WE
WANT
ZERO
INTEREST
by
ESTELLE FIELD
and
MARIO CAROTA
How
Jesus
enlightened and empowered
us
to raise our voice
against
usury
God,
as lover,
is passionate
about
social justice,
for the simple reason
that its opposite -
systemic injustice,
is the single
greatest source
of
unnecessary suffering
and misery.
A PENNY GIFT FOR OUR WEDDING PRESENT
1942
It was a hot, muggy
That was the beginning of an intensive
courtship of only three months and that ended up with a brief three week
engagement and a marriage that took place on Christmas Eve in the year
1942. But we keep reminding ourselves
that this miracle is only due to the fact that we became united and have remained
united with Christ as the center of our marriage and family life.
What made me want to get married to my Honey
was because of a conversation that took place that unforgettable evening in the
dairy bar. After looking lovingly at her
beautiful face with her long, sandy colored hair I suddenly became curious as
to what she wanted out of life. If
things were to get serious between us, I wanted to know more about her. I already knew that she was very spiritual
because of her devotion to Christ. I
also knew that she was quite philosophical because of her major in philosophy
at the De Paul University. What was more important to me was her aspirations for her future
life. So I asked her, “What do you want
out of life?”
She hesitated and thought for a moment before
she calmly answered, “I
just want to be good!”
Now this astounded me. I expected the normal reply about wanting to
have a house and a family. Instead she
had given me a much more profound answer.
Once I recovered I realized that this was the girl I wanted to
marry. However it took three more months
before that happy event took place.
The
wedding was a small and quiet ceremony that took place in the chapel of the University
and was carried out by Fr. Kearney, Estelle’s beloved philosophy professor, and
the person most responsible for her conversion to our faith.
After the wedding, Fr. Kearney gave us a little
gift. It was this simple gift from him that was mainly
responsible for our present mission against usury, although we never realized
it at the time. He was an admirer of
Dorothy Day and Peter Maurin,* the founders of the
Catholic Worker Movement. Since they
only charged a penny an issue, the gift was not worth that much
materially. But spiritually that little
gift completely shaped our future lives. Once we learned about the positions
they held against the war, we became pacifists even though I was already a
member of the armed forces. Fortunately,
I came to serve under commanding officers who accepted my beliefs and allowed
me to carry out only non-combatant assignments.
Because of the violent war going on around us, we were more committed to
pacifism than the other social justice issues of the Catholic Worker
Movement. We admired their efforts to
feed and house the poor. But, we were to
become much more committed to those issues as time went on.
*Peter Maurin's
essay on Usury:
Because John
Calvin legalized money-lending at interest,
The State has legalized money-lending at
interest.
Because the state has legalized
money-lending,
home-owners have
mortgaged their homes.
Because the State has legalized
money-lending at interest,
farmers have
mortgaged their farms.
Because the State has legalized
money-lending at interest,
congregations have
mortgaged their churches.
Because the State has legalized
money-lending at interest,
Cities, Counties, States and the Federal
Government
have mortgaged
their budgets.
So people find themselves in all kinds of
financial difficulties
because the State
has legalized money-lending at interest.
THE SALE
1947
We shall never forget the day that peace was
declared and World War II finally ended.
We rejoiced because now everyone could return to normal. And we were happy personally because we were
now free to get back to civilian life and carry out our plans for a
family. As soon as we heard the news
over the radio we rushed out onto the streets to join our fellow servicemen who
were out there cheering and celebrating the great event.
So we loaded up our old 1941 black Buick sedan
with our few personal belongings and head for
So we started looking around the edges of
Obviously, we needed a place to live so I went
out and bought some tools, and a book on building houses, so that I could build
a simple two-room cabin by the side of the road. Within a month we had a small but livable
cabin but it was sixty days before we obtained electricity. But water, the much more critical need was
another problem. We solved it by getting
a trailer and put two water drums on it.
Then everyday after mass at the Sister’s chapel we would fill up the
drums and haul it back to our cabin. We
parked the trailer on the hill above the cabin and by gosh there was enough
pressure to give us running water in the cabin by the road.
In an unbelievable short time, after telling
the priests and sisters about our plans to adopt twelve children, two of them
arrived! However, starting with just two was not that easy in a tiny cabin
without running water or electricity. Changing diapers in the middle of the night by
candle-light was a bit of a chore for my Honey.
So we sold off half of our purchase to pay off the mortgage and searched
for other options. While we looked we
began building a normal house on the hillside overlooking the road. By that time I was more skillful at
carpentry, wiring and plumbing so this helped us to build our new home without
having to borrow any money from a bank.
After completing our small but beautiful new
redwood home we moved out of the first cabin.
It was great to have so much more room and with nice shiny pine wood
floors. It was not long after that when
a single mother with three small children family saw our empty cabin and asked
if they could buy it and that we agreed to sell it on a plot of land for their
home-site. The unusual thing about the
transaction was that we agreed to take the payments in monthly installments and
not charge interest. We were still
committed to the Catholic Worker principles enough to not charge interest even
though we had not yet completely grasped the significance of the evils of
usury.
We never thought much more about the
transaction until fifty years later when we were surprised one day when one of
the sons of that family looked us up as we were working on our mission in
I was not at home at the time but he found my
Honey and explained,
"Boy am I glad that I have finally found you. Somehow I found out that you wound up in Aptos
and when I looked up the Carota name in the telephone
directory I called your daughter Martha and she told me you were up here in San
Bruno." "You were
fortunate, weren't you? " replied
Estelle. Then, out of curiosity she
added, "But
who are you and why did you look us up?"
"Oh, do you remember the family you
sold the cabin back in the forties in Monterey?" he answered
eagerly. "Well I am one of the
sons and I have never forgotten what you did to help us ,
especially by giving us that mortgage without charging interest. I came all the way here just to thank
you!"
Generosity does have its rewards!
THE PURCHASE OF OUR FARM
INTEREST FREE
1948
It only took a couple of years to realize that
our desired country life on a farm could not be achieved in water scarce
It was a steep hillside farm located on a
beautiful small stream that ran miraculously all year round. And, it was located on the edge of a
beautiful redwood forest. To us the more
attractive part, after living in
We moved as quickly as we could and sold our
place in
RESEARCHING THE
DOCTRINE ON USURY
1950
Once we had we had settled down on our farm, we
began to work on the usury issue. First
we needed to find out more about the history of the issue. Thus I began by going to the public library
in the nearby town of
One of the them
referred me to a thesis that had been written in
The author, a Fr. Patrick Cleary,
first outlined the whole history of the formulation of the Church’s doctrine
against interest. He gave the laws of
God against usury from the Old Testament.
Then he related quoted Christ’s teachings about making loans. Next he showed how the doctrine had been
created and formulated through the interpretations of these laws and teachings
by the Early Fathers of the Church. Next
he showed how these interpretations were expanded and strengthened by canon
laws and the declarations of the various ecumenical councils and popes. Fr. Cleary concluded with the teachings made
by the holy doctors of the Church,
Fr. Cleary, however, in his closing statement
said, “All of these changes to allow the charging of interest is based
merely upon the ownership of money to make the loans.”
The ordinary encyclopedias had only the normal
explanations about usury being excessive interest. However, an encyclopedia on religion and
morality had a long article about usury that was a much more informative. It explained that the Catholic Church once
had a doctrine prohibiting the charging of interest on loans. Then it showed that the original definition
of usury meant anything taken over and above of the amount of loan but that
this definition had been redefined to mean only exorbitant amounts of
interest. All the dictionaries I found
as well as moral theological texts ignore the original definition of the Church
and instead define usury in the same erroneous way.
To this day, as the
POPE JOHN PAUL THE
FIRST
1978
Upon the death of Pope Paul VI, Pope John
Paul I was elected by the College of Cardinals in the
Nonetheless
he began to serve as the highest authority of the Catholic Church. However, his reign only lasted for a total of
thirty-three days - one of the shortest reigns of a pope in the history of the
Church. On the morning of his
thirty-third day he was found dead in his bed by his faithful nurse. It was then publicly declared that he had
died after suffering a heart attack in the middle of the night.
There were, however, some mysterious events
about the causes of his sudden death. It
was claimed that the Pope had been ill even though his health had never been
questioned before. It was said that
because he was reading some serious and official papers late into the night,
that was the reason of his sudden heart attack.
Some writers later commented on the facts that the normal autopsy was
never performed and that he was buried in a very swift manner.
The most serious comments were later brought
out by books entitled "In the Name of God" and “A Thief in the
Night.” Both authors alleged that the Pope had been mysteriously put to death
because he intended to reform the financial affairs of the
WHY THE MUSLIM RELIGION
IS
AGAINST USURY
1979
In
the process of doing our research we were gratified to learn that the Muslim
religion also forbids the charging of interest on loans. In addition, it also forbids the paying of
interest. Thus it goes one step further
than the doctrine of our Church against usury.
The Muslim government of Pakistan actually has enacted strict laws
against usury. At one time the laws of
the English government did the same. However, this was short lived as the
money-lenders lobbied the government until the law was repealed.
Now critics proclaim that the Muslim religion
gets around these prohibitions. They say
that people have found loopholes to make a profit from their loans. One of these ways is the profit sharing
principle. When a lender makes a loan he
then gets a share of the profit when the loan is used by the borrower in a
business transaction that produces a profit.
This is just. However, it is
different from usury because when interest is charged for a loan, it is a fixed
amount and the interest rate must be agreed upon by the borrower before the
loan is granted. In contrast, with the
profit sharing principle there is no fixed amount guaranteed in advance of giving
the loan. In addition, the amount of the
profit can vary with the amount of profit produced by
the business transaction. There is also
a greater risk for the lender if there is no profit made at all by the
borrower, because then the lender receives no profit at all.
It would be interesting to know if the country
of Pakistan has any date to show that the absence of the burden of interest on
loans has benefited the entire economy.
As well, it would be good to know if this has benefited the poor of Pakistan
by not putting this burden on their backs.
Surely this burden in capitalistic countries
has a great impact on the overall economy.
But again there are no statistics to indicate the impact. Nonetheless, the impact of the amount of
interest being charged by banks is always reflected by the rise and fall of the
Dow Jones index. Anyone familiar with
the stock exchange knows that.
