Aquinas on Usury

Source: Aquinas Ethicus: or, the Moral Teaching of St. Thomas. A Translation of the Principal Portions of the Second part of the Summa Theologica, with Notes by Joseph Rickaby, S.J. (London: Burns and Oates, 1892). Vol. 2.

QUESTION LXXVIII. OF THE SIN OF USURY THAT IS COMMITTED IN LOANS.3

Article I.—Is it a sin to take usury for the lending of money?

R. To take usury for the lending of money is in itself unjust, because it is a case of selling what is non-existent; and that is manifestly the setting up of an inequality contrary to justice. In evidence of this we must observe that there are certain things, the use of which is the consumption of the thing; as we consume wine by using it to drink, and we consume wheat by using it for food. Hence in such things the use of the thing ought not to be reckoned apart from the thing itself; but whosoever has the use granted to him, has thereby granted to him the thing; and therefore in such things lending means the transference of ownership. If therefore any vendor wanted to make two separate sales, one of the wine and the other of the use of the wine, he would be selling the same thing twice over, or selling the non-existent: hence clearly he would be committing the sin of injustice. And in like manner he commits injustice, who lends wine or wheat, asking a double recompense to be given him, one a return of an equal commodity, another a price for the use of the commodity, which price of use is called usury. But there are things the use of which is not the consuming of the thing: thus the use of a house is inhabiting it, not destroying it. In such things ownership and use may be made the matter of separate grants. Thus one may grant to another the ownership of a house, reserving to himself the use of it for a time; or grant the use and reserve the ownership. And therefore a man may lawfully take a price for the use of a house, and besides demand back the house which he has lent, as we see in the hiring and letting of houses. Now according to the Philosopher, money was invented principally for the effecting of exchanges; and thus the proper and principal use of money is the consumption or disbursal of it, according as it is expended on exchanges.1

§ 2. To the text, “Thou shalt not lend to thy brother money to usury, nor corn, nor any other thing, but to the stranger,”1 it is to be said that from its being prohibited to the Jews to take usury from their brethren, that is, from other Jews, we are to understand that taking usury of any man is simply evil; for we ought to regard every man as a neighbour and a brother, especially in the Gospel state, to which all are called. As for their taking usury of strangers, that was not granted them as a thing lawful, but permitted for the avoidance of a greater evil, that their avarice might not lead them to take usury of Jews, the worshippers of God.

§ 5. To the objection, that a man may take a price for what he is not bound to do; but a man with money is not in every case bound to lend it,—it is to be said that he who is not bound to lend may receive compensation for what he has done in lending, but ought not to exact more. But compensation is given him according to the equality of justice, if the exact amount is returned to him that he has lent. Hence if he exacts more for the use of a thing that has no other use than the consumption of the substance, he exacts a price for that which has no existence, and so the exaction is unjust.

§ 6. The principal use of silver vessels is not the consumption of them; and so the use of them can be sold while the ownership is reserved. But the principal use of silver money is the disbursal of the money on exchanges. Hence it is not lawful to sell the use of it, while at the same time claiming to have back the original sum lent. There may be a secondary use of money, for show, or to pledge, and such a use of money a man may lawfully sell.

§ 7. To the objection, that any one may lawfully take a thing that the owner voluntarily hands over to him; and that the borrower voluntarily hands over the usury,—it is to be said that he who gives usury does not give it as an absolutely voluntary payment, but under some stress of necessity, inasmuch as he needs to borrow money, which the possessor will not lend without usury.

Article II.—Is it lawful to ask a consideration of another kind in return for a loan of money?

R. According to the Philosopher, everything counts for money that has a money price. And therefore whoever by agreement, tacit or express, takes for a loan of money anything else that has a money price, he sins against justice as if he had taken money. But if he takes a consideration of this nature, not as exacting it, nor on any bond, tacit or express, but as a gratuitous gift, he does not sin: because even before he had lent the money he might lawfully have taken a gratuitous gift, and his condition is not made the worse for his having lent it. But as for compensation in the shape of things that have no money price, as the good-will and love of the borrower, that he may lawfully exact.

