USURY. — The term has two meanings, one absolute, the other relating to interest. In the first case, u. is the profit received from a loan as though it were owed by virtue of the loan itself; in the second case, it is excessive interest, that is, interest exceeding the rate established by law. A loan is a bilateral contract by which one party grants the other, for a certain period, a fungible thing (consumable upon its first use) on the condition that, once the specified period has expired, it be returned in equivalent form. The subject of this contract may be any thing, provided that it is fungible, but in particular u. is understood to refer to the lending of money.
I. HISTORICAL ORIGINS
Since money first appeared as a means of exchange, lending it at interest also appeared; at the same time, in every country, extensive legislation arose and developed, aimed at curbing the greed that immediately followed. Among the Jews, the idea of interest-free lending was deeply rooted, but violations were continual, until, under the pretext of adapting themselves to the practice of foreigners, they did not hesitate openly to violate the law (cf. Ex. 22:25; Lev. 25:35-37; Ezek. 18:8, etc.). The Greeks practised usury without restraint; Plato and Aristotle, however, opposed it; indeed, Aristotle was the first to find the grounds for its unlawfulness, grounds that would later be taken up and developed in the Middle Ages (cf. Plato, Leges, V, 741-42; Aristotle, Polit., I, 2). In Rome too, both during the Republic and under the Empire (Tacitus, Annales, VI, 22), usury was practised, to the grave detriment of borrowers, and the law intervened many times, but without effect, despite the severe penalties imposed on offenders (ibid., VI, 16; Cicero, Ad Att., V, 21, etc.). Justinian’s legislation, while maintaining the immorality of usury as its principle, merely restricted the concessions allowed by earlier laws (13, C. 4, 32; 1, C. 7, 46). The Fathers of the Church opposed usury in forceful language, without giving it a doctrinal formulation: observing the harm that resulted from it (cf. Clement of Alexandria, Strom., II, 18; PG 8, 1024; Gregory Nazianzen, Orat., 16; PG 35, 957; St. Basil, In divites, chaps. 2-4; PG 29, 266 ff.; St. John Chrysostom, In cap. XVIII Genes. hom. XLI; PG 53, 376-77; St. Ambrose, De Tobia, 2 ff.; PL 14, 798 ff.; St. Jerome, Commentar. in Ezech., 18, 6; PL 25, 176-77, etc.).St. Thomas, linking his treatment to the patristic tradition and to Aristotle, examined the question in depth and concluded by judging every form of usury unjust, since it violated commutative justice, inasmuch as in this way the same thing was sold twice (Sum. Theol., 2°-2° q. 78, aa. 1-4). The Council of Vienne (1311) declared that anyone who dared deny that the practice of usury was a sin was to be punished as a heretic (Denz. U. n. 479). In reality, the inconveniences were always lamented, but the principles remained unshaken, and the morality of actions was judged in their light. The first to attack the traditional doctrine were Calvin (1509-64) and Carlo du Moulin (1500-1566). The former openly denied the sterility of money, equating its productive capacity with that of a field or a house; consequently, just as it is not sinful to rent out a house for money, neither is it sinful to charge usury on money lent; sin lay only in excess. Du Moulin, on the other hand, began by maintaining that a loan did not involve a transfer of ownership and therefore did not, in itself, require gratuitousness.
