USURY. — The term has two meanings, one absolute, the other relative to interest. In the first case, usury is the profit gained from a loan as if it were due by virtue of the loan itself; in the second case, it is excessive interest, that is, interest above the rate established by law. A loan is a bilateral contract by which one party grants to another, for a certain time, a fungible thing (consumable upon first use) with the condition that, upon expiration of the fixed term, it be returned in its equivalent. The subject of this contract can be any thing, provided it is fungible, but in particular usury is understood with reference to the lending of money.
I. Historical Notes
From the time money appears as a medium of exchange, so too does the lending of it with interest; simultaneously, in every country a broad legislation arose and developed, aimed at curbing the greed that immediately followed. Among the Jews, the idea of gratuitous lending was deeply rooted, but infractions were continual, until, under the pretext of conforming to the practice of foreigners, they did not hesitate to violate the law openly (cf. Ex. 22:25; Lev. 25:35-37; Ezek. 18:8, etc.). The Greeks practiced usury freely; Plato and Aristotle, however, were opposed to II. Aristotle was in fact the first to find the justification for its illicit nature, a justification that would be taken up and developed in the Middle Ages (cf. Plato, *Leges*, V, 741-42; Aristotle, *Politics*, I, x). In Rome, both in the Republican and Imperial periods (Tacitus, *Annales*, VI, 22), usury was practiced, to the grave detriment of borrowers, and the law intervened many times, but without effect, despite the severe penalties imposed on transgressors (ibid., VI, 16; Cicero, *Ad Atticum*, V, 21, etc.). Justinianic legislation, while holding as a principle the immorality of usury, limited itself to restricting the concessions of previous laws (C. 4.32.13; C. 7.46.1).The Fathers of the Church opposed usury with strong words, without giving it doctrinal formulation: they noted the damage that resulted from it (cf. Clement of Alexandria, *Stromata*, II, 18; PG 8, 1024; Gregory Nazianzen, *Oratio*, 16; PG 35, 957; St. Basil, *Homily to the Rich*, chaps. 2-4; PG 29, 266 ff.; St. John Chrysostom, *Homily on Genesis* 18, homily 12; PG 53, 376-77; St. Ambrose, *De Tobia*, 2 ff.; PL 14, 798 ff.; St. Jerome, *Commentary on Ezekiel* 18:6; PL 25, 176-77, etc.).
St. Thomas, drawing on the patristic tradition and Aristotle, examined the question thoroughly and concluded by judging every usury unjust, as it violated commutative justice, since in this way the same thing is sold twice (Summa Theologiae, II-II, q. 78, arts. 1-4). The Council of Vienne (1311) declared that one must punish as a heretic whoever dared to deny that the practice of usury was a sin (Denz. 479).
In reality, the inconveniences were always lamented, but the principles remained unexamined, and in their light the morality of actions was judged. The first to attack the traditional doctrine were Calvin (1509-64) and Charles du Moulin (1509-1566). The former openly denied the sterility of money, equating it in its productive capacity to a field or a house; it followed that, just as it is not a sin to rent a house for money, so too the usury of money lent is not a sin; sin arose only in cases of excess. Du Moulin, for his part, took as his basic point that with a loan there is no transfer of ownership, and therefore it does not of itself require gratuity.
These new doctrines caused a great stir and were soon concluded with the victory of traditional thought. A century later, the question was taken up again by C. Saumaise (1588-1653), who advanced 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. Following many others who drew on Calvin, he succeeded in imposing his views, and his principles were accepted and practiced.
In the Catholic sphere, ideas began to be reconsidered in light of new commercial customs and the introduction of new forms of contracts that seemed to have affinities with the loan. Some authors who began to support opinions favoring usury directly were condemned (Denz. 1190-91); after the condemnation, some attempted to evade it with a clever distinction between *mutuum consumptionis* (money lent for the necessities of life) and *mutuum productionis* (money lent for commerce), concluding that usury was illicit in the first contract and licit in the second; and some attempted to demonstrate that civil authority has the power to render licit that usury which it permits and illicit that which it prohibits. The ferment continued in France and Holland with alternating fortunes in the prevalence of opposing theses; yet the conviction that usury was licit was increasingly gaining ground. The echo of these disputes reached Italy, where the question had been entirely dormant, even though usury was almost universally practiced. Pietro Ballerini, wishing to prevent the spread of the theories condemned abroad, vigorously upheld the traditional idea and took no account of the progress made; moreover, he went so far as to deny even those extrinsic grounds for compensation legitimized in a loan, which had been admitted by St. Thomas himself, confusing the loan with other contracts that are in themselves licit, and subjecting the whole to condemnation. Scipione Maffei took a position against Ballerini and sought to demonstrate that moderate usury was not unjust but licit, indeed useful; only excessive usury was condemnable. His work, *Dell'impiego del denaro* (1744), provoked reactions and protests from many moralists, and accusations of heresy were frequently exchanged. Benedict XIV felt the need to intervene with an encyclical (*Vix pervenit*, Nov. 1, 1745), which did not entirely quell 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.
