Moral Hazard of Usury

SNAKEWhen Cato was asked by Cicero “What do you think of usury?” He replied, “What do you think of murder?”

Usury is the taking of interest for loans. The biblical term for usury is nashak (naw-shak’), to strike with a sting, as the bite of a serpent.

From “Usury is Destroying America”, written by Richard Freeman in the paper New Solidarity, during the Bush administration:

“Usury is the practice of charging excessively high interest rates for borrowing money, that is, interest rates above the cost to the lender or financial institution of servicing the loan. For most banks, in most situations, administrative service costs do not exceed 1 percent. During the Roosevelt years of 1940s, the average interest rate set by the U.S. Federal Reserve, under FDR’s strong influence, was 1.6 percent. Once excessive, usurious interest rates are established in an economy, they are generalized to all financial instruments- stocks, bonds, and home mortgages, for example. Usury thus loots wealth out of the economy, and puts it in the hands of the usuror bankers.

Usury creates its own bankruptcy, and brings in its train something else: fascism, the self same regime imposed on Germany by Hitler’s finance minister, Hjalmar Schacht. Usury bankrupts itself as the rising claims of the fictitious financial paper exceed the capacity of the real physical economy to pay them. As the financial paper depreciates, the bankruptcy of the financial elites of London, Wall Street, Boston, Geneva and Venice frantically increase their efforts to siphon real wealth out of the productive economy and the flesh and bone of the workforce, to fund and preserve the bankrupt financial system. This is the kernel of fascist economics.

Usury, fascism and the process of depopulation are three phases of the same process. The murderous debt-collection policies that dominated Imperial Rome destroyed the economy of the entire Mediterranean region, and led to a collapse of the population by 40 percent. The attempt to collect the debt imposed on Europe by the Bardi and Peruzzi banks in the fourteenth century led to the impoverishment of the population, the lowering of its standard of living and immunoligical resistance, and the devastation of the Black Death, which reduced the continent’s population by one-third between 1348 and 1373.

In America, this triple process is far advanced. The Bush administration lies that poverty is declining in America. The facts show otherwise. The minimal number of US poor is 45 million; but another 60 million are barely surviving with household incomes for a family of four within $6,000 of the poverty line. Two out of every five Americans barely subsist during what is supposedly the greatest recovery in American history in this century.

It is time to realize the consequences of our national economic policies over the past decades: Defiance of the injunction against usury, and our irrational enslavement to a free enterprise system of “money-making,” have exacted a terrible price from the United States, and if not ended, will destroy our nation.”

The English Usurer

A Usurer is not tolerable in a well established commonwealth

Usury Condemned by Aristotle, Cato, Plutarch and Plato:

Aristotle says, ‚ÄúThere are two sorts of wealth-getting, as I have said; one is a part of household management, the other is retail trade: the former necessary and honorable, while that which consists in exchange is justly censured; for it is unnatural, and a mode by which men gain from one another. 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 any modes of getting wealth this is the most unnatural.’

Plutarch says, “Are we not ashamed to pay usury? Not contented within the limits of our own means, we do by giving pledges and entering into contracts, fabricate the yoke of our slavery; flee from the tyrant-usurers; the barbarians’ debts beget before they conceive; they demand the very moment they lend; the usurious borrower heaps debts upon debts, and finally he sinks into complicated difficulties.”

Plato: “no one shall deposit money with another whom he does not trust as a friend, nor shall he lend money upon interest; and the borrower should be under no obligation to repay either capital or interest.”

Usury, or Interest Condemned in the Bible

Exod. xxii. 25. If thou lend money to any of my people, that is poor, and that dwells with thee, thou shalt not be hard upon them, as an extortioner, nor oppress them with usury.

Levit. xxv. 35. If thy brother be weak of hand, and thou receive him as a stranger and sojourner, and he live with thee, take not usury from him, nor more than thou gavest. Thou shalt not give him thy money upon usury, nor exact of him any increase of fruits.

