The Glossed Over, Institutionalized Sin of Usury

Of the many sins enumerated in the Bible, usury is among the worst. Not loan-sharking in the modern sense of the word, but the mere lending money with interest and requiring some collateral to cover the risk, as is common banking practice today.

The Mosaic law was unambiguous on the matter: “If you lend money to any of my people who are poor among you, you shall be like a moneylender to him; you shall not charge him interest. If you ever take your neighbor’s garment as a pledge, you shall return it to him before the sun goes down.” (Ex. 22:25-26.)

“You shall not charge interest to your brother –interest on money or food or anything that is lent out of interest. To a foreigner you may charge interest, but to your brother you shall not charge interest. (Deut. 23:19-20.)

“Take no usury or interest or interest from him; but fear that your brother may live with you. You shall not lend him money for usury, nor lend him food at a profit.” (Lev. 25: 35-37)
The exiled prophet Ezekiel at the time of the Babylonian captivity held that usury was one the great sins that brought ruin Israelite nation to ruin, and they who profited from this sin therefore deserve to die. “If he has exacted usury or taken increase – shall he then live? He shall not live! If he has done any of these abominations, he shall surely die; his blood shall be upon him.” (Ezek 18:13)

Nehemiah, the gifted Jewish cupbearer of the Persian king, entrusted to rebuild the walls of Jerusalem, denounced usury as a self-destructive form of slavery among his people, no less repressive than their bondage under the Babylonians: “We are forcing our sons and our daughters to be slaves . . . it is not our power to redeem them, for other men have our lands and vineyards. . . I rebuked the nobles and rulers . . . according to our ability we have redeemed our Jewish brethren who were sold to other nations. Now, indeed, will you even sell your brethren? . . . Restore now to them, even this day, their lands, their vineyards, their olive groves, and their houses, also the hundredth part of the money and the grain, the new wine and the oil that you have charged them.” (Neh 5: 1-13.)

In his classic The Wealth of Nations (1776) Adam Smith noted that European monarchs, in abiding as feasibly possible with Judeo-Christian teachings, either prohibited the lending of money with interest, or set limits on the interest, usually at 5 percent, a cap which Smith regarded as financially sound. Higher rates, he held, would only invite fraud and abuse, as had obviously been the case in Nehemiah’s time:

“The legal rate...ought not be much above the lowest market rate. If the legal rate of interest in Great Britain, for example, was fixed so high as eight or ten per cent, the greater part of the money which was to be lent would be lent to prodigals and projectors [promoters of fraudulent schemes], who alone would be willing to give this high interest....A great part of the capital of the country would thus be kept out of the hands which were most likely to make a profitable and advantageous use of it, and thrown into those which were most likely to waste and destroy it." (The Wealth of Nations, Book 2, Chapter 4).

Smith also noted: "The man who borrows in order to spend will soon be ruined, and he who lends to him will generally have occasion to repent of his folly. . . Ask any rich man of common prudence, to which of the two sorts of people he has lent the greater part of his stock, to those who, he thinks, will employ it profitably, or to those who will spend it idly, and he will laugh at you for proposing the question. (Ibid)

And no less harmful is the practice of lowering and manipulating interest rates to lure consumers into living beyond their means. Witness the subprime mortage market. A stable interest rate is key to well functioning free market economy. Consider how the recessions, depressions, bursting financial bubbles, and crumbling houses of cards that characterize our modern day global economy have resulted in large part, if not entirely, from the pervasive sin of usury. The Old Testament sages and Adam Smith were right, as was The Bard: “Neither a lender nor a borrower be, for loan oft loses both itself and friend, and borrowing dulls the edge of husbandry.” Hamlet,Act I, Scene 3.

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