Usury

Usury is the practice of making unethical or immoral monetary loans that unfairly enrich the lender. A loan may be considered usurious because of excessive or abusive interest rates or other factors. However, according to some sources, simply charging any interest at all would be considered usury.

Jews and usury

During the Middle Ages Christians were forbidden from charging an interest on loans. Jews were forbidden by Jewish scriptures to charge an interst on loans to other Jews, however they were permitted to charge interest on loans to non-Jews.

Kevin MacDonald has argued that this contributed to Jewish moneylending being seen as an hostile act against a non-Jewish outgroup that caused the transfer of resources from Jews to non-Jews. Also, interest rates rates could be very high and profits for moneylenders very high compared to occupations open for non-Jews in artisanry or agriculture. Jewish moneylending was sometimes seen as resulting in a Jewish “grip” on the Christian economy. It was also associated with, for example, religious institutions going bankrupt and being closed down as a result of debts owed to Jews. Another argued reason for dislike of Jewish economic activities during this time period is that Jews were involved in unpopular tax collection for the nobility/royality (tax farming).

He has also written that:

Historically, Jews were often concentrated in ethnic niches such as moneylending, tax farming, and estate management—occupations that were exploitative. In traditional societies these activities were not part of a market economy but an aspect of exploitation by elites. For example, Rubin treats moneylending as a service to debtors benefiting the society as a whole—on the model of buying a house in the suburbs or starting a business with a predictable economic surplus and at rates of 5–10% interest over a number of years. However, in the Middle Ages and down to the twentieth century in much of Eastern Europe, the great majority of loans were made to people living at or near subsistence, and they were made at exorbitant rates. There was often no free market in moneylending; typically, moneylenders obtained the right to engage in these activities as a result of being granted a franchise by a nobleman or a city which received a portion of the profits. The moneylenders then charged whatever they thought they could obtain from their customers, with the exception that interest rates were sometimes capped because of complaints by ruined debtors.

Loans made at interest rates common in the Middle Ages (oftentimes 33%–65%) are simply exploitative, and there is little wonder that they caused hatred on the part of ruined debtors and deep concern on the part of the Church. Moneylending under these circumstances did indeed benefit moneylenders and their aristocratic backers, but, as with loan-sharking today, it simply resulted in destitution for the vast majority of the customers—especially the poorer classes—rather than economic growth for the society as a whole. Loans were made to the desperate, the unintelligent, and the profligate rather to people with good economic prospects who would invest their money to create economic growth; they were made “not to the prosperous farmer...but the farmer who could not make ends meet; not the successful squire, but the waster; the peasant, not when his crops were good, but when the failed; the artisan, not when he sold his wares, but when he could not find a market. Not unnaturally, a century of such a system was more than any community could stand, and the story of Jewish usury is a continuous alternation of invitation, protection, protestation and condemnation.”

See also

• Jews and finance
• Napoleonic Jewish Decrees