Chapter 3 - The Definition of Usury


From ancient times, moneylenders were called usurers. Today it seems an old-fashioned, quaint word. The modern expression is 'the lending of money at interest'. This does not convey the full meaning of usury. All major religious texts strongly condemned usury. The Christian church managed to keep usury banned for about a thousand years. The Muslim religion maintains a ban on usury. The major feature of usury is that a debt is created which becomes unpayable. With usury, there is more money owing than there is money. The religious prophets knew about the impoverishment and dispossession caused by usury and the vast wealth and assets and control gained by the usurers. So great was this control that is usurers took control of the Roman Empire and usury led to its destruction. The religious people did not appear to know about the arithmetic of usury. Those that gained from usury, tend to advertise their lending habits by suggesting they are helping the society. The money-lenders avoid mentioning the Impossible Contract and Unpayable Debts and catastrophic dispossession. The definition of usury has been softened over the centuries. So let us study past and present definitions of usury and the flaws and errors in those definitions.

The Current Definition of Usury

The current definition is usually given in this form:

Usury is the lending of money at excessive or illegal rates of interest.
An Older Definition of Usury
Usury is the lending of money at any rate of interest.
A Roman Definition of Usury
Usury is the practice of lending money and expecting a greater amount in return.
The Hebrew Expression for Usury

The Hebrew expression for usury is translated as 'bite', as in 'snakebite'. This represents the characteristic of usury where the initial bite is comparatively painless, but the pain magnifies leading to a catastrophic ending. So our ancient ancestors clearly knew of the main characteristic of usury, which is the exponential build-up of unpayable debt leading to dispossession, poverty and enslavement.

So an ancient definition of Usury would be closer to:

Usury is the practice of lending money and expecting more in return leading to a catastrophic ending that includes dispossession and poverty.

The ancients knew enough about snakebite usury that a man called Moses, forbade its practice amongst his own people. However, Moses did state that usury was allowed against foreigners. Moses allowed usury to be used as a tactic of impoverishment against any nation deemed to be an enemy. This was a very destructive tactic used against the Canaanites to destroy their economy and impoverish the people. It culminated in the genocide of the Canaanites. A while later, usury crept back into Hebrew society amongst the Pharisees and their money changers. This new usury involved the half shekel coin. This practice of usury met with acceptance by the local religious Pharisee hierarchy. A local man, by the name of Jesus, from a separate sect called the Essenes, stood up for the local people being impoverished by the Pharisees and their moneylenders. These moneylenders had developed a monopoly on the ownership and supply of half shekel coins, which the religious authorities ruled were the only acceptable form of payment for the temple taxes. This man was publically nailed to a wooden scaffold, primarily, to prevent him from turning the people against the usurious temple tax system that impoverished the people and enriched the moneylenders and the then church. It must be remembered that it is expensive to build large churches and run a religious system, so it is always likely that large religions will be tempted to support usury.

Islam and Riba

Usury in Islam is called 'Riba'. The definition of Riba is close to the definition of usury as it was in medieval Christianity. Riba is the lending of money at interest, regardless of the rate of interest. Although some tolerance is given to trade in business transactions.

Usury is now commonly defined as the lending of money at excessively high or illegally high rates of interest. (Although the rate is not always defined.) This modified definition was a deliberate corruption of the meaning of Usury, that took place in Europe in order to permit the 'moneylender' (now called banker) to bypass the Christian objection to all forms of usury.

There are two schools of thought among Muslims about the prohibition of riba:

The orthodox school claims that all types of interest are riba and all types of banking transactions involving interest are illegal.

The modernist school says that only exorbitant and high rates of interest, along with that taken from needy persons, are riba. Interest on commercial bank loans is not riba. [30]

Muslims have a problem when they are buying houses or doing business in a society dominated by usury. The pressure is great to find a way to enable them to purchase.

