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u·su·ry (yoo'zhe-ree) u·su·ries

1. The practice of lending money and charging the borrower interest, especially at an exorbitant or illegally high rate. 2. An excessive or illegally high rate of interest charged on borrowed money.
3. Archaic. Interest charged or paid on a loan.

Usury and Dante's vision of Hell

Dante's Hell by Bartokomeo, c.1420

History of Usury
The History of Consumer Credit
Dante Aligheri: Dante and Money
An Overview from Biblical and Modern Perspectives
Dante's Geryon
Dante's Divine Comedy: Seventh Circle
See also

A map of Dante's Hell by Bartokomeo, c.1420The History of Usury

With credit to James M. Ackerman, Interest Rates and the Law: A History of Usury, 1981, Arizona St. L.J.61 (1981)

What do Hammurabi, Plato, Charlemagne, Dante and Queens Mary and Elizabeth have in common? 

They all condemned, outlawed or regulated the charging of interest on loans. 

In fact, until the early 1900s interest rates in the United States were kept at or near 10%.

And until 1979, loan laws provided some interest rate cap in every state. 

Then everything changed.  Governments and banks put profits before people. And now the lending industry is spiraling out of control.

Detail from Dante's Hell by Bartokomeo, c.1420

Old Testament

The Prophet Ezekiel includes usury in a list of “abominable things,” along with rape, murder, robbery and idolatry. Ezekiel 18:19-13.
Jews are forbidden to lend at interest to one another. Exodus 22:25; Deuteronomy 23:19-20, Leviticus 25:35-37.

1750 B.C.

The Code of Hammurabi regulates the interest that can be charged on a loan.
Historical records indicate that many loans were made below the legal limit.

800-600 B.C.

Both Plato and Aristotle believed usury was immoral and unjust. The Greeks at first regulate interest, and then deregulate it. After deregulation, there was so much unregulated debt that Athenians were sold into slavery and threatened revolt.

443 B.C.

The Romans adopt the “Twelve Tables” and cap interest at 8 1/3%.

88 B.C.

The Roman usury rate is raised to 12%.

533 A.D.

The Roman “Code of Justinian” sets a graduated maximum interest rate that did not go over 8 1/3 % for loans to ordinary citizens. This law lasts until 1543 A.D.

7th century

The Quran 2:275-276 states:  "...those you take usury will arise on the Day of Resurrection like someone tormented by Satan's touch. That is because they say 'Trade and usury are the same,' But God has allowed trade and forbidden usury. Whoever, on receiving God's warning, stops taking usury make keep his past gains -- God will be his judge -- but whoever goes back to usury will be an inhabitant of the Fire, therein to remain."

800 A.D.

Charlemagne outlaws interest throughout his empire.

11th century

In England, the taking of any interest at all is punishable by taking the usurer’s land and chattels.

Medieval Canon Law

Usury is punishable by ex-communication.

Medieval Roman Law

Usurer’s are fined 4X the amount taken, while robbery is penalized at twice the amount taken.


Dante pens “The Inferno,” in which he places usurers at the lowest ledge in the seventh circle of hell – lower than murderers.


During the reign of Queen Mary, English Parliament again disallows the collection of interest.


During the Reign of Queen Elizabeth, interest rates in England are limited to under 10%.
This law lasts until 1854.


Adoption in England of the “Statue of Anne,” an Act to reduce interest rates.

Early 18th Century

American colonies adopt usury laws, setting the interest cap at 8%.

After 1776

All of the States in the Union adopt a general usury. Most states set the interest limit at 6%.

Early 1900s

A move to deregulation causes 11 states to eliminate their usury laws. Nine more states raise the usury cap to 10% or 12%. Banks are not making personal loans. “Salary Lenders” fill the need by “purchasing” a worker’s future wages in exchange for a high fee – equal to a lending rate of 10% - 33%.


A Uniform Small Loan Law allows specially-licensed lenders to charge higher interest rates—up to 36%—in return for adhering to strict standards of lending.


All states adopt special loan laws that cap interest at higher than the general usury rate—at 36%—but cap it nevertheless.


The US Supreme Court decides that national banks may export the state interest rate law of their home state into any state where they do business. In response, South Dakota eliminates its interest rate caps. Several credit card issuing banks move to South Dakota and operate nationally with no interest rate cap.


Congress preempts state interest rate controls on all first lien mortgages. This enables predatory mortgage lenders to make seemingly affordable loans, like adjustable rate and interest-only loans, that lead to foreclosure for many.


Congress adopts the Home Ownership and Equity Protection Act of 1994, which provides some substantive protections to home mortgage borrowers with interest rates or points that are extraordinarily expensive, but sets no limits on what can be charged for these loans.


Many states and cities try to protect their citizens by adopting state statutes and local ordinances to curb predatory lending, but preemption claims by the federal government impede their efforts. Numerous bills are introduced in Congress to protect consumers in a wide range of transactions, including rent-to-own, credit cards, payday lending, and predatory mortgage lending, but none of these bills makes it to a hearing.


