By Edward Chancellor

The Critique of Usury

The subject of interest has long been neglected . And if not neglected , deplored . In Ancient Hebrew , words for interest are “ neschek ” ( a bite ). In Lagash , the Mesopotamian city where compound interest was first recorded in the third millennium BC , aristocrats lent at such high rates that borrowers lost their land and sometimes their freedom too . Debtors weighed down with interest suffered similar fates throughout the Ancient Near East . Compound interest at high rates in an economy with low growth is a terrible thing . In a dispute with

Les Usuriers ( The Moneylenders ) by Quentin Matsys , circa 1520 . a neighboring territory over unpaid rent over decades ( compounding at 33 % p . a .), Lagash demanded payment of 4.5 trillion liters of barley — roughly six times the US current production .

Over the centuries , countless people have criticized the charging of interest : ancient philosophers , religious scribes , medieval scholars , Marxists ( Marx himself ), fascists ( Hitler ) and even the current Archbishop of Canterbury , Justin Welby , who launched the “ War on Wonga ,” a payday lender , a few years back . Aristotle ’ s critique was the most influential . Usury was immoral , he said , because “ money was intended to be used in exchange , but not to increase at interest .” This view was taken up by the Church Fathers , and continued by Thomas Aquinas into the Middle Ages .

Yet something is lacking in Aristotle ’ s comment — the factor of time .

Lending takes place over time . This point was picked up by a 14th century English theologian Thomas of Cobham . Like Aristotle , Cobham claims that “ money that lies fallow does not naturally produce any fruit , but the vine bears fruit naturally .” But the Englishman rectifies the Greek philosopher ’ s oversight . The usurer , he says , is selling time . This doesn ’ t lessen the crime , in his view , since time belongs properly to God , and “ he cannot , therefore , make a profit from selling someone else ’ s property .”

A few centuries later , another Englishman , Thomas Wilson , took up the idea of the usurer as the seller of time , in a vicious ranting tract : In his Discourse Upon Usury ( 1572 ) Wilson claims that usury is as great an event as murder . The difference between Wilson and Bishop Cobham is that the Elizabethan writer is aware that his contemporaries consider

22 FINANCIAL HISTORY | Summer 2023 | www . MoAF . org