Recently we had a
interesting conversation about the Islam prohibition against usury with a
surgeon from Pakistan. As soon as we
learned that he was originally from Pakistan, we questioned him about his
background in reference to the usury issue.
He admitted that the Pakistan government does indeed forbid the taking
and paying of interest. And he also said
that he practices this law. Then when we
asked him if he knew the reason why, he explained that the main reason that
interest is forbidden is to protect the poor from being exploited.
What is really unfortunate is that our Church
no longer sees that the exploitation of the poor from the paying of interest -
especially on the emergency loans that they are required to make. For eighteen centuries it did forbid usury
for that important reason. Now, its once
noble tradition is ignored and the poor must fend for themselves. Worse yet, this new practice of the Church does nothing but favor the rich.
WE MOVE TO CANADA
1979
At this time the Vietnamese war was going
on. The local draft board was busy
rounding up boys to serve in the Army. When our son,
Benedict, was called up to be drafted, he applied as a conscientious
objector. The secretary of the draft
board denied this. So, we had no other
choice but to move out of the country.
We had to preserve the right of our sons, and we had fifteen at that time, to be
pacifists. Thus we moved up to Canada.
This was not easy. We were really getting established in California. Our children were making more and more
friends. There we had a very mild
climate and, instead, we had to move up to a country with harsh and long winters
that brought huge snowdrifts to our farm.
But we had no other choice.
We decided to move up to Prince Edward
Island. This is a small island in the gulf of St. Lawrence.
It has a unique rural culture with a tradition of farming and
fishing. It was a real change from the
"anything goes" culture of California. Nonetheless, we adapted by farming and
fishing for lobsters.
As for our spiritual life - we became active
members of the parish of St. Paul.
There we were fortunate to find a team of priests and nuns who had recently returned to
the island after doing missionary work in the Caribbean. They were then assigned to be a pastoral team
for our parish.
MORE RESEARCH ON THE DOCTRINE
Prince
Edward Island
1979
Although the team did not know much about usury
or that this was completely contrary to the Church’s doctrine against usury,
they knew that this did not aid the spiritual life of the Parish. On their arrival they went over the
finances of the Parish and found the incredible amount of over $300,000
invested in the stock market. The former
Pastor was an astute business man who had increased the principal by
reinvesting the interest and profit each year.
When the word about the surplus funds reached another parish on the Island, that was looking for some building funds, it
naturally applied for a loan from our Parish.
It was quickly granted by the team.
That was fine. It was a good
example of one Christian community helping another.
But the contradictory part was devoted to
explaining the new interpretations of the modern moral theologians and canon
lawyers. They went to a great trouble to
outline the reasoning on which they based their interpretations.
But, and this is what upset me, our parish was
going to charge interest on the loan. True, the three percent was very small but it
was still not the Christian way to help another community in need. We believed, that a Christian community
should charge no interest at all on loans to another Christian community. How could we make a profit at the expense of
the other community.
It would be much more Christian if we just gave them the money! Then at our next parish meeting we learned
that the interest rate had been raised to five percent. This was even more upsetting because it had
been authorized by our Bishop.
Then when I went to show my findings
to Fr. Murnaghan, the leader of the Parish team, to
get a clarification on the apparent contradiction between canon law, which
allowed interest-taking and the Church’s doctrine against interest-taking.
He studied the commentary and then, instead of supporting my position he
strongly affirmed that since it was canon law “That was that.”
To increase my meager knowledge I continued my
research with a book on canon law. I
borrowed a commentary on the law, written by a Franciscan priest by the name of
Fr. Wywod, from the Parish. In his text book, intended to educate
seminarians about canon law, there was an explanation of the new
interpretations that now permitted the charging of interest on loans despite
the Church’s doctrine against interest.
It stated that although the Church had once prohibited interest-taking,
because times had changed, the new interpretations allowed the taking of
interest. However, the text insisted
that there was no change in the prohibition of the clergy engaging in business
– providing they did not do it to excess!
His language was hard to understand because he used Latin terms like “lucrem cessam” but I was able to
get his message that the charging of interest was no longer sinful.
CONFRONTATION WITH
BISHOP MacDONALD
1980
Two of our new Parish team, together with a few
other priests, nuns and other activists, formed a new social justice group to
carry out more aggressive forms of social action. Soon after I joined I
apprehensively asked if they would like to take up some sort of action related
to usury. They then asked, "Mario,
in what form do you think this would take?"
I was grateful that they were willing to take
on such a far-out proposition and after a bit of hesitation I replied, "First I
think that we should ask to look at the books of the Diocese and then invite
Bishop MacDonald to explain his financial policy to us." They looked at one another in a surprised
manner before one of them indicated that it might make a good social justice
action.
The very next week I went up to see the people
in the Diocesan Accounting office at the huge
It did not take me long to uncover just what I was looking for. I found that the Diocesan had a central fund of over $800,000.00 that had collected, at the then very high interest rate of twenty percent, a sum of over $160,000.00 in interest in one year! It was unbelievable.
In the fiscal year of 1981, $79,274 was used
for parish interest subsidization. That
is, the policy was to have the parishes borrow money from the banks at the
going interest rate and then the Diocese would subsidize the difference in the
interest rates. $15,000 went towards a
pension for retired priests. $2,000 was
given to family services. $1,000 was
donated to rural parish assistance. Administration fees used
up $3,642. A large amount of $42,951 went to purchase some land.
Amazingly, only $3,000 of the total $152,116
was used to help the poor - an amount less than was used for
administration! Even so, I was much more
interested in how the Diocese was obtaining its funds rather than how they were
spent.
At least the money was invested in the credit
union instead of a bank. However, back
in the eighties, the credit union was charging twenty-three percent interest on loans to Islanders who needed funds for home
mortgages or to buy new cars. Thus they
were able to pay depositors such a high rate of interest. The injustice was that it was the little
people, as usual, who were subsidizing the large difference between what the Diocese was charging and what it was receiving.
At the next meeting I related my findings to
the group. They were glad to hear the
results of my research because it gave us a good foundation for a meeting with
the Bishop. Surprisingly, he was kind
enough to accept our invitation.
Of course, he was briefed before the meeting by his accountants who were still upset that they had been misinformed about my permission to see the books. First the Bishop make a few opening remarks to the effect that he was glad that we were meeting together and that he supported the aims of our group.
Then I eagerly asked, "Bishop, we appreciate very
much that you are willing to meet with us.
We have called you here to learn more about your financial policies for
the Diocese. Could you explain about the
Diocesan general fund and about the amount of $180,000 that was gained in
interest from the credit union."
"I would be glad to," he
answered in complete confidence. "That
money is used for helping parishes out and for priests who have no pension
funds saved up. However, I mistakenly
understood that the general fund was only earning five percent instead of
twenty percent."
I then countered, "Well, Bishop, that
is our concern. We believe that getting
twenty percent profit is completely unjust and contrary to the Church´s doctrine on usury."
A bit taken back by our concerns, he then
answered, "Well, I do not know about that. But if you will formulate the questions, I
know a good priest, Fr. Ryan, who teaches moral theology at the seminary near
It did not take me long to put together the
following questions:
1. Can the Diocese profit from the investing of
its surplus funds in a lending institution at the expense, and from the labor,
of other people who are being charged high interest rates on loans made to
purchase necessities?
2. Upon what moral and
theological grounds can this be justified?
3. What is the authority for the teachings of
the Church to justify the taking of interest on loans? In other words, the original teachings of the Church prohibiting the taking of interest on loans
was based upon the Councils of the Church and Encyclicals of Popes. Upon what similar authority is the new
teaching about interest based?
Hoping against hope that Fr. Ryan’s social
background would give us some support for our position, we waited anxiously for
his reply. Our hopes were not
fulfilled. Within a couple of weeks, the
Bishop called me into his office and gave me a long letter of clarification
written by the moral theologian.
To sum up - he justified the gaining of the
interest by the Diocese with the usual arguments used by the new interpreters
of the Church's doctrine against usury.
He answered the first question in favor of the Diocese by saying that it
was legitimate for it to lend funds and gain interest. He even justified it further by explaining
that putting the funds in a credit union, a genuine people's institution, was a
fine way to help make money available to people who needed to borrow. He stated that the Bishop had to collect
interest on the basis of inflation and that there indeed some risk involved. He did decry the large difference between the
rates being charged on loans and the rates being paid to depositors. (It should be noted that in 1994 Canadian
banks were charging 8.75 percent interest on loans and only paying 0.5 percent
on deposits. (They were so ashamed of
the tiny payment that they would not post the information in the lobbies!) Fr. Ryan felt, however, that this was
something out of control for small credit unions since they were at the mercy
of the banking system.
His answer for the second question was quite
long and complicated, and he used Latin terms which made it difficult to
understand. He first gave the earlier
teachings of the Church that declared the charging of interest was a sin. Then he went into the modern teachings. He stated that the social and economic
situations have changed since the 17th century and therefore the nature of
money had changed. It now has been given
a market value and therefore people who lend money can charge a rate of
interest based upon the value. He went
into detail to explain that there are two sets of values called liquidity-
preference and time-preference.
And I quote: "The modern teaching on
interest-taking, therefore, which is widely accepted by Catholic moral
theologians, is that interest-taking is justified , either on the grounds that
money in a modern economy has value over and above its ”unit of account”
status, on which a price can be put in a fair market; or on the late medieval
ground that there is, in a present day economy, always a title to return on the
basis of lucrum cessans,
and perhaps emergens."
“Lucram cessans” means the loss of the opportunity which might
present itself while the money is out on a loan and “damnun
emergens” means the money not being available to the
lender in case of an emergency.
As for the third question, he used the
definition of usury from the Fifth Lateran Council, held in 1512, "This is the proper interpretation of
usury: When gain is sought to be
acquired from the use of a thing not in itself fruitful, without labor, expense
or risk on the part of the lender.”
He also quoted the statements of the Holy Office (and we are still to this very day waiting
patiently for a definition from the Holy See) made in the 19th century that
permitting the taking of interest and Canon 153 of the Code of Canon law: “As
the administrators are bound to fulfill their office with the diligence of a
good father of a family, they shall (4) invest the surplus revenue of a church,
with the consent of the Ordinary, to the benefit of the church." Finally, he wrote about the social
teachings of the Church as paragraph No. 143 of Mater et
Magistra: “that
clearly presupposes a situation in which capital markets made possible the
funds that can be borrowed for economic development."
