Interest or Usury?
Another topic that was once troubling-and that changed at the time of Calvin’s Reformation-was the subject of lending with interest. Prior to Calvin, a hyper-literalism on this point prevailed. John Calvin had a good bit to say about the subject of interest-bearing commerce. He and the other Protestant Reformers both clarified and revolutionized how profit could be used to restrain theft. Usury is an old term, and it may be defined in one of two ways: (1) charging any interest at any time on a loan; or (2) charging such a high percentage of interest that it amounts to stealing or exploiting the poor.
Calvin commences his discussion of the 8th commandment with this axiom: “Since charity is the end of the Law, we must seek the definition of theft from thence.” Rooting himself firmly in the Golden Rule he calls for each person’s rights to be safeguarded and to treat others as one wished to be treated. Applied to the 8th commandment, that view of the law classified thieves as not only those who secretly stole property but also those who sought “gain from the loss of others [and] accumulate wealth by unlawful practices and are more devoted to their private advantage than to equity.”
Typical of Calvin’s approach to applying the law, many different sins fell under the heading of a single sin (theft in this case), and the reformer warned about the crafty ways that depraved thinkers might seek to cheat the system, while still reducing another’s property. From the outset, he warned against “false pretexts,” “craft,” “rapine,” and “cunning.” God’s law, in contrast, “pronounces all unjust means of gain to be so many thefts.” Moreover, by his hermeneutic of the law in which “an affirmative precept . . . is connected with the prohibition,” Calvin calls for stewards to utilize liberality and kindness as vaccines/antidotes for theft. In short, each person “should safely keep what he possesses, and our neighbor’s advantage should be promoted no less than our own.” Those preliminary principles would dictate Calvin’s view of usury and defend the propriety of lending to capitalists for business.
His commentary on Exodus 22:25 contains some of his fullest explanation that viewed usury in the second sense above. Calvin warned that the goal of profit was generally sought in lending, and that not only were exorbitant rates wrong but also that if lending was restricted only to the wealthy who could repay, then “we neglect the poor.” In addition, he noted that lending without interest depended on the “rule of charity” more than on the Jewish political law. He also recognized that Jewish law itself permitted interest-based profit to the Gentiles. The transcultural absolute, however, for Calvin was “that our brethren who need our assistance are not to be treated harshly.” Calvin was savvy enough to note that many kinds of commerce could be a “mode of extortion.” Further he wrote that “crafty men are for ever inventing some little subterfuge or other to deceive God.”
Calvin understood the market well enough to realize that “no creditor could ever lend money without loss to himself”, if usury meant an absolute prohibition of charging interest. What kept him from endorsing the definition of “usury-as-any-interest” was his view of human beings who would “cheat” under this scheme, or use “false pretences . . . to inconvenience the creditor.” Creditors could be victims, too, Calvin knew. His argument was that if interest were absolutely forbidden, then loss of property would occur in some cases, and that was a violation of the 8th commandment. Still he interpreted Ex 22:25 to apply only to the poor, and noted that usury was freely permitted for those able to repay.
On this verse, Calvin stated that not all usury was condemned. He argued:
If the debtor have protracted the time by false pretences to the loss and inconvenience of his creditor, will it be consistent that he should reap advantage from his bad faith and broken promises? Certainly no one, I think will deny that usury ought to be paid to the creditor in addition to the principal to compensate loss. If any rich and monied man, wishing to buy a piece of land, should borrow some part of the sum required of another, may not he who lends the money receive some part of the revenues of the farm until the principal shall be repaid? Many such cases daily occur in which, as far as equity is concerned, usury is no worse than purchase.
Calvin’s argument, in short, was this: the ethic of love called for us to value and protect our neighbor’s property and estate. To borrow from him, if one had the resources to pay interest, was to use part of his wealth for one’s own benefit with no repayment. “I win, he losses” (if no interest is charged), was a violation for Calvin of the “thou shall not steal” commandment. Or if I win and the neighbor’s children lose-by a reduction in estate-the charging of interest actually has an instrumental value to curb property loss.
Calvin continued his exposition on Exodus 22:25 to note that if one lends money to a fellow believer who is needy, money lenders still need to keep in mind the call to compassion. These OT laws-contrary to many misapprehensions of them-call for charity. The poor should, if possible, be helped by people with resources. Similarly, if a poor person tenders his cloak as collateral, it should be returned to him for the night: for that might be all the cover he has (Ex. 22:27). Holding on to the little that the poor has and needs could be abusive, if for no purpose.
Calvin consistently plied this interpretation, even calling for other OT verses to be harmonized with “the rule of charity.” On this verse in Exodus, he concluded that “usury is not now unlawful, except insofar as it contravenes equity and brotherly union.” Love for neighbor was the standard, and “how far it may be lawful to receive usury upon loans, the law of equity will better prescribe than any lengthened discussions.”
In sum, Calvin construed that a person violated the 8th commandment (whether by theft or usury) when “another is made poorer.” He called both for restraint and also for people to respect and protect the property of others. The purpose of the 8th commandment, therefore, was that “no one should suffer loss by us, which will be the case if we have regard to the good of our brethren.”