if he receives gain for the use, since such use is not distinguished from dominion, nor is it given without it. Scotus also uses this argument, 4 distinct. 15, question 2. To whom Molinaeus ridiculously answers, that I can even receive for what is not mine, but another's, if it is owed to me. But how do you prove that that is owed to me with gain, O stupid head!

THAT Usury is forbidden by positive divine law is proved by the holy Doctor in the places alleged, from many Scriptures of the New and Old Testament.

Psalm 14: Domine, quis habitabit in tabernaculo tuo? aut quis requiescet in loco sancto tuo? Qui pecuniam suam non dedit ad usuram. Weighing which passage, the Fathers of the Council of Nicaea, can. 18, relate thus: Many clerics following shameful gains have forgotten the Divine precept, which says: Qui pecuniam suam non dedit ad usuram; and in the same way this passage is understood in the Roman Council of Pope Martin, and is related in 14. quaest. 4, C. si quis oblitus. The same is forbidden in Exodus 22: Si pecuniam mutuam dederis populo meo pauperi, qui habitat tecum, non urgebis eum, quasi exactor, nec usuris opprimes. The same the holy Doctor proves on Psalm 71, in those words: Ex usuris, et iniquitate redimet animas eorum.

So Ezech. 18 pronounces the sentence of death upon the usurer, saying: Non vivet, cum universa haec detestanda fecerit, morte morietur.

PROVERBS 28: Qui coacervat divitias usuris, et foenore liberali in pauperes congregat eas, etc. oratio eius erit execrabilis.

HE URGES especially that of Luke 6: Peccatores peccatoribus foenerantur. Mutuum date, nihil inde sperantes. By which testimony Urban III proves it in C. Consuluit, extra de usuris. And the Lateran Council under Leo X, session 10, not far from the beginning, where the supreme Pontiff, with the holy Council approving, says thus: Dominus noster, Luca Evangelista attestante, aperto nos praecepto obstrinxit, ne ex dato mutuo quidquam ultra sortem sperare debeamus.

THE SAME the holy Fathers gravely affirm from the aforesaid Scriptures.

BASIL, on Psalm 14, pondering that passage: Qui pecuniam suam non dedit ad usuram, says: Do you not know that a greater heap of sins presses upon you than is the increase of wealth which you hunt from usuries.

S. GREGORY of Nyssa, homily 4 on Ecclesiastes: He who has called usury another robbery and parricide will not have strayed far from what is fitting.

S. AUGUSTINE, on Psalm 36: Do not be usurers, and therefore I do not will it, because God does not will it. Whence does it appear that God wills this not? Qui pecuniam suam non dedit ad usuram, Psalm 14. And how detestable, how odious, how execrable it is, I think even the usurers themselves know.

S. JEROME, on Psalm 54, at that passage: Non defecit de plateis eius usura, et dolus, says: All things that are forbidden in the Law have grown up to a heap of sin. In the Law they are forbidden to receive usury. Usury is to receive more than one gives.

THAT Usury is also forbidden by human law is proved by D. Bonaventure in the Confessionale, chap. 5, particula 54, from the whole title de usuris, which is evident also in 14. quaest. 4 and 47 dist., by many chapters, where usurers are forbidden under grave penalties, and lastly are deprived of Ecclesiastical burial. See Sylvestra, verb. Usura, 1. §. 9.

Usuries are forbidden also by CIVIL law; for the Authent. de Eccles. tit., at the beginning, commands the decrees of the Council of Nicaea to be observed, in which usuries were forbidden by canon 18, and it is related in C. Quoniam, 47 distinct., and in the Leg. cunctos populos, Cod. de Sum. Trin. et fide Catholica, Justinian commands all subject to him to follow the faith of the Roman Church and to render obedience, by whose authority it stands established in the aforesaid decrees that usury is forbidden. The Gloss uses this argument on Cap. Quid dicam, question 14, 4.

LET THESE THINGS be heard by those who say that usuries are not a sin; for they are condemned as heretics in the Clementina unica, de usuris, in C. Vien. under Clement V. Perish, therefore, the Albanenses and the Greek Schismatics, who denied this. Away with Carolus Molinaeus, who foolishly in his Tract. de Commerciis, et usuris admits some usuries, and erects certain silly little objections to obscure a doctrine so clear in the light of nature — a doctrine which even Aristotle, 1 Politic., chaps. 6 and 7, and 4 Eth. chap. 1, and Cato in Cicero, book 2 de offic., and others perceived by the mere twilight of nature, confessing it to be against nature; so much so that the most wise Cato called it the killing of men, at which Ausonius alludes, Eydil. 15, singing:

— Turpia lucra Foenoris, et velox inopes usura trucidat.

