THE THEORY OF INTEREST

§2. The Exploitation Explanation of Interest

Another very persistent idea is that to take interestis, necessarily and always, to take an unfair advantage ofthe debtor. This notion is something more than the obvi-ously true idea that the rate of interest, like any otherprice, may be exorbitant. The contention is that thereought to be no interest at all. Throughout history thisthought recurs. It seems natural that only what wasborrowed should be returned. Why any addition? Interestis therefore called unnatural.

The word used by the Greeks to signify interest, orusury, was t6kos, “offspring”; and Aristotle declaimedagainst the taking of interest, on the ground that money,being inanimate, did not have offspring. The Mosaiclaw forbade interest taking between Jews , and, similarlyin Rome , interest taking between Romans was prohibited.Many biblical texts show the hostile attitude of the writ-ers, in both the Old and New Testaments , toward thepractice. The Church Fathers , through the Middle Agesfor over a thousand years, waged a ceaseless but fruitlesswar against interest taking. St. Thomas Aquinas statedthat interest was an attempt to extort a price for the useof things which had already been used up, as, for instance,grain and wine. He also declared that interest constituteda “payment for time,” and that no such payment couldbe justified since time was a free gift of the Creator towhich all have a natural right.

In fact, interest taking is often prohibited in primitivesocieties. Loans under primitive conditions are generallymade for consumption rather than for productive pur-poses. Industry and trade being almost unknown, thedemand for loans in such communities usually betokens

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