Lend Hoping Nothing Podcast

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit lendhopingnothing.substack.com

Three Reasons

* Practical

* Theoretical

* Theological

Practical

* Usurers may be few, but borrowers suffering usury are many

* Examples of usurious debt (personally secured loans for profit)

* Credit cards

* Pay Day Loans

* Student loans

* Car loans

* Most mortgages

* Impoverishes many people, e.g. student loan debt

* Leads to hatred of the wealth not suffering the debt

* Hatred of institutions involved in it, such as universities

* Destabilizing force on the economy

* Aquinas: usury is selling what does not exist

* Usurers have fake wealth on their balance sheets

* Can't sell a person if he defaults

* Bad risk management

* 2008 Financial Crisis

* Implications of enforcing usury

* Healthier economy more based on real property and assets

* Almost all business credit would still be in place

* Consumer credit would be gone

* Universities would suffer

Theoretical

*  Usury is generally excused because of theoretical financial/economic concepts

* Time value of money, opportunity cost, risk premiums, etc.

* Usury doesn't invalidate these, but limits their scope

* Time value of money is an abstract way of measuring the value of a productive good in terms of the goods it produces

* Example of an apple tree - power to generate apples has value, can abstractly measure value of tree in terms of the future apples, but it is the tree that has the value

* A mutuum has no productive property, the one paying the claim is a person

* Legal Theory

* Moves us to a more classical understanding of contracts

* Since usury is based on property rights and the nature of contracts

Theological

* Reintegration of dogmatic and moral theology

* Fundamental moral determination in light of the moral object

* Reaffirmation of the dignity of the human person

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit lendhopingnothing.substack.com

Introduction

The Current problem - many different positions

* Usury is rent on money

* Usury not present today

* Thomas Woods - doctrine has implicit assumptions - https://archive.org/details/churchmarketcath0000wood

* Destroys all moral doctrine

* Thomas Divine, SJ - merely oppression of the poor, objective market rates prevent oppression of the poor - https://archive.org/details/interesthistoric0000thom

* Doesn't account for consistent condemnation of usury against wealthy

* Both fail to realize time preference as an excuse for usury was condemned by Innocent XI - https://archive.org/details/sourcesofcatholi00denz/page/326/mode/2up?q=innocent+xi&view=theater

* Attempts to reconcile modern economics with usury doctrine

* Brian McCall - takes up Belloc's position - https://angeluspress.org/products/church-and-usurers

* Confuses ancient argument of consumption of lent good, with consumption of good bought with lent money

* Dr. Storck - Tries to give extrinsic titles some teeth - https://thejosias.com/2017/06/05/usury/

* Still thinks savings accounts may be usurious

* Usury is nearly everywhere in modern economies

* Heinrich Pesch - the "general" sin of usury is taking any surplus value in a business transaction - https://archive.org/details/heinrichpeschons0000pesc

* Some people have called this the position that capitalism is "usury-ism"

* Typcially take this from canon law, where usury is very vaguely and generally condmened

* Any interest on any loan is usury

* Others

* Usury depends on the nature of money

* Nature of money has changed and become rentable capital

* Nature of money hasn't changed and loans of money are either always or generally usurious

Previous discussion

* Mutuum is central to the definition

* Mutuum is there contract where usury arises

Aquinas leads the way

* De Malo q. 13, a. 4, ad. 15

* When good is given such that it may be consumed -> usury

* When good is given otherwise, we have other considerations

* Sale

* Immediate transfer of full ownership

* Commodatum and Locatio

* Grant of the use of a thing for a time

* Commodatum - gratuitous loan, think grant of books at a library

* Locatio - lease of a good for a rental

* Census and leaseback

* Grant of ownership apart from the use

* The seller retains the use of the thing for a time and may pay rent for that use

* Mutuum

* Lender grants the use such that borrower may consume it

* This entails that the lender transfer the whole ownership

* This means that the lender does not hold a usufruct from which to charge some rent

* Usury then is attempt to sell what does not exist, namely the usufruct which the lender does not hold

* Aquinas dicussion that usury is the price of the use of money

* Discusses in a few places the absence of a usufruct

Evils of Usury

* A sort of theft

*  takes what does not belong or is not owed to the lender

* A sort of slavery

* Since the lender has no claim except against the person of the borrower, the usurer claims he can rent the person of the borrower.