Deut. xxiii. 19. Thou shalt not lend to thy brother money at usury, nor corn, nor any other thing, but to a stranger. To thy brother thou shalt lent that which he wanteth without usury.

Psalm xiv. 5. Lord, who shall dwell in thy tabernacle? Or who shall rest in thy holy hill? He that hath not put out his money to usury, nor hath taken bribes against the innocent.

Psalm liv. Cast down, O Lord, and divide their tongues: for I have seen iniquity and contradiction in the city: day and night shall iniquity surround it upon its walls; and in the midst thereof are labor and injustice; and usury and deceit have not departed from its streets.

Ezech. xviii 8. The man that hath not lent upon usury, nor taken any increase; he is just, he shall surely live, saith the Lord God. And the man that giveth upon usury and that taketh an increase; shall such a one live? he shall not live; whereas he hath done all these detestable things, he shall surely die; his blood shall be upon him.

Ezech. xxii. 12. They have taken gifts in thee to shed blood; thou hast taken usury and increase ; and hast covetously oppressed thy neighbours; and thou hast forgotten me, saith the Lord God. Behold, I have clapped my hands at thy covetousness, which thou hast exercised. Shall thy heart endure, or shall thy hands prevail in the days, which I will bring upon thee? I, the Lord, have spoken, and I will do it; and I will disperse thee in the nations and will scatter thee among the countries. And her prophets have daubed them without tempering the mortar: the people of the land have used oppression and committed robbery; they have afflicted the needy and the poor. And I have poured out my indignation upon them; in the fire of my wrath I consumed them; I have rendered their way upon their own head.

Notice that the Prophet ranks here again usury or taking increase, with the most horrible crimes-murder, idolatry, incest, oppression of the poor, of the widow, and orphan, pollution of the sanctuary and the Sabbath.

Nehemiah v. 1. There was a great cry of the people, and of their wives against their brethren, the Jews; and there were some that said, Let us mortgage our lands, and our vineyards, and our houses, and let us take corn because of the famine; and others said, Let us borrow money for the king’s tribute, and let us give up our fields, and vineyards. Behold, we bring into bondage our sons; and our daughters, and some of our daughters are bond-women already; neither have we wherewith to redeem them; and our fields and our vineyards other men possess. And I was exceeding angry when I heard their cry according to these words; and I rebuked the nobles and magistrates, and said to them, Do you every one exact usury of your brethren? The thing you do is not good; why walk you not in the fear of our God, that we be not exposed to the reproaches of the Gentiles our enemies? Restore ye to them this day their fields, and their vineyards, and their olive-yards, and their houses; and the hundredth part of the money, and of the corn, the wine, and the oil, which you were wont to exact from them, give it rather for them.

Matt. v. 42. Give to him, who asks of thee, and from him that would borrow of thee, turn not away.

Luke vi. 35. If you lend to them from whom you hope to receive, what thanks have you: for sinners also lend to sinners for to receive as much; but love ye your enemies; do good, and lend, hoping for nothing thereby, and your reward will be great, and you will be the sons of the Most High.

The Koran on Debt and Usury

II. 274 Those who in charity spend of their goods by night and by day, in secret and in public, have their reward with the Lord: On them shall be no fear, nor shall they grieve.

II. 275 Those who devour usury will not stand except as stands one whom the Evil One by his touch hath driven to madness. That is because they say: “Trade is like usury,” But God hath permitted trade and forbidden usury. Those who after receiving direction from their Lord, desist, shall be pardoned for the past; their case is for God (to judge); But those who repeat (The offense) are Companions of the Fire: They will abide therein (for ever).

II. 276 God will deprive usury of all blessing, but will give increase for deeds of charity: For He loveth not creatures ungrateful and wicked.

II. 278 O Ye who believe! Fear God, and give up what remains of your demand for usury, if ye are indeed believers.

II. 279 If ye do it not, take notice of war from God and His Apostle: But if ye turn back, ye shall have your capital sums: Deal not unjustly, and ye shall not be dealt with unjustly.

