Many people believe that “usury” is the practice of charging interest on a loan. Because the Catholic Church has condemned usury and now supposedly permits and benefits from this practice, anti-Catholics argue that the Church has contradicted her own teaching. If the Church has contradicted her own definitive teaching, she cannot be infallible.
The problem with the anti-Catholic argument is that the Church has never defined usury as “taking interest on a loan.” Instead, the Fifth Lateran Council (1515) defines usury as follows:
“For that is the real meaning of usury: when, from its use, a thing which produces nothing is applied to the acquiring of gain and profit without any work, any expense or any risk” (Session X).
Thus, usury is not “charging interest on a loan.” Usury is profiting from something which produces nothing, without any effort. Depending on the circumstances, this could apply to money, bushels of wheat, widgets or other goods. To better understand the Church’s teaching on usury as it relates to money, we must understand how money was viewed and functioned before we had competitive markets.
In the economies of antiquity, there was little or no opportunity to invest money to make a return. Money was used for private, not commercial exchanges. Accordingly, using Aristotelian terminology, money was considered “barren.” That is, money had no inherent value while idle. It could only be consumed or hoarded.
Of course, the nature of money has changed over the centuries. In today’s global economy of competitive markets, money is no longer “barren.” To the contrary, money is “fruitful” because there are many opportunities to invest money to make a return. Thus, a transaction that would have been usurious in the past would not necessarily be usurious today. Because money in today’s economy is “fruitful,” the act of loaning money in such an economy at interest is not usurious (since money has value even when idle).
Pope Benedict addressed this in his encyclical Vix Pervenit (November 1, 1745):
