Bus 1050 1st Edition Lecture 21 Outline of Last Lecture I Maimonides from The Code of Maimonides II Aquinas Of the Sin of Usury from The Summa Theologica A First Article Outline of Current Lecture II Aquinas Of the Sin of Usury from The Summa Theologica A Second Article B Third Article C Fourth Article III Francis Bacon of Usury from The Essays A Advantages B Disadvantages Current Lecture Aquinas Second Article Whether it is lawful to ask for any other kind of consideration for money lent For example I can t loan you money and say not only do you have to pay me back the principal but you also have to pay me interest because it goes against the first article But what if one says I ll loan you the money and you ll pay me back the principal eventually and you ll mow my lawn and shovel my driveway This is not allowed because these activities may be measured in money so it s the same as usury so it s prohibited In other words as long as it can t be measured in money then it s okay to ask for that when you loan someone money because it s not usury In objection 7 It happens sometimes that a man raises the price of goods in the guise of loan or buys another s goods at a low figure If you pay me early I ll give you a discount if you pay me late you ll pay me more But Aquinas says that this is not ok There is an idea that there is some identifiable value of things and although it s not precise it s a reasonable amount These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute If I give someone an extension of time to pay and in exchange I charge him or her interest it s implied usury and is not allowed The same things apply if one allows someone to pay something early at a cheaper price because the buyer in a way is taking usury from the person they bought the something from The most common arrangement between buyers and sellers when the buyer is buying on credit is 2 10 net 30 If the buyer pays within the first ten days they get a 2 discount but if you pay after the 10 day mark then you pay the original price and must pay within 30 days The longer you wait to pay the higher the cost will be and vice versa This is charging for the use of money and would be considered applied usury In Aquinas s mind one would imagine that Aquinas would consider this unjust but he says no Aquinas is what appears to be making an exception to the condition here because it was common practice for this kind of 2 10 net 30 to take place It s this idea that we always make exceptions for things that don t always fit the norm because people have been doing it for centuries even if it violates the norm the common rule Third Article This uses the same logic as in the First Article but the consideration applies to profit earned off of usury received If the usury was paid in the form of a thing whose use is its consumption the lender may keep the profits because the assumption is that it was the lender s effort which earned the profits It depends on the form that the usury took If the usury is paid in a form of something whose use is it s consumption or it s use is not its consumption There is the 1 million dollar loan example with 100 000 of usury money But because it was my effort that generated the profit consulting business I don t have to give you the profits generated from the business started by the usury money But if the usury is paid in the form of something whose use is its consumption any profits earned the lender gets the keep On the other hand if its use is not its consumption then one must pay back the usury along with the profits made from the usury money Fourth Article Whether it is lawful to borrow money under a condition of usury Jewish and Catholic doctrines are brought together According to Jewish doctrine it s not lawful to lend money and charge interest to one s brother Aquinas s view is that we need to have lending and borrowing because we don t live in a world where everyone has the same amount of money Aquinas says that if you re reading and willing to lend with interest and borrowing is a necessity then the only person sinning is the lender How can the borrower be sinning if he she is the one being bitten But it is not lawful to induce others to sin But it s lawful to make use of a sin to a good end assuming that the lender is already willing to sin This differs from Maimonides because he believes that if one lends with usury then it s unlawful and if someone asks for a loan from someone who is willing to charge interest even if they re not supposed to then it s not a sin Bankers lend for interest for a living These men are ready and willing to sin Jews were ready and willing to charge interest on loan to Catholics because that s what their religion taught If Catholics wanted a loan they d go to Jews You only borrow under a condition of usury if the usury will be used for virtuous purposes There must be virtuous reason for your borrowing money Francis Bacon The Transitional View Francis Bacon disliked usury because money works on Sundays even if religious folk don t work on Sundays And it s unnatural to have money make money because it s unnatural Men and women are hard at heart because they won t lend freely There are disadvantages and advantages of usury The second disadvantage is that it makes poorer merchants because there is not as much to reinvest The fourth disadvantage is that the wealthy give out loans and as a result they get wealthier In other words this exaggerates the inequality in the distribution of wealth The advantage of usury is that it allows lending and borrowing to continue It keeps the wealth circulating Two things must be reconciled 1 that the tooth of usury must be grinded so that it doesn t bite too much and 2 a lower rate for the general public and a higher rate for the merchants