"If one party is much benefited by the commodity which he receives of the other, while the other, the seller, is not a loser by going without the article, no extra price must be put on. The reason is, because the benefit that accrues to one party is not from the seller, but from the condition of the buyer. Now no one ought to sell to another that which is not his, though he may sell the loss that he suffers. He, however, who is much benefited by the commodity he receives of another, may spontaneously bestow some extra recompense on the seller: that is the part of one who has the feelings of a gentleman." (2a. 2æ, q. 77, art. 1, in corp.)
9. St. Thomas speaks of sales, but the principle applies equally to loans. It is upon loans of money that interest is commonly taken, and of money-loans we speak. Clearly, according to the doctrine stated, the lender can claim the compensation of interest, if he has to pinch himself in order to lend, or lends at a notable risk. He is selling his own loss,—or risk, which is loss once removed. But supposing he has other monies in hand, and the security is good, and he has enough still left for all domestic needs, and for all luxuries that he cares to indulge in,—moreover he has nothing absolutely to do with his money, in the event of his not lending it, but to hoard it up in his strong box, and wait long months till he has occasion to use it: in that case, if he lends it he will be no worse off on the day that he gets it back, no worse off in the time while it is away, than if it had never left his coffers. Such is the contract of mutuum, shorn of all accidental attendant circumstances, a contract, which "of its own nature," as Benedict XIV. says, that is, apart from circumstances, "requires the amount returned exactly to balance the amount received." Not though the borrower has profited of the loan to gain kingdoms, is any further return in strict justice to be exacted of him on that precise account.
10. But now an altered case. Suppose land is purchaseable, and it is proposed to stock a farm with cattle, and rear them, and convey them to a large town where there is a brisk demand for meat—the supposition is not always verified, nor any supposition like it, but suppose it verified in some one case—then, though the lender has other monies in hand for the needs of his household, and the security is good, yet the money is not so lent as that he foregoes no occasion of lawful gain by lending it. He foregoes the purchase of land and farm stock, or at least delays it, and delay is loss where profit is perennial. On that score of gain forfeited he may exact interest on the money that he lends, which interest will be no usury. The title of interest here given is recognized by divines as lucrum cessans, "interruption of profit." The interest is taken, so far as it goes upon a lawful title, not upon the fact of the borrower's profit—that is irrelevant—but upon the profit that the lender might have made, had he kept the money in hand.
11. This latter case (n. 10) represents that putting of money out to interest, which is an essential feature of modern commerce. The former case (n. 9) is the aspect that money-lending commonly bore in the Middle Ages. In those days land was hard to buy, agriculture backward, roads bad, seas unnavigable, carrying-trade precarious, messages slow, raids and marauders frequent, population sparse, commerce confined to a few centres, mines unworked, manufactures mostly domestic, capital yet unformed. Men kept their money in their cellars, or deposited it for safety in religious houses: whence the stories of treasure-trove belonging to those days. They took out the coin as they wanted it to spend on housekeeping, or on war, or feasting. It was very hard, next to impossible, to lay out money so as to make more money by it. Money was in those days really barren—a resource for housekeeping, not for trade—a medium of private, not of commercial exchange—a representative of use value, not of market value. Apart from risk of non-repayment, to take interest for money that you had no use for but to hoard, was getting "a breed of barren metal:" it was taking up what you laid not down: it was making profit out of your neighbour's need, or your neighbour's gain, where there was no corresponding need unsatisfied, or gain forfeited, on your part: it was that "attempt to draw profit and increment, without labour, without cost, and without risk, out of the use of a thing that does not fructify," which the Fifth Lateran Council defines to be usury.
12. In our time, thanks to steam and electricity, the increase of population, and continued peace, the whole world has become one trading community, representing now more, now less abundant opportunities for the investment of money, and the conversion of it into other lucrative commodities. Money consequently with us is not a mere medium of private exchange for the purposes of housekeeping: it is a medium of commercial exchange. It represents, not use value, but market value. To be a thousand pounds out of pocket for a year means an opportunity of gain irretrievably lost, gain that could have been made otherwise than by money-lending. Where this is so, and so far as it is so, the lender may without violation of justice point to lucrum cessans, gain lost, and arrange beforehand with the borrower for being reimbursed with interest.
13. The transition from mediaeval housekeeping, with its use values and private exchange, to the mercantile society of modern times, was not made in a day, nor went on everywhere at the same rate. It was a growth of ages. In great cities commerce rapidly ripened, and was well on towards maturity five centuries ago. Then the conditions that render interest lawful, and mark it off from usury, readily came to obtain. But those centres were isolated. Like the centres of ossification, which appear here and there in cartilage when it is being converted into bone, they were separated one from another by large tracts remaining in the primitive condition. Here you might have a great city, Hamburg or Genoa, an early type of commercial enterprise, and, fifty miles inland, society was in its infancy, and the great city was as part of another world. Hence the same transaction, as described by the letter of the law, might mean lawful interest in the city, and usury out in the country—the two were so disconnected. In such a situation the legislator has to choose between forbidding interest here and allowing usury there; between restraining speculation and licensing oppression. The mediaeval legislator chose the former alternative. Church and State together enacted a number of laws to restrain the taking of interest, laws that, like the clothes of infancy, are not to be scorned as absurd restrictions, merely because they are inapplicable now, and would not fit the modern growth of nations. At this day the State has repealed those laws, and the Church has officially signified that she no longer insists on them. Still she maintains dogmatically that there is such a sin as usury, and what it is, as defined in the Fifth Council of Lateran.
Readings.—St. Thos., 2a 2æ, q. 77, art. 1; Ar., Pol., I., ix.; St. Thos., 2a 2æ, q. 77, art. 4; The Month for September, 1886; _The Nineteenth Century _for September, 1877, pp. 181, seq.