A mistrust of usury is well justified

“Neither a borrower nor a lender be; For loan oft loses both itself and friend, And borrowing dulls the edge of husbandry.” – Lord Polonious. Hamlet (1602)

 

The first element of that phrase was handed down to me through the matrilineal line from my grandmother. Although she herself only advised me once or twice to “neither a borrower or a lender be”, it came to form a solid part of my own mother’s folk wisdom as I was growing up so I have heard it many times from her. I think it is excellent advice. In my younger days, I struggled with the implications of not being a lender but soon realised that it was not really advice which applied to childhood expeditions to buy sweets and comics.

Across the three major Abrahamic religions and on through the eastern Hindu and Buddhist traditions there is, historically, a deep mistrust of usury. In our modern English, the word refers to the practice of lending money at an exorbitant rate of interest. In its older, now obsolete form, it simply refers to the interest paid for the use of money. It was not only the major religions of the ancient world that poured scorn on the practice.

Aristotle was unequivocal in his denouncement. In his Politics he says, “The most hated sort, and with the greatest reason, is usury, which makes a gain out of money itself, and not from the natural object of it. For money was intended to be used in exchange but not to increase at interest. And this term interest, which means the birth of money from money, is applied to the breeding of money because the offspring resembles the parent. Wherefore of an modes of getting wealth this is the most unnatural.”

The Qu’ran, from its publication in the first century AD, has been steadfast in its criticism of usury and many modern Muslims adhere to the principle. Islamic banking is a powerful movement in the world and anyone with the time should investigate fully the principles behind it.

In a nutshell, the bank is prevented from engaging in riba (usury) so a specific set of practices have become established which are compatible with Sharia Law. In 2009, Bloomberg reported that the Vatican had said, “Islamic finance might help western banks in crisis.” An endorsement certainly but why does the Vatican want to help banks rather than their victims?

The relationship between the Catholic establishment and usury is no less ancient but a little more fluid. For the first 1500 years, usury was considered immoral and extended to all interest charged on loans, not just excessive extractions. At the Council of Nicea, it was decreed that no clergyman should exact usury from a layman but the rules were later extended to include all men and usury was generally condemned and outlawed.

According to Norman Jones of Utah State University, the 15th century marked a turning point. When there was a growing need for capital, “Gabriel Biel and John Eck argued that usury occurred only when the lender intended to oppress the borrower. Eck, supported by the Fugger banking family, defended five percent as a harmless and therefore legal rate of interest as long as the loan was for a bona fide business opportunity.”

It’s been a fairly slippery slope since that time. As a young man starting out, I would very much like to have stuck to the advice given to me by my mother and grandmother but of course if I wanted to get a home in which to house my family I could not. We now we find ourselves in a situation whereby a person starting out in life simply cannot get themselves a home or a vehicle or many of the other things most people agree constitute the basics of life, without getting into debt. All over Europe, entire nations are being brought to their knees because their lines of credit are drying up. In other cases, the levels of interest being sought by lenders are so high as to send a wave of panic across the entire European Union.

While I could never be considered an advocate for any of the major religions of the world, it is difficult not to grant them the fact that they appear to have had it on the button with regard to the practice of lending money. I often hear it said that in the run up to the financial crisis the people of Ireland ‘lost their heads’, ‘we went crazy’ and the greed got the better of us. There is an element of truth in this statement of course but the real truth of the matter is that money was thrust in people’s faces and in all honesty the impression was painted that it never had to be repaid.

It is easy to fall into the trap of thinking of evolution as moving along an upward scale towards a higher goal. In humans, as with other animals, it merely means adapting to cope.

Certain concepts, such as morality, are as pertinent and unresolved today as they were in Aristotle’s time. The British Prime Minister, David Cameron, was recently mocked and derided for having the gall to comment on an issue and brand it “immoral”. Politicians are in no position to comment on morality and everyone knows it; as it was so it shall be. That will not be changing any time soon.

Log on now and you can secure a payday loan, without a credit check, to help you out of a difficult financial position. The interest rates on these loans have exceeded 2,500% and yet they are perfectly legal businesses. Aimed at those in dire straits, these loans are the purest form of usury as it exists in the world today and they are a valid player in the financial markets. They are as much a part of the modern financial status quo as the lender who charges interest on a mortgage, which means it takes 30 years to own a home.

The prevalence of usury in modern society has driven prices to the point where borrowing is a prerequisite of acquisition. This remains as unjust and immoral today as it was when Aristotle walked the earth. It is a clear example of a solution to a current problem lying in the distant past.