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Usury - then and now

Wednesday, 4 Dec 2013

The Usurer on Staff and Scrip, Dr John Dunn

The Usurer from Basel's dance of death by Jacques-Antony Chovin.

As the individual sovereignty of European states crumble to nothing before the power of the banks, it is salutary to think that the lending of money for interest - usury - was once outlawed in Christian Europe.

The  prohibition is now confined to the Muslim world, a last enclave of opposition to what was once universally held to be an immoral act, likely to damn the perpetrator to Hell. Yet often here the opposition is often only nominal and is likely to be wiped away completely before long by the economic and military power of global capitalist interests.

It seems now that the victory of the usurer is complete. How very different in former times of religious piety, before the guiding hand of morality withdrew before the ‘invisible hand’ of economic expediency.

Imran Hosein, who lectures amongst other things on how the current world financial crisis is at heart one of usury, asks us to consider the world-changing enormity of the moral shift from one in which money-lending was loathed as evil, to a situation in which bankers just about rule the planet. He recommends reading Religion and the Rise of Capitalism by RH Tawney, for a brilliant summary of the retreat of religion.

Tawney explains that in medieval Europe there were degrees of acceptably in economic activity. Labour - the common lot of mankind - was deemed to be necessary and honourable. Trade was thought necessary, but perilous to the soul. Finance, if not immoral, was considered to be, at best sordid and, at worst, disreputable.

The loathing of the sin of avarice associated with finance found practical expression in the church’s prohibition of usury. On this matter, as the practice of borough and manor, as well as of national governments, showed, the church was preaching to the converted.

Florence was the financial capital of medieval Europe; but even at Florence the secular authorities fined bankers right and left for usury in the middle of the fourteenth century, and fifty years later, first prohibited credit transactions altogether, and then imported Jews to conduct a business forbidden to Christians.

The Court Leet of medieval Coventry put usury on a par with adultery and fornication, and decreed that no usurer could become mayor, councillor, or master of the gild.

Tawney explains that the economic background of it all was very simple. The medieval consumer usually lived in a tied house and was at the mercy of the local baker and brewer. Monopoly was inevitable. Indeed a great part of medieval industry was a series of organised monopolies, which had to be watched with jealous eyes to see that they did not abuse their powers. Loans by usurers were made largely for consumption, not for production. The farmers whose harvest failed or whose beasts died, or the artisan who lost money, had to have credit, seed corn, cattle, raw materials, and his distress was the money-lender’s opportunity. Naturally there was a passionate popular sentiment against an engrosser who held a town to ransom, the monopolist who brought the livings of many into the hands of one, the money-lender who took advantage of his neighbours’ necessities to get a lien on their land and foreclose. FORECLOSE, a word that still strikes terror into the hearts of mortgaged nominal home owners to this day.

The essence of usury that men hated was that it was certain, and that, whether the borrower gained or lost, the usurer took his pound of flesh. Medieval opinion, which had no objection to rent or profits, provided that they were reasonable, had no mercy for the money-lender. His crime was that he took a payment for money which was fixed and certain, and such a payment was sinful.

To take usury was and remains contrary to scripture. There were the texts in Exodus and Leviticus and Luke vi. 35. But practical considerations contributed to the doctrine more than is sometimes supposed. Because of the certainty of return on usury, it was argued that the rich, for the sake of safety and security, would put their money into usury rather than into smaller, more risky investments, such as the cultivation of land and the production of food. How the lessons in this observation ring out loud to this very day.

The high watermark of the ecclesiastical attacks on usury were probably reached in legislation of the Councils of Lyons (1274) and of Vienne (1312). These made the moneylender an outlaw. How the world has turned on its head, when it is now the money-lenders who make the laws in the Councils of the G8!

John Dunn.

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