II. 280 If the debtor is in a difficulty, grant him time till it is easy for him to repay. But if ye remit by way of charity, that is best for you if ye only knew.

II. 281 And fear the day when ye shall be brought back to God. Then shall every soul be paid what it earned, and none shall be dealt with unjustly.

Commentary on the text by Abdullah Yusuf Ali:

We recapitulate the beauty of Charity (i.e., unselfish giving of one’s self or one’s goods) before we come to its opposite, i.e., the selfish grasping greed of usury against those in need or distress. Charity instead of impoverishing you will enrich you: you will have more happiness and less fear. Contrast it with what follows,– the degradation of the grasping usurer.

Usury is condemned and prohibited in the strongest possible terms. There can be no question about the prohibition.

The following four verses (278-281) refer to further concessions on behalf of debtors, as creditors are asked to (a) give up even claims arising out of the past on account of usury, and (b) to give time for payment of capital if necessary, or (c) to write off the debt altogether as an act of charity.

 

Concerning the statement “take notice of war from God and his Apostle” (279) : This is not war for opinions, but an ultimatim of war for the liberation of debtors unjustly dealt with and oppressed.

III. 129 To God belongeth all that is in the heavens and on earth. He forgiveth whom He pleaseth and punisheth whom he pleaseth; But God is Oft-Forgiving, Most Merciful.

III. 130 O Ye who believe! Devour not Usury, doubled and multiplied; but fear God; that ye may really prosper.

The last verse spoke of forgiveness, even to enemies. If such mercy is granted by God to erring sinners, how much more is it encumbent on us, poor sinners to refrain from oppressing our fellow-beings in need, in matters of mere material and ephemeral wealth? Usury is the opposite extreme of charity . . . Real prosperity consists not in greed, but in giving,– the giving of ourselves and of our substance in the cause of God and God’s truth and in the service of God’s creatures.

XXX. 38. So give what is due to kindred, the needy, and the wayfarer. That is best for those who seek the Countenance of God, and it is they who will prosper.

XXX. 39 That which ye lay out for increase through the property of (other) people, will have no increase with God: But that which ye lay out for charity, seeking the Countenance of God, (Will increase): It is these who will get a recompense multiplied.

Riba is any increase sought through illegal means, such as usury, bribery, profiteering, fraudulent trading, etc. All unlawful grasping of wealth at other people’s expense is condemned. Economic selfishness and many kinds of sharp practices, individual, national, and international, come under this ban. The principle is that any profit which we should seek should be through our own exertions and at our own expense, however we may wrap up the process in the spacious phraseology of high finance or City jargon.

The Parable of the People of the Garden (LXVIII. 17-33) speaks of the rich owners of an Orchard who resolved to gather the fruits of the garden secretly in the early morning, and thus deprive the poor of their portion of the harvest. They were unaware that the night before ” there came on the garden a visitation from the Lord, which swept away all around, while they were asleep” As the morning broke they hurried to the garden speaking to each other in secret low tones, “Let not a single indigent person break in upon you into the (garden) this day.” But when they arrived at the garden they found it changed beyond all recognition. Instead of a rich harvest, it had become a howling wilderness. They said, “We have surely lost our way: Indeed we are shut out (of the fruits of our labor)!

Here the Koran recognizes the right of the poor to a share of the harvest, similar to the Biblical injunctions. In a later section of the Koran (LXIX 31-37) Hell-fire is promised those who neglect the feeding of the poor: “Seize ye him, and bind ye him, and burn ye him in the blazing fire. . . This was he that would not believe in God Most High, and would not encourage the feeding of the indigent! So no friend hath he here this day. Nor hath he any food . . . “

The Koran further instructs that those bound by debt should be helped to economic freedom:

IX 60 Alms are for the poor and the needy, and those employed to administer the (funds); For those whose hearts have been (recently) reconciled (to truth); for those in bondage and in debt . . .

Read more:

History of Usury Prohibition

Historical Views on Usury