YOU WILL OBJECT first, Deuter. 23: Non foeneraberis fratri tuo, sed alieno. Since, therefore, it concedes giving usury to foreigners, that is, to the Gentiles, it does not seem forbidden by natural law.

Conradus answers, quaest. 24, de contract.; Medina, question 2, de usura; Caspens., number 11: that it was conceded because God had already transferred dominion over the things pertaining to those Gentiles to the Hebrews. And so, as he conceded to them to carry off the treasures of the Egyptians, so also he had transferred the foenerari — the interest and principal of the Chanaanites — to them, so that they could exact it. Conaruv. subscribes, 3 variar. cap. 1; and it is taken from St. Ambrose, book de Tobia, chapter 15.

D. Bonaventure answers in the passage adduced to 6 Luke; D. Thom. question 78, art. 1; Alens. 3 p. quaest. 36, membr. 4; Sotus book 6 de Iust., question 1, art. 1; and Valencia: that the Jews sinned in lending thus at usury, but that it was permitted with impunity on account of their obstinacy; just as also the bill of divorce; and to wash away this guilt of theirs the Psalmist sings of the Messiah to come, Psalm 71: Ex usuris, et iniquitate redimet animas eorum. The Hebrew text pleases as rendered by Pagnino, where the exclusive particle (but) is not found: Non foeneraberis fratri tuo usura pecuniae, usura cibi, usura omnis rei, qua foenerabitur extraneo תַּשִּׁיךְ (the verb by which) he will lend at usury; where he seems gravely to rebuke the Jews, saying: Let it be far from you, nor let Usury be named among you, which you exercise so obstinately with the Gentiles. Therefore he permitted it that a greater evil might be avoided, as the holy Doctor says.

YOU WILL OBJECT secondly, that of Luke 6: Mutuum date, nihil inde sperantes. But this is a mere counsel, as is gathered from those preceding words: Si benefeceritis his, qui vobis benefaciunt, quae vobis est gratia? The same is gathered from the following words: Et erit merces vestra multa. So Sotus book 6 de Iustitia, quaest. 1, art. 1.

The holy Doctor answers, whom Couar. follows, book 3, var. cap. 1, num. 5; Nauar. in the Manuale, chap. 17, num. 107; and Valencia; nay, Urban III in C. consuluit, extra de Usuris; Leo X in the Concil. Later., sess. 10: that it was defined there, as Medina notes, quaest. 2, de Usura, that there is a precept forbidding usury; otherwise Alexander III would not assert with sufficient certainty in the Lateran Council — which is related in cap. Quia, extra, de usuris — that Usury forbidden in the pages of both Testaments, nor would he say solidly in cap. super eo, of the same title: Usuram utrumque Testamentum detestari. For there is hardly any other passage in the New Testament reproving usuries. Add also the Roman Penitential, far more ancient than Alexander III, where it is read: If anyone receives usuries, he commits robbery; and therefore whoever exacts it shall do penance for 3 years, one year on bread, namely, and water.

NOR does Sotus satisfy when he says that both Testaments forbid usuries only insofar as they forbid theft. For the contrary is the case; for the alleged Pontiffs prove from that text that usury is specially forbidden. The same is interpreted by the Fathers adduced, and by Beda on chap. 6 of Luke.

The holy Doctor proves this OPTIMELY, and Valencia after him; for he had premised the natural precepts in general: Prout vultis faciant vobis homines, et vos facite illis similiter; but soon adds the singular natural precepts of doing good in necessity, not only to friends, but also to strangers and enemies, and he also sets down the precept forbidding usury, which is against the natural precept of not doing to another what you do not wish done to yourself. Besides, the declaration of the Church is enough for me, and more than enough, which is the column and firmament of truth. If the condemned Molinaeus does not receive it, good Catholics at least receive it. But this declaration, beyond the places assigned, is found clearly in the Fourth Council of Carthage, can. 67; the Council of Calchitensis in England, cap. 17; the Council of Paris in the year 819; that of Meaux in the year 845, can. 55; the Capitulary of Aix-la-Chapelle, cap. 5; the Council of Crolseiano in the year 909, etc.