Usury and Interest

Vol. I, Bk. II, Tr. II, Diss. I, Pt. VII, Sect. I, Ch. II, Art. II, § V. On Mutuum · Vol. I, Bk. II, Tr. II, Diss. I, Pt. VII, Sect. I, Ch. II, Art. II, § V, Scholion. On Monts-De-Piete and Savings Banks

ECONOMIC goods may be divided into those which are meant for immediate consumption and those which are meant to subserve our wants by repeated use. In the first category are articles of food and drink, in the second are commodities which are capable of rendering continued services, such as a saw, a sewing-machine, a house. It is with the first class of goods that we have principally to do in this chapter. They are sometimes called fungibles because any amount is interchangeable with the same quantity and quality of the same commodity (mutua vice funguntur). Thus, if I lend a bushel of wheat, I shall be satisfied if I get back a bushel of the same quality; I do not expect to receive back the same identical grain. The matter of the contract of mutuum is something fungible, which is consumed in the very first use of it.

It is obvious that such commodities may be the matter of many different contracts. They may be the matter of the contract of sale, or gift, or exchange, or loan. The contract which was called mutuum in Roman and canon law was a gratuitous loan of a fungible commodity on condition that after a certain period of time the borrower should restore to the lender an equal quantity of the commodity and of the same quality. Unfortunately, we have no term in English which is the precise equivalent for mutuum. We use the term Joan of lending a horse, which we expect to be restored to us in specie, and of lending a bottle of wine, which we do not expect back but another instead of the same size containing the same quality of wine. As an equivalent for mutuum we may make use of the expression loan for consumption as distinguished from Joan for use.

In all contracts justice requires that values which are given in exchange should be equal. A sin against justice is committed by charging an unreasonable price for a horse. What the reasonable price is depends on the demand, on the available supply, and on a great variety of factors, but it is proximately determined by the common estimation of intelligent men at a fixed time in a certain place. The fair price of a fungible commodity which is consumed in the first use of it is the money equivalent of the value which that use has, The commodity is for consumption, and the only value that it has is the value of that consumption. There is no other use in the commodity which can give it any additional value. The fair price of a bottle of wine is the money equivalent of the value which the wine has for drinking. In other words, the value of the first consumption of the commodity is the value of the commodity.

On the other hand, commodities which are not consumed in the first use of them, but which continue to render repeated services, have a value over and above that of the first use. The value of a house is greater than the value of the lease of it for a year, because the house will continue to render services and be valuable after the year’s lease of it expires. The fair price, then, of a commodity which is not consumed in the first use of it will be greater than the value of that first use.

All this seems evident, yet with a view to the deductions which we shall presently make, it is well to strengthen what has been said by the words of a modern professor of political economy. Dr. G. Cassel writes: “‘ All economic goods may be divided into two categories: those which satisfy our wants in being consumed at once, and those which afford a series of useful services before they are worn out. Food is an instance of the former category, houses of the second. This line of subdivision is one of the most fundamental in economic science. The price paid for an article of immediate consumption is, of course, the same as the price paid for the use of this article. This is not so in the case of an article belonging to the second category. The price paid for the single useful service it affords is one thing; the price paid for the article itself is quite another.”¹

¹ The Nature and Necessity of Interest, p. 86 (1903).

n. 2.

Money considered as a medium of exchange is a fungible; it is a commodity whose use is exhausted for the owner of it when he has paid it in exchange for value received. It is not, under this respect, a commodity which is susceptible of repeated use by the same owner. Money, then, may be the matter of a contract of loan for consumption, and, if a sum of money be thus lent, justice requires that an equal sum be returned at the end of the term, and justice will not allow a greater sum to be exacted in return. For the whole value of the sum of money is the value it has for making exchanges, the value which it has in the first expenditure of it; and if, over and above the sum lent, a further sum were demanded for the use of the money, the same thing would be charged for twice over. An equal sum is due in return for the use of the money; a further sum would be a second payment for the same use. Thus when money is regarded merely as a medium of exchange a sin against justice is committed if an additional sum besides the principal is exacted for a loan; it is called the sin of usury, money unduly exacted for the use of money. This is the reasoning of Aquinas,¹ and it seems as cogent to-day as it was in the thirteenth century. By this argument he defended the doctrine concerning usury which the Fathers and Doctors drew from Holy Scripture and tradition. Benedict XIV sums up the constant teaching of the Church on usury in his celebrated encyclical, Vix pervenit. There the Pope says: “‘ The sin which is called usury consists in this, that from the loan for consumption (which of its own nature requires that only so much as was received should be returned) the lender desires more to be returned to him than the borrower received, and therefore contends that some gain, over and above the principal, is due to him merely on account of the loan. For whoever, when once a sum equal to the debt has been repaid, is not ashamed to exact something more from the borrower on account of the mere loan, which has been repaid by the equal sum, such a one stands convicted of acting against the obligation imposed by a loan for consumption, which requires equality between the sum lent and the satisfaction for it ” (cf. Can. 1543).

This argument is valid when money is regarded as a means of exchange for articles of consumption and a measure of their value. Until modern times this was the chief function of money, but now we find that the above argument does not impress us with convincing force because in modern society money is not only a means of exchange for articles of consumption and a common measure of value, but also the most convenient form of storing capital. Within the last hundred or hundred and fifty years modern society has become capitalistic, and money is the chief form of capital. No wealth-producing object of importance can be undertaken without a supply of money, and money is now readily exchangeable for land, machinery, means of distribution, and other instruments for the production of wealth. Capital is one of the factors necessary for the production of wealth, and it is the chief instrument of its production. Money, then, looked upon as capital, is not a mere fungible; it is not a commodity which is consumed in the first use of it; it is the main instrument necessary for the production of wealth, and it thereby acquires a new function; it becomes virtually productive and puts on the nature of land and machinery, with which it is so readily exchangeable. Indeed, nowadays land can hardly put forth its natural productivity without the aid of capital, and machinery cannot be worked for the production of wealth without it. It follows, then, that nowadays money is not merely a means of exchange; it is also an instrument of production, and just as money may be charged for the use of land, or of a house, so money may be charged for the use of money. Money now has its fair and reasonable price like any other commodity, and the sin of usury is committed not by taking a fair and reasonable interest for a loan, but by exacting excessive interest. What is a fair and reasonable interest is a question whose solution depends upon circumstances, and, proximately, on the common estimation of intelligent men, like the fair and reasonable price of other commodities.

The foregoing seems to be the true solution of the old and much-disputed question of usury. It rests on historical facts and economic truths which are commonly admitted by modern theologians and economists, and it furnishes a satisfactory explanation of the changed attitude towards the taking of interest for money loans which the Church has adopted in modern times. Canon 1543 rests the title for taking moderate interest for money on positive law.

Although the use of money as capital was known in particular places and especially in centres of commerce in former ages, yet this use was exceptional and could: not characterize money in general, The capitalistic function of money was of very gradual growth, and we have to wait till the latter part of the eighteenth, or the first part of the nineteenth, century before the capitalistic era was fully developed even in the most advanced nations of Europe. It may be well to quote one or two passages from economists of standing in proof of this. Dr. Cunningham writes: “ In dealing with the Christendom of earlier ages we have found it unnecessary to take account of capital, for, as we understand the term in modern times, it hardly existed at all. In the fourteenth and fifteenth centuries we may notice it emerging from obscurity, and beginning to occupy one point of vantage after another, until it came to be a great political power in the State, . . It would be still more hopeless to try to treat the intervention of capital as an event which happened at a particular epoch, or a stride which was taken within a given period. It is a tendency which has been spreading with more or less rapidity for centuries, first in one trade and then in another, in progressive countries.. We cannot date such a transformation even in one land; for though we find traces of capitalism so soon as natural economy was ceasing to be dominant in any department of English life, its influence in reorganizing the staple industry of this country was still being strenuously opposed at the beginning of the present century [the nineteenth].’’²

The following is from Professor Cassel’s book, The Nature and Necessity of Interest: ‘‘ Interest paid for the use of capital, not for the use of money. ... The question For what is interest paid ³ was taken up again, a few years afterwards, and treated in the most successful way by the eminent French economist, Turgot. He rejects the old idea of a ‘ price of money,’ and defines interest as the price given for the use of a certain quantity of value during a certain time—a formula never afterwards surpassed in clearness and definiteness. He shows how this price is fixed by demand and supply, and he gives special attention to the causes which govern the demand for capital. What he has to say on this subject is even in our days of the highest value, and should not be neglected by any serious student of the theory of interest. He puts capital— i.e., the use of a certain quantity of value during a certain time— as a factor of production on the same line with the other factors.

Thus historical fact and scientific explanation of the rise of the capitalistic age and the theory of interest on money as capital synchronize with the beginnings of the change in the Church’s teaching on the lawfulness of interest on loans. In the year 1830 the Holy Office gave answer to a question of the Bishop of Rennes that confessors were not to be disturbed who absolved penitents in spite of their taking interest on money lent to merchants. Similar answers followed in quick succession, so that now there is no practical difficulty as to the lawfulness of taking moderate interest for money loans, though the Church has not yet formally settled the general question.

In England the usury laws, dating from Edward the Confessor, were repealed in 1854, owing to the prevalence of the opinion that such laws were economically unsound and practically ineffectual. Experience, however, has shown that the rapacity of usurious moneylenders requires curbing, and the Moneylenders Act, 1900, empowered courts of justice to grant relief from any usurious bargain which, in the opinion of the court, was harsh and unconscionable.

Canon 1543 is as follows: “‘ If a fungible be so given to another that it becomes his and afterwards as much is restored in the same kind, no gain can be received on account of the contract itself; but in the lending of a fungible it is not per se unlawful to make an agreement about the lawful interest, unless it is certain that it is immoderate, or even about a greater interest, if there be a just and proportionate title.”

¹ Summa, 2-2, q. 78, a. I.

² Western Civilization, n. 114.

³ Page 20.

Wouters, Manual of Moral Theology

Ludovicus Wouters, C.SS.R. — 8 passages

Vol. I, Bk. II, Tr. II, Diss. I, Pt. VII, Sect. I, Ch. II, Art. II, § V. On Mutuum

n. 884.

I. Notion. Mutuum is a contract by which someone yields to another a certain quantity of fungible things under this law, that the other afterward return an equal quantity of the same nature and quality (St. Alphonsus, III, 754). By its nature it is a gratuitous contract; this nevertheless does not prevent - as we shall explain afterward - the lender from stipulating, for example, an increase; when this is done, another contract is added to the contract of mutuum. It is said:

Yields to another, that is, transfers into the ownership of another. Therefore it differs, for example, "from commodatum and letting, because in these ownership is not transferred, but only use" (St. Thomas, II-II, q. 58, a. 1; St. Alphonsus, III, 754).
Of fungible things, that is, of things which are consumed by first use, and this either physically, as wine, wheat, etc.; or morally, as money, which perishes for the one using it, and thus is as it were consumed for him (St. Thomas, loc. cit.; St. Alphonsus, loc. cit.).
An equal quantity, etc.; wherefore compare what is to be said below under V.

n. 885.

II. Division. A twofold mutuum can be distinguished: mutuum of consumption and mutuum of production. The former is had when a thing is given by loan, for example wine, whose use consists in physical consumption. The latter, when someone gives by loan a thing whose use, with human industry added, can produce profit. Money especially belongs to things of this kind.

n. 886.

III. Obligation of giving a loan. An obligation of charity is present per se if someone is greatly in need of your thing, while you rightly expect the return of the principal granted, and do not prefer to aid the needy person in some other way.

n. 887.

IV. Obligations and rights of the one giving a loan. The one giving a loan:

Is bound to disclose harmful defects of the thing, if he knows any; likewise, not to demand what is owed to him before the time concerning which agreement was made (St. Alphonsus, III, 754).
Cannot, by reason of the contract itself, receive any profit, in other words anything beyond the principal. First, this is clear from Sacred Scripture.¹ Ecclesiastical documents are added, namely: cap. Praeterea, 7, De usuris, and cap. Consuluit, 10, same title; the Lateran Councils III² and V;³ the Constitution of Benedict XIV Vix pervenit;⁴ likewise the Code of Canon Law, which establishes thus: If a fungible thing is given to someone in such a way that it becomes his and afterward only as much in the same kind is restored, no profit can be received by reason of the contract itself (can. 1543). Finally, reason confirms the same thing; for if it were licit by reason of the contract itself to demand something beyond the principal, this would be permitted either because of the principal given up, that is, because of being deprived of the principal as such, or because of being deprived of the principal for some time. But the principal given up is compensated by the principal to be returned in equivalent form; and deprivation of the principal for some time as such is not worthy of compensation, as is clear in one who, for the entire time during which he will lack the thing, most certainly is not going to use it. Hence proposition 41 was condemned by Innocent XI: "Since counted money is more precious than money to be counted, and there is no one who does not value present money more than future money, a creditor can demand something beyond the principal from the borrower, and by that title be excused from usury"⁵ (St. Alphonsus, III, 759).

St. Thomas says thus: It must be known that there are certain things whose use is the consumption of the things themselves; as we consume wine by using it for drink, and consume wheat by using it for food; whence in such things the use of the thing ought not to be reckoned separately from the thing itself; but to whomsoever the use is granted, by this very fact the thing is granted; and for this reason in such things ownership is transferred by mutuum. Therefore, if someone should wish to sell wine separately, and should wish separately to sell the use of the wine, he would sell the same thing twice, or he would sell what does not exist; whence he would manifestly sin by injustice. And by a similar reason he commits injustice who lends wine or wheat, asking that two compensations be given, one indeed the restitution of an equal thing, but the other the price of the use; and this is called usury (II-II, q. 78, a. 1). But note:

a) As we have already noted from St. Thomas, profit received by reason of the contract which is called mutuum is called usury. Hence Benedict XIV in the Constitution Vix pervenit: "That kind of sin which is called usury, and which has its proper seat and place in the contract of mutuum, is placed in this, that someone, from the mutuum itself, which by its own nature demands only that as much be returned as was received, wishes more to be returned to himself than was received; and therefore contends that some profit beyond the principal is owed to himself by reason of the mutuum itself. Therefore every profit of this kind, which exceeds the principal, is illicit and usurious."

b) But profit received in this way is usury even if it is demanded as owed from benevolence and gratitude, and not as owed from justice. This follows from proposition 42 condemned by Innocent XI: "It is not usury when something beyond the principal is demanded as owed from benevolence and gratitude, but only if it is demanded as owed from justice."⁶ The reason is that gratitude considers more the affection of the giver than the thing given, and therefore the recipient satisfies by a similar affection of doing good indeterminately. Therefore, when the lender demands something as owed from gratitude, he fictitiously appeals to gratitude, since there is no such debt of gratitude, but under the cloak of gratitude he hides the strict obligation which he tries to impose on the borrower. Therefore the Vatican thunderbolt strikes this fictitious obligation of gratitude⁷ (cf. St. Thomas, II-II, q. 78, a. 2, ad 2; St. Alphonsus, III, 764, 780).

c) However, someone can hope for some gift, not "as if owed, but as gratuitous and to be rendered without obligation; and thus he who lends can licitly do so; just as one who does a service for someone trusts that he will in friendly fashion do him service in his own time" (St. Thomas, q. 13, De malo, a. 4, ad 13).

The lender can, if titles extrinsic to the contract are added, demand beyond the principal as much as the title is worth. That extrinsic titles can be present is recognized both in the encyclical Vix pervenit and in the responses of the Holy Office and of the Sacred Penitentiary;⁸ likewise in canon 1543 of the Code. They are: risk of the principal, emergent damage, ceasing profit, conventional penalty; concerning others there is dispute.

a) Risk of the principal,⁹ that is, the risk of not recovering the thing, and that greater than if he did not give the thing as a loan. "The reason is that to expose yourself to such a true risk is estimable by price" (St. Alphonsus, III, 765; St. Thomas, II-II, q. 77, a. 4, ad 2; Opusc. 73, cap. 6, at the end).

b) Emergent damage, that is, the detriment which he is going to undergo because of the thing given by loan, for example because for this reason he will have to buy the thing more dearly. The reason again is that, besides the principal, he suffers another damage which is estimable by price (St. Thomas, II-II, q. 78, a. 2, ad 1; St. Alphonsus, III, 768).

c) Ceasing profit,¹⁰ that is, the profit which he is not going to receive because of the thing given by loan, for example because for this reason he is not going to trade with the money. The reason is that, besides the principal, he loses the hope of profit; and this is estimable by price; but in the case only as much can be sought as the hoped-for profit is worth (St. Alphonsus, III, 768). The mind of St. Thomas is disputed.¹¹

Since money today, although in itself sterile, can be employed in innumerable ways for trading and thus for making profit, for example by buying a fruitful thing, or a thing which can at least be sold more dearly, or shares in an industrial or mercantile company, therefore one who gives money by loan can commonly stipulate an increase under the title of ceasing profit.

d) Conventional penalty, that is, a penalty to be paid by the borrower if he does not return the principal at the established time. A convention or contract of this kind is just, because it conduces to forestalling the negligence of the borrower. Further, in order that the lender be able to demand the penalty, it suffices that the borrower, with juridical fault, has not returned the thing at the established time; indeed sometimes, according to the mind of the contracting parties, no fault is required. But the penalty seems to be owed before the sentence of a judge, because it has more the nature of a pact than of a penalty (St. Alphonsus, III, 766, 767); nevertheless, unless the contrary intention of the contracting parties is established, the petition of the one giving the loan can be awaited.

Question 1. Whether a law which permits an increase is a reason for demanding something beyond the principal.

Response. It must be affirmed, because the State, by force of high ownership, licitly permits it if grave reasons for doing so are present. But grave reasons are present; since a mode of acting of this kind creates the faculty of receiving money by loan, and this faculty promotes commerce. But the State can proceed in this way, whether another title, on which the law rests, is always present, or whether another title is lacking here and now. Canon 1543 says thus: "In the furnishing of a fungible thing it is not per se illicit to make an agreement concerning legal profit, unless it is established that this profit is immoderate, or even concerning greater profit, if a just and proportionate title supports it."

Question 2. Whether the benefit furnished to the borrower by the one giving a loan is a title for demanding something beyond the principal.

Response. The benefit furnished consists either in the action of giving a loan, or in the fact that a thing is given by loan which will be specially useful to the borrower. Now the action of lending is intrinsic to the loan, nor is it any more estimable by price, separately from the thing given by loan, than the action of donating or selling is estimable separately from the thing donated or sold. But the fact that the thing given by loan is specially useful to the borrower depends on the condition and circumstances of this borrower, not on the one giving the loan; and the one giving a loan cannot receive something for a thing which is not his.

Question 3. Whether the obligation of not demanding back the principal up to a certain time is a title for demanding something beyond the principal.

Response. This must be denied, with regard to proposition 42 condemned by Alexander VII: "It is licit for one lending to demand something beyond the principal if he obliges himself not to demand back the principal up to a certain time."¹² The reason is that deprivation of the principal for a time as such, and consequently also the obligation of lacking it as such, is not worthy of compensation (p. 594); nevertheless if someone obliges himself not to demand back the principal except after a long time, an extrinsic title for demanding something besides the principal will hardly be absent, since a lender who must wait for a long time will easily suffer damage or deprivation of profit.

Question 4. Whether the faculty of making profit, today commonly annexed to the possession of money, is a title for demanding an increase.

Response. It seems to be affirmed, because the said faculty, according to common estimation, has a value distinct from the commutative value of money, and therefore deserves to be compensated.

Corollary. Likewise, on account of the just titles explained, it is licit to demand interest from unpaid interest, that is, anatocism, because unpaid interest is equated with principal handed over.

¹ Cf. Ps. 14:1; Luke 6:35.

² Cap. 25.

³ Session 5.

⁴ November 1, 1745.

⁵ Denzinger-Bannwart, n. 1191.

⁶ Denzinger-Bannwart, n. 1192.

⁷ Billuart, De iure et iustitia, diss. IV, art. 4.

⁸ Collectanea (n. 1393).

⁹ Lateran Council V (session 10), Bull Inter multiplices, in the year 1515; it is found in Labbe, tom. 19, col. 906.

¹⁰ L. 13, ff. Rem ratam hab.; Benedict XIV, encyclical Vix pervenit, § 3, n. 3.

¹¹ Cf. Billuart, De contractibus, diss. 4, a. 5.

¹² Denzinger-Bannwart, n. 1142.

n. 888.

V. Obligations of the borrower. The borrower is bound to return a thing of the same species and quality;¹ but if he cannot return what must be returned in kind, let him give back an equivalent. As regards quantity, the same must be returned if the value, whether of money or of another thing to be returned, is the same at the time of return as it was at the time of the contract begun. If the value is different, what was said concerning contracts in general must be said, namely:

If there is question of ordinary or - so to speak - normal changes, the contract as it stands must be put into execution, because the contracting parties are judged to have consented to changes of this kind.
If there is question of a greater change, it must be said thus:

a) If law, or an express pact, or custom assigns a norm, one must stand by these. As regards law or pact, the matter is clear; as regards custom, it follows from the fact that the contracting parties are judged to have contracted according to custom.

b) Law, express pact, and custom being excluded, the one who suffers damage by executing the contract is bound to undergo this if there is question of a case which could have been foreseen or feared; otherwise, at least more often, if there is question of a case which could not have been foreseen, such as war or a disturbance of public affairs. The reason is that every contract entered into in the way assigned in the question has something of an aleatory contract; once this is posited, the former cases are judged to be comprehended in the contract, but not the latter.

c) Sometimes from the circumstances it is clear that the same quantity must always be returned, and that the same quantity always suffices; for example, if a farmer out of friendship gives by loan to another farmer some quantity of wheat.

As regards pacts which are licitly entered into, note these things:

a) If it is doubtful whether the value of the thing given by loan will be increased or diminished, they licitly agree about returning the same quantity; since to the contract of mutuum there is added a legitimate aleatory contract (St. Alphonsus, III, 782).

b) If it is foreseen that the value of the thing given by loan will be increased, it is not licit to agree about returning the same quantity, except on account of emergent damage or ceasing profit; as if, the loan being excluded, you would have kept your thing until the time of the increased value and of the principal to be returned; likewise if, your thing having been given by loan, you are compelled to buy another more dearly. The reason is that otherwise you receive profit from the loan (St. Alphonsus, III, 782).

c) If it is foreseen that the value of the thing given by loan will be diminished, the lender can agree about a greater quantity being returned. The reason is that the lender, by receiving the greater quantity, does not become richer than he was at the time of the contract begun, so that he is not enriched from the loan or by reason of the contract.

¹ Nevertheless it is not repugnant, for example, that wheat or wheat of lesser quality be given by loan, by stipulating that another thing of the same value, or wheat of better quality in lesser quantity, be returned.

n. 889.

VI. Obligation and penalties of usurers. 1. It is clear that usurers are held to restitution, namely to the borrowers or their heirs.

Canon 2354 establishes: A layman who has been legitimately condemned for the delict of usury is held by the law itself to be excluded from legitimate ecclesiastical acts and from any office, if he has any in the Church, with the burden of repairing damages remaining firm. But a cleric who has committed the delict of usury is to be punished by an ecclesiastical tribunal, according to the diverse gravity of the guilt, with penances, censures, privation of office and benefice, dignity, and, if the matter requires it, even deposition.

Vol. I, Bk. II, Tr. II, Diss. I, Pt. VII, Sect. I, Ch. II, Art. II, § V, Scholion. On Monts-De-Piete and Savings Banks

n. 890.

I. Monts-de-piete. Monts-de-piete - so called because the needy flee to them as to a mountain - are treasuries established for this end, that money be given by loan to the poor, with a pledge deposited, gratuitously or under moderate interest. If the sum owed has not been returned at the established time, the pledge is sold, and from the price the sum owed with interest is retained, so that what remains may be restored to the debtor.

Monts-de-piete, as is clear, are licit and useful, indeed in some way necessary.¹ But they are not without inconveniences. "The poor, not always upright and sober, deposit there even things necessary to themselves or to their family, which had been given to them for personal use. After about a year, if the money has not been restored, those things come under the hammer, often for an unequal price, so that the borrower labors under greater misery than before."² They are also more dangerous, namely because of excessive interest often exacted, if they are erected by private persons and are not constituted under inspection of public authority. Besides, it is licit, as is clear, to demand something beyond the principal on account of the expenses and labors of the ministers; to these another extrinsic title can also be added.

¹ Cf. Lateran Council (session 10), Bull Inter multiplices; Council of Trent, session 22, De reformatione, chapters 8 and 9.

² Vermeersch, Theologia moralis, 3rd ed., II, n. 450.

n. 891.

II. Savings banks. 1. They are banks constituted publicly or privately, where servants, workers, etc., deposit little sums at moderate interest. Interest whose day has come is added to the principal; but the depositor enjoys the faculty of demanding back the principal with the increments, or any part, at any time.

It is clear that institutions of this kind are to be commended. But it is licit for depositors to receive interest on money both on account of extrinsic titles, and sometimes because they have entered into a contract of partnership.¹

¹ Cf. Analecta Iuris Pontificii, 1880, p. 587 sq.

McHugh–Callan, Moral Theology

John A. McHugh, O.P., and Charles J. Callan, O.P. — 1 passage

Vol. II, Pt. II, Q. II, Art. 4. The Vices Opposed …, Usury

n. 2136.

Usury

Usury.—The sin of usury is committed in two ways.

(a) Usury in the strict sense is the taking of interest by reason of intrinsic title (i.e., on account of the use) for money or other fungible loaned on condition that it be restored in kind (mutuum). This is unjust since it exacts payment for that which is nonexistent, that is, for use, as a distinct value, of a fungible whose only value is in its use (see Aristotle, Politics, Bk. I, Ch. 10, 1258b 2-8; St. Thomas, Summa Theologica II-II, q. 78, a. 1). This was the opinion of most medieval theologians based on the fact that money was solely a medium of exchange. Interest was permitted, however, on the grounds of extrinsic titles, e.g., compensation for the expense of a transaction (damnum emergens), the loss of opportunity to make good bargains (lucrum cessans).

(b) Usury in the wide sense, which is all too common, is the taking of interest for a fungible loaned at mutuum, where there is an extrinsic title (e.g., the loss or inconvenience suffered by the lender) for the interest, but the rate charged is unjust, exceeding that fixed by law or that which is fair and reasonable (see Canon 1543). This is unjust when the lender takes more than his loan is worth; it is uncharitable when the lender does not demand more than the worth of his loan, but does exact what is due in a heartless manner. Examples of usury in the wide sense are the acts of loan sharks who take advantage of the distress of the poor to make them pay enormous interest for small loans, or who hold the debtor to the strict letter of the agreement at a great loss to him.

In recent years a new concept of usury in the wide sense has emerged. It is based upon the fact that in modern times the function of money has changed. In ancient times it was solely a medium or measure of exchange that could not be turned easily into capital. With the emergence of the capitalistic system, opportunities for investment increased, and money assumed the role of a factor of production. Money assumed a new value and function: it became virtually productive, and so today money does fructify. To place money, then, at the disposal of another to be employed in profitable ventures constitutes an economic service and, as such, is worth its price as any other service. This price of money constitutes modern interest, which seems to differ radically from the old contract of interest and to be more one of hire or lease. So viewed, interest, or the price of money, is determined in the same way as the price of any other service; the unjust price, or usury, is an excessive price. This is the modern concept of usury.

Bucceroni, Institutions of Moral Theology

Gennaro Bucceroni, S.J. — 33 passages

Vol. II, On the Seventh and Tenth P…, X. On Mutuum · Vol. II, On the Seventh and Tenth P…, XII. On Sale and Purchase

Vol. II, On the Seventh and Tenth P…, X. On Mutuum

n. 1080.

What is mutuum? Mutuum is sometimes taken for the thing itself given as a loan, but sometimes and more often for the contract itself by which that thing is given as a loan to another; and it is defined: a contract by which, through delivery, ownership of a thing consumable by use is transferred to another, with the obligation of returning only as much in the same species and goodness after some space of time. Through delivery, so that it may be indicated that it is a real contract, which is perfected by delivery of the thing. Wherefore a promise of mutuum is not mutuum. C. A. 983; C. B. 610. Ownership is transferred; for he who receives a thing by mutuum can use it; otherwise it would be a mere deposit.

But he cannot use it unless he has ownership, since that thing is consumable by use, and no one can consume another's thing at will. - Consumable, whether physically as bread, or morally as money, which, although by use it does not perish in itself, nevertheless perishes for him who hands it over to another. - With the obligation of returning as much, otherwise it would be a donation. In the same species, otherwise it would be sale or exchange, if in a different species; commodatum or lease, if the identical thing and in the individual had to be returned. And goodness, lest the lender suffer detriment from the benefit. - After some space of time, by which it is distinguished from exchange, by which immediately gold, for example, is given for silver. - L. 754; L. 2 de Reb. cred.; C. I. 1819; C. G. 1892; C. A. 983; C. H. 1740; C. B. 607; C. L. 1523, 1524; E. M.

n. 1081.

Whether there is a precept of lending? - As there is a precept of giving alms to the poor, so there is a precept of granting a loan to the rich who, on account of a peculiar circumstance, are in the greatest need of it. The reason is that the precept of charity binds us toward all human beings, even the rich, and requires that we gladly furnish this which we would wish to be furnished to us in an equal case, if nevertheless we can assist them by a loan without grave inconvenience. "No one," says Benedict XIV in the Encyclical Vix pervenit, "can be unaware that in many cases a man is bound to assist another by a simple and bare loan, especially with Christ Himself warning: From him who wishes to borrow from you, do not turn away," Matt. 5:42.

n. 1082.

What are the obligations of the borrower in mutuum? - 1. By force of mutuum the borrower becomes owner of the lent thing, which, in whatever way it perishes, perishes for him. L. 9 de Reb. cred.; C. I. 1820; C. G. 1893; C. H. 1740, 1753; L. 755. 2. The borrower must restore the thing lent in the same species and in the same quantity, quality, and established time; and, in defect of the thing, he must pay its value, according to the established time and place. C. I. 1828; C. G. 1902; C. L. 1524 ff.

If no time and no place have been established, restitution must be made according to the value corresponding to the time at which he is constituted in delay according to C. I., or at which the loan was made according to C. G. 1903. - The borrower cannot return money before the predefined time if it has been credited to him with legal interest; but if, from some agreement made, it exceeds the measure, he can do so only after five years, and with the creditor warned six months before, according to C. I. 1832. L. 2, 22 de Reb. cred.; C. B. 247. 3. Money given by mutuum must always be restored in the same numerical sum expressed in the contract. And whether the value of coins is increased or diminished, the same numerical sum must be restored in the species current at the time of payment. C. I. 1821; C. G. 1895; C. L. 1638. It is lawful, however, even in the forum of conscience, to give banknotes for silver or gold coins, any law or pact to the contrary having been removed.

Italian Law of May 1, 1866; S. Poenit., Jan. 21, 1873. But when gold or silver money has been given by mutuum with a pact of restitution in the same species and quantity, and its intrinsic value is modified, the equivalent must be returned according to the value at the time the loan was given. C. I. 1822; C. A. 988, 989. Cf. C. H. 1170, 1754; L. 782, 791; Gousset 814. 4. If the borrower does not restore the thing, or its value according to the established pact, interest is owed from the day of judicial petition. C. G. 1904. Indeed, if he is in culpable delay, he is also liable for the damages of which he is the cause. C. H. 1108.

n. 1083.

What are the obligations of the lender? 1. He is bound to warn the borrower concerning a defect of the thing handed over, if there is one; likewise concerning imminent damage, ceasing profit, and danger of the principal, unless he wishes to lend gratuitously; otherwise the borrower does not consent, and sustains an injury which the lender will be bound to repair. C. I. 1824; C. G. 1898; L. 754. 2. He cannot demand the thing back before the established time. C. I. 1824; C. G. 1899; C. B. 609; L. 754. If the time of restitution was not established, the judge can grant delay to the borrower according to the circumstances. C. I. 1826; C. G. 1900. But if it was established that the borrower should pay when he can, or when he has means for this, the judge will establish a term according to the circumstances. C. I. 1827; C. G. 1901; C. L. 1524 ff. 3. He is bound, per se, not to receive more than the lent thing was worth when it was given by mutuum; because mutuum per se is a gratuitous contract in this sense, that it imposes no other burden on the borrower than that he return in species, at the due time, that which he received. L. 754, 755.

n. 1084.

Whether you can receive the thing lent in the same measure and quantity if its price increases during the loan? Whether you can demand more if it decreases? If, when the thing is handed over by mutuum, there is equal doubt on both sides whether at the time of restitution the thing will be worth more or less, it is lawful to make an agreement that, with the same goodness and measure preserved, it must be returned at its time, even if its price has been greatly increased. The reason is that, since there was equal danger on both sides, equality is already preserved by that very fact. - The aforesaid pact is not lawful per se if it is certainly established, or is far more probable, that at the time of payment the value will be increased. The reason is that equality is not preserved in this way, but more is demanded than is given at the time of the loan. Hence, if a modius of wheat is now worth three francs and will be worth four at the time of restitution, it is not lawful to agree that just as much be paid. Exception, however, unless you had determined to preserve the thing until the time of the price; because then more is demanded by reason of ceasing profit.

If you foresee diminution of value or price, you can demand only as much, and the borrower must pay as much, as the thing was worth when it was handed over by mutuum; because in reality you do not demand more than you gave. - According to C. I. 1823; C. G. 1897, if metallic bars or saleable things are given by mutuum, they must always be restored in the same quantity and quality, although their price is increased or diminished. L. 782, 791; La-Croix 910 ff.

n. 1085.

Note: "That a loan furnished to a Church, Pious Cause, or University cannot be demanded back unless it is proved to have been turned to its utility. L. Civitas ff. Si certum petatur. And the same is said of a loan given to a minor, who otherwise is not bound, even when made an adult, to restore. L. 3 C. Quando ex facto tut. If nevertheless a Prelate, with the consent of the chapter, and the same is said of a governor with the consent of officials, receives a loan in the name of the church, the church itself is always bound to pay; since Prelates with the chapter can rightly alienate movable things of the church.... - That a loan given to sons of families, regarded as such and lacking castrense goods, without at least tacit consent of the parents, need not afterward be restored by them, at least in the external forum. L. 14 C. de S. C. Maced. Sons can use this privilege, even if they renounce it.... Exception: 1. If the loan is in things other than money, of which the law speaks. 2. If the son swore to pay; although after payment he has an action for reclaiming it; indeed he can procure for himself relaxation of the oath. 3. If the loan was given with the father knowing and not contradicting, or was turned to the utility of the father or children in things which the father was bound to furnish to him.

Likewise if the lent thing still exists, or if the father was accustomed to pay the debts of the children. - It is doubtful whether sons of families in the first case posited are free from restitution of the loan not only in the external forum but also in the internal. Bonacina, etc., deny it, because Civil Law does not take away natural obligation.

But Lessius, etc., affirm it sufficiently more probably, because the law with just cause can indeed take away a natural obligation, and is judged to have done so in this case in order to provide against the damage of parents and to avert the wickedness of usurers. But it does not seem that it can be denied that the supreme human power, on account of the high dominion which it has, can indeed, for the common good, transfer ownership of things from one to another, as is clear in the law of prescription." L. 756, 757, 918; C. I. 1307; C. G. 1312; C. H. 1263, 1304; C. A. 152; C. L. 1535, 1536. Cf. here 953.

n. 1086.

What are usury and a usurious contract? Resp. To the 1st: Usury is profit immediately arising from mutuum as something owed. Profit immediately arising from mutuum; for usury is properly committed when the lender seeks profit immediately because of the mutuum, and precisely under the title of mutuum, or something above the principal and the substance lent. Therefore, although he also who sells a thing above the highest just price, or leases it to another for use, sins against justice, nevertheless he is not said to commit usury strictly so called. Profit is understood as whatever can be estimated by price; whence, if, in giving a mutuum, you demand, e.g., that the other return to you what from another source he owes you by justice, it is not usury. As something owed, namely by justice, or by a pact of grateful spirit or benevolence. Wherefore, if the borrower, precisely from a natural grateful spirit and without an intervening pact, liberally gives something beyond the principal to the lender, or even from fear lest otherwise a loan be denied to him in the future, or lest he be judged ungrateful, the lender can accept this without the vice of usury. - C. L. 1636.

Resp. To the 2nd: A usurious contract is a pact by which the lender obliges the borrower to give something estimable by price above the principal from the title of mutuum alone. Hence simple mutuum, or mutuum without usuries, is distinguished from mutuum with usuries, which is called fenus and fenerari. L. 33 de Reb. cred.; L. 758, 761-765, 774, 777-781, 791; St. Thomas 2. 2. q. 78. a. 2; E. M.

n. 1087.