The Quran and Usury

That which ye give in usury in order that it may increase (other) people's property hath no increase with Allah; but that which ye give in charity, seeking Allah's countenance, hath increased manifold. 40

And of their taking usury when they were forbidden it, and of their devouring people's wealth by false pretences. We have prepared for those of them who disbelieve a painful doom. 41

O ye who believe! Devour not usury, doubling and quadrupling (the sum lent). Observe your duty to Allah, that ye may be successful. 42

Those who swallow usury cannot rise up save as he ariseth whom the devil hath prostrated by (his) touch. That is because they say: trade is just like usury; whereas Allah permitteth trading and forbiddeth usury. He unto whom an admonition from his lord cometh, and (he) refraineth (in obedience thereto), he shall keep (the profits of) that which is past, and his affairs (henceforth) is with Allah. As for him who returneth (to usury) - such are rightful owners of the fire. They will abide therein. 43

Allah hath blighted usury and made almsgiving fruitful. Allah loveth not the impious and guilty. 44

O ye who believe! Observe your duty to Allah, and give up what remainth (due to you) from usury, if ye are (in truth) believers. And if ye do not, then be warned of war (against you) from Allah and his messenger. And if you repent, then ye have your principal (without interest). Wrong not and ye shall not be wronged. And if the debtor is in straitened circumstances, then (left there be) post-ponement to (the time of) ease; and that ye remit the debt as almsgiving would be better for you if ye did but know 45

An excerpt from unedited full-text of the 1906 Jewish Encyclopedia:

In modern language this term denotes a rate of interest greater than that which the law or public opinion permits; but the Biblical law, in all dealings among Israelites, forbids all "increase" of the debt by reason of lapse of time or forbearance, be the rate of interest high or low, while it does not impose any limit in dealings between Israelites and Gentiles. Hence in discussing Jewish law the words "interest" and "usury" may be used indiscriminately. [32]

There are three Biblical passages which forbid the taking of interest in the case of "brothers," but which permit, or seemingly enjoin, it when the borrower is a Gentile, namely, Ex. xxii. 24; Lev. xxv. 36, 37; Deut. xxiii. 20, 21. [32]

When an Israelite lends money to a Gentile or to an "indwelling stranger" (a half-convert of foreign blood), he may and should charge him interest; and when he borrows from such a person he should allow him interest. It is the opinion of Maimonides that for Jews to charge Gentiles interest is a positive command of the written law. [32]

A Christian Stand on Usury

The great German Religious Leader of the Reformation of the 15th and 16th centuries, Martin Luther, was outspoken in biblical teachings and truth. Here is what he said about usury:

Martin Luther 1652

The Heathen, out of natural reason and understanding were able to render an account that an Usurer is a threefold thief and murderer. But we that are Christians hold them in such honor and esteem that in a manner (for money's sake) we adore and worship them; no regard is had, what scorn and derision thereby we procure to the name of a Christian and to Christ Himself. For although we were not Christians, yet natural sense and reason tells us (as well as the Heathen) that an Usurer is a murderer: for who so sucks the maintenance of another, the same not only robs and steals, but also (so much as in him lies) he commits even as great a murder as he that starves and utterly destroys one. This does an usurer, and in the meantime sits in his chair, whereas he justly ought to hang on the Gallows, and he devoured by so many Ravens as he has stolen shillings, if otherwise so much flesh were on him that so many Ravens might be able to piece it and to part it out. Cato, the Usurer's enemy, said: 'Little thieves lie stocked, ironed in Prisons, but great Thieves ride prancing in silks and chains of gold,' but so much as we neither punish nor strive against them, therefore without all doubt in the end we together with the Usurers shall pay sweetly for it. [33]

We cannot ignore the influence of religion on usury and finance. The different religions have different approaches to usury that will continue to influence the relations between persons of different religions. There is a constant pressure to adjust the definition of usury of favour those that benefit from usury. Christians tend to be quite gullible in this regard.

My Corrected Definition of Usury

So it would appear that the correct definition of usury should be:

Usury is the practice of lending money and expecting a greater amount in return such that unpayable debts occur.

With this definition, it is now possible to work out when usury occurs in society and when it does not.

With a Public Bank usury has not occurred because no unpayable debts have occurred. Unpayable debts do not occur because the government can spend extra money that is then available to pay interest. Government money lent to the government becomes irrelevant.

The Twelfth Flaw of Economics

   The definition of usury is incomplete. It should be: "Usury is the practice of lending money and expecting a greater amount in return such that unpayable debts occur."

