Usury and Enslavement of Civilization
Usury and Impoverishment
The impoverishing effects of usury, the practice at the heart of the modern economic system, are examined and an example of the creation of a Christian form of economic life based on the principles of Catholic social thought is presented. Habitat for Humanity’s remarkable success in building homes around the world is due in no small part to its preclusion of charging interest. The organization demonstrates that it is possible to return to the teachings of the Prophets of Israel and the Fathers of the Church forbidding usury.
“There is one bit of advice given to us by the ancient heathen Greeks, and by the Jews in the Old Testament, and by the great Christian teachers of the Middle Ages, which the modern economic system has completely disobeyed. All these people told us not to lend money at interest: and lending money at interest – what we call investment – is the basis for our whole system … Three great civilizations had agreed … in condemning the very thing on which we have based our whole life.”(1)
The central questions of political economy are what to produce, for whom, and how to produce it with the human relations involved being of particular importance. The matter abides in the human condition. As corporeal beings we must win our way in the world by provisioning for ourselves as any organism does.
Also abiding is the danger that in “solving” the provisioning problem human beings will forget that the world they are in and their own lives are not of their own making but are the gift of a loving Creator. Adam and Eve’s temptation in the Garden of Eden to reject God’s commandment endures in everyone. The desire of the builders of the Tower of Babel to “make a name” (Gen. 11:4) for themselves is eternally present. Seeing ourselves as the sole authors of our lives and of society simply presumes on divine Providence.
“Come now, you who say, ‘Today or tomorrow we will go to such and such a town and spend a year there doing business and making money’. Yet you do not even know what tomorrow will bring. What is your life? For you are a mist that appears for a little while and then vanishes. Instead you ought to say, ‘If the Lord wishes, we will live and do this or that.’” (Jas. 4:13-15)
To get to the “deepest roots”(2) of poverty and disorder in the economy then, our substitution of an ancient and ever new “idolatry of money”(3) for the worship of the
Triune God of Christianity must be considered. Setting ourselves up as creature and Creator is nowhere more evident than in the construction of a debt economy where money is created ex nihilo by the stroke of a banker’s pen and lent out at interest. This study examines the institutionalization of usury and its impoverishing effects. The evil of charging a fee for the use of property has been “crystallized in unjust social structures”(4). Understanding this reality opens up the possibility of replacing the rule of money with the reign of Christ.
Revelation and Reason: The Church’s Proscription
Sacred Scripture is God’s self-disclosure as the creator and sustainer of all that exists. In both the Old and New Testaments God has revealed what proper economic conduct entails if we are to live out our divine calling. Paramount in this revelation is God’s absolute prohibition of usury. The Old Testament condemns usury more than a dozen times,5 as an inhumane and predatory practice, as the biting (neshek) [of a serpent]. Jesus extends God’s law on borrowing and lending. Now we are to love our enemies, do good, and “lend, expecting nothing in return” (Lk. 6:35).
The Church Fathers jump off from Scripture to denounce the heartlessness of usury. St. Basil says that it is “the height of inhumanity”6 and draws an evocative parallel to a medicine that kills rather than cures. St. John Chrysostom says that by extracting interest “the rich man tears the poor in pieces.”(7) Jesus’ teaching on the Last Judgment (Mt. 25:31-46) is used by the Fathers in their indictment of usury. Ambrose, St. Augustine, Hilary of Poiters all point out that injuring the poor man by charging interest is injury to Christ. Gregory of Nyssa asks the usurer to consider himself in front of the divine judge.
“What will you answer when accused by the judge who cannot be bribed, when he says to you, ‘You had the law, the prophets, the precepts of the gospel. You heard them all together crying out with one voice for charity and humanity: ‘You shall not be a usurer to your brother’ (Dt. 23:20), or in another place, ‘He did not lend at usury’ (Ps. 15:5), or again, ‘If you lend to your brother, you shall not oppress him’ (Ex. 22:25)”?(8) Taken together the Church Fathers present a comprehensive and powerful critique of usury.
The foundational documents of the Church also inveigh against usury. The Council of Nicaea (325 A.D.) prohibited the charging of any interest by clergy. Violation would result in removal from the priesthood. Two major Church councils of the twelfth century (Second Lateran Council 1139, Third Lateran Council 1179) strongly condemned usury. In its instruction on the seventh commandment the Catechism of the Council of Trent states that usurers are guilty of robbery.