Congress passes the “Talent Amendment” which to caps interest on loans made to active military personnel and their families at 36%, reacting to findings that high-cost payday lenders had been targeting the military.


The launch of Americans for Fairness in Lending (AFFIL), a national multi-organization collaborative message and action campaign designed to raise public awareness and generate outrage about predatory lending.


The History of Consumer Credit: Doctrines and Practices - Book Reviews
Published by EH.NET (August 2000)

Rosa-Maria Gelpi and François Julien-Labruyère, The History of Consumer Credit: Doctrines and Practices. Translated by Mn Liam Gavin. New York: St. Martin's Press, 2000. ISBN 0-312-22415-X.

Reviewed for EH.NET by Lendol G. Calder, Department of History, Augustana College, Rock Island, IL.

Is credit good for us? Dante didn't think so. In his Inferno, we find usurers consigned to the seventh circle of hell, doomed to "roam round and round" among their fellow inmates, the blasphemers, murderers, sodomites, and others who practiced violence against God and nature. Dante doesn't say so, but he leaves us free to speculate that moneylenders continue to practice their trade in hell, lending money at interest to the damned. If so, it would make Visa's claim to be "everywhere you want to be" seem a little too modest! But enough of this credit bashing, plead the authors of this little volume on the history of consumer credit. According to Rosa-Maria Gelpi and François Julien-Labruyère, credit is too often made to be a scapegoat during times of social and economic crises, so that even today when we look more kindly on credit than Dante, consumer credit continues to be blamed for everything from business recessions to personal bankruptcies to society's moral degeneracy. It's enormously unfair, argue Gelpi and Julien-Labruyère, who invite us to accompany them on a "stroll through history" that will reveal just how good credit really is for us. As "the cornerstone" of economic growth (p. 84), as "one of the greatest promoters of social mobility" (p. 171), and as the "single greatest factor of social integration" (p. 95), they conclude that consumer credit is one of the most reliable indicators of advanced civilization, if not an important cause of it.

But if all this is true, why has consumer credit had to battle so hard and so long against a shameful stigma of wastefulness and wrongdoing to achieve a moral and economic legitimacy? Gelpi and Julien-Labruyère present their history as a search for the origins of the cloud of bad feeling that surround this most crucial institution of modern consumer societies. The crux of their argument is that present day attitudes about credit-attitudes rarely stated as propositions but that operate instead as a "mute yet active unconscious"-are outmoded and debilitating "hangovers" from an earlier era in the history of western societies, an era when social practices were inspired by theology and ethics rather than by the economy of free markets, as they increasingly are today. In other words, consumer credit struggles against a massive case of "cultural lag." The volume's subtitle-"Doctrines and Practices"-neatly summarizes the tale told in this book. Through the sixteenth century and beyond, legions of shortsighted theologians and philosophers tried to strangle credit in the noose of religious dogma, with the end result that credit was "more or less forbidden but more or less practiced because more or less necessary" (p. 95). But since the Reformation and Enlightenment, and primarily through the shining example of the Americans, religious doctrine has been replaced by economic practice as our fundamental social gyroscope, so that lending and borrowing are increasingly viewed more properly as economic concepts, free of unnecessary moral baggage. Today, in societies where economic "practice" is given primacy over moral and religious "doctrines," a bright future is being built on the basis of economic growth, responsible household budgeting and greater "self-actualization" through credit-financed consumption.

If all this sounds like a textbook case of the "Whig interpretation of history," well, it is, though of a refined and smartly written sort. Both authors are high-ranking officers for Cetelem, the French personal finance company that over the last five decades has worked to modernize European household credit on an American model (Gelpi is also Professor of Economics at the Free University of Lille). Given their day jobs, the authors' spirited defense of consumer credit is hardly surprising. Of the criticism of credit there is no end, which means that Gelpi and Julien-Labruyère are following a well-worn path blazed in the United States in the 1930s by the economist Morris Neifeld, who worked as a credit analyst for Beneficial. Neifeld, whose Personal Finance Comes of Age (1939) resembles the work under review here, labored tirelessly though his writings to elevate the status of his profession. But in terms of eloquence and wit, The History of Consumer Credit sets a new standard for defenses of consumer credit.

Still, glorifying the present at the expense of the past has its costs, and they are manifest here. The biggest problem is that the authors never really succeed in helping us to understand why so many otherwise smart people-from Aristotle to Ezra Pound-opposed on principle the lending of money at interest, or why their ideas resonated so long in the public mind. Consider the treatment given to John Calvin, himself an innovator when it came to new thinking about credit: "[Calvin's] work consisted in giving a new faith to the classes who, through their social skills, were destined to dominate the future. This supposes a relatively advanced economic organization, and Calvin built his moral system on such an organization" (p. 50). A page later, we are told, "For Calvin, the only good deed was worldly success" (p. 51). Reductiveness on this scale is not easy; one has to work hard at it. When every person and system of belief is viewed through the narrow lens of what is good for the development of credit, when economic progress and "social integration" into the wonders of consumerism are the only ends that count, it becomes impossible to understand what all the fuss over usury was really about.

