By IHE Graduate Scholar Matthew Advent
As debates about Church teaching on the modern economy have become more pronounced on social media, usury has received particular attention. Usury is a serious and complex topic with a rich intellectual history.1 When we examine usury through the lens of later developments within the Thomistic tradition, we can understand why the Church has chosen to deemphasize usury in its current social teaching.2
What is usury, and when is it a sin? In the medieval period, the Scholastics developed an understanding of usury as a charge for a loan in itself. Usury — at least for the Medievals — meant charging more than the face value of a loan simply for the favor of lending.
Saint Thomas gives a famous argument for why usury is a sin. Essentially, Aquinas argues that, because money (among other things) is “consumed in its use,” i.e., it is gone once you spend it, it is illegitimate to charge anything beyond the amount lent. We find a similar idea in Aquinas’s just price theory. For a price to be just, the things exchanged must be of equal value (as measured by their usual price). However, Thomas adds a wrinkle here: If you sell something of particular value to you, then you can charge more than the going rate for it because losing it imposes an extra burden on you.
Later theologians, such as Cardinal Juan de Lugo and Saint Alphonsus Liguori, applied Thomas’s price theory to usury. They argued that in some situations, loaned money can be worth more than its face value because it is intended for a special use. Therefore, a lender can charge for this additional value without committing the sin of usury because what is given up is then equal to what is gained by the lender. For example, imagine that I have money earmarked to register for an event at the discounted early bird rate. If instead I lend this money to you and consequently must pay the full registration price, I can ask you to pay this additional amount — the “emergent loss” (damnum emergens), in Scholastic terminology — because the loss resulted from lending to you. Similarly, if I am doing business but then must withdraw money from commerce to lend to you, I have given up whatever profit I would have made by doing this. This means I can charge the borrower the “foregone profit” (lucrum cessans). Importantly, these charges do not constitute usury since they merely offset the losses I have incurred in offering you a loan.
For several hundred years, the consensus among Catholic theologians rested here. It was not unjust to charge for a loan in some circumstances. Thus, it was not uncommon for theologians to require proof that someone who wanted to charge a borrower was suffering some kind of real loss through the loan.
As Cardinal Jozef-Ernest van Roey pointed out at the turn of the twentieth century, the modern economy changed these circumstances. Modern capitalist economies may have many problems, but they are vastly more productive than economies of the past. In fact, in a modern economy, we can be confident that there are always a multitude of economic opportunities available to us, such that lenders are always foregoing profit by virtue of lending money.3 Therefore, as long as a lender intends to act justly and the amount being charged is commensurate with the amount of profit being missed (in addition to other factors such as risk), there is no sin of usury according to the traditional Scholastic criterion. Accordingly, for Thomists like Cardinal van Roey, it made perfect sense for the Church to deemphasize its teaching on usury because of these economic changes. This was simply a result of the fact that Christians were no longer at major risk of committing this sin.
- In this article I do not take any position on what the Church’s teaching on usury is, since this is a very difficult subject. Instead, I simply assume that the position of the thinkers I quote below is correct. ↩︎
- For full discussion of the issues raised in this short article, along with complete citations, interested readers should consult my article: Matthew J. Advent, “Usury and Interest: Forgotten Contributions to the Thomistic Tradition,” Journal of Markets and Morality 27, no. 1 (2024): 7-30. ↩︎
- For responses to various objections to this, see Matthew J. Advent, “Usury and Interest: Forgotten Contributions to the Thomistic Tradition,” Journal of Markets and Morality 27, no. 1 (2024): 17–19. ↩︎