We were, of course, deeply disappointed by Fr. Ryan´s stand and advice to the Bishop. We should not have been considering the whole situation. We knew that the Church had recently made a “Preferential Option for the Poor.” Instead, Fr. Ryan had made a set of justifications that amounted to a preferential option for the rich.
The Bishop, of course, was then able to state
that his actions and financial policy was completely justified. Thus he was able to charge interest and
obtain a profit amounting to $152,116.00 on a loan of $777.616.00 without any
labor, expense, risk and, better yet, any moral problems.
Nonetheless, I felt it was too important an
issue to just drop and so I sent a rebuttal Fr. Ryan ń with, of course, a copy
to the Bishop.
Rebutting his answer to our first question,
with his use of the normal justification because of inflation, was not
easy. It is a difficult and complex
problem because a lender, in justice, is entitled to receive an equal amount of
money as he lent out. Thus they say that
they almost must charge interest because of inflation.
However, what few economists and moral
theologians admit is that interest is a primary cause of inflation. It therefore becomes a self-serving
justification. Banks and lenders always
have to charge more interest than the inflation rate in order to make a
profit. This higher interest rate, that
is paid by companies and governments who obtain loans from the bank, causes
inflation because the added costs are always passed on down to the consumer in
the form of higher prices and to the taxpayer in the form of higher taxes. Never in this world would a company pay the
extra cost out of its profits!
The worst part of it all is that governments
now use the excuse of raising interest to prevent inflation! This is so hypocritical because governments are
only doing this to compete with one another to attract funds from foreign
investors so that they have sufficient funds to pay the interest on their huge
debts. It is a vicious, vicious cycle
that only causes more and more damage to workers, taxpayers and the poor.
Still, in justice, the lender is entitled to an
equivalent amount of the original loan when it is repaid. The problem is how to determine the actual
amount of inflation and when the difference should be calculated ń before or
after making the loan. In practice, a
loan contract specifies a certain percentage of interest that must be agreed to
in advance that must be paid be paid in order to obtain the loan. Thus the borrower always ends up paying back
more than the amount of the loan. This is
the immorality of interest-charging - especially, when no one will admit that
in times of deflation, the borrower should pay back less than the original
amount of the loan.
The special problem for Christians is how to
determine how much of the inflation is due to interest. How are they to determine the amount when it
varies from day to day? Are they to call
the local bank to find out the rate of interest just before they make a loan?
However, much more important, is why should we let banks and capitalism
determine the principles and practice of my religion?
And that is what bothered me most of all by Fr. Ryan’s justification. We were looking for moral and scriptural answers from a moral theologian. We did not want to get economic answers from a theologian! If we wanted economic answers, we would have gone to economists.
He should have told us not to worry about
inflation because of Christ’s teachings about love and charity, "No, it is
your enemies you must love, and do them good, and lend to them, without any
hope of return." (Luke 6:35)
Finally, I rebutted his use of risk as a
justification by pointing out that the government insures all deposits. In addition, banks and lending institutions
always take collateral for loans that have a much higher value than the amount
of the loan. For example, in order for
farmers to get a loan for operational costs for a year, banks not only take as
collateral the value of the crop but the farmer signs away his machinery, his home,
the animals, buildings and land. Even
his wife has to sign as further collateral!
As far as credit unions are concerned, they all have a central credit
union to take care of possible failures of an individual credit union. Thus far there has never been a failure of a
credit union on
Fr. Ryan’s justified his answer to our second
question by using the modern argument of the changes in the economic system and
the nature of money. I have heard this
glib argument from every moral theologian I have ever talked to about the
Church’s doctrine on usury. They always
declare that, "Times
have changed, Mario, and therefore the old doctrine in no longer
relevant."
It is astounding to me how the modern
interpreters can completely ignore all the elements of the Church that
formulated the doctrine. They are, in
effect, declaring that the laws of God, the teachings of Christ, the statements
of the Ecumenical Councils and the popes are to be considered as provisional
teachings that can be changed and updated as the world changes. If so, what authority do the doctrines of the
church carry? Must they be updated each
century? Are there any permanent and
unchanging guidelines for our faith?
Theologically, the private and individual pronouncements of the modern interpreters just do not hold up. Even if they did, It still can be argued that the economic system for the lending of money has not changed. Banks and the lending of money with interest charges have been the same since the time of Bablyon. A review of the stock market history will show that they were started back in the fourteenth century! The point we wish to make is that the Church’s doctrine was not formulated in a vacuum.
As a foremost economist, Joseph A.
Schumpeter, puts it: "Of course,
they (the Scholastics) were late scholastics and lived in or near the centers
of capitalism. Before their eyes was a reality
that, so far as the fundamental categories of the capitalist economy are
concerned, did not differ so very greatly from ours. There were money markets and
speculators. There was the negotiable
paper, big business and high finance. If
those Schoolmen rose from the dead today, they would readily understand our
world and be quite prepared to take part in the discuss
of its problems."
Finally, to rebut Fr. Ryan’s use of the
declarations of the offices of the Vatican and canon law as his authorities, I
countered with the use of a statement of the Holy Office that declared in May
8, 1921, "the making of a profit from a
loan, as a loan, is unlawful."
Then, as far as canon law was concerned, I continued that I could not see where canon law made up the doctrine of the Church. (I was able to confirm this with an official of the Church’s Congregation for the Doctrine of the Faith.) Canon law cannot be considered as doctrine because it is only a set of regulations made up for its governance. Canon laws can be changed as necessary as shown by the various editions. Doctrines, on the other hand, cannot be changed. They are the interpretations of the laws of God and the teachings of Jesus Christ. The Church, of course, can change its interpretations but in no way can it change the laws of God and the teachings of Christ.
Together with other comments and opinions I sent
my rebuttal off to Fr. Ryan the Bishop. However, nothing more was heard and that ended our dialogue with
them about the Church’s doctrine against the taking of interest. But it did not end our efforts to do
something practical about it ń like the founding of a zero-interest credit
union.
A ZERO INTEREST CREDIT
UNION
Prince Edward Island
1980
The failure to change the Bishop’s policy of
taking interest did not discourage us. We realized that the best way to raise
our voice against usury was by personally doing something at the grass roots
citizen level. The best way to reform
the whole banking system was therefore to organize a small zero interest credit
union.
We had read about a Jewish credit union in New
York that was making zero-interest loans to its members. We still do not know if they did this for
religious reasons because the Jewish religion forbids the charging of interest
on loan, or what. But in the article it
was said that they had a remarkably high rate, something in the order of 97
percent, of repayment of the loans. Then
we learned about the Vancouver credit union and its policy of granting
zero-interest loans. They were able to
make this possible by asking people to deposit their savings in the credit
union without asking for any interest.
Encouraged by these examples, we started by locating a small building in
Central Bedeque that could be used for the
purpose. And that we could have it
without any charge for rent.
Next we called a meeting of our friends, Wilson
Shea, Nick Flaminio, Phil Handrahan and others.
At the meeting we announced our goal, "Friends, we have
brought you together to see if we can organize a zero-interest credit union."
Wilson then asked, "Mario, will you
please explain what a zero-interest credit union is? I know what a regular credit union is, in fact, my son is the manager of the one in Tignish."
Glad to reply, I answered, "Wilson, the
problem is that the regular credit unions are getting to be just like banks,
except for the personal service and giving loans to the little people the banks
do not serve, they are charging just as much interest as the banks. My idea is that we ought to have one credit
union that is a zero-interest one to help the poor."
Nick broke in with, "But, Mario, how do
you except a credit union to run without charging interest. They have to charge interest in order to stay
in business."
Glad to clarify the differences, I replied,
"Oh, there will be no interest on loans but, to help pay for the
expenses, the borrower will have to pay a small service charge. As for the rent and salaries, why can’t we
get some retired citizens to volunteer their labor and perhaps I can find a
small building that the owner will let us use rent free."
All of them smiled and shook
their heads in doubt over our idealistic expectations of other people. Nonetheless, they told us to go ahead and see
what would happen. As the meeting
started to break up, Phil Handrahan, an old time
cooperative member, advised, "Mario, you must be sure and see the Central
Credit Union in Charlottetown and see if they might give us some
support." Together, one find Spring day we went to see the person. He greeted us warmly but after we explained
what we were trying to do I could see by the look on his face that he did not
approve the idea. "I think you a very good objective," he began, "but I am afraid that
we cannot help you. You see the Central
Credit Union is the back up for all the local credit unions on the Island. Our insurance fund is made up of yearly
contributions form each local. In case
on of them runs into financial trouble by making bad loans then they can fall
back on us to restore their financial position.
So, if you want to join us in order to get that kind of back up, we just
cannot let you do it. With no profit on
your zero-interest loans you will not have any funds to contribute to the
central insurance fund. No, I'm sorry
but I’m sure that my Board of Directors would give me permission to have you
become a member!"
"But, don't you think that we can have
once exception - one that will help the poor get emergency loans?" I persisted. "If not, I guess we
will have to go it alone!"
"Well, I guess that will have to be the
way for you to go."
That not only ended the meeting but it also
ended our attempt to found the first zero-interest credit union on Prince
Edward Island.
BRIEF TO THE CANADIAN BISHOPS
Canada
1980
One day we finally mustered up enough courage to see the new bishop, Bishop Spence, in Charlottetown about his disturbing raising of the interest rate on the loan from our Parish funds to the Diocese. He immediately put us at ease by his gracious reception. He was a tall, thin person who once had served as a military chaplain so I knew we would be at odds about the issue of pacifism.
I began the conversation, “Bishop I have
come to see you because of the raising of the interest on the loan made by our
Parish. Is it true that you are the one
who told the Parish to raise it from three percent to five percent?”
He thought for a moment before he answered, “Yes,
I did. I did so because I felt that
three percent was much too low and told the Pastor to make in five
percent. I think that is still
Christian. Don’t you?”
“Of course not. We should not be charging any interest at all and I’ll tell you why.” I felt quite sure that he was unaware of the Church’s doctrine against the taking of interest, so I added, ”Bishop, do you know that our Church has a doctrine on usury that says we cannot charge any interest on loans.”
I looked for a sign on his face to see how it
would register from my bold comment but he remained passive, so I continued, “Well
it does. The problem is how do we define
what is a Christian rate of interest.