If the history is whiggish, it is also mostly recycled, at least through the first eight chapters. Gelpi and Julien-Labruyère begin their story in Mesopotamia, where the Code of Hammurabi (1792-1750 BC) established the first known law defining and regulating usury. Moving briskly on, they describe the business of credit in ancient Greece, the Roman Empire, Gothic Catalonia (where we see the first documented case of a European pawnbroker, 1000 AD), medieval Italy (which established the first public pawnshops, known as monts-de-piétés, in the fifteenth century), northern Europe at the time of the Reformation, and the United States, whose experience is "central" to the history of consumer credit because, beginning in the nineteenth century, it "offered to build the future" on the installment plan. Based on standard secondary sources, this part of the story involves a familiar cast of villains and heroes. Among those who come off looking particularly stupid or close-minded is Aristotle, who, declaring money to be sterile, decried interest as being a revolt against nature (silly old Aristotle, who "has only value judgments to offer when it comes to economics" (p. 8). Other villains in this tale include the Hebrews, the first people to condemn interest-bearing loans; the Church Fathers, especially Saint Basil, who began more than 1000 years of a total ban on interest by the Church; Charlemagne, who declared the first secular bans on usury; Dante, of course; the Inquisition at the time of the Councils of Lyon (1274) and Vienne (1312); and Catholic Europe after the Reformation, which doomed southern Europe to centuries of economic decadence, thereby offering "a lesson in how to fail to modernize an economy, while retaining one's guilt feelings!" (p. 66)

Opposed to this deadwood are the heroes of modern credit, men who were smart enough to see through Aristotle and brave enough to relativize the Scriptural prohibitions against interest, recognizing that a new type of economy was coming into being where wealth was created, not just plundered or commandeered. These include Scholastic theologians such as Thomas Aquinas, the Reformers Luther and Calvin, and greatest of all, Enlightenment champions of reason and liberty such as Jeremy Bentham and Anne Robert Jacques Turgot. Lengthy quotations from the latter two figures are included in the text, as Gelpi and Julien-Labruyère recommend that all who are interested in contemporary debates over consumer credit can do no better than to read Bentham's Defense of Usury (1787) and Turgot's Memoir (1770), which will persuade clear-thinking persons that the strict regulation of credit markets hurt the poor most of all while making criminals of everyone else.

Beyond the assertive and lively prose (which is marred in this English edition by a poor job of copy editing that allows too many misspellings and missing words), the strength of this book lies in the final two chapters. It is only recently that consumer credit has begun to receive from historians the attention it deserves. Part of the reason for this is that credit is a commerce deeply cloaked in confidentiality (as Gelpi and Julien-Labruyère point out, until recently the guiding principle of public relations for lenders was "to live happily you must live in secret"). What Gelpi and Julien-Labruyère bring to the history of consumer credit is valuable insiders' knowledge about the credit business in Europe over the last hundred years. Much of this information is interesting and new. For example, I was surprised to learn just how closely the European development of consumer credit has mirrored the history of credit in the United States, though with significant time lags between countries. Great Britain passed its first laws affecting consumer credit in the late nineteenth century, while Italy only did so in 1992!

This book seems to have been written primarily to influence the opinions of European policymakers in Brussels, who the authors would like to see taking a hands off approach to credit markets so governments can treat the causes of economic woes (e.g., high taxes, low investment) rather than mere symptoms (e.g., overindebtedness). This is a defensible wish, but there are risks involved when looking for a usable past, risks the authors seem unaware of. When packaged with facile claims such as this-"A healthy morality always coincides with commercial wisdom" (p. 55)-or with shaky historical claims such as this-"The history of consumer credit in the United States is almost entirely free of historic influences" (p. 119)-some readers will find even the credible claims in this book rather suspect.

Lendol Calder, author of Financing the American Dream: A Cultural History of Consumer Credit (Princeton University Press, 1999) is assistant professor of history at Augustana College and a Carnegie Scholar with the Carnegie Academy for the Scholarship of Teaching and Learning.

Dante Aligheri
by Henry Swabey Mid-May Draft 2008

Appendix I. Dante and Money
Usury and the Church of England has been subsequently revised from its original form as a Bachelor of Divinity thesis with the help of a friend who provided invaluable notes. He has also allowed me to add the following notes on Dante.

Inferno XVII, 36.
The usurers are on the edge (gente seder propinqua al loco scemo - people sitting near the empty space), before the descent on the beast Geryon, “that filthy image of fraud,” who has just been described.

The Usurers are mentioned after the description of Geryon, and are the very nearest to Fraud of the Violent.

Their position on the brink of fraud suggests possibly a distinction between simple usury and usury with falsification of account. But they are trembling on the brink of fraud, as it were, with their human features completely unrecognizable.

Inferno XXX, 74.
We find the Counterfeiters very near the final degradation of the treacherous, and Dante's
severity on them bears on his feeling about Usury. We may compare modern practises of
inflation, devaluation etc.