* Means that the mutuum is fundamentally an act of charity

* Not for profit, but out of love of a friend in need

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit lendhopingnothing.substack.com

Is it generally immoral to invest in 401k's for retirement? w/ Jacob Imam Vs Trent Horn

New Polity Blog Post: https://newpolity.com/blog/replies-to-trent-horn-401k

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit lendhopingnothing.substack.com

Last Episode

* Showed tradition definition is "exacting profit from a mutuum"

* Three key terms: exacting, profit and mutuum

* Exacting - obligating or requiring in the agreement

* Profit - anything over the principle, increment, addition, superabundance

* Here focus on mutuum

What is the mutuum?

* Great deal of disagreement

* Loan for consumption - Belloc and McCall

* Neither specifies mutuum, but takes this as the sort of loan where usury arises

* Loan of fungibles

* Fungibles as goods that can be returned in kind

* Loan of consumptibles

* Loan of things that are consumed in use

* Sometimes authors will put consumed in "first use"

* Some author equate fungible with consumption, which is obviously wrong

* This seems somewhat reasonable

* Roman Law - Justinian Institutes (Book III, Title XIV https://www.gutenberg.org/files/5983/5983-h/5983-h.htm) "…loan of such things as are estimated by weight, number, or measure, for instance, wine, oil, corn, coined money, copper, silver, or gold: things in which we transfer our property on condition that the receiver shall transfer to us, at a future time, not the same things, but other things of the same kind and quality…"

* Mutuum is often translated as a "loan for consumption"

* Aquinas: focuses on consumption in the Summa Theologica

* Mutuum = Personally Secured Loan

* First Point

* Outside of discussions of usury this is entirely uncontroversial

* However, when I've suggested this to people, I've received "How dare you defined that!"

* Personally vs. Asset secured debts

* Roman Law

* In law of obligations there are two sorts of actions or rights: in rem and in personam

* An action in rem is a right over a thing, which potentially involves everyone, since for example my ownership is a right that I can exercises against everyone else

* An action in persona is a right over a person. This is in every contract because every contract is made with a person. It allows me to pursue the person for a failure of performance in the contract.

* A mutuum gives rise to a condictio which is an action in persona and this is the only action. That is the only right or action the lender has is against the person of the borrower and this for the return of the principal

* St. Ambrose in De Tobia

* Discusses people that have to sell themselves and their families into slavery

* People who are reduced to destitution and commit suicide over usury

* Dr. Reyerson - Medieval practice in Montepellier

* "Mutuum loans were generally guaranteed by the borrower with the obligation of person and goods." https://archive.org/details/businessbankingf0000reye/page/63/mode/1up?view=theater

* Defaulting debtors were sent to debtors prison until the whole was paid off

* Fr. Patrick Cleary

* Mentions that the mutuum involves a "personal claim"

* "In a contract of loan [mutuum] then the lender is not owner of what is bought with the money lent, he has merely a personal claim on the debtor for the amount…" (page 82) https://www.google.com/books/edition/The_Church_and_Usury/WiMtAQAAMAAJ?hl=en&gbpv=1&bsq=personal

* St. Thomas Aquinas

* ST II-II, q. 78, a. 2, ad. 5: "Hence the borrower holds the money at his own risk and is bound to pay it all back…" https://aquinas.cc/la/en/~ST.II-II.Q78.A2.Rep5

* That is whatever happens to the money he is responsible for the return

* Comm on Sent Bk III, Dist 37, a. 6, ad. 4 "However, I ought not try to sell him his own industry, just as neither ought I to have less because of his own foolishness." https://aquinas.cc/la/en/~Sent.III.D37.A6.C.4

* That is even if the borrower loses it all through his foolishness, he is still obligated to make a return in the same amount to the lender.

* ST I-II, q. 105, a. 2, ad. 4: "Fourth, the Law prescribed that debts should cease together after the lapse of seven years. For it was probable that those who could conveniently pay their debts, would do so before the seventh year, and would not defraud the lender without cause. But if they were altogether insolvent, there was the same reason for remitting the debt from love for them, as there was for renewing the loan on account of their need." https://aquinas.cc/la/en/~ST.I-II.Q105.A2.Rep4

* That is if the borrower is wholly insolvent he is still obligated to make a repayment. However, the lender should forgive the debt from charity, not that the obligation is dissolved from the insolvency itself.