“To this class [of robbers] also belong usurers, the most cruel and relentless of extortioners, who by their exorbitant rates of interest, plunder and destroy the poor. Whatever is received above the capital and principal, be it money, or anything else that may be purchased or estimated by money, is usury; for it is written in Ezechial: He hath not lent upon usury, nor taken an increase; and in Luke our Lord says: Lend, hoping for nothing thereby. Even among the pagans usury was always considered a most grievous and odious crime. Hence the question, ‘what is usury?’ was answered: ‘What is murder?’[answer given by Cato in Cicero’s De officiis, ii. 25]. And indeed, he who lends at usury sells the same thing twice, or sells that which has no real existence.”(9)
It is clear from these Councils that the Church regarded usury as a grave sin punishable by eternal damnation.
By the mid seventeen hundreds the Church was beginning to be enmeshed in a complex commercial world. Usurious loan contracts were on the rise. Pope Benedict XIV felt the need to establish a fixed teaching on usury and on November 1, 1745 he issued the encyclical Vix Pervenit (On Usury and other Dishonest Profit).(10) He is fully aware that he is upholding the centuries old teaching of the Church established by “scriptural evidence, the decrees of previous popes, and the authority of Church councils and the Fathers”(11) Benedict XIV begins by disclosing the basic nature of usury and its illicitness.
“The nature of the sin called usury has it proper place and origin in a loan contract. The financial contract between consenting parties demands, by its very nature, that one return only as much as he has received. The sin rests on the fact that sometimes the creditor desires more than he has given. Therefore he contends some gain is owed him beyond that which he loaned, but any gain which exceeds the amount he gave is illicit and usurious.”(12) Both revelation, “the sin and vice of usury is most emphatically condemned in the sacred scriptures,”(13) and reason, “common human sense and natural reason,”(14) are used to establish the principles of just lending. It is a violation of commutative justice to receive (9) Catechism of the Council of Trent (Fort Collins, CO: Roman Catholic Books, 1923, p. 445–446.[Translated into English with notes by John A. McHugh, O.P. and Charles J. Callan, O.P.] The Council draws upon St. Thomas Aquinas here.
“To take usury for money lent is unjust in itself, because this is to sell what does not exist, and this evidently leads to inequality which is contrary to justice.” (ST. II-II, q-78, a. 1.)
Aquinas also argued that as a medium of exchange money has a fixed value and thus to ask for more than this fixed value in repayment of a loan is to sell money for more than it is worth, a violation of equality (IV Lib. Sent. III:37:1:6) interest.
“The law governing loans consists necessarily in the equality of what is given and returned; once the equality has been established, whoever demands more than that violates the terms of the loan.”(15) Those who violate this bond of justice are obligated to make “reparation”,(16) to restore any unjust gains to the persons that were collected from.
It is futile to try and build a social order on injustice yet whenever “equality is not maintained, whatever is received over and above what is fair is a real injustice.”17 Commerce is to be engaged in for the common good. Business cannot serve this noble end if it engages in “usuries and other similar injustices.”(18) That is, there are real social consequences to upholding or violating God’s law. “We learn from divine Revelation that justice raises up nations; sin, however, makes nations miserable.”(19) Usury drives us “headlong into ruin.”(20) Benedict XIV acknowledges that there may be just claims to compensation associated with a loan.(21)
“We do not deny that at times together with the loan contract certain other titles—which are not at all intrinsic to the contract—may run parallel with it. From these other titles [Extrinsic to the loan] entirely just and legitimate reasons arise to demand something over and above the amount due on the contract.”(22)
The distinction is made between providing compensation after weighing everything on the “scales of justice”(23) and demanding a gain through interest charges. Benedict XIV also makes the distinction between loans and investments.(24)
“It is very often possible for someone, by means of contracts differing entirely to provide oneself with an annual income or to engage in legitimate trade and business. From these types of contracts honest gain may be made.”(25) Loans to business men must still be treated as loans. Unless an investment is being made, no gain can be charged. Investment contracts and business practices in general are subject to being weighed on the same scales of justice Benedict XIV also summarizes the Christian ideal. Human beings have been “restored to liberty and grace by the blood of Christ.”26 Diligent care needs to be exercised when investing money since we are still subject to “cupidity, the source of all evil.”(27) We are obliged to help our fellows “with a simple, plain loan. Christ Himself teaches this: “Do not refuse to lend to him who asks you.’”(28)
The position on usury Benedict XIV takes in Vix Pervenit is the position of the Church today. While subsequent popes have not written papal documents dedicated specifically to the topic of usury, they have referred to the traditional doctrine on usury in their encyclicals, condemning those who practice it. Pope Leo XIII in the document launching contemporary Catholic social thought says that usury is a major cause of the misery of the working class.