According to the doctrine and the definition by the Fifth Lateran
Council is ‘The proper interpretation of usury is when gain is sought to be
acquired from the use of a thing not in itself fruitful, without labor, expense
or risk on the part of the lender.’”
The Bishop still maintained his silence, so I
went on, “I want you to know that I agree with Pope John Paul the Second
when he asks the Catholic family to live up to the highest ideals in terms of
not practicing birth control other than natural planning and self-control and
to trust in God’s providence to take care of the children. However, if the Church expects families to be
so idealistic and to depend upon God’s providence to help provide for
the needs of the children born under such teachings, then we believe that the
hierarchy should teach and practice the same ideals in regard to the
financial administration of the Church.
The administrators should not, therefore, be lending money for interest
and should not be investing money in order to obtain income for the expense of
the Church. If they are expecting us to
live on faith, then they too have to have faith in the providence of God - and
the generosity of the faithful."
At that point he intervened, “I know that some people want to
have the Church change its teaching about birth control because it has changed
its teaching about usury.”
I recoiled from the use of his words about the
supposed changes and quickly countered, “But I am not asking the Church to
change either of its teachings. I just
want the Church to live up to the original doctrine against the taking of interest
on loans!”
Then he answered, picking up on my statement
about the generosity of the faithful, “Although our Diocese is in debt for a
million dollars, I have not seen any signs where the faithful are worried about
it and rushing in to help me pay off the debt!”
Then, hearing no rebuttal on my part, he asked, “Do you believe in
taking interest from savings accounts in banks”
I could only answer, “No.”
“But then that would mean, under your ideas
about interest, no one would could keep their money in banks!”
I still maintained my position by explaining, “That
may be so but we use a credit union account that is not interest-bearing.”
He then got up to close the meeting by saying,
“If you want to present something to the Canadian Conference of Catholic bishops,
I will be glad to pass it on to them.”
I did not expect that kind of a gesture at all
but was happy for it and responded by answering, “As soon as we can put our
ideas together, I would like you to do just that. And I want to thank you very much for hearing
me out.”
Acting immediately upon Bishop Spence’s offer,
I began to put together a brief that he could present to the rest of the
Canadian bishops. First, I outlined the
old and new teachings of the Church on Usury with quotations from Scripture,
the Councils, the Popes, the Vatican and Canon Law. However, instead of just focusing on the harm
being done to the poor, perhaps it would be good to show the harmful effects on
the Church:
Richer parishes are lending money and charging interest to poorer parishes, for example, to build new church buildings and that this is the making of profit from the poorer parishes without labor, expense or risk.
Administrators of church funds are
gaining interest and income from their investments that cause the faithful to
believe that their material support is not necessary. As a consequence of realizing that their
support is not needed, the faithful are withdrawing their participation and
membership in the Church. This, in turn,
is destroying its community life.
On the effects on families and the poor:
High Cost of Living – Consumer goods are now produced
and marketed from the primary producer to the family through a complex
production and distribution system. As
each component of this system finances its operation through loans carrying
higher and higher interest rates, the cost of the financing is passed on to the
consumer. Thus the family is required to
pay higher and higher prices for its food, clothing, shelter, services and
transportation.
Unemployment – As the cost of family necessities
goes beyond its purchasing power, less and less is purchased. As production and demand decrease, workers
are discharge and high and higher unemployment takes place. Families, but with one wage earner and many
dependents, suffer the most.
Shortage of Housing – The increasing interest rate on
home mortgages has made the monthly payments so high that families no longer
qualify to buy homes even when employed.
Even landlords are no longer able to finance the construction of
apartments that could be rented to families who cannot afford to buy
homes. Those who do buy homes usually
have wives and mothers go to work to make the payments and young couples use
artificial means of birth control to keep the wife or mother on the job.
Higher Taxes – Families are now forced to pay
higher taxes because their governments have to pay more and more of the taxes
for the interest on the national debts.
The third largest item in government budgets, even in affluent countries,
is for the servicing of the national debt.
Decreased Social Welfare Programs by
Governments – As
governments must spend more and more on servicing their debts and as income
taxes decrease because of unemployment, this means that less and less
government funds are available for social welfare programs, such as medical
care and old age security.
Less Family Earnings Available for
Necessities – The
startling increase in the cost of paying for interest on all the debts of the
families means that they less and less to buy necessities. It is roughly estimated that ten to twenty
percent of a family’s income, even in affluent countries, receive no income
whatsoever from investments.
We concluded the brief with the exhortation that the Church
needs to follow the original doctrine against the taking of interest on loans
so that there can be economic justice for families and the poor.
THE LOBBYING OF THE BISHOPS IN THE VATICAN
Vatican City
1980
At the time the brief to the bishops was being
prepared the news was broadcast that bishops from all over the world were going
to gather in Rome with the Pope for a Synod on the Christian Family in October
of 1980.
My mind began to think up a scheme to take my
brief to the Synod and try to make an intervention to the bishops attending the
Synod. I had always wondered how I could
take my cause to the Vatican and the Synod seemed to be the ideal opportunity –
so, impulsively, I seized it.
Upon my arrival, the first naďve thing I did
was to approach the officials in charge of the Synod for permission to make a
personal intervention to the bishops.
They politely informed I that lay people could not possibly make any
direct interventions – that was only the privilege of the bishops. They recommended that I ask a bishop to
intervene on our behalf. Since I knew
the lay secretary of the Canadian delegation, Bernie Daly, who had been in the
Christian Family Movement, I went to see him in the hopes of getting them to
include usury as part of their intervention.
He agreed to arrange a meeting with them so a copy of the brief was left
with him.
While waiting to see the Canadian bishops, I
started lobbying the bishops and cardinals on a one-to-one basis in the
evenings at their residences.
The first meeting was with Cardinal Cordeiro, the Cardinal of Karachi. He came down from his room, dressed in an open shirt and slacks, to see me. He gave me a gracious reception to offset my nervousness. I kind of groped around at first but soon I got into the context of my brief. To my relief, he was quite open to my reasoning – undoubtedly because he was from such a poor country. He then indicated that he might use my ideas in the intervention he planned to make to the Synod. I left him feeling very enthusiastic by my first lobbying effort.
I was enthusiastic because I fully realized
that I was asking a very radical thing of the bishops. My request would have a tremendous impact on
the finances of the Vatican and the dioceses throughout the entire world.
Nonetheless, I had obtained some support, and
from one of the Cardinals. However,
those I visited from the Rich World would not support my position against
interest-taking. One of them, a bishop
from Northern Italy, told me that Iwas completely
wrong because he understood usury to mean excessive rates of sixty or more
percent. Therefore, he argued that
nothing was immoral about rates as low as ten or fifteen percent.
However, as I lobbied the bishops from Mexico,
Africa, South America and Asia, I found more and more support. In my meeting with Bishop Hummes,
from the Diocese of Santo Andre, Brazil, I was inspired by his words and
support. He told me that his people were
assembly-line workers in the huge automobile factories owned by the transnationals. At
one time he could preach to them about the hope of getting out of poverty. But no longer, because the
situation has changed to structural exploitation. No matter how hard his people would work, the
economic system would always keep them poor.
He called it “savage capitalism.”
I had never heard a bishop speak like that before. At the same time he took the trouble to add,
“that although the Church is sinful, it is
trying to become saintly. Therefore we
must try to purify our structure to give witness to the world through the
structure. Why don’t you give me some
copies of your brief and I will pass it on to other Brazilian bishops.” I caught the next bus back to my room with
much joy.
As I discussed my view with the various bishops
a pattern gradually revealed itself. I
found that the bishops of the Poor World were sympathetic to my position while
those of the Rich World thought I was absolutely crazy. Of course, the pattern was shaped by the
simple principle that the Rich World bishops were in the position of having
surplus funds to invest and loan while the Poor World bishops were in the
opposite position of having to borrow and pay interest.
The Canadian delegation, made up of three
bishops, one archbishop, Cardinal Carter from Toronto, a monsignor and two
laymen, received me politely but indicated that I had to hurry because they did
not have much time. After confirming
that they had read my brief, I went into the reasons why I wanted the
delegation to present my ideas to the entire Synod. I stressed that it was a very important issue
that was having a serious impact on the family – the very topic of the
Synod. It was naďve of me to think that
we could have our bishops present such a radical notion to a group of
administrators that were so heavily into banking, investing and the charging of
interest. Nonetheless, because of the
support I had received from the Poor World bishops, I knew that I was not too far out of line.
The two laymen were on my side, that was
evident from their remarks, but they had no official position on the delegation. However, Monsignor Murphy, the official
secretary of the Canadian Conference of Catholic Bishops, argued against my
reasoning on the usual basis of inflation.
Archbishop McNeil had not even read my brief. Bishop Lebel of
Quebec said nothing throughout the entire meeting – could it have been because
he agreed with me? If so, l will never
know. The other bishop from Quebec,
Bishop Legere, was totally against my position. I tried to justify my stand with more
arguments but had no success. Soon Cardinal
Carter ended the meeting with, “The doctrine of usury is a very controversial
thing and that it was an example of a doctrine in the process of
development.” Then he concluded, “Quite
frankly we would not include our opinions in their intervention because they
had not first been approved by all of the Canadian bishops.”
But what else could the bishops do? Although the Canadian bishops had issued many
admirable statements about justice for the poor, they never mentioned the issue
of usury. How could they when their
central office in Ottawa, with its expenses for travel and salaries for staff,
were financed by the interest and income from their investments in the
capitalist economic system? Weren’t they
in the same position as the Vatican? How
can they call for the prohibition of something that they are practicing?
I waited for the Social Affairs Commission to give us a reply with hope because I knew Bishop Remi de Roo, the chairman of the Commision, was a liberal bishop that might support my opinion. In the meantime, with the Cardinals remark in mind about getting the approval of all the Canadian bishops, I sent out a copy of the brief to each and every bishop across the country. I did not think that I would obtain their support but at least I would be giving them the opportunity to personally consider our position and perhaps make them aware of the original Magisterium of the Church on usury. Out of a total of one hundred and twenty-seven bishops we received only fourteen replies – not one of them agreed with our position.
