As new regulation on the finance industry became effective recently, news reports indicate that the average interest rate on credit cards is 14.7 percent – the highest level of average interest in nine years and 11.45 percent above the prime interest rate. That’s the largest gap in 22 years.
This information makes it clear that the finance industry’s well-paid lobbyists were very effective on Capitol Hill. Not long ago, profit margins and interest rates like this would have been considered “biting” interest.
Ancient Israel had a lot stronger regulation on loans than we do. Mosaic Law prohibited charging “your brother” interest, and all the tribes of Abraham were blood brothers. For Hebrews, it was only permissible to charge interest to “a foreigner” (Deuteronomy 23:19-20).
Considering each other brothers and sisters in Christ, early Christians extended the Deuteronomic prohibition against usury to all who shared their faith. Charging interest even to those outside the faith was viewed as a form of theft.
In the first millennium of Christian history, the opinion of Ambrose (c. 337-397) prevailed: “He fights without a weapon who demands usury: he who revenges himself upon an enemy, who is an interest collector from his foe, fights without a sword. Therefore, where there is a right of war, there also is the right of usury.”
During the time of the Crusades, the popes began to chafe at the interest they had to pay on the loans they obtained from Jewish moneylenders, who could charge interest in good faith, to finance their wars to reclaim the Holy Land.
Then Christian theologians started questioning the right of anyone to charge interest and began noticing the admonition in Christ’s sermon on the plain: “Love your enemies, do good to them, and lend to them without expecting to get anything back. Then your reward will be great, and you will be sons of the Most High, because he is kind to the ungrateful and wicked” (Luke 6:35).
Ultimately, Thomas Aquinas (1225-1274) summarized the Roman Catholic Church’s newfound emphasis on the brotherhood of all men in his “Summa Theologica.” He wrote, “The Jews were forbidden to take usury from their brethren, i.e., from other Jews. By this we are given to understand that to take usury from any man is simply evil, because we ought to treat every man as our neighbor and brother, especially in the state of the Gospel, whereunto all are called.”
In “The Idea of Usury: From Tribal Brotherhood to Universal Otherhood” (1949), Benjamin Nelson recounted that Aquinas’ view of the universal brotherhood of mankind held sway until the age of the Reformation.
After writing forcefully against the idea of usury, Luther sided with the territorial princes, who put down the peasants revolting against monopoly prices on rent contracts and exorbitant interest rates on loans – some as high as 60 percent. Luther and Melanchthon began denouncing legalistic pronouncements about usury and announced that the Christian is free to lend his money and charge as much interest as conscience would permit (for Luther, no more than 5 percent).
In Nelson’s view, John Calvin inaugurated a “transvaluation of values” by replacing both the Hebrew tribal brotherhood and Aquinas’ universal brotherhood with the idea of a “Universal Otherhood, where all become ‘brothers’ in being equally ‘others.'” He made it permissible to charge interest even to a brother.
Calvin interpreted Scriptures to forbid only “biting” usury – interest taken from the defenseless poor.
“If we wholly condemn usury,” he said, “we impose tighter fetters on the conscience than God himself.” Realizing that putting an end to usuries was impractical, Calvin said “we must make concession to the common utility.”
He concluded, “Usury is not now unlawful, except in so far as it contravenes equity and brotherly union. Let each one, then, place himself before God’s judgment seat, and not do to his neighbor what he would not have done to himself, from whence a sure and infallible decision may be come to. To exercise the trade of usury, since heathen writers counted it amongst disgraceful and base modes of gain, is much less tolerable among the children of God; but in what cases, and how far it may be lawful to receive usury upon loans, the law of equity will better prescribe than any lengthened discussions.”
Calvin and his fellow ministers fixed the maximum rate of usury at 5 percent. Those who charged more risked losing their principal, plus a fine.
Calvin’s idea of “universal otherhood” has clearly become the predominant economic viewpoint of the modern world. It is equally clear that the boundaries within which Luther, Calvin and their contemporaries hoped to confine the practice of usury have been themselves “transvalued.”
Today, the “defenseless poor” are forced to pay the highest interest rates. “Biting” usury is not only commonplace, it is considered to be among the best business practices of our strongest and largest lenders.
If the poorest Americans can obtain a credit card at all, they will be required to pay an interest rate of more than 20 percent. Military personnel can be charged up to 36 percent interest for a payday loan. Other low-income Americans have legally been charged up to 400 percent interest by payday lenders.
It is time for another “transvaluation of values.” If modern society cannot exist with credit and credit cannot exist without interest, then something must be done to make sure that the poorest among us have access to credit at a reasonable rate of interest.
Luther and Calvin capped interest at 5 percent. Why can’t we negotiate a range somewhere between that and the 14.7 percentage average we see on credit cards today?
Bruce Prescott is executive director of Mainstream Oklahoma Baptists, president of the Norman, Okla., chapter of Americans United for Separation of Church and State and host of “Religious Talk” on KREF radio. He blogs at Mainstream Baptist.
Bruce Prescott, now retired, served as executive director of Mainstream Oklahoma Baptists from 1998-2014.