Thus, he is willing to allow usury in those cases where the charging of interest is “in reality a sort of work of mercy to the needy, who would otherwise have nothing, and where no great injury is done to another.” Thus, when “old people, poor widows or orphans, or other necessitous folk, who have learned no other way of making a living,” were only able to support themselves by lending out their money, in such cases the “lawyers might well seek to mitigate somewhat the severity of the law.” “Should an appeal be made to the ruler,” then the proverb “Necessity knows no law” might be quoted. “It might here serve to call to mind that the Emperor Justinian had permitted such mitigated usury [he had sanctioned the taking of 4, 6 or 8 per cent], and in such a case I am ready to agree and to answer for it before God, particularly in the case of needy persons and where usury is practised out of necessity or from charity. If, however, it was wanton, avaricious, unnecessary usury, merely for the purpose of trade and profit, then I would not agree”; even the Emperor himself could not make this legitimate; for it is not the laws of the Emperor which lead us to heaven, but the observance of the laws of God.[280]
It follows from this that even the so-called “titulus legis” found no favour in his sight in the case of actual money loans, for it is of this, not of “purchasable interest,” that he speaks in the writing to the pastors. A real, honest purchase, so he there says quite truly, is no usury.[281]
A remarkable deflection from his strict principles is to be found not only in the words just quoted but also in his letter to the town council of Erfurt sent in 1525 at the time of the rising in that town and the neighbourhood. The mutineers refused among other things to continue paying interest on the sums borrowed. For this refusal Luther censures them as rebels, and also refuses to hear of their “deducting the interest from the sum total” (i.e. the capital). He here vindicates the lenders as follows: “Did I wish yearly to spend some of the total amount I should naturally keep it by me. Why should I hand it over to another as though I were a child, and allow another to trade with it? Who can dispose of his money even at Erfurt in such a way that it shall be paid out to him yearly and bit by bit? This would really be asking too much.”[282]
Luther also relaxed his principles in favour of candidates for the office of preacher. When, in 1532, the widow of Wolfgang Jörger, an Austrian Governor, offered him 500 florins for stipends for “poor youths prosecuting their studies in Holy Scripture” at Wittenberg, at the same time asking him how to place it, he unhesitatingly replied that it should be lent out at interest; “I, together with Master Philip and other good friends and Masters, have thought this best because it is to be expended on such a good, useful and necessary work.” He suggested that the money “should be handed in at the Rathaus” at Nuremberg to Lazarus Spengler, syndic of that town; if this could not be, then he would have it “invested elsewhere.” Such “good works in Christ” are, he says, unfortunately not common amongst us “but rather the contrary, so that they leave the poor ministers to starve; the nobles as well as the peasants and the burghers are all of them more inclined to plunder than to help.”[283] Thus it was his desire to help the preachers that determined his action here.
A writer, who, as a rule, is disposed to depict Luther’s social ethics in a very favourable light, remarks: “When his attention was riveted on the abuses arising from the lending of money [and the charging of interest] he could see nothing but evil in the whole thing; on the other hand, if some good purpose was to be served by the money, he regarded this as morally quite justifiable.”[284] That Luther “was not always true to his theories,” and that he is far from displaying any “striking originality” in his economic views, cannot, according to this author, be called into question.[285]
Luther on Unearned Incomes and Annuities
A great change took place in Luther’s views concerning the buying of the right to receive a yearly interest, nor was the change an unfortunate one. He was induced to abandon his earlier standpoint that such purchase was wrong and to recognise, that, within certain limits, it could be perfectly lawful.
The nature of this sort of purchase, then very common, he himself explains in his clear and popular style: “If I have a hundred florins with which I might gain five, six or more florins a year by means of my labour, I can give them to another for investment in some fertile land in order that, not I, but he, may do business with them; hence I receive from him the five florins I might have made, and thus he sells me the interest, five florins per hundred, and I am the buyer and he the seller.”[286] It was an essential point in the arrangement that the money should be employed in an undertaking in some way really fruitful or profitable to the receiver of the capital, i.e. in real estate, which he could farm, or in some other industry; the debtor gave up the usufruct to the creditor together with the interest agreed upon, but was able to regain possession of it by repayment of the debt. The creditor, according to the original arrangement, was also to take his share in the fluctuations in profit, and not arbitrarily to demand back his capital.
At first Luther included such transactions among the “fig-leaves” behind which usury was wont to shelter itself; they were merely, so he declared in 1519 in his Larger Sermon on Usury, “a pretty sham and pretence by which a man can oppress others without sin and become rich without labour or trouble.”[287] In the writing “An den Adel” he even exclaimed: “The greatest misfortune of the German nation is undoubtedly the traffic in interest.… The devil invented it and the Pope, by sanctioning it, has wrought havoc throughout the world.”[288] It is quite true that the arrangement, being in no wise unjust, had received the conditional sanction of the Church and was widely prevalent in Christendom. Many abuses and acts of oppression had, indeed, crept into it, particularly with the general spread of the practice of charging interest on money loans, but they were not a necessary result of the transaction. Luther, in those earlier days, demanded that such “transactions should be utterly condemned and prevented for the future, regardless of the opposition of the Pope and all his infamous laws [to the condemnation], and though he might have erected his pious foundations on them.… In truth, the traffic in interest is a sign and a token that the world is sold into the devil’s slavery by grievous sins.”[289] Yet Luther himself allows the practice under certain conditions in the Larger Sermon on Usury published shortly before, from which it is evident that here he is merely voicing his detestation of the abuses, and probably, too, of the “Pope and his infamous laws.”
In fact his first pronouncements against the investing of money are all largely dictated by his hostility to the existing ecclesiastical government; “that churches, monasteries, altars, this and that,” should be founded and kept going by means of interest, is what chiefly arouses his ire. In 1519 he busies himself with the demolition of the objection brought forward by Catholics, who argued: “The churches and the clergy do this and have the right to do it because such money is devoted to the service of God.”