§ 1. The lender may stipulate with the borrower without sin for compensation for his loss in being deprived of anything that he ought to have: for this is not to sell the use of the money, but to avoid loss; and it may be that the receiver of the loan escapes a greater loss than the giver incurs: in that case the receiver of the loan compensates the other’s loss with profit to himself. But the lender cannot stipulate for compensation for his loss in respect of his not gaining upon the money; because he ought not to sell what he has not yet got and may in many ways be hindered from getting.1

§ 2. Return for a good deed done you, may be made in two ways: in one way as the discharge of a debt of justice, to which you may be bound by formal stipulation; and this debt is fixed according to the amount of the benefit received. And therefore he who has received a loan of money, or of any other like thing, the use of which is the consumption of it, is not bound to return more than the amount of the loan received: hence it is against justice if he is bound by stipulation to return more. The obligation to return a good deed done you, may exist in another way as a debt of friendship, wherein the affection with which it has been conferred is more to be considered than the amount of benefit done. Such a debt cannot be reduced to a civil contract, as that brings in an element of constraint, which renders the return no longer spontaneous.

§ 5. Whoever lends money, transfers the dominion of the money to the borrower. The latter therefore holds it at his own risk, and is bound to restore the sum in its entirety: wherefore the lender ought not to exact any more. But he who entrusts his money to a merchant or manufacturer in the way of partnership, does not transfer the dominion of the money to him, but it remains his: so that at his risk it is that the merchant trades with it, or the manufacturer works upon it: and therefore at that rate he may lawfully demand a share of the profits thence arising as from his own property.1

Article IV.—Is it lawful to borrow money at usury?

R. It is nowise lawful to induce a man to sin; but to use the sin of another unto good is lawful; because God also uses all sins unto some good, inasmuch as He draws some good out of every evil. And therefore Augustine, in reply to a certain Publicola, who asked him whether it was lawful to take the oath of a man that swore by false gods, writes: “He who uses, not to evil, but to good, the word of another who swears by false gods, does not join in his sin whereby he has sworn by demons, but joins in his good faith whereby he has kept his word. But he would sin if he were to induce him to swear by false gods.” So in the case proposed we must say that it is nowise lawful to induce a man to lend at usury: it is lawful however for a good purpose, as for the relief of one’s own necessity or that of another, to borrow money at usury of him who is prepared so to transact usuriously; as it is lawful for him who falls among robbers to declare the goods that he has, to escape being slain, after the example of the ten men who said to Ismahel: “Kill us not, for we have stores in the field.”1

[3 ]See the doctrine of this Question explained and adapted to modern times, Ethics and Natural Law, pp. 255—263. (Trl.)

[1 ]As we saw above, q. 77. art. 4. there are two sorts of exchanges. In a society where the only exchange in vogue is the former of those two sorts, all interest on money is usury and injustice, as this argument shows. It is quite a different case where the latter form of exchange obtains, as in the modern commercial world. (Trl.)

[1 ]Deut. xxiii. 19, 20.

[1 ]To wit, in the thirteenth century. That a man may sometimes sell what he has not yet got, is admitted by St. Thomas above, q. 62. art. 4. This admission is a recognition of the title of lucrum cessans, or gain forfeited, the justification of interest in modern times, which is not paid on money merely—that would be usury—but on capital. (Trl.)

[1 ]And therefore if there are many merchants and manufacturers asking for such sleeping partners, at the same time holding out a fairly sure promise of profitable returns; and if, instead of putting my money into partnership with them, I lend it to some one else; I may ordinarily stipulate with the borrower that he is to pay me compensation for the gain forfeited. (Trl.)

[1 ]Jerem. xli. 8.