Usury (pronounced /ˈjuːʒəri/ , comes from the Medieval Latin usuria , "interest" or from the Latin usura "interest") originally meant the charging of interest on loans. This included charging a fee for the use of money, such as at a bureau de change. After interest became accepted, usury came to mean the interest above the rate allowed by law. In common usage today, the word means the charging of unreasonable or relatively high rates of interest. The term is largely derived from Abrahamic religious principles; Riba is the corresponding Arabic term. The primary focus in this article is on the Christian tradition.
The pivotal change in the English-speaking world seems to have come with the permission to charge interest on lent money: particularly the 1545 Act 'An Acte Agaynst Usurie' (37 H.viii 9) of Henry VIII in England (see book references).
Historical meaning
Main articles: History of banking and History of pawnbrokingThe First Council of Nicaea in 325, forbade clergy from engaging in usury (canon 17). At the time "usury" meant simply interest of any kind, and the canon merely forbade the clergy to lend money on interest above one per cent per month. Later ecumenical councils applied this regulation to the laity.
Lateran III decreed that persons who accepted interest on loans could receive neither the sacraments nor Christian burial. Pope Clement V made the belief in the right to usury a heresy in 1311, and abolished all secular legislation which allowed it. Pope Sixtus V condemned the practice of charging interest as "detestable to God and man, damned by the sacred canons and contrary to Christian charity."
Theological historian John Noonan argues that "the doctrine was enunciated by popes, expressed by three ecumenical councils, proclaimed by bishops, and taught unanimously by theologians."
Certain negative historical renditions of usury carry with them social connotations of perceived "unjust" or "discriminatory" lending practices. The historian Paul Johnson, comments:
Most early religious systems in the ancient Near East, and the secular codes arising from them, did not forbid usury. These societies regarded inanimate matter as alive, like plants, animals and people, and capable of reproducing itself. Hence if you lent 'food money', or monetary tokens of any kind, it was legitimate to charge interest. Food money in the shape of olives, dates, seeds or animals was lent out as early as c. 5000 BC, if not earlier. ...Among the Mesopotamians, Hittites, Phoenicians and Egyptians, interest was legal and often fixed by the state. But the Jews took a different view of the matter.The Hebrew Bible regulates interest taking. Interest can't be charged to Jews but only to non-Jews.
Deuteronomy 23:20 Thou shalt not lend upon interest to thy brother: interest of money, interest of victuals, interest of any thing that is lent upon interest.Deuteronomy 23:21 Unto a foreigner thou mayest lend upon interest; but unto thy brother thou shalt not lend upon interest; that the LORD thy God may bless thee in all that thou puttest thy hand unto, in the land whither thou goest in to possess it.
Interpretations of this vary widely. One understanding is that Israelites were forbidden to charge interest on loans made to other Israelites, but allowed to charge interest on transactions with non-Israelites. However, the Hebrew Bible itself gives numerous examples where this provision is evaded.
Johnson contends that the Torah treats lending as philanthropy in a poor community whose aim was collective survival, but which is not obliged to be charitable towards outsiders.
A great deal of Jewish legal scholarship in the Dark and the Middle Ages was devoted to making business dealings fair, honest and efficient.Usury (in the original sense of any interest) was at times denounced by a number of religious leaders and philosophers in the ancient world, including Plato, Aristotle, Cato, Cicero, Seneca, Plutarch, Aquinas, Muhammad, Moses, Philo and Gautama Buddha.
For example, Cato in his De Re Rustica said:
"And what do you think of usury?" — "What do you think of murder?"But one must always consider that usury, in historical context, has always been inextricably linked to economic abuses, mostly of the masses and of the poor; but sometimes of the financier and royalty, as bankrupt royalty has led to many a demise, thus frowning upon lending at interest or for a euphemistic "just profit". The main moral argument is that usury creates excessive profit and gain without "labor" which is deemed "work" in the Biblical context. Profits from usury are argued not to arise from any substantial labor or work but from mere avarice, greed, trickery and manipulation. In addition, usury is said to create a divide between people due to obsession with monetary gain. Most importantly, usury is the derivation of profit from biological time, which is linked to life, considered sacred, God-given and divine, leading to excessive worrying about money instead of God, thus subjugating a God-given sanctity of life to man-made artificial notions of material wealth.
Interest of any kind is forbidden in Islam. As such, specialized codes of banking have developed to cater to investors wishing to obey Qur'anic law. (See Islamic banking)
As the Jews were ostracized from most professions by local rulers, the church and the guilds, they were pushed into marginal occupations considered socially inferior, such as tax and rent collecting and moneylending. Natural tensions between creditors and debtors were added to social, political, religious, and economic strains.
...financial oppression of Jews tended to occur in areas where they were most disliked, and if Jews reacted by concentrating on moneylending to non-Jews, the unpopularity — and so, of course, the pressure — would increase. Thus the Jews became an element in a vicious circle. The Christians, on the basis of the Biblical rulings, condemned interest-taking absolutely, and from 1179 those who practiced it were excommunicated. Catholic autocrats frequently imposed the harshest financial burdens on the Jews. The Jews reacted by engaging in the one business where Christian laws actually discriminated in their favor, and became identified with the hated trade of moneylending.Peasants were forced to pay their taxes to Jews who were economically coerced into becoming the "front men" for the lords. The Jews would then be identified as the people taking their earnings. Meanwhile the peasants would remain loyal to the lords.
In England, the departing Crusaders were joined by crowds of debtors in the massacres of Jews at London and York in 1189–1190. In 1275, Edward I of England passed the Statute of Jewry which made usury illegal and linked it to blasphemy, in order to seize the assets of the violators. Scores of English Jews were arrested, 300 were hanged and their property went to the Crown. In 1290, all Jews were expelled from England, and allowed to take only what they could carry; the rest of their property became the Crown's. The usury was cited as the official reason for the Edict of Expulsion. However, not all Jews were expelled: it was easy to convert to Christianity and thereby avoid expulsion. Many other crowned heads of Europe expelled the Jews, although again conversion to Christianity meant that you were no longer considered a Jew (see the articles on marranos or crypto-Judaism).
The growth of the Lombard bankers and pawnbrokers, who moved from city to city along the pilgrim routes, was important for the development of trade and commerce.
In the 16th century, short-term interest rates dropped dramatically (from around 20–30% p.a. to around 9–10% p.a.). This was caused by refined commercial techniques, increased capital availability, the Reformation, and other reasons. The lower rates weakened religious scruples about lending at interest, although the debate did not cease altogether.
The papal prohibition on usury meant that it was a sin to charge interest on a money loan. As set forth by Thomas Aquinas, the natural essence of money was as a measure of value or intermediary in exchange. The increase of money through usury violated this essence and according to the same Thomistic analysis, a just transaction was one characterized by an equality of exchange, one where each side received exactly his due. Interest on a loan, in excess of the principal, would violate the balance of an exchange between debtor and creditor and was therefore unjust. The development of double entry bookkeeping would provide a powerful argument in favor of the legitimacy and integrity of a firm and its profits. As a usury is no longer morally suspect and business is accepted as a right and proper activity.
Religious context
The Old Testament
From the King James Version
"If thou lend money to any of my people that is poor by thee, thou shalt not be to him as an usurer, neither shalt thou lay upon him usury."
Take thou no usury of him, or increase: but fear thy God; that thy brother may live with thee."
Thou shalt n
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