last updated: 8 March 2020 (approximate reading time: 6 minutes; 1074 words)
Usury is a term that has—for most of us—fallen out of common parlance.
The concept of usury is one that has been around for nearly as long as civilization. It is likely that immediately after someone invented money, someone else made the first loan and charged interest, thus introducing the notion of usury.
With the practice of usury becoming more widespread—and the consequences more obvious—societies felt a need to regulate the practice. An example of regulation occurs in the Abrahamic faiths which all have some form of prohibition on the practice of usury.
So what is usury, why do we still care about it, and why is a fiction writer interested in the notion?
What is Usury?
If you look in a dictionary, usury will usually be defined as the practice of making immoral, unethical, or illegal loans. The definition may also talk about the practice of lending money at unreasonably high rates of interest.
This view is a very modern view of usury and a very Western secular view.
Ancient civilizations and many religions took (and some still take) a far simpler view regarding usury as the practice of charging interest on a loan. Interest at any rate, even “reasonable” rates constituted usury. This is a far more straightforward and understandable definition which allows specific practices to be identified and labeled.
If usury is (as many would suggest) the practice of lending at unreasonably high interest rates, that then poses the question: what is a reasonable rate of interest? If you can answer that question, the next question is: at what rate does reasonable become unreasonable? It’s hard to suggest that x% is “good” but x + 1% is “bad”.
Whether usury should be allowed—or should be only allowed within certain parameters—is a separate issue to identifying the practice. For this piece, I’m using the terms usury and charging interest on loans interchangeably.
Religions and ancient civilizations quickly identified that usury could have unwanted human and social consequences. Some addressed these consequences by prohibiting charging interest so a loan could be given, but interest could not be charged.
Another practice first undertaken in ancient civilizations and religions was forgiveness. Debts would be forgiven, in other words, the principal owed (not simply the interest) would be written off. In the Book of Leviticus, (among other matters) debts are forgiven every seven years.
This forgiveness of debts (not necessarily every seven years) is part of the Jewish and the Catholic faith (among others), and is also part of a wider practice where it becomes obvious that debts are unsustainable. For instance, debt relief is an integral part of bankruptcy. But bankruptcy is not always a necessary pre-requisite, for instance as part of the Millennium Development Goals many developing nations had their debts forgiven.
Why is Usury Significant Today?
So far, you might have been forgiven for thinking usury is something from biblical times. It was, but it is a practice that is still around today and which has the potential to be just as destructive as ever, if not more so given that it’s quite difficult to avoid credit (which leads to interest) in our day to day interactions.
The most obvious example of prevalent credit is the credit card. But phone contracts and car payments (to give two examples) have credit terms wrapped within the deal, and mortgages are just credit by a different name.
Money, the Social Construct
Money is a strange notion. I call it a notion because, in many ways, money is not real—a pound, a euro, or a dollar are only real, and only have value, because we believe they are real and have value. There is nothing inherently valuable about money; to a large extent it is simply a means of exchange that makes it easier to conduct business. The alternative would be to use barter and ascribe value to different objects and services (so I might chop down your tree in exchange for a dozen eggs).
Taking this social construct, money—which only has value because we believe it has value—and charging interest on it, seems quite bizarre in many ways. And indeed, once you understand that money is “made up”, it seems hard to make a logical justification for interest.
Usury and Fiction
Usury is as old as time and has been recognized as causing harm since money was invented, so it seems logical that the consequences of usury will find their way into fiction. As one example, in crime fiction, the loan shark is still a staple character. As the interest on any loan mounts, the menace of the loan shark grows more acute.
But any loan—whether there is a loan shark or a more conventional lender—gives the possibility of a way into debt, and when people are in debt, they tend to make less good choices. Often those choices will be increasingly desperate ways to get out of the debt, especially as the debt ratchets up.
That ratcheting is another pressure that can be brought to a character. Initially, interest is paid on the principal, but as a debt increases, interest will be paid on unpaid interest which is the point when debt starts to spiral and a small problem becomes a big problem.
Usury also brings a conflict between the haves and the have not. The have nots want, and when the have nots receive a loan, the haves want that loan returned. Mix in a dash of unfairness where the borrower has needs, but is powerless in the negotiation, and usury becomes an engine to drive any story.
Leathan Wilkey and Money
Because of the life he leads, Leathan Wilkey avoids credit-related transactions.
For Leathan money has less value; he sees value in non-financial assets, such as his friends and his network of business contact. He understands how money has value for others. He also knows that money has some facility for him as a lubricant in more sticky situations. But for Leathan, a bank account and a credit card make him vulnerable, so he has little reason to acquire and use money, and he will never be certain that he will be able to repay a loan.
Without a mortgage and without a credit card, Leathan lives a life without paying interest. This means that he doesn’t accrue the debts that come with interest, but without these debt people need to use other ways to apply and enforce an obligation upon Leathan.