The most interest response came from Bishop
MacDonald, the Bishop of Grand Falls, Newfoundland. He personally knew about us because he used
to be the Chancellor on the Island. He
wrote,
“I have
pondered your invitation that I, as Bishop, support a request that the Pope reproclaim the Church’s original teaching on usury. I am sorry that I could not support such a
move. You cast a vast problem in a very
simplistic context. If I supported this
move, you could then use the same principle to urge me, and other Bishops, to reproclaim some of the other laws in the Old
Testament. My face is red enough now,
but I could imagine what it would be like trying something like that.
I hope you come up with a more enlightened
approach to the science of economics. I
would we pleased to follow any and all your endeavors.”
I became really amused by his remarks so I replied by telling him that I was not asking to go back to the laws of God as found in the Old Testament. I was asking him to support a doctrine of the Church that had been enforced for over eighteen hundred years and that had been formulated by the declarations of the Early Fathers, many Church Councils, many Popes, the most eminent scholastics and doctors of the Church and by the Holy Office of the Vatican. Even so, if we are to ignore the laws of the Old Testament, did Bishop MacDonald infer that we can forget about obeying the Ten Commandments?
The total lack of support from the Canadian
bishop made me realize that I could not possibly hope to get approval from the
Social Affairs Commission – even though it had a liberal bishop as its
chairman. When I continued to press for
a decision, I still obtained no response.
Impatiently, I finally wrote to Bishop de Roo
directly and told him it was shocking that I had never been given any
indication as to the conclusion reached by the Commission.
That did get a response. It was dated June 18, 1982 – some twenty
months after we had given my brief to the delegation in Rome. The letter stated:
“I
want to assure that your intervention was given direct consideration by both
the Social Affairs Commission and the Pastoral Team at the January and March
meetings of 1981. Indeed, your
intervention helped to spark considerable discussion about tackling the issue
of rising interest rates from the standpoint of the Church.”
Well, at least they had around to considering the impact of interest. They should have, because at that time interest rates in Canada went up to over twenty percent.
Then the
letter went on:
“To our knowledge, the doctrine
on usury has not been updated by the Vatican in relation to the economic
realities of modern times. For these
reasons, the Commission has asked the Canadian Conference of Bishops to petition
the Pontifical Commission for Justice and Peace for an updated interpretation
of the doctrine on usury in relation to the current world economic situation
and its implications for the poor today.”
Although we waited patiently for some word as
to the response from the Vatican, we never ever received any. Whether it was lost somewhere in the
bureaucracy of the Conference or the Pontifical Commission or was simply
ignored as a minor complaint by a crackpot, we will never know.
CHRISTIAN COOPERATIVES
State of Mexico
1983
Not long after we had returned to Canada we
received an invitation to return to Mexico. We were delighted to receive it
because it meant that we could do something about the great need to create part
time work for the rural poor through the means of Christian cooperatives.
At that time we wondered whether the
cooperatives should be ordinary cooperatives or Christian ones. Intuitively we decided that we should work to
establish intentionally Christian cooperatives.
We were glad that we made that decision.
In Mexico, the poor definitely have not
benefited from the growth and expansion of the capitalism in Latin
America. Worse yet, the foreign
investment in the Mexican stock market, the banks and in speculation instead of
job creation and economic development has served to
deepen the economic crisis of Mexico.
Mexico’s inflation rate at that time was near 20%. The average wage, for those fortunate enough
to find work is three dollars a day.
Rice, beans, clothing and even gasoline is cheaper in the U. S.
The
future for Mexican workers is bleak because people have no purchasing power to
turn the economy around. Unemployment
will soon be over fifty percent. That
means that there will soon be more unemployed than employed workers. On top of all this, Mexico has no safety net
such as unemployment insurance, social welfare or old age pensions for the
elderly poor, such as those in U.S. The
major problem being that the government has to spend so much of its budget to
service its huge foreign debt that it has no funds for social programs let
alone the creation of jobs.
Despite these huge global problems, what can
we, as Christians, do to help the poor of Mexico besides ship food and second
hand clothing to them – if we can get them through customs at the border? What can we do, we to whom Christ has given
the secrets to build the Community of God, to help them earn a living? What, since the over-praised capitalistic economic
system has failed the Mexican people completely, have we to offer as an alternative
economic system that is viable, able to create economic development.
We have read many books about capitalism and
its primary aim to make the rich even richer.
However, never have we found any book that says that cooperativism
is a viable alternative economic system.
We firmly believe that the viable alternative
economic system is cooperativism. Even more utopian is Christian cooperativism.
However, cooperativism, as ignored as it is in
the Rich World,
is not a new, small and untried economic system. It has been around for over a century.
The International Cooperative Alliance is now,
next to the Catholic Church, the largest non-governmental institution in the
world with almost one billion members in over a hundred different countries. In Mondragon, Spain,
the cooperative movement has eighty very successful cooperatives with over
twenty thousand worker owners. Even in
capitalistic U.S., there are many successful electric power cooperatives that
are owned and operated by the member consumers.
Credit unions, banks owned and managed by the members, are the most
growing threat to the banking system in the country of Canada. Most of the construction in Italy is done by
building cooperatives. Thus there should
be no doubt about the economic viability of the cooperative movement.
The more important feature of cooperativism, than its economic viability, is that it is a
non-violent revolutionary alternative to capitalism for workers. Under capitalism, the owners of the
corporations are outside investors who derive a profit, not from their labor as
do the workers, but just from the investment of their capital. Secondly, the benefits, especially from the
value added by the workers to the finished product or service, are not equally
shared by the owners with the workers.
All the workers get is a fixed wage and that is it.
Under Christian cooperativism,
the first radical principle is that all of the owners of the commercial
enterprise must be workers and all of the workers must be owners. Secondly, all of the benefits and profits
are shared equally among the workers-owners. In terms of financing the
production of goods and services, under capitalism the cost of interest on any
loans must be charged and all of the profits given to the owners of the
capital. This is a sacred principle of
capitalism and there are absolutely do deviations allowed from this
principle. Under cooperativism,
however, any profit from interest on loans is given to the owners of the
credit union. The third radical principle
is that all loans, i. e. from credit unions, are made
on a no-interest basis with only a small charge to cover administration
expenses. These three principles are the
radical differences between capitalism and cooperativism.
In addition, to these radical differences there
is a great difference between the two in terms of the means and objectives of
the economic system. Capitalism has but
one objective – to maximize the bottom line of profit for the benefit of the
owners of the capital. Whereas cooperativism has the objective of promoting the common
good – of the workers, the consumers and most important of all is the common
good for the surrounding community. To
accomplish this idealistic objective, cooperativism
uses idealistic means such as quality for the consumer and concern over the
ecology. A close study of the principles
and ideals of the cooperative movement will serve to inspire anyone.
An amazing example of how cooperativism
is a successful and viable alternative to capitalism is the great part it plays
in the economy of the province of Quebec in Canada. The following prove how
successful it is in Quebec.
1. The number of new cooperatives doubled in
the last year and provided employment for 68,000 people.
2. There are 3,402 cooperatives with a total
membership of 6,330,000 men and women.
3. The cooperatives have assets worth over $100
billion.
4.There are now 1,212 credit unions in
Quebec.
5. At the end of 1998, they accounted for 15%of
the total savings and 45% of the savings held by Quebecers in financial
institutions. They also held 39% of the
mortgages, 32% of the consumer loans, 40% of the farm loans and 20% of the
business loans made by financial institutions.
6. The credit unions rank sixth among Canada’s
financial institutions, is largest bank in the
province, is the single largest employer and now has assets equaling $100
billion.
7. The
Quebec cooperatives include insurance for its members. They hold 25% of the life insurance market
and nearly 15% of the general insurance market.
8. Agricultural cooperatives are also a major
player in the agri-food business. More than 32,000 members are owners of 140
agricultural cooperatives, including 40 farm machinery user cooperatives. The combines sales
of these co-ops totaled $4 billion.
9. The cooperative housing network now includes
nearly 1,200 cooperatives that own more than 22,000 housing units inhabited by
nearly 50,000 people.
10. There are now 90 food cooperatives that
have a total of 85,000 members, 975 elected leaders and 2,000 employees.
11. Forestry cooperatives started out as
cooperative logging camps in the 1930s and 1940s. Today they are modern enterprises operating
in a highly competitive sector. The 42
forest cooperatives are owned by 4,500 workers.
They had combined sales totaling $400 million at the end of 1998.
12, Worker cooperatives started up in
Quebec in the late 1970s. Currently, the
some 120 worker cooperatives include more than 4,000 workers and have sales
totaling $59million.
13. More than 110,00
person in Quebec are members of one of the existing funeral cooperatives.
14. Cooperatives are also serving the natives
and Eskimos. They are the owners of 16
cooperatives that handle the marketing of Inuit artworks. The combined sales of these
cooperatives totaled &70 million in 1998.
15. There are 110 cooperatives in secondary
schools, colleges and universities that enable young Quebecers to gain valuable
work experience. More than 500,000 young
people between the ages of 14 and 25 are members o
cooperatives in the bookselling, stationery and office computer areas. These cooperatives had sales totaling $100
million.
16. Not only are young people involved but
there are also cooperatives to serve the elderly. There are now 40 home care cooperatives that
have 10,000 members.
17. There are also 25 cable distribution
service cooperatives to provide television service to meet the needs of people
living in communities not served by traditional cable distribution
companies.
Now, when we Christians, form cooperatives not
in the name of money or in the name of the government but in the name of
Christ, we add a profound spiritual dimension that makes cooperativism
not only a viable alternative to capitalism but makes it a movement that shares
benefits with the poor and the marginalized.
This is another great difference between capitalism and cooperativism.
Whereas capitalism works only to benefit the investors, cooperativism shares its benefits with others besides the
owners. In Mondragon,
Spain, cooperatives do not have to pay any taxes on their profits. However, for this privilege, they must give
ten percent of their profits for a community project such as the building a new
school.
Organizing cooperatives with the poor and
unemployed is a difficult task because they have no tradition in their culture,
especially in Latin America, where they work together to own and manage their
own commercial enterprise. They know how
to work for bosses. They know how to
organize individual enterprises. But
they do not know anything about cooperatives, where the group is the owner and
manager despite their great hunger to work together in unity. After the cooperative is formed and
functioning there is the real obstacle of overcoming all the differences and
imperfections between the members. Now,
add to this the Christian dimension, and it becomes even more difficult.