Of how many kinds is usury, and what are its names? Resp. To the 1st: One usury is mental and another real. The former is that by which the lender, without an externally manifested pact, either formally intends profit, not to be offered gratuitously, but as though owed under the title of mutuum; or virtually, for example if he internally hopes for profit in such a way that such hope is the principal motive of lending. But the latter is that by which the lender brings profit into an external pact, whether expressly or tacitly. Real usury is either open or disguised. Open usury, or express and formal usury, is when in the contract of mutuum itself something beyond the principal is demanded under this title. Disguised or virtual usury is that which is cloaked by another distinct contract, in which profit because of the mutuum is involved; as would happen if a merchant sold goods at a dearer price than is just precisely from the fact that he must wait for payment, for thus a greater profit would be virtually demanded because of the mutuum. - L. 761, 762; St. Thomas 2. 2. q. 78. a. 2; De Malo q. 13. a. 4.

Resp. To the 2nd: As regards the names of usury, centesimae were usuries in which the hundredth part of the principal, that is, one for a hundred, was paid each month, and accordingly twelve for a hundred each year, twelve percent; by this reckoning in the hundredth month the usury equaled the principal. This was the gravest of usuries, and as it were the as, from which the lesser usuries were called by the names of the parts of the as: the very least usury, semunciaria, one half percent per year; uncia, unciaria, one percent; sextans, sextantaria, two; quadrans, quadrantaria, three; triens, trientaria, four; quincunx, five; semissis, semissalis, six; septunx, seven; bes, bessalis, eight; dodrans, nine; dextans, ten; deunx, eleven; centesima, twelve; double centesimae, twenty-four; triple, thirty-six; quadruple, forty-eight; quintuple, sixty.

n. 1088.

Whether usury is licit? Usury is prohibited by natural, divine, and ecclesiastical law. - By natural law. "For the evidence of this, it must be known that there are certain things whose use is the consumption of the things themselves; as we consume wine by using it for drink, and we consume wheat by using it for food. Hence in such things the use of the thing ought not to be counted separately from the thing itself; but to whomever the use is granted, by this very fact the thing is granted; and on account of this, in such things ownership is transferred by mutuum. Therefore if someone should wish separately to sell wine, and should wish separately to sell the use of wine, he would sell the same thing twice, or he would sell what does not exist; whence he would manifestly sin by injustice. And by a similar reason he commits injustice who lends wine or wheat, asking that two recompenses be given to him: one, indeed, the restitution of an equal thing; but the other, the price of the use, which is called usury. But there are certain things whose use is not the very consumption of the thing, as the use of a house is habitation, but not its destruction. And therefore in such things each can be granted separately, as when someone hands over to another ownership of a house, reserving to himself the use for some time; or conversely, when someone grants to another the use of a house, reserving its ownership to himself. And on account of this a man can licitly receive a price for the use of a house, and besides this demand back the house lent, as is clear in the hire and lease of a house. But money, according to the Philosopher in Ethics 5, ch. 5, middle, and Politics 1, chs. 5 and 6, was principally invented for making exchanges; and thus the proper and principal use of money is its consumption or alienation, according as it is expended in exchanges. And on account of this, in itself it is illicit to receive a price for the use of lent money, which is called usury; and just as a man is bound to restore other things unjustly acquired, so he is bound to restore the money which he has received through usury." St. Thomas 2. 2. q. 78. art. 1; Quodl. 3. a. 19. "It is certain," says St. Alphonsus 759, "that usury is illicit even by natural law." "But a certain modern author in a recently published book laboriously attempted to prove that money of itself is not sterile and unfruitful, as other things consumable by use are; since, as he asserts, from the common commerce of men we observe very many profits to arise from money. Hence he infers that, apart from the just titles of danger, loss, etc., something can licitly be demanded from a loan of money beyond the principal, provided the profit is moderate, and provided the borrower is rich and expends that money in increasing his goods. But deservedly this new opinion was interdicted by Benedict XIV in the Encyclical Letter Vix pervenit. The certain reason is that the profit which is received from money arises entirely not from the money itself, which, since it is altogether sterile, cannot bear fruit, but arises from the mere industry of men. Nor, because my money will profit another through his industry, can I demand from him anything beyond the principal." L. 758; Collectan. S. C. de P. F. n. 2130.

By divine and ecclesiastical law. Thus Ezekiel 18:10, 13 said: "If he has begotten a son who is a robber, shedding blood ... giving at usury and receiving more, shall he live? He shall not live ... since he has done these detestable things, he shall die by death; his blood shall be upon him." And "the Lateran Council, sess. 10 under Leo X, condemns as usury any profit perceived from an unfruitful thing, with the title of labor, or expense, or danger, however, excluded. When, namely, in the words of the Council, from the use of a thing which does not germinate, with no labor, no expense, or no danger, profit and fruit are sought to be acquired." L. 765. Whence it is evidently clear that usury is not condemned because it is exorbitant, or because it is demanded even from the poor, or for another similar extrinsic reason, but because it is usury. Thus Benedict XIV also openly pronounces illicit any profit arising from a mutuum by reason and force of that same mutuum, in his celebrated Encyclical Vix pervenit ad aures. Add the whole title de Usuris in the Corpus of Canon Law, from which also the usurer, if he is public and notorious, is kept from Communion, is deprived of absolution for the forum of penance, is regarded as infamous, and, if he dies impenitent without having made satisfaction, is deprived of ecclesiastical burial. Add propositions 41 and 42 condemned by Innocent XI, and 42 condemned by Alexander VII. - Benedict XIV, de Syn. 1. 10. c. 4; Catech. Rom. 11; E. M. Hence "the usury of money which we receive is not in the fruit, because it is not from the body itself, but from another cause, that is, a new obligation." L. 121 de Verbor. signif. Nor indeed, for the intrinsic licitness of usury, is it valid to say that he who gives money as a loan furnishes a benefit which is worthy of a fee; that he himself undergoes a burden while he deprives himself of his thing, which again is estimable by price; that mutuum in reality is nothing other than the lease of money, since in money not the body but the value is considered, and ownership of this always remains with the lender; whence it is that the borrower is truly said to be and is burdened with another's money; that finally, with attention to the present increased commerce of things, constant and always progressing in modern Society, by the force precisely of money, and of the incredible facility of transmitting and exchanging it, money in reality today can no longer be called sterile and unfruitful, but fruitful and most fruitful. But all these things are worth only as much as nothing. For to a benefit considered formally a fee is not owed, but gratitude of spirit. But the benefit here considered materially is worth no more than the lent thing itself; therefore, when this has been restored in the same quantity and quality, all things return to the equality which commutative justice intends and makes. Likewise deprivation of one's thing is estimated not at more, but at as much as the thing itself of which one is deprived is estimated. Therefore, when it is restored, that burden is entirely compensated according to equality. Otherwise it would have to be said that in the sale of a thing, besides the price of the thing itself, the seller would have to receive another price equivalent to the deprivation of his thing; and since this deprivation in sale is forever, he would have to receive not only a doubled or tripled price, but one multiplied several times, so that perpetual deprivation of the thing might be compensated. If the borrower were not truly owner of the money, not only materially but also formally considered, he certainly could not expend it according to its monetary value. The formal value of money is in reality inseparable from the money itself materially considered. And if this formal value did not pertain to the borrower himself, but to the lender, the borrower could enter into no onerous contract in his own name from the money. But that he is said to be burdened with another's money certainly does not mean that the borrowed money is not his, but that it is not his absolutely, namely without the obligation also of restoring as much. Another's money has never indeed signified stolen money, deposited money, leased money, etc., but has signified and does signify debts to be paid, from whatever source those debts arise, whether from mutuum, or from another contract, or from another title. That present commerce of things has not rendered money fruitful is as true as it is true that present commerce is governed more by credit, as they say, than by material money; and credit is from one's own industry, talent, labor, and trust acquired among public merchants, especially from honesty of life. Moreover, especially at present, it is seen that poor workers, laborious and industrious, in a short time gather enormous riches; on the contrary, very wealthy noble men, because of defect of labor and due industry, are reduced to extreme poverty. Therefore it is not money which is fruitful, but one's own labor and one's own industry. - Nor indeed are business and commerce something new; but ancient, most ancient; and nevertheless usury had always previously been regarded as illicit from its nature. Increased business and increased commerce could not change the intrinsic nature of things. L. 758, 759, 764; St. Thomas 2. 2. q. 78. a. 2, q. 106; De Malo q. 13. a. 4; Gousset 815 ff.; Collectan. S. C. de P. F. n. 2119, 2121, 2122, 2124, 2133; C. B. 138.

n. 1089.

He resolves: Both the usurer and his cooperators are obliged to restitution of the usury received. For a usurious contract is altogether null; and the bare delivery of the thing does not transfer ownership. L. 761, 783, 791 ff.; St. Thomas 2. 2. q. 78. a. 3.

n. 1090.

In doubt whether the borrower gave something above the principal gratuitously or not, can you retain it? Resp. Affirmatively, with the common and more probable opinion, if you accepted it in good faith and the doubt supervenes; negatively, if you accepted it with negative doubt. But if with positive doubt, or with probability, you are bound to restore, commonly speaking; since in doubt the borrower ought to be presumed, speaking per se, to have given under compulsion, not gratuitously; for men with difficulty lavish their own things gratuitously. But you are by no means bound to restitution if from the circumstances a donation can truly be presumed. - According to C. H. 1256, a borrower who has paid interest not in the least stipulated can neither reclaim it nor impute it to the principal. L. 761.

n. 1091.

Whether the lender can retain what the borrower gave from fear lest otherwise a loan be denied to him? - Resp. More probably affirmatively. The reason is that for usury it is required that it be given by force of a pact, or as something owed by justice. Thus more commonly. L. 763; St. Thomas 2. 2. q. 78. a. 2.

n. 1092.

Whether a donation of antidoron, or one which is made from a grateful spirit, can be brought into a pact? - Resp. Negatively. The reason is that from pacts a title of justice necessarily arises, but not a donation merely given from a grateful spirit. L. 764; St. Thomas 2. 2. q. 78. a. 2.

n. 1093.

Whether for an obligation to which the lender would submit himself, of not demanding back the loan except after a long time, he can demand something beyond the principal, even if no inconvenience comes to him from the delay? There are three opinions. The first common opinion denies, and Lessius, Viva, Laymann, and Lugo hold this; they call the contrary opinion most false and commonly rejected by others. The reason is that such an obligation is intrinsically annexed to mutuum, that it not be demanded back at once; therefore, just as something cannot be demanded because payment is awaited for some time, so neither for such a long time; otherwise, they say, in this way usury could easily be disguised many times by demanding it not for the mutuum, but for the obligation of awaiting payment. And the condemnation of proposition 42 proscribed by Alexander VII seems to favor this. The second opinion says that, although in mutuum there is an obligation of awaiting payment for some time, nevertheless when the obligation is of not demanding it back except after a long time, say for three years, then, since that is not intrinsic to mutuum, something can licitly be demanded. Thus Medina, Serra, and Ledesma apud Salm. n. 25; and there Trullench, Henriquez, and Bassaeus think it probable, and Sporer thinks it not improbable. And this opinion truly does not seem to lack its probability. For if he who is obliged to give a mutuum after a long time can licitly demand something, as the doctors more commonly teach with Molina apud Viva on the condemned proposition 42, n. 5, why cannot he who is obliged not to demand back his own except after a lengthy time? See what will soon be said below. The third opinion, not much unlike this second opinion, which the Salmanticenses hold with Banez, etc., says that, although, by adhering to the first opinion, to demand something precisely for time is usury, nevertheless, since it is morally impossible that, by waiting for a long time, the lender should not suffer some danger, loss, or inconvenience, or at least not be impeded from exercising some act of liberality or another decent operation, for that reason he can receive and contract for something beyond the principal. To any mutuum there is indeed intrinsic the obligation of waiting for some ordinary time; nevertheless to a particular mutuum, with a pact of waiting for an extraordinary time, such an obligation is not intrinsic, but altogether extrinsic; and therefore that obligation does not proceed from liberality, but from justice, which obliges him to wait for so much time. Hence, if the lender receives something for such an obligation, he receives it rightly, not by reason of the convenience of which he is deprived, but by reason of the burden imposed on him by the pact, which burden indeed is estimable by price. L. 760.

This intrinsic and extrinsic obligation of not demanding the principal back for some certain time can be declared from another title, namely from danger to the principal, which likewise can be intrinsic and extrinsic to the mutuum; whence from it some increase beyond the principal is illicitly or licitly perceived. Cf. Instruct. S. C. de P. F. part II. Quaeri nunc potest. - C. B. 609; E. M.

n. 1094.

What are Montes pietatis, and are they usurious? - Resp. To the 1st: Montes pietatis are certain treasuries, whether public or private, which were instituted so that the needy might have recourse to them as to a mountain of refuge, to receive money on loan for a pledge, lest they be compelled to receive money from usurers with greater damage to themselves; yet in such a way that they must leave a certain profit to the Monte pietatis, and unless, e.g., within a year they redeem the pledge, it falls into the ownership of the Monte itself.

Resp. To the 2nd: Montes pietatis, duly instituted, are not usurious. This is clear from the authority of Leo X, who in the Lateran Council, sess. 10, by the Bull Cum inter nonnullos, approved such Montes pietatis as licit and free from the stain of usury. But the reason of the response is that the moderate profit which the borrower must leave to similar Montes or public treasuries is not demanded under the title of mutuum, but for paying the salaries of officials and conserving a similar treasury; and accordingly such profit is not usurious. - Duly instituted.

For 1. that profit which is received must be moderate and proportionate to the expenses to be made for the ministers of that Monte, whose labor is truly estimable by price. 2. Sufficient time must be conceded to borrowers so that they can redeem the pledges and not be compelled to abandon them. 3. An equivalent pledge, or one not greatly exceeding the thing lent, should be demanded; for since those pledges, unless, e.g., they are redeemed within a year, fall under the ownership of the Monte, disguised usury would intervene if those pledges were appraised at too cheap a price and then sold for much more, without any refund made to the pledger. L. 765; Benedict XIV, de Syn. 1. 10. c. 5; A. S. S. v. 4. p. 27 ff.; E. M.

n. 1095.

What is the just interest of the lender? - In mutuum, usury is one thing, fenus, just interest or the just interest of the lender, another: for usury properly exists when the lender immediately because of the mutuum demands something beyond the principal; but the just interest of the lender exists when he, from another just extrinsic title, which accidentally occurs in the mutuum, demands something beyond the principal in compensation for such title, or cause estimable by price. For this reason that increase which is demanded is not demanded by force of the contract of mutuum, but by force of another contract annexed to the mutuum. This interest can also be called usury, but less properly and only in a broad signification, insofar as it is beyond the principal. But a contract must intervene; otherwise, although a just title of demanding something is present, nothing can be justly demanded. Thus expressly C. H. 1755, and it is clearly deduced from C. I. 1829, 1830; C. G. 1902, 1903; C. A. 984; C. B. 608. L. 765, 773; E. M.

n. 1096.

Whether it is lawful for a lender to demand his interest because of the title of emergent loss or ceasing profit? Resp. Affirmatively. For in two ways, says the Angelic Doctor 2. 2. q. 62. a. 4, someone can be damaged: in one way, by taking away from him what he actually has, and this is called emergent loss; in another way, by impeding him from acquiring what he was on the way to having, and this is called ceasing profit. Moreover, both because of emergent loss and because of ceasing profit it is lawful for the lender to demand from the borrower what concerns his interest on account of the loan, if the due conditions are present. The same Angelic Doctor gives the reason, 2. 2. q. 78. a. 2 ad 1, teaching that this is not to sell the use of money, but to avoid loss. And certainly equity does not allow that someone lose profit or suffer loss from conferring a benefit: in the Law it is read, No one ought to suffer expense from that from which he seems to have deserved a reward. Add that this is expressly approved by Benedict XIV in the Encyclical Letter on usuries.

If the due conditions are present. The conditions are: 1. That the interest be brought into the pact from the beginning, though not demanded immediately, with the borrower also warned concerning the title of emergent loss and ceasing profit, or another title, if any exists, for which he wishes to demand something beyond the principal; for after the contract the lender can no longer demand anything, even if he had forgotten emergent loss and ceasing profit; for an interpretative or conditional will does not suffice for a contract, but an actual or virtual will is required, or at least one sometime had and not retracted: he ought to have provided for himself, says the Angelic Doctor, q. 3 De Malo a. 4, concerning the lender in such a case, lest he incur detriment; nor ought he who receives the mutuum to incur loss from the foolishness of the lender.

Nevertheless, even if emergent loss was not brought into the contract, if the borrower culpably delays payment beyond the established term, he is bound to repair to the lender whatever damage arises from such delay; for according to Rule 25 in 6: His own delay is harmful to each person. 2. That the lender not demand more than the loss which he suffers, or the profit which he hopes for from another licit contract, according to the estimation of hope and danger, and with expenses deducted; for this is the whole reason for the exaction.

Hence interest cannot be demanded for the whole quantity of profit which the lender could hope for; for this profit, since it can often be impeded, must be estimated at less; indeed the lender would have had to concur toward it through his own labor, the lack of which likewise is estimable by some price. Whence the value of ceasing profit must be estimated according to the judgment of prudent men; and this is well to be observed. - 3.

That the mutuum is actually the cause of the emergent loss or of the ceasing profit. Whence, if someone had no occasion at all of making some profit by business, or even when the occasion was given did not wish to engage in business, he could not demand interest precisely from the title of ceasing profit, although he could from other titles. L. 768, 799; St. Thomas 2. 2. q. 62. a. 4; Gousset 819; Collectan. S. C. de P. F. n. 2133; E. M.

n. 1097.

Whether the lender can demand compensation for emergent loss if he himself freely offers to give the mutuum? Resp. More probably affirmatively. "The reason is that the lender then does not offer the loan absolutely, but under the condition that ceasing profit be compensated to him; and thus the borrower, by accepting the loan, is the true cause of the cessation of profit, and truly impedes the lender from justly making profit from his own money." L. 760, 807; E. M.

n. 1098.

Whether it is lawful for the lender to make an agreement from the beginning about a certain profit to be perceived, if the emergent loss is only probably future? It is common that something can still be demanded above the principal, while nevertheless the proportion between the fear of loss or hope of profit and the increase which would be received in the hypothesis is considered and carefully preserved. The reason is that due equality is already preserved thence; for just as, if the loss does not occur, the lender would profit, so on the contrary, if it does occur, the borrower would profit. Nor does it matter that the foreseen loss does not occur; for the pact concerning the increase is not made for the loss, but for the danger of it, which is actually supposed and is estimable by price. A fisherman who sells the cast of a net does not indeed sell the fish, which perhaps will not be caught at all, but sells the probable hope of them, which actually exists and is estimable by price. L. 770; E. M.

n. 1099.

Whether you can demand something by reason of ceasing profit because of a loan of money, if you keep other idle money? Resp. Affirmatively, "if you had reserved that other money for the use of the family ... because you are not bound by reason of the loan to neglect your own providence." Also probably affirmatively, if without such inconvenience you can substitute other money for the money destined to business. For, with this posited, that you had determined to destine this money alone to business, you can licitly ask ceasing profit; "because the lending is truly the cause that the hoped-for profit from that money ceases for you." L. 771, 772.

n. 1100.

Whether it is licit to demand something above the principal by reason of the danger of losing it? Resp. Affirmatively. The reason is that the lender is not bound to give a loan with danger of losing the principal, and such probable danger is estimable by price; just as the labors perhaps necessarily to be undertaken and expenses to be made for recovering the principal are also estimable by price, if, e.g., it is later necessary to go to the judge. And accordingly, if proportionate interest is demanded because of this danger, such a contract is contrary neither to the virtue of liberality nor to justice. St. Thomas 2. 2. q. 78. a. 2; L. 765. Exception: 1. If the borrower is poor, because then the precept of lending from charity urges. 2. If the borrower secures the principal by pledge, because thus the danger ceases. E. M.; Collectan. S. C. de P. F. n. 2135.

n. 1101.

What conditions must be observed in the aforesaid title? - In order that interest be just from this title, two things must be attended to: 1. The danger of losing the principal must not be precisely possible, but also probably future; either by reason of the borrower, who is not sufficiently known, or is of doubtful faith, or conducts dangerous business; or by reason of the principal, which is to be carried elsewhere with danger to the lender. 2. The quantity of the interest itself must be proportionate to the quantity of the danger. Each is clear from the response of the S. C. de P. F., which in the year 1645, having been questioned by Missionaries from the Chinese Kingdom in a similar doubt, and having been convoked by mandate of Innocent X, responded: "They judged that by reason of mutuum immediately and precisely, nothing is to be accepted beyond the principal sum; but if they accept something by reason of danger probably arising, as in the case, they are not to be disturbed, provided account is taken of the quality of the danger and of its probability, and proportion is preserved between the danger and that which is accepted." La-Croix n. 856; L. 765.

n. 1102.

Whether in a mutuum it is licit to make an agreement about a penalty to be paid by the borrower if he does not return the principal at the defined time? Resp. Affirmatively.

The reason is that in this way provision is made for the firmness of the contract, and at the same time the negligence of the borrower is guarded against. L. 766. Nevertheless it must be observed that this pact is not licit unless 1. the delay of the debtor is notable and culpable; notable, for some delay is intrinsic to mutuum; culpable, for he who has not sinned is not to be punished. 2. The intention of profiting through that attached penalty is absent; and this is presumed to be present if the debtor is burdened with the obligation of restoring the principal at that time at which it is certainly known that he is by no means able to pay. 3. The penalty is moderate and proportionate to the fault; otherwise it would be unjust. But more probably it is owed before the sentence, for it has more the nature of a pact than of a penalty, although it also is a penalty. L. 44 de Usur.; L. 766, 767, 775.

n. 1103.

Whether civil law supplies a just title for demanding something above the principal, even with any other title excluded? - C. I. 1829; C. G. 1905. Resp. Affirmatively. And, when written law is lacking, legitimate existing custom, which has the force of law, supplies. - Proof: 1. For since ordinarily in a mutuum an extrinsic title of just interest is not lacking, by reason of danger to the principal, ceasing profit, and emergent loss, civil authority can well determine by law the increase which can justly be demanded, to impede the unjust extortions of wicked men, to render the contract of mutuum easier for all, and also to impede lawsuits and controversies, not without grave damage to the parties. - 2. Public authority can, by reason of the common good, transfer the ownership of private persons, as is seen in the law of prescription. Therefore the same authority can transfer ownership of an increase above the principal, which in this case is freely and willingly given by all, by reason of the public and private good, to which, as has been discovered by experience itself, facility of lending especially contributes. 3. The same is evinced from the Responses of the Sacred Congregations, namely that those who accept the profit conceded by law, even without any other title, are not to be disturbed. Collect. cit. 2141; E. M. Legal interest or fenus of this kind is in the manner of civil fruits, L. 34 de Usur. et fruct., and can also be called usury, but less properly and in a broad signification. Cf. 1086, 1095. As civil law, so consequently legitimate custom, and as the S. Penitentiary has it, April 18, 1889, the common practice observed by men of fearful conscience in their respective places and times, can determine the just interest to be received from mutuum. E. M.

n. 1104.

What kind is the fenus, or interest, constituted by positive laws?

According to C. I. 1831; C. G. 1907 and the Law of Sept. 3, 1807, one interest is legal, another conventional. Legal interest is five per cent in civil matter, six per cent in commercial matter; or civil usuries are quincunces, mercantile are semisses. Nevertheless by the Law of June 22, 1904 in Italy, and the Law of Apr. 7, 1900 in France, legal interest is four per cent in civil matter and five per cent in commercial matter. Conventional interest according to the cited French Law cannot exceed the aforesaid quantity; according to C. I. it depends on the judgment of the contracting parties; but if it exceeds legal interest, it must be established by a written act; otherwise no interest is owed. Nevertheless the debtor after five years from the contract can always restore the sums accepted with interest to be paid exceeding the legal, notwithstanding any contrary pact, but with written notice given six months before. C. I. 1832. Cf. 1833. According to C. H. 1100, 1109, in civil matter likewise one interest is legal, another conventional. Legal interest is six per cent. In commercial matter one must stand by the Commercial Code. But in it commercial contracts are treated, arts. 50-63. According to C. L. likewise one interest is conventional, another legal, and this is five per cent, art. 1640. According to C. A. 994, 995, one interest is legal, another conventional. The first is four per cent, and among merchants six per cent. The other cannot exceed five per cent in a loan with pledge, and six per cent in a loan without pledge. But by the Law of June 14, 1868, the predefined limits for conventional interest of this kind were abrogated. C. B. 246, 247. Legal interest is four per cent. Conventional interest can exceed this quantity. But if it exceeds six per cent, the debtor can restore the capital after six months, with a prior delay of notice of six months. As regards Roman Law, cf. L. 36. E. M. de Usur. C.

n. 1105.

Whether from positive laws interest also from interest, anatocism, is constituted? - According to Roman law it is prohibited. L. 29 de Usur.; L. 27 de Re iud.; L. 28 de Usur. C. - According to C. I. 1232, 1233; C. G. 1154, 1155, interest from interest is owed after a year, if the creditor juridically seeks it, or by a particular agreement, after the prior interest has already become due. But it can also be demanded from the beginning from revenues of estates, perpetual or life-long. Gousset Cod. comm. on art. 1154. According to C. H. 1109, legal interest from interest is likewise owed after this is owed and the former is juridically sought. According to C. A. 998, only interest which is owed from two or more years can, by means of an agreement, constitute a new capital. Likewise according to C. L. 1642, cf. C. A. 1335, it is required that interest already owed be constituted as capital by a new contract. According to C. B. 248, an agreement made in advance that interest which is owed should be productive of new interest is null. - E. M.

n. 1106.

Whether legal interest is sometimes to be paid even without agreement? Civil law itself, apart from every agreement, establishes legal interest to be paid sometimes by reason of delay and loss; sometimes by reason of fault and injury; sometimes by reason of natural equity. By reason of delay, e.g., of a debtor who does not restore at its time money credited to him, C. I. 1231; C. G. 1153; C. B. 288; by reason of fault and injury, e.g., of a guardian who did not invest the money of a ward, C. I. 291; of a mandatory or depositary who used another's sum, C. H. 1724, 1770; C. B. 698, etc. This interest is in the manner of a penalty, and accordingly before the sentence of the judge it is not owed; after it, it is owed even in the forum of conscience, even if because of only civil fault.

By reason of natural equity, e.g., if a dowry has been constituted in counted money, if the buyer of a house or estate does not pay the price on the established day, and the thing sold and handed over produces fruits, etc. C. I. 1397, 1509; C. G. 1548, 1652. This interest does not need the sentence of a judge in order to be owed. Cf. n. 1114. 2, 3. The cases in which, according to C. I., legal interest is owed by the law itself are: 1. The remaining sum owed by the guardian, once accounts have been rendered, C. I. 308. 2. The dowry owed by those promising from the day of marriage, C. I. 1397. 3. The dowry to be restored from the day of the dissolved marriage, C. I. 1415. - 4.

The sum owed by a partner of a partnership, C. I. 1710. 5. The sum which the surety paid, C. I. 1915; C. H. 1838. 6. Advances made by a mandatory, C. I. 1755. 7. A legacy from the death of the testator, if it is a legacy of a farm, capital, or a fruitful thing, C. I. 865. 8. Whenever a sold thing produces fruits, the price not yet having been paid, C. I. 1509. 9. Whenever an agent of affairs has made expenses for the utility of another, C. I. 1144. 10. Whenever someone in bad faith has received what was not owed, C. I. 1147. 11. Whenever reduction of a donation is juridically sought as regards the excess of the disposable part, C. I. 1094. C. B. 256, 288, 289, 290, 291, 347, 452, 641, 668, 698, 849, 1834; C. H. 1724, 1770.

n. 1107.

Whether a borrower paying interest not owed can reclaim it according to positive laws? - Although in the Law there is generally given a reclaiming of what was not owed, C. I. 1237; C. G. 1235; C. H. 1895, nevertheless here it is not given. C. I. 1830; C. G. 1906; C. H. 1756. Wherefore the borrower who pays interest which was not agreed upon, or beyond what was agreed upon, cannot reclaim it, nor impute it to the principal.

n. 1108.

To whom is it lawful to receive 5 or 6 per 100, by reason of commerce, according to civil laws? It is certainly lawful for merchants lending money to other merchants, because it is altogether a matter of commerce. It is also lawful for merchants with respect to others who are not merchants, because the law intends to favor commerce; but it favors it by permitting merchants to receive a greater rate from lent money. If it concerns others who are not merchants with respect to merchants, it is disputed. More commonly they deny that it is lawful, and report that such is the decision of tribunals. The reason is that the law which intends to favor merchants would rather be harmful to them, if they had to pay greater interest. Nevertheless several, even among jurists, affirm it. Their reason is: 1. Because the words of the law are general: in matter of commerce; nor is it established what the genuine sense of those words is. 2. Because it is expedient for commerce that the law be so understood: for thus merchants much more easily find money with greater utility to themselves and to commerce.

n. 1109.

Whether it is lawful to exceed the legal rate in a mutuum by reason of emergent loss or ceasing profit? - Resp. Negatively, with respect to the poor or others who seek a loan in necessity, and who would be oppressed by a greater increase. Nevertheless you do not seem to be bound, with great inconvenience to yourself, to grant them a loan. Charity does not oblige with grave inconvenience.

If money is handed over for the utility, but not for the necessity, of another, it is disputed, and a twofold opinion is given. The first opinion affirms by reason of indemnity or just compensation. The second opinion denies. The reason is that compensations for losses arising from a pecuniary obligation can be demanded according to the legal rate. This opinion indeed can have place if the lender compels or obliges another to receive a loan from himself; otherwise the reason does not appear why the lender should undergo the detriment of emergent loss for the favor of another. In many places, from the common practice even of the timorous, the legal rate is exceeded; nor for that reason is it believed that sin is committed. For emergent loss, ceasing profit, and the danger of losing the principal must be estimated variously from the various circumstances of places, things, and persons. Hence generally in great cities it is thought to be less than in small towns; and in the former semis usuries, six per cent, and in the latter septunx usuries, seven per cent, are often tolerated. Those which exceed these must be judged from particular circumstances. But those which exceed the decunx, ten per cent, seem immoderate, regularly speaking, and to be rejected. And since Governments themselves rather reduce legal interest, and in titles of public debt in reality pay only three and four per cent and even less, private interest among themselves of a dextans or ten per cent now seems excessive also, speaking per se, at present. Cf. 1087.

n. 1110.

Whether it is lawful to receive the legal increase where it exceeds 5 or 6 per 100? Resp. Affirmatively, if the law, after all circumstances have been weighed, and especially the practice and custom of the timorous, seems just, that is, if equality appears between the profit permitted by law and the value of the use of money or the dangers to the principal, etc. For no absolute rate can be established, but attention must be paid to the various circumstances of places, and also to the dearness of money, from which its price and therefore its use increases, as in Africa, in India, etc.

n. 1111.

What must be said of institutions which are commonly called Savings Banks or Banks of Thrift? Not only are institutions of this kind to be tolerated, but they are also to be praised, since they assist widows, servants, maids, and the poor, while their modest money is accepted by loan and proportionate interest is paid back to them.

Vol. II, On the Seventh and Tenth P…, XII. On Sale and Purchase

n. 1153.

Whether those sin against justice who buy precious things for a cheap price when they are exposed for sale among secondhand sellers, commonly rigattieri? Resp. Negatively, because those things are judged to have lost the old price and to receive another by custom, or by agreement of the contracting parties. Whence things of this kind receive very great latitude with respect to price. Thus sometimes books are bought for a few asses which could have been sold for five or ten francs. The same must be said of the purchase of old furniture, because these things are commonly held to be of lesser value. - L. 807.

Bucceroni, Cases of Conscience

Gennaro Bucceroni, S.J. — 44 passages

74. On Mutuum

Ascanius gives money as a loan for consumption with interest of eight, nine, ten per cent, according as the borrowers flourish less or more in resources and industry.

n. 2.

Gaspar gives money as a loan for consumption, requiring by a prior agreement, for interest, ten per cent. For he says that the law permits even conventional interest besides legal interest, and leaves it to be defined by the free consent of the contracting parties.

n. 3.

Ernestus gives money as a loan for consumption, constantly requiring for interest ten per cent; because, he says, this is the practice of the place, almost commonly observed even by honest men.

n. 4.

Iovianus, having an occasion of gaining from trading twenty per cent, asks a large sum of money from Iovinus, spontaneously offering to him ten per cent, that he may obtain it more easily. Iovinus accepts, saying: to one knowing and willing, no injury is done.

n. 5.

Cornelius, altogether inculpably, lost an immense sum of money received as a loan for consumption. Hence he wishes neither to restore the capital nor to pay the legal interest owed by agreement; saying, as to the capital, that the thing perishing without any theological fault of his perished for its owner; but as to the interest, that since the thing brought no fruits, he owes nothing to the owner of the capital; for a thing fructifies for its owner.

"Whether it is lawful for a Religious Community, which receives a loan for consumption with an increment of four or five per cent, to lend those same monies received as a loan for consumption to some other person with an increment of ten per cent?"

Q. What as to the cases?

R. Ascanius acts illicitly and unjustly. For from the fact that the borrower flourishes more or less in resources and industry, since this thing is altogether the borrower's and depends only on him, it does not furnish a title to the lender for receiving a greater increment. Hence Benedict XIV, Encycl. Letter Vix pervenit, says: "Nor indeed, to purge the stain of usury, can any aid be summoned either from the fact that that profit is not excessive and too much, but moderate; not great, but small; or from the fact that he from whom that profit is demanded on account of the loan alone exists not poor but rich; nor that he is not going to leave idle the sum given to him as a loan, but is going to spend it most usefully for enlarging his fortunes, or buying new estates, or carrying on profitable business." Wherefore Ascanius is held to restitution. Benedict XIV ib.

Gaspar, by title of a mere agreement completed, cannot require ten per cent, an interest exceeding by double the legal interest. The reason is that the law indeed permits conventional interest which exceeds legal interest, but that agreement, in order to be able to have force, must be otherwise honest and just. Such it certainly will not be when there would be no other title for that excess except the agreement itself made, as in the case; for then that agreement would in reality be without a just title, and therefore unjust. On the contrary, an agreement of a greater increment to be paid would be lawful, if the lender truly suffered extraordinary detriment, the compensation of which he can legitimately require. Wherefore Gaspar, suffering no special damage and nevertheless requiring by pact a greater increment, is held to restitution. I. M. 1109; Scav. l. 2. n. 443, 569.

Ernestus does not seem to be disturbed, if that is truly the custom of the place. For the legal tax can be determined by written law and by custom. Just as written law, constituting a tax, defines the compensation commonly to be made, with attention to the common conditions of emergent damage, of ceasing profit, of risk of capital, and of the common good to be promoted by easy trading and commerce, so also common practice and custom can define and determine this same thing. Enchir. Moral. 1095; I. M. 1095, 1103, 1109; G. 893 seqq.

If Iovinus required that greater interest for the greater profit of Iovianus in his trading, he would act altogether illicitly and unjustly, and would be held to restitution, as was said in the first case. But since Iovianus himself, altogether spontaneously and not asked, offers that greater increment, it does not appear why it cannot be accepted. For in the case there is truly a free and full donation of the borrower. G. 905; Scav. l. 2. n. 571; Kenrick.

Cornelius is altogether held to the restitution of the capital, and to paying legal interest, according to the agreement made, as is supposed. For the money lent by force of the mutuum passed into his ownership, and did not remain in the ownership of the lender. Hence consequently the thing perished for him, and for him also ceased every emolument to be received on the occasion of the money lent and by his personal industry. Hence there remains entire, by force of the previous contract of mutuum, the obligation of restoring the capital, and, by force of the previous agreement, the obligation of paying legal interest. G. 891, 892; I. M. 1080, 1095.

"It is not lawful for Communities of Regulars to give to others, at a greater agreed usury, money received with the burden of paying four or five on each hundred." S. O. 4 and 18 March 1784; Collectan. S. C. de P. F. n. 2121. ad 7; M. E. v. 7. p. 2. p. 258.

Fridericus in France received as a loan for consumption one hundred gold scutata, to be restored in the same species. Since the extrinsic value of gold has increased, so that one hundred gold lire are worth one hundred twenty lire of paper money, Fridericus indeed wishes to restore to the one seeking them one hundred gold scutata, in the same species of money, but only eighty, not one hundred.

