The first was the doctrine of "damnum emergens": if a lender suffered loss by the failure of the borrower to return a loan at a date named, compensation might be made. Thus it was that, if the nominal date of payment was made to follow quickly after the real date of the loan, the compensation for the anticipated delay in payment had a very strong resemblance to interest. Equally cogent was the doctrine of "lucrum cessans": if a man, in order to lend money, was obliged to diminish his income from productive enterprises, it was claimed that he might receive in return, in addition to his money, an amount exactly equal to this diminution in his income.
But such evasions were looked upon with little favour by the great body of theologians, and the name of St. Thomas Aquinas was triumphantly cited against them.
Opposition on scriptural grounds to the taking of interest was not confined to the older Church. Protestantism was led by Luther and several of his associates into the same line of thought and practice. Said Luther. "To exchange anything with any one and gain by the exchange is not to do a charity; but to steal. Every usurer is a thief worthy of the gibbet. I call those usurers who lend money at five or six per cent." But it is only just to say that at a later period Luther took a much more moderate view. Melanchthon, defining usury as any interest whatever, condemned it again and again; and the Goldberg Catechism of 1558, for which he wrote a preface and recommendation, declares every person taking interest for money a thief. From generation to generation this doctrine was upheld by the more eminent divines of the Lutheran Church in all parts of Germany. The English reformers showed the same hostility to interest-bearing loans. Under Henry VIII the law of Henry VII against taking interest had been modified for the better; but the revival of religious feeling under Edward VI caused in 1552 the passage of the "Bill of Usury." In this it is said, "Forasmuch as usury is by the word of God utterly prohibited, as a vice most odious and detestable, as in divers places of the Holy Scriptures it is evident to be seen, which thing by no godly teachings and persuasions can sink into the hearts of divers greedy, uncharitable, and covetous persons of this realm, nor yet, by any terrible threatenings of God's wrath and vengeance," etc., it is enacted that whosoever shall thereafter lend money "for any manner of usury, increase, lucre, gain, or interest, to be had, received, or hoped for," shall forfeit principal and interest, and suffer imprisonment and fine at the king's pleasure.(453)
(453) For Luther's views, see his sermon, Von dem Wucher, Wittenberg,
1519; also the Table Talk, cited in Coquelin and Guillaumin, article
Interet. For the later, more moderate views of Luther, Melanchthon, and
Zwingli, making a compromise with the needs of society, see Bohm-Bawerk,
p. 27, citing Wiskemann. For Melanchthon and a long line of the most
eminent Lutheran divines who have denounced the taking of interest, see
Die Wucherfrage, St. Louis, 1869, pp. 94 et seq. For the law against
usury under Edward VI, see Cobbett's Parliamentary History, vol. i, p.
596; see also Craik, History of British Commerce, chap. vi.
But, most fortunately, it happened that Calvin, though at times stumbling over the usual texts against the taking of interest for money, turned finally in the right direction. He cut through the metaphysical arguments of Aristotle, and characterized the subtleties devised to evade the Scriptures as "a childish game with God." In place of these subtleties there was developed among Protestants a serviceable fiction—the statement that usury means ILLEGAL OR OPPRESSIVE INTEREST. Under the action of this fiction, commerce and trade revived rapidly in Protestant countries, though with occasional checks from exact interpreters of Scripture. At the same period in France, the great Protestant jurist Dumoulin brought all his legal learning and skill in casuistry to bear on the same side. A certain ferretlike acuteness and litheness seem to have enabled him to hunt down the opponents of interest-taking through the most tortuous arguments of scholasticism.
In England the struggle went on with varying fortune; statesmen on one side, and theologians on the other. We have seen how, under Henry VIII, interest was allowed at a fixed rate, and how, the development of English Protestantism having at first strengthened the old theological view, there was, under Edward VI, a temporarily successful attempt to forbid the taking of interest by law.
The Puritans, dwelling on Old Testament texts, continued for a considerable time especially hostile to the taking of any interest. Henry Smith, a noted preacher, thundered from the pulpit of St. Clement Danes in London against "the evasions of Scripture" which permitted men to lend money on interest at all. In answer to the contention that only "biting" usury was oppressive, Wilson, a noted upholder of the strict theological view in political economy, declared: "There is difference in deed between the bite of a dogge and the bite of a flea, and yet, though the flea doth lesse harm, yet the flea doth bite after hir kinde, yea, and draweth blood, too. But what a world this is, that men will make sin to be but a fleabite, when they see God's word directly against them!"
The same view found strong upholders among contemporary English Catholics. One of the most eminent of these, Nicholas Sanders, revived very vigorously the use of an old scholastic argument. He insisted that "man can not sell time," that time is not a human possession, but something which is given by God alone: he declared, "Time was not of your gift to your neighbour, but of God's gift to you both."
In the Parliament of the period, we find strong assertions of the old idea, with constant reference to Scripture and the fathers. In one debate, Wilson cited from Ezekiel and other prophets and attributed to St. Augustine the doctrine that "to take but a cup of wine is usury and damnable." Fleetwood recalled the law of King Edward the Confessor, which submitted usurers to the ordeal.
But arguments of this sort had little influence upon Elizabeth and her statesmen. Threats of damnation in the next world troubled them little if they could have their way in this. They re-established the practice of taking interest under restrictions, and this, in various forms, has remained in England ever since. Most notable in this phase of the evolution of scientific doctrine in political economy at that period is the emergence of a recognised difference between USURY and INTEREST. Between these two words, which had so long been synonymous, a distinction now appears: the former being construed to indicate OPPRESSIVE INTEREST, and the latter JUST RATES for the use of money. This idea gradually sank into the popular mind of Protestant countries, and the scriptural texts no longer presented any difficulty to the people at large, since there grew up a general belief that the word "usury," as employed in Scripture, had ALWAYS meant exorbitant interest; and this in spite of the parable of the Talents. Still, that the old Aristotelian quibble had not been entirely forgotten, is clearly seen by various passages in Shakespeare's Merchant of Venice. But this line of reasoning seems to have received its quietus from Lord Bacon. He did not, indeed, develop a strong and connected argument on the subject; but he burst the bonds of Aristotle, and based interest for money upon natural laws. How powerful the new current of thought was, is seen from the fact that James I, of all monarchs the most fettered by scholasticism and theology, sanctioned a statute dealing with interest for money as absolutely necessary. Yet, even after this, the old idea asserted itself; for the bishops utterly refused to agree to the law allowing interest until a proviso was inserted that "nothing in this law contained shall be construed or expounded to allow the practice of usury in point of religion or conscience." The old view cropped out from time to time in various public declarations. Famous among these were the Treatise of Usury, published in 1612 by Dr. Fenton, who restated the old arguments with much force, and the Usury Condemned of John Blaxton, published in 1634. Blaxton, who also was a clergyman, defined usury as the taking of any interest whatever for money, citing in support of this view six archbishops and bishops and over thirty doctors of divinity in the Anglican Church, some of their utterances being very violent and all of them running their roots down into texts of Scripture. Typical among these is a sermon of Bishop Sands, in which he declares, regarding the taking of interest: "This canker hath corrupted all England; we shall doe God and our country true service by taking away this evill; represse it by law, else the heavy hand of God hangeth over us and will strike us."