These new doctrines caused considerable alarm and soon ended with the victory of traditional thought. A century later, the question was taken up again by C. Saumaise (1588-1653), who maintained two fundamental principles: the use of money is saleable, and the price of this use must be determined by the free will of the contracting parties. Followed by many others who drew on Calvin, he succeeded in prevailing, and his principles were accepted and put into practice. In Catholic circles, ideas were beginning to be reassessed in the light of new commercial customs and the introduction of new forms of contract that seemed to have affinities with the loan. Several authors who began to uphold opinions directly favouring usury were condemned (Denz. U. 1190-91); after the condemnation, some attempted to evade it by means of an ingenious distinction between mutuum consumptionis (money given for the necessities of life) and mutuum productionis (money given for commercial purposes), concluding that usury was unlawful in the first contract and lawful in the second; and someone even attempted to demonstrate that civil authority had the power to make lawful the usury it permitted and unlawful that which it prohibited. The ferment continued in France and Holland, with alternating fortunes in the predominance of the opposing theses; nevertheless, the conviction that usury was lawful was increasingly gaining ground. The echo of these disputes reached Italy, where the theoretical question was entirely dormant, although usury was practised almost universally. Pietro Ballerini, wishing to prevent the spread of the theories condemned beyond the Alps, energetically upheld the traditional view and took no account whatsoever of the progress that had been made; moreover, he went so far as to deny even those considerations extrinsic to the loan that legitimated compensation and had been admitted by St. Thomas himself, confusing the loan with other contracts that were legitimate in themselves and subjecting the whole matter to condemnation. Scipione Maffei took a stand against Ballerini and sought to demonstrate that moderate usury was not unjust but lawful, indeed useful; only excessive usury was to be condemned. His work, Dell'impiego del denaro (1744), provoked reactions and protests from many moralists, and mutual accusations of heresy were frequent. Benedict XIV felt the need to intervene with an encyclical (Vix pervenit., 1 Nov. 1745), which did not entirely succeed in silencing the controversies. Among others, COCINCINA (v.) intervened in the debate in a rigorist sense, basing himself on Vix pervenit. The question subsided, and the practice of usury did not change.
interest (v.) was first introduced into official language in a law of the French Constituent Assembly. From then on, all States took care to establish the rate of interest and to suppress usury. In Italy, loans and interest are regulated by the Civil Code (Book IV, chap. XV, arts. 1813-22) and by the Penal Code (Book II, title XIII, chap. II, art. 644).
II. THE PROBLEM OF USURY
For economists it is now universally accepted that interest may be demanded on a loan of money, in whatever form, and in order to re-examine the situation radically today, it is useful to see briefly what the Scholastics thought. It must first be stated that neither Sacred Scripture nor Tradition speaks of usury in the technical sense of the word, and that the Scholastics, in condemning it, do not base themselves on Revelation, but examine thoroughly the nature of things and, in particular, that of money: for them the idea precedes and shapes reality, with an anti-opportunistic tendency; the moderns, on the other hand, study the contingency of reality, believe they see the nature of money changed, consequently establish other principles, and deduce from them conclusions diametrically opposed to those of the school. The point of departure is to determine what is meant by capital, and which things are res frugiferae and which are non frugiferae. The moderns have in view the production of new things, whereas the ancients thought especially of the distribution of a new value. For the moderns, the intrinsic reason why a thing is capital is that it contributes to the production of a new value; for the ancients, it was that it had an estimable use, distinguishable from the thing itself. According to the moderns, three elements are necessary for production: nature, labour, and capital; the latter is defined as a portion of produced wealth destined for new production. Scholasticism, on the other hand, in seeking to determine to whom the profit should accrue, investigated from which sources gain could be derived and posited only two: nature and labour. Nature means anything capable of bringing about some utility by itself, and therefore everything that can have a useful employment; but, according to the different essence of things, some remain in being after they have been used, while others perish through the use made of them (quorum usus est abusus, according to the classical expression); hence the former are ex se frugiferae, the latter steriles, even though, through the application of human industry, they may become fruitful like seed. Capital, therefore, according to Scholasticism, consists of those things that possess an intrinsic capacity to yield profit, that is, whose use is separable and distinct from their substance and can therefore be the object of a contract independently of II. Capital includes the totality of immovable and movable goods encompassed by the classical phrase res quae primo usu non consumuntur. From this it follows that the concept of res frugifera was applied both to things that are formally productive—fields, forests, plants, animals—and to those that are not formally so—houses, instruments, furnishings; both categories, however, are productive of a just profit, because they have a use that can be valued in addition to the value of the substance.Having