3) Usury in the Catholic Social Documents

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 John Paul II, in his 1987 encyclical Sollicitudo Rei Socialis (SRS), states that “the Church does not have technical solutions to offer” and that “the Church does not propose economic… systems or programs, nor does she show preference for one or the other, provided that human dignity is properly respected and promoted.”[1] This proviso keeps the Church in the discussion on usury. While it is true that the economic situations of contemporary life are scarcely comparable to those of Christian antiquity, and that thus it is improper to follow unilaterally the economic and social prescriptions of antiquity in the present context, it is also true that the Church’s concern for human dignity and her concern for the welfare of the poor remains. Consequently, while some interest rates on loans may now be permissible, usurious interest rates are not. The meaning of "usury" now requires nuance. 

            In his landmark 1891 encyclical on social justice, Rerum Novarum (RN), Pope Leo XIII demonstrates an awareness of the constant teaching of the Church in condemnation of usury. He writes that “rapacious usury” has increased the evil of “misery and wretchedness, [which] press so heavily at this moment on the large majority of the very poor.”[2] Such usury, he writes, “although more than once condemned by the Church, is nevertheless, under a different form but with the same guilt, still practiced by avaricious and grasping men.”[2] Leo XIII acknowledges that the Church has repeatedly condemned usury and he repeats that condemnation for the same reasons. However, he introduces a descriptor perhaps previously unnecessary – “rapacious.” To condemn “rapacious usury” is perhaps to indicate that there may be usury that is not “rapacious.” Perhaps, given new economic conditions, there could be interest rates on loans that are not motivated by greed or excess.

            Leo XIII gives a clearer idea later on in the encyclical about what he might mean by rapacious usury: “The rich must religiously refrain from cutting down the workman’s earnings… by usurious dealing.”[3] In this paragraph, he lays down the principle that makes usury evil. He writes, “To make one’s profit out of the need of another, is condemned by all laws, human and divine.”[3] He makes clear that rich employers must refrain from “usurious dealing” against their poor workers “because the poor man is weak and unprotected, and because his slender means should be sacred in proportion to their scantiness.”[3] Usury, then, is an evil because it deprives the poor of even the little they have earned – thus keeping them poor and beholden to their creditors. The poor must be given aid and opportunity to overcome their poverty, not loans designed to keep them bereft even of the little they could otherwise accumulate. The Church always opposed usury due to its tendency to oppress the poor.


            Forty years after Rerum Novarum, Pius XI demonstrates an understanding of the grave importance of lending practices and the effect they can have on the whole of society. In 1931, he writes in Quadragesimo Anno (QA),

"In our days…, immense power and despotic economic domination is concentrated in the hands of a few…. This power becomes particularly irresistible when exercised by those who, because they hold and control money, are able also to govern credit and determine its allotment,[4] for that reason supplying, so to speak, the life-blood to the entire economic body, and grasping, as it were, in their hands the very soul of the economy, so that no one dare breathe against their will."[5] 

Those who determine who may receive loans and at what interest rates, however ruinous, have far too much power over the poor. This is especially so given that those most likely to attain to such high positions may tend to be precisely those least likely to demonstrate compassion for others. “Unrestrained free competition… permits the survival of those only who are strongest. This often means those who fight most relentlessly, who pay least heed to the dictates of conscience.”[6] If these “strongest” are the people to whom regulation of interest rates is given, those who are “weakest” – the poor – have much to fear. It is necessary to ensure that those with the needs of the poor foremost in mind are those who determine interest rates.

            
          With concern for the poor, Pope John XXIII, in his encyclical of 1961, Mater et Magistra (MM), continued the Church’s teaching on usury by repeatedly emphasizing the role of government in regulating credit, along with many other economic issues, with the ultimate goal of overcoming gross economic inequalities.



          Pope Paul VI, with his 1967 encyclical Populorum Progressio (PP), may have been the first Church authority to every actually recommend loans as a means of helping the poor. Loans are one of many means of working toward “building a world where every man… can live a fully human life, freed from servitude.”[7] Just as it is clear that usury can be a means of causing servitude, so does Paul VI now recognize that loans with low interest can actually be an aid toward climbing out of a position of servitude. Speaking specifically about the benefits of wealthy nations lending money to developing countries, he writes, "Rates of interest and time for repayment of the loan could be so arranged as not to be too great a burden on either party, taking into account free gifts, interest-free or low-interest loans, and the time needed for liquidating the debts."[8] He recommends as means of aid firstly, “free gifts,” secondly, “interest-free… loans,” and only lastly, “low-interest loans.” The preference for absolute giving in charity remains. However, it is nonetheless remarkable for a pope to refer positively to low-interest loans when the fathers of the Church regarded interest of any kind as a grave sin.

           Usury – in the sense of high-interest loans – remains a problem to this day. The comparatively recent (1986) USCCB document of the, Economic Justice for All (EJA) found it necessary to observe injustices taking place due to high interest rates. For example, “persistent high interest rates that make it difficult to repay or refinance loans” for many farmers experiencing various economic problems in the 1980s.[9] These “otherwise viable family farms… are threatened with bankruptcy or foreclosure.”[10] The USCCB recommends a policy of “reduced rates of interest and programs of debt restructuring” to correct this injustice.[10] In other words, those in a position to do so should alleviate the suffering of those laboring under usurious interest rates.

            The USCCB also recognizes, however, the possibility of offering low-interest loans as a means of aiding the poor. Echoing Populorum Progression, Economic Justice for All specifically recommends that industrialized nations provide assistance to Third World nations in the form of “low-interest/long term loans.”[11] However, it first recommends not loans but “grants.” A gift remains the primary recommendation, though now bishops of the Church are comfortable recommending moderate interest rates as a means of assistance to the poor, whereas long ago any interest rate would have been considered theft. A principle for the rich to keep in mind when they lend to the poor is to offer the loan not for their own profit or gain primarily, but for the good of the poor to whom they lend.

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[1] SRS 41; Catholic Social Thought: A Documentary Heritage (CST). Ed. David J. O’Brien and Thomas A. Shannon. Maryknoll: Orbis Books, 2012. 455. emphasis mine. 
[2] RN 2; CST 15.
[3] RN 17; CST 21.
[4] The phrase, “determine its allotment,” is elsewhere translated, “rule the lending of money.”
[5] QA 105-106; CST 67.
[6]  QA 107; CST 67. 
[7]  PP 47; CST 264. 
[8]  PP 54; CST 266.
[9] EJA 223; CST 749. 
[10] EJA 242; CST 753.  
[11] EJA 265.