A Crucial Lesson Of History: Why Do We Have Usury?

(Left/Above: John Calvin, Prophet of the Money Changers)

Usury was forbidden in Europe, during the Medieval Era. But there was no mechanism to provide interest-free credit. As a result, there was credit scarcity. This was a very real problem, hindering economic expansion. And this was the rationale for letting the Money Lenders back in.

1500 Europe was a burgeoning Civilization, that was seeing growing urbanization and specialization in the economy.

Because of Usury prohibition, there was no Banking. There was an economy based on the understanding that men share the common fate of having to wrest a living from the Earth, and that brotherly love, and not money grabbing, was the basis of the economy.

It’s hard to even fathom such enlightenment now, and certainly things will not have been all roses. But this was how they thought and operated.

However, the economy was stalling because of a bottle neck: there was insufficient credit.

The key problem was that the Powers that Be, the Aristocracy and the Church, were not developing interest-free lending. What should have been done is organizing collective savings, and using those for both mutual credit, and mutual guarantees. It could have been done, but the rich and powerful are typically not too concerned with the needs of the masses, and usually see them as a herd to be exploited, and this was definitely ongoing in Europe at the time too.

Be that as it may, the key economic issue is that businesses needed credit for further expansion, and it was hard to come by. And this was stifling economic development.

And this, then, was the key rationale for ‘rational’ people saying that Usury must again be permitted, to entice the rich to lend.

Francis Bacon

Francis Bacon, arguably the most influential man of the 16th century, wrote a screed ‘Of Usury‘ in which he put it bluntly:
“since there must be borrowing and lending, and men are so hard of heart as they will not lend freely, usury must be permitted.”

In this quote, we can clearly see the need for credit, and that apparently lending was insufficient. He points at the ‘hard hearts of men’, which is direct reference to Jesus’ famous parable of the Talents, in which He tells the wicked servant something to the effect of ‘if you really thought I was that hard of heart, you should have put the money in to a bank to collect interest for me’. (Matthew 25:26-27).

Men will not lend without interest. At any rate, the rich, who have the money, won’t.

Again, this problem could have been solved in other ways, even at the time, but this was the direction the debate in society was taking. And make no mistake, this debate was heavily manipulated by the money lenders behind the scenes, Michael Hoffman extensively documented this in his ‘Usury In Christendom’.

Francis Bacon himself obviously was a highly connected Rosicrucian and Freemason. He was definitely doing the work of the secret societies.

John Calvin
Another notorious 16th century enabler of Usury is John Calvin.

Calvin was famous for his scriptural expertise, and to this day Calvinists and Presbyterians use the motto ‘sole scriptura’.

And John Calvin concluded, in a letter to a friend: “I do not consider that usury is wholly forbidden among us, except it be repugnant to justice and charity.”

He apparently overlooked Deuteronomy 23:19:
“Thou shalt not lend upon usury to thy brother; usury of money, usury of victuals, usury of any thing that is lent upon usury“.

So Calvin was just lying. Of course, the Scriptures radiate an absolute disgust of Usury in general. Peter, in an apocryphal book, said that he saw the Usurers in Hell, thrown into boiling mire and filth. At the link you can find dozens of other Bible verses directed against Usury.

By the Bankster con job known as ‘Modern Economics‘, Calvin is credited thusly:
“But his real contribution was going further and demolishing the old Scholastic arguments about the unnaturalness of “money begetting money”, by emphasizing the relationship of credit to economic activity.  “Why should the lender be cheated of his just due, if the money profits the other man, and he be the richer of the two?”

“Here Calvin states that usury is permissible, but only on commercial loans, and subject to additional conditions, notably, that it never be demanded of the poor & needy”

Note that Calvin is emphasizing commercial credit, which is exactly the problem we’re discussing: credit was needed for further economic development.

Also note that Calvin says Usury must not be demanded of the poor, only commercial loans. But in doing so, he ‘overlooks’ that when businesses borrow at interest, they will have to pass on these costs to the consumer, who ultimately pays for everything. And these consumers would have been the peasants.

As we know, today 40% of prices is Usury passed on by producers.

It’s hard to overstate Calvin’s influence on the rise of Banking and Capitalism during Modernity. The Amsterdam Empire was controlled by hard core Calvinists. London, which was the successor base of International Finance after the Cromwell and Glorious Revolutions in the 17th century, was Presbyterian.

The United States’ brand of Christianity has always been a mix of Dutch and British Calvinism. And these three Nations are the main culprits in the Capitalist take over of the West and the World.

Having said all this, and as Hoffman also indicates: we cannot blame Usury on Calvin alone. The Vatican had already been taken over by the Medici in the 14th/15th century, which is why Usury came back in Italy with their blessing.

Debt-free money
Classical American Populism has always promoted debt-free money. Which would indeed be much better than what we have now. It would solve the National Debt.

But not the need for commercial credit.

The issue at hand is: debt free money does not provide interest-free credit, while credit will still be needed. The Populists deny this, and say that with plentiful money, there will be no need for loans. But there was plentiful money in Medieval Europe. There was no money scarcity, there was credit scarcity. Usury is a function of credit, not money. But it will overtake money, if allowed. If anything, Modernity has shown that.

Only after the Usurers got back on the saddle, did money scarcity come to Europe. Usury is a key driver of money scarcity.

Conclusion
It’s a vital and crucial lesson: Usury Prohibition failed because it was not combined with the provision of interest-free credit. As a result there was credit scarcity in the economy, and this was used as the excuse to let the Money Changers back in.

Usury prohibition is not enough: interest-free credit is needed, or there will be bottlenecks in economic development.

It will help to have the Government print debt free money, but there will still be a need for credit in the economy, and debt cannot be entirely avoided. Especially in industry and commerce.

And there is no need to entirely avoid it, because we can simply create all the credit we need in the same way banks do today, but without the Usury.

The solution to interest on loans of money is not to end credit, but to have no interest on loans of money.

Related:
Capitalism Is Jewish Usury
Rationalizing Usury: the Time Value Hoax
The Difference Between Debt Free Money and Interest Free Credit
How Usury Encloses The Commons
Cause and Effects of Money Scarcity
More on Mutual Credit

Anthony Migchels is an interest free currency activist and founder of the Gelre, the first regional currency of the Netherlands. His articles can be found at http://realcurrencies.wordpress.com. Contact him at [email protected]