thus delimited the field of capital, it does not follow that everything that exists is included in it; there are other things that likewise have a useful use, but one that cannot be distinguished from their substance—namely, those that, by the very fact of having been used, no longer continue in being: salt for seasoning food, oil for lighting or nourishment, and coal for combustion. Utility evidently results from the use, but here it is obtained formaliter through the consumption or substantial destruction of the thing itself, so that the use of such a thing is not distinguishable from its substance; and if it is not distinguishable, it cannot be valued separately from it, nor ultimately can it be the object of a separate contract. This is the profound reason why such things are called infruttifere or sterili, even if they were evidently fruitful like seed. Therefore, apart from donation, when such things are sold, it is not lawful to demand that the utility of their use be valued or reckoned in addition to the price of the substance. In the case of a loan, by granting the use of a sterile thing one grants the right to destroy it; this entails ownership of the thing itself, and therefore in a loan ownership is transferred. Justice requires the equivalent to be returned in quantity and quality; whoever demanded more would violate commutative justice, because in practice he would be selling the same thing twice (bis vendere idem, vel vendere quod non est). This is the contract called mutuum, characterized by the transfer of ownership and the gratuitousness of use, the first condition justifying the second; violation of the latter is genuine usury, regardless of whether the sum is large or small, whether the loan is made to the poor or the rich, and whether it is intended for immediate sustenance or commercial purposes. It may happen that the lender suffers a loss by making the loan: either because a profit he had been obtaining from the thing ceases (lucrum cessans), or because he actually suffers damage (dannum emergens), or because he runs a serious risk of not recovering what is his (periculum sortis); in such cases he cannot be denied the right to demand something. But then this would not be by virtue of the loan (ex mutuo, vi mutui), but for reasons extrinsic to the loan as such.
It now remains to see in which category of goods money should be placed, given its complex nature.
It seems that the Middle Ages did not know the system of paper money; the Scholastic formulation, however, still possesses all its value today, and perhaps more than ever, even if one begins with coinage struck from more or less precious metal. Money is defined as the instrument essentially used for the exchange of things possessing value. For this it was invented, and it is therefore the measure and price of all things; indeed, it represents them all and transports them from one sphere to another, from one time to another, so that it becomes for man a kind of guarantor. According to s. Tommaso, it is the rule and measure of saleable things; by its essence it entails a relation to all things that can be exchanged in the reciprocal economic relations of human beings, but not to those lying outside such relations. That is, the value of something necessary or useful to man is measured by the price given to obtain it; this price is money, because money was devised for the precise purpose of being spent in exchange with other things: this is its use.
In other words, money, expressing the relation of value that exists among things, stands in relation to all saleable things among themselves, insofar as it measures their value, as the balance stands in relation to all things that have weight, and the metre to those that have length.
The essential function of money, the balance, and the metre is exhausted in measuring value, weight, and length; it matters little whether these means are made of gold, silver, iron, or paper. If the essential property of money is to be a measure, its proper use will be that it actually measures. Now it cannot measure—that is, compare the value of two things—unless, having been received in the exchange of one, it is itself exchanged for the other, and therefore unless, as money, it is spent, that is, consumed. This immediately highlights the identity between money and res primo usu consumptibilis: it too is therefore sterile. This identity is the point of departure for the principles to be deduced.
When St. Thomas speaks of money as such, he always abstracts from the material of which it is made, as well as from the purpose for which it is employed—whether to purchase things necessary for life or to engage in further commerce. It would therefore be erroneous to say that he considered money primo usu consumptibilis because at that time it was spent only to purchase things necessary for life and not for commerce; one would thus be led to maintain, in accordance with his principles, the distinction between mutuum consumptionis and mutuum productionis. On the other hand, as historians attest, monetary circulation was already very active in the 13th century; hence the distinction between one loan and another, deduced from the purpose for which the loan was made, certainly did not escape the Angelic Doctor, who would have incorporated it into his framework had it truly accorded with the principles deduced from the nature of things. From this one also understands in what sense the scholastics understood this sterility: it does not mean that profit could not be obtained through money and human industry (St. Thomas asserts: de pecunia lucrari posse); but in that case the profit originates solely from human industry, or more precisely from labor and from the things purchased with money, never from money in itself. Thus the principle of the sterility of money was deduced from its specific nature, and St. Thomas by this did not at all intend to provide a scientific explanation of the prohibition of usury.