Purgatory. XV, 45 ff.
Partnership is mentioned ‘consorto’ ‘compagnia’ (50).
“by so much more there are who say ‘ours’ so much the more of good does each possess, and the more of love burns in that cloister.” (55-7).

Purgatory XVI.
“.. evil leadership is the cause that has made the world sinful, and not nature which may be
corroded (corrotta) within you" (103-105).

Purgatory XXXIII, 5I.
“the Naids will solve this hard riddle without scaith to flock or corn”. Such loss precisely has
accompanied solutions to problems offered by the offspring of usury, scarcity economics.”

Paradise XVI, 105.
“they who blush red for the bushel”, shows preoccupation with the just measure

Paradise XVI, 110.
‘le palle dell'oro’, the golden balls which “adorned Florence in all her great feats” are mentioned
with disgust.

Paradise XXIV, 84.
“Right well hath now been traversed this coin's alloy and weight.”

cesc publications, 69 Fore Street, Buckfastleigh, Devon TQ11 0BS England

Usury or Taking Interest for Lending Money
An Overview from Biblical and Modern Perspectives  
by The Lord Sudeley FSA

I have been asked to write about usury from a Christian perspective. This recalls a pamphlet that I published as Chairman of the Monday Club, with articles by various contributors. I wished to call the pamphlet The Case against Usury but was told that most people do not understand what the word “usury” means. So I changed the title to Are Banks Misusing Your Money? (A Case against Usury). 

Usury is usually taken to mean driving hard bargains. The Oxford dictionary defines it as: “the lending of money at interest, especially at an extortionate or illegal rate”.  Thus the word signifies the lending of money on which interest is charged - without the lender taking a share of the risk. 

For reasons which I will develop, I oppose this practice. I believe that banks and other lending institutions should not be lending at all; instead they should make their money by taking a share of the risk or equity in business enterprises.

My interest in this question arose from the tragedy of my own family which was made bankrupt through usury. The June 1999 issue of London Miscellany carried my article on The Sudeley Bankruptcy and its significance for today. At the time, owing to an agricultural depression, we were in debt for about half a million pounds Sterling. Unfortunately, Lloyds Bank refused to accept our collateral so that some assets could be sold on a reasonable timetable to fetch their proper value. Instead, the bank filed for bankruptcy to force immediate payment of the debt. Our creditors got next to nothing while we lost everything.

2. Biblical Roots of the Christian Condemnation of Usury
Recent deciphering of Cuneiform in ancient clay tablets has helped to disclose ancient practice in this regard. During the Bronze Age in Mesopotamia, people began to recognise the invalidity of lending money or interest-bearing debt, as well as the need to cancel debt in order to sustain rural self-sufficiency. The Mesopotamian cradle of enterprise has bequeathed a wealth of economic records from the Third Millennium B.C. We can see how the disorder caused by interest-bearing debt mounting beyond the ability of debtors to repay was addressed, in the way it has not been in Third World debt today. 

After the Babylonian Captivity, the Jews in the Old Testament adopted this Mesopotamian Clean Slate policy of cancelling debts.  The authors of a revived Judaism wove laws into the Old Testament’s first five books (the Torah or Pentateuch) to protect the rural population from large creditors.  The freedom from debt advocated by the Covenant Code of Exodus, the Septennial Year of release in Deuteronomy, and the Jubilee Year of the Holiness Code in Leviticus are not just abstract literary ideas, but actual legal practices that freed rural populations from debt servitude, and land from appropriation by foreclosure. 

Release from debt was revolutionary in Biblical times because it took power from the hands of rulers and became a sacred popular commandment. Deuteronomy directed that the laws on cancellation of debts be read aloud in public every seven years, so that the population would know that they were to be freed from bondage, this at a time when anyone unable to repay a debt became a slave. 

For many centuries scholars have doubted this practice because it would seem to wreak economic havoc. As a result, the Biblical tradition of cancelling debts was lost.

The ancient law in Exodus that forbids the charging of interest on a loan to a fellow Israelite was breached when Israel came in contact with a wider world.

Thus, in Deuteronomy, interest was permitted when dealing with a foreigner - identical to Islamic practice.  Thereafter, outside our Christian tradition, usury was forbidden by Aristotle and Mahomet, and within it by St. Thomas Aquinas and Dante.  When Virgil takes Dante on his tour of Hell, the poet looks on the shades of usurers seated with the Sodomites on the burning sand.  An old commentator observed that the Sodomites and usurers are classed together because Sodomites “make sterile those natural instincts which should result in fertility”, while usurers “make fertile what by its nature is sterile,” that is, they make money “breed” when it should not.

Dante gives us the heraldry of various usurers, especially the Scrovegni, and you may be familiar with Giotto’s painting in the Scrovegni Chapel at Padua.  Then, as we know from R.H.Tawney’s classic work, Religion and the Rise of Capitalism, the Church became embroiled in usury in breach of its own rules. It did not help that with the building of Sainte Chapelle to house the Crown of Thorns, the Crown was acquired on a loan or mortgage basis from the bankrupt Byzantine government. With the Reformation, Calvin sanctioned usury. By the 1860s, the writings of such economists as Petty, Locke, Turgot and Bentham had the effect of removing many anti-usury laws from the statute books of Western European countries.

