As used in the Scriptures, usury means any kind of interest on money loaned, although in the English language it has come to mean an exorbitant rate of interest, or interest in excess of the legal rate.
The Mosaic code forbade the taking of interest from brethren in the faith, although it might be received from strangers. The prohibition grew out of the agricultural economy of the time when there was little need for productive capital loans for business purposes. The chief purpose of loans was for the assistance of a friend or brother in need. To receive interest under such circumstances was a violation of the law of love that required the Israelite to care for his own. "If you lend money to any of my people with you who is poor, you shall not be to him as a creditor, and you shall not exact interest from him. If ever you take your neighbor's garment in pledge, you shall restore it to him before the sun goes down; for that is his only covering, it is his mantle for his body; in what else shall he sleep" (Ezekiel 22:25-27, RSV)? This command as well as that of Jesus. "Give to him who begs from you, and do not refuse him who would borrow from you" (Matthew 5:42), are not to be thought of as economic principles or as business procedures. They have to do with the Christian's social responsibility to the poor; they are a statement of the law of love which extends mercy to the brother in need.
In the Middle Ages and the Reformation, as in Biblical times, money was regarded primarily as a medium of exchange, not as productive capital; and money loaned was for the purpose of helping the brother in need, not for investment purposes. For this reason the medieval church, and to some extent Luther, as well as the Anabaptists, opposed the use of interest. This was entirely consistent with the principle of brotherhood espoused by the Anabaptists, as well as with the simple economy of the handicrafts and noncommercial agriculture that characterized their economic life.
The economy of Geneva, on the other hand, was characterized by industry, commerce, and banking in which the borrowing and lending of productive capital and its accompanying payment of interest played an important role. In this setting John Calvin approved the use of interest as an instrument of the business economy, suggesting 5 per cent as a reasonable rate. In the case of noncommercial loans, however, for the aid of the brother in need, he agreed with the Anabaptists that no interest should be paid. Interest in such a case, as well as excessive rates for business loans, he condemned as "usury."
In their later history Mennonites have generally come to accept the practice approved, by Calvin, a reasonable rate of interest on business loans, with a low rate or none at all for cases where brother is helping brother in need. Mennonite history reveals many cases where loans with little interest, or none at all, have been made to tide families over difficult financial situations; or where in case the need continued even the payment of the principal was canceled. There have been many cases where loans requiring little or no interest have been extended to assist a poor but worthy young family in getting a start in the purchase of a home or means of livelihood, especially if this could be the means of helping the family to relate its life more constructively to the life and work of the brotherhood.
A recent case was called to the writer's attention where a Mennonite student received a loan to continue his education, with the understanding that upon completion of his education, if he entered into direct church service no interest would be required, and perhaps even part of the loan canceled. But if he entered a business or professional career promising normal financial returns, the normal rate of interest would apply.
During those years of American history when money and credit were scarce and when unscrupulous money lenders reaped huge profits, Mennonite Church (MC) conference regulations recognized the temptation of covetousness facing some of the members. The Ohio Mennonite Conference in 1866 declared the "established rule of the Church" to be "that the brethren should not take more than six per cent interest on money loaned, for the reason that it is unchristian and oppressive. It was further recommended to lend to the honest poor and needy without any interest, yea to lend to the upright in heart, hoping for nothing." Eight years later the Indiana Conference agreed that "In regard to interest it was considered that members of our church should not take more than legal interest and the penalty if a brother transgress in this point shall be he shall pay back the amount exceeding the legal rate and confess his fault." In 1884 the Ohio Conference declared that the "Brethren shall not exact more than legal interest," which position was taken also by the Kansas-Nebraska Mennonite Conference in 1888 and by the Western District Amish Mennonite Conference in 1891.
It was formerly standard practice among the Old Order Amish to make loans for necessary purposes without interest and without notes or mortgages. In recent times this practice has not been fully maintained everywhere.
Adapted by permission of Herald Press, Harrisonburg, Virginia, and Waterloo, Ontario, from Mennonite Encyclopedia, Vol. 4, pp. 791-792. All rights reserved. For information on ordering the encyclopedia visit the Herald Press website.
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MLA style: Hershberger, Guy F. and Melvin Gingerich. "Usury." Global Anabaptist Mennonite Encyclopedia Online. 1959. Web. 24 May 2013. http://www.gameo.org/encyclopedia/contents/U81.html.
APA style: Hershberger, Guy F. and Melvin Gingerich. (1959). Usury. Global Anabaptist Mennonite Encyclopedia Online. Retrieved 24 May 2013, from http://www.gameo.org/encyclopedia/contents/U81.html.