Q. Does Fridericus act rightly?

R. Affirmatively. For, apart from a special agreement, when money has been given as a loan for consumption, it suffices that the same extrinsic value be restored, and indeed in the same species of coin, as in the case, even if the coin which was handed over has meanwhile increased or decreased. For, where the question concerns counted money, its extrinsic value is attended to under the aspect of money, not its intrinsic value under the aspect of gold or silver. For the object of the contract in money is not gold and silver, but its value insofar as it is money.

Except, unless it has been agreed that restitution ought to be made in the same species and quantity, if the question concerns silver and gold money, namely that as many silver or gold coins in number, and of the same species, be restored as were lent, whether their value has increased or decreased. - But if the monies, at the time of restitution, cannot be found, or are no longer in commerce, then there is paid, in current money, what corresponds to the value which they obtained at the time when they were lent. - I. M. 1082, 1084; C. G. 1895; Gousset in h. a.

Titius, when the Italian Government had not yet prescribed the compulsory use of paper money, gave to Sempronius as a loan for consumption one hundred gold coins, under the condition that as many be restored in their species, every other bronze coin and every other representative of money being excluded.

This the borrower promised, now for then renouncing the benefit of the law, if anything should have been established concerning this matter. But if the law does not admit renunciation, the borrower obligates himself to compensate every damage, either by paying gold money, or by adding over and above the paper money as much as is required at the time of restitution, that they may be equated with the gold according to the difference. Moreover the law of 1 May 1866 appeared, by which it is established: National banknotes shall be given and received as sounding money according to their nominal value, in paying within the State ... notwithstanding any contrary disposition of law or conventional pact.

Q. 1. Does the simple condition added in the chirograph, concerning restitution to be made in no other way than in sounding money, lose its force even in the forum of conscience through that subsequent civil law invalidating it? - 2. And insofar as affirmatively, can Sempronius in this case, that is, on account of the special conditions stipulated as above, safely conform himself even in the internal forum to this civil law so useful to himself, when this law, even in these circumstances, would have supported him in the external forum?

R. "To the 1st. Regularly, affirmatively, unless peculiar circumstances stand in the way, concerning which recourse will have to be made in particular cases, with the same diligently set forth. - To the 2nd. Attention being paid to the quality of the pacts, and also attention being paid to the tenor of the law of which there is question in the case, negatively." S. Poenit. 21 Jan. 1873, Acta S. Sed. v. 7. p. 209 seqq. Namely, just as the law abrogates any contrary preceding law, not a future one, so also it abrogates preceding pacts, not future ones. But it by no means abrogates preceding pacts also by which it had been explicitly agreed that the debtor would not use the benefit of the law, if some future law should abrogate pacts of this sort concerning money to be returned in its proper species. Therefore the law abrogates only pacts made simply before that law concerning restitution to be made in real coins.

Rufus in Italy gave to Rufinus as a loan for consumption the sum of 10,000 lire, by a legitimate agreement, that the loan would last for ten years, and that throughout this whole time interest would be paid to him of twelve per cent, whether because that sum was being given in gold money, or because all others more or less commonly require the same interest. But when the decade was completed, the same sum of 10,000 lire was altogether to be restored according to the same species and quantity of money, express renunciation having been made of any benefit of law concerning a mode of restitution of this sort. Rufinus indeed hoped that he would gain thirty and more per cent. But after six months Rufus, knowing that the commerce of Rufinus was not succeeding well, wishing to secure for himself the sum of money lent and unwilling meanwhile altogether to lose hope of that rich interest, urgently simulates a business of commerce and asks from Rufinus as a loan for consumption the sum of 10,000 lire, to be restored as soon as possible, in turn meanwhile promising him legal interest of five per cent. Thus Rufus, recovering his capital, still continued to receive a profit of seven per cent. But Rufinus, using the good occasion, by a written agreement, gave the aforesaid sum as a loan for consumption to Rufus. But Rufinus, considering the matter, afterward refused to pay the constituted interest, saying that a legal compensation had been made between both loans for consumption. And since a year had not yet passed from the loan received, he adds that he owes no interest. But since the intrinsic value of that gold money had meanwhile been diminished by ten per cent, new coins of that species having been struck, Rufinus gains one thousand lire by the mere change of monies; and he is sufficiently content with this notable and easy profit.

Q. 1. Could Rufus lawfully have made the first agreement concerning interest of twelve per cent on account of the reasons alleged? - 2. Could Rufus lawfully have made the other agreement by which he himself would still receive interest of seven per cent? - 3. Can Rufinus lawfully exempt himself from every obligation of the loan received, and receive the profit of one thousand lire?

R. To the 1st. That the aforesaid sum was given in gold money certainly is not a reason for requiring more than double the legal interest. If the value of the gold money is greater, that excess can indeed be computed in the very sum given as a loan, and the legal interest which is required can be increased proportionately. Hence, if the excess of the gold money had been 15 or 20 per 100, then Rufus in reality would not have required twelve, but ten per cent in reality by reason of the loan. But the better reason for requiring the aforesaid interest is the common practice and custom in that place, which, since it is common to all, certainly is a practice observed also by men of timorous conscience. S. Poenit. 18 Apr. 1889. Hence, such a legitimate custom of the place being supposed, Rufus could lawfully make the first agreement.

To the 2nd. Since Rufinus, from the case, altogether spontaneously consented to less interest to be received from the money lent, and another contract of mutuum truly intervened, as is elicited from the very objection made by Rufinus to Rufus, it does not appear why, the prior agreement legitimately made persevering, Rufus cannot still receive seven per cent.

To the 3rd. Rufinus illicitly exempts himself from every obligation of the loan. For legal compensation has no place in the case. For each debt is not equal on both sides as to the interest to be paid, nor can it be immediately exacted and restored as to the capital, since in the first agreement the contract must last for a decade; in the other agreement the money lent is to be restored as soon as possible. If he does not wish to lack the advantage of his money, let him indeed seek its restitution as soon as possible. Yet he cannot exact it before at least one year has elapsed, since meanwhile he consented that legal interest be paid before its restitution, which is owed only after a year. But only after five years can he himself, from the Italian Code, restore the capital, since its interest exceeds legal interest. But as to the one thousand lire which Rufinus thinks he gains from the diminished intrinsic value of the gold coin, the profit first would still be uncertain; for the matter depends on the value which the aforesaid coin will have then, when Rufinus restores the money lent to Rufus after the decade has elapsed, or at least after the five-year period, unless Rufus should beforehand consent to the rescission of the contract. Then Rufinus will be able to receive no profit from it. For it is established by the law itself that, if gold or silver monies have been given as a loan, an agreement having been made of restitution in the same species and quantity, if their intrinsic value is altered, an equivalent to the intrinsic value of the same coins at the time of the loan must be restored. - C. I. 1286, 1287, 1822, 1826, 1832.

But the condition of Rufinus is better from the French Code. For first, Rufinus, from art. 3 of the law of 3 Sept. 1807, cannot be obligated to pay conventional interest exceeding legal interest. Likewise nothing special is determined from this Code as to a loan for consumption of gold or silver coin. The borrower is held only for the numerical sum designated in the contract, and in the species current at the time of payment. C. G. 1290, 1291, 1895, 1907.

The condition of Rufinus is also better from the Spanish Code. For from this Code also nothing is determined as to a loan for consumption of gold or silver coin, except that restitution is to be made in the agreed current species. C. H. 1170, 1195, 1196, 1754, 1755.

From the Austrian Code, conventional interest cannot exceed the limits constituted by the law itself. Yet by the law of 14 June 1868, the limits predefined in a mutuum for conventional interest of this sort were abrogated. But as to the change of monies it is established that changes of coins, by force of law, without alteration of their intrinsic value, are for the advantage or damage of the lender. For he receives the same coins in species, and the same number of them which he gave. But if the intrinsic value is altered, payment is to be made according to the intrinsic value which the coin had at the time of the money lent. C. A. 988, 989, 994, 1438, 1439; I. M. 1082, 1104, 1471.

Augustus, a son under paternal power, more than once received money as a loan for consumption with immense usury from a Jewish man, yet with faith first given to him that he would never use the privilege of age, and would restore all things after the death of his father. Augustus spent the aforesaid money in games and a freer life. Meanwhile the father of Augustus dies, and Augustus, having returned to good fruit and having become more prudent, refuses to restore anything to the Jew, opposing in judgment the privilege of the age in which he had received the loan.

Q. What as to the case?

R. Augustus uses his right: for he can use the favor of the law. Nor can the faith given be opposed; otherwise the aforesaid law would in practice be altogether frustrated, since all would require such a promise. This law is consigned in Roman Law, lib. 14, Cod. tit. 6, de Senatus Consulto Macedoniano: "It pleases that no action and petition be given to anyone who had given money as a loan to a son under paternal power, even after the death of his parent in whose power he had been." Where it must be noted that "although by the words of this Senate decree only the civil obligation seems to be removed ... nevertheless more probably the natural obligation also is removed; so that in the forum of conscience he is never held to restore such a loan, if he wishes to use this privilege ... And this the law established, both as a punishment of those who would lend to such persons, and so that every occasion of wicked machination against parents by sons would be cut off. Whence also the son cannot renounce this privilege, because it is more in favor of the parents than of himself ... Yet notice that there are many cases in which the son is held: 1. If he has military goods, or quasi-military goods. 2. If he was publicly thought to be of his own right. 3. If he received as a loan not money, but another thing, such as wheat, wine, and the like; for the law speaks only of a monetary loan, unless he did this in fraud of the law, so that from it he might collect money. 4. If the money was turned to the utility of the father. 5. If the father ought to have supplied it according to right reason, as if the son, absent for the sake of studies, receives a necessary loan so that he may live, so that he may buy necessary books, so that he may pay the teaching fees ... 6. If the son swore that he would pay ... because an oath made in favor of another must always be observed, when it can be observed without sin ... Yet relaxation of this oath can be sought from the prelate, because it was opposed in fraud of the law, and otherwise the law would easily be rendered useless; and it being obtained, he will be able not to pay." Lessius l. 2. c. 20. d. 2.

The same in the case is established from the Italian Code 1307: "No one can claim the restitution of what he paid to a minor, interdicted person, or incapacitated person, or to a married woman, by force of an obligation which has remained void, unless he proves that what was paid was turned to their advantage." The same is had in Cod. Gall. 1312; Cod. Hisp. 1304; Cod. Austr. 152. Wherefore Augustus does not seem to be disturbed, if, using the benefit of the law, he invokes the sentence of the judge, that the obligation contracted may be rescinded. I. M. 565, 953, 970, 1085; S. Alph. 757. Cf. G. 771, 772.

n. 11.

Celina, a woman bound to a husband, received money as a loan for consumption, offering a mortgage over part of her dowry, entirely without the knowledge of her husband, to extinguish debts contracted by a freer life. But the children, when both parents were dead, obtain from the judge a sentence by which they are exempted from every payment.

n. 12.

Sophia, having paraphernal goods, sought money as a loan for consumption to pay debts common to herself and her husband. This payment having been made, her husband and children were able to continue commerce to the great advantage of the whole family.

Generosa, having a husband gravely ill and oppressed by debt, without the consent of her husband sought money as a loan for consumption, to pay his debts, that she might provide for the honor of the family. But she did not obtain it except with a special obligation undertaken, and this only on the condition that she herself would restore it, either from the goods of her husband himself, if they sufficed, or also from her own, even from dotal goods, even after the death of her husband, if the husband should die of that illness, as in fact happened after a few months.

Q. What as to the cases?

R. The children of Celina can legitimately use the benefit of the law, lest they pay; since they suffer no advantage, but truly damage, from the aforesaid loan. I. M. 953; G. 774.

Neither Sophia, nor her husband, nor her children can invoke rescission of the obligation contracted. For the loan truly turned to their advantage. I. M. 678, 679, 953; G. 873.

Generosa is altogether held to restore the money received as a loan. The reason is that she herself truly perceived emolument from the loan, and because she obligated herself to restitution by a special contract. I. M. 953; G. 755. - C. I. 134; C. G. 217; I. M. 677, 678, 679; G. 1009.

…and 4 more passages — all of them are listed on the topic page.

Gury-Ballerini, Compendium of Moral Theology (8th ed., 1884)

Jean-Pierre Gury, S.J.; notes by Antonio Ballerini, S.J. — 13 passages

Vol. I, Treatise On Contracts, Second Part. On Contracts …, Sect. I, Ch. VI, Article II. On Usury, or on Profit Received from Mutuum

n. ¶1.

Usury, taken in a broad sense, is called every profit received from mutuum, or by occasion of it, whether with or without a legitimate title. But usury in the stricter sense is profit immediately proceeding from mutuum, that is, precisely by force of the mutuum, and without another just title. Nevertheless the crime of usury is not present if someone expects something for a mutuum, not as a debt, but from mere benevolence, provided implicit usury does not underlie it; or if he exacts a thing already owed elsewhere from justice, since thus in fact no new burden is imposed. St. Lig., n. 774, 777 and following. If it exceeds the limits of a just title, or is exercised toward the poor, it is called oppressive usury ¹.

¹ The case is not equal, that profit exceeds the limits of justice, and that profit in itself just is sought from the poor. For in the first case justice is injured, but in the second charity alone is injured, as the Author notes below. Therefore, since the obligation of restitution follows a violation of justice, and by no means merely the violated office of charity, for that reason the burden of restitution can indeed be urged in the former case, but not in the latter, at least if the matter is considered merely according to natural right.

Principles. I. Usury received by force of mutuum in a thing consumable by first use, as in wine, wheat, etc., is altogether illicit. The reason is that the use of such a thing is scarcely appreciable by price independently of the borrowed thing itself; but that thing furnishes title only to the restitution of a similar thing, nor is there a permanent use which can be equivalent to price ². Thus commonly.

² The intrinsic reason why usury received by force of mutuum is altogether illicit, if it is to be solid and so unshaken that it always retains its force, cannot be sought elsewhere than from the nature of this contract, which, by the certain opinion of all, is and must be gratuitous. And in fact, even if you suppose, which is false, that wine, wheat, etc., have no other use except that they are consumed, is it not some advantage which is procured for you, that here and now you can consume? But further, as will be said below, the reason why it is appreciable by price to grant one's own money or anything else to the free use of another is not to be sought, according to the very common sense of the Doctors, from the advantage which another receives from it, but rather from the inconvenience which, from the very nature of the thing, he undergoes who deprives himself, in favor of another, of the advantage of using his own thing. Therefore, just as, when treating of commodatum or donation, we certainly do not seek the reason why the donor or lender can lawfully exact nothing from justice from the fact that no utility appreciable by price accrues to the donee or borrower, or that the donor or lender assumes no burden appreciable by price for himself, but rather we must seek it from the nature of a gratuitous contract, by force of which one by spontaneous liberality renounces the right of exacting the deserved price for the use or full dominion of some thing granted to another; so also it seems it must be determined concerning the contract of mutuum, unless one wishes to be entangled and wrapped up in inextricable difficulties.

II. Oppressive usury is repugnant to natural law, whether it is done toward the poor or toward the rich: 1. if it is done toward the poor, because the lender is bound from charity ³ to give the mutuum gratuitously; 2. if it is done toward the rich beyond the limits of a just title, or at least of the legal rate, because justice requires that there be proportion between this title and the profit received from it, or between profit and the value of use ⁴. This is clear from various texts of Scripture.

³ If oppressive usury is said to be that which also exceeds the limits of some extrinsic title, the reason of guilt here arises not only from violated charity, but also from injustice; for the laws of justice must be preserved no less with the poor than with the rich.

⁴ A little before, in Principle I, the Author had determined beforehand that the use of the thing is in no way appreciable by price; but here, as it were, he proposes the value of use as a just title of profit. Thus, of course, and not otherwise, it must happen whenever, for asserting the gratuity of mutuum, you wish to use some reason other than that which you have in the preceding note to that first principle.

III. Usury can be excused from all injustice if a just title is present, for example, emerging damage, etc. The reason is that then the profit is received not by force of the mutuum, but by reason of an extrinsic title. For it is lawful for you to receive as much as you handed over; moreover, if from a hundred coins given you lose ten, in some way you disburse one hundred and ten. Therefore you can receive one hundred and ten.

IV. Usurers and their cooperators are bound from justice to restitution, since they injure commutative justice no otherwise than thieves themselves; therefore the rules handed down in the Treatise on Restitution are to be applied to them.

Questions. QUESTION 1. In doubt whether the borrower gave something above the principal gratis or not, can you retain it?

I answer affirmatively, with the common and more probable opinion, unless something else must be determined from the circumstances ⁵. St. Lig., n. 761.

⁵ Namely, what was received can be retained when, all things considered, it can prudently be judged from the circumstances that the borrower repaid it merely from a liberal gift. When the confessor sufficiently learns this, he will determine that the gift can be retained, both if the lender accepted it in good faith, and if in doubtful or even bad faith, namely as if it were owed to him from justice. For in the latter hypothesis he will indeed be bound to put aside the erroneous persuasion, as it were, of a debt paid to him, and his depraved disposition; but not likewise to lose that which has been conferred upon him by the legitimate title of donation.

Moreover, those words of St. Alphonsus contribute to the prudent judgment of which we have spoken (book 3, n. 761, question II): "In doubt, the borrower is regularly presumed to have given under compulsion, because men give their own things gratis with difficulty." Thus the holy Author, who nevertheless soon adds: "But in this doubt deference must be given to that party for which the stronger presumption stands; hence the Salmanticenses, Sporer, Lessius, say that it is to be presumed that the borrower with moral certainty donated, if he is not poor or avaricious, or did not give impelled by fear, nor from vexation or the request of the lender, or," add, "if the little gifts are of slight moment, as the Doctors commonly hold, even when the crime of simony is in question.... But the opposite is presumed if the lender before the donation signified that he wished something as owed to himself, or if the borrower is poor, or not accustomed to give, or if he pays before the return of the mutuum; because then he is easily presumed to give lest he soon be compelled to restitution." Nevertheless this question will rarely have place in practice, since in the common custom pacts are established beforehand.

QUESTION 2. Can the lender retain what the borrower gave from fear lest otherwise the mutuum be denied to him?

I answer affirmatively, more probably. The reason is that, for usury, it is required that it be given by force of a pact, or as a debt from justice. Thus more commonly. St. Lig., n. 763, inclines to this opinion.

QUESTION 3. Is it usury if you lend on this condition, that the borrower buy the things necessary to himself at a just price in your shop?

I answer affirmatively, if this is brought into a pact. The reason is that a burden is imposed on the borrower, and his liberty is restricted, which is illicit and unjust ⁶. St. Lig., n. 780, etc.

⁶ Although from a pact of this kind no damage or inconvenience comes to the borrower, nevertheless the pact will be repugnant to the nature of this plainly gratuitous contract, and therefore it will not lack some injustice. The same would have to be said if someone, with such a pact, gave another a vineyard; for in the same way pacts imposing a burden are repugnant to donation, which by its own nature is a gratuitous contract.

QUESTION 4. Can an antidoral donation, or one which is made from a grateful mind, be brought into a pact?

Vol. V, Pt. I, Ch. V, Section 5: The So-Called Onerous Contracts · Vol. V, Pt. I, Ch. V, Section 9: Sins Against the Property of Others

I answer negatively. The reason is that from pacts there necessarily arises a title of justice, but not a donation bestowed merely from a grateful mind. St. Lig., n. 764, and others commonly.

Tanquerey

Adolphe Tanquerey, S.S. — 43 passages (filed under the subtopics)

Vol. III, Contracts, and the Obligat…, On the Virtue of Justice (…, Part II — Chapter II: On Contracts in Particular

n. 864.

§ IV. On Onerous Loan, Or On The Contract Of Credit.

State of the question. After the things said concerning the lease of things and of services, it remains to speak of onerous loan, which by certain moderns is called the lease or quasi-lease of money, and by others the contract of credit.

¹ Among the almost countless works written on loan, the principal are: Gibalinus, De usuris, commerciis, Lyons, 1656; Bossuet, Traite de l'usure, 1682; Leotardus, Liber singularis de usuris, Lyons, 1682; Collet, Traite des usures, Paris, 1694; Thomassin, Traite du negoce et de l'usure, Paris, 1697; Broedersen, De usuris licitis et illicitis, Delft, 1743; P. Ballerini, De jure divino et naturali circa usuram, Bologna, 1747; Zech, Rigor moderatus doctrinae Pontificiae circa usuras, 1747 (Migne, Curs. Th., XVI, 763-996); Biner, Dissertatio juridica de usuris, 1766 (ibid., 996-1007); Card. de la Luzerne, Dissertations sur le pret de commerce, Dijon, 1823; Pages, Dissertation sur le pret a interet, Lyon, 1830-1838; Funk, Zins and Wucher, Tubingen, 1868; id., Zur Geschichte des Wucherstreites, Tubingen, 1901; Ashley, An Introduction to English Economic History and Theory, London, 1892; W. Blissard, The Ethic of Usury and Interest, 1892; J. Favre, Le Pret a interet dans l'Anc. France, Paris, 1900; H. Savatier, La theorie moderne du capital et la justice, Paris, 1898; Bohm-Bawerk, Capital und Capitalzins, rendered into French under J. Bernard's care: Histoire critique des theories de l'interet du capital, Paris, 1902-1903.

(A) Loan in general is a contract by which a fungible thing, or a thing consumable by first use (above, n. 121-122), is handed over to another on this condition, that, at the appointed time, a thing of the same species and quality be returned. - It differs therefore from commodatum, in which the same identical leased thing is returned, because it is not consumable by first use, but permanent; and also from lease of things, in which the lessor retains dominion of the leased thing, while in loan the dominion of the money is transferred to another; hence in lease the thing perishes for the owner, while in loan it perishes for the borrower (emprunteur), who is held to return a similar thing to the lender (preteur).

Loan, according to Roman civil law, is a contract of itself gratuitous, and under this respect it is also distinguished from lease, which is of itself an onerous contract (n. 779). But the question is whether loan can be onerous, namely whether the lender can justly receive, beyond the thing lent (which is called the principal), some gain, namely an increase or interest. This was formerly disputed with great heat among theologians and economists, and today also is frequently debated among sociologists.

n. 865.

(B) For understanding this better, certain notions must be set forth. (a) Today money is considered under a twofold respect: as a medium of exchange (moyen d'echange), insofar as by the help of money any thing whatever can be procured; as a medium of production (moyen de production), insofar as it is capital and an instrument by which new things are produced. Now ancient philosophers and theologians generally held money as a medium of exchange and a measure of saleable things; wherefore they called it sterile, because in reality under this respect it bears or produces nothing.¹ - But modern economists teach that money is not only the measure of saleable things, but also and chiefly a medium of production, insofar as it greatly contributes to producing new things; whence they say that it is virtually fruitful, insofar as it can at once be changed into fruitful things of any kind, and therefore is able to beget many things.

¹ Van Roey, De justo auctario ex contractu crediti, Louvain, 1903, p. 150-175; V. Brants, Les Theories economiques aux XIIIe et XIVe siecles, Louvain, 1895, p. 133-138.

(b) Wherefore loan can be industrial or commercial, when it is made for producing or distributing new things, namely when money is handed over to those who give themselves to industry or commerce for this end, that they may make something estimable by price; or a loan of necessity, when money is given on loan to the needy, so that from it they may procure for themselves the necessities of life. - Now in antiquity the loan of necessity mostly flourished, while today commercial loan is very frequently made.

n. 866.

(c) Moreover the increase or interest received from money lent can be moderate, if, with attention to the practice commonly observed by honest men of this place or time, it does not exceed just limits; or immoderate, if, with all things considered, it goes beyond the limits determined by the upright. Moreover in antiquity interest was not rarely immoderate, namely twenty, thirty, and sometimes fifty percent; while today, among cultivated Nations, it does not exceed five or six percent.

Today the word usury generally designates an immoderate increase; formerly it signified whatever was received beyond the principal, and therefore even moderate interest.

All these things indeed must be kept before one's eyes when ancient authors are read and the history of loan is sketched.

Since the matter is very involved, and the principal difficulties arise from history, we shall hand on a historical survey of this question, setting forth: 1. the doctrine of each Testament; 2. the theories of ancient legislators and philosophers; 3. the common doctrine of the Fathers and Councils up to the twelfth century; 4. the opinions of the Scholastics and the decisions of Councils up to the sixteenth century; 5. the principal systems of the moderns; 6. the doctrine of Benedict XIV and practical resolutions of the Congregations; 7. today's theories concerning loan; 8. the solution of the difficulty which seems more consonant with authority and reason at the same time.

I. The Doctrine Of Each Testament Concerning Loan Is Set Forth.

n. 867.

1. Before Christ, under the Mosaic law, usury was prohibited to the Jews among themselves, but was permitted to them with respect to foreigners.

(A) It was prohibited to Jews among themselves, especially toward the poor and in an excessive way: "If thou lend money to my people, poor, who dwells with thee, thou shalt not urge him as an exactor, nor oppress him with usuries";¹ a little below: "Thou shalt not lend to thy brother at usury money, nor fruits, nor any other thing, but to a foreigner. But to thy brother thou shalt lend without usury that which he needs, that the Lord thy God may bless thee in every work of thine in the land into which thou shalt enter to possess it."² That this law was not accurately observed is gathered from the fact that the Prophets reprove usuries, and praise those who do not give their money at usury;³ wherefore, after the captivity, Nehemiah rebuked usurers thus:⁴ "And my heart thought with me, and I rebuked the nobles and magistrates, and said to them: Do you exact usuries, each one from your brethren?... The thing which you do is not good." - Now from the context it is sufficiently evident that, in all these places, the matter concerns a loan made to the needy, but not a commercial loan.

¹ Exod., XXII, 25; cf. Levit., XXV, 35-37.

² Deut., XXIII, 19-20; cf. XV, 7-10. - La Luzerne, op. cit., t. I, p. 211-284, shows at length that these texts do not regard commercial loan.

³ Ps. XIV, 5; Ps. LXXI, 14; Ezek., XVIII, 5-20.

⁴ Nehem., V, 7, 9.

(B) Onerous loan was permitted with respect to foreigners; this is certainly clear from the words related above: "Thou shalt not lend to thy brother at usury... but to a foreigner." This indeed is easily understood, if it is kept before the eyes that, under the Old Law, the Jews did not cultivate charity toward foreigners in the same way and to the same degree as among themselves.

From this, moreover, it can at once be gathered that moderate usury is not absolutely and intrinsically evil; otherwise it could not have been permitted by God even toward strangers. - Some indeed have said that this was permitted by force of the supreme dominion of God, as if, namely, he had given to the Jews the power of despoiling foreigners; but this distorted evasion does not please honest men: so unusual a derogation from natural right cannot be admitted without a solid reason.

n. 868.

1. Christ himself handed down these things concerning onerous loan: (a) in the parable of the talents, the master thus speaks to the servant who had hidden the talent received: "Thou oughtest therefore to have committed my money to the bankers, and on my coming I would certainly have received what is mine with usury."¹ From this some wished to infer that interest from commercial loan is legitimate; but undeservedly; for here the matter concerns a parable, in which Christ sets forth what those who possessed money were accustomed to do in his time, without by that fact wishing to approve their manner of acting; he indeed does not reprove them, but neither does he intend to praise them, since the primary end of the parable is to show that those alone are to be rewarded who have used well the talents received from God.

¹ Matt., XXV, 27.

(b) Elsewhere, speaking of charity, he says: "But love your enemies; do good, and lend, hoping for nothing thereby; and your reward shall be great."² From this it is certainly gathered that one of the works of charity which obtain an eternal reward is gratuitous loan; but whether, and in what cases, it is commanded to lend money is not clearly defined, but must be determined from the rules concerning alms. But, as is clear, nothing is said about money handed on loan to the richer, and destined to produce new things; Christ by no means intended here to discuss industrial matters. - In the same sense he says: "To him that asks of thee, give: and from him who wishes to borrow from thee, turn not away";³ there likewise loan is enumerated among works of charity, and nothing is said about onerous loan, which therefore in the Gospel is neither approved nor condemned.

² Luke, VI, 35. - In the older Latin versions it is read: despairing nothing, that is, do not fear lest your money perish; - in the Syriac version: and do not cut off the hope of anyone, that is, do not cast anyone into despair by denying money to one in need. Cf. Fillion, Les SS. Evangiles, Saint Luc, in this place. - Some Fathers understood these words in this sense, that even the return of the principal itself ought not to be expected. (La Luzerne, t. I, p. 290-329.)

³ Matt., V, 42.

It must be noted that under the New Law no distinction is made between Jews and foreigners, but gratuitous loan is commended with respect to all.

II. The Theories Of Ancient Philosophers Concerning Loan.

n. 869.

Usury prevailed among most pagan peoples, and generally was approved by laws; but commonly it was reproved by the philosophers themselves.

Thus, among the Greeks, immoderate usury flourished: namely borrowers had to pay at least twelve and often thirty percent. Before the times of Solon, debtors who could not furnish interest were reduced to servitude; yet the wise Athenian legislator prohibited this,¹ although he permitted onerous loan.² - But the philosophers, by no means distinguishing between use and abuse, condemned all usury as alien to nature. Plato reproves it as contrary to the equality of citizens: according to him, to avoid seditions, it is necessary that there not be two orders of citizens, one very rich and the other very poor; therefore the means by which riches can easily be procured must be prohibited, especially certain forms of commerce and usuries.³ - Aristotle likewise, averse from every gainful exchange of money, condemns usury especially as contrary to the right of nature; for money of itself is sterile, because coin does not beget coin; nevertheless usurers wish to gain money from money, as if it were fruitful.⁴

¹ Schomann, Antiquites grecques, trans. by Galuski, Paris, 1884, t. I, p. 376-379.

² A. Boxler, Precis des Institutions publiques de la Grece et de Rome, Paris, 1903, p. 72.

³ Plato, de Legibus, V, 742.

⁴ Aristotle, Polit., l. I, c. 3, n. 23.

Among the Romans, by the law of the twelve Tables, unciary interest was permitted, that is, ten percent; from the time of Sulla, centesimal usury began to flourish, that is, twelve percent; not rarely, however, money-lenders demanded double centesimals, or twenty-four percent; when Christian emperors reigned, semisses usuries prevailed, namely six percent.⁵ - Yet Roman philosophers reproved usuries no less strictly than the Greeks; thus Cicero⁶ says that, according to Cato, to lend at interest is the same as to kill: "When he was asked what was most expedient in household property, he responded, to feed well... And when he who had asked said, what about lending at interest? Then Cato said, what about killing a man?" Likewise Seneca:⁷ "For what are these things, what are debt-book and calendar and usury, except names of human cupidity sought outside nature?"

⁵ A. Boxler, op. cit., p. 215.

⁶ De officiis, II, near the end.

⁷ Seneca, De Beneficiis, VII, 10.

These things indeed must be kept before one's eyes when the doctrine of the Fathers is weighed.

III. The Doctrine Of The Fathers And Councils Concerning Usury Up To The Twelfth Century.

n. 870.

1. The Fathers generally held usury as something contrary to Christian charity, since in the Gospel it is commended and commanded to give money on loan to the needy, without any hope of gain; indeed, especially in the fourth and fifth centuries, since immoderate usuries were not rarely extorted from the poor, several Fathers openly denounced this as inhuman and unjust. Yet a few tolerated or permitted some moderate gain to be received from money lent. We shall declare this by setting forth certain places of the Fathers.

n. 871.

(A) In the first three centuries, the Fathers teach only that interest exacted from a needy person is opposed to the precept of charity and mercy.

(a) Thus, among the Greeks, Clement of Alexandria, speaking of the Mosaic law insofar as it is the source of all moral doctrine, commends its humanity from the fact that it prohibits exacting interest from brethren:¹ "But concerning largess and communication, although many things could be said, it suffices to say this, that the law prohibits lending at interest to a brother; naming as brother not only him who was born from the same parents, but also him who has been of the same opinion, and a participant of the same Logos; not judging it fair that we gather usuries from money, but that with open hands and souls we gratify the needy."

¹ Clem. Alex., Stromat., l. II, c. 18, Migne, P. G., VIII, col. 1023.

(b) Among the Latins, St. Cyprian,² in describing the corrupt morals of Christians, severely rebukes very many Bishops, "who ought both to be an exhortation to the rest and an example," and nevertheless, divine care having been contemned, increase interest by multiplying usuries. - But Tertullian,³ proving against Marcion that the New Testament does not contradict the Old, observes that the prohibition of usuries which is found in Ezekiel (l. cit.) prepared the way for the more perfect law which commends that the lender renounce the principal itself; for thus they interpret the words of Luke: hoping nothing thereby.

² St. Cypr., De lapsis, c. 6, Migne, P. L., IV, col. 470-471.

³ Adversus Marcionem, l. IV, c. 17, Migne, P. L., II, 398-399.

n. 872.

(B) In the fourth and fifth centuries, the Fathers inveigh much more strongly against usurers; and deservedly: for in these times usuries were sometimes carried even to fifty percent, and sometimes the children of those who could not pay interest were sold as slaves;¹ it is therefore not wonderful that usuries of this sort were reproved as inhuman and unjust.

¹ Troplong, Contrat de Pret, Preface, p. LXXXII.

(a) Among the Greeks, St. Basil has an entire homily against money-lenders,² in which he declares usury to be reproved by the Sacred Scriptures: "For in reality it is very great inhumanity, that he indeed who lacks necessaries seeks a loan for the support of life, while this one is not content with the principal, but devises revenues for himself from the calamities of the poor, and gathers riches."³ Afterwards he vividly describes the miserable lot of the borrower:⁴ "He who has received silver is at first indeed splendid and cheerful... but, when the monies gradually flow away, and time, advancing, brings interest with it, then nights bring him no rest, the day is not cheerful, the sun not pleasant, but life wearies him. He hates the days hastening toward the appointed time, he fears the months as parents of interest. But if he sleeps, he sees the money-lender in dreams, which is an evil dream over his head, standing by; but if he wakes, he thinks and is anxious about the interest." At the end, he rebukes the usurer thus:⁵ "You make gain from calamities, you gather silver from tears, you strangle the naked, you beat the hungry: nowhere is mercy." From these things it is established that the matter here concerns a loan furnished to those in need.

² In Migne, P. G., XXIX, col. 263-280.

³ Ibid., 266.

⁴ Ibid., 267.

⁵ Ibid., col. 279.

St. Gregory of Nyssa likewise has a whole oration against usurers,⁶ where, besides biblical arguments, he brings another philosophical one drawn from the sterility of money; God alone is so omnipotent that he can produce something from things by no means fertile: "But you, of bronze and gold, things not accustomed to bear, do not seek offspring, nor compel poverty to furnish those things which belong to the rich, nor him who seeks the principal to pay usuries."⁷

⁶ Migne, P. G., XLVI, col. 433-452.

⁷ Ibid., 442.

St. Chrysostom asserts that usuries are prohibited by Christ with respect to all, while in the old Law it was forbidden to exact them from brethren alone; and from this he extols the humanity of Christ: "And see the humanity of the Lord. In these sensible monies he prohibited anyone from receiving usury. Why and for what cause? Because each one is afflicted with great damage. For the debtor indeed is worn away by want, but the creditor, increasing riches, accumulates for himself a multitude of sins."⁸ - Proceeding further, he declares that those who oppress the poor with usuries are guilty of injustice:⁹ "Those who are commanded to open their treasures to the needy grow rich from the poverty of others, devising a specious robbery and a well-colored avarice... this is a bond of injustice... Are there not many just trades? Of fields, flocks, herds, manual labors, and skillful care of the household? Why do you rage madly so that you may reap thorns in vain?" - These words indeed are rather easily explained of immoderate usuries toward the poor.

⁸ In Genesim homil. 56, Migne, P. L., LIII, 377.

⁹ In Matth. homil. 56, Migne, P. L., LVII, col. 556-558.

n. 873.

(b) Among the Latins, St. Ambrose, in the book on Tobit, discusses usury at length,¹ which is a grave sin; for the money-lender hands over to the poor man money which is idle, so that he may receive more than he gave: "He seeks medicine, you offer poison; he begs bread, you extend a sword; he beseeches liberty, you inflict servitude; he prays for release, you tighten the knot of a shapeless snare."² There usury is reprehended as something inhuman.

¹ Migne, P. L., XIV, col. 762-794.

² Ibid., col. 763.

St. Augustine teaches the same, reproving every interest received from any thing whatever:³ "I do not wish you to be money-lenders, and therefore I do not wish it because God does not wish it... And how detestable it is, how hateful, how execrable, I think even the money-lenders themselves know... if you have lent at interest to a man, that is, have given your money on loan, from whom you expect to receive something more than you gave; not money alone, but something more than you gave, whether that is wheat, or wine, or oil, or any other thing; if you expect to receive more than you gave, you are a money-lender, and in this you are to be disapproved, not praised."

