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While America has grown to become a nation full of a diverse range of religions, most of the founders shared a christian heritage. They developed their understanding of the human person and the basis for government from christian thought. While now a key consideration at all levels of society, from credit-owing individuals to the federal government, interest has not always been so commonly accepted in the Christian world. From the original Hebrew texts to the present, thoughts concerning interest have been a society-defining sidebar in the western world.
The Old Testament’s discussion of interest is brief and primarily forbids it. Exodus 24 allows loans yet bars interest to those in need. It operates under the assumption that loans can allow the poor to get their feet back under them, and does not allow anyone to make the already difficult repayment process even harder. The author writes in Exodus that God commands, “If you lend money to one of my people among you who is needy, do not treat it like a business deal; charge no interest.” While not explicitly allowing them, the verse implies that interest-driven business loans were at least common at the time. However, a separate passage in Leviticus is less clear yet used by Jews and Christians to forbid business loans to those with shared faith. Once again the author writes, “You shall not charge interest on loans to your brother, interest on money, interest on food, interest on anything that is lent for interest. You may charge a foreigner interest, but you may not charge your brother interest.” The interpretation of the motivation behind this has allowed the fragmentation of Christian thought in many different strands. Some believe that interest is allowed to the foreigner as a means of harming them, others see the lack of interest towards the Hebrew as an act of sacrificial solidarity. Nonetheless, this passage has been used to justify centuries of Christian reluctance to charge interest on business loans.
Those in the early church often took the more aggressive interpretation that assumed that interest was forbidden in all contexts because it posed too much of a risk for the lender to take advantage of the borrower. However, a few verses earlier to the Exodus passage, a seemingly contradictory ethic is created. It is written that “If anyone borrows an animal from their neighbor and it is injured or dies while the owner is not present, they must make restitution. But if the owner is with the animal, the borrower will not have to pay. If the animal was hired, the money paid for the hire covers the loss.” A framework for lending and interest in a business context can be reasonably inferred from the passage. The scripture seems most concerned with ensuring that no one is taken advantage of, and in a business context where lenders and banks take on the risks of those they lend to, neither side of the agreement is being taken advantage of.
For the first 16 centuries of the church, interest in all circumstances was forbidden. Interpretation of the Old Testament texts ensured that Christians did not lend to one another. Ironically, the same text that led the Christians to avoid charging interest themselves, allowed Jews to charge interest to both Christians and Muslims. The idea at this time was the Aristotelian idea that money could not beget more money, and that interest could only be charged on assets with the potential of producing more directly. This concept meant that people could charge for lending out farm animals or tools, but not money.
The fifth Lateran council was a key turning point in the church’s view of interest. The council approved of charging interest as long as no profit was made. It also gave a definition of usury that would allow entrepreneurial business loans as we think of them today. “For, that is the real meaning of usury: when, from its use, a thing which produces nothing is applied to the acquiring of gain and profit without any work, any expense or any risk.” Many more medieval thinkers, including Thomas Aquinas, allowed for interest as long as the one who gave it bore some of the risk of the one to whom they were lending. They wanted to protect against the possibility of a venture, failing, and one who lent towards it still expecting to receive their compensation even after receiving interest.
In the 16th through 19th century, charging interest became far more accepted in the Christian world. Calvin prohibited it from being charged to the poor yet allowed it in business contexts as he believed that the biblical warnings against interest were primarily directed towards those who lent to the poor, and restricting interest charging would limit businesses from receiving funds they needed to grow. The American founders, partially driven by Puritan influence, greatly expanded upon this vision for the necessity of interest, even allowing it to be charged to the poor. While loans to the poor were allowed, a strong societal sentiment against usury, also known as exploitive interest rates, was present. From the founding until the present, public opinion on lending and lending to the poor has grown more favorable. Many Christians are unaware of the church’s long hesitancy towards interest in general and particularly to those in poverty. Credit cards have become almost a necessity in American society, and the government keeps enabling the poor to sink deeper in debt by encouraging loose lending practices and distorting price signals.
While difficult to enforce, and far outside the scope of government regulation, the distinction between productive and unproductive debt should be considered both in personal and national decision making. National and personal debt to increase consumption with no potential for return makes both a servant to the lender. While the tradition of christian thought is varying and diverse, the general theme that interest usually benefits the lender and debt should not be the status quo must be reconsidered today more than ever, as our nation’s interest and debt load continue growing.
