Originally published in The Chesterton Review, spring/summer 2025.
David Hunt, Something for Nothing? An Explanation and Defence of the Scholastic Position on Usury. Lincoln, Nebraska: Os Justi Press, 2024. 133 pages, including bibliography. $26.95 cloth. $17.95 paper. $14.95 e-book
For about two hundred years the question of usury has slept a deep and untroubled sleep in the consciences of most Catholics: usury, that is, as it was traditionally understood in the Church up till sometime in the nineteenth century. For the sin of usury, so much detested by our Catholic forebears, was not the practice of charging excessive interest on a loan of money, but the practice of charging any interest on such a loan, simply because of the loan contract. That is, the understanding of usury that occupied many of the best minds in the Church from the patristic age until the early nineteenth century was that, absent special circumstances, which were by no means always to be assumed, it was a sin to charge interest on a loan of money, and that those who did charge such interest were held to the duty of restitution to the borrower.
To most moderns this sounds like an impossible notion, and probably absurd also. Surely, the argument runs, whatever validity such an idea might have had in the Middle Ages, today the function of money has changed and the usury doctrine is no longer applicable. And though, as we will see, the modern economy does mean that the application of this doctrine is not exactly the same as it was in 1200, still the doctrine itself remains unchanged, and instead of simply assuming the right to charge interest, each kind of transaction must be examined in the light of the Church’s unchanged teaching.
David Hunt’s book, then, is a commendable effort not only to acquaint modern Catholics with a much neglected truth, but to explain and justify it. Hunt writes in his introduction,
Almost everything written or said about usury today is based on a misunderstanding. Usury today is considered to be the charging of excessive interest on loans, rather than the supposedly outmoded (and some would say outrageous) definition of usury as the charging of any interest on a loan.
How, then, can this teaching be justified? The usury debate takes its form from a type of contract in Roman law called a mutuum. As Hunt explains, a mutuum applies to “things that are used up in their use, like food, wine, and medicine, [whose] use cannot be separated from ownership.” Money, likewise, falls into that category, since the borrower uses the money to invest or to purchase some asset or to pay a previous debt. The money is considered to be consumed, just as the food or wine will be consumed. And since for all practical purposes, the right of ownership is temporarily transferred to the borrower, and with that right of ownership the right to the use of the borrowed item, the borrower must return to the lender not the same physical item that was lent, but something of the same value, quantity, etc. That is all that can be required by a simple contract of mutuum, that the borrower return to the lender the equivalent of what he has been lent. If there is any just title to interest payments over and above that, that comes not from the existence of the loan itself, but from other factors.
What are those factors? Hunt explains these “extrinsic titles” (as they are called), which are due not to the loan itself but to other circumstances that can accompany it. All of them have quaint Latin names from the Middle Ages. Damnum emergens concerns “cases of loss arising for the lender surrounding the loan.” If a lender, for example, would suffer some damage from the fact that he has temporarily lost access to the money that he has loaned, he probably is entitled to stipulate some payment for that damage, a payment which would be interest but not usury. Or, if the borrower does not repay the loan according to the terms of the contract “and the lender suffers some real loss on account of not having the money when expected, the borrower is justifiably held to have caused a damage to the lender which can be charged for.”
This brings us to the most controversial of these extrinsic titles, that of lucrum cessans. Lucrum cessans refers to a gain which a lender loses the opportunity of obtaining on account of his money being tied up in a loan. Hence, it is argued, he has a right to stipulate in the loan contract for interest payments which cover this loss. Aquinas rejects this title on the grounds that such a gain is uncertain and can be prevented by many circumstances, but other important medieval and Baroque era theologians and canonists accepted it. In his comprehensive 1745 encyclical on usury, Vix Pervenit, Pope Benedict XIV mentions the existence of extrinsic titles, but wisely refrains from enumerating them, leaving this to the free debate of theologians and canonists. Hunt, however, is firmly opposed to the legitimacy of lucrum cessans, arguing that the “future has not happened, so you cannot own anything in it right now; you can only own real things. But if you don’t actually possess the future profit yet, you can’t lose it….” But I think that the same argument could be brought against the title of damnum emergens, since in many or most cases the expected damages will likewise occur in the future and many things could happen that might prevent them. In at least the early medieval economy, opportunities for constant gain were not as common as they are now, and depended on the discrete acts of merchants, e.g., the organization of a trading voyage for which investors might be sought. But today, of course, this is not the case, and one has only to ring up his broker to find a profitable use for money. Hunt opines that if lucrum cessans were admitted as licit “it would remove any practical significance” from the usury prohibition. One can concede a certain amount of force to this argument, but all things considered, I do not regard the case against lucrum cessans as conclusive, and in fact this title, if accepted as legitimate, goes a long way in helping us understand why the Church’s praxis with regard to usury changed. Note that I do not say that the doctrine changed. But the praxis decidedly did when, beginning in 1822, a series of decisions originating from the Holy Office, the Sacred Penitentiary and the Sacred Congregation of Propaganda, instructed confessors that persons charging interest on loans within the limits allowed by civil law should not be denied absolution. Although some have seen this as a tacit repudiation of the Church’s so often affirmed condemnation of usury, I think it is better understood as a recognition that the complexity of the modern economy gives constant and numerous opportunities for the licit taking of interest. If lucrum cessans is a legitimate title, then it is hard to deny that such opportunities exist. This does not mean, though, that someone who is unprepared or unwilling to take advantage of these opportunities is entitled to otherwise claim lucrum cessans. And obviously this does not justify simply any rate of interest. And in particular, the exorbitant interest rates that are too common in this country should be strictly prohibited by civil authority.