“The mischief has been increased by rapacious usury, which, although more than once condemned by the Church, is nevertheless, under a different guise, but with like injustice, still practiced by covetous and grasping men.”(29)
Pope Pius XI assailed those who hold and control money in the economy. So great is their power “that no one dare breathe against their will.”(30) Pope Benedict XVI in encouraging financiers to rediscover the ethical foundations of their activity again points up the problem of usury.
“This is all the more necessary in these days when financial difficulties can become severe for many of the more vulnerable sectors of the population, who should be protected from the risk of usury and from despair. The weakest members of society should be helped to defend themselves against usury, just as poor peoples should be helped to derive real benefit from micro-credit, in order to discourage the exploitation that is possible in these two areas.” (31)
On January 29, 2014 Pope Francis’ greeting to the National Council of Anti-Usury Foundations contained an extremely harsh condemnation of usury.
“I hope that these institutions may intensify their commitment alongside the victims of usury, a dramatic social ill. When a family has nothing to eat, because it has to make payments to usurers, this is not Christian, it is not human! This dramatic scourge in our society harms the inviolable dignity of the human person.”(32)
Catholic doctrine has always taught that usury is contrary to divine and natural law. What must be unraveled then is how usury could become the very center of an ostensibly Christian society.
From Medieval Order to Financial Capitalism: The Institutionalization of Unequal Exchanges
The church was able to suppress usury for a millennium and a half. How did the lid get blown off the practice so that today it is the unquestioned reality at the center of the modern world? How was the Church’s stance on usury undercut and what are the implications of this momentous step?
Human beings must provide for their material needs. At the most basic or primitive state we make use of the resources immediately at hand to us and produce the articles our personal abilities allow us to create. In this natural state or economy human flourishing is restricted by the limitations of resource availability and personal talent. It is not surprising then that human beings engage in trade for the goods they need but are unable to provide for themselves. The desire for greater abundance leads to a search for trading partners.
Money enters the economic picture as an instrumental means that makes the exchange of goods easier. It helps to solve the problem of finding someone who will take what you have for the exact article you require at the time you need it. Money, if it is to serve as an effective medium of exchange, must have more or less universal appeal (so that most or all others will accept it) and must hold its value more permanently than other objects (so that it can be used in the future). Other less essential but beneficial characteristics include divisibility, portability, durability (resistance to deterioration), and easy standardization. Historian Will Durant documents the wide variety of goods that have served as money: “beans, fish-hooks, shells, pearls, beads, cocoa seeds, tea, pepper, at last sheep, pigs, cows, and slaves.”(33)
In time gold and silver emerged as the prime media of exchange. To overcome the inconvenience of trading those in lump form gold and silver coins were minted. Greeks coined metallic commodities as far back as the 7th Century BC. Rome set up its coin generation operations in the pagan temple “moneta”. It is this name that gives us the word money. Strictly speaking then, money refers to silver and gold in coin form. The mintage of these precious metals was the key element in the transition from a natural economy to a money economy.
Coinage disappeared and Europe was plunged back into a natural economy as a result of the barbarian invasions. For a half millennium production was localized for local needs with little if any long distance trade. The feudal system gradually developed and modified this subsistence economy reaching a kind of perfection in the High Middle Ages. Exchanges in this period were characterized by their reciprocity. The value received was equivalent to the value given. The use of commodity money made the exchange transparent and the absence of credit made it complete. There was a deep aversion to usury. No one wanted to be a brother biter. (33) Will Durant, The Story of Civilization, Simon & Shuster, New York (1954), Vol. I, p. 15.
A series of revolutions—commercial, philosophical, financial, industrial—ensued that would shatter the organic order of medieval society and usher in our modern world. The legitimization of usury is decisive in bringing about this world.
The first of these revolutions was a change of heart towards material and pecuniary gain. Human fallenness has always made covetousness a besetting problem for human beings. The Church is able to mitigate this condition by presenting sanctifying grace as a higher ideal than possessing more in this life. As early as the 12th Century, however, and certainly by the 14th century, religious restraint was thrown off and gain was sought as an end in itself. Capitalism, a new monetized and commercial economy that had the endless accumulation of capital or surplus as its purpose, was birthed. Usury is a particularly potent technique to this end so its adoption naturally increased and there was a cry for credit to finance the increasing level of commercial activity.
