Reflections on Charging Interest
In the sermon on Psalm 15, I promised to go into a bit more detail on how to understand David’s condemnation of “putting out money at interest” (what older translations referred to as “usury”). This condemnation is not isolated to Psalm 15. It’s rooted in the Law of Moses. Here are three relevant passages:
Exodus 22:25–27“If you lend money to any of my people with you who is poor, you shall not be like a moneylender to him, and you shall not exact interest from him. [26] If ever you take your neighbor's cloak in pledge, you shall return it to him before the sun goes down, [27] for that is his only covering, and it is his cloak for his body; in what else shall he sleep? And if he cries to me, I will hear, for I am compassionate. (ESV)
Leviticus 25:35–37[35] “If your brother becomes poor and cannot maintain himself with you, you shall support him as though he were a stranger and a sojourner, and he shall live with you. [36] Take no interest from him or profit, but fear your God, that your brother may live beside you. [37] You shall not lend him your money at interest, nor give him your food for profit. (ESV)
Deuteronomy 23:19–20[19] “You shall not charge interest on loans to your brother, interest on money, interest on food, interest on anything that is lent for interest. [20] You may charge a foreigner interest, but you may not charge your brother interest, that the LORD your God may bless you in all that you undertake in the land that you are entering to take possession of it. (ESV)
The Westminster Larger Catechism includes usury under the actions prohibited by the eighth commandment (“You shall not steal”).
Q. 142. What are the sins forbidden in the eighth commandment?
A. The sins forbidden in the eighth commandment, besides the neglect of the duties required, are, theft, robbery, man-stealing, and receiving any thing that is stolen; fraudulent dealing, false weights and measures, removing land marks, injustice and unfaithfulness in contracts between man and man, or in matters of trust; oppression, extortion, usury, bribery, vexatious lawsuits, unjust enclosures and depopulations; engrossing commodities to enhance the price; unlawful callings, and all other unjust or sinful ways of taking or withholding from our neighbour what belongs to him, or of enriching ourselves: covetousness; inordinate prizing and affecting worldly goods; distrustful and distracting cares and studies in getting, keeping, and using them; envying at the prosperity of others; as likewise idleness, prodigality, wasteful gaming, and all other ways whereby we do unduly prejudice our own outward estate, and defrauding ourselves of the due use and comfort of that estate which God hath given us. [1]
Westminster’s prohibition is fairly standard in the history of the church. Drawing from the Mosaic law (as well as the ethical teaching of Aristotle), Christians have frequently condemned the taking of interest as a violation of love for neighbor. For example, this was the standard view during the Middle Ages.
However, during the Reformation, John Calvin (among others) sought to distinguish financial transactions involving interest which violated the Bible’s condemnations from those that didn’t. In doing so, he opened the door for lawful interest-taking, which many credit with contributing to the expansion of capitalism and growing economic prosperity in the West. The question is whether Calvin (and those who followed him) were right to do so.
This short article isn’t designed to answer the question. But I would like to point out a number of features of the biblical texts that may help us to wrestle with putting out money at interest.
First, the three laws quoted above are all examples of case law (see Approaching the Law of Moses for a discussion of different types of law). That is, they are prudential and judicial applications of the moral and natural law in Israel’s context. That’s why the Westminster theologians rooted prohibitions of usury in the eighth commandment. Particular judicial case law ought to be rooted in a universal moral law. Following from this, we ought to think about how taking interest might violate our obligation to love our neighbor, especially in relation to respecting his property.
Second, because Old Testament case law is about wisely applying universal moral principles in a particular context, we need to consider some of the basic features of the Israelite economy. For starters, Israel’s economy was a landed economy. That is, wealth was especially tied to who owned land and the fruit that could be derived from it (through farming or shepherding and so forth). Along with that, land was allotted to Israelites based on their tribe (see Joshua 15-21). What’s more, the Mosaic Law required a year of Jubilee every fifty years (Leviticus 25) in which any land that had changed hands would revert to the tribal allotments. This was to preserve the structure of Israelite society which was based on the 12 tribes and the clans within them. The importance of these two facts (landed wealth and tribal allotment with a Jubilee year) is that prohibitions against usury were likely tied to the particulars of the Israelite political and economic arrangement. We must keep this in mind as we seek to grow in wisdom in considering these laws.
Third, an obvious fact about the Mosaic laws on usury is that it doesn’t completely forbid the taking of interest. Deuteronomy 23:20 explicitly permits charging interest to non-Israelites. Thus, the prohibition isn’t an absolute prohibition.
Fourth, we should notice the two groups that the Mosaic Law singled out. Israelites were not allowed to charge interest to the poor (Exodus 22:25) and to other Israelites (brothers; Deuteronomy 23:19). Leviticus 25 combines these two categories, describing one’s obligations to a brother who becomes poor. For the Israelites, charging interest seems to entail seeking to enrich oneself at the expense of another. To take advantage of the poor in this way was to violate the law of charity. It’s not loving your poor neighbor. This is why Israelites couldn’t take a poor man’s coat in pledge; if they did, he would sleep out in the cold. Similarly, to charge interest to a brother is to violate the obligations we have to care for our family. Families freely share with one another.
Based on these observations, the prohibition against charging interest seems to primarily be about loving your neighbor by not taking advantage of him. Charging interest in the ancient world was regarded as a zero sum game; one person enriched himself at the expense of another. This was especially wicked when applied to the poor. Charging interest was one way that the wealthy oppressed the poor in Israel.
At the same time, our economy is not structured in precisely the way that Israel’s was. Wealth is not tied exclusively to land, nor do we have Jubilee laws to preserve tribal and clan claims on the promised land. Thus, we might consider whether wealthy people charging interest to other wealthy people as a way of incentivizing economic activity runs afoul of the biblical commands. Charging interest might be a way of managing risk and encouraging economic growth, and thus be consistent with love for neighbor.
On the other hand, the biblical laws against usury also challenge us as we consider our economic system. Predatory lending is still around, and it still is a way of oppressing the poor. As we evaluate economic structures, we might ask questions like, “In this economic transaction, am I treating others the way that I would want to be treated?” To put a practical point on it, imagine that you’re lending money to someone at interest. If the situation were reversed, and you were the borrower, would you feel that you were being cheated? In lending, are you doing as you would be done by?
Again, these reflections don’t answer every question. Below I’ve included some links to some resources that explore these questions in more detail for those who are interested. At the very least, the Bible’s teaching on usury gives us a concrete opportunity to wrestle with what it means to love our neighbor and to honor God with our wealth.
For Further Study
A Reformed Understanding of Usury for the Twenty-First Century - a short booklet by the Presbyterian Church (USA) that gives a biblical and historical overview of the teaching on usury, and then seeks to apply it to some contemporary questions. While I’ve not thought through every application, it’s a good example of the kind of theological thinking that we need on this subject.
Pope Francis Condemns Usury—But What Is It? – an article that briefly looks at what usury is from a Roman Catholic perspective
[1] Westminster Assembly, The Westminster Confession of Faith: Edinburgh Edition (Philadelphia: William S. Young, 1851), 305–308.