The distinction between usury and interest (v.) was first introduced into official language in a law of the French Constituent Assembly. Since then, all states have taken care to fix the rate of interest and to punish usury. In Italy, loans and interest are regulated by the Civil Code (Part I, Book IV, Chap. XV, arts. 1813-22) and by the Penal Code (Part I, Book II, Title XIII, Chap. II, art. 644).
II. THE PROBLEM OF USURY
For economists it is now beyond dispute that money lent, in whatever form, may demand interest; and in order to re-examine the situation radically today, it is useful to look briefly at the thought of the Scholastics. It must be stated at the outset that neither Holy Scripture nor Tradition speaks of usury in the technical sense of the word, and the Scholastics, in condemning it, do not base themselves on Revelation but examine thoroughly the nature of things and, in particular, the nature of money: for them, the idea precedes and shapes reality with an anti-opportunistic tendency; moderns, on the other hand, study the contingency of reality, believe they see the nature of money changed, consequently posit other principles and deduce conclusions that are the very opposite of those of the school.
The starting point is to determine what is meant by capital, which things are *res frugiferae* and which are not. Moderns have in view the production of new things, while the ancients thought especially of the distribution of a new value. For moderns, the intimate reason why a thing is capital is that it contributes to the production of a new value; whereas for the ancients it was that it had a usable value distinct from the thing itself. According to moderns, three elements are necessary for production: nature, labor, and capital; and the latter is defined as a part of wealth produced, destined for new production. The Scholastics, however, seeking to investigate to whom the profit should go, inquired from what sources profit could be drawn and posited only two: nature and labor. By nature is meant anything that has the capacity to bring utility of itself; hence everything that can have a useful use; but according to the different essence of things, some remain in their being after use, others perish with the use made of them (*quorum usus est abusus*, in the classical expression); therefore the former are *ex se frugiferae*, the latter *steriles*, even if, by applying human industry, they may become fruitful, as seed does. Capital, therefore, according to the Scholastics, consists of those things that have an intrinsic profitability, whose use is separable and distinct from the substance and thus can be the object of a contract independently of II. Into capital fall the aggregate of immovable and movable goods, included in the classical phrase *res quae primo usu non consumuntur*.
From this it is deduced that the concept of *res frugifera* was applied both to things that are formally productive: fields, forests, plants, animals; and to those that formally are not: houses, tools, furnishings; yet both are productive of a just profit, because they have a usable value beyond the value of the substance itself.
Having delimited the field of capital, it is not said that everything that exists is included in it; there are other things that have a useful use, but one that is not distinguishable from their substance; those, namely, that by the very fact of being used, no longer continue in their being; such as salt for seasoning food, oil for lighting or nourishment, coal for combustion. Clearly, a profit arises from the use, but this is had *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; if it is not distinguishable, neither is it appreciable distinctly from the thing itself, nor can it ultimately be the object of a distinct contract. This is the profound reason why such things are called unfruitful or sterile, even if they are evidently fruitful like seed. Therefore, apart from donation, when such things are sold, it is not lawful to claim that the profit of the use be evaluated or computed in addition to the price of the substance. In the case of a loan, by granting the use of a sterile thing one gives the right to destroy it; this implies ownership of the thing itself, and thus in the loan there occurs a transfer of ownership. For justice it will be necessary to restore the equivalent in quantity and quality; whoever should demand 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*, with its characteristics of transfer of ownership and gratuitousness of use, of which the first condition justifies the second; violation of this is true and proper usury, no matter whether it is great or small, whether the loan is to the poor or the rich, whether the loan is for immediate sustenance or for commercial purposes.
It may happen that the lender, in lending, comes to suffer loss: either because a profit he obtained from the thing ceases (*lucrum cessans*) or because he actually suffers damage (*damnum emergens*), or because he runs serious risk of not having his money returned (*periculum sortis*); in these cases one cannot deny him the right to demand something; but then it would not be by virtue of the *mutuum* (*ex mutuo, vi mutui*) but rather for reasons extrinsic to the *mutuum* as such.
It remains now to see in which category of goods money must be placed, given its complex nature.
It seems that the Middle Ages did not know the system of paper money; the Scholastic approach, however, retains its value even today, perhaps more than ever, even if it started from coined money made of more or less precious metal. Money is defined as the instrument that essentially serves for the exchange of things that have value. For this it was invented and is therefore the measure, the price of all things; indeed, it represents all things and transports them from one place to another, from one time to another, so that it becomes for man like a guarantor. According to St. Thomas, it is the rule and measure of venal things; by its essence it involves having a relation to all things that can be exchanged in the reciprocal economic relations of man, not to those that stand outside such relations. That is, the value of a thing necessary or useful to man is measured by the price given to obtain it; this price is money because it was found for the precise purpose of being spent in exchange with other things: this is its use.
