Lending and Usury

Lending as such is a transfer of use without a transfer of ownership. When I loan you my pen, I allow you to use it but it remains mine even as you use it. There are then two sorts of things that are said to be “loaned.” There are things which are and are not consumed in their use. My pen is not consumed in its use, but it is possible that it may be returned to me. The ink may run dry, but the pen itself may be returned. On the other hand, something like sugar cannot be used without also being consumed. If I decide to bake a cake, I cannot use the sugar without also consuming it. The distinction of a thing being fruitful or sterile. A fruitful thing is able to produce something in addition to itself, while something that is sterile cannot. Consequently, a sterile thing cannot strictly be loaned, because it cannot be returned. It may be possible to repay in kind, but not the thing loaned itself.

In the act of charging for something, we must consider this distinction. With my pen, I can charge for its use as distinct from selling the pen itself. I may loan you the pen and expect something in addition to the pen in return for having used it. This is not the case for sterile things. When I loan you the sugar, I do not grant you merely use but ownership, because the two cannot be divided. To use sugar is to use it up. To do this without theft, I must not only have use of the sugar but ownership of it. Consequently, a loan of a sterile thing must be a transfer of ownership.

In this transfer of ownership, we cannot expect more than the value of it in return. Justice demands that if I loan you a cup of sugar, all I can expect in return is a equal cup of sugar. To expect more is to “double charge” or to charge for what does not exist. It is said to be a double charge, because I am charging for the transfer of ownership and usage, but these cannot be separate and constitute a double charge. I may also be charging for something that does not exist, for example the counterfactual of what I could have done with it had I not loaned it. Neither of these is a just claim upon something in addition to the thing lent.

Along these lines, loaning money at interest is usury. Money is sterile, because it is consumed in its use. Whatever is exchanged for money, whether it is productive, unproductive or destructive, my possession of the money is dissolved. This is not changed by the circumstances of modern economics which is manifestly extrinsic to money.

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