3. Creating ‘Additional Money’ or Lending beyond Reserves
Once the abolition of usury allowed the lending of money, those who did it soon realised that they could do so fraudulently, in my view, by lending far beyond their own reserves. That is, in Tudor times, the goldsmiths, the antecedents of our present banking industry, realised that not all the gold plate and bullion deposited with them would be withdrawn at the same time. So they invented the audacious and fraudulent trick of issuing promissory notes - the precursor of our present bank notes - to represent an excess of what they really had, or what might be called “additional money”.

To summarise what I see as the main problem, the use of bank credit, which consists not just of loans of the bank’s reserves but the creation of additional money, cuts money loose from the real economy where goods and services are exchanged. In this way, money is treated as a commodity though it should not be used to reproduce itself. When the money supply increases by this means, the previously existing supply is debased, resulting in inflation.

To revert to history, during the reign of Louis XIV in France, Dutch banks lent beyond their reserves. The American Revolution and Britain’s war against Napoleon were financed by unfounded paper currency. Our Bank Charter Act of 1844 finally accepted that paper notes were indeed circulating as money and attempted to regulate their creation and circulation.

In the US at least a third of the price rises during and after the First World War were due to the Federal Reserve System permitting banks to lend beyond their reserves, and the severity of the consequent major contradictions in 1920-1921 and 1929-1933 were attributable to acts of commission or omissions by the “Fed”.

In his Encyclical Quadragessimo Anno of 1931, Pope Pius XI remarked that: “…the power to create money and to expand and contract the money supply at will carries with it too great an opportunity of economic domination (and therefore ultimately tyranny) to be left to private control without injury to the community at large.”

From the 18th century until the beginning of the 20th, the terms on which money could be created oscillated between the state and the private banking industry in the US, with dangerous consequences. For example, during the 18th century, Britain forbade the issue of paper money in the colonies. The American Revolution was, as mentioned, funded by paper money. President Abraham Lincoln declared: “Governments should create, issue and circulate all currency and credits needed to satisfy the spending power of Governments and the buying power of consumers. By adopting these principles the taxpayer would be saved immense sums of interest.”

With Lincoln’s Greenbacks the public became accustomed to Government-issued, debt-free money. It resulted in great prosperity in the opening up of the American West. Then the Federal Reserve Act of 1913 transferred control of the money supply from the Government to a private banking elite.

4. Gold or ‘Backing a Currency’
When Sir Robert Peel introduced his famous Bank Act of 1844, it was held that the value or purchasing power of money was due to the metal composing it and into which it was legally convertible. Gold was held to have a fixed value the world over. During the First World War, the Gold Standard was suspended, and then again by President Nixon in 1971 to pay for the Vietnam War. Since then the US has had a totally debt-backed monetary system. Banks create money out of the issuance of new debts.

In the UK between 1963 and 1997, the role of notes and coins and their proportion of the money stock have fallen from over 20% to less than 4%. Notes and coins are created free from debt. By contrast all ‘numerical money’ or bank credits comes into existence in parallel with an equivalent amount of debt.

The over-availability of such additional numerical money - or bank credit created out of debt - is particularly reflected in the way it has increased the price of housing. In 1960, 19% of the value of the nation’s houses was subject to mortgages. The credit for a house has become a prime example of banks not only charging exorbitant rates of interest but also establishing and potentially controlling houses as assets. It is generally estimated that with an average mortgage four times the original value is paid.

Apart from the private sector we need also to glance at banks and National Debt. The mechanism of National Debt is quite simple.

It involves the assumption of debt by the Government to obtain additional revenue to cover the annual shortfall of taxation. So to pay for the war against Louis XIV, the Bank of England was chartered in 1694 and started out in the business of loaning out several times over the money it held in reserve, all at interest. Such lending at a prudent rate took a quantum leap to pay for the First World War, extended further to pay for the Second World War, while the US took an even greater quantum leap to finance the Vietnam War. By 1971, the gap was unbridgeable and increasing at a rate beyond control. So Nixon had no choice but to cancel the right of the Government to exchange dollars for gold so as to remove the gap altogether.

5. America wins – Keynes loses in the Bretton Woods Agreement
Turning to debt on the present international scene, we need to look at why during the terms of the Bretton Woods Agreement in 1944 the Americans wished to over-ride the sage advice of Keynes. We will also see how they enforced their point of view in a way which had nothing to do with the validity of the argument on the other side, and its negative consequence of creating a Third World Debt that were as inherently unrepayable as were the cancelled debts in ancient Mesopotamia and the Old Testament.

Keynes sought to foster a balance of trade between nations to avoid the scenario in which nations became creditors and others debtors through their trade accounts. Creditor nations were those which exported more than they imported and so ended up with surplus revenues from an imbalance of trade. Debtor nations were those whose imports exceeded their exports, and so suffered a loss through a trading deficit. Keynes’ fiscal device of the Clearing Union placed an equal obligation on creditor and debtor nations to maintain a balance of trade. For America, however, as a creditor nation exporting more than she imported, the notion she might be under an obligation to expend her surplus trade revenues back into other economies was deemed to be completely unacceptable.

