Interest: Semites and their neighbours
Mesopotamia Torah Greek and Roman Philosophers Greek and Roman State Laws Christian revelation Catholic law Islamic law Protestantism Modern European State Laws 1830: Catholics Converted to Usury
Chaldea, the Mesopotamic paradise left by Abraham, allowed interest on loans (cf. Law of Hammurabi, 48 sqq.).
No absolute prohibition can be found in the Old Testament; at most, Exod., xxii, 25, and Deut., xxiii, 19, 20, forbid the taking of interest by one Jew from another.
Greek and Roman Philosophers
Plato (Laws, v. 742) and Aristotle (Politics, I, x,xi) considered interest as contrary to the nature of things; Aristophanes expressed his disapproval of it, in the "Clouds" (1283 sqq.); Cato condemned it (see Cicero, "De officiis, II, xxv), comparing it to homicide, as also did Seneca (De beneficiis, VII, x) and Plutarch in his treatise against incurring debts. Aristotle disapproved of the money trader's profit; and the ruinous rates at which money was lent explain his severity.
Greek and Roman State Laws
On the other hand, the Roman and Greek laws, while considering the mutuum, or loan for consumption, as a contract gratuitous in principle, allowed a clause, stipulating for the payment of interest, to be added to the bond. The Law of the Twelve Tables allowed only unciarium fenus, probably one-twelfth of the capital, or 8.33 per cent. A plebiscitum, lex Ganucia, 412 <a.u.c>. went so far as to forbid all interest whatever, but, at a later period, the Roman law allowed interest at 1 per cent monthly, or 12 per cent per annum. Justinian laid down as a general rule that this maximum should be reduced by half (L. 26, I, c. De usuris, IV, 32).
In the Christian era, the New Testament is silent on the subject
The councils condemned clerics who lent money at interest (44th of the Apostolic Canons; of the Council of Arles (314), and of the 17th canon the First Council of Niceaea (325)). The text of the Council of Elvira (305 or 306) is ordering the degradation of clerics, also inflicts punishment on laymen committing usury.
The 12th canon of the First Council of Carthage (345) and the 36th canon of the Council of Aix (789) have declared it to be reprehensible to make money by lending at interest. The canonical laws of the Middle Ages absolutely forbade the practice. This prohibition is contained in the Decree of Gratian, q. 3, C. IV, at the beginning, and c. 4, q. 4, C. IV; and in 1. 5, t. 19 of the Decretals, for example in chapters 2, 5, 7, 9, 10, and 13. These chapters order the profit so obtained to be restored; and Alexander III (c. 4, "Super eo", eodem) declares that he has no power to dispense from the obligation. Chapters 1, 2, and 6, eodem, condemns the strategems to which even clerics resorted to evade the law of the general councils, and the Third of the Lateran (1179) and the Second of Lyons (1274) condemn usurers. In the Council of Vienne (1311) it was declared that if any person maintained that there was no sin in the practice of demanding interest, he should be punished as a heretic (see c. "Ex gravi", unic. Clem., "De usuris", V, 5).
For a long time catholic law granted impunity in such matters to jews. The Fourth Council of the Lateran (1215), c. 27, only forbids them to exact excessive interest. Urban III, c. 12, "De usuris" (V. 19) and St. Louis in twenty-three of his regulations extended the prohibition to the Jews.
Theologians and canonists of the Middle Ages constructed a rational theory of the loan for consumption, which contains this fundamental statement: The mutuum, or loan of things meant for immediate consumption, does not legalize, as such, any stipulation to pay interest; and interest exacted on such a loan must be returned, as having been unjustly claimed. This was the doctrine of Thomas Aquinas and Scotus; of Molina, Lessius, and de Lugo. Canonists adopted it as well as the theologians; and Benedict XIV made it his own in his famous Encyclical "Vix pervenit" of 1 November, 1745, which was promulgated after thorough examination, but addressed only to the bishops of Italy, and therefore not an infallible Decree. On 29, July, 1836, the Holy Office incidentally declared that this Encyclical applied to the whole Church; but such a declaration could not give to a document an infallible character which it did not otherwise possess. The schismatic Greeks, at least since the sixteenth century, do not consider the taking of interest on loans as intrinsically bad.
While Luther, Melanchthon, and Zwingle condemned loaning for interest, Calvin permitted interest on money advanced to rich persons; his disciple Salmasius gave effect to this opinion by a systematic code of rules.
Modern European State Laws
In the sixteenth century, Germany allowed interest at 5 percent; in France, on the contrary, interest on loans was forbidden until the Decree of 2 and 3 October, 1789.
1830: Catholics Converted to Usury
Since 1830, the catholic church admits practically the lawfulness of interest on loans, even for ecclesiastical property, though it has been thought too tough to promulgate a doctrinal decree on the subject. See the replies of the Vatican dated 18 August, 1830, 31 August, 1831, 17 January, 1838, 26 March, 1840, and 28 February, 1871; and that of the catholic "Sacred Penitentiary" of 11 February, 1832 ("Collectio Lacensis" (Acta et decreta s. conciliorum recentiorum), VI, col. 677, Appendix to the Council of Pondicherry; and in the "Enchiridion" of Bucceroni.