The immorality of usury does not sit easily with the economic assumptions and practices of our culture. In this review of Something for Nothing? An Explanation and Defence of the Scholastic Position on Usury, by David Hunt (Os Justi Press, 2024), Dr Garrick Small, a property economist and author with wide academic experience, discusses the historical understanding of usury.
He probes the philosophical principles and practical distinctions that underlie the Catholic teaching on usury, highlighting Chesterton’s Utopia of Usurers and Other Essays (1917), which contain some of his most polemical writing on the detrimental effects of modern economic practice on work, culture and family life.
Usury as the unjust charging of interest on loans is repeatedly denounced as a sin throughout the Bible, especially the Old Testament. It was well understood in the Catholic world as a grievous evil at least up to the Council of Trent, but since then it has become increasingly controversial to the point that the American Catholic jurist, John T. Noonan, argued that it was an example of the Church changing its mind on a moral question.
Few now believe it could actually be a common problem or mortally sinful. The last century in particular has seen it fade from Catholic consciousness, despite Pope Leo XIII lamenting that the world was awash with “rapacious usury” and Heindrich Pesch, the moral theologian behind Pope Pius XI’s Quadragesimo Anno, defining capitalism as “state sponsored usury”. These descriptions correspond with Chesterton’s argument in Utopia of Usurers that “taking a usurer’s money by proper authority is not robbery, but recovery of stolen goods.”
Into this debate David Hunt has contributed a novel explanation for why usury is indeed an evil, but curiously one that few need to be concerned over. Hunt’s explanation will please some who see themselves as morally upright whilst embracing the economic values of the world.
Chesterton’s Utopia of Usurers hints at Hunt’s persuasiveness. Hunt begins by adopting Chesterton’s understanding of St Thomas Aquinas’s argument for the immorality of usury and the Angelic Doctor provides a reference point to assess Hunt’s argument.
Candles and hammers
In his Summa Theologica, St Thomas developed Aristotle’s sterility argument into what is known as his consumptibility argument, to provide the best explanation for the immorality of usury.
He distinguished consumable value from durable value. He recognised that goods are “good” due to their capacity to serve some human need, and some were used up in use while others were not.
A candle is consumed in its use, but a hammer is not. Goods like candles have usefulness, or value, only in being consumed. They are called consumptible goods, or more commonly consumables. Once they are used up their value is exhausted. They have no value apart from their use.
Hammers are durable, or non-consumptible, goods. They have two aspects of value since their usefulness is separate to their intrinsic value. One can sell a hammer for its capital value, or hire it out for the value of its use, expecting to eventually have it returned with its capital value unchanged.
Charging twice for the same thing
By contrast, it would be obviously unjust to lend a person a candle and expect it back intact as well as charging for the light it produces. This is because it is a consumptible good. It would be charging for both having your cake and eating it too. You can sell a consumptible good, but you cannot simultaneously charge for its use as well. This would be charging twice for the same thing.
St Thomas noted that money was a consumptible good. That is, it is consumed in use, in the way candles and cake are. There is no other value to money apart from its purchasing power. Hence charging for its use as an interest charge in addition to eventually expecting it back intact was selling it twice. David Hunt described this as charging something for nothing, and in this he is agreeing with St Thomas.
However, Hunt then develops his argument away from St Thomas by focusing on another closely related aspect of money, the fact that it is fungible. A fungible is a good that is not valued for its individual character, but merely for its quantity and quality. It is readily interchangeable with another similar item.
Consumptibles are often, but not necessarily fungibles. A rare and unique bottle of wine is consumed in use, but it is not fungible: it cannot be replaced from the shelves of a bottle shop in the way other wines are. Likewise, some durable goods are fungibles, such as the balls in ball bearings.
Fungibility has nothing to do with the consumptibility argument, but Hunt is not the first recent commentator to confuse fungibility with consumptibility. His innovation is to then focus on the contractual form used in Roman law for contracts involving fungibles, what is called the mutuum.
In a mutuum a fungible is lent, and the borrower holds it entirely at his own risk until return. The mutuum contract began in Roman law and was significant into the 18th century.
For some reason Hunt then asserts that the immorality of usury is actually based on the mutuum’s personal guarantee and proceeds to devote considerable attention to unpacking its implications. The result is a discussion on the contractual conventions involved rather than the essences.
The strategic merit of making a personal guarantee from the borrower the test for the existence of usury is that it exempts the great majority of money loans. A loan to an institution, such as a bank, is not secured by a personal guarantee from the individual owners of the bank, so interest on bank deposits is exempt from usury, according to Hunt.
Also, a loan secured by goods or real estate, such as car loans and mortgages, is secured by assets, not personal guarantees, so it may also be exempt.
The overall result is that David Hunt asserts support for the immorality of usury, but exempts all but a handful of lenders from the evil.
Overall, Hunt’s treatment of usury is only superficially attractive, despite its impressive bibliographical depth, and treatment of several technical aspects that accompany detailed treatments of the topic. However, it will be problematic for anyone pursuing a serious understanding of this critical economic problem. It will, regrettably, contribute confidence to those wanting to ignore the problem of usury and remain Catholic, which is now a well-established group with a half-millennia pedigree, who rely on modernist arguments to subvert Christian economic morals.
The late 20th century has seen this approach flourish amongst Catholic scholars in a manner foretold by Chesterton. His distributism opposed the exploitation of the majority using economic might and reflected Pope Leo XIII’s vision for economic order.
Distributism is now offensive to many conservative Catholics whose preoccupation with opposing socialism has left them vulnerable to the British liberalism that the Church once explicitly condemned, and that has now resurfaced as neo-conservatism.
Fortunately, Pope Leo XIII established St Thomas as the philosophical reference point for all Catholic thought. The Church is currently flooded with initiatives from both its progressive and conservative wings that reject Pope Leo’s insistence. Unfortunately, David Hunt’s work will continue this trend.
Pope Pius XI pre-empted this dual attack on the Church’s moral teaching when he described the threats as forming “twin rocks of shipwreck” (progressivism and conservativism) that were merely different aspects of “moral, juridical, and social modernism”.
For those interested in genuinely understanding usury, there remains a strong correlation between those who respect St Thomas, and those who recognise the common sense of Chesterton.