Lending and usury

Is charging interest a sin?

Charging for a loan simply because it is a loan is what the Church has called usury and condemned; gain on other just grounds it has allowed, and today it condemns rates that crush the borrower. Benedict XIV set out the line in 1745. A loan “demands, by its very nature, that one return to another only as much as he has received”, and “any gain which exceeds the amount he gave is illicit and usurious”, however moderate, and even if the borrower is rich or uses the money profitably. Vix Pervenit 3 But the same text allows other titles, “not at all intrinsic to the contract”, to justify “something over and above the amount due”, and contracts “differing entirely from loans”, such as investment in trade, from which “honest gain may be made”. Vix Pervenit 3 It warned against both extremes: those who hold “any profit derived from money to be illegal and usurious”, and those who hold “any gain whatsoever to be free of usury”. Vix Pervenit 8

Recent texts speak of credit as a service with an “irreplaceable social function”, and name the wrong as “applying excessively high interest rates, really beyond the range of the borrowers of funds”, which is “not only ethically illegitimate, but also harmful to the health of the economic system”. Oeconomicae et Pecuniariae Quaestiones 16 The Compendium accepts “the quest for equitable profit” and condemns usury, CSDC 341 and the Catechism counts it among the ways of killing: “Those whose usurious and avaricious dealings lead to the hunger and death of their brethren in the human family indirectly commit homicide, which is imputable to them.” CCC 2269

The same holds between nations. Poorer countries “must never be made to suffer ‘abusive if not usurious financial systems’”, CSDC 341 and debts are to be repaid by ways that do not compromise “the ‘fundamental right of peoples to subsistence and progress’”. CSDC 450 The Old Testament's measures for the poor included “the jubilee year of forgiveness of debts” and a “prohibition of loans at interest”. CCC 2449

The moneylender and his wife, 1514

2269

The fifth commandment forbids doing anything with the intention of indirectly bringing about a person's death. the moral law prohibits exposing someone to mortal danger without grave reason, as well as refusing assistance to a person in danger.

The acceptance by human society of murderous famines, without efforts to remedy them, is a scandalous injustice and a grave offense. Those whose usurious and avaricious dealings lead to the hunger and death of their brethren in the human family indirectly commit homicide, which is imputable to them. Cf. Am 8:4-10.

Unintentional killing is not morally imputable. But one is not exonerated from grave offense if, without proportionate reasons, he has acted in a way that brings about someone's death, even without the intention to do so.

2449

Beginning with the Old Testament, all kinds of juridical measures (the jubilee year of forgiveness of debts, prohibition of loans at interest and the keeping of collateral, the obligation to tithe, the daily payment of the day-laborer, the right to glean vines and fields) answer the exhortation of Deuteronomy: "For the poor will never cease out of the land; therefore I command you, 'You shall open wide your hand to your brother, to the needy and to the poor in the land.'" Deut 15:11. Jesus makes these words his own: "The poor you always have with you, but you do not always have me." Jn 12:8. In so doing he does not soften the vehemence of former oracles against "buying the poor for silver and the needy for a pair of sandals . . .," but invites us to recognize his own presence in the poor who are his brethren: Am 8:6; cf. Mt 25:40. When her mother reproached her for caring for the poor and the sick at home, St. Rose of Lima said to her: "When we serve the poor and the sick, we serve Jesus. We must not fail to help our neighbors, because in them we serve Jesus. P. Hansen, Vita mirabilis (Louvain, 1668).

341

Although the quest for equitable profit is acceptable in economic and financial activity, recourse to usury is to be morally condemned: “Those whose usurious and avaricious dealings lead to the hunger and death of their brethren in the human family indirectly commit homicide, which is imputable to them”. Catechism of the Catholic Church, 2269. This condemnation extends also to international economic relations, especially with regard to the situation in less advanced countries, which must never be made to suffer “abusive if not usurious financial systems”. Catechism of the Catholic Church, 2438. More recently, the Magisterium used strong and clear words against this practice, which is still tragically widespread, describing usury as “a scourge that is also a reality in our time and that has a stranglehold on many peoples' lives”. John Paul II, Catechesis at General Audience (4 February 2004), 3: L'Osservatore Romano, English edition, 11 February 2004, p. 11.

450

The right to development must be taken into account when considering questions related to the debt crisis of many poor countries. Cf. John Paul II, Apostolic Letter Tertio Millennio Adveniente, 51: AAS — Acta Apostolicae Sedis (official gazette of the Holy See)Volume 87 (1995) at vatican.va — scanned PDF (1995), 36; John Paul II, Message for the 1998 World Day of Peace, 4: AAS — Acta Apostolicae Sedis (official gazette of the Holy See)Volume 90 (1998) at vatican.va — scanned PDF (1998), 151-152; John Paul II, Address to the Conference of the Inter-Parliamentarian Union (30 November 1998): Insegnamenti di Giovanni Paolo II, XXI, 2 (1998), 1162-1163; John Paul II, Message for the 1999 World Day of Peace, 9: AAS — Acta Apostolicae Sedis (official gazette of the Holy See)Volume 91 (1999) at vatican.va — scanned PDF (1999), 383-384. Complex causes of various types lie at the origin of the debt crisis. At the international level there are the fluctuation of exchange rates, financial speculation and economic neo-colonialism; within individual debtor countries there is corruption, poor administration of public monies or the improper utilization of loans received. The greatest sufferings, which can be traced back both to structural questions as well as personal behaviour, strike the people of poor and indebted countries who are not responsible for this situation. The international community cannot ignore this fact; while reaffirming the principle that debts must be repaid, ways must be found that do not compromise the “fundamental right of peoples to subsistence and progress”. John Paul II, Encyclical Letter Centesimus Annus, 35: AAS — Acta Apostolicae Sedis (official gazette of the Holy See)Volume 83 (1991) at vatican.va — scanned PDF (1991), 838; cf. also the document At the Service of the Human Community: an Ethical Approach to the International Debt Question, published by the Pontifical Commission “Iustitia et Pax” (27 December 1986), Vatican City 1986.

Oeconomicae et Pecuniariae Quaestiones Jan 6, 2018
Sollicitudo Rei Socialis Dec 30, 1987
Vix Pervenit Nov 1, 1745

From the Catechism

From the Social Doctrine

From the Magisterium