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.

www.robertjcavanaughjr.com

bobcavjr@gmail.com

Economic Clarity

Sept 27, 2024  |  1,336 words  |  Politics, Economics, Religion  

Over the course of his twelve-year run as pope, Francis has made it pretty clear appeasing First World sensibilities is not his top priority.  We here in the United States have not always known what to make of this, since his lack of deference can seem like disrespect at times.  

It can feel as if this Argentine pontiff is going out of his way to challenge our sense of exceptionalism, our sense of being a light to the nations and a city on a hill.  And who knows, maybe he is.  Or maybe he is just trying to broaden our perspective and bring a little Third World awareness to bear on the situation.  

I choose to think he is not disparaging us so much as he is gently prodding us to see how much more work there is left to do.  So that we should not be content to pat ourselves on the back and rest on our laurels.

In the service of this cause, Francis displays a unique ability to chide American conservatives and liberals simultaneously.  This has always struck me as part of his charm, and a sign he is doing something right.

It happened again on his return flight from a grueling 12-day trip to four tiny countries in the Asia-Pacific Rim, when reporters on the plane asked him about our upcoming presidential election.  He turned up his nose and declined to endorse either major party candidate, on the grounds that each is “against life.”  Kamala Harris because of her position on abortion, and Donald Trump because of his position on immigration.  

This bothered political partisans on both sides, since each group wants to see Catholic teaching applied in a way that endorses their preferred worldview.  Each side thinks they hold the high ground, convinced the other is the obvious apostate.

Having said that, it is undoubtedly the conservative camp who has had the longest-running feud with Pope Francis. 

They have never approved of his more “pastoral” approach to doctrine.  But what really gets their goat is the way this pope raises the issue of economic inequity every chance he gets.  Conservatives hear this as harping, and take it as a personal affront, an attack on their way of life.

This is especially true whenever Francis uses the term ‘social justice.’  That phrase puts American conservatives in a foul mood, as it smacks of the policy initiatives enacted by the Democrat left over the last hundred years, which they have steadfastly opposed as governmental overreach.

Never mind that these policies have been aimed at smoothing out the rough edges of ‘free market’ ideas advanced by conservatives.  Whether this-or-that Democrat policy has been an effective way to legislate ‘fairness’ is certainly open to debate.  My point is conservatives have always opposed these policies out of the gate, on the grounds they violate the hallowed concept of ‘limited government.’

Now, I am four-square in favor of keeping government as small as possible.  But how small is just right?  What size should a government be, to do what needs to be done?  Namely, provide for or administer to a just society, or at least a ‘more equitable’ one.  This should be an ongoing negotiation.  But the discussion should center on ‘social justice’ every bit as much as it does on ‘fiscal responsibility.’

*

That, to me, is all Pope Francis has been trying to tell us throughout his papacy.  He is talking to the Hey-I-don’t need-any-help, independent-minded contingent here in the United States, as well as the successful minority in all other ‘developed’ countries across the First World.

He was at it again on September 20, soon after he returned from that grueling trip the Asia-Pacific Rim, when he visited the Dicastery for Promoting Integral Human Development in Rome, where he addressed a gathering of The World Meeting of Popular Movements for the fourth time in his pontificate.  Here are a few excerpts…

“If there are no policies, good policies, rational and equitable policies that strengthen social justice so that everyone has land, shelter, work, a fair salary and adequate social rights, the logic of material waste and human waste will spread, leaving violence and desolation in its wake.”

“Social justice is inseparable from compassion,” Francis insisted.  “True compassion builds the unity of people.”  The opposite of compassion is “to look down on others as if they were worthless.  It is the great temptation of our time.  To look from afar, to look from above, to look with indifference, to look with contempt, to look with hatred.”

“This is how violence is conceived: the silence of indifference enables the roar of hatred.  Silence in the face of injustice gives way to social division, social division to verbal violence, verbal violence to physical violence, physical violence to the war of all against all.”

Then Francis really got down to brass tacks, commenting on one of the foundational truths of free market ideology:

“Blind competition for more money is not a creative force, but an unhealthy attitude and a path to perdition.  Such irresponsible, immoral, and irrational behavior is destroying creation and dividing peoples.”

“Dehumanized ideologies promote the ‘culture of the winner’…  Some call this meritocracy…  (but) it is paradoxical that many times great fortunes have little to do with merit:  They are the result of income or inheritances, they are the result of the exploitation of people and the plundering of nature, they are the product of financial speculation or tax evasion, they derive from corruption or organized crime.”

Francis then repeated a familiar refrain of his:

“Sadly, it is often precisely the wealthiest who oppose the realization of social justice or integral ecology out of sheer greed.”  They pressure governments “to sustain bad policies that favor them economically.”

On the bright side Francis also acknowledged:

“Some of the richest men in the world (do) recognize that the system that allowed them to amass extraordinary fortunes – allow me to say ridiculous fortunes – is immoral and must be modified” and “that there should be more taxes on billionaires.”

“If that small percentage of billionaires who monopolize most of the planet’s wealth were encouraged to share it…  how good it would be for themselves and how fair it would be for everyone,” the pope said.  “I sincerely ask the privileged of this world to be encouraged to take this step.  They’re going to be much happier.”

*

There were about thirty representatives of different popular movements from various countries in the room as Pope Francis spoke on September 20, but many more were connected by streaming worldwide, and speakers from Sri Lanka and South Africa spoke to the group via Zoom.

Like his previous three talks to the World Meeting of Popular Movements, this 45-minute speech was a stirring call to action.  It echoed and built upon themes of social justice his papal predecessors have stressed since at least 1891, when Pope Leo XIII drilled down on the economic disparities created by the first Gilded Age.

Unfortunately, this September 20 address received zero coverage in the mainstream media.  Major news outlets did not mention the event or comment on the pope’s remarks in any way.  And apparently there were  no social media influencers in attendance, to help spread the word.  What meager reporting it did receive was  relegated to the religious press, which is where I found out about it.

The ‘silent treatment’ was no doubt the result of Francis’s choice of venue:  A not-particularly-well-known international body that brings together organizations of people on the margins of society, including the poor, the unemployed, and peasants who have lost their land.

The absence of a big, splashy, headline story enabled American conservatives to dodge another chance for a close encounter with basic Christian principles regarding economic behavior, and how that behavior impacts social justice.  Not just on the world stage, but here at home as well.  

All is not lost, however.  I have a feeling this aged, increasingly infirm Argentine pontiff will keep trying to get their attention.

Robert J. Cavanaugh, Jr.

www.robertjcavanaughjr.com

bobcavjr@gmail.com