³ Enar. in psalm. XXXVI, Migne, P. L., XXXVI, col. 386.

St. Leo the Great calls unjust the manner of acting of those who oppress the poor with usuries: "Unjust and shameless avarice, which says that it furnishes a benefit, when it deceives... The iniquity of interest must be fled altogether: and gain which lacks all humanity must be avoided. Wealth is indeed multiplied by unjust and sorrowful increases, but the substance of the mind wastes away: since the interest of money is the funeral of the soul."⁴

⁴ Sermon XVII, al. XVI, in Migne, P. L., LIV, 181.

From these and other places, in which the same doctrine is contained, it can be gathered: (a) usury received from the needy is something inhuman and opposed to the precept of charity; (b) in certain cases, immoderate usuries exacted from the poor are truly unjust; (c) but nothing certain can be defined with respect to commercial loan, about which the Fathers are silent.

n. 874.

1. At the same time, Councils first prohibited clerics from receiving usuries; then gradually extended this prohibition to laymen themselves; finally they asked from civil legislators that laws permitting usury be changed.

(A) Already among the Canons of the Apostles (fourth century) we read: "A bishop, or presbyter, or deacon exacting usuries from debtors, either let him desist or certainly be condemned."⁵ - The Council of Elvira (Eliberitanum, 305) also prohibits laymen from receiving usuries, although it acts more mildly with them than with clerics: "If any of the clerics shall have been detected receiving usuries, it has pleased that he be degraded and abstained. But if any layman is proved to have received usuries, and, corrected, shall have promised that he will now cease and will exact no further, it has pleased that pardon be granted him. But if he shall have continued in iniquity, he is to be cast out from the Church."¹ - But the general Council of Nicaea (325) treats only of clerics who were exacting centesimals (12 percent):² "The holy and great Synod judged it fair that, if anyone shall have been found after this definition receiving usuries... he be deposed from the clergy." - The provincial Council of Carthage (about 419) brought penalties against usurious clerics, at the same time reprehending usury in laymen; for it says: "What is reprehended in laymen ought much more to be condemned beforehand in clerics."³

⁵ Can. 44, in Mansi, Sacr. Concil. Collectio, Florence, 1759, t. I, p. 56. - Cf. La Luzerne, op. cit., t. III, 1st part, 256-386, where all the canons published concerning this matter are gathered.

¹ Can. 20, in Mansi, t. II, p. 10. - Yet not a few critics hold this last sentence suspect, since it is lacking in Ivo and the Panormia, Migne, P. L., CLXI, 805, 1167.

² Can. 17, in Mansi, t. II, p. 675.

³ In Mansi, t. IV, p. 494.

(B) Already from the eighth century the prohibition of usury becomes common even with respect to laymen; Aachen (Aix-la-Chapelle, 787): "In the law the Lord himself commanded that it be altogether forbidden to all to give anything at usury";⁴ likewise Paris⁵ (829) and Meaux⁶ (845). - Indeed, from the ninth century, certain Councils declare usurers to be subject to restitution: "If those from whom they exacted usuries survive, let them restore to these what they are proved to have taken more abundantly."⁷

⁴ Mansi, t. XIII, p. 825.

⁵ Mansi, t. XIV, p. 470.

⁶ Mansi, t. XIV, p. 831.

⁷ Mansi, t. XIV, p. 937.

At about the same time, namely in the age of Charlemagne, civil law, at the persuasion of the Church, prohibited usuries to all.⁸

⁸ "It is only at capitular legislation that one must arrive to find the abrogation of imperial laws on usuries and the agreement of Church and State for proscribing their use. The capitulary of Aachen of 789 (lib. 1, c. 5) forbids usuries to all without exception: Omnino omnibus interdictum est ad usuram aliquid dare. This prohibition is repeated in another Capitulary of 813 (lib. V, c. 38): Usuram non solum clerici, sed nec laici christiani exigere debent." (Troplong, op. cit., CX-CXI.)

n. 875.

1. Although in these times no explicit distinction was made between immoderate usury and moderate interest, a few facts and testimonies are alleged from which it seems to be established that a moderate increase was tolerated or permitted. Thus Sidonius Apollinaris (430-488), bishop of Clermont, narrates that he went to a creditor named Maximus, to seek delays in favor of a friend burdened with debt; the creditor, who had been made a cleric, benignly granted the delays and forgave the usuries; Sidonius praises this act as a work of piety and mercy, and adds that the creditor had the right to receive the usuries, "since he could exact the whole," that is, the principal and increase, as appears from the context.¹

¹ Sidonius, Epistle 24, Migne, P. L., t. LVIII, col. 528-531.

n. 876.

Likewise St. Gregory the Great (540-604) asks Anthemius to go to a certain creditor, who had handed merchandise to another under the condition of some interest, and ask him to yield from his right, because matters had succeeded badly for the debtor, thus supposing some moderate gain to be legitimate: "Let him not expect gain from another's loss, but, the principal of the price having been received, let him be content, so that whatever he shall have yielded to the poor man, almighty God may compensate to him, as he has promised, by a multiplied restitution."²

² Epist. 38 to Anthemius, Migne, LXXVII, col. 973.

Likewise St. Gregory of Tours (538-593) narrates that Desideratus, bishop of Verdun, asked King Theuderic to lend some money to citizens engaged in business, promising that he would return the money with legitimate usuries: "We shall return your money with legitimate usuries."³ In reality the citizens traded with that money, and indeed with a happy outcome; but the king liberally refused the money offered. - From these things it seems to be established that a certain moderate interest was held as legitimate.

³ Histor. Franc., l. III, n. 4, Migne, P. L., LXXI, col. 267.

n. 877.

1. Nevertheless, from the time of Gratian (1150), usury was universally prohibited: for Gratian, in his Decree, inserted those sentences of the Fathers and those Canons by which usuries are reproved in a general way.⁴ Afterwards Gregory IX, in the Decretals, promulgated an entire title De Usuris,⁵ where suspension is decreed against usurious clerics, and excommunication against laymen.

⁴ Decret. Grat., 2nd p., cause XIV, q. 3-4, p. 734-738, ed. Friedberg.

⁵ Decretal. lib. V, tit. XVIII, p. 811-816, ed. Friedberg.

IV. The Theories Of The Scholastics And The Decrees Of Councils Down To The Sixteenth Century.

n. 878.

For rightly understanding the doctrines of the scholastics concerning loan, it helps to set forth the opinion of St. Thomas, whom nearly all the others followed.⁶

⁶ St. Thom., 2. 2., q. 78; Quodlibet III, art. 19; De Malo, q. 13, art. 4.

Doctrine of St. Thomas. (A) "To receive usury for money lent is, according to itself, unjust."⁷ To prove this, he asserts, after Aristotle, that money was principally invented for making exchanges, and thus the principal use of money is its consumption; he treats therefore of loan destined for consumption, not for commerce. This being posited, he thus proves his thesis: (a) If interest is received for money, that which is not is sold, namely the use of the thing which is not distinguished from the thing itself; or, in other words, a double compensation is demanded for the same thing: one indeed, the restitution of an equal thing; but another, the price of use, which is called usury; this is unjust. For, in consumable things, the use of the thing ought not to be counted separately from the thing itself, but to whomever the use is conceded, by this very fact the thing is conceded; if therefore, besides the principal, some interest is demanded, the use of the thing is unjustly sold, as if it were distinct from the thing itself; just as he would act unjustly who, after he has sold wine at a just price, would wish again to sell the use of the wine separately. (b) Besides, money, which principally is a medium of exchange, is sterile, and therefore nothing can be received for its use.

⁷ St. Thom., 2. 2., q. 78, a. 1.

n. 879.

(B) But by accident some gain can be received from money lent: (a) "If someone conceded coined money for display or for placing in the place of a pledge; and man can licitly sell such a use of money."¹ For then money is not destined for consumption, but for another use, from which gain is legitimately received. (b) "He who gives a loan can without sin draw into an agreement with him who receives the loan the recompense of damage by which something which he ought to have is withdrawn from him; for this is not to sell the use of money, but to avoid damage."² Behold the origin of the extrinsic title which afterward was called emergent damage. (c) "He who commits his money either to a merchant or to a craftsman by way of a certain partnership does not transfer the dominion of his money to him, but it remains his; so that the merchant trades with it, or the craftsman works with it, at his risk; and therefore thus he can licitly seek a part of the profit proceeding from it, as from his own thing."³ Or, in other words, he who enters a contract of partnership with a merchant and craftsman, lending money so that this man may trade or work with it, licitly receives some gain, because he retains dominion of the money and undergoes the risk of the principal.

¹ St. Thom., 2. 2., q. 78, a. 1, ad 6.

² St. Thom., 2. 2., q. 78, a. 2, ad 1.

³ Ibid., ad 5.

n. 880.

1. Decrees of Councils. These things having been set forth, the Canons of the Councils of this time can be better understood. For since in the Middle Ages industry and commerce did not greatly flourish, money was handed on loan, at least for the most part, not for producing new things, but for consumption, to the needy, and often with the greatest increase (15 and 20 percent):¹ whence it is not wonderful that usury was strictly prohibited. Thus the Third Lateran Council (1179) says that usuries are condemned by the pages of each Testament, and strikes usurers with excommunication.² Lyons II (1274) besides prohibits houses from being leased to foreigners wishing to hire them for exercising usuries.³ But Vienne (1311), after renewing the excommunications formerly laid down, also condemns the error of those who pertinaciously assert that usury is not a sin: "If anyone shall have fallen into that error, that he presume pertinaciously to affirm that to exercise usuries is not a sin, we decree that he is to be punished as a heretic."⁴ It is not there defined whether usury is a sin against justice or against charity, whether against the natural law or against positive law. Nor likewise is it declared what usury is; but afterward, in the Fifth Lateran Council (1515), this notion was handed down, which can be accommodated to the definition of the Council of Vienne: "This is the proper interpretation of usuries, namely when from the use of a thing which does not germinate, with no labor, no expense, or no danger, gain and fruits are studied to be acquired."⁵ Wherefore he does not exercise prohibited usuries who receives gain from a thing which is fruitful, or is exposed to some danger of the principal. - Around the end of the sixteenth century, Sixtus V reproves "the gulf of usuries, hateful to God and men, condemned by the sacred canons, and contrary to Christian charity."⁶

¹ "From the twelfth to the fourteenth century, in France and England, on the part of the Lombards and Jews, the rate of 20 percent is cited. Philip IV of France fixes the maximum interest at 20 percent, and lowers it to 15 percent for the fairs of Champagne." (P. Leroy-Beaulieu, Traite, t. II, p. 148.)

² Mansi, t. XXII, p. 231.

³ Mansi, t. XXIV, p. 99.

⁴ In Denzinger, n. 407.

⁵ In Denzinger, n. 623.

⁶ Bullar., p. 4, t. 4, p. 263.

n. 881.

Many indeed of today's writers turn it into a fault for the Scholastics and Councils that they were ignorant of economic laws and, by the prohibition of usuries, retarded the progress of industry and commerce. - We observe first that the error of which they are accused is not moral, but economic; for they thought that money was sterile, and from this inferred that no interest could be received from money lent according to itself: this principle is true, if money really is altogether sterile. Besides, the error of fact which is attributed to them can easily be excused. For money in itself is truly sterile, and is not made fruitful except when it is turned into fruitful things. Now in the Middle Ages it was very difficult, because of the economic conditions of that time, to turn money into fruitful things: namely, lands could scarcely be procured, because of the system which they call feudal; industries were local and reserved to workers' associations; commerce was exercised only by a few, namely Jews and Lombards; it is therefore not wonderful that money was commonly held as sterile.¹

¹ "With a very narrow market, without powerful equipment and without active industry, when great enterprises were reduced to the construction of churches and feudal fortresses, productive employments of money were lacking. There was scarcely place, at least in the twelfth century and almost still in the thirteenth, except for loans for consumption... The fixity of feudal property and the general immobility of conditions even excluded what we call today employments in immovables." (J. Rambaud, Histoire des doctrines econ., p. 39.) On the state of industry and commerce, and also on the economic doctrines of the Middle Ages, cf. W. J. Ashley, An Introduction to English Economic History and Theory, London, 1892-1893; Ch. Jourdain, Memoires sur les commencements de l'Economie polit. dans les ecoles du Moyen Age (Mem. Acad. Inscr. et B. L., t. 28, 1874); L. Cossa, Di alcuni studii recente sulle teorie economiche nel Medio Evo, Milan, 1876; Espinas, Histoire des doctrines econom., Paris, s. d., p. 72-119; V. Brants, Les Theories economiques aux XIIIe et XIVe siecles, Louvain, 1895.

Besides, if by this prohibition the Church in some way retarded the progress of commerce, she favored agriculture and also small industries, and contributed not a little to the dignity and happiness of workers. Besides, by the contract of partnership and other agreements of this sort, provision was sufficiently made for the evolution of industry, until the invention of machines gave rise to a new state of things, and to a new form of loan which is called the contract of credit.

n. 882.

1. Mitigation of discipline concerning usuries. Already from the fifteenth century a milder discipline gradually began to flourish. (A) First indeed there were instituted Mounts of piety (Monts-de-piete, Funds of piety), in which monies and other fungible things were collected which were handed on loan to the poor, by means of some pledge and moderate increase. Now the Fifth Lateran Council (1515) solemnly declared that these mounts were licit and meritorious, "in which, for their expenses and indemnity, something moderate is received only for the expenses of the ministers and of other things pertaining to their preservation, as stated before, merely for their indemnity, beyond the principal, without the gain of the same Mounts." From this it also happened that wealthy merchants, especially Lombards, obtained from princes the license of receiving moderate gain from loan, as was done in the Mounts of piety. And thus provision was made for the necessities of the poor.

n. 883.

(B) Afterwards, even with respect to the rich, besides the contract of partnership (above, n. 879), there was recognized the contract of census, by force of which there was acquired the right of receiving an annual pension, first indeed from a fruitful thing alienated, then also from money handed over to another. Such a contract did indeed differ from loan, because money was handed over to another in perpetuity, on this condition, that an annual census (rente annuelle) be paid; but, when it was stipulated that the census would be redeemable, in reality that contract was scarcely distinguished from onerous loan. Wherefore it was reproved by Pius V (1569); nevertheless it was held as legitimate by not a few theologians and canonists.¹

¹ Thomassin sketched the history of this contract of census, op. cit., p. 453-471.

n. 884.

(C) Likewise extrinsic titles, from which interest can legitimately be received from money lent, began to be multiplied; namely, not only emergent damage was admitted (above, n. 879), but also ceasing gain, which namely is verified when the lender loses the occasion of gaining, insofar as with his money he wished to buy a census or fruitful field, or to trade licitly; and also danger to the principal, insofar as it is legitimately feared that the money lent may be lost.

(D) Soon by custom and civil law the practice prevailed, in the sixteenth century, of receiving moderate interest (5 percent), as distinct from usury; this indeed Pichler, S.J., acknowledged as legitimate on account of the public good. - Moreover, as opportunities for using money for trading increased, not a few theologians taught that it is permitted to any merchant to demand an increase for a loan, as the price of the obligation of lacking money for a certain time, even if in reality no gain ceased thereby.

n. 885.

(E) Likewise the triple contract was acknowledged by many as licit, so called because a threefold agreement was included in it: a contract of partnership, a contract of insurance of the principal, and a contract of insurance of gain. Namely Peter and John enter a partnership of trading, into which Peter contributes 1000 gold pieces, and John his works: Peter hopes from this to gain 200 gold pieces; behold the contract of partnership. But Peter, who does not wish the principal to be endangered, offers John 50 gold pieces so that he may insure the principal: behold the contract of insurance of the principal. But because he prefers a lesser certain gain to a greater uncertain gain, he sells to John the hope of gaining 200 gold pieces for 100 gold pieces: behold the contract of insurance of gain. When the trading has finished, therefore, Peter will receive 50 gold pieces. Now it is easily understood that by this manner of acting interest of 5 percent is received for money.

But the contract mohatra was deservedly reproved, by which, under the appearance of sale-purchase, immoderate usuries were received.²

² The contract is entered thus: Peter, needing one hundred gold pieces, wishes to borrow them from John; John denies the loan, but offers to Peter goods to be sold on credit at the highest price, e.g., one hundred and ten gold pieces, with the agreement that Peter immediately sell back the same goods to John at the lowest price, e.g., one hundred gold pieces; thus Peter indeed obtains one hundred gold pieces, but, after a year has elapsed, will return one hundred and ten.

V. The Theories Of The Moderns Concerning Loan.

n. 886.

1. The theories of Protestants. The first defenders of onerous loan were Calvin and Molinaeus (Dumoulin), who had not a few followers.

(A) Calvin (1509-1564) taught that not every usury is a sin, but only that which is opposed to charity toward the miserable, or is opposed to justice, as demanding immoderate interest. For the texts of Scripture adduced above regard only Jews; but reason shows that usury is legitimate, because money is not sterile, but is virtually fruitful, insofar as fruitful things can be procured with it.¹ Oecolampadius, Viretus, and Rivetus followed him.

¹ He set forth his doctrines in Comment. ad Ezechielem, and in Epist. ad Oecolampadium; cf. Favre, op. cit., p. 127-129; Bohm-Bawerk, op. cit., t. I, p. 32-34.

(B) Molinaeus (1500-1566), a very celebrated Parisian jurist, asserted that money must indeed be lent to the poor without any interest, but that moderate usury is legitimately received from a loan granted to traders; for the public good requires that traders be able to borrow money; now they will not be able to obtain this unless they pay some increase.²

² Tractatus contractuum et usurarum redituumque pecunia constitutorum, 1546; cf. Favre, op. cit., p. 130-145; Bohm-Bawerk, op. cit., t. I, p. 34-38.

(C) Grotius contended that, by natural right, moderate usury is permitted, but confessed that it is prohibited by divine right.³ - Pufendorf held that it is permitted by both natural and divine right: "For although a coin does not beget another, nevertheless, after eminent price was conferred upon it, by means of the industry of men it is certainly rendered most fruitful, things naturally and civilly fruitful having been procured for it."⁴ - Salmasius (Claude de Saumaise, 1588-1658) judged that money can be leased, or that the use of money is saleable, just as the use of all fruitful things is: for money, like a field, is rendered fertile by human industry.⁵

³ De Jure belli ac pacis, lib. II, cap. XII, § 20-23; Commentar. in Lucam, VI, 35; cf. Favre, p. 158-161.

⁴ De jure naturae et gentium, lib. V, cap. 7, § 10; cf. Favre, p. 161-165.

⁵ Salmasius, De usuris, 1638; De modo usurarum, 1639; Dissertatio de foenore trapezitico, 1640; Diatriba de mutuo, 1640; cf. Favre, p. 148-153; Bohm-Bawerk, I, p. 41-47.

n. 887.

1. The theories of economists. Many writers who gave themselves to political and economic matters generally taught that moderate usury is necessary - and therefore legitimate - for the public good, but especially for commercial affairs.

Thus Montesquieu (1689-1755) handed down that trading would be impossible without onerous loan;¹ Condillac (1715-1780) taught the same,² and Turgot, who besides added that money is fruitful, insofar as it is as it were capital, which greatly serves for producing new things;³ and also Bentham, who contended that the amount of the increase is to be defined not by law, but by the free convention of those making the agreement.⁴

¹ Montesquieu, Esprit des Lois, liv. XXII, ch. 19-22; cf. Favre, p. 216-220.

² Condillac, Le commerce et le gouvernement, ch. 18; cf. Favre, p. 224-226.

³ Turgot, Memoire sur les prets d'argent, presented to the Council of State in 1769.

⁴ Bentham, Defense of Usury, 1787, in French: Lettres sur l'usure, 1787; cf. Favre, p. 232-237.

n. 888.

1. Opinions of certain theologians. Moved by these arguments, some Catholic theologians began to hand down a milder doctrine concerning usury; thus, among others, J. Gibalinus, S.J., who openly defended the liceity of the triple contract;⁵ - Maignan, of the Order of Minims, who acknowledges as licit the contract of committed money, "by which someone, retaining for himself dominion of property in his own money, and therefore the right to seek it back, hands it over for trading, not by his own work, but by another's work and industry hired for this, with an agreement of vindicating for himself one moderate part of the gain, to be determined by the judgment of prudent persons";⁶ - Le Correur, a Parisian priest,⁷ who distinguishes a twofold loan: one, by which a thing is given for consumption, another by which it is given for trading; now gain received from the former, as from a sterile thing, is usurious, but gain accepted from the latter is licit, because the thing is given for a use estimable by price; - Scipio Maffei, who teaches that usury is indeed unjust when gain is demanded beyond the measure determined by laws, or from the poor; but that moderate gain received from the rich, who seek a loan for amplifying fortune, is licit.¹

⁵ Gibalinus, De usuris, commerciis, deque aequitate et usu fori Lugdunensis, Lyons, 1656.

⁶ Maignan, De usu licito pecuniae, Toulouse, 1673, p. 42. P. de Calonia, of the same Order, taught almost the same, Eclaircissement sur le legitime commerce des interets, Lyon, 1676; cf. Carriere, III, n. 1114, note 1.

⁷ Le Correur, Traite de la pratique des billets entre les negociants, Mons, 1684.

¹ Maffei, Dell' impiego del Danero, 1744; in French: De l'emploi de l'argent, by M. le marquis de Maffei, Avignon, 1787. - Maffei had dedicated his book to Benedict XIV, but nothing shows that this dedication pleased the Pontiff; besides, after the Encyclical Vix pervenit had been published, he retracted nothing, but in the second edition declared that the doctrine of the Encyclical was by no means opposed to his theories.

VI. The Doctrine Of Benedict XIV And Of The Roman Congregations Concerning Loan.

n. 889.

1. The Encyclical Vix pervenit. Since minds in the Church, and especially in Italy, were greatly moved by these various opinions and controversies, Benedict XIV instituted a congress of theologians for thoroughly weighing the matter, and promulgated their conclusions in the Encyclical Vix pervenit, Nov. 1, 1745, which he sent to all the bishops of Italy.² In this Letter, as he himself declares, he did not wish to decree anything concerning those contracts "about which Theologians and interpreters of the Canons go off into diverse opinions," but to establish certain doctrine concerning usuries. This doctrine is contained in five propositions, which we briefly contract.³

² There is much dispute about the doctrinal force of this Encyclical; for some hold that it is an infallible definition; but others, a doctrinal judgment of the gravest moment, but not infallible. To the point Vermeersch, S.J., n. 360, p. 458: "Observe, however, that this letter was sent only to the bishops of Italy. Long afterward indeed, July 29, 1836, the Holy Office, with the approval of Gregory XVI, seems to have declared in passing that the letter regards the universal Church. Yet this letter could not for that reason become an infallible definition. Wherefore we judge that there is in it the gravest authority indeed, but not the supreme." Likewise E. Van Roey, op. cit., p. 44, note 1, writes that it "is not an utterance ex cathedra, but rather bears as it were the form of a decree of some Congregation, approved indeed in a special and more solemn manner by the Sovereign Pontiff, and promulgated by his authority."

³ You have the text in Denzinger, n. 1318-1322.

Usury is placed in this, that someone from the loan itself, which by its nature demands that only as much be returned as was received, wishes more to be returned to himself than was received, and therefore contends that, beyond the principal, some gain is owed to himself by force of the loan itself: this is illicit and usurious.

Nor can usury become legitimate from the fact that the gain is moderate, or is demanded from a rich man, or from one who is going to spend the money for amplifying his fortunes, or for buying new estates, or for carrying on gainful business; by force of the loan itself nothing can be received, and if someone has received gain, he will be subject to restitution.
Nevertheless, extrinsic titles can concur with the contract of loan, from which a just cause may arise for demanding something more above the principal. - Likewise money can rightly be placed and spent through other contracts different from loan, whether for acquiring annual revenues for oneself, or also for exercising licit commerce and trading, and receiving honest gains from them.
In these various contracts equality must be preserved; otherwise injustice is committed and an obligation to restore is present; but with equality preserved, there remains a manifold licit way of preserving and frequenting fruitful trading for the public advantage.
It is falsely and rashly asserted that there are always found and everywhere available, together with loan, other legitimate titles, or other just contracts, by which it is permitted to demand a moderate increase beyond the principal. For in many cases a man is held by a simple and naked loan to succor another gratuitously, according to that:¹ "From him who wishes to borrow from thee, turn not away."

¹ Matt., V, 42.

n. 890.

1. Controversies after the Encyclical. This letter did not impose an end on the dispute. Maffei, in a new edition of his work, said that he had taught beforehand whatever the Pontiff handed down, but had not taught whatever was reproved in it; - Fr. Grangier did not cease to defend the triple contract;² - De la Forest, parish priest of Lyons, contended that in a loan of trading usury is not admitted;³ - Beurrey, a priest of La Rochelle, said that money can be leased as a fruitful thing.⁴ At the beginning of the nineteenth century, two men chiefly contended that moderate interest can legitimately be received from commercial loan: Cardinal de la Luzerne, who sets forth that money can be handed on loan to another for a threefold end, for consumption, for conservation, or for increase: in the first case there is loan properly so called, from which usury cannot legitimately be received; in the second and third case, there is the contract of commercial credit, from which moderate interest is legitimately received;⁵ - Mastrofini, who tried to show that the faculty granted to the borrower of gaining something by means of the use of the money lent is estimable by price, and therefore a legitimate title for receiving some increase.¹

² Examen theologique sur la societe du pret a rente, Paris, 1741; this work was refuted by Lecoq, superior general of the Eudists, Dissert. theologique sur l'usure, Rouen, 1767.

³ Traite de l'usure et des interets, Cologne and Paris, 1769, 1776; this was refuted by P. Carpuac, Minor Conventual, Examen et refutation du Tr. de l'Usure, Avignon, 1779.

⁴ La question de l'usure eclaircie, Paris, 1786; this was attacked by Rougane, Les nouveaux patrons de l'usure refutes, 1789.

⁵ Dissertation sur le pret de commerce, Dijon, 1823; this was attacked by Bouyon, canon of Clermont, Examen du systeme de feu Mgr le Card. de la Luzerne sur le Pret de commerce, Clermont, 1826.

¹ Le Usure, Rome, 1831; this was refuted in the following works: Osservazioni pacifiche sopra di un'opera intitolata, Le Usure, Rome, 1834; Reponse au livre de Mastrofini, by Moralet, priest of the diocese of Annecy, Lyon, 1836; cf. Pages, Dissertation sur le Pret a interet, t. II, Lyon, 1838.

n. 891.

1. Responses of the Roman Congregations. (A) Until the year 1830, the Sacred Congregations, when asked about loan, responded, according to the mind of Benedict XIV, that it is not permitted to receive an increase by force of loan, but only by force of an extrinsic title, namely by reason of danger to the principal, ceasing gain, and emergent damage. Thus, for example, in 1645, to the Chinese Missions it was responded: "By reason of loan, immediately and precisely, nothing is to be received beyond the principal principal; but if they receive anything by reason of a probably imminent danger, ... they are not to be disturbed, provided that account be had of the quality of the danger and its probability"; in the same place it is added that something can be received by reason of ceasing gain and emergent damage.²

² In Collectanea S. C. de Propag. Fide, n. 2118; ibid. n. 2119-2143 you will find the principal responses of the Congregations; cf. Bucceroni, Enchiridion, n. 853 sq., 863 sq.

n. 892.

(B) From the year 1830, the Sacred Congregations proceeded further: (a) the Holy Office, asked by the bishop of Rennes whether the manner of acting of confessors could be approved, who did not deny absolution to penitents receiving gain from money given on loan to traders, responded, Aug. 18, 1830, "that they are not to be disturbed"; (b) the Sacred Penitentiary, Sept. 16, 1830, declared that priests are not to be disturbed who contend that it is licit to receive an increase of five percent by force of the law of the Prince alone, without another title; (c) the same Congregation responded, Nov. 11, 1831, that a confessor acts more harshly and severely who denies absolution to penitents who received gain from loan by the sole title of civil law; (d) the Holy Office declared, Jan. 17, 1838, that penitents who received moderate gain from loan by the title of law alone in doubtful or bad faith can be sacramentally absolved, no burden of restitution being imposed. - We here submit the principal part of these documents.

n. 893.

Pius VIII, in the audience of the Assessor of the Holy Office, to the doubts of the Bishop of Rennes: - "The Bishop of Rennes in France sets forth to the Sacred Congregation of the Inquisition that the opinion of the Confessors of his diocese is not the same concerning gain received from money given on loan to traders, so that they may grow rich.

The sense of the encyclical letter Vix pervenit is sharply disputed. On each side reasons are brought forward to defend the opinion each has embraced, favoring such gain, or contrary to it. From this arise complaints, dissensions, denial of the sacraments to very many traders adhering to this manner of growing rich, and countless damages of souls.

So that they may meet damages of souls, some Confessors think they can hold a middle way between each opinion. If anyone consults them concerning gain of this sort, they try to deter him from it. If the penitent perseveres in the plan of giving money on loan to traders, and objects that the opinion favoring such a loan has many patrons, and besides has not been condemned by the holy See, more than once consulted concerning that matter; then these Confessors demand that the penitent promise that he will obey with filial obedience the judgment of the Supreme Pontiff, if it should intervene, whatever it may be: and, this promise having been obtained, they do not deny absolution, although they believe the contrary opinion to such a loan more probable. If the penitent does not confess about gain from money thus given on loan, and seems to be in good faith, these Confessors, even if they otherwise know that such gain has been received by him or is even now being received, absolve him, no questioning having been made about that matter, when they fear lest the penitent, warned, refuse to restore or to abstain from such gain. Therefore the said Bishop of Rennes inquires: I. Whether he can approve the manner of acting of these latter Confessors. II. Whether he can exhort other stricter Confessors approaching him for the sake of counsel, to follow their manner of acting, until the holy See should bring an express judgment on that question. - C. L. Bishop of Rennes.

On Wednesday, the 18th day of August 1830, our Most Holy Lord Pius, by divine providence Pope VIII, in the usual audience granted to the Rev. Lord Assessor of the Holy Office, the report of the above doubts having been heard together with the vote of the most eminent Lords Cardinal General Inquisitors, responded: To I. That they are not to be disturbed. To II. Provision has been made in the first."

n. 894.

The Sacred Penitentiary to the doubts of D. Denavit, Professor of theology in the Seminary of St. Irenaeus at Lyons: - "When doubts concerning the matter of usury are proposed to the Sacred Penitentiary, it always refers to the doctrine of the Supreme Pontiff Benedict XIV, which in reality is sufficiently clear and perspicuous for those who wish to investigate it in good faith.

Nevertheless there are certain Priests who contend that it is licit to receive an increase of five percent by force of the law of the Prince alone, without another title either of emergent damage or ceasing gain: because, they say, the law of the Prince is a legitimate title, since it transfers dominion of the increase just as it transfers dominion in prescription: and thus they utterly annihilate the divine law and ecclesiastical law which prohibits usuries.

Wherefore the undersigned Orator humbly begs that the following doubts be solved: I. Whether in conscience he can deny absolution to the aforesaid priests. II. Whether he ought to. - Lyons, May 25, 1830. Denavit, professor.

The Sacred Penitentiary, the proposed doubts having been diligently and maturely weighed, judged that it should be responded: The Priests of whom the matter concerns are not to be disturbed until the holy See has issued a definitive decision, to which they are prepared to submit themselves; and therefore nothing stands in the way of their absolution in the sacrament of Penance. Given at Rome, in the Penitentiary, on the 16th day of September 1830."

n. 895.

The Sacred Penitentiary to the new questions of D. Denavit, professor: - "To the Sacred Penitentiary the undersigned orator again sets forth: From the response of the sacred Penitentiary directed to the undersigned orator on Sept. 16, 1830, those priests are to be absolved who contend that the law of the Prince is a sufficient and legitimate title for receiving something beyond the principal in loan, without another title commonly admitted by Theologians, until the holy See has issued a definitive decision, to which they are prepared to submit themselves: and to this response I humbly and gladly acquiesce. Nevertheless, saving the aforesaid response of the sacred Penitentiary, approved authors having been consulted, and with attention to the doctrine of almost all the Seminaries of France, and especially of those which are directed by the priests of the Congregation of Saint Sulpice, the opinion which rejects the title of civil law as insufficient seems far more probable, safer, and the only one to be held in practice until the holy See has defined. Wherefore to the faithful who seek counsel from me whether they can receive an increase from loan, and who have no title commonly admitted by Theologians besides the title of civil law, I respond that they cannot demand the aforesaid increase, and I deny sacramental absolution if they demand it. Likewise I deny absolution to those who, having received usuries of this sort, that is by force of the title of law alone, do not wish to restore. It is asked: I. Whether I hold myself more harshly and severely toward the faithful of this sort. II. What manner of acting is to be held in practice toward the faithful, until the holy See has issued a definitive sentence. Lyons, Sept. 24, 1831. Denavit, Professor.

The Sacred Penitentiary, the doubts proposed by the orator having been weighed, responded: To I. Affirmatively: since from the response given by the sacred Penitentiary it is clear that faithful of this sort, who so conduct themselves in good faith, are not to be disturbed. To II. Provision has been made in the first: whence let the orator strive to conform himself in practice to the earlier response of the sacred Penitentiary under the date of Sept. 16, 1830. Given at Rome, in the sacred Penitentiary, on the 11th day of November 1831."

From these and other responses of this sort, the practical question is now solved, and moderate gain can be received in every case, until the Holy See shall judge otherwise, with the offices of charity nevertheless preserved, concerning which below; but the speculative question remains to be weighed.

VII. Today's Theories Concerning Loan.

n. 896.

They are reduced to three principal ones: of Socialists, Economists, and Theologians.

The Socialists, with Proudhon, Lassalle, and K. Marx, contend that no gain can ever be received from money; for since labor is not only the primary, but the unique source of value, the whole value which is produced belongs to the workers themselves; therefore the increase which is attributed to the capitalists is unjustly given to them, since it deprives the worker of a part of the value owed to him.¹ - Certain ones, however, admit that some moderate interest is legitimate so long as private dominion remains.

¹ V. Modeste, Le pret a interet, derniere forme de l'esclavage. Bohm-Bawerk sets forth and refutes this theory, t. II, p. 1-136; cf. G. Rambaud, Hist. des Doctrines economiques, p. 447-466. - Besides socialists, certain persons reject every increase received from money as illicit and contrary to the good of society: thus J. Moret, Du pret a interet ou des causes theologiques du socialisme, Paris, 1873; P. Lafleyre, Le Catholicisme social, Paris, s. d., t. II, p. 125-150.

n. 897.

1. On the contrary, Economists who reject collectivism acknowledge not only the liceity of interest from money lent, but also its advantages and necessity, in the state of today's civilization, and proclaim this with one voice;² yet they greatly disagree concerning the reason why it is permitted to receive an increase.

² P. Leroy-Beaulieu, Traite, II, p. 83-108; Gide, Principes d'Econ., p. 487-490.

(A) Many say that the primary cause, or reason, why an increase can be received from money lent is the fruitfulness or productivity of capital and of money, which participates in the nature of capital when it concurs in producing new things. Namely three things concur for production: nature, or natural powers, - labor, and capital: for by means of money, machines, materials, and other things of this sort can at once be procured or made, from which human powers are multiplied and the productive force is increased a hundredfold. Now if money has no small part in the production of things, it ought to have a part in the gain.³

³ Thus chiefly J. B. Say, Traite d'Econ. Politique, Paris, 1803; Cours complet d'Econ. Pol., Paris, 1828-29; Lauderdale, An Inquiry into the Nature and Origin of Public Wealth, Edinburgh, 1804; Bohm-Bawerk sets forth and critically weighs this theory, t. I, p. 135-243; t. II, p. 248-268.

(B) But others say that by this fruitfulness of money the increase is not sufficiently explained, unless it be added that the increase is the remuneration of the use of money; for money is not productive of itself, but only from human labor; therefore not the money itself, but the use of money confers a right to receive some gain; namely he who uses money lent produces more than he could have produced alone; therefore he who handed money on loan has some right to a part of the things produced.⁴

⁴ Hermann, Staatswirthschaftliche Untersuchungen, 1870; Menger, Grundsatze; cf. Bohm-Bawerk, t. I, p. 244-343; t. II, p. 198-200.

n. 898.

(C) Yet this opinion did not please all; wherefore some devised another theory, namely that some remuneration is owed to capitalists because for some time they deprive themselves of things which they could enjoy, and voluntarily cede them to others so that these may be able to produce new things; and this privation, or abstinence, insofar as it contributes something to production, merits a certain recompense.¹ For he who voluntarily abstains from the enjoyment of some money, and cedes it to another, confers on this man an advantage, namely an opportunity of gaining something, which is estimable by price.

