Usury

[thrombomodulin]

"You shall not charge interest to your brother--interest on money [or] food [or] anything that is lent out at interest.

- NKJV Deu 23:19

Thou shalt not lend upon usury to thy brother; usury of money, usury of victuals, usury of any thing that is lent upon usury

- KJV Due 23:19

I would like to ask what the definition of the word "usury" is in the Old Testament law. Was it wrong to charge any interest at all, or only wrong to charge excessive interest?

It is indeed wrong to charge any interest at all, two consequences seem to follow because men subjecitvely value present goods higher than future goods. (1) The investment and the accumulation of capital goods is hindered. The reason is that one has a choice between using any given resource for present consumption or, by savings, for the production of captial goods. The experience of the last few hundred years, demonstrates the wellbeing of the comon man is greatly benefited by the accumulation of capitial goods (i.e. we live in a state of wealth compared to those of ancient times due to savings). If the benefits of savings are diminished by the fact that no interest can be recieved, then some people will engage in more present consumption than otherwise, at the expense of loss the ability to produce the things people need (and would otherwise have preferred to have) in the future. (2) Those who have some wealth have the ability to either lend the money, or use it for consumption. If the ability to recieve interest on a loan is removed, one who might otherwise have lent a sum to one in need, in a mutually beneficial arrangement, would be more inclinded to never make the loan at all and use the money for some other purpose. These "unintended consquenses" are not evil, but they are perplexing. The would be resolved if it were the case that a market rate of interest is legal to charge.

[Paidion]

I think in the OT days, the law forbade people from charging any interest at all. In those days it was recognized that charging interest took extra money from the poor (who must borrow to survive) and gave it to the rich (who could afford to loan money). In our day, interest is so prevalent in our society, that it is hard to avoid receiving it. If we can see the immorality of receiving it, we can give all of that interest which we receive (as well as much more) to the needy.

[thrombomodulin]

Unlike the OT we, unfortunately, are in practice required to use a depreciating fiat currency. If one does not charge interest, then he actually recieves back less than what he loaned out. I suppose, however, this is true of a hard money system too because people place a higher value on a particular good in the present, as they would on the exact same good in the future.

Nonetheless, would it not be the case that the law would prohibit anyone from loaning with interest to a rich man? This might in fact be a prudent thing for the poor to do as a way of earning a higher income than otherwise. Of course, I am presuming the rich man has the opportunity to make a capitial investment which allows him to accomplish something more productive than otherwise would have come to be. By the payment of interest, the rich and poor would otherwise have been able to share in the benefits attained. Prohibiting interest payments, makes both worse off than otherwise.

[Singalphile]

I see what you're saying. I often think of voluntary borrowing/lending as just a kind of partnership and investment, and it seems like a good thing in general for an economy. Why would it be illegal under OT law then given the likely consequences that you point out? More info about "usury" at that time certainly might clear it up.

If my brother came and asked for $ for some medical bill or something, he might insist that he would pay me back, and I might agree to that. I certainly wouldn't charge him interest though. Maybe that's what was in mind. I don't know. I hope I won't have to call my bank and tell them to stop paying me interest!

[Paidion]

Another factor of which perhaps most people are unaware is that our money system is based on debt. When you go to a bank and borrow ten grand, the bank cannot lend you the depositors' money; rather they just make an entry into your account of $10,000. The money is created out of nothing! When you repay the loan, the money goes out of existence. However, chartered banks are not permitted to create an unlimited amount of money. The amount which they can create is based on the amount which they have on deposit. Suppose a bank had twelve million on deposit, and the rate is 6%. They would be permitted to create $200 million (6% of $200 million = $12 million).

Thousands of businesses must borrow money. The governments, as we know, have huge debts. If every cent of money in the country were applied toward the national debt, there would be no money at all in the country, and we'd still be deeply in debt. There would be no money to buy the goods and services which we need.

[thrombomodulin]

Paidion,

What you say is true. Murray N Rothbard explains this very well in http://mises.org/Books/mysteryofbanking.pdf. I browsed quickly through the verses on usury, and as far as I could see, there was no penalty imposed by civil magistrates upon those who disobeyed this admonishion. If you know of any exceptions, please let me know. A friend of mine has asserted that "matters of the heart" (e.g. how much I love my neighbor) are always outside the jurisdiction of the State. This could be a counterexample to prove this notion wrong.

Establishing a market price of interest rates seems to be fairly crucial to the succesful functioning a modern free market economy. If we were to ever return to the ideal - abolishing government issued currency, having a non-fiat currency, and market rather than government controlled interest rates, then in such an environment Christians probably should not charge interest. I do wonder if the lack of interest rates would have deletrious effects on the way the resources God has provided in this world are used. This is really, however, more of economics rather than biblical question, so I might forward this question to more of an expert on economics - Maybe Thomas Woods or Jorg Guido Hulsman.

[Perry]

I always thought that "usury" was actually a term for describing excessive interest. It's not equivalent to interest, but a term for interest at egregiously high rates.