* Magisterium

* As noted, usury arises specifically in the mutuum. Hence, wherein usury arises a mutuum is present. Thus if in discussing other contracts as usurious, we are talking about a mutuum present in some manner or other. We can then infer the nature of the mutuum from the way that usurious contracts are talked about

* Regiminis Universalis - Callistus III (1455)

* Discusses census grounded in real estates where the fruits, rents or profits arise from those goods

* Someone was refusing to pay the rents, claiming that they were usurious

* Very likely infallible

* Discussing an issue of faith and morals

* Invokes apostolic authority

* "But the buyers, on the other hand, even though the said goods, houses, lands, fields, possessions, and inheritances might by the passage of time be reduced to utter destruction and desolation, would not be empowered to recover even in respect of the price paid."

* Licit census is full secured by the property, there is no personal guarantee

* Cum Onus - St. Pius V (1568)

* "We by this our constitution decree, that rent or an annuity, can by no means be created, or constituted, unless in an immoveable thing, or a thing that may be considered as immoveable, of its own nature fruitful, and that may be nominally designated by certain limits."

* That is a licit census must be grounded in some real property

* "Let the pacts providing that the remiss debtor of the rent be liable to pay the loss, expenses, or salaries of the creditor, to lose the thing, or any part of the thing, subject to the rent, or to forfeit any right arising to him from that contract, or otherwise, or to incur any penalty, be entirely null and void."

* "But when the income is to be extinguished, by delivering the price, we wish that this be intimated two months beforehand, by the person, to whom the price ought to be delivered; and that, subsequent to the notice, the price can be recovered, however, within a year, from him, even against his will : and when he is not willing to demand the price within the year, we wish, however, that the rent can be extinguished at any time — the notice, however, being given, as said before, and notwithstanding the things that are mentioned above; and we command that the same course be observed, even when the notice had been often and often given, and the effect never produced."

* Confirms what was implied by Callistus, contracts that require the census seller to guarantee the rents are usurious

* Destabalis Avartia - Sixtus V

* "We do in this our perpetual decree, reprobate and condemn all contracts, pacts and conventions whatever, to be celebrated in future, whereby it will be provided on the part of the persons putting into company money, animals, or any other things whatever, that if, even by mere accidence, any injury, loss, or damage, follow, the very principal, or capital be always safe and restored in full by the managing partner ; or that he guarantee to pay yearly, or monthly during the existence of the company a certain sum or quantity."

* "…not even, whether they stipulate for a definite or indefinite profit, to obligate by pact or promise the managing partner, to restore in full and entire the capital or principal, if by casual accidence it be lost or destroyed."

* "If any man do in future rashly presume to contract under the foregoing pacts or conditions ; or under the veil of such conventions, pacts, or contracts formed in the name of a company heretofore existing, do presume to take proceedings for the recovery of the said capital or principal, or the value or price thereof, after it be casually lost or perished, in the whole or in part, or of an annual or monthly specified sum or quantity, We decree that they, and every one of them do, ipso facto, incur the penalties decreed and promulgated by the Sacred Canons and General Councils against notorious usurers, and that they could and ought to be proceeded against as against notorious ururers with the law and with other suitable remedies."

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit lendhopingnothing.substack.com

* Introduction

* Many divergent opinions

* Taking advantage of the poor - Divine

* Excessive rates in loans

* Any surplus taken on a transaction - Pesch

* Any interest on any loan

* Interest on loans for consumption - Belloc, McCall

* Scripture

* Hebrew (Divine, 6) https://archive.org/details/interesthistoric0000thom

* Masah: to take interest and to oppress

* Nesek: to bite, oppress or take interest

* Passages:

* Exodus 22:25 - lend to the poor, oppress with usuries

* Leviticus 25:35-37 - take no usury from brother

* Deuteronomy 23: 19-20 - tolerance of usury against foreigners

* Ezekiel 18:4-9: places usury among idolatry, adultery, theft and murder

* All usuries are forbidden

* Jermone reads this as part of a development culminating in the words of Jesus

* Luke 6:35 - lend hoping nothing in return

* Fullness of the revelation

* Medievals disputed

* Counsel vs. precept

* Hope not for interest or even principle

* Church Fathers - https://www.jstor.org/stable/1582909

* Greek Father

* Gregory of Nyssa, Basil and Gregory Nazianzen

* Based on Aristotelian "sterility of money" argument

* Latin Fathers

* Augustine and Jerome

* Ambrose - significant development - De Tobia - https://babel.hathitrust.org/cgi/pt?id=uc1.$b109460&view=1up&seq=5

* And do you think you are acting piously because you receive as it were a loan [mutuum] from the merchant? Thereby he commits fraud in the price of his goods from which he pays usury to you. You are the cause of this fraud, you are a partner; whatever he gets by fraud is to your profit. Food too is usury and clothing is usury, and whatever is added to capital is usury.