Hunt also devotes considerable space to types of contracts that were popular in the Middle Ages and the Baroque period to allow investment while avoiding usury. These were chiefly the societas or partnership, the census or rent contract, by which an investor could purchase the income from a piece of land or even from the tax revenues of a city, and the contractus trinus or triple contract, a complex and controversial practice by which an investor contracted to supply funds to a merchant for a particular enterprise, receiving in turn two contracts of insurance (hence the triple contract), one which guaranteed repayment of his principal and the other a guaranteed rate of interest, even if the enterprise itself failed. The investing partner paid for the two contracts of insurance by accepting a lesser rate of profit than what the enterprise was expected to gain, say the difference between an expected 8% and a guaranteed 4%. Thus even if the enterprise miscarried the active partner would be required to restore the principal plus a guaranteed profit to the investor. Not surprisingly some critics saw this as nothing but disguised usury, and Pope Sixtus V in 1586 condemned such contracts, though with enough ambiguity that the prohibition was generally ignored. Hunt argues that, with modifications, these types of contracts can be adapted to modern conditions so as to avoid the injustice of usury.
Hunt includes as an appendix the texts of some of the original source documents on usury, some in both Latin and English, including St. Thomas’s treatment in the Summa and several papal statements, notably the full text of the all-important encyclical of Benedict XIV, Vix Pervenit. Also, an exhaustive bibliography which supplies plenty of reading for those who want to dig deeper into this question. A
further positive point to be noted is Hunt’s statement that “the idea that eradicating usury is the panacea that will recover sound ethical economics is also false.” This is important because sometimes theorists who focus on the role of money as a distorting factor in modern economies appear to think that when we have corrected these financial distortions, nothing else matters. Hence they ignore questions such as just wages or the need for formal structures promoting cooperation in the economy (such as guilds), on the ground that the only real problem was that concerning money or money creation. But although questions involving money, including usury, are important, they are not the sole key to creating a just economy, simply one important ingredient of doing so.
One will readily perceive that this book has solid merits, especially in introducing contemporary readers to some of the intricacies of the classical usury debates. However, there is one important point I must bring up, a point which renders this book a less than wholly trustworthy source for guidance on the question of usury. This is the question of how a loan is guaranteed and what difference, if any, that makes to the possibility of usury. Hunt states that
this book aims to show that essential to usury is the idea of recourse in contracts. Where there is recourse to assets distinct from the contracting parties, this points away from a mutuum. Interest in this context may or may not be justified, legitimate, and moral, but it is not usury. A personal guarantee and recourse to the borrower implies a mutuum.
What he means is that if some asset, as in a mortgage loan, is pledged as sufficient collateral for the loan, then there can be no question of usury. Usury can arise only when repayment of the loan is based on the borrower’s personal guarantee with no asset given as pledge or pawn. For someone with any acquaintance with the classic usury debates, this is a dubious assertion. Indeed, Hunt himself admits that “recourse [to an asset] does not at first appear as central in the history of usury and its related arguments.” Indeed, not. It cannot be found in Aquinas nor in Benedict XIV’s encyclical nor in the two most often cited historical surveys of usury in English, John T. Noonan’s The Scholastic Analysis of Usury (1957) or Patrick Cleary’s The Church and Usury (1914). Whence does Hunt derive this idea? The source he gives for this is a book, Usury: Frequently Asked Questions, which he attributes to one Thomas Dickson. But in fact this booklet originated a few years ago with an anonymous Catholic blogger, Zippy, whose real identity, as far as I know, has never been revealed. It is still available on the archives of Zippy’s blog and in its published version, which is accessible on Amazon, authorship is simply attributed to Zippy. (Dickson curiously is listed as typesetter.) His booklet is interesting, but I believe he misunderstands the sources that he claims as authorities for his peculiar distinction between recourse and non-recourse loans. For historically a mutuum was defined simply as a loan
of things that can be measured, weighed, or numbered, such as wine, corn, or money; that is, things which being consumed can be restored in genere…. From the nature of this contract the obligation is imposed upon the borrower to restore to the lender, not the identical thing loaned, but its equivalent – that is, another thing of the same kind, quality, and value…. (William C. Morey, Outlines of Roman Law, New York, 1914, 356.)
The effort to stipulate an additional feature to a contract of mutuum rests upon the slimmest of historical evidence.
Moreover, there is an important historical point which renders Zippy’s argument impossible. This is the question of the Montes Pietatis, publicly owned institutions which originated in the late Middle Ages to provide low-interest loans as alternatives to usurers, and which demanded a pledge as guarantee for the repayment of the loan. According to Zippy’s (and Hunt’s) argument, the requirement of a pledge would have rendered the question of usury entirely irrelevant for their loans. Yet in fact the Montes had many critics on the ground that their interest charges, which were designed to cover their expenses, including salaries, were usurious.
Hunt also makes a comparison between usury and slavery, based on his claim that a mutuum must be a personally guaranteed loan, not one guaranteed by any pledged asset. “Both [slavery and usury] treat individuals as property, but to differentiate the two types, we can call the latter `financial chattel slavery’….” He compares it to someone owning a few shares in a corporation, which while that does not give him a power of direction over the firm, still he
clearly exercises some right of ownership in the company in making a return via the shares. In the same way, an interest-bearing mutuum is far from total control and ownership of a person, but one exercises a right of ownership over the lender in deriving a profit from him via interest on the loan.
This comparison, however interesting it might be, seems stretched to this reviewer, and moreover is based upon the claim that a loan of mutuum must be guaranteed solely by a personal guarantee, a claim for which there is little or no historical evidence.
Hunt’s book does introduce the reader to a subject that had an important place in Catholic theological debate for centuries. Despite its strange embrace of an argument with no apparent historical pedigree, it can still serve as a primer for those for whom usury (in its classic meaning) was assumed to be a dead issue.
Practical Distributism 