Abstract
The chief complaint levied against microfinance is that its moneylending operations are usurious. Money lending in general has never quite escaped its pejorative label of usury, for which it has had a long history. In fact, when the ancient Roman politician Cato was asked what he thought of money lending he replied, “You might as well ask me what I think about murder.”1 Long before the Romans, Hindu manuscripts dating from 1500 BCE contain the earliest mention of usury in either religious or secular texts. Two separate admonitions are contained in a list of laws promulgated by the sage Manu to help recreate civilization after the great floods some 10,000 years ago. One admonition is included in a list of offences which also consist of defiling a damsel, breaking a vow, and selling one’s wife or child.2 The other is more descriptive:
In money transactions interest paid at one time (not by installments) shall never exceed the double (of the principle); on grain, fruit, wool or hair, (and) beasts of burden it must not be more than five times (the original amount). Stipulated interest beyond the legal rate, being against (the law), cannot be recovered; they call that a usurious way (of lending); (the lender) is (in no case) entitled to (more than) give in the hundred; Let him not take interest beyond the year, nor such as is unapproved, nor compound interest, periodical interest, stipulated interest, and corporal interest.3
“Profitless usurer, why dost thou use So great a sum of sums, yet canst not live?”
William Shakespeare (Sonnet 4)
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Notes
Marcus Tullius Cicero, On the Good Life (Penguin Classics. Harmondsworth: Penguin, 1971), 171.
Manusmriti, The Laws of Manu, trans. G. Buhler (Oxford, UK: Clarendon Press, 1886), 73.
Hinduism and Buddhism address issues of avarice surrounding money lending, but they identify “usury” as lending money at exorbitant rates. Because microfinance lending does not conflict with Hindu or Buddhist beliefs or practices, a historical discussion on the topic is unnecessary for the purposes of this book. See: Wayne A. M. Visser and Alistair McIntosh, “A Short Review of the Historical Critique of Usury,” in Accounting, Business & Financial History, vol. 8, no. 2 (London: Routledge, July 1998), 175–189.
Paul Johnson, A History of the Jews (London: Orion Books Ltd, 1987), 173.
Benjamin Nelson, The Idea of Usury: From Tribal Brotherhood to Universal Otherhood (Chicago: University of Chicago Press, 1969), 54–55.
Susan L. Buckley, Teachings on Usuly in Judaism, Christianity and Islam (Lewiston, New York: The Edwin Mellen Press, 2000), 1–2.
Rabbi Meir Orlian, “What is a Heter Iska and How Does it Work,” Jewish Press, 13 May 2009, http://www.businesshalacha.com/articles/heter-iska-101-ipes (accessed 4 January 2014).
Kenneth H. Ryesky, “Secular Law Enforcement of the Heter ‘Iska,” JLaw. corn, http://www.jlaw.com/Articles/heterl.html (accessed 4 January 2014).
Martin Luther, Luther’s Works, Volume 45, ed. Jaroslav Pelikan (St. Louis, MO: Concordia Publishing House, 1955), 20.
David B. Ruderman, The World of the Renaissance Jew: The Life and Thought of Abraham Ben Mordecai Farissol (Cincinnati: Hebrew Union College Press, 1981), 91.
Evangelical Lutheran Church of America, “A Social Statement on: Sufficient, Sustainable Livelihood for All,” Adopted by a more than two-thirds majority vote by the sixth Churchwide Assembly of the Evangelical Lutheran Church in America, meeting in Denver, Colorado, 16–22 August 1999. http://download.elca.org/ELCA%20Resource%20Repository/Economic_LifeSS.pdf (accessed 4 January 2014).
Christoph Kneiding and Richard Rosenberg, “Variations in Microcredit Interest Rates,” CGAP.org, 1 July 2008, http://www.cgap.org/publications/variations-microcredit-interest-rates (accessed 4 January 2014).
N. J. Dadwood, The Koran (London: Penguin Books, 1990), 286.
Malcolm Harper, D. S. K. Rao, and Ashis Kumar Sahu, Development, Divinity and Dharma: The role of Religion in Development and Microfinance Institutions (Rugby, Warwickshire, UK: Practical Action Publishing, 2008), 130.
Muhammad Yunus, Banker to the Poor (New York: Public Affairs, 2003), 110.
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© 2014 Michael Looft
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Looft, M. (2014). Usury. In: Inspired Finance. Palgrave Macmillan, London. https://doi.org/10.1057/9781137450784_6
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DOI: https://doi.org/10.1057/9781137450784_6
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