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14. December 2011

The moral parameters of private lending (a case against usury)

Filed under: economy,natural law and rights — admin @ 17:03

Though buried beneath a sea of absurdities and proposed injustices, Americans should take note that some of Occupy Wall St’s demands are not entirely garbage. Aside the attempt to ban electronically recorded voting machines, perhaps the next most sensible demand concerned the abolition of debts; for while these protesters erred in requesting the relinquishment of international debts (as wars have been started for far less), it is not entirely unreasonable to wonder whether the American economy can ever truly rebound when so many — most, actually — Americans are deeply indebted to bankers, if the nation is not itself already owned by the Federal Reserve and foreign powers.

Concerning the economic direction of a country, Adam Smith wrote in The Wealth of Nations that how a nation spent its money determined whether or not it would become impoverished or enriched, noting, specifically, that if a nation was to spend its money consumptively, paying laborers for too many nonproductive services, eventually the wealth of the nation would be consumed.  For any transfer of money is not actually a transfer of money, but of a right to goods or labor, and if men are entitled to their share of goods without producing goods to exchange, then reason suggests that they will consume a portion of the national wealth, and the nation will become, on some level, poorer.  This is not to say that every non-productive employment is evil or dangerous, since many noble and necessary careers, like those of the judge and the soldier, do not necessarily produce anything.  But like the consumption of calories, consumptive expenditures are only prudent, and thus helpful, if they exist within a reasonable amount of time and do not equal or exceed the level of production.

But supposing an entire society were to trend toward debt and interest payments, a great portion of their produce would be transferred to others who themselves produced nothing.  And if production is necessary to support nonproduction, and the majority of wealth is owed to nonproductive peoples through usury, and an overwhelming majority of that debt is used for consumptive purposes, then a society’s wealth is ultimately being siphoned toward non-production.

But economic viability is not alone any sort of moral answer, so let Americans not be persuaded one way or another based upon what they believe will enrich the majority, as that attitude has historically disastrous consequences.  Rather, they should concern themselves with what is immutably righteous, and with what unalienable economic rights man actually has.

Usury is condemned by God because it encourages the attitude that something can be had without production first.  It capitalizes on the intemperance of men, like lotteries and casinos do, and encourages immediate satisfaction instead of bedrock moral market virtues such as patience, planning, and parsimony.  Instead of forcing men to plan how they will healthily increase their productiveness and capital to procure the goods they desire, it allows them to sit in material satisfaction — or some pale shade of it — without building the character by which material wealth is accrued.  Usury is a cancer of the economic mind, and like drugs destroy inhibition and reason, it perverts man’s quiet tendency toward self-improvement, and rewards his childish urges to have what he cannot, even if it places his family in servitude to the banker.  It also has an disturbing effect upon the ownership class, as a usurious nation’s best and brightest naturally begin to prefer education in financial manipulation, to enrich themselves parasitically on the blood, sweat, and tears of actual laborers, when they could instead be learning how to produce.

Further compounding impairments to character, consumptive borrowing must necessarily result in a poorer financial state than before the transaction, the borrower having less capital by which to build his wealth.  It is argued by some that consumptive usury spurs the economy, but that cannot be the case, since after a man borrows, if he is to make another large expenditure, he must first either pay his debt or indebt himself further.  And if because of usury he has no outlet by which to develop his God-given financial sense, he will not likely develop it as he was intended to do: every dollar tied in consumptive debt is a dollar which cannot be invested.  He is a junkie, his livelihood — his habit — supplied by the bankers who enrich themselves on the public’s economic infancy.

There are a couple of questions, then, which must be asked concerning this very recent accrual of American personal debt.  Americans must ask themselves, first, whether liberty can exist in any society which owes its wealth, plus interest, to an increasingly concentrated few.  The second question Americans must ask is whether or not it was liberty itself which resulted in such a transfer of wealth from majority to minority.

