I love Lewis Hyde’s Trickster Makes This World: Mischief, Myth and Art, so I recently checked to see if he wrote other books, and, thus, read his The Gift: Imagination and the Erotic Life of Property. One chapter is focused on usury.
Hyde explains that the first Christian pawnshops were allowed on the condition that charging interest was necessary in order to be able to pay the salaries of the pawnshop owners and workers.
This, of course, is precisely why usury had been prohibited in the first place: the spirit of the gift demands that no one make a living off another man’s need. A group of people comes to be called a brotherhood not only when the circulation of gifts assures that no one has lost touch with the sources of wealth, but also when no individuals in the group can make a private living by standing in the stream where surplus wealth flows toward need. If there are always enough needy people around to feed a group of pawnbrokers, then something is seriously wrong with the brotherhood.
(Hyde, The Gift, loc 2433)
This passage stuck out to me, since I am used to thinking of the problem of usury as being one of building artificial, predatory loans to take advantage of need. For example, some payday loans are structured to revolve indefinitely, requiring the borrower to pay interest every two weeks, but not allowing them to pay down part of the principle if they can’t pay all of the principle. But here, Hyde shames usury for obstructing a natural flow of money to those who need it. He sounds like Basil the Great:
When someone steals another’s clothes, we call them a thief. Should we not give the same name to one who could clothe the naked and does not? The bread in your cupboard belongs to the hungry; the coat unused in your closet belongs to the one who needs it; the shoes rotting in your closet belong to the one who has no shoes; the money which you hoard up belongs to the poor.
Later in the chapter, Hyde contrasts the double law of Mosaic law, where usury is forbidden between brothers, but permissible to be offered to others, with the way Martin Luther recontextualized usury as sometimes being “interest” which can be permitted by civil authority.
It is a different thing that is being divided in two. In the Old Testament, mankind as a whole is seen as either Brother or Other, and an Israelite conducts himself differently depending on whom he is with. Now each man is divided. The church and state may be separate, but each man partakes of both. When each man has a civil and a moral part, the brother and the stranger live side by side in his heart. Now when I meet someone on the street he is either alien or kin, depending on his business. As each man may participate in a universal brotherhood, so he may partake in an unlimited foreignness. He may be an alien anytime he chooses and without leaving home.
(Ibid, loc 2457).
If you have never read Pope Benedict XIV’s masterful encyclical Vix Pervenit, you really should. Urgently necessary but woefully neglected (one might consider it the Humanae Vitae of its time), it’s a magnificent Magisterial proclamation from one of our most extraordinary Pontiffs (also, if you don’t know much about the life and reign of Benedict XIV, you should!)
A word of caution, however: when reading English translations of Vix Pervenit (or any originally Latin writings pertaining to usury), it’s important to bear in mind that usury refers to profitable interest on mutuum contracts. “Mutuum” is a Latin word that is commonly translated as “loan” but it more accurately refers to what we would call a “full recourse” loan in modern English. Without this understanding the issue of usury is a lot harder to comprehend. The clearest summary of this and other issues (that I’m aware of) can be found here in the Usury FAQ.
The “Usury FAQ” that Donnie posts is a good resource, although it could use some polishing in a few minor places. Definitely start there. Don’t get too hung up on any one point that you’re not getting, because like I said I think it needs some refinement. The reasoning behind the usury prohibition involves some upper-level Thomism that doesn’t necessarily come naturally to someone who hasn’t studied it or isn’t steeped in it. In other words, if you haven’t read much Aquinas yet, the discussion of usury isn’t a great place to start.
Donnie is right: the problem with usury is charging interest on loans that allow recourse to the person. That’s at the core. Collateralized loans are often okay. It’s fine to collect interest on money loaned for a car, as long as the lender’s remedy for nonpayment is to repossess the car, sell it, and collect the money owed from the sale. You can’t morally go after the borrower personally if the sale proceeds don’t cover it, though.
While the risk of exploiting the poor or needy is *a* reason not to lend money at interest, it’s not the principal reason. Indeed, it’s still wrong even if the loan is to a person of means who will have no problem repaying the debt.
[…] Makes This World: Mischief, Myth and Art, and this was also pretty great. I quoted from Hyde’s passages on usury on the blog already. The most refreshing thing about Hyde’s book is how seriously he takes […]
[…] way I went beyond the original article was weaving in Lewis Hyde’s discussion of usury in his book The Gift: Imagination and the Erotic Life of Property. You can see the full passage I […]