Usury and doctrinal development

The other day I found myself once again pondering what, at a glance, looks a lot like a dramatic change in the Church’s teaching on a moral issue. As a Catholic who counts on the Church to be a reliable and authoritative teacher on matters of faith and morals, I’ve always found this matter to be a bit of a challenge.

After all, if charging interest on a loan was once considered immoral but is now allowed, isn’t that a reversal of moral doctrine? And if such a reversal is possible, might not similar reversals be possible on other moral teachings of the Church? And if the Church’s moral teachings are reversible, does the Church have any moral authority to begin with?

I’ve gradually learned not to assume that my inability to answer a question regarding the faith means that no answer exists. Too often people stumble upon some doctrinal puzzle they can’t solve themselves and conclude that they’ve outsmarted the Church.

It is a bit like a beginning violinist concluding that something is wrong with a million-dollar Stradivarius because he can’t make it sound the way he thinks it should. Given the number of brilliant minds who have belonged to the Church over the years, one is very unlikely to come up with a doctrinal question that hasn’t been dealt with at some point. If I’m stuck on a question about Church teaching, it is probably a reflection on me, not on the Church.

Unfortunately, however, my ability to come up with questions I couldn’t answer, and naive assumption that no one else in the Church could answer them either, led me away from the Church for a number of years. Determined not to make that mistake again, when I have a question about some aspect of Church teaching, I assume that there has to be an answer out there somewhere, and I try to find it.

Granted, this is a lot easier to do than it would have been, say, 30 years ago, when you had no search engines to look through thousands of years worth of Church documents scattered across countless websites in a few seconds. For some questions, though, finding a satisfactory answer can still be tricky.

The case of usury was, for me, such a question. I’d looked into the matter on a number of occasions over the years but found only vague explanations that the Church’s moral teaching had not changed, but that the nature of money had, and that this change in the nature of money made the old prohibitions against usury obsolete. (To be clear, these old prohibitions were not merely against charging excessively high rates of interest, which is how we tend to use the word “usury” today – they were against trying to make a profit of a loan at all.)

The other day, I was glad to find a somewhat in-depth discussion of what has really happened with the Church’s teaching on usury over the years. Father Gary L. Coulter has on his website an essay titled “The Church and Usury: Error, Change or Development,” which he wrote as research paper toward his master’s degree in theology. I appreciated that Fr. Coulter sought to explain the matter rather than simply explain it away. I have to admit, I still find the issue a little abstract, but Fr. Coulter’s essay made the water a little less muddy.

In a nutshell, Fr. Coulter explains that while money was once considered a “barren” commodity that only had value as it was spent, it has become a productive commodity in today’s economy, such that ordinary people can use it to generate new wealth.

Basically, as I understand Fr. Coulter’s explanation, if you had $100 in the Middle Ages, you had two options – spend it or save it to spend on some other day. If I loaned that $100 out to someone and got it back, I was out nothing – I would still have the full, one-time use of that $100 upon getting it back. If I charged him $10 for the loan, I was $10 richer and he was $10 poorer, even though I had neither given up nor produced anything in exchange for that $10.

This was the primary moral problem with lending money – that one was taking money from someone else without really giving up anything or producing anything in return.

One point Father Coulter made that I found particularly interesting is that the Church did allow for compensation where the lender could show that he HAD given up something in making the loan, for losses that occurred as a result of making a loan, including lost profits. The catch was that those losses had to be provable, and the burden of proof was on the lender.

The Church also permitted the lease of productive commodities, because it was understood that by lending out such commodities, the lender deprived himself of their productive benefits. For example, if I leased a wheelbarrow to someone, I would be deprived of the use of that wheelbarrow during that time. Presumably, there would also be some wear and tear on the wheelbarrow, too, making it less valuable when I received it back. Plus, as owner of the wheelbarrow, I would maintain some of the inherent risk of ownership, such as the possibility that the wheelbarrow might fall apart due to previous wear or some defect.

The Church also allowed for the investment of money in business enterprises, such that if I provided capital for a business, I could take some share of the profits, even if I was not materially involved in the operation. Of course, I also bore a risk of loss in doing so – if the business failed, I lost my capital.

Today, money has the ability to be productive for an individual even while it is not being spent. Just as lending out my wheelbarrow deprives me of its use for a time, so does lending out my money. There is also a greater understanding of the inherent risk involved in lending money today, and an acceptance of compensating the lender for bearing that risk. Therefore, a lender is assumed to have just title on a loan, where previously it was assumed that he did not.

The moral principles underlying the usury teaching remain intact, however. It is still wrong to try to obtain more from a contract than one has a justifiable claim to, but it is understood that, in today’s economy, one generally does have a justifiable claim to interest due to a change in the nature of money.

If the primary sin of usury is the attempt to get something for nothing, I am inclined to wonder if, while the principle may not apply to the standard practice of charging interest, it might apply to other attempts to get something for nothing, simply because one can. Clearly, if I charge excessive interest on a loan, not simply because the borrower is high-risk or because of opportunity costs, but because I happen to know that the borrower is desperate and has no alternatives, this would seem to be an obvious case of usury.

If I charge someone a higher price for something sheerly because I know that person has no other options – not because the situation somehow imposes a higher burden on me – this would seem to violate the same principle, whether I am a loan shark or an auto mechanic. Insider trading – exploiting another person’s lack of knowledge to sell something for far more or purchase something for far greater than what I know the value to be – would be another example. Frivolous lawsuits, where one tries to exploit the legal system to gain compensation well beyond a wrong he has suffered, might also apply.

I found another article at CatholicCulture.org that also wrestles with this subject, making more or less the same points as Fr. Coulter.

This is not a development in Church teaching that can be summed up adequately in a few words, but I am at least satisfied that it is not a change in moral doctrine, but a change in economic conditions.

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