On the other hand, working together in the name
of Christ, brings far more blessings than problems. With Christ we can overcome all these traditions
and historical problems. Without Him we
can do nothing. When we are gathered
together in His name, Christ is present and is helping us to work together. Amazingly, He actually becomes a member of
the cooperative. That is profound. We have witnessed His presence and power in
the Christian cooperatives here in Mexico.
It is a profound experience to be able to participate in their work,
scripture sharing and deliberations. The
poor always have a desire to share with others.
They do it all the time regardless of how poor they are. Once the cooperative becomes successful and
meets the objectives of the members and then goes beyond that to reach out to
form new cooperatives with others, for example, or shares their benefits with
others poorer than themselves, the members obtain a dignity that cannot be
obtained in any other way. Even
more profound, they are not only helping themselves but are creating an
economic system that benefits the common good.
And this world needs something besides benefiting the individual good.
The process of integrating the spiritual
dimension into cooperatives takes a while but at the same time it is a natural
process that fits in with the character and desires of the poor. It is not an artificial process that conflicts
with their natural life. Working
together in a commercial enterprise, in His name, fits right in with the
desires of the poor to sanctify their lives, their work and indeed all of their
actions.
And that is where the weekly sharing of
scripture at their business meetings fits in.
All of the meetings are opened with a sharing of the life and teachings
of Christ. Middle-class groups do this
all the time at their meetings but the poor have rarely done this. In fact, until recently, the poor have rarely
had the Bible in their own hands. They
have had it preached to them for centuries by the clergy, (until about only
fifty years ago it was forbidden for lay people in Mexico to read the Bible)
but now they are finally able to read it with their own eyes.
The poor have a great deal of faith but lack
the Word. We middle-class people have
the Word but lack faith. Once the poor
begin to integrate the Word with their faith they begin to attain a great deal
of spiritual development. Once again
this spiritual development is not done for their own individual good. Their spiritual development helps them
sanctify their natural disposition to be of service and to make their
much-needed contribution towards the common good and to the needs of
others. In other words, it sanctifies
their natural disposition to be of service to others.
We must inject here at this point that we are
not trying to make out the poor to be saints.
They definitely are not. They are
human beings and have their imperfections like all of us. We are only trying to describe how they can
and do develop when a spiritual dimension is added to their work and economic
activities. Nonetheless, though they are
not saints they do have one distinct advantage.
They know what it is to be poor and are not all hung up with the cares
of this world. They eagerly want to
embrace the more idealistic ways of living and working when they are presented
to them. They are similar to the fertile
ground in Christ’s parable about the sowing of the seed. This characteristic of the poor always came
out when they closed their cooperative meetings with a prayer. They always prayed to God to help their
cooperative succeed and go ahead – always.
The whole reason why capitalism has not brought
prosperity to the world, especially to the poor –the world wide statistics on
unemployment and amount of governmental and individual debts prove this without
a doubt – is that it is an economic system that has no morals. The Reformation broke down the traditional
integration of commerce and morality and was able to divorce commerce from
morality. Commerce then, unfortunately,
constructed its own set of regulations but completely outside of the religious
and moral framework.
A Christian cooperative economic system is not
divorced from our morals. It is
desperately needed to bring prosperity and peace to the poor because it is the
only way in which we can integrate the morality that lies within the laws of
God and the teachings of Christ.
These are the secrets of the Kingdom that
Christ has revealed to us. Let us go
forth as His disciples to apply these secrets to our economic activities not
only for our own personal benefit but for the benefit of the common good. We could not do anything better or more
profound for and with the poor.
THE SAN MARTIN ZERO-INTEREST CREDIT UNION
1984
One of the more successful
cooperatives that we were able to organize was the one in the barrio of San Martin – one of
the poorest barrios of Malinalco. We started by contacting Amelia because she
was very active in her community. She
happened to attend the meeting that we held for the parishioners of Malinalco. We
explained to the small gathering what cooperatives and zero-interest credit
unions were all about. In a short time
they created a cooperative food store.
Then we were surprised when Amelia called me to come to a meeting of
some people interested in the credit union and explain how they could form one.
About fifteen middle-aged and one old woman
were waiting for us in front of the door to the chapel with about twelve
children of all ages. The eighteenth
century chapel is old and its walls are marked with dark streaks from the rain
and weather. The bell tower needs
repair.
Everyone greeted me, in the typical
Mexican fashion, as I went around and shook the hands of all the women. The animator of the group, Amelia, had her
latest baby cuddled up in her lap. As
they all sit down again, I began to explain what a zero-interest credit union
is all about. They listened carefully
because they all are in need of occasional loans for emergencies or to pay for
a doctor or to buy medicine.
Months later I happened to bump into
Amelia and when I asked what happened she surprised me with a glowing
report. The group decided to go ahead
and start up the union by meeting weekly and bringing twenty-five cents for
their deposit. Slowly the fund built up
and the members were able to get small loans – without paying the normal
interest charge of twenty to thirty percent per month!
Three significant things happened,
as time went on. One, all the loans were
repaid. This was true because the
members felt that the credit union was a thing of God and they had to be
faithful. Second, to keep the money
being devalued, at a huge rate for
Unfortunately, the credit union only
lasted about seven years. Either the
members lost interest or they became self-sufficient to the point where they no
longer needed emergency loans.
A word of advice.
For those of you interested in working with the poor to alleviate their
poverty, the best thing you can do is to organize a zero-interest credit
union. It is a simple and important
thing to do!
OUR
VISIT TO THE MONDRAGON COOPERATIVES
1985
We had heard that the Mondragon
cooperatives was the most successful cooperative
movement in the world. Since it had been
founded by a parish priest, we hoped that it would have a spiritual dimension
similar to ours from which we could learn how to improve our own cooperatives.
Somehow, we were told by a parish priest that
things had changed and that the movement had lost the original spirit and now
were becoming capitalistic. In the
beginning they used to take their surplus funds to create more worker-owners by
organizing new cooperatives. However,
they had not done that for the past four years.
Instead, they were now investing their surplus funds in the stock
market!
Nonetheless, Mondragon
is an impressive example of cooperativism. The most impressive feature is that some
fifty years ago they started out using what little available local resources
existed in their own community. The
people of Mondragon, instead of investing their
meager savings for their own individual benefit, loaned their money to the
cooperatives for the common good. Thus
four unemployed engineers were, encouraged by their socially active parish
priest, to start a stove factory as a cooperative. This humble beginning became a movement with
over a hundred cooperatives, with 20,000 worker-owners, its own university and
schools, its own hospital and health plan and a social security system superior
to that of the Spanish government.
The secret to their success was their constant
striving for the common good by using their surplus to fund the organization of
more cooperatives. Then, however, as the
movement grew and needed more managers they made the mistake (according to our
opinion) of turning to outside university graduates, the usual Master of
Business Administration types, instead of their own workers to manage the
enterprises. The problem was that these
graduates looked more to the financial success of the individual cooperative
than to the spirit of cooperativism and to the common
good. In this way the cooperatives
became more like business enterprises than cooperatives.
Nonetheless, the Mondragon
cooperatives had the important features of cooperative. They the principle having
the workers as the owners with no outside investors as the owners. Interestingly enough, the amount of cash
needed for a new worker to become a member of the cooperative can be quite
substantial. In Mondragon
it amounted to something like twenty to thirty thousand dollars. But provisions are made for this by allowing
the new member to pay it off in installments from his salary. By the way, the ratio of payment of salaries
is roughly four times. In other words
the managers can only receive four times the amount as the lowest paid
worker. This has been changed to a ratio
of seven to one – probably because of the pressure from university-educated
managers.
In addition, Mondragon
has the principle
of sharing that is generated by the work of the workers for the common good of
the community. Under the laws of
Nonetheless, the creeping in of the spirit of
capitalism has done much to change the original Christian dimension of Mondragon. Once upon
a time, due to the influence of the remarkable priest, spirituality was very
much a part of the work and thinking of the movement. Now, however, the main thing that counts is
economic development and the bottom line success of the cooperatives. In addition, the very size of some of the
cooperatives, some have as many as twelve hundred workers, caused a loss of the
personal relationships that existed in smaller enterprises. One of the workers told me that he was
planning to leave his cooperative because there no longer was any personal
relationship among the workers.
Before we left we approached the President of
the Mondragon Bank to see what they could do to help
us in
We were disappointed. The President told us that as much as he
would like to help, their regulations prohibited
lending to anyone outside of their movement.
As far as missionaries were concerned, he laughingly told us that we
could talk to all of the 20,000 workers and we would not find one volunteer.
OUR DIALOGUE WITH THE VATICAN
1985
We decided that it was time to for me to go to
visit the
First I asked, “How do you personally feel
about the charging of interest on loans?"
He was quick to reply, “Well, my father was
able to buy our home because a mortgage was available to pay the cost. So I think it is a good thing despite the
extra payments caused by the interest.
What do you think?”
I was well aware of this argument so I could
easily retort, “That is true. But why
do fathers of families have to pay three times the amount of the loan just to
move into a house? This means that they
have to work three times as long because they do not have the cash needed to
buy the house in the first place!”
I noticed by the look on his face that he could
see my side of the argument. Then I got
down to the crucial question, “I would like to know if the original doctrine
of the Church against usury is still in force?”
He replied, “As far as I know it still is.”
This was an amazing revelation to me. Here was an official of the Congregation of
the Doctrine of the Faith telling me that the Church’s doctrine on usury was
still an official doctrine of the Church.
This meant that if the Church administrators were to live up to the
doctrine, there would be Church-shaking ramifications in their financial
practices.
After I left Fr. Herron, I realized
that I had to get this in writing from the Congregation. So I borrowed the use of a typewriter in the
FEDERACION
DE COOPERATIVAS CRISTIANAS
Reforma
Portal Norte 104
Toluca,
Estado de Mexico
50000
The Federacion de Cooperativas Cooperativas, located in the State of Mexico, Mexico, is
hereby requesting a ruling from the Congregation on the Doctrine of the Faith
in regards to the Church’s doctrine on usury and the taking of interest on
loans.
The
Federation has been in existence for about one year and a half in order to share
experiences, skills and resources with the Christian Cooperatives that make up
its membership. At the present time
there are twelve members. The Federation
works in complete collaboration with the Bishops of
The
Federation has a revolving fund that is used to make loans, without charging
any interest, to the rural poor who have production cooperatives and to groups
of the rural poor who wish to organize new production cooperative. These peasants use the loans in order to buy
materials and tools necessary to begin production and thus create
self-employment. These people, without
land, jobs, or government programs of social welfare, have no other means to
create the employment they need to support their families.