Given the sterility of money, it is impossible to separate in it a use distinct from the substance and appraisable separately; therefore it is impossible to give or sell the use of money separately from the substance: whoever gives the use gives the substance, and vice versa; whoever sells the use sells the substance, and vice versa. Now the contract to which money as such may be subject will be either unilateral and gratuitous, or bilateral and onerous. Leaving aside the first case (donation), in the second the only obligation that may be imposed is the restitution of the money in the same quantity in which it was received: this is the loan, with all its properties, hence the transfer of ownership and the gratuitousness of use; by violating this, one commits usury, which injures commutative justice and entails an obligation of restitution. The amount of the usury will indicate its greater or lesser gravity, without thereby changing its species. It will be determined neither by the different uses to which the money may be put nor by the different circumstances of the borrowers.
This, in summary, is the traditional doctrine of the Church, sanctioned by the encyclical Vix pervenit of Benedict XIV. Even today moral theologians, generally speaking, adhere to it; they add, however, that, given the present economic situation, every loan of money can always be regarded as lucrum cessans and, moreover, since civil law permits interest, it is always lawful to demand it, provided that it remains within the permitted limits. Some take a position contrary to the traditional doctrine: “Money, which in ancient times was not regarded as res frugifera and could be considered such only potentially, must now be said to be fruitful in actuality, and it is lawful for anyone to obtain a profit from a loan of money (except where, by the law of charity, he is bound to lend gratuitously), independently of any extrinsic title” (Noldin). Another returns decisively to the traditional doctrine, adapting it to the deve-
USURA - USURPAZIONE DEI BENI ECCLESIASTICI
luppo che ha preso l'economia (Thiberghien). Si ritiene però che la questione attenda ancora di essere risolta.
Elio Degano
III. ITALIAN LAW
Art. 1815 of the Civil Code, forming part of the provisions governing loans for consumption, establishes in its second paragraph: “If usurious interest has been agreed upon, the clause is void and the interest is owed only at the statutory rate.” In private law, the civil-law regulation of u. is provided through the sanction of nullity (which affects not the entire contract but only the clause concerning interest, which is not owed at the agreed rate but at the statutory rate); moreover, the Criminal Code punishes the offence of u. (art. 644).The position taken by the Italian legislator against u. is justified by the need to reconcile recognition of freedom with a certain degree of equality. The thesis according to which u. can be effectively combated only by improving economic conditions and perfecting credit has now been definitively superseded: even if it be conceded that its incidence may be reduced by these means, the law has not intended to renounce the right to intervene against II.
U. must now be defined in legal terms. Its field traditionally corresponds to the interest-bearing loan. Interest consists of money or other fungible things, just as do the things lent (art. 1813), in relation to which it is calculated as a percentage; in comparison with the debt whose object is restitution (of “the same quantity of things of the same kind and quality” as those lent), the debt of interest, although it exists independently of the parties’ agreement (art. 1815, first paragraph), is accessory in nature. When remuneration, through interest, for the use of money and other fungible things lent assumes excessive proportions, u. occurs, and the interest acquires the attribute of being usurious.
When the speculative purpose concerns the use of money (or of other fungible things), the question whether or not it is appropriate to leave the economically stronger party the unlimited power to overpower the weaker becomes particularly acute and significant; since speculations on the lending of money have been, and still are, particularly frequent, and since they constitute the subject matter of a specific and very serious social problem, it can be understood why the legislator intended to adopt a particular position in this regard, imposing nullity as a sanction for the usurious clause.
The immorality of the usurious contract must also be added: it is, in fact, repugnant to the moral conscience that the debt of interest should give rise to excessive enrichment in favour of the creditor; and this moral evaluation likewise inspired the legislator when it provided for the nullity of the usurious clause.