Francis Bacon produced the philosophical revolution that would accompany capitalism’s quest for more. Bacon’s seminal idea was that human beings could return themselves to the paradise enjoyed before the Fall by taking on the power of God. This new power would come from scientific discovery and resultant technological invention using Bacon’s Novum Organum (new method). The vision is of a sovereign science that would remedy all our woes. Pope Benedict summarized the changed orientation from Christendom:
“Our contemporary age has developed the hope of creating a perfect world…thanks to scientific knowledge…Biblical hope in the Kingdom of God has been displaced by hope in the Kingdom of man.”(34)
Modernity begins in earnest with the advent of modern banking. Finance is revolutionized with the invention of paper money and the institutionalization of usury. As trade expanded considerably the level of wealth and silver being amassed become great. To deal with the problem of security money was stored in the vault of a goldsmith and a receipt, a basic paper record to collect the money, was issued. As commerce spread over greater and greater distances it became impractical to ship large quantities of silver and gold. Merchants began accepting bills of exchange instead of immediate payment. The exchange is completed when the bill of exchange is redeemed for money—i.e., the paper (bill of exchange) is a promissory note not money itself.
The next step in the progression to paper money was to sign over a bill of exchange itself to someone who is selling something rather than turning the bill into money and then having the vendor deposit it back. The paper bills of exchange and goldsmith receipts began to circulate as a medium of exchange. Goldsmiths, organized into banks, became a clearinghouse operation based on surety. Their real genius in the capital accumulation game was the discovery of a potent way of activating money. They realized that only a small amount of gold and silver deposits would normally be withdrawn at any one time. They could issue receipts promising to pay a greater quantity of money than they actually had in their vaults. Fractional reserve banking was born and the money supply was compounded.
A Faustian bargain was struck by the British Crown with the monied men of England in founding the Bank of England in 1694. In return for the money needed to prosecute its war with France the parliament granted a charter to the privately owned Bank to issue paper notes to be loaned to government and the public with usury. The startling reality of what had been done was well known by the Bank principals as indicated by this statement by William Paterson, the originator of the Bank.
Unequal exchanges have been institutionalized. Usury is an arbitrary tax or tribute on the borrower. It is an ancient injustice. What is new to our times is that the wealth is no longer earned prior to its being lent out. Now, loans, that must be repaid with added interest by the sweat of the borrower’s brow, are made solely by the wrist reflex of the lender. It is unthinkable that private citizens could lawfully engage in the practice of creating money ex nihilo. It ought to be equally unthinkable for private banks to do so.
Justice is the basic social virtue rectifying human relationships. In its absence social order is simply not possible. Despite generating an historically unheard of material bounty for some, our current monetary and banking regime, having set itself firmly on the injustice of usury, ultimately impoverishes. What forms does this take?
1) Social Impoverishment
Competition is instantiated in the regime. In creating money ex nihilo bankers only create enough money to pay the loan not the added interest. Each borrower must compete furiously with all others to grab these goods for himself or herself. We move from a state of brotherhood to universal otherhood. Organizationally, the pressure to lower costs, including labour costs, arises because the demands of usurious credit must be met.
Interest is also “the cause of chronic unemployment.”39 Production ceases when the rate of interest exceeds the rate of profit leaving people without work. In an usurious economic system labour can never be fully employed and the community’s capital can never be fully utilized for productive purposes.
Confidence or trust is indispensible in human relationships but the debt based financial system where all true money has disappeared erodes trust. Even though the present paper money economy is a house of cards the illusion that it can be trusted must be maintained. Any piercing of the illusion could lead to a collapse.
The maldistribution of resources in this world-wide regime is staggering. While some people experience an opulence never known before, three quarters of the human population lack enough to fulfill their distinctly human capacities, with a good percentage of these living in utter deprivation. Through usury wealth is steadily extracted from numerous borrowers and concentrated in the hands of relatively few creditors. Interest is collected on mortgages, educational loans, credit card and consumer debt. Interest costs to the individual citizen are hidden in the taxes collected to fund government’s usury payments and in the price increases the commercial sector demands to meet its own debt servicing obligations. Society is divided into two groups: debtors and creditors. This is the true class warfare being played out, with those in the most precarious economic positions paying the most usurious rates.
Life is conditioned by the burden of debt. Debt prevents many people from achieving financial security and subjects many more to lives of debt servitude. Labouring on behalf of creditors, or existing as a ward of the state because one isn’t lucky enough to have a job, is not liberating. Stress and anxiety fuel the regime. Life in debt is plagued by despair, depression, guilt, shame, insomnia, nightmares and ends in suicide for a good number.
Economic instability is the order of the day. Now that money can be printed at will there is no limit to the debasement of the currency. Economic booms and busts are a regular occurrence because of the difficulty of matching monetary levels with actual levels of production. Money is now untethered from the real economy. Reality is subject to the commands of investment. The valuation of everything money measures becomes extremely difficult. The concept of exchange is disrupted. Trade is the giving of goods for goods. Now we give goods and receive paper. The exchange is not complete until the paper is redeemed for gold and silver. This can no longer be done. The paper can only be circulated.
