Terms of Interest

Anyone who has spent some time researching Catholic social teaching has probably come across fierce debates on the issue of charging of interest. The Bible condemns the taking of interest on a loan as the sin of usury and states that it is a form of bondage. However, the discussion is not that simple. Is all interest usury? If so, what of the demands of justice that he who gives out his money in a loan have some sort of compensation for the risk he assumes? If not all interest is usury, at what point does it become usurious? Are there any circumstances that mitigate culpability? Is there nuance in how interest is assessed? Do the Bible and the popes who follow in the biblical tradition have the same thing in mind when they condemn "interest" as the modern practices associated with the taking of interest? Has the Church's teaching on this point remained constant, or has it developed over history?

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Status and Contract

In his classic 1937 work The Crisis of Civilization, Hilaire Belloc summarizes the development of Christendom and diagnoses with precision how the rejection of the Catholic Church at the time of the Protestant Revolt is responsible for the social and economic troubles of the modern world. The most pressing economic problem is that the vast majority of people are wage-earners to a small owner class who have a disproportionate control of the means of production. This situation Belloc calls 'Proletarianism.' While modern wage-earners have political rights, full economic freedom eludes them because they are too dependent upon those who pay their wages. Unlike the Communists, who assert that the evil is in private ownership of property, Belloc states the problem is not that capital is owned and utilized by so few, but that so many are proletarian wage-earners. At the end of the Middle Ages, Europe was moving towards a free peasant class of owners. By 1900, the peasant class had disappeared and was replaced by landless wage-earners, which occurred simultaneously with the rise of Capitalism. How did the free peasant of the 16th century become the urban proletarian of the 19th? Belloc says the crux of the transformation was in the shift from Status to Contract in socio-economic relationships.

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Pius XII on Rural Economy

The 1940's were an interesting time in the economic development of the west. On the one hand, the end of World War II had brought us definitively into the modern era with electrification, modern communication, nascent consumerism, and of course the inauguration of nuclear energy. On the other hand, many regions of Europe and North America were primarily rural and depended upon agriculture for their economic survival. In many places, horse-power was still being used. It was a period of transition, a brief crossroads between two epochs with all the questioning and uncertainty that comes with such times. In 1946, Pius XII gave an address at the Convention of the National Confederation of Farm Owner-Operators in Rome on the importance of agricultural activity in the economy, and of the dangers facing rural life as we transition into the modern world. These observations are even more pertinent now than when the Holy Father first spoke them.

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Usury and the Love of Money

A friend of mine who is adept in Catholic apologetics recently remarked to me that there is one accusation hurled at Catholics for which he had never been able to find an effective reply: namely, that the Church has changed its teaching on usury. Having since then examined this question in more depth I have found that the problem is only exasperated by the fact that those who should know how to counter this accusation almost invariably give us answers which seem designed to make us look foolish as Catholics. A very good example of such an “embarrassing argument” is given to us by Father William B. Smith in his “Questions Answered” column in the June, 2003 issue of Homiletic and Pastoral Review. In his reply to the question, “Does the Church still have a teaching on usury?”, he quotes Germain Grisez (Living Christian Life vol.2, pp.833-34):

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On Objective and Subjective Ends of Work

Many individuals, both religious and secular, have decried what has been described as the crass materialism of the modern age. This criticism of the modern west is not restricted to leftists. In 1978, famous Russian author Alexander Solzhenitsyn, certainly no friend to communism, gave a commencement speech at Harvard in which he decried the materialist culture of the west as oppressive of human dignity. The earned Solzhenitsyn the ire of the American right, who had hoped his speech would trumpet the glories of American capitalism. Instead, Solzhenitsyn warned that in the capitalist west "destructive and irresponsible freedom has been granted boundless space."

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