How did the Americans get their way against Keynes’ advice? We are still too close to the war for most to judge whether we should have entered it. However, at least some revisionist history has been written to insist that Germany was looking East.

Germany never wanted to go to war with England and Neville Chamberlain saw we could not win it without the financial assistance of America which, since the Treaty of Versailles, wished to destroy the British Empire.

By the turn of the 1940s, our gold and dollar reserves were nearly exhausted, and by the terms of American Lend-Lease which enabled us to carry on in the war, our industry had to be switched from exports to war production. Whereas our Empire had been held together by Imperial Preference, the Americans tied the obligations of what is known as multilateral trade into their loan.

That is, tariff barriers would be reduced and non-discriminatory in effect, applying in equal measure to all countries. As US Secretary of State Cordell Hull said: “…multi-lateral trade was the knife with which to open the oyster shell of the British Empire. ” Thus, while we won the war on paper, in point of fact we lost it to the US. As an extra condition of the continuation of their war loan, the Americans forced on the British Parliament their understanding of what should be the terms of the Bretton Woods Agreement, rather than that of Keynes.

6. Third World Debts or National Debts on the International Scene
What were the consequences for international trade following American rejection of Keynes’ advice? The model was that a nation wishing to develop should

a)  borrow funds from the World Bank and the IMF to invest in agricultural and industrial projects,

b)  export products resulting from investment of these funds,

c)  repay the capital loan from export revenues gained and

d)  end up in an improved position with a more highly developed economy.

But this paradigm is flawed. No Third World country has ever succeeded in restoring solvency once funds have been borrowed from the World Bank and the IMF. Third World countries have made huge efforts only to service the debt; they cannot repay the capital. Payments of interest charges far exceed the amount of the principal loaned in the first place. So the Third World has been sustained by continual bailouts of additional credit. When this happens, Third World countries are invariably required to devalue their currencies and thus reduce the price of their exports, not least their export of raw materials. For decades, therefore, the Third World has been transferring vast quantities of primary commodities, manufactured goods, raw materials and minerals to the wealthy nations, when the acknowledged need for Third World countries is to direct less effort towards exports and develop their agricultural and industrial infrastructure for their own domestic purposes. At the moment their agriculture and industry are driven into decline and decay.

Whilst as I have explained that the old Christian teaching on usury is clear, the churches have to date failed to lead in providing any remedy for Third World Debt. The Jubilee 2000/Christian Aid effort has considered debt as a series of unpleasant numbers to be reduced, whilst failing to tackle its cause.

If there is any region where protest against debt should be at its most intense, it is Latin America. Yet this continent’s liberation theologians seem to have a blind spot for Biblical economic law. The Vatican has given us no Papal Encyclical to relate Third World Debt to the Old Testament cancellation of unrepayable debts.

7. The Myth of Inflation and the Reality of Bankruptcies
To examine the modern consequences of usury, inflation has been due to the creation of new units of additional money. With our economy so dependent on the US, during the last four decades the Fed has doubled the American money supply every ten years. That fact, and the system of fractional reserve in which banks lend far beyond their own reserves, sometimes given as a proportion of 10 to 1 but with hedge funding actually far higher, constitute the real causes of inflation and the reduction of buying power.

It has also been argued that usury or an interest-based system of money intensifies business cycles. In a recession, the payment of interest acts as a fixed cost outside a company’s control, and the higher the debt the worse its implications. Under the Islamic system where lending is not allowed and the bank has to take a share of the equity, repayment would be determined by profitability.

In my Monday Club pamphlet, Austin Mitchell MP says “…bankruptcy is the daughter of usury or debt.” In private correspondence with me he has been more blunt, stating that it is usury with its intensification of business cycles which drives many people into bankruptcy.

In the US the Chapter 11 provision allows businesses to put themselves into a protected situation to create a breathing space and ensured survival for many American businesses. By contrast, in the UK a bank’s reporting accountant may recommend liquidation – to be not the debtor’s physician but mortician – because the insolvency arm of the bank’s accountancy house gets the fees and the business from it.  Here, as Austin Mitchell MP remarks in my Monday Club pamphlet on usury, we operate a culture of closure whilst a healthy economy needs a culture of nurture - not a rush to close businesses which may have a future. The market for insolvency is guaranteed by the state; auditors owe no duty of care to stakeholders; and clients are not consulted when a bank orders an accountant’s report and forecloses. And there is no regulation of the excessive fees charged by insolvency practitioners.

“Phoenixing” is alive and kicking with the aid of insolvency practitioners. In one reported case, an individual who went to an insolvency practitioner to make his company insolvent then had it sold back to him at knockdown value to leave the creditors in the air.

