Redefining Usury
May 21, 2025 | 1,298 words | Papal Politics, World Economics
Another worth-your-while entry in this overview of the incoming Leo XIV is The New Pope Might Be Somewhat Like The Old Pope, written by Daniel Gibson and published in The New York Times. In it he gently chides conservatives who fault Francis for sowing confusion among the faithful and surreptitiously undermining established doctrine through ‘synodality.’ He rightly notes the Catholic Church has always changed and is always changing, even though it prefers to classify this activity under the heading of “developing the teaching” and “building on the deposit of faith.”
Mr. Gibson then goes on to observe “Under previous popes more to their liking, the Catholic right demanded that Catholics toe the line on papal pronouncements or be considered bad Catholics. But now that they find themselves in a church led by popes they disagree with, they are stuck. They defined dissent as wrong, so it must be the pope who is the bad Catholic. It’s an awful mess.”
Gibson cites a few big-time examples of this “development” in his article: slavery, religious freedom, and usury. Most of us immediately recognize the change in official teaching regarding slavery and religious freedom. Slavery is a no-brainer, while religious freedom, at least as it is sometimes invoked, does still occasionally require some sorting out. But when was the last time you heard anything about usury?
It’s an old-timey word, a vestige of a long-ago time that no one remembers. Yet once all faith traditions shared a prohibition against the charging of interest on a loan. What we have now is a rather mild, modern-day caution against charging of “exorbitant” interest that “unfairly enriches” the lender.
But who decides what constitutes exorbitant? Delegated to the legislatures, that determination has been left exposed to lobbying efforts by vested interests (a.k.a. the banking industry).
If ever there was an area in which Catholic social teaching was in dire need of further development, it is this one. Last we checked, the ancient prohibition once shared by all faiths had evolved into what might be called a clever Christian work-around: a limited prohibition against charging anything more in interest than what the money lent could be expected to earn if used elsewhere by the lender during the term of the loan.
But given the widespread speculation in today’s financial markets, how does one determine “anticipated earnings”?
In his book Moral Philosophy published in 1918, Joseph Rickaby describes the early development of mercantile enterprises in relation to usury. As commerce increased in the great cities five centuries ago, conditions that rendered interest lawful, as apart from usury, presented themselves.
But things were different outside of those cities because the level of commercial exchange was not as robust. “Hence the same transaction, as described by the letter of the law, might mean lawful interest in the city, and usury out in the country – the two were so disconnected.”
Rickaby then gives the following view of the development of Catholic practice: “In such a situation the legislator has to choose between forbidding interest here and allowing usury there; between restraining speculation and licensing oppression.
“The medieval legislator chose the former alternative (restraining speculation). Church and State together enacted a number of laws to restrain the taking of interest, laws that, like the clothes of infancy, are not to be scorned as absurd restrictions, merely because they are inapplicable now, and would not fit the modern growth of nations.
“At this day (1918) the State has repealed those laws, and the Church has officially signified that she no longer insists on them. Still she maintains dogmatically that there is such a sin as usury, and what it is, as defined in the Fifth Council of Lateran (1512-1517).”
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The conditions or opportunities for usury – as apart from legal interest – have increased exponentially since the publication of Joseph Rickaby’s book Moral Philosophy in 1918. Consider the introduction of widespread consumer credit, or the murky landscape of international finance. In their best guise the former enables people of modest means to enjoy more of life’s conveniences, and the latter is an important mechanism for economic growth.
But exorbitant interest rates make it impossible for individuals, or nations, to ever get out from under their debt obligations. And so it has always been.
In an attempt to define legal interest as apart from usury, The Fifth Lateran Council that Rickaby refers to in his book decreed that a lender could charge a fee for services rendered, ”provided it is intended exclusively to defray the expenses of those employed and of other things pertaining to the upkeep of the (lending) organizations, and provided that no profit is made therefrom.”
Obviously the phrase “no profit” sounds unduly to our ears, in 2025. It might help to keep in mind this papal decree was making a distinction between monte di Peita organizations, which in 15th century Italy gave poor people access to loans with moderate interest rates, as an alternative to what was thought to be the usurious money-lending practices associated at the time with Cahorsins and Lombards.
It should also be noted the source of these acceptable loans, the “Mount” in the Mount of Peity, came from voluntary donations by financially privileged people who had no intention of regaining their money. Which, needless to say, speaks of a unique mindset on the part of those financially privileged individuals.
The contemporary international version of monte di Peita might be ‘micro-lending,’ which seeks to make start-up investment capital available to poor people or nations who otherwise would not have access to such capital. Which is a good thing. Except that this capital is being offered at excessively high interest rates, to offset the increased risk of that capital not being paid back. Which is not such a good thing.
I think most of us would agree that some lending is “predatory” and some loans “unfairly enrich the lender.” But trying to parse that out is a very sticky wicket. One the one hand, the Wolves of Wall Street should not be left in charge of watching the hen house. On the other hand, no one is going back to the Fifth Lateran Council of 1512, expecting that definition of usury to make sense for us today.
So, then, if the Catholic Church is going to “maintain dogmatically” in 2025 that usury is still a destructive force having a deleterious effect, especially on the poor and downtrodden of the world – which by the way is still very much the case – then it needs to up its game.
It is incumbent on the Catholic brain trust to once again utilize the resources of its rich tradition, this time to engage the modern world of complex economic transactions. It is time for the Catholic Church to define “usury” in the 21st century.
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We should not allow the concept of usury to be scorned and dismissed out of hand, just because the old understanding of the term no longer applies, and does not fit the modern growth of nations. The problem remains one of “restraining speculation” (so that people are not taken advantage of), and “licensing oppression’ (which assures that people will be taken advantage of).
Much like regulators at the SEC, who lack the sophistication needed to oversee the wily financiers they are assigned to regulate, economists and finance majors of a Catholic bent need to hit the books and come back with a sharper perception of the corrosive aspects of usury as it is practiced today. So as to effect positive change for all those of modest means who lack resources and have no leverage whatsoever when negotiating terms.
That the new Pope has selected the name Leo XIV leads me to hope he might add this issue to his already-overloaded agenda.
Robert J. Cavanaugh, Jr.
bobcavjr@gmail.com