Money has a time value to it. (It's called the "time value of money"). This would be true even in a standardized (non-inflating) monetary model, since money loaned out would not be available for other, more profitable, endeavors. This effect is monstrously magnified in a inflating economy like ours. If you loan me $20.00 today, and I give you back $20.00 two years from now, I'm not giving you back the same amount of buying power that I borrowed.

Money is a resource, an asset, not unlike a durable good... a lawn mower, say.

I don't think there's anything unChristian in the lender asking that he at least be given back the buying power of what he loaned. (If I loan out my lawn mower, there's nothing unChristian about expecting to have it returned on working order.) There may even be nothing unChristian about the lender asking for a bit of rent for the opportunity he lost in not having that money available for other, more profitable, ventures. (I could have been using that lawn mower on a job to earn money, but couldn't because I loaned it to you.)

Of course Christians should be generous. If my lawn mower comes back broken (or not at all), I can bear the expense of it rather than take someone to court.

[thrombomodulin]

I don't think there's anything unChristian in the lender asking that he at least be given back the buying power of what he loaned.

Everything you said is very logical, but the trouble is that the modern definition of usury is "excessive interest", whereas the ancient definition (e.g. see Paidion's comments above) appears to be "any interest at all". If indeed, no interest at all is allowed, then something is amiss in our reasoning that the time-value of money justifies the charging of interest. I have not yet found out why it is that the time-value of money apparently does not justify charging a "natural" rate of interest, but would very much like to know.

[Suzana]

Deu 23:19 "You shall not charge interest to your brother--interest on money [or] food [or] anything that is lent out at interest.

Deu 23:20 "To a foreigner you may charge interest, but to your brother you shall not charge interest, that the LORD your God may bless you in all to which you set your hand in the land which you are entering to possess.


I always thought usury to mean 'any interest at all' (and if it merely meant excessive interest, would God advocate charging this to foreigners?).

As I don't understand complex economics I can't comment on possible national consequences, and my understanding of this mainly refers to behaviour between Christians.

I've always assumed the reference to be regarding lending to those in genuine & urgent need (as opposed to catering to wants), so I can understand perfectly why it would be wrong to charge interest; we are all part of one body; all we have really belongs to God, and we are stewards of what comes through our hands – I am one of God's children, whose needs are supplied by my Father – the people in question are also God's children, therefore a brother or a sister of mine, same family, whose needs God also supplies.

Throughout the whole new testament we are urged to share, and to give to those in need (and have examples of the early church doing so). I'm thinking that there are times where we just give, but conceivably there may be times where it could be more useful and a good thing for the receiver to actually pay back an [interest-free] loan.

As to the practical application in every day living, I think we have to pray for wisdom & be prepared to be continually led by the Holy Spirit regarding giving or lending or saving as the case may be, and as the question arises.

p.s. I wouldn't worry about asking the bank to stop interest payments - 'To a foreigner you may charge interest' .. besides, half the time what they pay wouldn't pay for the phone call to stop payment!

[Perry]

I'm not so sure I agree with the idea that usury means no interest at all. Look at the verses.

First, notice the destitute condition of the brother described. We're not talking about a car loan here. This is someone who is literally “fallen in decay”.

Second, notice the phrases “or increase” and “for increase”. I'm no scholar of Hebrew, and when I look at the Strongs definitions (man this is so easy with E-Sword), both “usury” and “increase' could, it appears, be technically talking about any interest. But that just don't seem to be the spirit of the passage to me.

Lev 25:35 And if thy brother be waxen poor, and fallen in decay with thee; then thou shalt relieve him: yea, though he be a stranger, or a sojourner; that he may live with thee.
Lev 25:36 Take thou no usury of him, or increase: but fear thy God; that thy brother may live with thee.
Lev 25:37 Thou shalt not give him thy money upon usury, nor lend him thy victuals for increase.

Now notice just a few verses down.

Lev 25:39 And if thy brother that dwelleth by thee be waxen poor, and be sold unto thee; thou shalt not compel him to serve as a bondservant:
Lev 25:40 But as an hired servant, and as a sojourner, he shall be with thee, and shall serve thee unto the year of jubile:
Lev 25:41 And then shall he depart from thee, both he and his children with him, and shall return unto his own family, and unto the possession of his fathers shall he return.
Lev 25:42 For they are my servants, which I brought forth out of the land of Egypt: they shall not be sold as bondmen.

I see no injunction against owning the actual people must less renting them some money.

I think the spirit of these commands is this: When you see someone who's fallen on hard times, don't profit from their misfortune. This, to me, is what's so sickening about much of what goes on in the medical industry. When a wheel-chair that's no more difficult to construct than a $100.00 bicycle, costs $2000.00, someone is profiting on misfortune of another. There are a lot of vultures out there, and those who've fallen on hard times can be easy targets. Sharon is particularly repulsed by those “cash for your car title” bill-boards.