In other ways our bankruptcy laws are not working properly. A bankrupt is likely to know more than anyone else about his own affairs yet is boxed in and not allowed to represent himself. Whilst a criminal is innocent until proved guilty, a bankrupt is presumed to be guilty and is not allowed to have an adviser present at any questioning.

As happened in our case, creditors can expand their claims. In our case they were doubled, because these claims are not independently and adequately audited. One accountant, Christopher Arkell, former editor of London Miscellany, presented a paper on this subject to the Forum for Stable Currencies, quoting at length a case between the Inland Revenue and a café near Heathrow Airport. Had I not been thrown out of the House of Lords as an hereditary peer, I would have introduced a Bill on this abuse.

Perhaps the best that can be hoped for now is that a judge will clean it all up when the next case comes along. When Parliament passes a statute, it cannot be expected to anticipate every contingency. Lord Denning often used to say “…we can’t wait for Parliament to come round to this, I will sort it out.” Whilst under the theory of our constitution judges are meant only to interpret the law, I have rarely met one who does not think he is there to bend it or make it.

8. Bankruptcy as Vendetta
Bankruptcy can be abused when employed not for economic purposes but to pursue a vendetta. Take the case of the Duke of Westminster who wished to punish his brother Earl Beauchamp for homosexuality. In my own family’s case, Lloyds Bank is suspected of using bankruptcy for political instead of economic purposes. It is suggested that as a very powerful politician Joseph Chamberlain, who helped to build Lloyds Bank into becoming one of the Big Five – both he and the bank came from Birmingham and banks are sensitive to political pressure – used the bank to destroy the 4th Lord Sudeley, partly owing to class jealousy but also because they fell out over Home Rule for Ireland.

On that issue, when Chamberlain took so many Liberals with him into the Tory Party and thus destroyed the old Whig interest, the 4th Lord Sudeley stayed behind as a Liberal Unionist. As a middle class Radical, Chamberlain loathed the old Whig aristocracy such as the 4th Lord Sudeley for their espousal of reform in order to exercise a restraining hand. At a more ordinary level, most bank customers are not made bankrupt by banks – they prefer Individual Voluntary Arrangements or IVAs. Some bank managers, however, notably those with a grudge, prefer to enforce bankruptcy even though they know it will produce a lower return for creditors than an IVA.

When filing for bankruptcy, a bank has no duty to keep records, and the law of libel prevents us from suggesting that they are hiding anything when they are in total control of their own information. I investigated this question in the June 1999 issue of London Miscellany. To obtain any information, we need a new independent regulator with proper search powers as per Customs and Excise.

The Secretary of the Historical Manuscripts Commission told me that Parliament should not seek to impose proper statutory controls as this would encourage the concealment and early destruction of the records it is sought to preserve.

But the ease and economy with which banks’ records are stored with computer technology requires a change of thinking.

9. The Future of Money
Now that we have seen the harm inflicted by usury, how do we see the future? At the beginning of this paper I described how Lloyds Bank could act as it did to force the immediate payment of the debt on the nail because the bank would not accept the collateral of our other assets. Dr. Stanley Chapman of Nottingham University, who presented a paper on this subject at a public conference that I held on the history of my family, blames my great-grandfather, the 4th Lord Sudeley, for failing to observe the cardinal rule in business that liquidity or cash flow is more important than capital. That rule no longer applies.

With Lloyds Bank being far back in the Stone Age, a similar case occurred a century later. A company, Heritage plc, a distributor of household wares, had ample assets but an immediate cash flow problem. This could have been resolved if Lloyds Bank had not withdrawn their facility within the space of two banking hours. Based on this case, Dr. Rudi Vis MP introduced an Adjournment Debate in the House of Commons. The result: a mandatory grace period of 28 days to realise assets, effective from 1st April 2001. I congratulate Dr. Vis on this major and very satisfactory change in the law.

To move further forward, we must stress that our case derives its strength from the fact that it is not party political. Historically the case for removing the supply of money from banks and having Governments re-assume them, ie, by issuing credit on a debt-free basis, has been supported from quite disparate quarters: Gladstone, Disraeli, Pope Pius XI with his Encyclical Quadragessimo Anno, Russia’s 19th century Tsars who prevented the setting up of a privately owned central bank, and US Presidents Jefferson and Abraham Lincoln. My Monday Club pamphlet on usury cites speeches in the House of Lords from Lord Caithness, ex Tory Front Bench and Labour peer Lord Beswick, as well as a paper by Austin Mitchell, Labour MP, leading officer of the Forum for Stable Currencies, also supported by Sir Richard Body, for many years a Tory MP.

Of course, people will always wish to borrow money no matter how objectionable the terms. With this wish being so ingrained in our monetary system and the vested banking interest so powerful, it has been said that it will be very difficult to get rid of usury altogether. Austin Mitchell MP tells us that most Parliamentarians shy away from any mention of the word usury, and with his orthodox (commonly regarded as unorthodox) views, he is in a tiny minority in the House of Commons.

As the UK is unique with the dominance of its financial rather than manufacturing sector, our banks are more powerful than those in Germany and the US.

