A Message from Pastor Hale
Usury seems like an Old Testament concept and it is. The word is not even found in the ESV. The King James states God’s commands to the Israelites: “If thou lend money to any of my people that is poor by thee, thou shalt not be to him as an usurer, neither shalt thou lay upon him usury” (Exodus 22:25); “Thou shalt not give him thy money upon usury, nor lend him thy victuals for increase” (Leviticus 25:37). While we are not Jews, nor subject to OT civil or ceremonial laws, the moral principle of not hurting our neighbor by lending to someone in need to reap undue benefit is still valid according to the law of love. We are not to hurt our neighbor, but to help and support him.
Luther addresses the issue of usury from an evangelical point of view – not making a new law, but showing the motive which must come from the freedom of the Gospel, making us willingly suffer and not be greedy for what others have. A modern definition of usury is “the illegal action or practice of lending money at unreasonably high rates of interest.” Governments still have usury laws – there is a reason credit card companies have flocked to South Dakota with its friendly interest laws, and it is not because it is the center of the U.S. financial system.
Luther addresses the issues of lending (which is not the same as usury) in the relational way – not in the economic/business atmosphere of today. He speaks of lending to individuals in need, not impersonal banks or investment funds. He mentions greed and usury together as vices, not in a technical economic description.
A few things make Luther’s explanation simplistic for our day. Our potentially (and current) rapid inflation makes the interest not pure profit, but potentially a loss (if untied to an inflation index). Also there was no debt forgiveness or easy bankruptcy in Luther’s day. It was much closer to the Bible’s culture where a man could be imprisoned or even his family sold if he did not keep his word to repay. It was a way to literally enslave a desperate person in need by debt – not by helping them, but taking advantage of them to gain a long-term profit.
Mentioning the Law of love, Luther says we should want to help our neighbor, not hurt him. It is apparent that credit card loans approaching 30% interest or payday loans even higher do not help the poor they prey on. That is clearly usurious. Notice what part of town these types of places are in. Do payday loan places and the like advance the community or take from it?
The risk of borrowing is much greater today, especially with a crowd-funded or personal loan today. People might lose a possession if they fail to make payment (repossession), but failure to pay an unsecured credit card loan has few physical repercussions – compared to how the Bible describes failure to repay a loan: “And since he could not pay, his master ordered him to be sold, with his wife and children and all that he had, and payment to be made” (Mt. 18:25). Some today even go the opposite way, by taking advantage of the easy money and much looser financial laws: spending freely on a credit card with no intention of repaying – which is morally theft.
Luther is not a firm moralistic, but applies the evangelical precepts in a spiritual way – directing his hardest words at the heart of man, not his financial instruments. We often want to get into a technical discussion, when the heart of the law is quite simple: “You shall love your neighbor as yourself.” Of course sinners want to profit with little work – off the backs of the ignorant and poor – but God’s people cannot do that and please the Lord also. A “loan shark” is a person not out to help the poor and needy, but extort and hurt people. A person lending at high interest is not called a “loan puppy” for a reason.
The Nebraska state government has this law stated online: “any rate of interest which may be agreed upon, not exceeding sixteen percent per annum on the unpaid principal balance, shall be valid upon any loan or forbearance of money, goods, or things in action and may be taken yearly, for any shorter period, or in advance, if so expressly agreed.” Theft is not always by force and hurting people is not always illegal. It is not just a religious issue, but about the basic treatment of the relationships between the wealthy with money to lend and those desirous of it. Jesus teaches us a new dimension to the OT laws, to live according to God’s will in heart, not just by regulation: “And if you lend to those from whom you expect to receive, what credit is that to you? Even sinners lend to sinners, to get back the same amount. But love your enemies, and do good, and lend, expecting nothing in return, and your reward will be great, and you will be sons of the Most High, for he is kind to the ungrateful and the evil” (Luke 6:33-35).
Luther does not equate simply borrowing and lending with immoral usury, though they can be connected. He speaks of the lender having similar risks to the borrower – which is sometimes the case today where debts so easily go unpaid (and unpunished). He mentions a modest interest rate (5%) that is not about taking, but a fair price for a potential income.
I recommend reading the whole treatise carefully (it is easily found online). Luther is not a simplistic moralist, but he thinks about this issue in a careful and biblical way. God’s law and human nature have not changed, despite the more sophisticated economy in which we partake.
Excerpts from “A Treatise on Usury”
It would be impossible to become pure of our attachment to temporal goods, if God did not decree that we should be unjustly injured, and exercised thereby in turning our hearts away from the false temporal goods of the world, letting them go in peace, and setting our hopes on the invisible and eternal goods. Therefore he who requires that which is his own, and does not let the cloak go after the coat is resisting his own purification and the hope of eternal salvation, for which God would exercise him and to which He would drive him. And even though everything were taken from us, there is no reason to fear that God will desert us and not provide for us even in temporal matters; as it is written in Psalm 37:25, “I have been young and have grown old, and have never seen that the righteous was deserted or his children went after bread.” This is proved in the case of Job also, who received in the end more than he had before, though all that he had was taken from him. For, to put it briefly, these commandments are intended to loose us from the world and make us desirous of heaven. Therefore we ought peacefully and joyfully to accept the faithful counsel of God, for if He did not give it, and did not let wrong and unhappiness come to us, the human heart could not maintain itself; it entangles itself too deeply in temporal things and attaches itself to them too tightly, and the result is satiety and disregard of the eternal goods in heaven.
