Saturday, 3 December 2011

What if?

…and I write as a financial dunce (please don't rub it in)…

 Catholics, Christians, were to put their money into those British Islamic banks that don't do usury? Or even have our own, similar, institutions?

In the end, has the ancient prohibition of usury been shown to have more behind it than might have appeared, say, ten years ago?


Anonymous said...

A pertinent link:

+ Wolsey

De Liliis said...

There appears to be in general no such thing as Catholic business and finance anymore.

It is such an apostasy.

AndrewWS said...

Writing as another financial dunce (as my past bank managers can testify) I suppose that if we all did that, an awful lot more non-Islamic banks would be in worrying financial straits than are already.

What actually is the Church's teaching on interest/usury (not the same thing) and has it changed? Somebody told me that it was banned in the Middle Ages (which is where Lombard secured loans came in) but the Jews were allowed to charge interest on loans to Gentiles. Then Calvin, apparently, decided that interest was permissible.

No wonder, if that's the case, that the Calvinistic Swiss turned out to be good at banking.

Flambeaux said...

What's changed is the nature of money, not the Church's teaching on usury.

The charging of interest is not the same thing as usury.

Tom Woods wrote an excellent book on this subject (among others):

Anonymous said...

The nature of money has not changed at all. Those who say it has indulge in a ridiculous fiction, no doubt aimed at justifying morally illicit behaviour.

+ Wolsey.

Andrew said...

"When money is lent on a contract to receive not only the principal sum again, but also an increase by way of compensation for the use, the increase is called interest by those who think it lawful, and usury by those who do not." (Blackstone's Commentaries on the Laws of England, p. 1336). Source: Wikipedia.

There are a number of interesting articles on Islamic banking on the Internet, but to summarize very superficially, the principal is that the borrower should not bear the entire cost and risk of the transaction. As one example, again at very high level, rather than loan an individual a sum to buy goods with repayment including principal and interest, an Islamic bank will buy the goods and sell them to the individual at a profit, payment to be made in installments.

All businesses exist to make profits, and financial institutions are no different, but perhaps the Islamic bnakin model is fairer in these troubled times.

berenike said...

On Thomas Woods, it is good to remember the words of Pius XI:

Many believe in or claim that they believe in and hold fast to Catholic doctrine on such questions as social authority, the right of owning private property, on the relations between capital and labour, on the rights of the labouring man, on the relations between Church and State, religion and country, on the relations between the different social classes, on international relations, on the rights of the Holy See and the prerogatives of the Roman Pontiff and the Episcopate, on the social rights of Jesus Christ, Who is the Creator, Redeemer, and Lord not only of individuals but of nations. In spite of these protestations, they speak, write, and, what is more, act as if it were not necessary any longer to follow, or that they did not remain still in full force, the teachings and solemn pronouncements which may be found in so many documents of the Holy See, and particularly in those written by Leo XIII, Pius X, and Benedict XV. There is a species of moral, legal, and social modernism which We condemn, no less decidedly than We condemn theological modernism.

Woods knows what he thinks about Free (look! they're free! They must be True American!) Markets and Capitalism, and then sets out to show that the Church does, or should, agree with him. Not a good start in morals.

I had a brief exchange with Peter Kwaśniewski (a copy of an article on his dealing partly with some articles by Woods is here) on the Islamic banking thing. We concluded that it is a bad idea, but I can't remember why except for the obvious not-wanting-to-support-the-spread-of-Islam, which pious Islamic organisations presumably do.

About four years ago I came across a couple of chaps doing some kind of Catholic investment thing in England, but my Google-ninja skills are failing to find them now.

Evagrius Ponticus said...

Vix Pervenit, which Benedict XIV circulated to the Italian bishops in 1745, and which was expanded to apply to the whole church by Gregory XVI in 1863, is firm in condemning the practice of usury.

Even had the Church not condemned the practice, the idea and attempt to create money without labour would surely be inimical to Catholic moral teaching.

I have recently written a post on my blog, laying out both some of the ancient and more modern proscriptions, as well as the Angelic Doctor's excellent explanation of why we cannot, as Catholics, support the underlying assumptions of modern economics (and, indeed, why the whole debt-interest system is a logical nonsense) :

Delia said...

I seem to remember reading somewhere a couple of years ago that some Dominicans (i.e., friars, not people from the Dominican Republic, at least, I don't think so!) had put together an ethical share investment scheme, but can't find it now - not sure whether it's the same one that Berenike is referring to?

berenike said...

The scheme probably meant "shares in companies that don't do dodgy stuff like the Pill", as opposed to "ethical way of profiting from one's money".