¹ N. W. Senior, Outlines of the Science of Political Economy, London, 1836; Bastiat, Harmonies Economiques, p. 188-211; cf. Bohm-Bawerk, t. I, p. 344-373; t. II, p. 200-230. Lassalle mocked this theory thus, Kapital und Arbeit, Berlin, 1864, p. 110: "The profit of capital is the wage of abstinence! Happy, inestimable word! The European millionaires are ascetics, Indian dervishes, canonized saints! They hold themselves on a column, pale of face, bent of body, arm extended to present the plate in which they gather the wage of their privations!" (In Bohm-Bawerk, I, 352.) These things are certainly witty; nevertheless money, of which capitalists deprive themselves for increasing production, profits others more than if it were uselessly consumed in pleasures.

(D) But others, thinking that the unique source of value is human labor, contend that an increase is nothing other than the price of previous labor; namely money, like capital, is as it were labor inserted into some thing and as it were frozen in it (travail cristallise); when therefore money is handed on loan, by that very fact some labor is furnished to another, which certainly is worthy of some recompense.² - Yet certain German writers propose this theory otherwise; for they say that the capitalist is as it were a minister constituted by society for producing goods, to whom therefore an increase is owed as the recompense of quasi-social labor.³

² J. Mill, Elements of Political Economy, London, 1821; M. Culloh, Principles of Polit. Economy, 1825; Courcelle-Seneuil, Traite d'Econ., Paris, 1858; cf. Bohm-Bawerk, I, 374-384.

³ Schaffle, Das gesellschaftliche System, der menschlichen Wirthschaft, 1873; Wagner, Allgemeine oder theoretische Volkswirthschaftslehre, 1879, I p.; Stolzmann, Die Sociale Kategorie in der Volkswirthschaftslehre, Berlin, 1896; - cf. Bohm-Bawerk, I, 384-394; II, 230-248.

(E) Some reject these theories as insufficient, and propose a new one, by force of which increase becomes legitimate from the difference which exists between present goods and future goods; namely present goods are worth more, other things being equal, than future goods; thus, for example, one hundred coins possessed here and now are deservedly estimated as worth more than one hundred coins which will be possessed only after a year has elapsed; wherefore he who here and now hands one hundred coins to another, on this condition, that they be returned to him after a year, in reality loses something if, after the year has elapsed, he receives only one hundred; therefore he has the right to obtain something more: otherwise equality is not preserved.¹

¹ Thus Bohm-Bawerk, t. p. 332: "Loan is a true exchange of actual goods for future goods... Actual goods possess a value superior to that of future goods of the same kind taken in equal quantity. Consequently and as a general rule, a determined quantity of actual goods can be acquired only with the help of a more considerable sum of future goods."

n. 899.

(F) Finally certain eclectics compose several of these titles together, so that they may more easily demonstrate the legitimacy of the increase. Thus P. Leroy-Beaulieu thinks that the principal foundation of a legitimate increase is indeed the productivity of money, but that at the same time the difference between present and future goods, and also the privation which the creditor suffers and the danger to the principal, and the advantage enjoyed by the debtor, contribute to this.²

² P. Leroy-Beaulieu, Traite, II, p. 83-94; cf. Bohm-Bawerk, II, p. 137-159.

From these things it can be gathered that the matter is sufficiently tangled, and therefore that ancient theologians cannot be censured without injustice because they were ignorant of the principles of today's economic science: they could not foresee the evolution of industry and commerce; besides, from the things said, the dispute is still under the judge.

n. 900.

Today's theologians, before the Code, held various opinions:

(a) Some, adhering to the footsteps of Benedict XIV, said that every gain received from loan itself by force of loan is unjust, but that moderate gain can very often be received by force of an extrinsic title, e.g., on account of a special danger to the principal, emergent damage, ceasing gain, or a conventional penalty.

(b) Certain ones, with Ballerini (n. 707-735), contended that an increase cannot be received from loan properly so called, but from the lease of money.

(c) Many also, after Lehmkuhl, thought that loan taken in the proper sense excludes the right to usury (1296), but today generally passes into the lease of a quasi-fruitful thing (1314).

Today, however, in practice one must stand by the solution which the Code exhibits, c. 1543, concerning which we must now speak.

VIII. Doctrine To Be Held And Practical Conclusions.³

³ F. Cavallera, in Semaine sociale, 1921, p. 71-76.

We shall speak: 1. on loan in general; 2. on pecuniary loan.

n. 901.

1. On Loan in general the Code hands down these things (c. 1543): "If a fungible thing is given to someone in such a way that it becomes his, and afterward as much is to be restored in the same kind, no gain, by reason of the contract itself, can be received. But in the furnishing of a fungible thing it is not of itself illicit to agree concerning legal gain, unless it is established that this is immoderate, or even concerning a greater gain, if a just and proportioned title supports it."

It is explained and proved by parts.

(a) The matter concerns a contract by force of which a fungible thing, and one consumable by first use, either physically or morally, e.g., a cask of wine, is given into someone's dominion on this condition, that a thing of the same kind be restored in the same quantity, whatever name may be imposed upon this contract.

Now, by force of such a contract, no gain can be received.

It is established from natural right. For it is not permitted to someone to sell what is not his own. But the use of a fungible thing given to another so that it may become his and afterward be returned in the same quality and quantity does not pertain to the giver. Therefore the giver cannot receive gain from that use.

But the minor is proved thus. In a fungible thing, use is not distinguished from dominion; but dominion pertains to him to whom the thing has been given; therefore also the use. Cf. above n. 878.

It is established from ecclesiastical right, namely from the various documents which have already been adduced, especially from the Encyclical of Benedict XIV, Vix pervenit.

(b) Nevertheless, in the furnishing of a fungible thing it is not of itself illicit to agree concerning moderate legal gain.

It was indeed sharply disputed whether civil law, other titles failing, could render usury licit. Before the Code, the affirmative opinion seemed more probable and could be held in practice, especially from the response of the Sacred Congregation de Propaganda Fide, 1873: "Other titles of whatever sort failing... the one title of civil law also can be held as sufficient in practice."¹

¹ Collect. de Propaganda Fide, n. 2140.

But the Code declares as of itself licit an agreement concerning legal price, which is presumed just, unless it is established that the gain is immoderate; but it abstains from a formal explanation of this liceity.

Yet the reason seems to be the following, according to many. Civil authority can validly transfer the dominion of material goods from one to another by reason of the common good; but when some gain is determined by law on the occasion of the contract of which the matter concerns, it is presumed that a transfer of dominion from one to another is required for the common good, and this now becomes licit.

(c) Indeed, in the furnishing of a fungible thing, it is not of itself illicit to agree concerning greater gain, if a just and proportioned title supports it.

But what can be a just and proportioned title is gathered from the doctrine already commonly admitted, and confirmed by the Sacred Congregation de Propaganda Fide, in the year 1873, in these words: "Other titles of whatever sort failing, of which kind are ceasing gain, emergent damage, and the danger of losing the principal or of undertaking unusual labors for the recovery of the principal." Namely the matter concerns the privation of gain which the lender would have had if he had not given the loan, the detriment which the lender suffers in his own things by reason of the loan, the special danger of losing the principal or of undertaking extraordinary labors for the recovery of the principal. To these titles there is also added the title of conventional penalty, by which the borrower obliges himself to pay something by way of penalty, if he shall not have returned the principal at the appointed time.

Now, when these extrinsic titles are present, according to common estimation, the lender has a right to some compensation estimable by price, provided that it does not exceed just proportion.

On pecuniary loan.

The question concerning pecuniary loan is solved theoretically from the principles already set forth. But it can be asked whether today in practice a just title is always present for receiving gain. Now these things seem to us to be established.

n. 902.

(A) Today, on account of the peculiar economic conditions of society, money is virtually and truly fruitful.¹

¹ Antoine, ed. du Passage, p. 602-606.

The matter therefore concerns today's times, but not past or future ones, in which economic conditions can be plainly diverse. Nor do we contend that all money has been fertile at every time, but that today, because of special circumstances, it is virtually productive. For money of itself is sterile, because coins do not generate coins; but it can be called virtually fruitful, because today it can at once, and without any difficulty, be converted into fruitful things or fruitful uses. This aptitude for gainful uses does not depend on the special industry of the individuals using it, but inheres in money itself, as it is now generally considered. For it is very easily converted into fertile fields, houses from which a legitimate census is received, machines and instruments from which the productive force of labor is greatly increased. But if some persons do not wish to use their own money in this way, everywhere there are agricultural, industrial, and commercial societies which vehemently desire to render this money fruitful, for a moderate increase; nor are States, Cities, and Municipalities lacking, which earnestly solicit capitalists to be willing to commit monies to them, for moderate interest, for promoting the public good.

Nor should it be said that money entrusted is only the occasion, but not the cause of gain, which in reality is acquired from human labor alone.

It is indeed true that coins, without man's industry, remain idle and produce nothing of themselves, just as generally a field does not bear fruits without cultivation, nor does an instrument work anything without the hand of the craftsman. But the farmer who wisely uses money for cultivating lands better, the craftsman who with money lent obtains more perfect instruments, legitimately make a much greater profit, and indeed from those things which they have obtained by the help of money; therefore money is not only the occasion, but truly an efficient instrumental cause, at least partial, of this increase, and consequently can vindicate some right to a part of the profit.

n. 903.

(B) Since today money is virtually fruitful, it is permitted to receive from it moderate interest, provided that the matter does not concern a charitable loan (n. 905).

For he who hands money over to another to be used deprives himself, for a determined time, of the opportunity of making some gain, and confers an advantage on another, insofar as he furnishes to him the faculty of gaining something; or, in other words, on the part of the creditor there is ceasing gain, while on the part of the debtor there is an opportunity of increasing his revenues. Moreover these two things are something estimable by price, which merits some recompense. Formerly the title of ceasing gain occurred rather rarely; but today, given the virtual fruitfulness of money, it has become universal.

…and 3 more passages — all of them are listed on the topic page.

Koch–Preuss

Antony Koch; adapted and edited by Arthur Preuss — 25 passages

Vol. V, Pt. I, Ch. V, Section 5: The So-Called Onerous Contracts

n. ¶70.

Loaning money at interest is generally done by means of a contract in which a definite sum (census, interesse) is agreed upon as a recompense for the temporary use of the amount loaned.³⁹ The permissibility of taking interest can be demonstrated from Holy Scripture and ecclesiastical tradition. a) In some passages of the Old Testament the taking of interest is strictly forbidden,⁴⁰ whereas in others it is forbidden only on loans made to brothers or the poor,⁴¹ and in still others it is expressly permitted when the lenders were foreigners, i. e., non-Israelites.⁴² Since Holy Scripture, therefore, makes a distinction between Israelites and non-Israelites, and permits interest to be taken from the latter, it follows that interest cannot be per se forbidden by the moral law of nature, for if it were, God could no more have permitted the Jews to practice it than He could have permitted them to rob or murder foreigners.⁴³ Hence it is certain that the Old Testament prohibition of interest-taking was purely a matter of civil law. The economic system of the Jews under Moses was such as to limit loans among themselves to cases of urgent necessity, whereas the gentiles borrowed Jewish capital for purposes of speculation and production. In view of this fact Moses allowed his people to take interest from strangers, but not from fellow-Hebrews. Thus we find the key for the correct solution of this much-debated problem in the Mosaic law.

³⁹ See the bibliography at the end of this Section, p. 314.

⁴⁰ Cfr. Ps. XIV, 5; LIV, 12. J. Hejel, Das alttestamentliche Zinsverbot, Freiburg i. B. 1907, pp. 62 sqq.; Benzinger, Hebräische Archäologie, 2nd ed., pp. 292 sq.

⁴¹ Cfr. Ex. XXII, 25; Lev. XXV, 35 sqq.; Ez. XVIII, 8, 13; Ps. LXXI, 14.

⁴² Deut. XXIII, 19 sq.: “Thou shalt not lend to thy brother money to usury [i. e., on interest], nor corn, nor any other thing: but to the stranger. To thy brother thou shalt lend that which he wanteth without usury [i. e., interest].”—Cfr. Lev. XXV, 36; 2 Esdr. V, 7; Ehrlich, Randglossen zur hebr. Bibel, II, 95.—Cfr. P. Cleary, The Church and Usury, Dublin 1914, Ch. I, “Usury among the Hebrews,” pp. 1–18.

⁴³ Cfr. K. J. Hefele, Beiträge zur Kirchengeschichte, Vol. I, p. 36.

n. ¶71.

The New Testament contains but one text that is commonly referred to interest-taking. It is Luke VI, 34 sq., where Christ is quoted as saying: “And if you lend to them of whom you hope to receive, what thanks are to you? for sinners also lend to sinners, for to receive as much (τὰ ἴσα). But love your enemies, do good and lend, hoping for nothing thereby (δανείζετε μηδὲν ἀπελπίζοντες).” This text, however, throws no light on the problem of interest-taking, for in it Christ does not advise His hearers to refrain from taking interest, but to give away the capital itself.⁴⁴

⁴⁴ Luke VI, 34 sq.—Cfr. D’Annibale, Summula Theol. Mor., Vol. II, 5th ed., p. 449: “That Luke’s words [vi, 34] do not pertain here is now known almost even to the bleary-eyed and barbers.”—A. Vermeersch, S.J., Quaest. de Iustit., 2nd ed., p. 452: “As regards the New Testament, it contains nothing, not even in appearance.”—P. Cleary, The Church and Usury, pp. 32 sqq.

n. ¶72.

Hence it may be safely held that the Bible does not prohibit interest-taking. b) The Fathers of the Church and the early councils, on the other hand, sternly condemned the practice, mainly for reasons drawn from the Old and New Testaments and under the influence of the Greek and Roman philosophers of antiquity, who seem to have opposed the taking of interest.⁴⁵ Some of the Fathers expressly refer to Aristotle’s well-known teaching that money is an unproductive thing. A good deal of the feeling displayed against interest-taking in the early Church was no doubt a result of the shameless way in which usury was practiced at that time. Most of the early ecclesiastical writers use “interest” and “usury” as synonymous terms. Beginning with the fourth century, however, the law against loaning money on interest was enforced only against clerics, whilst the laity were left free to do as they pleased.

⁴⁵ Matth. V, 42; VI, 12; XVIII, 23–35; cfr. Luke VI, 34 sq.; the teaching of the ancient philosophers is discussed by Cleary, The Church and Usury, pp. 19 sqq., 26 sqq.

n. ¶73.

The teaching of the Fathers on the subject of interest, says Dr. Funk, “was not without its defects, and the early Church seems to have made allowance for this fact when she employed her penal power in this matter against clerics only, and left the laity unmolested.”⁴⁶

⁴⁶ F. X. Funk, Geschichte des kirchlichen Zinsverbotes, p. 7.—Cfr. P. Cleary, The Church and Usury, pp. 37 sqq.

n. ¶74.

c) During the Catholic Middle Ages the prohibition of interest-taking was adhered to, at least in principle.

n. ¶75.

d) After the thirteenth century the question began to be dealt with in a more scientific way by the Scholastics, who, not content with the authority of Sacred Scripture and the Fathers, searched for arguments against interest-taking in reason and the natural law. One of the principal arguments they evolved was based on the nature of money. They held that money is a commodity which is consumed in the first use and has no other use which can give it an additional value, and that, consequently, in the business of exchange, its substance (res) cannot be separated from its use (usus rei), nor can it be separately valued without an offence against distributive justice. Thus a man who would sell to one buyer the substance of a bottle of wine (vinum), and to another the right to drink it (usus vini), would violate justice because he would sell the same commodity twice, or sell something which had no real existence. In other words, the fair price for a bottle of wine is the money equivalent of the value which the wine has for drinking, because the value of the first consumption of a commodity is the value of the commodity. Money, considered as a medium of exchange, they argued further, is a commodity whose value is identical with the value of the first consumption of it, and, therefore, it is per se unlawful to charge a compensation (usura) for its use (usus). Hence the Schoolmen regarded all gain or profit derived from the use of an unproductive or unfruitful commodity, or from a loan as such (lucrum ex mutuo ratione mutui), as unjust and usurious.

n. ¶76.

St. Thomas puts it thus: “To take usury [interest] for money lent is unjust in itself, because this is to sell what does not exist, and this evidently leads to inequality, which is contrary to justice. In order to make this evident, we must observe that there are certain things, the use of which consists in their consumption: thus we consume the wine when we use it for drink, and we consume wheat when we use it for food. Wherefore in such like things the use of the thing must not be reckoned apart from the thing itself, and whoever is granted the use of the thing, is granted the thing itself; and for this reason, to lend things of this kind is to transfer the ownership. Accordingly, if a man wanted to sell wine separately from the use of the wine, he would be selling the same thing twice, or he would be selling what does not exist, wherefore he would evidently commit a sin of injustice. In like manner he commits an injustice who lends wine or wheat, and asks for double payment, viz.: one, the return of the thing in equal measure, the other, the price of the use, which is called usury. On the other hand there are things, the use of which does not consist in their consumption: thus to use a house is to dwell in it, not to destroy it. Therefore in such things both may be granted: for instance, one may hand over to another the ownership of his house while reserving to himself the use of it for a time, or, vice versa, he may grant the use of the house whilst retaining its ownership. For this reason a man may lawfully make a charge for the use of his house, and, besides, reclaim the house from the person to whom he has granted its use, as happens in renting and letting it. Now money, according to the Philosopher, was invented chiefly for the purpose of exchange, and consequently the proper and principal use of money is its consumption or alienation, whereby it is sunk in exchange. Hence it is by its very nature unlawful to take payment for the use of money lent, which payment is known as usury; and just as a man is bound to restore other ill-gotten goods, so is he bound to restore the money which he has taken in usury.”⁴⁷

⁴⁷ St. Thomas, Summa Theol., 2a 2ae, qu. 78, art. 1. “To take usury for money lent is unjust in itself, because what does not exist is sold. By this an inequality is manifestly established, which is contrary to justice. To make this evident, it must be known that there are certain things whose use is the consumption of the things themselves, just as we consume wine by using it for drink and wheat by using it for food. Hence, in such things, the use of the thing ought not to be reckoned separately from the thing itself, but to whomever the use is granted, by this very fact the thing is granted, and for this reason ownership is transferred in such things by a loan. Therefore, if someone wished to sell the wine separately and wished to sell the use of the wine separately, he would sell the same thing twice, or would sell what does not exist; hence he would manifestly sin through injustice. And for a similar reason he commits an injustice who lends wine or wheat, asking that two recompenses be given him: one, indeed, the restitution of an equal thing, and the other the price of its use, which is called usury. But there are certain things whose use is not the consumption of the thing itself, just as the use of a house is habitation, not its destruction. And therefore in such things either may be granted separately; for example, when someone hands over to another the ownership of a house, reserving its use to himself for some time, or conversely when someone grants another the use of a house while reserving its ownership to himself. And for this reason a man may lawfully receive a price for the use of a house and, besides this, demand the house lent for use, as is evident in the hiring and letting of a house. Money, however, according to the Philosopher [Ethic., l. V, c. 5; Polit., l. I, cc. 5–6], was principally invented for making exchanges; and thus the proper and principal use of money is its consumption or alienation, according as it is expended in exchanges. And for this reason it is in itself unlawful to receive a price for the use of money lent, which is called usury; and just as a man is bound to restore other things unjustly acquired, so he is bound to restore the money which he received through usury.” On the teaching of St. Thomas and the Scholastics generally see Cleary, The Church and Usury, pp. 78 sqq.

n. ¶77.

β) All through the Middle Ages canonists and theologians were unanimous in condemning the taking of interest on loans made for consumption only (mutua), as distinguished from loans for use, reckoning money as an article of consumption. When, however, some external reason seemed to justify the taking of interest, it was not regarded as usury. Such a reason was called titulus mutuo extrinsecus. The principal “titles” held to justify interest were: (1) damnum emergens, i. e., a loss or damage arising to the lender from the loan; (2) lucrum cessans, i. e., profit lost to the owner by not having the money in his control; (3) periculum sortis amittendae, i. e., the danger of losing the capital lent; and (4) poena conventionalis, i. e., a penalty agreed upon between the contracting parties for remissness in repaying the money loaned. Where one of these “titles” could be alleged, it was permissible to demand and receive a moderate charge over and above the capital lent. This charge was not paid for the use of the money loaned, but for the danger incurred by the lender, or to indemnify him for the loss he had sustained and which he was not bound to take upon himself gratuitously.⁴⁸

⁴⁸ P. Cleary, The Church and Usury, “Extrinsic Titles,” pp. 91–105.—Gury, Comp. Theol. Mor., I, n. 818: “Emerging loss is a detriment which the lender suffers on the occasion of a loan made to his neighbor. If the lender suffers loss because of the loan, it is a legitimate title for receiving something above the principal or the thing lent. The reason is that it is not equitable that you should bear loss from the loan; for no one is bound to confer a benefit at his own loss except in the neighbor’s necessity.”—Ibid., n. 819: “Ceasing gain is that which the lender would have gained from his property or money, had he retained it, if he had employed it in another lawful contract. Ceasing gain is a legitimate title for demanding something above the principal. The reason is: 1. Because then there truly is an emerging loss; 2. Because the hope of gain is extrinsic to the loan and therefore capable of valuation in money.”—Ibid., n. 820: “Risk to the principal is a well-founded fear that the principal may not be recovered. There is a twofold risk: 1. Common, intrinsic to every loan, e. g., the fear that all the borrower’s goods may perish in a fire, etc.; 2. Extraordinary, e. g., if a loan is given to a prodigal or to a man of doubtful credit or to one going by sea, or if great expenses in recovering the principal are feared.”—Ibid., n. 821: “Nothing can be demanded for the common risk. The reason is that such a risk is entirely intrinsic to the loan and therefore cannot be separated from it. Extraordinary risk is a legitimate title according to the more common and more probable opinion. The reason: 1. Because, if the hope of gain is capable of valuation, much more so is the danger of probable loss; 2. Because things placed in safety are valued more highly than things placed in danger; 3. It is established by a decision of the S. C. de Propaganda Fide for the Chinese missionaries, approved by Innocent X (cf. S. Alph., l. III, n. 765 [ed. Gaudé, II, 211]). Except: 1. If the borrower is poor, because then the precept of lending is urgent; 2. If the borrower secures the principal by a pledge, because in that case the risk ceases.”—Ibid., n. 822: “A contractual penalty consists in this, that the borrower binds himself to pay something above the principal if he does not repay it at the appointed time. A contractual penalty is a legitimate title for receiving, besides the principal, that which was agreed upon. The reason is that in this way provision is made for the firmness of the contract and at the same time the borrower’s negligence is forestalled. The required conditions are: 1. That the debtor’s delay be notable and culpable; 2. That the penalty be moderate and proportionate to the fault; 3. That a usurious intention be absent, that is, that the lender not desire the other party’s culpable delay.”—Funk, Zins und Wucher, pp. 119 sqq.; Ratzinger, Die Volkswirtschaft, 2nd ed., pp. 278 sqq.; Göpfert, II, 172 sqq.

n. ¶78.

Other and more practical exceptions from the law prohibiting interest were made in favor of those who purchased rentes (supra, pp. 293 sqq.) and in favor of State loans or charitable institutions (montes pietatis).⁴⁹ Thus it came about that, towards the end of the Middle Ages, the law against interest was more often violated than respected, for while Church and State still insisted that it was forbidden to take interest on loans made purely for consumption (ratione mutui), in matter of fact interest was quite generally demanded and taken on the strength of various “extrinsic titles,” which practically neutralized the prohibition.

⁴⁹ Denzinger-Bannwart, n. 739.—Funk, Zins und Wucher, pp. 62 sqq., 80 sqq.—IDEM, Geschichte des kirchl. Zinsverbotes, pp. 42 sqq.—H. Holzapfel, O. F. M., Die Anfänge der Montes Pietatis, Munich, 1903.

n. ¶79.

d) In modern times the ancient definition of usury was still adhered to, not only by Catholic theologians,⁵⁰ but also by Luther and Zwingli, who forbade their followers to take interest on loans.⁵¹

⁵⁰ H. Busembaum, Theol. Mor., l. III, tr. 5, c. 3, dub. 7: “Usury is gain arising immediately from a loan, so that the lender gains, above the principal (i. e., the capital sum), something which can be valued in money, in such a way that such gain is intended precisely by reason of the loan. This is plainly unjust and a grave sin against human and divine law, since the lender acquires gain from a thing which is no longer his, because the thing lent has already passed into the ownership of the borrower, as is evident from the definition. And the general rule is: Every act or burden or charge added to a loan beyond that which is proper and intrinsic to it renders the contract usurious.”—Cfr. St. Alphonsus, Theol. Mor., l. III, nn. 758–759 (ed. Gaudé, II, 203 sqq.); Gury, I, nn. 815–817.

⁵¹ P. Cleary, The Church and Usury, pp. 147 sqq.; Walther, Thesen über den Wucher, St. Louis, 1876.

n. ¶80.

But in spite of many synodal decrees, the capitalistic function of money led to a change in ideas and practice. Of particular importance in the process of evolution was the practice of selling rentes and the recognition of the so-called contractus trinus,⁵² i. e., a combination of three different contracts, one social and the other two insurance. In evolving this new form of contract, the Scholastics, in Funk’s opinion, did a great thing: “Though they had not succeeded in storming the fortress of the anti-interest law, they had surrounded it from two sides and laid a double breach for modern Capitalism. The capitalist through this teaching was enabled to invest his money profitably by means of a contractus trinus, which was always feasible when there was a question of lending capital for productive purposes. Or he could buy rentes, since this species of contract was now no longer hedged in with the former limitations, but the contracting parties were left free to make whatever agreement they chose. The seller could pay his indebtedness at any time, and the buyer was free to demand his capital back whenever he wished. The only precaution that had to be observed was to avoid the terms ‘loan’ and ‘interest,’ for paying interest on loans was still regarded as usury and forbidden under pain of mortal sin.”⁵³

⁵² See infra, pp. 329 sq.; Cleary, The Church and Usury, pp. 126 sqq.

⁵³ Funk, Geschichte des kirchl. Zinsverbotes, pp. 57 sqq., 60,— IDEM, Zins und Wucher, pp. 84 sqq.

n. ¶81.

Soon the civil governments revoked the laws forbidding interest-taking and confined themselves to punishing usury in the modern sense, and the Church and her theologians acknowledged the titulus legis civilis as an additional reason justifying interest. The last important papal decision on the subject is the encyclical letter of Benedict XIV, “Vix pervenit,” issued November 1, 1745. It condemns taking interest on a loan merely for the sake of the loan (omne lucrum ex mutuo ratione mutui), but recognizes the extrinsic titles enumerated above.⁵⁴

⁵⁴ The text of the encyclical in Migne, Theol. Cursus Compl., XVI, 1059; cfr. Busembaum, Theol. Mor., II, 59 sqq.; St. Alphonsus, Theol. Mor., ed. M. Haringer, Vol. III, Ratisbon 1846, pp. 356 sqq.; Denzinger-Bannwart, nn. 1609–1612; Cleary, The Church and Usury, pp. 160 sqq.

n. ¶82.

A substantial mitigation of ecclesiastical discipline was initiated by the Apostolic See in the early part of the XIXth century, when it repeatedly declared, in response to inquiries, that those who took interest at a moderate rate should not be disturbed in their peace of mind, provided they were ready to submit to such decisions as the Church might see fit to make on the subject in future.⁵⁵ At first these declarations were limited by the clause that interest might be taken to the extent permitted by the civil laws of the respective country (titulo legis civilis), but this clause, too, was soon omitted, and the permission to take interest was extended to clerics, monasteries, and ecclesiastical foundations.⁵⁶

⁵⁵ “They are not to be disturbed, provided they are prepared to abide by the mandates of the Holy See.”—Cfr. Cleary, The Church and Usury, pp. 168 sqq., 174 sqq.

⁵⁶ S. C. Offic., decree of Feb. 28, 1872 (Collectio Lacensis, VI, 690); cfr. Gury, Comp. Theol. Mor., Vol. I, n. 823 sqq.

n. ¶83.

The New Code expressly says: “If a fungible thing is given to someone in such a way that it becomes his and afterward an equal amount is restored to him in the same kind, no gain may be received by reason of the contract itself; but in the furnishing of a fungible thing it is not in itself unlawful to stipulate for lawful gain, unless it is clear that it is immoderate, or even for greater gain, if a just and proportionate title supports it,”⁵⁷—that is to say, in loaning goods to be consumed by the borrower, when return is made in the same kind, no interest may be charged by reason of the contract itself; but in loaning fungible goods, a reasonable interest may be charged if there is a just and proportionate title. “The quintessence of this canon, according to Father Augustine, O. S. B., is “that interest on loans is permitted according to the usual and legal rate, not precisely by reason of the contract, but by reason of the risk incurred and other circumstances.”⁵⁸

⁵⁷ C. I. C., can. 1543.

⁵⁸ A Commentary on the New Code of Canon Law, Vol. VI, p. 609. Fr. Augustine refers to Benedict XIV’s encyclical “Vix pervenit” and to the instructions of the S. C. of the Propaganda of 1873 (Coll. S. C. P. F., n. 1303), where, he says, “the documents referring to these subjects are given and the question is treated ex professo.”

n. ¶84.

The changed attitude of the Church on interest-taking is perfectly justified in view of the fact that money is no longer, as it was before the dawn of the industrial era, a mere means of exchange for articles of consumption and a measure of their value, but the chief form of capital. Today “no wealth-producing object of importance can be undertaken without a supply of money,” says Fr. Slater, “and money is now readily exchangeable for land, machinery, means of distribution, and other instruments for the production of wealth. Capital is one of the factors necessary for the production of wealth, and it is the chief instrument of its production. Money, then, looked upon as capital, is not a mere fungible; it is not a commodity which is consumed in the first use of it; it is the main instrument necessary for the production of wealth, and it thereby acquires a new function: it becomes virtually productive and puts on the nature of land and machinery, with which it is so readily exchangeable. Indeed now-a-days land can hardly put forth its natural productivity without the aid of capital, and machinery cannot be worked for the production of wealth without it. It follows then that now-a-days money is not merely a means of exchange, it is also an instrument of production, and just as money may be charged for the use of land, or of a house, so money may be charged for the use of money. Money now has its fair and reasonable price like any other commodity, and the sin of usury is committed not by taking a fair and reasonable interest for a loan, but by exacting excessive interest.”⁵⁹

⁵⁹ Slater, A Manual of Moral Theol., I, 515 sq.

n. ¶85.

“If,” says Father H. Pesch, S. J., by way of a demonstratio ad absurdum, “moderate interest were objectively and per se forbidden by the moral law of nature, the Church would not only have mitigated her demands in favor of a generation living under Capitalism, but she would be tolerating, positively and for all classes of human society, a most atrocious crime, namely, usury, which is admittedly opposed to the natural law and, in consequence, intrinsically and essentially evil.”⁶⁰

⁶⁰ H. Pesch, “Zinsgrund und Zinsgrenze,” in the Zeitschrift für kath. Theologie, Innsbruck, 1888, p. 37; cfr. P. Cleary, The Church and Usury, pp. 200 sqq.—The whole problem is admittedly a thorny one, and though many solutions of it have been proposed, none has found general acceptance. One of the latest writers on the subject, Fr. J. B. McLaughlin, O. S. B., thinks the dispute arose from ambiguity about the term mutuum. Benedict XIV, who, by the way, in his encyclical letter spoke with authority as teacher of the universal Church (“lest the purity of Catholic doctrine, the deposit of which was entrusted to us by Christ, be defiled by this stain of error”), used the term mutuum in its precise technical sense, in contradistinction to investments. His meaning was that “if the money passed so that they might become rich, then it is not mutuum, but of a nature altogether different from the nature of a mutuum. If it is mutuum, then it is not so that they might become rich; the purpose for which the money is to be used does not enter into a mutuum contract, which necessarily turns upon equality between what is given and what is returned, and in nothing else. . . . The root difference seems to be this. There is such a thing as enriching yourself by impoverishing your neighbors. And there is such a thing as enriching yourself by enriching your neighbors. The first is usury, the second is the investing of capital. My neighbor needs a loan; I shall have to help him; I will take the opportunity to annex some of his belongings. That is usury. I have not added to the wealth of the country; I have merely transferred some of it from his pocket to mine. On the other hand, is the fact expressed in such sayings as, ‘I could make my business a success if I had more capital’; ‘This country only needs capital to make it prosperous’; ‘If these islanders had a steamboat to take their fish to a market; if a bridge were built here, a railway there, a creamery opened, a pit sunk, the whole district would become prosperous.’ It is in this way that countries have become rich, and that their standard of living has been raised. Money employed in these ways is employed for the enriching of others; and you who so employed your money have a right to your share of the new riches. Not simply to a return of your money; but to a share in the increased wealth that is flowing in to us each year. Further; in a highly ‘developed’ country, the existing machinery of production must be kept efficient merely to maintain the present standard of living, apart from any question of improving it. Therefore there is a continuous demand for new capital, for the purposes of upkeep and replacement; and you who provide this capital are saving the country from impoverishment, and can claim a share in the wealth you are helping to produce. A ‘legal rate’ of interest, mentioned in the Canon Law, would seem to be an attempt to estimate what your fair share should be. This seems to have been in St. Thomas’s mind when he wrote of the man who takes up a business for the public utility, that the country may have what it needs for its life; and seeks a profit, not as his final purpose, but as his reward for what he has done. Similarly Benedict XIV says, ‘It cannot be doubted that in these contracts we have a manifold lawful method and system for preserving and improving human intercourse and profitable trade, to the public good.’ (“Vix pervenit,” § 3, 4; Denzinger-Bannwart, n. 1478). Whereas usury causes poverty: ‘Far be it from Christian minds to suppose that profitable commerce can flourish through usuries or similar injuries to others.’ (ibid.). The natural way to help a man in a difficulty is to give him the money he needs and let him make the best he can of it, binding him to return you the same amount later on. Whereas the natural way to help to develop the country is to lend your money for that purpose to some one who can use it for that purpose. The giving in the one case and lending in the other do not at first glance seem to be essentially tied up with the two contrasted purposes; but St. Thomas and Benedict XIV and the Codex unanimously put this distinction at the very root of the matter. In the Codex we read, ‘Si res ita alicui detur ut eius fiat,’ in contradistinction to ‘sed in praestatione rei’; and St. Thomas and Benedict XIV are equally explicit. Unfortunately, besides the two processes I have mentioned, enriching yourself by impoverishing others, and enriching yourself by enriching others, there is a third—enriching yourself by enslaving others. You can use your capital, not to enable me to develop my business, but to buy up my business and make me pay you revenue if I want to continue it. It is this process of gaining control of all the means of livelihood, and taking toll of the fruits of all men’s industry, that seems to many to be the main occupation of the capitalist at present. After the war, a cotton-mill valued by its owners at three and a half millions was bought by a syndicate for five millions. Those who work that mill in future have to pay interest on the extra million and a half. One reads of an American millionaire keeping a staff of experts to advise him on one point, the new businesses in which his yearly revenues are to be invested and which are to pay him tribute for the future. Leo XIII speaks of ‘the concentration of so many branches of trade in the hands of a few individuals; so that a small number of very rich men have been able to lay upon the teeming masses of the poor a yoke little better than that of slavery itself.’ This party holds in its grasp the whole of labor and trade; manipulates for its own benefit and its own purposes all the sources of supply.’ His remedy is ‘to induce as many as possible of the humbler classes to become owners.’ (The Pope and the People, pp. 179, 208).”

n. ¶86.

e) So much from the point of view of justice. Charity, of course, imposes additional duties. With a hard pressed debtor the creditor should not only have patience, but is bound ex caritate, in proportion to his own ability and the degree of his creditor’s necessity, to aid him by giving alms or renouncing his legitimate compensation for damage sustained or profit lost. A loan without interest made to a person in need is a true act of charity, and to demand interest in such a case would be to enrich oneself unjustly at the expense of a needy fellowman. For the distinguishing mark of usury may be owing to the economic condition of the borrower.

n. ¶87.

The lawful rate of interest, like the fair and reasonable price of other commodities, depends upon circumstances and, proximately, upon the common consent of intelligent men.⁶¹ For the farmer who earns no more than three or four per cent. on his capital, says Ratzinger, five or six per cent. on loans would be a usurious rate of interest, whereas the merchant who makes a profit of ten per cent., can pay from four to six, and the manufacturer or trader who cleans up a net gain of from thirty to forty per cent., can be charged from twelve to twenty per cent. for short term loans without usury.⁶² Of course, in de- ciding this question, the civil laws of each country have to be taken into consideration.⁶³

⁶¹ Slater, I, 515.

