Loaning money at interest


#1

Was it ever or is it a mortal sin to loan money at interest I was reading it was illegal in Europe for Christians to loan money at interest for a long time in Europe ?


#2

For most of history, the practice of charging interest was called the sin of usury. For most of history, economics worked primarily on a barter system and cash was used as a place to park temporarily surplus wealth. Inflation is generally not a factor in such systems. Inflation came about when kings started to increase the money supply in order to pay their debts.

So the sin was always usury, not charging interest. What changed was not catholic moral theology, but economics. Usury is still a sin, but it’s not as easy today to draw the line between just compensation for inflation, opportunity cost and risk and usurious profit. The church, as far as I know, doesn’t even claim competence to be able to draw that line in today’s complex economic environment.

Think of it this way: It was once immoral to eat meat on any Friday. Today catholics are allowed to substitute another form of penance instead of abstaining from meat. That’s not a change in moral principles, it’s a change in authoritative prudential interpretation of how a catholic should practice penance and self discipline.

The change in the definition of usury is a similar change in authoritative prudential judgment about what constitutes taking unfair advantage of a borrower in a changed economic climate.


#3

Very helpful I had no idea how much the world has changed regarding economics

I also read that in Massachusetts when it was a colony it was illegal to loan money at interest or work on Sunday when it started. Which was non catholic


#4

Which is why the Jews ended up specializing in banking, and were later vilified for it. :shrug:


#5

Bingo. Jews were exempt from catholic moral law on usury so neither the church nor state prohibited them from lending money. Before kings invented the scheme of diluting the money supply, their preferred con was to borrow from the Jews, rack up big debts then incite Anti-Semitic violence to avoid having to pay back the debt. One problem though: it’s a trick that only works once.

One wonders if the entire concept of “nobility” is one of sarcasm.


#6

Well…they were also prohibited from working in many other types of industry, too. A person has gotta eat.


#7

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