Usury and the Poor

It can be reasoned that the older definitions of usury and the term Neshek were referring to the lending to the poor who might have difficulty in repayment. Certainly lending to the less well off would generally lead to enslavement or dispossession of goods or persons. Daughters would often find themselves in sexually compromising enslavement. The old scriptures do not limit the ban on usury to personal loans. The Koran is clearer on the subject where it gives a total ban on usury against persons and has very descriptive arrangements for the lending of money for trade. The lending of money for the purpose of business is essential for the functioning of society. Government spending does not meet the needs of business. Business needs money before it can make an income. Bank lending to business has been the major feature that has propelled us into the technological are over the last three centuries. We are grappling with the issue of debt and financial instability as well as the destruction caused by excessive use of resources. Credit is essential to the enabling of business entrepreneurship and business expansion. Certainly business can factor the interest into its profitability calculations. However, this does not stop the build up of debt in society. Debt in society will still exceed available money and some of the citizens will still get mired in unpayable debt. One business may not suffer unpayable debt, but someone else will. For every $1000 of money in circulation, someone else has to hold at least $2000 of debt. We need a better system.

The Thirteenth Flaw of Economics

   Under most bank systems in most countries, for every $1000 of Credit in circulation, someone has to hold at least $2000 of debt.

Enemies and Usury

It is quite common to assume that the Bible banned usury, but this is not correct. Moses explicitly allowed usury against 'foreigners'. The meaning of 'foreigners' is not entirely clear. The Canaanites suffered dreadfully from the usury practiced by the followers of Moses. One has to be suspicious that anyone practicing usury on us, may be treating us as the enemy. It is thus appropriate for me to warn people to be suspicious of the motives of those practicing usury. They are likely to extol the benefits of the borrowed money without adequately explaining the pitfalls and without adequately explaining where they obtained such vast quantities of credit. From the wording of the bible, you can to assume that you are being treated as an enemy, irrespective of the polite manner of the lender. By reverse logic, the usurer is your enemy.

The Fourteenth Flaw of Economics

   Usury has been and can be used as a weapon of war.

The Fifteenth Flaw of Economics

   Anyone practicing usury on you, is treating you as an enemy.

Christian Usurers

We may make a simple assumption is that it is only the bankers that are the beneficiaries of usury. Under the real definition or biblical definition, numerous citizens are the benefactors of usury. Anyone receiving interest on a bank account or interest from pension savings scheme is a benefactor of usury. Many live off the interest on money saved over a lifetime. So, many Christians have unwittingly become usurers and without any feeling of moral error. Usury has become an accepted practice amongst populations of otherwise moral, decent people. Whatever stand you wish to take on this, the practice has led to usury on a national and international scale that is destroying the lives of people, impoverishing nations and destroying the environment. As humans, we have replaced what many would call god's law with national law. As economic considerations have taken greater consideration than moral or religious law, there has been a gradual reinterpretation of the word 'Usury' to mean 'excessive or illegal' rates of interest, rather than 'any rate of interest'. This can be seen in this passage from the 1911 Encyclopaedia Britannica: "At the present day, ' usury,' if used in the old sense of the term, would embrace a multitude of modes of receiving interest upon capital to which not the slightest moral taint is attached." [31] and "The change in the moral attitude towards usury is perhaps best expressed by saying that in ancient times so much of the lending at interest was associated with cruelty and hardship that all lending was branded as immoral (or all interest was usury in the moral sense), whilst at present so little lending takes place, comparatively, except on commercial principles, that all lending is regarded as free from an immoral taint." [31]