⁶² Ratzinger, Die Volkswirtschaft, 2nd ed., p. 261 sq.—Cfr. Seneca, De Benefic., l. VI, c. 13: “I am not so unjust that I owe him nothing, who, while being useful to me, was also useful to himself. For I do not demand that he consult my interest without regard for his own; indeed I even desire that the benefit given to me should have profited the giver more, provided that he who gave, having both of us in view, gave and divided it between himself and me. Although he himself possess the greater part of it, if only he admitted me into partnership, if he considered both of us, I am ungrateful, and not merely unjust, unless I rejoice that what profited me also profited him. It is the height of malice not to call anything a benefit unless it has affected the giver with some inconvenience.” (Opera Omnia, I, ed. I. Lipsius, Amsterdam 1672, p. 794).

⁶³ A. Vermeersch, S. J., s. v. “Usury” in the Catholic Encyclopedia, Vol. XV, pp. 235 sqq.; Maingie, La Théorie de l’Intérêt et ses Applications, Brussels, 1911; H. Parkinson, A Primer of Social Science, p. 157; P. Cleary, The Church and Usury, Dublin 1914.

Vol. V, Pt. I, Ch. V, Section 9: Sins Against the Property of Others

n. ¶44.

D) Usury (usura, fenus) is the exploitation of the necessity of others by unjustly appropriating of their property in exchange and loan transactions.³⁵ Its principal features are the needy condition of the victim and his ignorance or carelessness, of which the usurer takes advantage by charging more for loans than he is entitled to. The term usury is sometimes broadly used to cover dishonest manipulations in grain or other commodities, excessive charges for rent, etc.

³⁵ Funk, Zins und Wucher, pp. 192 sqq.; Ratzinger, Die Volkswirtschaft, 2nd ed., pp. 259 sqq.

n. ¶45.

Not only the creditor but also the debtor may become guilty of usury, namely, by abusing the confidence of the creditor in order to appropriate his property. Thus bankruptcy proceedings are sometimes used to exploit the good nature or carelessness of creditors. The Catechism of the Council of Trent says: “Those who defraud their creditors, who deny their just debts, and also those who purchase goods on their own or on another’s credit, with an agreement to pay them at a certain time, and do not redeem their pledge, shall be convicted of the crime of rapine, and it is an aggravation of their guilt that, in consequence of their want of punctuality and their fraud, prices are raised, to the no small detriment of the public.”³⁶

³⁶ Catech. Rom., P. III, c. 8, qu. 12: “Defrauders of creditors and repudiators—whoever, having taken a period of time for payment, purchase goods on their own or another’s credit and do not discharge their pledge—will be condemned for the same crime of rapine; their offense is also graver because merchants, on account of their default and fraud, sell at higher prices, to the great detriment of the community; that saying of David seems to apply to them: ‘The sinner shall borrow and shall not repay’ (Ps. XXXVI, 21).”

n. ¶46.

Hence usury both from the moral and the legal standpoint is as deserving of punishment as fraud, theft, and robbery.³⁷ Economically this crime is committed not only when a higher rate of interest is demanded than law or custom permit, but likewise in all cases where the borrower appropriates so much of the value created by the co-operation of his labor with the capital of others, that the lender is unable to carry on his business.³⁸

³⁷ Ps. XIV, 1, 5; Ez. XVIII, 8 sq., 13; XXII, 12.—Cfr. Conc. Lat. II, can. 13: “We condemn that detestable and shameful, insatiable rapacity of usurers, rejected by divine and human laws through Scripture in the Old and New Testament, and we separate them from every ecclesiastical consolation, commanding that . . . usurers be held infamous throughout their whole life and, unless they repent, be deprived of Christian burial.” (Denzinger-Bannwart, n. 365).—Cfr. Conc. Lat. V, sess. 5; and Holweck, Die kirchlichen Strafgesetze, p. 276.

³⁸ Ratzinger, Die Volkswirtschaft, 2nd ed., pp. 261 sqq.

n. ¶47.

Usurious manipulation of the food supply is a particularly heinous crime, all the more contemptible because it most severely affects the poor. “Amongst those who are called extortioners by the holy Fathers,” says the Roman Catechism, “are they who, in times of scarcity, hold on to their grain, thus culpably producing dearth and high prices, and this also holds good with regard to all necessaries for food and the sustentation of life.”³⁹

³⁹ Catech. Rom., P. III, c. 8, qu. 14: “Among the number of those who are called extortioners by the holy Fathers are those who, in a scarcity of crops, withhold grain and bring it about through their own fault that the market price is dearer and harsher; this also holds for all things necessary for food and for life.”

n. ¶48.

“He that hideth up corn,” says Sacred Scripture, “shall be cursed among the people.”⁴⁰

⁴⁰ Prov. XI, 26.

n. ¶49.

Habitual usury in credit or commodities is reckoned among the sins that cry to Heaven for vengeance.⁴¹

⁴¹ See this Handbook, Vol. II, pp. 89 sq.; cfr. St. Ambrose, De Tobia, c. 2–22 (Migne, P. L., XIV, 761); Ratzinger, Die Volkswirtschaft, pp. 286 sqq.

n. ¶50.

The crime of “usury” is committed also by corrupt and venal judges, who allow themselves to be won over by money or bribes to decide against the poor and the necessitous, no matter how good their cause may be.⁴²

⁴² Ex. XXIII, 8; Deut. XVI, 19.—Catech. Rom., P. III, c. 8, qu. 12.

Vermeersch, Theologia Moralis

Arthur Vermeersch, S.J. — 1 passage

Vol. II, Bk. II, Tractate V: On Justice, Ch. VI, Article I: Generalities Concerning Contracts

n. 450.

II. On Usuries. 1. Notion. Usury, in the broader sense, is whatever, beyond the principal, is accepted by the creditor. In a stricter sense it designates an increment to be paid to the creditor after individual intervals.

Norms. Concerning this matter these things are to be held, which are proposed more fully in the Questions on Justice.

a) "No gain can be received by reason of the contract itself" (c. 1543).

b) It has always been lawful, when an agreement has first been made, to stipulate compensation for an extrinsic title. Several are numbered: emergent damage, ceasing gain (from lost possession of money), risk of the principal, or difficulty of recovering it, conventional penalty, and also, according to St. Alph., the long time for which the money is yielded.

c) But while the present condition of society perseveres, it is commonly lawful (and never contrary to commutative justice) to lend money under moderate interest. Wherefore today questions concerning personal census, concerning the triple contract, and concerning agreements by which disguised usuries were sought, are obsolete. Nor must one today dispute concerning the lawfulness of Mounts of piety, savings banks.

The reason is that today, on account of the general facility of doing business or of exchanging money into fruitful things, and the utility of economically securing credit for oneself, the very possession of money has a value which is compensated by interest.

The just rate of interest is to be estimated from the common rules of just price.

The common hope of gain which business in the region brings, after deducting the price of labor and industry which commonly must be applied to that gain, supplies an abstract norm of justice. The concrete norm is taken from common opinion, from the practice of the timorous in a definite society.

In the customary rate the ordinary risk of the principal and ceasing gain are counted. Wherefore, on account only of extraordinary circumstances of risk, emergent damage, etc., which are not otherwise compensated, a greater rate can be sought. But in circumstances which diminish the risk of the principal or the convenience of the debtor (as if he must, when asked, restore the money after a brief interval), the rate is justly diminished proportionally.

And when someone seeks money not from necessity but from hope of gain or because of positive utility, an increase of interest can be explained and made just by a certain tacit partnership.

Nor is moderate anatocism (usury of usuries) illicit of itself. By our law of Italy, of France, the parties can, for annual usuries already owed, obtain usuries either by a later agreement or by judicial authority (art. 1232).

Concerning moratory usuries, laws must be approached and the general principles concerning a penal clause must be applied.

The present-day character of sinful usury. The sin of usury by no means is banished from our societies. But, unless there is question of prodigal sons of families who hand themselves over without scruple of conscience into the hands of certain moneylenders, in several regions sin is committed not so much by open lending-at-interest as by hidden lending-at-interest. This disguised usury chiefly has place in sales with credit, i.e. in which instruments of labor or furniture are bought, with payment permitted by parts and after intervals. Then buyers, easily deceived by hope of credit, do not advert to the harder conditions which are imposed on them, or they think that they can satisfy those conditions conveniently. Thus it happens that by explicit agreement, unless partial payments were made on the stated days, they would give the seller the right of recovering the thing sold and keeping the moneys received. Yet there are, even in Europe, regions in which 20 and 30 p. c. are demanded as usuries. But outside Europe, for example in China, in the Indies, biting usury kills very many debtors, since not less than 60, 100, 200 p. c. are demanded. There indeed there would be place for those very severe rebukes of the holy Fathers of the Church which we reported in Questions on Justice, n. 359, ff. But this seems to us to be the sign of illicit usury, if so much interest is demanded in the region where the contract is made as generally cannot be obtained from fruitful businesses. For, according to the abstract rule of justice, interest ought to remain below that quantity, since the moneylender obtains interest for himself without labor. Another sign is had if debtors after some time are compelled to put their things up for sale. Exactions of this kind, in the first place, gravely offend charity. For it is better, if the debtor is not able to pay, to deny him the loan than, as the holy Fathers objected, to cover the greatest cruelty under the appearance of a benefit (cf. Questions on Justice, n. 359). But they are also opposed to justice. Nor should you object that because of risk of the principal a much greater interest can be sought. For moneylenders of this kind are accustomed by their unjust conditions to reduce the debtor to inability, so that then from the selling-off of his goods they may acquire a greater gain for themselves. Therefore by that faculty the very risk of the principal is abundantly compensated.
Positive law. 1. Canon 1543 has this: "In the furnishing of a fungible thing, it is not of itself illicit to agree concerning legal gain, unless it is certain that it is immoderate, or even concerning a greater gain, if a just and proportionate title supports it." Therefore legal gain is presumed just.

Civil laws. a) If you except commercial business, as in the Swiss C. (Obl. 313), they preserve this notion of mutuum, by which mutuum is of itself gratuitous: interest is not owed unless it has been promised by stipulation. - b) For a sufficiently long time the laws themselves established a maximum interest, beyond which interest could not validly be promised. Today almost everywhere it is lawful for the parties to agree concerning a greater interest. In France, however, there still theoretically remains the law of 3 Sept. 1807, which forbade that by private agreement heavier usuries than 5 p. c. in civil matter, 6 p. c. in commercial matter, be promised. But by the law of 12 Jan. 1886, that law was abrogated in commercial matter. Finally, by the law of 18 Apr. 1918, even in civil matter, the law of 1807 was suspended until the end of the war and for a space of at least five years from the end of the war. Yet most laws establish legal interest for this reason, that it may be defined what usuries sometimes must be paid without agreement, for example by a debtor in delay. But they think of checking excess in various other ways, for example by invalidating acts in which someone has abused another's necessity, levity, or simplicity so that he might make excessive gain (art. 138 Code of Germany); or by permitting that the debtor can pay the debt before the contracted day if interest greater than legal has been promised. By the Code of Germany, art. 217, already after six months he can return money accepted as a mutuum, if more than 6 p. c. has been demanded, provided that six months beforehand he has made the creditor more certain. In Italy the one who must pay beyond legal interest (4 and 5 p. c.) can do the same after five years. There also, for the validity of the obligation, interest greater than the legal must be promised in writing (1831). - d) Legal interest is for the most part contained between 4 and 6 p. c. Usually in commercial matter, legal interest surpasses legal interest in civil matter by one p. c. It is established, for example, 5 in civil matter, 6 in commercial matter. In the Brazilian Code, the rate 6 p. c. is placed without distinction. - c) Other laws (for example the Brazilian) permit anatocism, or usuries of usuries; others, more numerous, forbid that they be promised in advance, excepting current accounts (Conto corrente) in banking. Thus the Swiss C., 313. But either every year, or, as in the Austrian C., § 998, after two or more years, it is lawful, by a new agreement, to convert interest already owed into fruitful capital.

Penal sanctions also have been enacted in very many regions against excessive usuries: for example in the C. of Belgium and France, against those who are accustomed to practice those arts.

In England, after the laws against usuries enacted by Edward the Confessor were abrogated in the year 1854, a new law, of the year 1900 (Money lenders Act), opened recourse to tribunals, which can free debtors from that burden of excessive usuries.

In the U.S.A., legal interest varies (in 32 States it is 6 p. c.) between 5 and 8 p. c. In eight States no limitation is placed on agreed usuries, while in most there is established a maximum interest which can be demanded by agreement: i.e. 6 p. c. in 12 States; 7 in 2; 8 in 8; 10 in 12; 12 in 7; 15 in 1 State. Sanctions vary: here only the interest, there only the principal sum; there, in Arkansas and New-York, the principal and interest are lost by the exactors of excessive usury.

Remedies against mordant usuries. Laws have some efficacy; but morals have greater efficacy. It is especially useful that what, in a definite society, are sinful usuries be openly taught, and at the same time that institutions be established where useful moneys can be obtained at moderate interest: in this way the very occasion and temptation of abusing a neighbor's necessity are diminished. Thus, by the work of the Friars Minor, in the 15th century, there arose in Italy the so-called Mounts of piety for helping the poor, who had been oppressed by the exaction of the Jews, through mutual money to be given against a pledge accepted. The same religious keenly defended the disputed cause of the Mounts and prevailed in Lateran V (1512-1517), so that by Inter multiplices they were solemnly approved. Today almost everywhere these Mounts are found publicly administered. Although they must be called useful, indeed necessary, they do not escape every rebuke. The poor, not always upright and sober, deposit there even things necessary to themselves or to the family which had been given to them for personal use. After about a year, if the moneys have not been restored, those things are sold under the spear, often for an unequal price, so that the borrower suffers by greater misery than before. Besides, this defect is common to all "official" philanthropy: its ministers, hired for exercising that function, often lack the spirit which offices of charity require; and since they are obligated, they excite no grateful affection in the souls of the poor; nor do they know how to adapt their mode of acting to various cases.

Far more useful for society are funds, especially of private origin, which are established everywhere so that they may lend money for fruitful uses at moderate or at least not excessive interest. Therefore missionaries, in regions where voracious usury rages, should not neglect to warn neophytes concerning the crime; and by social institutions prudently erected they should strive to lessen and gradually remove the evil. In this way also they can wonderfully help the propagation of the gospel.

Prümmer, Manuale Theologiae Moralis

Dominic M. Prümmer, O.P. — 8 passages

Vol. II, Tr. XI, Sect. I, Q. IV, Ch. II, Art. I, § 4. On Loan for Consumption and Usury

n. ¶49.

Preliminary note. The doctrine concerning loan for consumption and usury today presents almost no practical difficulty for the confessor. Therefore we treat this matter briefly, indicating the summary heads of this doctrine. Almost innumerable works have been written concerning loan for consumption and usury. Among modern moralists Tanquerey⁹⁰ has treated this matter most sufficiently.

⁹⁰ De iust. n. 864-906.

n. 284.

284. A loan for consumption⁹¹ is a contract by which ownership of a thing consumable by its first use and fungible is delivered to another with the obligation that a thing of the same value be returned at its proper time.

It is said: "of a thing consumable by its first use and fungible," to distinguish a loan for consumption from a loan for use and from hiring, in which a non-consumable thing is given with the obligation of returning the same thing individually. A loan for consumption is likewise distinguished from a deposit and the other contracts enumerated in the preceding paragraph for the same reason, and furthermore because the thing lent, under this its individual form, immediately passes into the ownership of the recipient, which does not occur in contracts of loan for use, deposit, etc.

Therefore the object of a loan for consumption is a thing consumable by its first use and fungible, e.g., wine, oil, and especially money. Every such thing, however, is unfruitful in itself. A thing can be fruitful: 1. naturally, as a tree produces fruits; 2. artificially or industrially, as a merchant with the aid of money buys merchandise, from the sale of which he makes profit; 3. civilly, as a leased house produces the price of the lease. Cf. above, n. 208.

⁹¹ Contract of loan for consumption (Darlehensvertrag).

n. 285.

285. Usury is defined by St. Thomas as "the acceptance of a price for the use of a thing lent for consumption,"⁹² or, considered objectively, "the price of the use of a thing lent for consumption." The Fifth Lateran Council, session 10, explains this definition more broadly: "For this is the proper interpretation of usuries: when, namely, from the use of a thing which produces nothing, without labor, without expense, and without risk, gain and offspring are sought to be acquired." Therefore the essence of usury consists in the acceptance of gain from a pure loan for consumption. For if gain is accepted by reason of another extrinsic title, e.g., emerging loss, risk, etc., it is not usury. Likewise, it is not usury if gain is indeed accepted from a loan for consumption, but by a gratuitous and not an onerous title.⁹³

Although according to the force of the words usury and interest are not distinguished, nevertheless, for the sake of clarity, it is better that usury always be taken in a bad sense, but interest (or return, or increase) in a good sense. Therefore usury is either gain from a pure loan for consumption or excessive gain⁹⁴ received from money lent, e.g., 30 percent. But interest is gain licitly received from a loan for consumption. Interest is distinguished as either legal, which is determined by the law of the country; customary, which is established by common usage in some business; or conventional, which is determined by agreement of the lender and borrower. Legal and customary interest is judged to be just. Conventional interest, however, is not just unless, after consideration of the circumstances of places, times, and persons, it corresponds to the gain ceasing and the risk to the principal which the lender must undergo. No other more exact measure can be given concerning the amount of interest. On April 18, 1889,⁹⁵ the Sacred Penitentiary, to the question whether it was lawful to receive eight or ten percent interest, responded: "Since it is dangerous to determine the fruit of money by way of a rule, the Venerable Father in Christ, the bishop making the request, is to decide the matter in individual cases according to the common practice observed by men of conscientious conscience in the respective places and times." I think that in our times, under ordinary conditions, interest exceeding 20 percent is usurious and unjust,⁹⁶ because it greatly exceeds the amount established in public banking institutions, commonly called banks. From this, however, I do not wish to condemn shares of industrial companies which give 30 percent or even 50 percent annually, because such an increase is not interest properly so called, but the fruit of commerce conducted. Usury taken in this evil sense is gravely punished also by civil codes⁹⁷ and induces an obligation of restitution.

⁹² S. theol. 2, 2, q. 78, a. 1.

⁹³ Cf. Billuart, De contract. diss. 4, a. 1 and 2.

⁹⁴ Usurious interest (Wucherzins). Usury is often taken in a broader sense for the abuse of any need of one's neighbor. Thus, e.g., we speak of a usurious price, a usurious wage, etc.

⁹⁵ Collect. de Prop. Fide n. 1702.

⁹⁶ In his time D'Annibale taught (Summula Theol. mor. II, 535): "As a rule, I would say that interest of seven percent is not immoderate; above ten percent, immoderate."

⁹⁷ Cf. German Penal Code § 302.

n. 286.

286. Principle. Usury properly so called is contrary to positive divine law, ecclesiastical law, and natural law.

Thus the most common opinion, which Benedict XIV in the book On the Diocesan Synod⁹⁸ calls the doctrine of the Catholic Church, and which almost only D'Annibale⁹⁹ contradicted in these words: "It is established by no manifest law, whether natural or divine, that usuries are illicit in themselves or otherwise forbidden. Indeed, rather, the contrary is inferred from the manner of acting of the Catholic Church."

Proof 1. It is contrary to positive divine law. From the many texts of Sacred Scripture¹⁰⁰ we select only two. It is said in Psalm 14: "Lord, who shall dwell in Thy tabernacle?" Among others there is enumerated: "He that hath not put out his money to usury." Therefore usury excludes from heaven. In the Gospel¹⁰¹ it is said: "Lend, hoping for nothing thereby." Concerning the meaning of this passage, see Billuart.¹⁰²

Proof 2. It is contrary to ecclesiastical law. There are five ecumenical councils which prohibited usury, namely, the Third, Fourth, and Fifth Lateran Councils, the Second Council of Lyons, and the Council of Vienne.¹⁰³ Likewise, Sixtus V reproved "the abyss of usuries, hateful to God and men, condemned by the sacred canons, and contrary to Christian charity." Alexander VII proscribed proposition 42: "It is lawful for the lender to demand something beyond the principal if he obliges himself not to reclaim the principal until a determinate time."¹⁰⁴ Cf. also propositions 41 and 42 condemned on March 2, 1679, by Innocent XI.¹⁰⁵ But Benedict XIV especially established a certain doctrine concerning usuries in his encyclical Vix pervenit of November 1, 1745.¹⁰⁶ The Code of Canon Law, canon 1543, also proposes the same doctrine.

Proof 3. It is contrary to natural law. Therefore St. Thomas says: "To accept usury for money lent is in itself unjust."¹⁰⁷ He proves this thesis in this manner: it is contrary to justice, and consequently to natural law, to sell that which does not exist or to sell the same thing twice. But the usurer does this. Therefore he sins against justice and natural law and consequently is bound to restitution. The major is evident. The minor is proved: in fungible things consumable by their first use, which are the proper object of usury, the things themselves and their use are morally the same. Therefore, just as it would be plainly ridiculous and unjust if a merchant, after selling wine for a just price, wished in addition to sell the use or consumption of the wine, so would one act unjustly if, besides the wine lent for consumption, he demanded something else for the use of that wine. Moreover, money, concerning which usury principally exists, is manifestly not morally distinguished from its use. Therefore nothing can be sought for the use of money lent for consumption; and if something has nevertheless been accepted, it must be restored. St. Leo the Great says beautifully: "Interest on money is the funeral of the soul."¹⁰⁸

⁹⁸ L. 10, c. 4, n. 2.

⁹⁹ L.c., n. 533.

¹⁰⁰ E.g., Ex. 22:25; Lev. 25:35-37; Deut. 23:19f.; Ez. 18:8 and 13.

¹⁰¹ Luke 6:35.

¹⁰² L.c.

¹⁰³ The texts are cited by Lehmkuhl, Theol. mor. I, n. 1302.

¹⁰⁴ Denz. n. 1142.

¹⁰⁵ Ibid., n. 1191f.

¹⁰⁶ Ibid., n. 1425ff., or better in the instruction of the Sacred Congregation for the Propagation of the Faith of 1873, where several decrees concerning usury are given (Collect. de Prop. Fide n. 1393).

¹⁰⁷ S. theol. 2, 2, q. 78, a. 1.

¹⁰⁸ Sermon 17 (16), Migne, Patr. lat. 54, 181.

n. 287.

287. Extrinsic causes legitimating interest. Although usury is never lawful and a loan for consumption properly so called must always be gratuitous, nevertheless extrinsic causes are present on account of which some increase or interest can be demanded in a contract of loan for consumption. St. Thomas¹⁰⁹ already sets forth such causes, and Benedict XIV¹¹⁰ expressly teaches this. Four causes or titles are wont to be enumerated: 1. risk to the principal; 2. a conventional penalty; 3. gain ceasing or emerging loss; 4. civil law or legal premium.

Risk to the principal¹¹¹ is a special, not general, danger by which it is prudently feared that the lender may not recover his property. Such a special danger is often present, especially if someone entrusts his money to certain banking institutions or debtors who are not very secure. It is evident that some interest can be accepted on account of such danger.¹¹² For a thing possessed outside danger is valued more than the same thing placed in danger.
A conventional penalty is established for the case in which the borrower, through culpable delay, defers the repayment of the principal beyond the stipulated time. For this cause to be sufficient and just, it is required that the penalty imposed be moderate and that the delay in payment be truly culpable.
Emerging loss and gain ceasing. Gain ceasing is the failure of some proximately expected gain which the lender certainly would have had if he had assigned the money lent to other uses at hand. Emerging loss, however, is the positive detriment which the lender must undergo because of the contract of loan for consumption. That these causes also suffice for demanding proportionate interest in a loan for consumption is evident of itself and is admitted by all today.¹¹³

¹⁰⁹ S. theol. 2, 2, q. 78, a. 2 ad 2: "He who gives a loan for consumption can without sin bring into the agreement with the one who receives the loan compensation for loss."

¹¹⁰ De synod. dioec. l. 10, c. 4.

¹¹¹ The principal (sors) is the same as what today is commonly called "capital."

¹¹² Thus also the Sacred Congregation for the Propagation of the Faith declared in 1645 (Collect. de Prop. Fide n. 117 ad 3).

¹¹³ Older authors disputed very subtly concerning these two titles of a loan for consumption. Cf. Cajetan, Comm. in 2, 2, q. 78, a. 2. Indeed, some doubted whether St. Thomas admitted gain ceasing as a sufficient title for a loan for consumption. Today those disputes are of little practical usefulness, since in the lending of money sufficient titles for moderate interest are always present. Billuart, De contract. diss. 4, a. 5, discusses the individual titles of interest excellently. D'Annibale (Summula theol. mor. II, n. 531) quite undeservedly cites St. Thomas (De malo q. 13, a. 4 ad 14) as though not even emerging loss were a sufficient title for receiving interest.

n. 288.

288. 4. Legal premium or civil law. From the sixteenth century onward it was sharply disputed whether civil law, in the absence of other titles, could render usury lawful. Today this dispute seems to be ended. For to the doubt: "Whether penitents who, on the title of law alone, received moderate gain from a loan for consumption in doubtful or bad faith can be sacramentally absolved without any burden of restitution imposed, provided they sincerely repent of the sin committed because of doubtful or bad faith and are prepared with filial obedience to stand by the mandates of the Holy See," the Holy Office responded on January 17, 1838: "Affirmatively, provided they are prepared to stand by the mandates of the Holy See."

In the same sense the Sacred Penitentiary responded several times, e.g., August 14, 1831; November 11, 1831; February 11, 1832; November 23, 1832.¹¹⁴ The Sacred Congregation for the Propagation of the Faith, gathering almost all the resolutions of the Sacred Congregations issued up to the year 1873, concludes in these words: "Although all other titles may be lacking ... the title of civil law alone can also be regarded as sufficient in practice, both by the faithful and by their confessors, who consequently are not permitted to disturb their penitents concerning this matter so long as this question remains under judgment and the Holy See has not explicitly defined it."¹¹⁵ The Code of Canon Law, canon 1543, establishes the same: "In the furnishing of a fungible thing, it is not in itself illicit to agree upon legal gain, unless it is clear that this is immoderate, or even upon greater gain if a just and proportionate title supports it."

The reason is that, by force of high dominion and by reason of the public good, there belongs to the supreme legislator the right of transferring ownership of this increase from the borrower to the lender; and this all the more because the subjects consent spontaneously. And in truth, in present times commerce would be impossible and the public good would be gravely injured if a moderate increase or interest were not permitted.

Other authors¹¹⁶ proceeded otherwise, thinking moderate interest to be lawful even without extrinsic legitimating titles. For in present times an increase or interest is demanded and accepted almost solely for money lent. But money today is not altogether sterile, but is truly, as it were, fruitful. Certainly money does not beget money as a cow begets a calf; but just as a rented house produces gain, so in almost the same way does money lent. Furthermore, money today is the principal instrument of trade and can immediately and without any difficulty be converted into fruitful things. Hence a contract by which money is delivered to another under the condition of legitimate interest is no longer a proper loan for consumption or usury, in which a sterile thing is delivered, but a contract of its own kind.¹¹⁷ Consequently, the most grave prohibitions enacted against usury can no longer be applied to money lent. Whether this opinion is true does not clearly appear. For although money today can much more easily be converted into fruitful things than in ancient times, it does not yet follow from this that it has changed its nature and of itself has become fruitful.

For practice. All, whether clerics or laity, can with a safe conscience receive moderate interest, indeed even compound interest or interest upon interest,¹¹⁸ from money lent, so that there is never an obligation of restoring such interest received. For today the extrinsic titles indicated above are always present. But what interest is moderate depends upon risk to the principal, gain ceasing, and emerging loss. Therefore, in regions where there is a legal rate or an admitted custom, this is to be followed. Indeed, something more can be accepted if the money is delivered to those companies commonly called joint-stock companies, sociétés par actions. But it is never lawful to abuse the need of the borrower in order to extort immoderate interest, since otherwise both justice and charity are injured.¹¹⁹

¹¹⁴ Cf. Denz. n. 1612 and note 1.

¹¹⁵ Collect. de Prop. Fide n. 1393.

¹¹⁶ Lehmkuhl, Theol. mor. I, n. 1313; Weiss, Apologie des Christentums IV, 794ff.; Tanquerey, De iust. n. 902; Henry Pesch, Lehrbuch der Nationalökonomie V, 226ff.

¹¹⁷ It is called a contract of credit (Kapitaldienstvertrag).

¹¹⁸ Compound interest (Zinseszins, intérêt d'intérêt, compound interest).

¹¹⁹ Since in ancient times grave penalties were established against every usury, some attempted to evade these penalties through disguised usury by entering into the triple contract or the "Mohatra" contract. The triple contract is one contract of partnership and two contracts of insurance. E.g., Peter asks Paul for 10,000 francs to carry on some business, promising him a portion of the gain, namely, 1,000 francs. Behold the contract of partnership. For Peter and Paul conduct a business in which Paul furnishes the money and Peter the work. When this contract has been made, Paul, who fears risk to the principal, offers Peter 300 francs so that he may be willing to insure the principal. Behold the first contract of insurance. Paul, furthermore fearing for the profit, offers Peter another 200 francs so that he may be willing also to insure the profit; and this is done. Behold the second contract of insurance, by which the triple contract is completed. Therefore, for the 10,000 francs lent, Paul receives 500 francs, or 5 percent; cf. the constitution of Sixtus V, Detestabili avaritiae, 1586. - The Mohatra is a species of purchase for disguising usury. Behold an example: Peter asks Paul for 1,000 francs. Paul responds that he can neither lend this money gratuitously nor with usury, since usury is gravely prohibited; but he proposes this manner of acting: I sell you my horse for 1,100 francs, and you give me a promissory note in which you promise that after a year you will pay this sum. Immediately you sell the horse back to me for 1,000 francs, which sum I deliver to you. Therefore Peter has the 1,000 francs sought, but after a year he must pay 1,100 francs, or 10 percent, for the money lent. On March 2, 1679, Innocent XI condemned proposition 40: "The Mohatra contract is lawful, even with respect to the same person and with a contract of resale entered into beforehand, with the intention of gain" (Denz. n. 1190).

n. 289.

289. Scholion 1. On montes pietatis, savings banks, and banks.

A mons pietatis is a fund of money or other lendable things collected for this purpose: that the poor, upon giving a pledge and moderate interest, may receive from it on loan those things which are necessary for them. Today they are called pawnshops, Pfandhäuser, monts de piété. The Fifth Lateran Council¹²⁰ and the Council of Trent¹²¹ approved montes pietatis, first established at Orvieto in 1463 or Perugia in 1467. At that time they existed for the relief of the poor, since only very moderate interest was demanded; but now, since these montes pietatis have often passed to private persons and the interest demanded is not rarely excessive, for various reasons montes pietatis are sometimes rather mountains of iniquity. It is greatly to be desired that the government diligently supervise and restrain institutions of this kind.

Savings banks (Sparkasse, caisse d'épargne, savings-bank) are established either by municipalities or by private persons to receive sums of money, not of such great quantity, and to pay suitable interest for the money received. The purpose of these institutions is to foster thrift, especially among persons of moderate fortune; this is certainly excellent. It is lawful to place money in these savings banks, as the Sacred Penitentiary expressly declared on February 25, 1836.

Banks (Bank, banque, bank) exist everywhere in the world and are of great service to commerce of different kinds. Nevertheless, as experience proves, they can also produce no small inconveniences and losses. Since it happens not rarely that a priest, especially if he is a pastor, must administer money or that his counsel is sought in monetary affairs, it will be very useful if he endeavors to know the different kinds of banks. According to modern practice all persons, even priests, can place money in these banks and purchase both "shares" and "bonds,"¹²² provided scandal, cooperation in evil, and speculation on the stock exchange properly so called are avoided. Whether money belonging to churches and other pious causes can be placed in savings banks or banks depends both upon the condition of those institutions and upon particular ecclesiastical statutes.

¹²⁰ Session 10 (Denz. n. 240).

¹²¹ Session 24, c. 8ff., De reform.

¹²² Cf. Holy Office, April 15, 1885.

n. 290.

290. Scholion 2. On the contract of census. A census (Rente) is a right of receiving an annual pension from a thing or person. This annual pension was called a canon or revenue. There was distinguished a reservative census, arising from the delivery of an immovable thing; a consignative census, or census simply so called, purchased by delivery of some "capital," e.g., I deliver 10,000 francs to you on the condition that until death I receive 800 francs annually; a real census, which is, as it were, a servitude imposed upon some thing and is almost the same as emphyteusis,¹²³ e.g., I deliver these fields to you so that you and your heirs may pay me 100 francs annually from their fruits. There are still other divisions, such as personal, pecuniary, and fructuary census, redeemable and irredeemable census, etc.¹²⁴ Whatever may be true of the old laws, today a census is lawful, provided there is a just proportion between the census and the price. For a census is after the manner of interest. But today interest or a loan for consumption is lawful, provided it is moderate.

¹²³ Hereditary lease (Erbpacht).

¹²⁴ Cf. Billuart, De contract. diss. 5, a. 1.

Marc, Institutiones Morales

Clement Marc, C.SS.R. — 5 passages

Vol. I, Pt. II, Sect. II, Tr. VII, Diss. IV, Ch. II, Art. VII, § 2, OR ON USURY

n. ¶1102.

- DEFINITION. In the broader sense, usury is called every profit which someone perceives from money handed over to another in any way whatever, for example for constituting a census, for entering upon partnership, etc. In the strict sense, as it is taken here, usury is profit immediately proceeding from loan for consumption (III, 758), that is, precisely by force of the loan, another title being excluded, or, to use the words of the Fifth Lateran Council: Usury is the profit which one endeavors to acquire by no labor, no expense, no peril (Sess. X, Bull Inter multiplices).

DIVISION. Usury is twofold: 1. real, which is expressed by pact; - 2. mental, which is intended in the mind, without express stipulation.

Usury is called palliated or implicit when it lies hidden under another contract, for example purchase, lease, etc. (III, 761).

n. ¶1103.

- PRINCIPLES. I. Usury, or profit precisely by force of loan for consumption, is altogether illicit. In other words: Loan for consumption is an essentially gratuitous contract, and both Positive and Natural Law prohibit that one endeavor to acquire profit from a loan for consumption by force of the loan. The first is established from the Encyclical of Benedict XIV, Vix pervenit (1 Nov. 1745), by which the Supreme Pontiff confirms all laws previously enacted, especially those of the Council of Vienne (1313), the Fifth Lateran Council (1515). Cf. Lehmkuhl, I, n. 1301; Bucceroni, Ench. mor., p. 97. - The reason for the second is that it is unlawful to exact profit for the use of a thing not one's own. There is indeed no injustice if, for the utility which the lender loses, he exacts compensation, likewise for the burden which perhaps he undertakes, or which is included in his action (cf. n. 1035); but to exact profit solely because of the utility which the borrower perceives is nothing other than to exact the profit of a thing which has already passed into the ownership of another through handing over, indeed which in many cases already does not exist, since through its use it has already been consumed (III, 759).

Do not say: To furnish another the occasion of acquiring something, or to lack some thing which profits another, are estimable by price. We deny both assertions, on account of the reason given n. 1035, namely that only that is estimable by price which contains some burden in itself. Besides, how could the lack of a plainly useless thing, as is supposed, which immediately passes into the ownership of the borrower, and the imposition of the burden of returning a similar thing at its own time, be called estimable by price?

Therefore usury does not consist in the oppression of the poor alone; even when made toward the rich, it is bad. Read the words of the Bull of Benedict XIV.

Note. The things just said have force for real usury and for mental usury, namely if the loan for consumption were made principally on account of hope of gain, although hoped for from mere benevolence, so that without such hope the loan would not be given. And hence it is why this 42nd proposition was condemned by Innocent XI: "It is not usury when something beyond the principal is exacted as owed from benevolence and gratitude." The reason for the condemnation is that benevolence can never oblige to furnishing gain, since it can be shown in many other ways (III, 762; H. Ap., X, 143).

n. ¶1104.

- II. Usurers and their cooperators are held concerning usuries exacted as concerning a stolen thing. The reason is that a usurious contract is null by every law; but the naked handing over of a thing does not transfer ownership of it (III, 783). See the things said concerning the possessor of bad faith (n. 940 ff.).

Yet the lender can retain what the borrower gave beyond the principal merely gratis, or so that he might show himself grateful, or so that he might prepare for himself a new loan (III, 763).