The answer to the former is no.  It is impossible for true liberty to properly exist in a society which is immersed in debt, because the property of men will be owned primarily by the banks, the ownership will be backed by law, and whatever men do produce will have a large portion siphoned into the pockets of their “benevolent” lenders.  A man cannot be said to own a home which will be taken away from him, supposing he becomes unemployed.  The answer to the latter is likewise no.  For there is one liberty and one justice, and neither can exist opposite to the Laws of God, which plainly state that lending with interest is to be illegal, unless loaned to foreigners, and that domestic debt is to be released every seven years to prevent perpetual debt slavery and excessive lending. These are not cleanliness or priestly laws, intended as metaphors for the supreme holiness of the Almighty Jehovah, nor do they pertain to the maintenance of theocratic government (such as penalties for apostasy, which would otherwise be known in a non-theocratic state as laws against sedition): they are laws intended to regulate the proper boundaries of human interaction and promote the maximum liberty and stability of society itself.

Libertarians, of course, and even many Christians, will argue that it is in the interest of justice and liberty to allow men to do what they will with their own capital, and to allow them to contract usurious debt as they please. But to differ from true justice is not to differ in opinion, but rather to prefer injustice.  To differ from true liberty is not to have an alternative view of liberty, but rather to prefer some level of slavery — particularly slavery of others.  The righteous do not believe that usury should be legal just like they do not believe that prostitution is a legitimate business, or that insider trading must result from a combination between property rights and freedom of speech.

This brings attention to a very important point, and one without which the prohibition of usury could become very dangerous to society.  There will be those who cry that an attack on consumptive lending is an attack on investment, which would utterly bankrupt society, but nothing could really be farther from the truth.  The difference between a ban on usury and the system Americans now have is the difference between a man seeking entrepreneurs to build his company, and a man playing hot potato with sub-prime loans.  A ban on usury would simply end the profitability of any future consumptive debt, and require that investors take partial (if not total) responsibility for the successes and failures of actual investment, instead of merely dispensing money and receiving payment regardless of the borrower’s financial turmoil.  God does not oppose the flow of capital, but merely an irresponsible dispensation of it.

It must be explained, then, in light of usury’s Biblical prohibition, what an economy actually is.  For too long, perhaps due to the sophistry of bankers and their partners, and perhaps because of an decreasingly Biblical American population, westerners have believed that productivity depends upon banking, when in fact the very value of money, and therefore the value of banking, depends upon productivity.

An economy, never to be confused with the medium of exchange, is the production and consumption of wanted goods alone, according Biblical principles of goodness.  It is comprised of men who, reliant upon the dynamism of the human spirit and the eternal justice by which production is defended from plunder, use their God-given talents to benefit those around them, and are rewarded for doing so.  It is a spirit of camaraderie which rewards patience, and prudence, and temperance, and skill, and teamwork, and honesty, and brilliance, and creation, and respect for the property of other men.  Conversely, to build “wealth” contrarily to these is not a sound economy, but rather a means by which to siphon the productivity of others and cripple the glory of man for which he was designed.  It is in this latter category of illegitimate enrichment in which usury belongs, and so it must go.  The question then, is whether or not Americans will recognize where they went wrong before it is too late, when ownership not just of American goods, but of American government itself, may be said to belong to men whose wealth depends upon their violation of Biblical principles, and when Lady Liberty, no longer being welcome amongst her once most amicable company, has quietly and with little controversy been shown the door.


  1. Very good thinking. A quote from Lincoln (Abraham) would seem supportive: “Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration” (from First Annual Message to Congress, December 3, 1861).

    I refrain from using the term “capitalism” to describe our economic system. First, the term was coined, I believe, by Karl Marx. Second, it infers our system is based on money rather than what you have more than adequately described. I tend to use “free enterprise,” but even that falls a bit short.

    Comment by Ben Terrill — 27. December 2011 @ 18:04

  2. I had no clue Lincoln said that! Good grief, that quote alone would have helped the article get published by AT, who, though oftentimes supportive, found the article to be offensive and anti-market. Thanks for your input, and thank you for the valuable information =)

    Comment by admin — 27. December 2011 @ 18:51

  3. The article’s title seems to focus the topic on private lending, but the article does not clearly define whether it is referring to some loans and not others or whether it is discussing all loans. Can you clarify what, if any, loans for which usury would be acceptable?

    Comment by Arthenor — 11. January 2012 @ 22:21

  4. Thank you for your response! As far as Biblical Law is concerned, the only moral application of usury is when a foreign, non-citizen, non-Israelite was involved. In our day, a usurious loan would be permissible if lending to non-citizens: Christians, Jews (just to be safe), and citizens would be protected by law from any usurious debt, and all citizen loans would be released after a seven year period.

    Comment by admin — 12. January 2012 @ 04:39

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