Communal structures, under assault in the regime of capitalism since the time of feudalism, are finally decimated by a relentless and radical privatization. At the point where the expansion of debt exceeds the ability to pay, “the financial sector moves to take the public domain for itself—the public enterprises, roads, broadcasting systems, ports and harbours.”(40)
The institutionalization of usury brings about the ultimate social impoverishment, a permanent war economy. President Eisenhower warned of a military/industrial complex in his final speech before leaving office. It was a prescient warning but not entirely on the mark. He would have been closer to the heart of the matter if he had talked about the fiscal/military state. With commodity money capital projects and other enterprises, including war, had to be paid up front. Wars can now charged to a credit card as well. Indeed, the institutional innovations discussed earlier (e.g., founding the Bank of England in 1694) were compelled by war. Britain achieved naval superiority in the 18th century because it was a first mover away from reciprocal exchange and this has set the pattern for super power success ever since. Thomas Jefferson, writing at the founding of the American Republic, would note that the perpetuation of debt had “drenched the earth with blood.”(41)
2) Ecological Impoverishment
Economic growth is the unquestioned mantra of our economy. Usury is behind this compulsion to grow at all costs. Production must expand to pay interest on loans. The world financial system is really a giant game of musical chairs. As long as the economic growth demanded by usury can be achieved the fallout can perhaps be managed. Should the growth ever not materialize then many will be without seats.
The growth imperative of the debt economy is running up against the natural limits of the planet. The result is a host of intractable environmental problems including resource depletion, habitat destruction and species loss, ecological disruption and pollution.
Life on the planet is being extinguished. There are now 3500 tigers left in the wild in the world. This is down from 100,000 a century ago. Their habitat is down to 7% of what it once was. This theft of the natural and biological capital of the planet is a result of the economic expansion the financial system requires. We are unable to grant other creatures a place in the sun because the financial system must constantly be fed more debt money to service the interest charges on prior debt. It is truly madness to think that infinite growth is possible on a finite planet.
3) Spiritual Impoverishment
Life is accelerated to an inhuman pace in the debt economy. Commodity money is quite inelastic. In a system based on this money time has little compulsion to it. Credit is a claim against future production, however, so debtors are compelled to make the future different from the past. There is a necessity to continually increase production and this changes one’s relationship to time. Time is now money, or more accurately, one must not miss the chance to use one’s time to make money. One must move at the rate the technological system demands. There is no time for the contemplation of higher things.
The appetite our usurious system incites is insatiable but even our petty usury is not as innocuous as we might think. It sets our hearts on gain not on God. We no longer see our neighbor as a person to love.
The evidence of our spiritual bankruptcy is plain to see. Credit card companies call those who avoid interest charges by paying their balance in full each period deadbeats. Predatory lenders act without compunction. Debt is aggressively marketed to everyone. Enslavement of the young and vulnerable is sought.
Ancient usurers thirsted for sheer power over the lives and property of men. The titans of financial capitalism are no different but the hold they have on society is predicated on the promise of utopia and a continual stimulation of a lust for things across the populace. Hundreds of billions of advertising dollars are expended to bombard people with messages of the salvific potential of consumption. The “frenetic intemperance”(42) gripping the souls of so many yields a dependable stream of borrowers and a steady flow of wealth into the hands of the banking elite.
Borrowing and lending are as old as humanity itself. What transformed this ancient practice was the idea that credit could be used to create money. Financial capitalism is not a natural evolution of the economy as the change from a natural to a money economy is. Men who desired gain at the expense of others spun a web of debt forcing society in this direction. They are proving to be the most destructive ruling elite in history. The claims on the future they have stacked up are simply untenable. Hudson’s Law, “debts that can’t be paid, won’t be,” will not be evaded. We must remove ourselves from the fantasy world they have created and get busy building a provisioning system that proposes to endure.
Return to Order: Building a Humane Economy
The consequences of usury are always calamitous because charity is absent when interest is charged on a loan. Human beings are made by love and for love. Charging for the use of property goes against this teleology.
How are we to live out our vocation to divine love in our economic lives? Can money be returned to its rightful place as a means of exchange? Is it possible to make unearned income a thing of the past? What efforts are being made to build a new economy based on sound money and non-usurious lending in the collapsing shell of the old economy?
Pope Benedict XVI thought it possible to “steer the system”43 to more humane ends by the expression of “gift”.44 The success of the Christian housing ministry Habitat for Humanity lends credence to this hope. A key element in this global home building endeavor is the granting of no interest mortgages when the houses are sold. Besides turning away from usury, the rest of the practices of Habitat for Humanity are also an embodiment of the principles of Catholic social thought.