In the case in which the lender doubts whether the borrower gave gratis or as the price of the loan, one must distinguish: when the lender received in good faith and afterwards, when doubt supervenes, cannot become certain, then he can licitly retain it for himself. But otherwise, if he already received in doubt, whatever others say; because with doubt no one can legitimately begin possession. For the rest, if the borrower was not poor, nor illiberal, nor gave moved by some demand or threats of the lender, then it can be presumed that he gave gratis (H. Ap., X, 144).

n. ¶1105.

PRACTICAL RULE. For discerning what pacts in a loan for consumption are licit and what are illicit, when no extrinsic title accedes, one must attend to the rule which St. Thomas hands down: "Every burden estimable by price, imposed in a loan for consumption as a debt from justice, is true usury" (2. 2, q. 78, a. 2).

Hence: 1. If what is exacted is not measured by money, as benevolence, friendship, it is not usury; provided that in sign of benevolence some benefit in particular is not exacted, as is clear from the 42nd proposition mentioned above.

It is not usury to exact something already otherwise owed from justice, for example that the borrower cease from vengeance, from unjust vexation, etc.; because a new burden is not imposed. But it would be usury to exact a debt which is owed from charity alone, for example that the borrower buy from oneself or from one's relatives; because, when such a pact has been placed, a burden of justice is added, which is estimable by price (cf. above n. 1036, Quaer. 2, n. 2). See St. Alphonsus, III, 774, 780, 781; H. Ap., X, 158-160.

n. ¶1106.

IT IS ASKED. What can the lender recover when THE VALUE OF THE THING grew or decreased during the time of the loan?

Resp. 1. If in good faith attention is not given to the increase or decrease which will supervene upon the thing lent, a pact can be made in such a way that the thing be returned in the same quantity. Likewise, if it is equally doubtful whether the value of the thing is to be increased or diminished. The reason is that, since the peril is equal on each side, equality by this very fact is already preserved in the contract.

If it is certainly or more probably foreseen that the value of the thing is going to be increased, it is not licit to agree that it be returned in the same quantity: for example, if a bushel of wheat is now worth three lire, and is going to be worth four at the time of restitution, it is not licit to agree that just as many be paid, or that a whole bushel be returned. The reason is that, in this way, more would be accepted than was given.

Except unless the lender had determined to preserve the thing until the time of increased price; because then he can exact more by reason of profit ceasing. Yet the valuation of peril, or of expenses for preserving the thing, must be deducted.

If certainly or probably the thing at the time of restitution is considered going to be of less value, the lender will be able to seek a greater measure, so that he may preserve himself unharmed (III, 782; H. Ap., X, 160).

As concerns money, it suffices that it be restored according to the same value, "because in money one does not think of the bodies, but of the quantity." Yet a pact is licit that it be returned in the same species and in the same number of coins, at least if the peril of increase or decrease is common (Sacred Penitentiary, 21 Jan. 1873; A. S. S., vol. 7, p. 221).

Konings, Theologia Moralis

Anthony Konings, C.SS.R. — 4 passages

Vol. I, TREATISE ON CONTRACTS, SECOND PART: ON CONTRACTS …, Ch. VI, Art. II, OR ON PROFIT PERCEIVED FROM LOAN FOR CONSUMPTION

n. ¶1.

Usury, taken in a broad sense, is called every profit perceived from loan, or on occasion of it, whether with a title or without a legitimate title. But usury in the stricter sense is profit immediately proceeding from loan, that is, precisely by force of the loan and without another just title. Yet the crime of usury is not present if someone expects something for a loan, not as owed, but from mere benevolence (provided implicit usury does not underlie it), or if he exacts a thing already owed from elsewhere by justice, since thus in fact no new burden is imposed.¹ - If it exceeds the limits of a just title, or is exercised toward the poor (such in reality and hope), it is called oppressive usury.

n. ¶932.

Principles. - I. Usury perceived by force of a loan in a thing consumable by first use, as in wine, wheat, etc., ... is utterly illicit. The reason is that "in a thing" consumable by first use, "as wine, wheat, money, there is not present a use of the thing distinct from dominion, since the use of the thing is the very consumption of the thing, and therefore in loan for consumption from its nature the dominion of the thing is transferred to the borrower: therefore, if something were exacted for the use of a consumable thing, it would indeed be exacted unjustly, says St. Thomas,² and all, because it would be exacted for a thing which does not exist," or, as Scotus says, for a thing not his own.³

II. Oppressive usury is repugnant to natural right, whether it is done toward the poor or toward the rich: 1° if it is done toward the poor, because the one lending is bound from charity to give the loan gratuitously; 2° if it is done toward the rich beyond the limits of a just title (or at least of legal rate), because justice requires that there be a proportion between this title and the profit perceived from it. This is established from various texts of Scripture. (m) p. 482.

III. Usury will not be unjust if there is present a title extrinsic to the loan, for example, emergent damage (n. 935 sq.). The reason is that then profit is not taken by force of the loan, but by reason of the extrinsic title. For it is licit for you to receive as much as you handed over; moreover, if from one hundred coins given you lose ten, in some manner you expend one hundred and ten: therefore you can receive one hundred and ten.

IV. Usurers and their cooperators are bound from Justice to restitution, since they injure commutative justice just as thieves themselves do; therefore the rules handed down in the Treatise on Restitution must be applied to them.

n. ¶933.

Questions. - Query 1° In doubt whether the borrower gave something beyond the principal gratuitously or not, can you retain it?

Resp. Distinguish; for you accepted either in good faith, or in doubtful faith. If the former, a doubt supervening, and after due inquiry remaining, you can retain what was accepted; if the latter, speculatively speaking you cannot, because you cannot begin possession with doubt; in practice deference must be given to that party for which there is the stronger presumption, and thus the borrower can be presumed to have donated gratuitously if he is not poor, or avaricious, or did not give impelled by fear, or from annoyance or petition of the one lending.¹

Query 2° Can the lender retain what the borrower gave from fear, lest otherwise the loan be denied to him?

Resp. More probably affirmatively. The reason is that, for usury, it is required that it be given by force of pact, or as owed from justice. - Thus more commonly. St. Alphonsus in H. A. goes over to this opinion.²

n. ¶934.

- Query 3° Is it usury if you lend on this law, that the borrower buy necessaries for himself at a just price in your shop?

Resp. Affirmatively, if this is brought into pact. The reason is that a burden is imposed on the borrower and his liberty is restricted, which is illicit and unjust.³ Yet otherwise it must be said if the burden imposed is owed from elsewhere by the borrower. Thus you can propose to another that you will give him money as a loan, provided he include in a promissory note what he owed you before. Thus likewise you will be able to give money as a loan by this pact, that the other abandon an unjust lawsuit which he had instituted.

Query 4° Can an ANTIDORAL donation, or one which is made from a grateful mind, be brought into pact?

Resp. Negatively. The reason is that from pacts there necessarily arises a title of justice, but not a donation bestowed merely from a grateful mind. - St. Alphonsus⁴ and others commonly. Hence with him to whom you give a loan, you cannot contract that he obtain some gift for you. But nothing forbids asking that he interpose his prayers, but it is very dangerous.⁵

Merkelbach, Summa Theologiae Moralis

Benedict Henry Merkelbach, O.P. — 78 passages

Vol. II, Special Moral Theology: On…, Treatise: On the Cardinal …, Third Part: Concerning Com…, Sect. C, Ch. IV, Question One: On the Contr…, Article II: On Mutuum

576. Usury (woeker), from use, generally designates the use of any thing, good or bad; but in moral science and in law it is taken in a bad sense for the price of the use of a thing which has no use except its own consumption, and therefore whose use has no value distinct from the thing. It is therefore the price of the use of a thing lent in mutuum, or gain from mutuum as owed by force of the mutuum. It is said:

Gain, that is, something estimable by price beyond the principal, whether it is money or anything else, for example, gifts, burdens, protection, a civil obligation of doing something, such as frequenting a workshop, not raising a building, not opening a window, recommending, ceasing from a just lawsuit; but not ceasing from an unjust one;

From mutuum, because if it is from another contract, it is not injustice, or it is not usury;

As owed by force of the mutuum (alleenlijk om het leenen), because if gain in mutuum does not proceed immediately from the force and nature of mutuum, or from an intrinsic title, but on the occasion of the mutuum by reason of an extrinsic title acceding to it, for example, ceasing gain or emerging damage, it is not usury; and likewise if it is not received as owed, but is conceded wholly voluntarily, from mere gratitude, without any obligation.

Sometimes, however, the word usury is taken in a more general sense and designates any increase beyond the principal to be paid by the borrower, and thus it embraces every interest; and then it is distinguished into lucrative usury, which seeks gain from the force of the mutuum; compensatory usury, which is given for compensating damage; and punitive usury, which is the penalty of negligence in paying.

Today, since generally moderate interest is lawful on account of extrinsic titles, interest (interet; kroos) is customarily distinguished from usury (usure; woeker). Interest is named from offspring, in the manner of the Greeks, among whom tokos, birth, is so called because through use money brings forth its own fruits; but interest is now taken in a good sense for a lawful increase, while usury is now understood as exaggerated or unjust interest: for what is taken beyond that which an extrinsic title permits seems to be taken by force of the mutuum itself.

Now the question is whether, just as in lending a thing for use some gain can be received for the use of the thing, in which case it is no longer commodatum but letting, so also in lending a thing in mutuum something can be received, not sometimes and by accident, but per se, always, and by force of an intrinsic title, from the very force of mutuum. Concerning this there are the following three assertions.

577. Principle I. Every interest beyond the principal, or usury, even the least, received by force of the mutuum is per se prohibited by natural law, and unjust.

It is proved:

By a general argument. By natural law itself it is contrary to justice to sell the same thing twice, or to sell what is not, or what is not one's own: for thus there is manifestly constituted an inequality which is contrary to justice. But the usurer does one or the other. Therefore. The minor is proved: either he receives gain for the thing lent in mutuum itself, and then he sells the same thing twice, or receives a double price for the same thing, namely, the thing restored and an increase. Or he receives gain for the use of the thing lent in mutuum, and then he sells what is not, because if there is question of things consumable by their very use, the use is not counted separately from the thing, because it is the very consumption of the thing;² or he sells what is not his own, because he sells the use of a thing which is not his, since he has transferred its full dominion, both useful and direct, to the borrower.³ Therefore he always commits injustice, if not only an equal thing is returned, but interest is added besides, because more is returned than he gave.

² Thus in II-II, q. 78, a. 1.

³ Thus in III Sent., d. 37, a. 6.

"If someone," says St. Thomas, "wished to sell wine and the use of wine separately, he would sell the same thing twice, or would sell that which is not. Hence he would manifestly sin by injustice. And by a like reason he commits injustice who lends wine or wheat in mutuum, asking that two recompenses be given to him: one as regards the restoration of an equal thing, but the other the price of the use, which is called usury."

By a special argument concerning money. Money as money is nothing except the measure of the utility of other things, which are compared with one another according to value; and therefore its proper and principal use, for which it was made, is wholly in the exchange by which it is consumed and lost to him who exchanges it for a certain thing (elle n'est rien qu'un instrument d'echange). Hence money of itself is sterile and unfruitful, and has no utility except that of representing all things, no fruit or utility distinct from its consumption. And therefore by its own nature it is a thing consumable by first use; consequently the use of money as such is not distinguished from money itself; therefore the use of money cannot justly be sold or let separately.

Hence is understood the definition of the sin of usury alleged in the Fifth Lateran Council: "this is the proper interpretation of usuries, namely, when from the use of a thing which does not germinate, by no labor, no expense, and no risk, gain and offspring are sought." Cf. Benedict XIV, encyclical Vix pervenit;⁴ likewise condemned prop. 42 by Alexander VII, and 41 and 42 by Innocent XI.⁵

⁴ "That kind of sin which is called usury... consists in this, that someone, from the mutuum itself, which by its own nature demands only that as much be returned as was received, wishes more to be returned to himself than was received, and therefore contends that some gain beyond the principal is owed to him by reason of the mutuum itself...; which is illicit and usurious," prop. 1.

⁵ "It is lawful for one lending in mutuum to demand something beyond the principal, if he obliges himself not to demand back the principal until a certain time," prop. 42 condemned by Alexander VII.

Therefore the specific malice of usury is not in the oppression of the poor, because usury can also be exercised against the rich;⁶ nevertheless oppression of the poor often accedes, and then, besides the essential malice, there is a new malice either of injustice or of injured charity, according as the poor man is oppressed in those things to which he has a strict right or does not have one.

⁶ Thus Benedict XIV: "Nor can any aid be summoned for purging that stain of usury from this, ... that he from whom that gain is demanded solely by reason of the mutuum is not poor but rich..." prop. 2.

"Since ready cash is more precious than money payable later, and there is no one who does not value present money more than future money, a creditor can demand something beyond the principal from the borrower, and by that title be excused from usury," prop. 41 condemned by Innocent XI.

"It is not usury when something beyond the principal is demanded as owed by benevolence and gratitude, but only if it is demanded as owed by justice," prop. 42.

578. Principle II. By accident it can be lawful and just to receive something beyond the principal on account of extraneous titles, which are not had by force of the mutuum itself, and therefore not necessarily and universally, but which can and do in fact accede to the contract of mutuum. Such titles for moderate interest were acknowledged by theologians and by the Church, for example, S. Cong. P. F. 1873: incurred loss (damnum emergens), after St. Raymond of Pennafort, already by St. Thomas, saying in a. 2, ad 1: "for this is not to sell the use of money but to avoid damage"; foregone profit (lucrum cessans), to which St. Thomas does not seem to be favorable (ibid.),⁷ although from his principles it could legitimately be deduced (q. 62, a. 4), afterward, and other titles in the course of time were acknowledged by all and by the Church. They are five:

⁷ Some, however, understand St. Thomas concerning gain that is not probable; or concerning gain to be compensated totally: for, treating of restitution in q. 62, a. 4, he admits that something must be restored for the hope of gain.

Incurred loss (damnum emergens), or a positive detriment which the creditor suffers in things already acquired, for example, if through the lack of money or wheat which he hands over in mutuum, he is forced to sell goods or rents at a lower price, or cannot repair a collapsing house, or afterward must buy a thing more dearly, for example, wheat.

Foregone profit (lucrum cessans), or the loss of the price which the lender would have gained if he had employed the thing in another contract or business; that is, the gain legitimately and probably hoped for, of which the creditor deprives himself by lending his money to another, such as the impossibility of carrying on a profitable business which otherwise he probably would have carried on.⁸ This can be brought into a pact in two ways: a) only conditionally, namely, if afterward he finds that gain would otherwise have been made, and then it must be compensated in whole; b) absolutely, namely, if from the beginning there is hope of gain, which can equally be compensated, though less than the gain itself.

⁸ Theologians of the eighteenth century seem to have applied right principles too rigorously, not being sufficiently ready to admit presumed foregone profit (lucrum cessans).

Special and extraordinary danger of the principal, that is, a serious danger of not recovering the principal, or not except with difficulty, labors, and expenses; namely, a danger distinct from the common danger which is incurred even with the owner. This is estimable by price and is equally compensated if the interest is proportioned to the danger, so that it is greater according as the danger is more imminent.

Conventional penalty, that is, a clause by which the borrower obliges himself to pay some increase by way of penalty, if he has not returned the principal at the prefixed time, as is equitable, provided the increase is proportioned to the delay and the delay is culpable; juridical fault suffices for this.

Title of the civil law, when the law permits moderate interest to be accepted in order to foster commerce and the common good. But this does not seem to be a title distinct per se, but rather is founded on the presumption of the first three.

579. Principle III. In present economic conditions, in which ordinarily there are extrinsic titles, it is always lawful to receive a moderate increase, even if in some particular case the aforesaid titles are not demonstrated to be present.

For the fluctuation and exchange of things, even fruitful things, has in our time become very easy and continual; industries, commercial undertakings, and industrial societies are almost innumerable, so that whoever wishes can always have a part, with probable hope of gain, in profitable businesses. Hence, if money is given in mutuum, a title of foregone profit (lucrum cessans) also arises. And looking to this condition of things, our law, after it has spoken of merely gratuitous mutuum, also permits the stipulation of interest to be added to the contract of mutuum, and indeed generally, whether for money or for other things, and without restriction, because it presumes that these conditions are always verified (a. 1905-1908).

And thus the contract of mutuum, per se gratuitous, now by accident, on account of special reasons commonly acceding in our days, becomes onerous; whence also the Church, after for many centuries condemning every usury, as is clear from condemned prop. 42 of Alexander VII, and 41-42 of Innocent XI, and from the encyclical of Benedict XIV, from the nineteenth century onward has answered that "confessors are not to be disturbed, nor penitents who in the matter of mutuum conform themselves to civil law or to common practice."⁹ This also the Code of Canon Law authentically published, because the presumption is present that the civil law is just (can. 1543). This practice will be lawful so long as economic conditions remain the same; the recent war demonstrated that this is not necessary.

⁹ Thus various decrees: S. Off. 18 Aug. 1830, and 17 Jan. 1838; S. Poen. 16 Sept. 1830 and 11 Nov. 1831.

The whole doctrine, as to the principles together with the practical solution, is proposed summarily by the Code in the said can. 1543: "If a fungible thing is given to someone in such a way that it becomes his and afterward only the same amount in the same genus is restored, no gain can be received by reason of the contract itself (first principle); but in the furnishing of a fungible thing it is not per se illicit to contract concerning legal gain, unless it is clear that it is immoderate (third principle), or even concerning greater gain, if a just and proportionate title supports it (second principle)."

580. Observations. Although the Scholastics hold gain from money lent in mutuum, or from the proper and principal use of money lent in mutuum, as usurious, nevertheless they do not on that account hold every gain made from money as illegitimate.¹⁰ And indeed some gain can be received from money:

¹⁰ Thus Benedict XIV himself, prop. 3: "Nor is it denied that often one's own money can rightly be placed and expended by another in contracts of a nature altogether diverse from the nature of mutuum, whether for acquiring annual revenues for oneself, or also for exercising lawful commerce and business and receiving honest gains therefrom"; and prop. 4: "It is not to be doubted that in these same contracts there is a manifold lawful mode and reason for conserving and frequenting human commerce and fruitful business itself for the public advantage."

a) If someone were to concede coined money for display or for placing in the place of a pledge, and such a use of money a man can lawfully sell according to St. Thomas himself, q. 78, a. 1, ad 6. For then money is not destined for consumption, but for another use, from which gain is legitimately accepted. It is a secondary and proper use of money, but under this respect money is not a thing merely consumable by first use.

b) Money has a use common with other things, when it is considered not formally as money, but materially as a thing, by reason of the matter from which it is made, or of its figure, or of convenience or distance, etc.; and thus it is considered, not according to its legal and normal value, but according to its natural and real value, which is diverse from the former and varies in various regions. Thus money, like every other thing, can be merchandise which can be sold or exchanged, and especially compared with other money, as happens in the contract of exchange, which St. Thomas calls "a species of exchange of coins for coins" (q. 77, a. 4).

c) "He who commits his money to a merchant or craftsman by way of a certain partnership does not transfer the dominion of his money to him, but it remains his, so that the merchant trades with it, or the craftsman works with it, at his risk; and therefore thus he can lawfully seek a part of the gain proceeding from it as from his own thing," says St. Thomas, q. 78, a. 2, ad 5. In other words, he who enters into a contract of partnership with a merchant or craftsman, furnishing money so that this man may trade or work with it, lawfully receives some gain, because he retains the dominion of the money and undergoes the danger of the principal.

d) Moreover, in the course of time, it was permitted that a moderate gain be received from the institutions of montes pietatis, and from a redeemable rent assigned upon money handed over; this brought about a change of discipline concerning usuries.

a) Montes pietatis are public treasuries in which money and other fungible things were collected, which were handed over in mutuum to the poor, in order to defend them against usurers, by means of a pledge, whose officials take the danger upon themselves, and with a moderate increase on account of expenses necessary for the wages of the officials and the administration of the house.¹¹ Now Leo X, in the Fifth Lateran Council (a. 1515), solemnly declared these mounts lawful and meritorious, "in which, for their expenses and indemnity, something moderate is received beyond the principal, without profit of these same Mounts, solely for the expenses of the officials and of other things pertaining, as stated, to their preservation, for their indemnity only." Therefore not by force of the mutuum, but by reason of labor which merits a wage; not for gain but for compensating work and other expenses; indeed perhaps for more easily collecting the necessary money, but this last thing was not affirmed as legitimate in the said Council.

¹¹ Some are Italian, collected from alms and pious legacies, which had their origin at Perugia in the middle of the fifteenth century; others, from money accepted for rent-charges, are Belgian, permitted by authority in the year 1618; others are mixed. There is customarily civil legislation concerning montes pietatis: thus Belgian law of 30 Apr. 1848.

From the approval of Leo X it happened that wealthy merchants, especially Lombards, obtained from princes the license of receiving moderate gain from mutuum, as was done in the montes pietatis: thus provision was made for the necessities of the poor.

b) The rent contract came more into use around the same time, by force of which the right was acquired of receiving an annual pension, not only from an alienated fruitful thing but also from money handed over to another. That contract indeed differs essentially from mutuum, because money is handed over to another in perpetuity under the condition that an annual rent be paid; but after it was stipulated that the rent could be made redeemable, practically it was no longer distinguished much from an onerous mutuum. For this reason it was prohibited by Pius V (a. 1569) by positive law, but nevertheless was not declared intrinsically unjust against the natural law; therefore the prohibition did not endure, and the redeemable rent was held legitimate by not a few theologians, but under certain conditions, as was noted in n. 565.

c) The triple contract likewise was acknowledged as probably lawful, which, as the name indicates, is a threefold joined contract: namely, of partnership, of insurance of the principal, and of insurance of the gain. Let there be an example: Peter and Andrew enter into a partnership of business, into which Peter contributes 10,000 fr. and Andrew his labor, from which Peter hopes to gain 2,000 fr.: behold the first contract, namely, of partnership. But Peter, who does not wish to risk the principal, offers Andrew 500 fr. that he may insure the principal: behold the second contract, of insurance of the principal. But because he prefers a smaller certain gain to a greater uncertain gain, afterward he sells to Andrew the hope of gaining 2,000 fr. for 1,000 fr.: behold the third contract, namely, of insurance of the gain. Therefore, when the business is finished, Peter will receive 500 fr. But by this manner of acting he in fact receives 5% interest for the money.

Now this contract, consisting of a threefold contract not unjust, is lawful of itself,¹² yet not always, but provided the gain to be made is truly probable: for then the interest is no longer usury, because foregone profit (lucrum cessans) is present, therefore a just extrinsic title.

¹² Sixtus V did not condemn the contract, but unjust modes and an unjust price.

Diss. I, Chapter I — Propositions condemned by Alexander VII and Innocent XI · Diss. I, Chapter II — The lax opinions of several Casuists · Diss. IV, Chapter II — The notion of usury: all usury, whether small or great, whether exacted from a rich man or from a poor man, is forbidden by divine law · Diss. IV, Chapter III — Certain little questions concerning usury are resolved · Diss. IV, Chapter VII — On mental usury, and on agreements added to a loan · Diss. IV, Chapter VIII — On the *Monti di Pietà*

By these and other circumstances it happened that cases in which extrinsic titles occurred became more frequent, and thus little by little they brought about mitigation, not indeed in the doctrine of the Church, but in the practical discipline concerning usuries.

n. 581.

581. Corollaries. To explain the apparent contradiction between the ancient doctrine of the Church rigorously condemning every usury, and the more recent practice or tolerance of moderate interest, others have entered upon a way different from ours, yet not a happier one.

n. 581.

Some have distinguished a mutuum of consumption and a mutuum of business, according as the money lent in mutuum ought to serve for buying food and drink, or for carrying on business; they said the former is gratuitous, the latter onerous.¹³

¹³ Thus Le Correur, a Parisian priest of the eighteenth century; Ramboud; Card. de la Luzerne; Cl. Jannet.

n. 581.

But Benedict XIV condemned usury in both.¹⁴ Moreover, the extrinsic end to which the contract is ordered does not change its nature, for money, insofar as it serves for exchange, is always handed over to another so that it may be consumed at his discretion.

¹⁴ "The sin of usury does not cease from this, that he from whom that gain is demanded solely by reason of the mutuum is not poor but rich, nor that he is not going to leave idle the sum given to him in mutuum, but is going to spend it most usefully for enlarging his fortunes, or for buying new estates, or for carrying on profitable businesses," prop. 2.

…and 38 more passages — all of them are listed on the topic page.

Sabetti-Barrett, Compendium of Moral Theology

Aloysius Sabetti, S.J., and Timothy Barrett, S.J. — 6 passages

Vol. I, Tr. IX, Pt. II, Sect. I, Chapter VI. On Mutuum

n. 525.

Mutuum is sometimes taken for the very thing handed over by loan; but sometimes, and more often, for the contract by which that thing is handed over to another to be used. In this latter sense it is taken here, and is customarily defined: a contract by which a thing consumable by first use is handed over to another, with the obligation of returning a similar thing at the appointed time and in the same species and quality. Hence mutuum differs from commodatum, hiring, and deposit: 1st, because in mutuum the thing must be consumable by first use, otherwise in the others; 2nd, because the thing is to be restored not in the individual but only in the same species; 3rd, because in mutuum the dominion of the thing is transferred and not in the others, and therefore in mutuum the thing perishes to the one receiving, in the others to the one handing over. But the reason why in strict and properly so-called mutuum dominion is transferred is that, since the thing loaned is consumable by first use, a use of this sort would not be licit without dominion itself.

n. 526.

I say, 1st. There is given a strict precept of making a mutuum not only with respect to the poor who will have the means to restore, but also with respect to the rich who, because of a particular circumstance, greatly need it. The reason for each is deduced from the law of charity, which obliges one to come to the aid of a neighbor placed in necessity, and demands that we willingly furnish to him that which in a like case we would wish to be furnished to ourselves. - I said, 1st, who will have, etc.; because otherwise another precept urges, namely that of giving alms, according to the rules set forth above, where charity was treated. - I said, 2nd, also with respect to the rich who because of a particular, etc.; because charity obliges us to nothing toward those rich persons who seek a mutuum for increasing their wealth, since they suffer no necessity.

I say, 2nd. Although the borrower is not freed from restitution, however the thing loaned may perhaps perish, nevertheless he is held to nothing else except to returning a similar thing; nor can the lender exact anything else by force of the mutuum without injuring commutative justice and being held to restitution. - The reason for the first is that, once the contract of mutuum has been completed, dominion of the thing loaned passes to the borrower, and therefore if it perishes, it perishes to him. But the reason for the second is that, as St. Thomas teaches, the use of a consumable thing, since it is the consumption of the thing itself, cannot be distinct from its dominion; and therefore if besides the thing itself something were exacted for the use, by force of the mutuum, a price would be exacted for a thing which does not exist; or in other words, the same thing would as it were be sold twice, which certainly injures justice. There is added the reason taken from the special and repeated prohibitions and declarations made by the Roman See, and especially by Benedict XIV in the Encyclical Letter issued in the year 1745, which begins Vix pervenit. The new code accords:

If a fungible thing is given to someone in such a way that it becomes his and afterwards as much in the same kind is restored, no profit can be received by reason of the contract itself; but in the furnishing of a fungible thing it is not illicit in itself to agree concerning legal profit, unless it is established to be immoderate, or even concerning greater profit, if a just and proportionate title suffices (Can. 1543).

n. 527.

You Will Resolve. - 1st. If sometimes the poor seek a mutuum, and nevertheless they are not presumed to be going to have the means from which they may be able to return the equivalent, then, as has been said, the precept of making a mutuum ceases, but that precept urges of giving some alms. - I said some, because you are not held to furnish so much alms as the poor man was demanding by mutuum, because there are others who can and ought to give help.

2nd. Some grave inconvenience sufficient for excusing from the obligation of giving alms also excuses from the obligation of making a mutuum, but not conversely, since to give a mutuum is much less than to confer alms. Nevertheless the obligation of making a mutuum must be carefully distinguished from that of not exacting something above the principal by force of the mutuum; the first proceeds from charity, the other from justice. The sin of injury to justice committed in such a way is properly called usury, which can be explicit and open if an express agreement occurs; or implicit and disguised if the agreement occurs through consent only virtually manifested or under the species of a contract diverse from mutuum.

3rd. Nevertheless, the crime of usury is not committed if someone expects something for a mutuum, not as owed, but from mere benevolence. - I said expects, for if someone were to exact something from benevolence, he would have to be called a usurer; since Innocent XI condemned prop. 42, which has itself thus: "It is not usury when beyond the principal something is exacted as owed from benevolence and gratitude, but only if it is exacted as owed from justice." Cf. St. Alphonsus, nn. 774 and 777.

4th. A fortiori, however, he ought to be excused from every crime of usury who either expects or even exacts something above the principal, not indeed by force of the mutuum, but by force of some extrinsic title. The reason is taken from the practice of God-fearing faithful, from the implicit approbation of the Church, and from the fact that such a manner of acting is altogether consonant with the rules of justice.

n. 528.

Questions

Question 1. What are those extrinsic titles by force of which it is licit to exact something beyond the principal?

Resp. Five principal ones are enumerated, namely: emergent damage, ceasing profit, danger of the principal, conventional penalty, and civil law. Concerning each one it will be said briefly what it is and why it is licit to use it.

1st. Emergent damage is the detriment which the lender suffers on occasion of a mutuum furnished to a neighbor. But that this title is legitimate is established from the fact that it is not equitable that someone should bear damage from a mutuum, since no one is held to furnish a benefit with his own damage, except in the necessity of a neighbor. But for the legitimacy of this title, besides the existence of the damage itself, the following conditions are required, namely: that the mutuum be the cause of the damage; that nothing besides compensation be exacted; and that the increase be brought into the pact from the beginning. - Cf. St. Alphonsus, nn. 768 and 769.

2nd. Ceasing profit is that which the lender, preserving his own thing, would have gained if he had applied it in another licit contract. That this is a legitimate title is proved, because the hope of profit on the one hand is extrinsic to the mutuum, and on the other is truly estimable by price. Cf. St. Alphonsus, n. 771; and Hom. Ap. nn. 149 and following.

3rd. Danger of the principal is a prudent fear lest the principal cannot be recovered. - This title also, according to the more common and more probable opinion, is legitimate. The reason is both because things placed in safety are valued more highly than things placed in danger, and also because it is established from the decision of the Sacred Congregation de Propaganda for the Chinese Missionaries, approved by Innocent X, in the year 1645. Nevertheless except if the borrower secures the principal by pledge, because thus the danger ceases. - Cf. St. Alphonsus, n. 765. - Kenrick, n. 89.

4th. A conventional penalty is as it were a certain fine, which the borrower obliges himself to pay if he does not restore the principal at the prefixed time. But it is proved to be a legitimate title because thus provision is made for the firmness of the contract and at the same time the negligence of the borrower is prevented; but it is required that the delay of the debtor be notable and culpable, and that the penalty be moderate and proportionate to the fault. - Cf. St. Alphonsus, n. 766.

5th. The title of civil law consists in a positive permission made by the supreme legislator of civil society of receiving a certain determined profit, which therefore is diverse according to the diversity of places and laws. Much indeed was previously disputed concerning the legitimacy of this title in the forum of conscience; but today it can scarcely be doubted, although the same explanation is not given by all. For some invoke the force of the high dominion which the supreme authority has over the goods of private persons; but others, far better, have recourse to the right and office which the supreme authority has of decreeing a reward for those who, by supplying money, favor commerce. But natural equity itself dictates that this reward be paid by those same persons who take utility therefrom. Besides, there exist many responses of the Roman Congregations by which it is decreed that those who, relying only upon this title, have obtained some profit are not to be disturbed; nor are priests to be disturbed who contend that this title is legitimate. - Cf. Taparelli, Saggio Teoretico, dissert. 4, cap. 4.

n. 528, Q. 2.

Question 2. Is it licit to exceed the legal rate by reason of special emergent damage, or ceasing profit, or danger of the principal?

Resp. Negatively, with respect to the poor or others who seek a mutuum in necessity and who would be oppressed by a greater increase. But if money is handed over by mutuum not indeed for another's necessity, but only for utility and even for gathering new riches, there is no little dispute among theologians. Very many more recent authors, among whom is our Kenrick, rightly affirm, both by reason of indemnity or just compensation, and by reason of the free consent of the borrower, who, as is supposed, suffers no necessity. - Cf. Kenrick, n. 96. Nouvelle Revue Théol. vol. 21, p. 496.

n. 528, Q. 3.

Question 3. What is to be said concerning those who, when the discussion is only of money to be given by mutuum, after rejecting all the aforesaid titles, rely solely upon its fecundity to legitimize the profit which is taken above the principal?

Resp. Their doctrine does not seem improbable, and it can be reduced to the following heads:

1st. A mutuum, according to all, cannot occur except concerning a thing to be consumed by use, which is evinced from the nature of mutuum itself. But money is not consumed by first use unless it is furnished to a poor man who is going to spend it for his sustenance. For in the handing over of money, only value is transferred and is the object of the contract; but value does not perish when it is spent for increasing the fortune of the borrower. Therefore . . .

2nd. Hence the contract by which money is handed over to a rich man is not mutuum properly so called, but rather commodatum or hiring, according as it is given gratuitously or for a price, and therefore the dominion of the money is not transferred.

3rd. That contract of hiring money is licit in itself, for a price is justly exacted for a thing which has intrinsic value; but the use of money, which is not consumed by first use, has intrinsic value, which can be estimated by price and in human commerce becomes the cause of many emoluments. Therefore the increase of the principal is the just price of that use.

4th. Money, as is established by the experience of merchants, produces fruit and is multiplied of itself, independently of human industry; therefore it is not to be reputed altogether sterile. For the same merchant, in the same circumstances and with the same degree of industry, makes much greater profit if he can spend a much greater sum in commerce; therefore the faculty of spending money in commerce is truly estimable by price.

Concina, Compendium

Daniele Concina, O.P. — 90 passages

Diss. I, Chapter I — Propositions condemned by Alexander VII and Innocent XI

n. IX.

IX. It is not usury when something beyond the principal is exacted as owed out of benevolence and gratitude, but only if it is exacted as owed out of justice. This is the 41st of Innocent.

Diss. I, Chapter II — The lax opinions of several Casuists

n. XXXVII.

XXXVII. Cardinal de Lugo, Vol. I On Justice, disputation 26, section 11, no. 108: “It is inferred thirdly, that neither is this contract (the Mohatra) rendered unjust from the nature of the thing by this, that the seller manifests his intention to the buyer, saying: I freely sell you these wares on credit; but if you should wish afterwards to sell them at a lower price in order to have ready money, I am prepared to buy them.”

n. LVI.

LVI. Whether it be usury that the borrower at the beginning of the loan should pay the gain on occasion of the loan. Baunius, in his Moral Theology, Vol. III, book 2, question 12 (cited in Diana, in the place cited, resolution 45), answers in the negative, scandal being set aside: “First, because time is something extrinsic to usury: therefore from it the payment of ceasing gain does not contract the stain and vice of usury. Secondly, as soon as anything is owed, to pay it is not evil; but ceasing gain is owed to the lender as soon as the loan is made: therefore he will then be able to pay it.”

Diss. IV, Chapter II — The notion of usury: all usury, whether small or great, whether exacted from a rich man or from a poor man, is forbidden by divine law

I. QUESTION I. What is usury? ANSWER. It is gain perceived from a loan by force of the loan. Whensoever gain is exacted by force of a loan, whether from a rich man or from a poor man, it is usurious. The vulgar are wont to constitute the whole crime of usury in the excess of gain. Which error of the vulgar the younger heretics have adopted, and one or another unskilled Catholic. But I shall show below that all err basely.

II. Some contend to disguise the doctrine concerning usury by a new distinction. They distinguish a twofold kind of loan: one of consumption, which is delivered to the needy; the other they call of trade, which is delivered to merchants for the enlarging of their money and the increasing of merchandise and business, whence vast utilities come to the commonwealth. The gain which is perceived from the first loan of consumption they confess to be usurious. That which is exacted from the other, the trading loan, they assert to be lawful, provided it be moderate and consonant with the laws of the country.

n. III.

III. These crafty and inept fictions both the divine Scriptures and the Fathers explode. In Leviticus 25 these things are had: Take not usury of him, nor more than thou gavest. Here the particle more than thou gavest excludes altogether every accession added to the principal delivered. Similarly Christ the Lord says: Lend, hoping for nothing thereby. This word nothing disapproves not only excess, but any increase whatsoever, however small. I omit the testimonies of the Fathers, that I be not long.

n. IV.

