Tom Hodgkinson On Usury

Both on an individual and a national scale, debt imprisons. By taking out a loan, I am committing myself to years of interest repayments, and therefore to years of wage slavery. And the UK has been borrowing like crazy since 1694, when the Bank of England was invented. This means that we are locked into high taxation to pay for 300 years of wars and other costly and generally disastrous state enterprises.

This state of affairs, though, is not inevitable and did not exist in the Middle Ages. Before the Reformation, charging interest on loans – usury – was considered sinful by the church. There are repeated injunctions against it in the Bible. Aristotle, who had also written against usury, provided the classical view. For Aristotle money, unlike, say, an apple tree, was infertile, and could not produce more of itself. Therefore usury sets up an imbalance: someone's got to pay, and it is generally the poor. The Latin phrase which echoed around in people's heads was Fenus pecuniae, funus est animae, meaning: "Usurious profit from money is the death of the soul."

Everything changed in the Reformation when Calvin, a friend of the Fugger banking family, lifted the ban on usury, thus opening up a new way for the rich to steal from the poor. Today, we see the popular suspicion of usury returning with our renewed hatred of the bankers. And in a new scam, usury has been half-banned: the banks no longer pay out interest on our savings, but they still charge 12.9% when they lend to us! This is monstrously unjust and this is why I call for a simple boycott on the banks: it's time to investigate new systems.

Tom Hodgkinson will be hosting our next Simple Living Weekend on the 2-4 July.  For more information click here or come along to our evening class at The School of Life, 'How to Think About Money'  on 20 April 2010.

Comments

[Adele]

Very interesting, I wasn't aware that banks were no longer providing interest on savings - it should work both ways. The profits banks, etc. make on loans, etc. is staggering. I also think there is an element of 'force' when it comes to borrowing, access to credit is fine, but surely interest rates should be more 'supportive' if we're truly borrowing to allow us to grow.

[Jasper de Vries]

I'm sorry, but Tom's view on debt is just too narrow minded.

Of course, debt is an instrument which can be abused to imprison people. But lending money was also one of the essential ingredients on our way towards the prosperity we know today (see for example the article Roots of Prosperity on http://www.strategy-business.com/article/09502). That's also one reason why international institutions like the UN and international aid organisations try to stimulate microfinance: lending small amounts of money so a local community can buy a cow, or some sewing machines to set up a small company (see http://www.cgap.org/p/site/c/).

By the way, in the S&B-article, it is mentioned there was already some lending taking place during the Roman Empire:"Rome’s legal system enabled credit, allowing loans with interest as a form of contract".

[James]

Debt imprisons? Sure, but debt also sets us free. Debt allows us to create. Without debt, how many of the companies providing revolutionary and life changing products would have ever been founded, let alone continued to survive? The opportunity to create youtube or twitter, or to start a new organic farm, or to develop the new cancer drug, or nearly anything else is drastically reduced.

[Alex Benejaraffe]

Credit has its place in society,... Usary is something a bit different no? Credit at 12.5% perhaps. Charging a bit extra to cover risk is one thing,... but look at where the credit card companies' profits come from.

Education is important and so is making the fine print bigger and simpler.

That is all.

[xavier]

??!!
No interest rate means no incentive to lend money and assume the risk of not getting the money paid back! Having access to credit is considered by some a human right; credit improves people's lifes; institutions that are providing small credits to very poor people without collateral are improving their lifes, even when they usually pay very high interest rates.

Credit has improved my family's life, since we have had access to a house before having the money to buy it.

No one is forcing me to borrow money; I only do it if I think that it makes sense for me after knowing how much I will have to pay. Access to credit is fundamental for businesses and families.