Founded without fanfare in rural Georgia in 1976, Habitat for Humanity has grown to where it is now the largest home builder in the world, operating in more than 100 countries and 7,000 communities. A new home is completed every ten minutes. To date, Habitat for Humanity has constructed almost one million houses.
Habitat for Humanity’s solution to poverty housing emphasizes partnership and participation but the inspiration for the work has always been Christian.45 Each work day at a building site begins in prayer. Homeowners are presented with a Bible when they move in. These rituals serve to maintain the identity of the organization and it is the spiritual unity provided by the Christian worldview that allows Habitat for Humanity to accomplish what it does.
Contractual relationships undergird economic transactions but Habitat for Humanity holds out the high ideal that human beings are capable of mirroring the covenantal love of God, are capable of entering into unconditional, secure, personal commitments with each other. This is operationalized by having affiliates sign a covenant promising to honor the purpose of the organization and to uphold its basic principles. The Covenant Agreement is a moral and spiritual document, not a legal one. As such, it demands more out of its signatories but by operating on a higher moral plane it also achieves more, not to the least of which is a radical decentralization of the effort. Relationships between Habitat affiliates and homeowners are also covenantal.
Habitat for Humanity dares to dream of the elimination of poverty housing. Its moral vision is of a world where every man, woman, and child has a safe, healthy place to live. This is a significant element of the common good since people need to have a decent home in a decent community if they are to develop as they ought to. Solidarity is shown as the problem is tackled one local affiliate, one house, one family at a time until everyone’s basic shelter needs are met.
Habitat for Humanity works because subsidiarity is insisted upon. Habitat volunteers go down into the local, sometimes daunting and almost hopeless, presence of the problem. The home ownership that results brings stability to a family, the primary vital cell of society.
Partnerships that Habitat for Humanity enters into with homeowner families are characterized by enduring commitment. The aim is not just to provide a family with a decent living space but to return them to their communities as full and productive members. A complete maturation, integral human development, is sought. The aim is to provide people with the opportunity to live and grow into all that God intended them to be. This means that in the relationship with the partner family responsibility is taken by the affiliate to sustain them as a family would. Continuing love and concern are shown to the homeowner family to ensure their flourishing. God’s love seeks and suffers in order to save and this is the type of love Habitat for Humanity members try to pour forth.
Homeowner families put 500 hours of sweat equity into the Habitat effort, building their own home and that of others. This serves to build pride of ownership, foster positive relationships with others (what better way is there to build a neighborhood than to build your neighbor’s house), develop new life and employment skills and give new confidence. Habitat is a partnership not a give away. Sweat equity is the epitome of this—a reaching out of the hand saying, “let’s work together.” By insisting on the assumption of responsibility respect is shown for the moral and personal resources, the human dignity, of the prospective homeowners themselves.
The additional benefit of subsidiarity is that pressure is taken off the unsustainable welfare state and no one is demeaned by paternalistic social assistance. Habitat for Humanity purposefully limits government involvement because it sees the problem of inadequate housing in both its material and spiritual dimensions. Obviously, if a person lacks adequate shelter, then he has a material problem. If others are unable to empathize with their neighbor’s plight and see his problem as their own, they are poor in faith. Government cannot provide a solution to this.
Catholic social doctrine has always insisted on a preferential option for the poor. Housing is considered to be a universal right of all human beings and Habitat for Humanity’s concern is that this right be met. As an expression of solidarity with poor countries Habitat affiliates in the developed world tithe 10% of their donations to an affiliate in the developing world. This ancient Judaic requirement is fulfilled for the reason that it was installed, that justice may prevail. Differential costs between countries generally mean that for each house built in an overdeveloped country, another house can be built for the most deprived peoples. Even a very small tithe is fruitful but more importantly the rich are responding to the cry of the poor.
Houses are not simply given away. No-interest mortgages amortized over a 15 to 25 year period are granted to homeowner families and held by the affiliate. The mortgage payments are returned to a revolving fund. All income from house payments is used for the construction of more housing. This principle serves a number of common sense purposes—i.e., it is prudent.
i) It impresses upon homeowner families that they have a moral obligation to keep up their payments. This deepens their stake in the Habitat family and helps them to develop responsibility. Homeowner partners are challenged to repay at a faster rate and even to make direct contributions to the fund.
ii) It establishes a long-term relationship, thereby weaving a network of charity.
iii) It effectively ensures that whatever money Habitat for Humanity gets as an organization will be tied up or stewarded for doing good. If more money comes in, home building is simply accelerated. Money is forever relegated to its rightful place as a means. Payments received from approximately 12 homeowners allow the construction of one additional home per year, in perpetuity.
iv) It helps to avoid “super-development of a wasteful and consumerist kind.”(46)
Rather than using resources to satisfy “selfish desires”(47) ones surplus can be directed in a wise, just, and honorable way.
v) It provides the poor a way to experience the “blessedness of giving” (Acts 20:35) since any contribution adds to the fund.