IV. Usury is divided into real and mental. Real is the usurious gain itself. Mental is the will by which it is intended that something beyond the principal be perceived by force of the loan, as a debt, although it be not expressed by any agreement. It is also wont to be divided into lucrative, compensatory, and punitive. They call lucrative that gain which is perceived by force of the loan beyond the principal. Compensatory is that which is exacted for the compensating of the loss which the creditor suffers. Punitive is the gain which is imposed to be paid by a tardy borrower. Lucrative usury alone is usury properly so called, and vicious. And this alone is commonly understood by the name of usury.

n. V.

V. They divide usury besides into conventional and necessitated. The former is owed from convention; the latter from delay, that is, on account of the postponement of paying the price from a contract of selling and buying, or on account of the postponement of rendering the principal lent. Others divide usury into formal, or express and open, perceived from a loan; and palliated, or virtual, which is hidden in other feigned contracts. Usury is also distributed into usury of the principal and usury of usury. The gain which is perceived from the principal, commonly called the capital, is usury of the principal. Usury of usury is when the agreed gain is not paid but is constituted into the principal, that it may again bring forth usury. And so gain from usurious gain is called usury of usury, and by Ulpian is called interusurium. Lastly, among the Romans one usury was centesima, that is, by which one in the hundred was paid every month, and consequently twelve in the year. Lower usuries were deunces, which paid eleven in the hundred; dextantes, ten; dodrantes, nine; bessales, eight; septunces, seven; semisses, six; quincunces, five; trientes, four; quadrantes, three; sextantes, two; unciariae, or uncia, one in the hundred. Some contend that under the name unciaria the centesima is understood. For the as unciarius consisted of twelve ounces. But for the rest, usuries unciariae are commonly held for the least.

n. VI.

VI. QUESTION II. Is all usury, whether perceived from the rich or from the poor, prohibited not only by natural but by divine law? ANSWER. Catholics commonly affirm it. I have examined this controversy with a full pen in Vol. VII, Book 3, dissertation 3. Here in few words I will touch upon the same. In any contract, if anything beyond the just price be exacted, justice is injured. When in a contract of loan you receive something beyond the principal, you exceed the measure of the just price: therefore you injure justice. For there is no title by force of which you can exact something beyond the principal. For money by its own nature is barren. Usurers laugh when they hear money called barren. But they offer themselves to be basely derided when they blurt out such things. A field also, they say, is barren; a house is barren; and yet from the use of them a price is paid. ANSWER. They betray themselves as more stupid by these things. A house by use becomes worse; therefore its use is separated from its dominion. If the house falls, it falls to the lord, to the letter. A field by its own nature is fruitful, though it needs to be helped by industry, that it may bear these fruits rather than others. If the field perishes by alluvion or other misfortune, it perishes to the lord. Money alone delivered on loan perishes to the borrower. Therefore in it the use cannot be distinguished from the dominion. What say the patrons of usuries here? If money can be let out just as a house, a field, a horse, why must money alone perish to the borrower, and all the rest to the letter? Let them afford a clear answer. They will never give another, save that money is civilly consumed by use, and that from this use dominion is inseparable. That the parity may press, lenders ought to lie under the danger of the money, just as letters lie under the danger of the horse, the house, the field. They will not have this. They will not, therefore, and yet gain is necessary. The patrons of usuries deny that gain can be exacted from money delivered on loan to the poor. And yet from a house, a field, a horse let out to the poor gain is by right perceived. Therefore they do not reason well when from the gain perceived from the letting of a house, a field, a horse, they infer that gain can be exacted from money delivered on loan.

n. VII.

VII. The patrons of usury object again: Although money be barren by its own nature, it is nevertheless fruitful. For money is equivalent to the thing, and with money are bought estates, houses, and other things which bear fruit. Nor does a field bring forth money; but because it bears fruits, from which money is gathered, it is called fruit-bearing. Similarly, although money does not bear money, yet because with money fruit-bearing things are procured, it is to be called fruitful, no otherwise than a field, a house, and the like.

n. VIII.

VIII. These words rest upon no solid foundation. A borrower can by right buy fruit-bearing things, because he is lord of the money. If an estate bought with borrowed money be evicted, if it be swallowed by a river, if the house perish by fire, to whom does it perish? To the borrower. But to the lender the whole principal is to be rendered. Let those tell us, who are wont to display a skill in natural law, what natural law prescribes that he who suffers no inconvenience ought to experience the convenience. All things perish to the borrower — both the money lent and the things bought with the money. No danger of this loss, no inconvenience, will the lender undergo. But if the borrower, by his own industry, fortune complying, should gain something, does the lender dare to claim a part of that gain for himself? What law of nature, what equity, permits this?

n. IX.

IX. They insist again. Moderate usury is useful to the commonwealth. It being taken away, commerce falls, fairs fall, and all things are disturbed. Moneyed men refuse to lend gratis. So many merchants, so many craftsmen cannot conduct their business without borrowed money. Take away moderate usuries, and you have taken away business.

n. X.

X. What then? Does the Christian religion break up human society, and destroy civil commerce, and forbid the enlarging of riches and merchandise? By no means. Nay, it recalls all these things to the laws of equity, and permits their sober and moderate use to man, weak and labouring under a thirst for riches. Let the patrons of usuries awake, and emerge at last from the darkness. Hitherto I have made plain the iniquity of usury, the law of nature alone being regarded, every other circumstance being removed. But now I say that, even if usury, all precision being made, were lawful, nevertheless in this state of lapsed and corrupt nature it would be destructive to human society and to civil commerce, and consequently would have to be prohibited. From original sin man contracted, among others, two most grave wounds: namely, concupiscence of the flesh, and of riches. With so great an impulse is he carried away toward riches, by which he fills all his appetitions, that he prescribes no measure for himself. Imagine usury committed to a man sound and an absolute moderator of his own cupidities. Will it therefore be expedient for a man infirm, wounded, and impotently thirsting for money? A drink of wine wholesome to a sound man can be poisonous to a sick man. Let those usurers hear the most severe declamations of Christ Jesus against men desirous of growing rich. Woe to you that are rich. … Go to now, ye rich men, weep and howl. It is easier for a camel to pass through the eye of a needle, than for a rich man to enter into the kingdom of heaven. Let them hear the Apostle Paul thundering: They that will become rich fall into temptation, and into the snare of the devil, and into many desires hurtful, which drown men into destruction and perdition. Let them again lift up attentive ears: For the desire of money is the root of all evils; which some coveting have erred from the faith, and have entangled themselves in many sorrows. But thou, O man of God, fly these things; and pursue justice. 1 Timothy 6.

Diss. IV, Chapter III — Certain little questions concerning usury are resolved

I. QUESTION I. Is there given a smallness of matter in the sin of usury? ANSWER. Some deny it. But since usury is opposed to justice, just as there is given a smallness of matter in other faults against justice, so in usury it seems to be admitted. This question I do not discuss more fully, because as regards practice it is idle. For which of the usurers delivers a very great sum on loan for the gain of one julius or another?

II. QUESTION II. Is present money counted down more valuable, apart from titles, so as to justify accepting something beyond the principal? ANSWER. Caramuel affirms it, Book II of his Moral Theology, disputation 14, where he praises many others. This opinion is false and lax, and deservedly proscribed by Innocent XI in thesis 42. For from this opinion it would follow that all usury is lawful.

n. III.

III. QUESTION III. Is it lawful to accept something above the principal on account of the trouble arising from the privation of the money delivered on loan? ANSWER. Caramuel in the place cited proposes this question in witty words, and jestingly eludes the evangelical doctrine. A few of his words I transcribe: Is there not truly some recreation in seeing precious things — why not also in possessing them? A price is given for hearing a comedy or seeing a beast, and no one contradicts: why not for seeing or possessing the best pieces of gold? By reason therefore of this trouble arising from the want of money, every other danger being set aside, Medina affirms that something above the principal may be accepted; and the interpreters of St. Thomas, question 78, article 1, judge it speculatively probable. Dicastillo contradicts, and says: “To me this opinion seems speculatively improbable and morally pernicious in practice.” You see a censorious Cato condemning the doctrine with a severe brow. Hear him nevertheless at no. 154 contradicting himself. The contradiction being related, by which Dicastillo proves the doctrine which he had asserted to be pernicious, Caramuel thus resumes his discourse: The mountains are in labour; a ridiculous mouse will be born. Why were those things said before? An opinion which a few lines ago was speculatively improbable and practically dangerous is now at last asserted to be true. For truth is truth, though, prepossessed with other notions, you condemn it; and while you condemn it, it shines forth, and you will defend its sincerity against your very self.

n. IV.

IV. Good heavens! Those who refute lax opinions full of scandal are severe and censorious Catos who speak from a lofty brow. And a most grave error Caramuel calls shining truth! And Fr. Lessius, Book II, chapter 20, doubt 14, no. 105, himself exhibits as probable the condemned opinion, which on account of the want of money and the will of not demanding back the loan within a fixed time exacts something. Because, he says, as upon other things and burdens some price can be imposed, so also upon the burden of being without one's own money for such and such a time. For since money is the instrument of trading, and to deprive oneself of the instrument of one's art is appraisable at a price, why could not merchants also, by the consent of all, impose some price upon the want of money, especially if the reason of the common good demand it? He adds nevertheless that so lax reins are not to be given to merchants, because this opinion is new and therefore not easily to be admitted. If it is false, as it is, it is always to be rejected. Wherefore Fr. Nocetius wholly went astray, who by an unhappy endeavour strove to excuse his Lessius from this laxity. Fr. Thomas Tamburini says that this doctrine of Caramuel is uncertain to him.

n. V.

V. These things I have indicated in passing, that the reader may hence gather whither the new manner of theologizing impels even theologians honest and learned, such as chiefly was Fr. Lessius. This doctrine of Caramuel utterly destroys the evangelical dogma against usury, and therefore has been condemned by the Church: As a price is paid for seeing a comedy or a beast, so for seeing and possessing pieces of gold? Therefore usury will always be lawful. For money cannot be given on loan without the privation of the sight of the same. And the more avaricious men are, the greater the sadness and trouble with which they are affected while they deprive themselves of it for a time. Therefore if avaricious men on account of the aforesaid sadness exact five in the hundred, the most avaricious will be able to exact seven or ten. There is no need that we refute this unheard-of opinion more fully, since it betrays its own horror and has been condemned by the Church. No less false is the other opinion which Caramuel teaches in the same place: namely, that a lender can accept something because he deprives himself of the faculty of trading with his money. The privation of that faculty is appraisable at a price, says someone. This doctrine likewise takes away all usuries out of the midst; and is therefore to be disapproved as anti-evangelical.

Diss. IV, Chapter VII — On mental usury, and on agreements added to a loan

I. He who delivers a loan with the intention and hope of obtaining gain as owed to him, although no agreement, whether tacit or express, intervene, commits the sin of usury.

II. Mental usury is twofold. The one which stops within the mind, every exterior action being excluded, when namely a man, although with the hope of an accession above the principal, gives a loan, and yet, being disappointed, receives nothing beyond the principal. This never brings in the burden of restitution. The other, which has an exterior act conjoined, namely when a man, without an express agreement, according to his hope receives an accession: this brings the debt of restitution. This is distinguished from real usury, because real usury besides the real acceptance adds an agreement, that is, real usury receives an accession above the principal from an agreement either tacit or express. On the contrary, mental usury hopes for and receives an accession, every exterior agreement being removed.

n. III.

III. QUESTION I. Is it lawful to hope for anything from a loan? ANSWER. It is lawful for anyone to hope for benevolence and friendship. But to hope for gain is in no way lawful, as is plain from the evangelical text, nor even as owed out of benevolence. Therefore Innocent XI condemned this thesis: It is not usury when something beyond the principal is exacted as owed out of benevolence and gratitude, but only if it be exacted as owed out of justice. To exact therefore, or to hope for, anything as owed out of benevolence and gratitude is usury. Cajetan, Serra, Prado, whom many of the younger authors follow, teach that it is not only lawful to hope in a loan for gain out of benevolence and gratitude, but moreover that you can manifest this intention, saying that you hope that the offices of a friend and the benefit of the loan will be requited, provided that by an agreement no obligation be imposed. The Salmanticenses say that this is not to be set forth before the avaricious. If it is false, as it is, it is to be proposed neither before the avaricious nor before others. Tamburini, Book VIII, chapter 8, § 2, no. 6, teaches that it is lawful per se and speculatively for a lender, even before he lends, to ask or to stir up the borrower, nay even to bargain with him, that something above the principal be imparted out of mere liberality and truly voluntarily, because nothing is expected by force of the loan. So Molina. Cloaks of usury are proposed speculatively; the rest reduce them to practice, and usurers clothe themselves in them.

n. IV.

IV. Lend, hoping for nothing thereby, says Christ. Let a lender deliver a loan absolutely gratis, so prepared that, every remuneration ceasing, he would deliver the loan. If some hope of a gratuitous remuneration should accompany this absolute will, he would not be to be condemned of mental usury, as St. Thomas teaches. For the rest, if the hope of gain were the chief cause, he would not be free from usury. Nevertheless borrowers also are to be disapproved who neglect to exhibit the offices of liberality and of a grateful mind. On account of the avarice of lenders, and the faithlessness and ingratitude of debtors receiving a loan, the offices of charity are in exile from very many Christians.

n. V.

V. QUESTION II. He who has celebrated a usurious contract in good faith, can he retain the gain, the usury being known, when he could have entered upon another lawful contract? ANSWER. Some affirm it; but this opinion is to me false. The conditions which are wont to be added, although they temper the laxity, do not nevertheless — as I at least judge — make the opinion probable. Since indeed the lender in fact consents to a usurious contract. His habitual disposition to celebrate another lawful contract does not take away that here and now he consents to what they call material usury. That he receives the gain in good faith does not hinder that, the usury of the gain being known, he ought to restore it. He who in good faith sells above the just price is, the error being known, liable to restitution. Good faith excuses from sin, but not from the burden of restitution. See Vol. VII, Book 3, dissertation 3, chapter 17.

n. VI.

VI. QUESTION III. Whose are the fruits of a pledge delivered to a lender for the assurance of the principal? ANSWER. They are the borrower's, because with him the dominion of the pledge remains. But any thing brings forth fruits for its own lord.

n. VII.

VII. QUESTION IV. Is the agreement of the lex commissoria lawful in the delivery of pledges? ANSWER. This agreement is wrongly called a law. For it is a mere convention, that the pledge be the lender's when at the fixed time the principal is not redeemed. That this agreement is unlawful the laws have decreed, and all affirm it: since a pledge commonly exceeds the price of the principal lent.

n. VIII.

VIII. QUESTION V. What is to be said of pupillary and dotal usuries? ANSWER. They call pupillary those usuries which some contend that guardians and curators ought to pay on account of fraud in administering the money of wards: as when guardians turn the ward's money to their own advantage; or because they kept the aforesaid money idle; or because they did not succour the wards in a time of necessity. In these and like cases the civil law decreed that usuries are owed to wards. But this civil law has been abrogated by natural, divine, and canon law. For there is not one Gospel for wards and widows and another for Christians. Unless therefore another just title be present, nothing is owed for money to wards.

n. IX.

IX. A son-in-law can take the fruits of a dotal pledge, just as the fruits of a dowry, as Innocent III decreed, chapter Salubriter, On Usuries. A dowry is given for the sustaining of the burdens of matrimony. Therefore so long as the son-in-law lacks the dowry, he by right perceives the fruits of the pledge, since the pledge was given in place of the dowry.

n. X.

X. QUESTION VI. Is he a usurer who gives a loan that he may obtain a benefice, or an office, or services of the tongue, of attendance, or of the hand? ANSWER. If it be brought into an agreement, say some, that a benefice or office be conferred upon the lender out of mere liberality and, as they say, out of a requiting gratitude and friendship, there is by them no usury; but otherwise if an agreement be added that the remuneration be made out of justice. This distinction seems to be a mask and cloak of usury. The addition of an agreement is a burden which makes the loan onerous and not gratuitous, as St. Thomas teaches, opusculum 13, and 2-2, question 78, article 2, reply 3. The aforesaid services of the tongue, of attendance, and of the hand are appraisable at a price. Wherefore to bring the same into an agreement, whether express or tacit, is usury.

n. XI.

XI. QUESTION VII. Is he a usurer who gives a loan with the agreement that the borrower resort to his mill, his shop, and the like? ANSWER. Whatever burden is imposed beyond the restitution of the principal is usury. The aforesaid lender therefore, who obliges the borrower to buy wares in his shop, or to come to his mill to grind his wheat, and the like, is a usurer. When two spontaneously deliver things to one another on loan, they commit no usury; but they exercise the mutual offices of charity or benevolence.

n. XII.

XII. QUESTION VIII. Is it lawful to give a loan with an agreement that the other lend back in the future? ANSWER. St. Thomas denies it in the place cited. All these agreements ought to be absent from a loan.

n. XIII.

XIII. QUESTION IX. Is he a usurer who obliges a borrower to render the same measure of wheat, wine, oil, and so forth, if the price be increased? ANSWER. It is a lawful agreement to render the same measure when it is equally doubtful whether the price of the said things is to be diminished or increased: since then the advantage or disadvantage is equal. Similarly, when a loan is delivered in good faith, no regard being had to the increase or decrease of the price, the same measure is to be restored. I deliver to you on loan in the month of January three measures of wheat, to be rendered in the month of May, which I had destined to keep for the sustaining of my family. At the time of restitution the price is increased. The same measure altogether is to be rendered, of the same quantity and quality. Moralists dispute whether one who gives corn on loan, being about to keep it for a time of greater price, can exact this greater price. But this dispute is futile. For either the borrower restores before the fixed time, and you keep it until the time of greater price; or he restores at the time of greater price, and you sell it at this time; or finally the borrower is tardy, and then by reason of delay he is a debtor liable to the rules of compensation, according to what is said in chapter 5, no. 6 and following.

n. XIV.

XIV. QUESTION X. In the restitution of money lent, is the value or the species to be considered? ANSWER. You delivered on loan a hundred gold pieces at a time when each was worth twenty julii; but at the time of restitution they are worth twenty-four, or eighteen. Innumerable are the subtleties which the jurisconsults have devised upon this question. But the true opinion is that in the restitution of money lent, not the species but the price is to be regarded: and consequently that not money of the same species, but the price at which it was worth at the time of delivery, is to be restored. For although in wares physically consumable by use just as much of the same species in number, weight, and measure is sometimes to be restored, according to what is said in the preceding number; nevertheless money is excepted, in which not its physical species is considered, but the extrinsic value, which depends upon the prince's law. The general rule is always to be held before the eyes, namely that any thing whatsoever increases or decreases to its lord. But the dominion of a thing lent is with the borrower.

n. XV.

XV. When a lender adds an agreement that the borrower restore money of the same species, the general rules are to be regarded. If the danger of increase and of decrease be equal, the agreement is lawful. If the danger be not equal, but greater in respect of the borrower, the agreement is usurious.

n. XVI.

XVI. QUESTION XI. Is the opinion probable that a borrower can choose as his surety the lender himself? ANSWER. A borrower, says a certain man, can choose a third party as surety: therefore the lender himself; just as he can by right pay the price to a third party, so also to the lender. That you may perceive the falsity of this opinion, consider the difference between a surety and an assurer. An assurer takes upon himself the danger of the principal, and bargains for a price. If by theft, fire, shipwreck, or other chance the principal perishes, it perishes to the assurer himself. A surety takes upon himself only the danger which is with the borrower, inasmuch as, if the borrower either by impotence or by faithlessness do not restore the principal, the surety himself is bound to render it, and retains an action against the borrower, whom he can by right compel to compensate, if he be solvent. But an assurer retains no action against the debtor. In brief, an assurer takes upon himself the danger of right; a surety the danger of fact. These things being laid down, it is plain how fictitious is the opinion related. For if the borrower himself were to go surety for himself with the lender, would he not betray himself as ridiculous and foolish? Therefore no less ridiculous and foolish is the suretyship which the lender himself undertakes for the borrower. Does this suretyship make the borrower more secure, more rich, more trusty? Therefore this suretyship of the lender is a pure and mere cloak of usury, disapproved by Gregory IX in the chapter Naviganti.

n. XVII.

XVII. More witty is the suretyship which a certain man devised. You will ask secondly, he says, whether there is usury in a feigned suretyship. For example: Peter asks a loan of you. You say: I will not lend to you, but to Paul, who afterwards will lend to you. Paul lends to Peter that which he received on loan from you, and wishes you to go surety for Peter. You go surety, and for the suretyship you exact a price from Peter, which now you gain beyond the principal. And this suretyship is here called feigned, because in truth you do not oblige yourself to pay Paul, though Peter do not pay, since Paul owes you just as much.

n. XVIII.

XVIII. This loan we may call circulatory. These are the questions which the Fathers were ignorant of, and which, that I may use the words of Fr. Reginald, the Doctors of our times turn over. You wish to give a loan to Peter asking it; but that you may obtain gain without usury, this loan must come to the hands of Paul, then from the hands of Paul to the hands of Peter, that by this circuit the gain which you pant after may strip off the dregs of usury. He who contrived this concludes that no injustice or usury is found in this contract, if the suretyship for Peter be truly dangerous. This suretyship, which they call feigned, is worse than the preceding. For it is crafty and fraudulent. The whole machination here at last comes back to this, that Peter the borrower pay you gain above the principal delivered on loan. But usury of itself offers itself to be seen among these artifices. Nor in a manifest matter is there need to dwell longer.

n. XIX.

XIX. QUESTION XII. Is the opinion probable of those who grant gain to a lender at the same time receiving a pledge? ANSWER. Fr. Paul Layman proposes this case to himself, tract 4, chapter 16, no. 2, in these words: “A citizen for the greater part of the year has money ready, out of which he can give a loan to needy craftsmen, especially weavers, a pledge being left him for the security of payment, for example a web. But when, the pledge being received, payment is to be made after half a year, an increment is to be added upon each florin given on loan — for example, one batzen. For it must be considered that that increment is not received by reason of the loan, but by reason of the obligation, burden, and care which that citizen takes upon himself for the sake of the weavers, that for nearly the whole year he may have money in readiness for them, that at whatever time they come to his house he may admit them, count out the money,” and so forth: “which obligation is appraisable at a price.”

n. XX.

XX. Fr. Patrick Sporer, tract 6, chapter 4, section 1, § 1, no. 39, adopts this opinion of Layman, and for the same cites Molina, and says that it is common. Tamburini also defends it. Layman's, Sporer's, Tamburini's, and others' opinion being admitted, no one is so immune from usury as manifest usurers. For these, not for half a year, not for nearly the whole year, but for many lustres and for a whole lifetime keep moneys ready, not for weavers only, but for all the needy. Nay, these are not wont to demand a pledge, but expose themselves to some danger. Willingly do they receive all who come to their house, they count out the moneys, and so forth. Why then shall they not be able to exact for each florin one batzen, for each crown two batzen, for each doubloon six batzen? Where then is usury in the world? German citizens receive the craftsmen's web in pledge, and at the same time exact an increment of batzen? If this is not usury, what will be? But they receive the increment, the kindly probabilists reply, not by force of the loan, but because they oblige themselves to deliver the loan, and on account of the burden of receiving into their houses the borrowers who come, and of counting out the money, and of guarding the pledge of the web. Have there been from the founding of the world usurers who did not count out the moneys delivered on loan, who did not receive borrowers into their houses? Even the avaricious themselves suffer scandal when they hear that some usurers are so savage that with a pledge in hand they exact gain. The evasions by which Fr. Layman endeavours to disguise this wicked usury I have overthrown in Vol. VII, Book 3, dissertation 1, chapter 19. The good intention of pious theologians is to be excused. They saw in their own regions — Tamburini in Sicily, Layman and Sporer in Germany, Lessius in Flanders — trades of this and like kind brought in, strengthened by custom, fenced about by the multitude of the peoples. They did not dare to disapprove the customs of their countries, and to condemn contracts long obtaining in their houses. These men said: If we declare these contracts usurious, we take away good faith, no hope of amendment appears, and we thrust an infinite multitude of men into hell. A hundred times does Fr. Diana inculcate these reasonings to confessors. The pious intention of the younger theologians of saving all souls is to be praised, and their zeal to be commended. But if their opinions are false, the peoples commit usury; nor do the desires of the theologians, says St. Augustine, nor the error, because it is public, adds St. Cyprian, withdraw souls from hell.

Diss. IV, Chapter VIII — On the Monti di Pietà

I. A few things concerning the monti di pietà, which by another name are called monti di Cristo or apostolic deposits, I shall touch upon. A mons pietatis is a sum of money gathered from the alms of pious faithful for the relief and support of the poor, that it may be delivered on loan to the needy, a pledge being deposited, and with a contribution of an accession by which the ministers are maintained.

II. The Lateran Council celebrated under Leo X approved these sacred monti. To the decree of the Council all the theologians subscribed, except Cajetan and Soto, who with too great daring indeed did not cease, even after the Council's decree, to accuse these monti of usury. And as regards this, although we are Dominicans, we disapprove their error, because we are not respecters of persons, nor do we take up arms against persons, of whatever institute they be, but against errors.

…and 50 more passages — all of them are listed on the topic page.

Bontempi, Palladium Theologicum V

Gaudentius Bontempi of Brescia, O.F.M. Cap. — 1 passage

Tr. II, Disputation VI: On the Loan and Usury

I shall treat these two under a single title, since Usury is nothing other than the abuse of the Loan; of which the pages of both Testaments speak clearly; moreover, the Canons of Councils and the decrees of Pontiffs plainly condemn it. Yet Scholastics are not lacking who strive to purge so shameful a vice from every stain, and who rather cut up than examine the material of the most delicate consequence with empty little distinctions — men who have come to such rashness as to calumniate simple usuries as licit to laymen before Alexander III, although they were most expressly condemned in the Council of Nicaea, can. 8, as I shall say below.

Slater, Cases I

Thomas Slater, S.J. — 12 passages

Slater, Cases I, Contracts, Case 17. Usury

n. ¶1.

Caius, a Catholic moneylender who doubts concerning his manner of transacting business, consults a confessor and says that he asks the same interest as others demand, which, with respect to the poor, who not rarely borrow a few shillings to relieve daily necessities, is fixed by this condition: that they pay one penny for each shilling borrowed per week. But since Caius recently read in a newspaper that this interest is altogether usurious and unjust, he asks the confessor what is to be done. Hence it is asked:

n. ¶2.

What is usury, and by what law is it prohibited?

n. ¶3.

Can any interest justly be demanded for money lent, and how much and by what title?

n. ¶4.

How are the ancient and present practices in this matter to be reconciled?

n. ¶5.

What is to be said of the case?

n. ¶6.

Solution

What is usury and by what law is it forbidden?

n. ¶7.

Usury is forbidden by natural, divine, and ecclesiastical law. The sin was defined by Benedict XIV in his encyclical letter Vix pervenit in these terms: “The sin which is called usury consists in this, that from the loan for consumption (which of its own nature requires that only so much as was received should be returned) the lender desires more to be returned to him than the borrower received, and therefore contends that some gain over and above the principal is due to him merely on account of the loan.” If we accept the theory of many modern theologians and say that in our capitalistic society money is no longer a fungible but an instrument of production, we must say that usury in the strict sense is not committed now by taking interest on money loans, but the name may be used to designate the sin which is committed by exacting excessive interest.

n. ¶8.

May interest be justly exacted for a money loan, how much, and by what title?

n. ¶9.

Yes; interest may now in our capitalistic society be exacted for a money loan, as money is now virtually an instrument of production and no longer merely a fungible. The amount which may be exacted must be fair and reasonable in the judgment of prudent men.¹

1 Manual of Moral Theology, vol. i, p. 516.

n. ¶10.

How can the old and the modern practice of the Church be reconciled in this matter?

n. ¶11.

By the economic, industrial, and political changes which make modern society so different from former ages.²

2 The same work, pp. 515 and following.

n. ¶12.

The case. The interest charged by Caius on his loans to the poor is 433.3 per cent per annum. This is altogether excessive and extortionate. There may be considerable labor and trouble involved in collecting such small debts, and especially when the debtors so easily and so frequently change their places of abode. In some cases also there may be great risk of losing the principal. For these reasons, although charity might require that the poor should be helped gratuitously, yet a sin against justice would not be committed by exacting a high interest when circumstances justify it. It might rise to 20, 40, or 60 per cent per annum. But over 433 per cent per annum seems altogether extortionate and unjust.

Rickaby, Moral Philosophy

Joseph Rickaby, S.J. — 13 passages

Pt. III, Ch. V, Section V. Of Usury

We must distinguish use value and market value. The use value of an article of property is the esteem which the owner has of it from every other point of view except as a thing to sell. Thus a man values his overcoat on a journey as a protection from cold and rain. A book is valued that was held in the dying hand of a parent. This is use value. The market value of an article is the estimate of society, fixing the rate of exchange between that and other articles, so much of one for so much of another, e.g., between mahogany and cedar wood, considered as things to sell.

n. 2.

Answering to this twofold value is a twofold exchange, private exchange, which regards use value; and commercial exchange, which is founded on market value. If I part with my watch to a sailor for carrying me across an arm of the sea where there is no public ferry, that is private exchange. If I pay the ordinary fare where there is a public ferry, that is commercial exchange.

n. 3.

Private exchange begins in the need of at least one of the contracting parties. It is an act of charity in the other party to accommodate him by offering the thing needed. If the offer is made otherwise than as a gift, and is accepted, he who avails himself of it is bound in justice to see that the afforder of the accommodation is compensated for the loss that he suffers in affording it. Thus far the recipient is bound in justice, and no further in that virtue. However wholesome or profitable the thing be to him that gets it, the supplier cannot charge for that but only for the loss that he himself suffers, or the gain that he foregoes, in handing the thing over, or the pains that he takes, or the hardship that he endures, or the risk that he runs, in rendering the service desired. If all the labour to be undergone, or damage incurred, or risk encountered, by the sailor who goes about by private bargain to be my ferryman, is fairly met by the remuneration of a thirty-shilling watch, he has no right to stipulate for any more, not though the passage that he gives me sets me on the way to a throne. The peculiar advantage that I have in prospect does not come out of him, but out of myself. He must not pretend to sell what is not his, what attaches, not to him, but to me. He can only sell his own loss, risk, pains and labour. At the same time, if I have any gentlemanly or generous feeling in me, I shall be forward to bestow extra remuneration on one who has rendered me so timely a service: but this is matter of my gratitude, not of his right and claim in justice. Gratitude must not be put into the bill. And this much of private exchange.

n. 4.

Commercial exchange is conducted according to market value. Apart from dire necessity—and one in dire necessity is not fit to enter into commercial exchanges—the rule is, that a seller may always ask the market value of his article, however much that may be above what the thing cost him, or the use value which it bears to him. Thus, if one finds in his garden a rare Roman coin—so far as his tastes go, a paltry bit of metal—he may sell it for whatever price numismatists will offer: whereas, if there were no market for coins, but only one individual who doted on such things, the finder could make no profit out of that individual, the coin having neither market value with the community, nor use value in the eyes of the finder.

n. 5.

As there is a twofold value, and a twofold exchange, so a twofold character is impressed on the great instrument of exchange, money. Money, in one character, is an instrument of private exchange: in its other character, to mercantile men more familiar, it is an instrument of commercial exchange. In the one, it represents use value to the particular owner, more or less to him than it would be to some other owner: in the other, it represents market value, the same to all at the same time.

Leo X. in the Fifth Council of Lateran, 1515, ruled that—"usury is properly interpreted to be the attempt to draw profit and increment, without labour, without cost, and without risk, out of the use of a thing that does not fructify." In 1745 Benedict XIV. wrote in the same sense to the Bishops of Italy: "That kind of sin which is called usury, and which has its proper seat and place in the contract of mutuum, consists in turning that contract, which of its own nature requires the amount returned exactly to balance the amount received, into a ground for demanding a return in excess of the amount received." Mutuum, be it observed, is a loan for a definite period, of some article, the use of which lies in its consumption, as matches, fuel, food, and, in one respect, money. We shall prove this to be properly a gratuitous contract. (s. iv., n. 4, p. 254.)

Usury then is no mere taking of exorbitant interest. There is no question of more or less, but it is usury to take any interest at all upon the loan of a piece of property, which

(a) is of no use except to be used up, spent, consumed:

(b) is not wanted for the lender's own consumption within the period of the loan:

(d) is so lent that the lender foregoes no occasion of lawful gain by lending it.

When all these four conditions are fulfilled, and yet interest is exacted upon a loan, such interest is usurious and unjust. And why? Simply by reason of the principle that we laid down before, speaking of private exchange (n. 3), a principle that is thus stated by St. Thomas:

"If one party is much benefited by the commodity which he receives of the other, while the other, the seller, is not a loser by going without the article, no extra price must be put on. The reason is, because the benefit that accrues to one party is not from the seller, but from the condition of the buyer. Now no one ought to sell to another that which is not his, though he may sell the loss that he suffers. He, however, who is much benefited by the commodity he receives of another, may spontaneously bestow some extra recompense on the seller: that is the part of one who has the feelings of a gentleman." (2a. 2æ, q. 77, art. 1, in corp.)

St. Thomas speaks of sales, but the principle applies equally to loans. It is upon loans of money that interest is commonly taken, and of money-loans we speak. Clearly, according to the doctrine stated, the lender can claim the compensation of interest, if he has to pinch himself in order to lend, or lends at a notable risk. He is selling his own loss,—or risk, which is loss once removed. But supposing he has other monies in hand, and the security is good, and he has enough still left for all domestic needs, and for all luxuries that he cares to indulge in,—moreover he has nothing absolutely to do with his money, in the event of his not lending it, but to hoard it up in his strong box, and wait long months till he has occasion to use it: in that case, if he lends it he will be no worse off on the day that he gets it back, no worse off in the time while it is away, than if it had never left his coffers. Such is the contract of mutuum, shorn of all accidental attendant circumstances, a contract, which "of its own nature," as Benedict XIV. says, that is, apart from circumstances, "requires the amount returned exactly to balance the amount received." Not though the borrower has profited of the loan to gain kingdoms, is any further return in strict justice to be exacted of him on that precise account.

But now an altered case. Suppose land is purchaseable, and it is proposed to stock a farm with cattle, and rear them, and convey them to a large town where there is a brisk demand for meat—the supposition is not always verified, nor any supposition like it, but suppose it verified in some one case—then, though the lender has other monies in hand for the needs of his household, and the security is good, yet the money is not so lent as that he foregoes no occasion of lawful gain by lending it. He foregoes the purchase of land and farm stock, or at least delays it, and delay is loss where profit is perennial. On that score of gain forfeited he may exact interest on the money that he lends, which interest will be no usury. The title of interest here given is recognized by divines as lucrum cessans, "interruption of profit." The interest is taken, so far as it goes upon a lawful title, not upon the fact of the borrower's profit—that is irrelevant—but upon the profit that the lender might have made, had he kept the money in hand.

n. 11.

This latter case (n. 10) represents that putting of money out to interest, which is an essential feature of modern commerce. The former case (n. 9) is the aspect that money-lending commonly bore in the Middle Ages. In those days land was hard to buy, agriculture backward, roads bad, seas unnavigable, carrying-trade precarious, messages slow, raids and marauders frequent, population sparse, commerce confined to a few centres, mines unworked, manufactures mostly domestic, capital yet unformed. Men kept their money in their cellars, or deposited it for safety in religious houses: whence the stories of treasure-trove belonging to those days. They took out the coin as they wanted it to spend on housekeeping, or on war, or feasting. It was very hard, next to impossible, to lay out money so as to make more money by it. Money was in those days really barren—a resource for housekeeping, not for trade—a medium of private, not of commercial exchange—a representative of use value, not of market value. Apart from risk of non-repayment, to take interest for money that you had no use for but to hoard, was getting "a breed of barren metal:" it was taking up what you laid not down: it was making profit out of your neighbour's need, or your neighbour's gain, where there was no corresponding need unsatisfied, or gain forfeited, on your part: it was that "attempt to draw profit and increment, without labour, without cost, and without risk, out of the use of a thing that does not fructify," which the Fifth Lateran Council defines to be usury.

n. 12.

In our time, thanks to steam and electricity, the increase of population, and continued peace, the whole world has become one trading community, representing now more, now less abundant opportunities for the investment of money, and the conversion of it into other lucrative commodities. Money consequently with us is not a mere medium of private exchange for the purposes of housekeeping: it is a medium of commercial exchange. It represents, not use value, but market value. To be a thousand pounds out of pocket for a year means an opportunity of gain irretrievably lost, gain that could have been made otherwise than by money-lending. Where this is so, and so far as it is so, the lender may without violation of justice point to lucrum cessans, gain lost, and arrange beforehand with the borrower for being reimbursed with interest.