Usury

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Usury is the fee, denominated in money, for the use (loan) of money. It is often considered to mean lending money at interest, but it also covers extending credit at interest. In has been modified by modern usage to mean the extraction of interest on a loan above the maximum rate permitted by statute. However, long term usury is mathematically unsustainable in a finite money token system. Due to the exponential equation used to calculate compound interest, an infinite money supply is required. Short term usury is destructive, as well, since a portion of debtors must default because enough money never exists for all to repay their debt and interest. Gain from usury is also subject to an excise tax.

In the United States, most states have usury laws limiting interest rates. This area of law is complex, particularly since, during the period of high inflation in the 1970s, the Federal government passed a law exempting national banks from state usury laws. Every state has its own usury law setting a maximum rate of interest that may be lawfully charged.[1]

In many states the "legal rate of interest" may be 6%, but this only applies to rare situations and certainly does not mean that home mortgages at higher rates, or credit card finance charges (often as high as 18%, and even higher for dealings between companies), are illegal.

Usury in History

Islam prohibits usury or interest on loans, as do certain passages in the Old Testament:

Thou shalt not lend upon usury to thy brother; usury of money, usury of victuals, usury of any thing that is lent upon usury: Unto a stranger thou mayest lend upon usury; but unto thy brother thou shalt not lend upon usury: that the LORD thy God may bless thee in all that thou settest thine hand to in the land whither thou goest to possess it. Deuteronomy 23:19-20 (KJV)
(If he beget a son that) Hath given forth upon usury, and hath taken increase: shall he then live? he shall not live: he hath done all these abominations; he shall surely die; his blood shall be upon him. Ezekiel 18:13 (KJV)

The New Testament also refers to usury, sometimes indirectly:

Then he which had received the one talent came and said, Lord,I knew thee that thou art an hard man, reaping where thou hast not sown,and gathering where thou has not strawed: And I was afraid, and went and hid thy talent in the earth: lo, there thou hast that is thine. His lord answered and said unto him, Thou wicked and slothful servant, thou knewest that I reap where I sow not, and gather where I have not strawed: Thou oughtest therefore to have put my money to the exchangers, and then at my coming I should have received mine own with usury. Matthew 25:24
And found in the temple those that sold oxen and sheep and doves, and the changers of money sitting: And when he had made a scourge of small cords, he drove them all out of the temple, and the sheep, and the oxen; and poured out the changers' money, and overthrew the tables; John 2:14 (KJV)

Note: Usurers are synonymous with exchangers and changers of money. Matthew 25:24 is often mistakenly interpreted, ignoring the condemnation of usury as a capital offense in Ezekiel 18:13. The "Hard Man" cannot be moral if he wants his servants to engage in an abomination.

And if ye lend to them of whom ye hope to receive, what thank have ye? for sinners also lend to sinners, to receive as much again. But love ye your enemies, and do good, and lend, hoping for nothing again; and your reward shall be great, and ye shall be the children of the Highest: for he is kind unto the unthankful and to the evil. Luke 6:34-35 (KJV)

Because of this Biblical condemnation, Christians were forbidden to lend money for interest for centuries. Dante's Inferno places usurers in the seventh circle of Hell, along with blasphemers and homosexuals. In Renaissance society, the only people allowed to charge interest were Jews, which often led to resentment as the Jews were enriched by their shrewd financial activity. However, Christian thinking on this subject has changed, and almost all Christians now either lend their money for interest, or have an account in a bank which does it for them. The last Christian denomination to remove the ban on usury was the Roman Catholic Church, in 1918.

References

  1. http://www.lectlaw.com/files/ban02.htm
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