Houses are built and sold with no profit or interest added. Houses are sold at cost because the purpose of building them is not to make money but to empower the people who will live in them. Human need and not monetary gain drives the effort. No interest is charged because it is a burden on the backs of the poor they cannot afford to bear. Interest forces people to pay for two (or more!) houses when they only get one. Since the poor lack money to pay for two houses, they get none. Habitat for Humanity is on the cutting edge where our civilization has no solutions because it is willing to provide capital on terms that are feasible for the homeowner. It helps the weakest members of society defend themselves against usury.
Habitat for Humanity’s entire program rests on the shoulders of volunteers—on people individually, and through the organizations and churches they are members of, giving their time, energy, effort, enthusiasm, ability and money. This principle is no accident. It is there by design. Through it people are required to invest a part of their lives in the lives of others. Habitat for Humanity is a demonstration plot for love in action. The thousands of houses being built are a means for people to experience the goodness of agape love.
The opportunities to help are unlimited. The invitation, extended to every person, is to come and give what one can. Business partnerships abound and the extent of them is limited only by the moral imagination. Businesses lend their expertise, donate construction materials and capital, give employees time off to build a house. Some companies even organize the building and dedication of an entire house by members of their firm. For many the experience is life-changing.
God’s original gift of the earth was to the whole of mankind. The principle of the universal destination of goods is therefore primordial. There is room on the earth for everyone to live with dignity. Some four million people have found such room due to the actions of Habitat for Humanity. The organization demonstrates that it is possible “to go back to the point from which we should never have gone,”48 to the teachings of “the Prophets of Israel and the Fathers of the Church [forbidding usury].”(49)
Jim Wishloff is an Associate Professor and an award winning teacher at the University of Lethbridge. He has a B. Sc. (Engineering) and an M.B.A. from the University of Alberta and a Ph.D. from Case Western Reserve University.
1 C. S. Lewis, Mere Christianity (New York: MacMillan, 1943), 81.
2 Pope Francis, Evangelii Gaudium (The Joy of the Gospel). (Boston: Pauline Books & Media, 2013), #205
3 Ibid., #55
4 Ibid., #59
5 Ex. 22:25; Lev. 25:35-37; Deut. 23:19, 20; Prov. 22:7; Deut. 15:10; Neh. 5:1-13; Prov. 15:1-5; Prov. 28:8; Ezek. 18:8,9,13
6 St. Basil the Great, On Social Justice, St. Vladimir’s Seminary Press. Crestwood, New York (2009), p. 90. Translated by C. Paul Schroeder.
7 Robert P. Maloney, The Teaching of the Fathers on Usury: An Historical Study on the Development of Christian Thinking. Vigilae Christianae, Vol. 27, No. 4 (Dec. 1973), p. 258
8 Ibid., p. 250.
9 Cato in Cicero’s De officiis, ii. 2
10 Benedict XIV, Vix Pervenit (1745). Available at www.papalencyclicals.net/Ben14/b14vixpe.htm
11 Ibid., 4.
12 Ibid., I.
13 Ibid., 7.
14 Ibid., V.
15 Ibid., II.
16 Ibid., II.
17 Ibid., IV.
18 Ibid., IV.
19 Ibid., IV.
20 Ibid., 7.
21 Extrinsic titles, those charges that were legitimate because they upheld commutative justice, were allowed in Church teaching all the time remembering that it is the very nature of money that makes usury unjust. For instance, Aquinas thought it just to be compensated for losses incurred.
“A lender may without sin enter an agreement with the borrower for compensation for the loss he incurs of something he ought to have, for this is not to sell the use of money but to avoid a loss.” (ST II-II, q. 78, a. 2, ad. 1.)
22 Ibid., III.
23 Ibid., II.
24 Meeting the objection that money can bear fruit because it can be used to purchase a productive asset led the Church to make the distinction between money, non productive in itself, and investment in capital assets or the provisioning of capital assets to a productive effort.