In other words, money, by expressing the relation of value that exists among things, stands to all venal things among themselves (as the measure of their value) as the balance stands to all things that have weight, as the meter does to those that have length.
The function of money, the balance, and the meter is essentially exhausted in measuring value, weight, length; it matters little whether such means are 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 thus as money it is spent, that is, consumed. This immediately highlights the identity that exists between money and *res primo usu consumptibilis*: it is therefore also sterile. This identity is the starting point for the principles to be deduced.
S. Thomas, when speaking of money as such, always disregards the material of which it is made, as well as the purpose for which it is employed; that is, whether it is used to acquire things necessary for life or for further trading. Hence one might be tempted to say that he considered money as *primum usu consumptibilis*, because at the time it was spent only to acquire things necessary for life and not for commerce; and thus one would be led, in conformity with his principles, to uphold the distinction between *mutuum consumptibilis* and *mutuum productionis*. On the other hand, as historians attest, monetary circulation was already very active in the 13th century; therefore the distinction between one kind of loan and another, deduced from the purpose for which it was made, certainly did not escape the Angelic Doctor, who would have included it in his system if it had truly accorded with the principles derived from the nature of things. From this one can also understand in what sense the scholastics understood this sterility: it does not mean that profit could not be drawn from money and human industry (St. Thomas asserts: *de pecunia lucrari posse*); but then the profit arises only from human industry, or more precisely from labor and from the things purchased with money, never from money itself. Hence the principle of the sterility of money was deduced from its specific nature, and St. Thomas did not at all intend thereby to provide a scientific explanation for the prohibition of usury.
Given the sterility of money, it is not possible to separate in it a distinct use from the substance and to value it separately; therefore it is not possible to donate or sell the use of money separately from the substance: whoever donates the use donates 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 burden that can be imposed is that of the repayment of the money in the same quantity in which it was received: that is, the loan (*mutuum*), with all its properties, hence the transfer of ownership and the gratuity of its use; violating this principle constitutes usury, which is an offense against commutative justice, with an obligation of restitution. The gravity of usury will be an index of its greater or lesser seriousness, without, however, changing its species. Neither the different uses to which money may be applied, nor the different conditions of the borrowers, will alter this.
This, in summary, is the traditional doctrine of the Church, sanctioned by the encyclical *Vix pervenit* of Benedict XIV. Even today moralists, in principle, adhere to it; they add, however, that given the current economic situation, every loan of money can always be considered a loss of profit (*lucrum cessans*), and moreover, since civil law permits interest, it is always lawful to demand it, provided it is kept within the permitted limits. There are some who take a contrary position to the traditional doctrine: “Money, which in antiquity was not considered a *res frugifera* and could be considered such only potentially, must now be said to be fruitful in act, and it is lawful for anyone to make a profit from a loan of money (except where charity obliges one to grant a gratuitous loan) independently of any extrinsic title” (Noldin). Others return decisively to the traditional doctrine, updating it to the developments in the economy (Thiberghien). It is believed, however, that the question still awaits resolution.
### III. ITALIAN LAW
Art. 1815 of the Civil Code, which forms part of the regulation of the loan (*mutuo*), states in its second paragraph: “If usurious interest is agreed upon, the clause is void and interest is due only at the legal rate.” The civil-law regulation of usury is provided for, in the sphere of private law, through the sanction of nullity (which affects not the entire contract, but only the clause concerning interest, which is not due at the agreed rate but at the legal rate); furthermore, the Penal Code punishes the crime of usury (art. 644).
The Italian legislator’s stance against usury is justified by the need to reconcile the recognition of freedom with a certain equality. It is now definitively superseded the thesis according to which usury can be effectively combated only through the improvement of economic conditions and the refinement of credit: even if these means may reduce its application, the law has not intended to renounce its intervention against II.
We must now define usury in legal terms. Traditionally, its scope corresponds to the interest-bearing loan (*mutuo ad interesse*). Interest consists of money or other fungible things, just as the things loaned (art. 1813), to which they are proportional as a percentage; in relation to the debt for the repayment (of “as much of the same kind and quality”) of those things loaned, the debt for interest, although it exists independently of the parties’ agreement (art. 1815, 1st paragraph), assumes an accessory character. When the remuneration, through interest, of the use of money and other fungible things given on loan assumes excessive proportions, usury occurs, and the interest takes on the attribute of being usurious.
When speculative intent focuses on the use of money (or other fungible things), the problem of whether it is appropriate to leave the economically stronger party unlimited power to exploit the weaker one becomes particularly acute and sensitive; given that speculation on money lending has been and still is particularly frequent, and that it constitutes the subject of a specific and very grave social problem, one can understand why the legislator has intended to take a particular stance in this regard, decreeing nullity for the usurious clause.
One must add the immorality of the usurious contract: it is repugnant to moral conscience that the debt for interest gives rise to excessive enrichment in favor of the creditor; and this moral evaluation has also inspired the legislator when it decreed the nullity of the usurious clause.