Nevertheless there are some encouraging signs when, as with the rise of early Christianity, cells are being formed. Especially in the US over the past 20 years, the importance of the banks has fallen with the increase in equity funding. In the US the aggregate amount of capital controlled by the banking system is now actually less than that in the hands of a mutual fund industry.

On the whole the Japanese do not borrow as consumers; they save. So if the Sumitomo Bank wishes to earn money for its investors, it is obliged to take risks by investing in industry and commerce.

Malaysia became the first country to establish a fully Islamic system with an inter-bank money market operating on a profit sharing concept in which the provider of funds earns a profit from his investments instead of paying interest.

Guernsey continues, as it has done for 200 years, to use debt-free money to pay for large building projects.

During the 1980s in the UK, when rising unemployment and plummeting job security made many people feel they were losing what autonomy and power they had over their own lives, groups of people got together to trade services. They set up Local Exchange Trading Systems or LETS and developed their own money. Other organisations have emerged as “commercial barter companies”.

In June 2002 Austin Mitchell MP tabled an Early Day Motion in the House of Commons. Since then the topic has been newly formulated by various members of the Forum and now reads:

"That this House, concerned at the rising burden of private debt, public borrowing, student borrowing and public-private finance initiatives;

•    notes that the proportion of publicly created money in circulation has fallen from 20% of the money supply in 1964 to 3% today;

•    believes that increasing the proportion of publicly created money in issue may provide a new means of financing public investment;

•    further notes that it is suggested that the use of publicly created money can cut the cost of public investment by at least one half of what it would otherwise be by eliminating the need to pay interest;

•    accepts that such a policy can be adopted without any impact on inflation if suitable regulatory changes are made;

•    and therefore urges the Treasury and Treasury Select Committee to commission independent reviews on procedures for increasing the proportion of publicly created money in the economy and on the benefits of so doing and report them to this House."

We recommend that Britain should encourage the Commonwealth into monetary cooperation as a model for the creation of wealth. At the moment the Commonwealth has nothing in common nor is it wealthy. But it could represent both if ‘global Sterling’ were a clean and stable currency free from debt and interest and administered as a public service - instead of fostering private wealth in the banking sector.

Further reading is given in the bibliography. In particular I would recommend Michael Hudson’s pamphlet The Lost Biblical Tradition of Debt Cancellations; R.H.Tawney’s classic work Religion and the Rise of Capitalism on the old Catholic teaching and how it was superseded by Calvin; Peter Selby Bishop of Worcester’s Grace and Mortgage, especially in relation to Third World Debt, Michael Rowbotham’s Goodbye America, and the classic definition of money given by Aristotle: that it is barren, it can be the medium of exchange only and never the mother of interest.

Whilst it is sometimes supposed that Aristotle was writing in an era of barter economy that is no longer relevant, that is not the case. We still agree with the old Christian and Islamic condemnation of usury: that the interest charged on a loan is the increment out of excrement.



A drawing of the Dante's winged Geryon represents the sin of fraud,Out of the pit where Dante’s belt was thrown rises a terrifying monster with the head of a man, the body of a serpent, and the tail of a scorpion.

This is Geryon, who “swims” through the murky air of the abyss, undulating his body like an eel while stroking the air with his claws. Geryon represents the sin of fraud, with a trusting face and a deadly tail. Incredibly, he will be giving Dante and Virgil a “ride” down to the pit.

While Virgil speaks to Geryon, Dante talks to another group of souls nearby squatting on the sand, the Usurers, or moneylenders. Their faces are unrecognizable from the burns and ash, and are identified only by the insignias of the moneybags around their necks. Dante then joins Virgil and Geryon to continue in their journey of terror.


Dante's Divine Comedy

In the third and final Ring of the Seventh Circle are condemned those who were violent against God in life, either by cursing God's name or by despising Nature and God's bounty. Sinners in this Ring include blasphemers, usurers and sodomites. They are stranded forever on the Plain of Burning Sand where it constantly rains great burning flakes of fire which vanish when they hit the ground, but not when they hit the flesh of sinners. This region is also known as The Abominable Sands. "The symbolism of the burning plain is obviously centred in sterility... and wrath."

The different sinners condemned to this Ring behave in different ways:

Blasphemers, who were violent against God, are stretched supine and naked upon the ground under the burning rain. Many shout and curse God.

Sodomites, also naked, must wander forever on those hot sands, or squat with their arms about themselves.

Usurers, who were in life violent against art, must crouch on the hot sand with heavy moneybags around their necks. They are dressed in the finery of all ages, but their identities are concealed. This is a symbol of how they have lost their identity due to their concern with material goods. However, the colours they wear express their family shields. Loan Sharks are the modern Usurers, and are also condemned here.

The stream of boiling blood from the Phlegethon flows through this Ring and over the edge into the Eighth Circle. It is narrow but fast, its roar somehow different from that of water, and it is bright scarlet. It falls with a sound of rushing water into the Abyss.

See also
Debt matters
Aristotle - a compendium of articles
It’s The Jews Stupid
Archbishop of Canterbury: UK debt culture straining fabric of society
Why read Dante

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