Certainly, it is clear, that in days long gone, Usury was associated with poverty, dispossession, famine and starvation. Loans would normally be used by those driven by necessity and despair to borrow for survival at exorbitant rates of interest. Today, we would probably call this usurious extraction. Usury is often now associated with the borrowing for the purposes of obtaining greater gain. The gain through business activity or asset gain is seen as the reasonable justification for the lending of money. However, one cannot thus assume that all lending is reasonable. Much of the usury occurring today is leading to dispossession, desperation, suicide, poverty and economic control of nations by big international lenders. This leads to the dilemma of whether lending should only occur where business can be enhanced to the benefit of those in the community. And again in 1911 Encyclopaedia Britannica: "The conditions of ancient usury find a graphic illustration in the account of the building of the second temple at Jerusalem (Neh. v. 1-12). The reasons for borrowing are famine and tribute. Some said, 'We have mortgaged our lands, vineyards and houses, that we might buy corn, because of the dearth.' Others said, 'We have borrowed money for the king's tribute [tax], and that upon our lands and vineyards ... and, lo, we bring into bondage our sons and our daughters to be servants,... neither is it in our power to redeem them, for other men have our lands and vineyards. In ancient Greece, we find similar examples of the evil effects of usury, and a law of bankruptcy resting on slavery. In Athens about the time of Solon's legislation (594 B. C.) the bulk of the population, who had originally been small proprietors or metayers, became gradually indebted to the rich to such an extent that they were practically slaves. Those who still kept their property nominally were in the position of Irish cottiers: they owed more than they could pay, and stone pillars erected on their land showed the amount of the debts and the names of the lenders. Usury had given all the power of the state to a small plutocracy. The remedy which Solon adopted was of a kind that we are accustomed to consider as purely modern. In the first place, it is true that according to ancient practice he proclaimed a general seisachtheia, or shaking off of burdens: he canceled all the debts made on the security of the land or the person of the debtor. This measure alone would, however, have been of little service had he not at the same time enacted that hence-forth no loans could be made on the bodily security of the debtor, and the creditor was confined to a share of the property. The consequence of this simple but effective reform was that Athens was never again disturbed by the agitation of insolvent debtors. Solon left the rate of interest to be determined by free contract, and sometimes the rate was exceedingly high, but none of the evils so generally prevalent in antiquity were experienced. When we turn to Rome, we find exactly the same difficulties arising, but they were never successfully met. As in Athens in early times, the mass of the people were yeomen, living on their own small estates, and in time, they became hopelessly in debt. Accordingly, the legislation of the XII. Tables, about 500 B.C., was intended to strike at the evil by providing a maximum rate of interest. Unfortunately, however, no alteration was made in the law of debt, and the attempt to regulate the rate of interest utterly failed. In the course of two or three centuries, the small free farmers were utterly destroyed. By the pressure of war and taxes, they were all driven into debt, and debt ended practically, if not technically, in slavery. It would be difficult to overestimate the importance of the influence of usury on the social and economic history of the Roman republic. In the provinces, the evils of the system reached a much greater height. In 84 B.C. the war tax imposed by Sulla on the province of Asia was at first advanced by Roman capitalists, and rose within fourteen years to six times its original amount. It is interesting to observe that the old law of debt was not really abolished until the dictatorship of Julius Caesar, who practically adopted the legislation of Solon more than five centuries before; but it was too late then to save the middle class." [31] Please note that this was from 1911.

The general acceptance of usury has allowed a national system of usury to develop that has put individuals in debt for money, that, en-mass, they cannot pay. It has put national governments in debt to national banks for money they cannot pay. It has put governments in debt to international lenders for money that in total cannot be paid. The usurers no long roam with hatchet men to break your arms or take your daughters into servitude, they use a legal system and army of lawyers and compliant politicians on a local and national scale. On an international scale, they use the armies of compliant nations to demolish nations they deem are uncompliant. British law was modified to favour the lenders so that the assets of the borrower could be seized in a court system that provided the bailiffs to carry out the procedure. Thankfully, for the most part, this no longer includes debt slavery or imprisonment. Sexual debt slavery still occurs in developed nations as does various enforcement systems in the drugs trade and indentured labour on foreign farm workers. The prostitute, the drug user and the illegal alien worker are generally criminalized and offered little assistance by fellow citizens or government.

To appease those readers that were unaware that they had become usurers under the biblical definition, perhaps consider the 'Jaks Bank'. This is a bank that provides interest-free loans to its members. Members pay a fixed annual fee and deposit their money interest-free. When they need a loan, a mathematical formula determines the amount based on their saving history.

Please do a websearch for 'jaks bank' Please do a websearch for 'jaks bank'.

Please take look at this graph and consider some following situations.

Australia Money Supply and Debt

Consider that you have $10 000 of Bank Credit in a bank account. You hold $10 000 in the green section which is Bank Credit. Someone else, who we shall call Mr. Mysterious, is holding around $30 000 of debt in the red section to match your $10 000 Bank Credit. Do not consider that having Bank Credit is helping the system. If you have money saved in a bank account, you are contributing to the problem.

It is a strange dilemma as, 'not to charge interest' is to gradually lose purchasing power as the money devalues. The solution is that we need to store value for future use in some other way than in a bank account. I always like the example of planting trees as a store of value. Although homeownership is clearly a good prospect.

The Nineteenth Flaw of Economics

   Money is not a store of value.


[30] Prohibition of riba: Modernist vs. Orthodox and the 'need' for Islamic Financial Institutions - by Muhammad Akram Khan



[33] From "Colloquia Mensalia Martini Lutheri" printed in 1652