The
primary objectives of the Federation are: 1. To create
work for the rural poor through the means of Christian cooperatives and 2.
Promote the spiritual and human development of the rural poor through the
cooperative process undertaken in the name of Jesus Christ.
The
revolving fund of the Federation has the primary objective of providing
financial assistance to Christian cooperatives in order to create
self-employment for the poor. Money
collected for the revolving fund was obtained from friends, bishops, priests,
religious orders in the
The
Federation makes all loans without charging any interest to the poor in the
belief that it is un-Christian and contrary to the Church’s doctrine on usury
to do otherwise.
The
Federation hereby formally requests a ruling from the Congregation on the
Doctrine of Faith as to whether its practice of making zero interest loans to
the poor is in conformity with the Church’s doctrine on usury or not. If not, the Federation requests a ruling on
the rate of interest that could be charge on the loans.
Finally,
the Federation requests the Congregation to provide the theology for the
rulings along with the documents that state the official teachings of the
Church on the doctrine of usury.
Respectfully
yours, Estelle and Mario Carota
Before I left
We waited in
CONGREGATIO PRO DOCTRINA FIDEI
00193 Romae, June 13, 1986
Piazza del S. Uffizio, 11
Prot. N. priv.
(Un responsione fiat mentio huius numeri)
Dear Mario,
I would like to acknowledge
your
First, as a kind of general
procedural observation, I do not believe that you really want the Congregation
to take such swift action on this complex question that would endanger the
objectivity and truth of its eventual position.
I say this with full recognition of the dire straits of many of the world’s
poor. I agree with you, however, that
sophisticated but unenlightened and unethical banking practices are at least
partially to blame for the present mess.
Second, I want to bring a new
book to your attention: Usury, by John Noonan. It has appeared recently and I have not yet
read it myself, but I thought that you should certainly get your hands on it
and I would appreciate any comments you might have.
Third, the suggestion has
been made that perhaps the Pontifical Academy of Sciences could sponsor an
international symposium on Ethics and Contemporary Banking Practice.
This is only a
suggestion. I would like your ideas on
this concrete approach, with suggestions of qualified persons who could
be invited to such a meeting. I would
like to see as broad an input as possible.
On the other hand, if such a symposium is to have any enduring effect,
it is obvious that the participants must be very well versed in the complicated
matter of banking, especially on an international scale.
I’m looking forward to
hearing from you.
Sincerely in Our Lord, Rev. Thomas J.
Herron
This letter was highly
encouraging. At least they were
interested in doing something. We gave him some
names of qualified persons about international banking and agreed that a symposium
might be useful if it could lead to some action. I also remarked that I had read John Noonan’s
book but found it to agree with the modern interpreters and not with my
position on the issue. Nonetheless,
perhaps because our tone in our letter was not that anxious for more talk
instead of direct action, we waited another year without receiving any
reply. Perhaps, when
Fr. Herron checked with his superiors, they though that the idea for a
symposium was not really that great and to let it drop in the hopes that I
would forget the whole issue.
But the serious and damaging
economic effects from the Wall Street crash of 1987 for the poor of
This time we received a rather rapid
response.
CONGREGATION PRO
DOCTRINA FIDEI
00193 Romae,
Dear Mr. and Mrs. Carota,
I would like to acknowledge
your letter of
I have enclosed the recent
statement of the Pontifical Commission for Justice and Peace on the question of
the International Debt, which contains what the Holy See wishes to say on the
issue at the present time.
If you have any further
questions, perhaps you might take them up with the Pontifical Commission whose
offices are in the
Sincerely
yours in Our Lord, Rev.
Thomas J. Herron
This letter, in contrast to his
first more supportive letter, was obviously a “pass the buck” letter. It revealed to me that they were really no
longer interested in the problem of usury and, worse yet, in giving us a
ruling. Instead, the Congregation was
saying that the Commission’s document, “At the Service of the Human Community:
an Ethical Approach to the International Debt Question,” was now the current
policy of the
Create new forms of solidarity
Accept co-responsibility
Establish relations of trust
Know how to share efforts and
sacrifices
Foster the participation of all
Identify emergency and long term
measures.
These suggestions, as constructive
as they were, reveal the present mind-set of the
“All rulers and magistrates knowingly
maintaining laws that sanction usury and that compelled debtors to observe
usurious contracts are to incur excommunication, and requires the legislation
in question to be revoked within three months.
Since the true nature of usurious transactions is often concealed
beneath various devices, money lenders are to be compelled by the
ecclesiastical authorities to submit their accounts to examination.”We,
however, were not looking for a statement about the international debt or the
ethical requirements for secular banks.
We wanted a definitive statement on the practice of the usury by the
administrators of our Church!
Nonetheless, to keep the dialogue going, we wrote a letter to the
Pontifical Commission after reading their statement. We were not impressed by the document at
all. We believed that their declaration
was just a nice set of friendly recommendations that did not touch upon the
evils of usury or the great harm being done to the poor.
Anyway, we resumed the dialogue with the
Is the
practice and policy of our Federation to make loans to the poor without
charging interest in conformity with the Church’s doctrine against usury?
If this is
not in conformity with the doctrine, what rate of interest could be
charged? And, upon what theological
basis can interest be charge to the poor?
Has the
original doctrine of the Church on usury been officially changed?
If so,
when, where, how and by whom have these changes been made?
In which
document, proclamation or encyclical can the new official doctrine and new
definitions by the Church be found?
We waited for ten months and received no reply,
let alone an acknowledgment. Our simple,
but profound, questions were either too difficult for them to answer or they
regarded our letter as just another letter from a person with some sort of
obsession.
THE COMPUTER PAMPHLETS
Malinalco
1993
JOINT PASTORAL LETTER
Nicaraguan Bishops
“Indeed, the day when the Church fails to
present the appearance of poverty and to act as the natural ally of the poor,
will be the day she has betrayed her divine creator and the coming of God’s
Kingdom.”
While we waited for the
Mindful of the lack of time for the
modern person to read books, especially those about the problems of the taking
of interest, we turned to the writing of easy-to-read pamphlets about the
meaning of usury. We were led into this
alternative by the history of the power of pamphlets as used by Thomas Paine to
mobilize support of the colonists to carry out the American revolution
against
Naturally, we began with a pamphlet entitled, “The
Immorality of Interest.” In it we
described the nine reasons, beginning with the laws of God, why the charging of
interest on loans, especially to the poor, was immoral. Then we continued by giving the scriptural
references for the laws and the teachings of Christ. For the reason that it is contrary to the Magisterium of the Church, we outlined the formulation of
the doctrine by the Early Fathers, the popes and the Ecumenical Councils giving
dates and places.
In regards to this subject, we decided to send
a copy of my open letter to the Pope, to every cardinal in the Church. Having obtained a copy of the
His reply, “I am grateful to you for the
copy of your letter to His Holiness John Paul about the interest on loans. I prefer to be faithful to doctrines of the
Successor of St. Peter, who only has the charism
of infallibility.”
Our reaction was: “What about being faithful
to the doctrine of the Magisterium of the Church as
expressed by Pope Benedict XIV, plus eight other popes, all the other
Ecumenical Councils all the saints of the early Church and the learned doctors
– including St. Thomas of your own Dominican Order?!?”
The next pamphlet was one entitled, “How
Interest Harms our Church.” By then,
as we gained experience, we were able to insert illustrations such as a
photograph of the top money manager for the investments of the
“Argentiere
and his team of four traders manages some $100 million
in
In this pamphlet we had sections about the
capitalistic investments of Church administrators; how we, the Church, has
become a business organization; how we have become rich; why we are silent; why
we are being hypocritical and why we are failing to carry out Christ’s mission.
Then, still working only two hours each
morning, we produced similar pamphlets entitled, “How Interest Harms the
Middle-Class” and “How Interest Harms the Poor.” In these pamphlets we went into detail as to
how mortgages, emergency loans, and the like damaged the ordinary workers as
well as the poor.
On a more positive note, the next pamphlet, “Cooperativism, the Alternative Economic System,”
went into how cooperativism is an alternative
economic system. We did this because of
the way the North Americans and the Rich World have come to believe that
capitalism is the only economic system available. The first part presented the great value of
the cooperative economic system and why it was a creative way to solve the
world-wide problem of unemployment. Then
we showed how small local groups could get together as a community to use their
available resources to create self-employment through worker-production
cooperatives – similar to the Mondragon
movement. We then gave some suggestions
as to how production cooperatives could obtain the essential community support. We also included ways and means to cut down
the overhead and to find the all important markets.
The second part outlined the social philosophy
of the cooperative economic system. It
went into the human values, the individual rights, the social values and the
commercial philosophy of regular cooperatives.
The final part was about Christian cooperatives
showing how they are unique because they are founded and work in the name of
Christ. We followed with the norms for
Christian credit unions, consumer cooperatives and the production cooperatives,
the process for the organization of the new cooperatives in order to create
work for the rural poor followed. Then,
we offered some suggestions about the proper role of the animators in the
process of organizing new cooperative.
Another pamphlet called, “Christian
Cooperatives,” simply went into detail about the nature and unique value of
Christian cooperatives and how they could be organized.
HOW INTEREST CAUSED THE
MEXICAN PESO CRISIS
1994
Our theories on how usury damages the poor were
verified when the Mexican government had to rapidly devalue its peso in
1994. The devaluation was good for us
and other North Americans because we were able to get more pesos for Canadian
and American dollars. But as for the
Mexican poor and the middle-class it was a disaster.
The present foreign debt of
It all began back in the 1970’s when the large
increase in world-wide oil prices gave a bonanza to
The tragedy was that the citizens had nothing
to say about putting their country into so much debt and that most of the money
went directly into the pockets of politicians or for non-essential capital
projects such as luxury hotels. Then,
because of inflation, interest rates began rising until they were the main
factor for the devaluation. The five
point percentage point increase between summer of 1980 and fall 1981 added
close to $20 billion to the debt service burden for the debtors. The bubble burst when oil prices plunged in
the 1981-82 recession and
Soon, the debt-servicing burden got to be too
much for
The relief, of course, went directly into
foreign lenders pockets and did nothing to help the Mexican economy. Finally, at the end of the regime of
So now
At the grass-roots level, we have a friend who
borrowed money to buy the home he was renting.