25 Ibid., III.
26 Ibid., 7.
27 Ibid., 7.
28 Ibid., V.
29 Pope Leo XIII, Rerum Novarum (On the Condition of the Working Classes), Boston, MA: Daughters of St. Paul, 1891, #3.
30 Pope Pius XI, Quadragesimo Anno (On Social Reconstruction) (Boston, MA: Daughters of St. Paul, 1931), #106
31 Pope Benedict XVI, Caritas in Veritate (On Integral Human Development in Charity and Truth) (Vatican City: Liberia Editrice Vaticana, 2009), #65
32 Houston Catholic Worker, vol. XXXV, No. 1, Jan-Feb. 2014, p. 4.
17.prosecute its war with France the parliament granted a charter to the privately owned Bank to issue paper notes to be loaned to government and the public with usury. The startling reality of what had been done was well known by the Bank principals as indicated by this statement by William Paterson, the originator of the Bank.
“The bank hath benefit of the interest on all moneys which it creates out of nothing.”
35 Credit money, money created ex nihilo, was well on its way to replacing commodity money.
The British system was exported first to the United States and then to the rest of the world. The United States got its National Bank, a privately owned bank with an exclusive monopoly on usury reaping paper declared to be legal tender, with the establishment of the Federal Reserve in 1913.
36 Money in the modern world is no longer a claim ticket for existing silver or gold. It is merely a symbol or a token possessing no intrinsic value. Federal reserve notes masquerade as real money but the only thing they can be redeemed for is another note.
37 Why do people continue to take these “pieces of paper” in exchange for goods? What had to happen for this fiat currency to be considered money by the modern mind? The first thing was the use, for a fairly long time, of paper substitutes for real money. People had to grow accustomed to using paper while not seeing real gold and silver coins. Secondly, government had to deprive people of their freedom to employ gold and silver as medium of exchange.38 Paper money systems simply cannot survive without the tyranny of legal tender laws—government decree that certain privileged bank paper is declared to be money and must be accepted if it is offered in payment of debts public or private.
The coinage of money is no longer a prerogative of the Sovereign. Bankers rule in the regime of capitalism. Our social world is profoundly shaped by the historically unprecedented step of governments placing their sovereign power to make and define money in the hands of those who lend it with interest for profit.
What has this 3 century revolution in finance brought us? What are the consequences of this triumph of the imagination?
34 Pope Benedict XVI, Spe Salvi (On Christian Hope), (Vatican City: Liberia Editrice Vaticana, 2007),
35 In Adrian Kazminski, The Ecology of Money, Lexington Books: Lanham, MD, 2013, p. 47
36 The basic plan for the Federal Reserve System was drafted at a secret meeting in November 1910 at the private resort of J.P. Morgan on Jekyll Island, Georgia. Six men, representing one quarter of the total wealth of the world at the time, spirited themselves to the Island under the cover of night to work out an agreement on the structure and operation of a banking cartel. Even the name was chosen for its deception. The Federal Reserve is not a part of government. It is made up of 12 privately owned banks each covering a region of the country.
37 The look of Federal reserve notes was copied from silver certificates already in existence. This appearance has helped to cover up a significant difference. The silver certificates paid out a certain value of silver to the holder.
38 On May 1, 1933 citizens of the United States had to surrender all the gold coins and bars in circulation to the Federal Reserve in exchange for paper currency. The penalty for noncompliance was $10,000 or 10 years in prison. Gold was eliminated as a circulating medium of exchange. In 1965 silver was taken away and the mint stopped putting silver into coins. In 1971 all remaining ties between gold and the dollar were severed.
39 Arthur Birnie, The History and the Ethics of Interest, William Hodge & Co., Ltd., Glasgow, 1952, p. 31.
40 Michael Hudson, Financial Capitalism and Its Discontents. ISLET-Verlag, Dresden, 2012, p.45.
41 Jack Cashill, Popes & Bankers. Thomas Nelson, Nashville, 2010, p. 115.
42 John Horvat II, Return to Order, York Press. York, Pennsylvania (2013).
43 Pope Benedict XVI, Caritas in Veritate, #46
44 Ibid. #34
45 The genesis of Habitat for Humanity can be traced to the acceptance of the radical nature of Christian discipleship by two men. The spiritual depth of Clarence Jordan, a dynamic Southern Baptist preacher and the founder of Koinonia Farms, a precursor to Habitat for Humanity, combined with the entrepreneurial energy and genius of repentant businessman Millard Fuller to bring the organization about.
46 Pope Benedict XVI, Caritas in Veritate, #22
47 Ibid., #28
48 Peter Maurin, Easy Essays. Rose Hill Books, Washington, DC, 1984, p. 25. Originally published in 1961 by Academy Guild Press.
49 Ibid., 17.15
publications include articles in the Journal of Business Ethics Education, Teaching Business Ethics, the Review of Business, and the Social Justice Review.