Now comes the second degree. It is that we give our goods freely to everyone who needs them or asks for them. Of this also our Lord Jesus Christ speaks in Matthew 5, “He who asks of thee, to him give.” Although this degree is much lower than the first, it is, nevertheless, hard and bitter for those who have more taste for the temporal than for the eternal goods; for they have not enough trust in God to believe that He can or will maintain them in this wretched life.
We come now to the third degree of dealing with temporal goods. It is that we willingly and gladly lend without charges or interest.
Of this our Lord Jesus Christ says, in Matthew 5:42, “He that would borrow of thee, from him turn not,” that is, “do not refuse him.” This degree is the lowest of all and is commanded even in the Old Testament, where God says, in Deuteronomy 15:7, “If anyone of thy brethren in thy city become poor, thou shalt not harden thy heart against him nor shut thy hand; but that shalt open it and lend him all that he needs”; and they have allowed this degree to remain a commandment, for all the doctors agree that borrowing and lending shall be free, without charge or burden, though all may not be agreed on the question to whom we ought to lend.
But he who lends expects to receive back the same thing that he lends, and if he expects nothing, then, according to their interpretation, it would be a gift and not a loan. Because, then, it is such a little thing to make a loan to one who is a friend, or rich, or who may render some service in return, that even sinners who are not Christians do the same thing, Christians ought to do more, and lend to those who do not the same, i.e., to the needy and to their enemies.
It follows that they are all usurers who lend their neighbor wine, grain, money, or the like, in such a way that he obligates himself to pay charges on it in a year or at a given time; or that he burdens and overloads himself with a promise to give back more than he has borrowed, or something else that is better. And in order that these men may themselves perceive the wrong that they are doing — though the practice has, unfortunately, become common — we set before them three laws.
Therefore it is not enough that this business should be rescued by canon law from the reproach of usury, for that does not rid it of or secure it against avarice and self -love; and from the canon law we find that it is not directed toward love, but toward self-seeking.
For who would not rather invest a hundred gulden for income than trade with it, since in trade he might lose twenty gulden in a year, and his capital besides, while in this business he cannot lose more than five, and keeps his capital? Moreover, in trade his money must often be inactive because of the market (Der wahr halben), or because of his own physical condition, while in this business it is moving and earning all the time
The only way of defending this business against the charge of usury — and it would do so better than all talk of interest — would be that the buyer of income have the same risk and uncertainty about his income that he has about all his other property. For with his property the receiver of income is subject to the power of God — death, sickness, flood, fire, wind, hail, thunder, rain, wolves, wild beasts, and the manifold losses inflicted by wicked men. All these risks should apply to the buyer of income, for upon this, and on nothing else, his income rests; nor has he any right to receive income for his money, unless the payer of the income, or seller of the property, specifically agrees, and can have free and entire and unhindered use of his own labor.
Again it happens that both buyer and seller need their property, and therefore neither of them can lend or give, but they have to help themselves with such a bargain. If this is done without breaking the church-law which provides for the payment of four, five, or six gulden on the hundred, it can be endured; but respect should be always had for the fear of God, which fears to take too much rather than too little, in order that avarice may not have its way in a decent business deal. The smaller the percentage the more divine and Christian the deal.
It is not my affair, however, to point out when one ought to pay five, four, or six percent. I leave it for the law to decide when the property is so good and so rich that one can charge six percent. It is my opinion, however, that if we were to keep Christ’s command about the first three degrees, the purchase of incomes would not be so common or so necessary, except in cases where the amounts were considerable and the properties large.
There are some who not only deal in little sums, but also take too much return — seven, eight, nine, ten percent. The rulers ought to look into this. Here the poor common people are secretly imposed upon and severely oppressed. For this reason these robbers and usurers often die an unnatural and sudden death, or come to a terrible end (as tyrants and robbers deserve), for God is a judge for the poor and needy, as He often says in the Old Law.
There is also in this business a dangerous tendency, from which I fear that none of the buyers of income — at least very few of them — are free. It is that they want their income and their property to be sure and safe, and therefore place their money with others, instead of keeping it and taking risks. They very much prefer that other people shall work with it and take the risks, so that they themselves can be idle and lazy, and yet stay rich or become rich. If that is not usury, it is very much like it. Briefly, it is against God. If you seek to take an advantage of your neighbor which you will not let him take of you, then love is gone and the natural law is broken. Now, I fear that, in this buying of income, we pay little heed to the success of our neighbor, if only our income and our property are safe, though safety is the very thing we ought not to seek. This is certainly a sign of greed or laziness, and although it does not make the business worse, it is, nevertheless, sin in the eyes of God.