* Links the Scriptural masah and nesek to the Roman law usura and mutuum

* Studied Roman law, was a judicial councillor and governor in the Roman Empire

* Also mentions other Roman law contracts: hypotheca, pignus, fiducia, etc.

* 12th Century canonists - McClaughin - https://archive.org/details/MediaevalStudies/Mediaeval%20Studies%20-%20Volume%2001%20-%201939/page/80/mode/2up

* Renewed study of Roman law

* Usury is anything on a mutuum

* Usury is found only in a mutuum

* Early Scholastic and Doctors

* All agree that usury is more taken on a mutuum

* Bonaventure - https://archive.org/details/05636860.5.emory.edu/page/527/mode/2up?q=usura

* Albert - http://watarts.uwaterloo.ca/cgi-bin/cgiwrap/albertus/searchAlbertus.cgi?browse=%3B+Lib.III%3B+dist.37%3B+art.13%3B+p.705a&chosenTexts=48&normalized=0&exclude=0&language=0&word=usura&newstart=1&quantity=0&scope=paragraphs+and+titles&format=Edited

* Aquinas

* Some confusion around Aquinas, because appears to tie specifically to money and consumption

* Links to mutuum contract

* https://aquinas.cc/la/en/~ST.II-II.Q78

* https://aquinas.cc/la/la/~QDeMalo.Q13.A4.Rep15

* Late Scholastics

* All agree that usury is profit from a mutuum contract

* Cajetan, de Soto, Vitoria, Molina, De Lugo, etc.

* Bernard Dempsey, SJ says that everyone agrees what usury is at this point: https://archive.org/details/InterestAndUsuryDempseyBernardW.S.J.1905277/page/n173/mode/2up

* Lateran V - https://www.papalencyclicals.net/councils/ecum18.htm

* Some will note this definition in discussing usury

* Definition: For, that is the real meaning of usury: when, from its use, a thing which produces nothing is applied to the acquiring of gain and profit without any work, any expense or any risk.

* Reasons not given by Council

* Arises in context of explaining those opposed to the Montes Pietatis, a position rejected by the Council

* Contemporaries don't seem to accept as Scholastics don't cite Lateran V in defining usury

* First appears in late 19th/early 20th century by Neo-Scholastics (e.g. Prummer) who cites Bucceroni, SJ's Enchirdion Morale which take it out of context

* Even given it is from the Council

* It is radically deficient as a definition: mentions only a thing that does not fructify and not what contract. What are we to make of the sense of labor, risk or expense here?

* Needs to be put in the context of the broader tradition that takes usury as exacting profit from a mutuum. Here the ambiguities and deficiencies are resolved.

* Vix Pervenit - english https://www.papalencyclicals.net/ben14/b14vixpe.htm, Latin - http://www.domus-ecclesiae.de/magisterium/vix-pervenit.html

* Benedict XIV writes in the mid-1700's to address problems and settle the question

* Defines the sin of usury as arising from the mutuum contract and taking anything over the principle

* Confirms what has always been held by the faith

* Degradation

* Silence of the Magisterium since Vix Pervenit

* Holy Office in the 1830's and French Bishops

* https://archive.org/details/TheSourcesOfCatholicDogmaDenzingerHeinrichDeFerrar6229_201903/page/n431/mode/2up

* Parisian Priest - Le Correr https://archive.org/details/dejustoauctario00roeygoog/page/n54/mode/2up?view=theater

* Mutuum consumptionis et productionis

* Similar to Belloc

* Rejected contemporaneously by Benedict XIV

* Goes back to extrinsic titles

* Cajetan admitted that business men could take more the principal on mutuum loans from each other. https://archive.org/details/the-scholastic-analysis-of-usury/page/253/mode/2up?view=theater

* Some priest simply read canon law

* See ambiguity in canon law and take it as on any transaction

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit lendhopingnothing.substack.com