The interest rate was thirty-five percent – but, and this is the
dangerous part, the bank was allowed to raise to
rate to whatever they wanted. After
one year of making regular payments, his mortgage had doubled! Now his monthly payment does not even cover
the principal let alone the interest.
Each month the left over interest was added on to the principal under
the devastating principle of compound interest.
He will never get to own his home or ever get out of debt!
J. Pierpont Morgan once said, “The eighth
wonder of the world is compound interest.”
To add to the misery, credit card interest
rates went over one hundred percent! It meant that if a person has an unpaid
balance of $200, the interest charges will be an equal amount of $200 per
month!
The peso crisis came about as the Mexican
government was forced to devalue the peso drastically. It did not want to but they had no other
choice in order to maintain its credit rating.
From then on things became even worse.
The rate of inflation went up beyond forty
percent in order for the companies to cover their costs to produce goods and
services. This was, of course, passed
on to the consumer in the form of higher prices for food, clothing, services
and transportation. The price of gasoline
went up 35 percent. Since the poor have no cars and have to depend on bus
transportation to get to work and to buy their groceries, they were especially
vulnerable. The impact was that suddenly
workers had very little purchasing power.
Since companies had no market, they started laying
off their employees. This in turn made
the cycle even more vicious because there were less consumers to purchase goods
and services. It is now said that there
will be more unemployed people than employed – there were as many as six
million unemployed people in
More than half of the nation’s population
suffers from malnutrition. A recent
university study concluded that over 10,000 people died from malnutrition in
1997 alone. Infant mortality, preschool
mortality, stunted growth and death from respiratory disease are some of the
consequences of malnutrition.
One of the causes of malnutrition may be the
decrease in the consumption of tortillas – the country’s principal staple – due
to the fact that it has tripled in price in the last three years. The price has risen because of the removal of
the government subsidy due to budget cuts in order to cover the costs of
servicing the debt. Help for the
poor is readily cut but the interest payments are too sacred to be touched!
At the same time the government keeps calling
on the little people to make sacrifices while it is forced to terminate social
welfare programs so that it can make the interest payment on its foreign
debt. It had the utter gall to ask
workers to donate a day’s wages each week to help pay off the debt! The government is no longer in a financial
position to bring about economic development that can create work.
The crisis brought about the usual bail-out
plans in order to keep the crisis from spreading to the rest of
Latin-America. President Clinton was
able to get around thirty billion to bail out
In order for
It has to impose austerity programs.
It has to reduce domestic consumption.
It has to eliminate the use of foreign exchange
control to stop the flight of capital.
It
has to open its country to the penetration of foreign capital and to ensure
that the outflow of profits and interest to foreign investors is not impeded.
It must hold down wages.
It
must cut down the subsidies for basic items needed by the poor (tortillas).
It must
reduce its governmental expenditures and social services programs.
And, it
must sell off its government-owned enterprises. (privatization)
It is very difficult to understand how
governments, economists and moral theologians can justify such drastic measures
just to rehabilitate an economy. All the
economists know about controlling inflation is to raise the interest rates – which only serves to make the cycle even more
vicious.
Amazingly, although the Mexican people have a
reputation that they can never get organized, they were the first among all of
the indebted countries to organize concrete action against the money
lenders. They organized a non-violent
revolution against the banks with a movement called “El Barzon”
– which means “oxen yoke.” For once, those who were in debt to the banks because of the huge
increase in interest rates, focused on the real source of their economic
problems.
The main factor that led to the organization of
this unique movement was the way the borrowers were treated by the banks. Once the family could not make the payments
the banks foreclosed and took away the home.
This meant that not only did the family lose their home but all of their
life savings that they had put in as the down payment. In addition, after losing all of their
savings, the payments already made and their home, the families had to keep
making payments to cover the balance of the loan. If this was not done they were thrown into
prison. Imagine, in this the twentieth
century, people being put in prison because they owed money to a bank!
The movement protested this great injustice by
simply encircling the banks with a chain of people and thereby prohibits the
passage of customers into the banks.
They closed down more than a thousand banks in the process. It is a nationwide movement and is the
fastest growing protest movement in
A more positive way to promote economic development, can be learned from the history of
In
CONFRONTATION WITH BISHOP FOUGERE
1995
An unpleasant visit to the new Bishop of our
diocese providentially served to increase my commitment to work even harder to
eradicate usury. On a brief visit to
visit my sons, Mark, James and Mario, in
I waited for him in the well-furnished
reception room. He was a tall,
middle-aged person who had formerly been the chancellor of the Diocese in Antigonish,
He must have sensed my apprehension because he
greeted me with a cool handshake and immediately got to the point by brusquely
exclaiming, “I suppose you have come to tell me that we are being immoral
because we charge interest on our loans to parishes!”
“Oh, no Bishop,” I offered. “I just want your permission to look at
the books. I could hardly make any
judgments without first seeing them.”
“Then, I suppose, you are going to tell me
that it is immoral for us to charge interest,” he retorted sharply.
“Oh, no, Bishop,” I replied confidently. “I could hardly make that judgment without
first seeing the financial accounts of the Diocese.”
“Well,” he countered a bit defensively,
“I am not about to go back to the middle ages. The nature of money has changed as has the
economic system. I know a lot of people
give generously without lending because they believe that any surplus should be
given away.”
Then, based upon his former work as
a missionary in
Those statements from him were quite
encouraging but his next statement confirmed his position, “I am sorry but I
cannot give you permission to see our financial statements. It is my policy to charge interest on loans
because, first of all, whenever we need to borrow money, we have to pay
interest and secondly, under Canon 1284, I am obligated to invest money and
earn interest.”
I intervened with my knowledge of canon law by
telling him, “Yes, I know. It is
Canon 1284, section 6!”
Then getting on the offensive, he declared, “You
just tell me where I can money without having to pay interest.”
I thought for awhile as to how to answer and
was inspired (there is no other word to use) to reply, “Bishop, every Sunday
we, the faithful, give our money to the Church as a gift and without charging
interest. In our Parish of Summerside it amounts to about $4500 each Sunday!”
Taken back by my statement, he meekly replied,
“Anyway, interest comes from the rich and not from the poor.”
I then explained, “The rich do not pay
interest, they collect it. That is why
they are rich. The poor do not have
money to invest and therefore obtain interest.
Instead, the poor pay it through higher taxes and higher prices. The interest cost of the government and
companies are passed on to the workers and the poor.”
Finally I raised one more important point, “Bishop
I just cannot see how one Christian community can charge for helping another
Christian Community. It just is not
right.”
Then he showed me to the door. On the way he stopped to ask, “Listen. I understand that the funds of the
government’s old age pension program are running out because of the
deterioration of the economy. Why don’t you consider not taking your pension so that there will
be some left for me when I retire?!”
A bit shocked, I then replied, “I will think
about that.”
THE FIRST AND ONLY
CONFERENCE ON USURY
1996
Once we began to learn that there were other
groups were raising their voice against usury, we decided to hold a conference
on the issue. Using our mailing list of
Catholic Worker groups, we invited them to come to the conference. We held the conference in the parish of
We were only a small group of
twelve or thirteen people but this in itself was reassuring because it was the
same number as Christ’s apostles. At
least we had two priests in attendance, Fr. Burke and Fr. Cliff Murphy from
I opened the meeting, “Fr. Murphy would you
be so kind as to open the meeting with a prayer.”
He nodded in agreement and made the sign of the
cross and began, “In the name of the Father, the Son and the Holy
Spirit. We thank you Heavenly Father for
being able to gather here in the name of your son, Jesus Christ. Help us to carry out your will in our efforts
to help the Church reform its financial practices.” Then having the bishop’s lending practices in
mind, he added, “especially in the matter of usury.”
First, Eric made a presentation of the
scriptural basis for the Church’s doctrine against usury, then Peter went into
the harm being done to the poor and for my part I told of the nine reasons why
interest-taking is immoral.
We had some wonderful discussions that were
especially enlightening to the members of the Parish. After the pot lock supper some of the
participants camped out by sleeping on the floor. The next day, Sunday, we resumed the conference.
Looking around the room towards Eric, I said, “Eric , would you be kind enough to sum up your
discussion of yesterday. Then we can
make some resolutions before we break up.
Is that O.K. with everyone?” Everyone agreed.
Eric replied, “I talked about how usury was
prohibited by the scriptural references of the Old New Testament. I quoted some of the references in the Old
Testament in which God forbids usury, and those made by Christ in the New
Testament.”
It was Peter’s turn then – like most Catholic
Workers, he was well educated. Like so
many couples, they lived and worked on no salary and with just their faith in
the Providence of God. Young and
handsome he sat next to Katie, his wife, while he shared his knowledge with the
rest of the group, “So, it is easy to see how I could talk about the damage
being done to the poor from usury. It is
a bit complicated but let me try and explain.”
“The long and short of it is that interest
causes unemployment by decreasing the ability of workers to purchase goods and
services. This comes about from the
higher prices companies charge when they include the cost of debt service on
their loans. They do not take this cost
out of their profits. Instead, they pass
it on to the consumer. Then, because of
the higher prices, there is a decrease in the number of sales for the
companies. The decrease in sales means
cutting production, consequently comes the laying off of people from their
jobs .In addition, taxes go up because
governments, and local, state and federal governments are all in debt, have to
raise taxes to pay for the cost of servicing their debts. Naturally this hurts the poor because it
leads to cuts in social programs. Here
in
Then I concluded with, “As you all know, I
talked about the nine reasons why the taking of interest on loans is
immoral. I also briefly covered the
history of the Church’s formulation of its doctrine. Then I explained how the present practice of
the bishops of charging interest on their loans to parishes is harming, not
only the poor, but our Church as well.
And that just about concludes our conference.”
As everyone started to pick up their notebooks
and prepared to leave, I exclaimed, “What a minute, we have not finished
yet. We have to take time to make some
resolutions! Do I hear any resolutions?”
At that Mrs. McConeghy
spoke up, “I
would propose, first of all, that we continue to meet once a year. I have found this conference to be a very
useful one to me. I have learned a
lot. However, I must confess to all of
you that I had some doubts before I came.
I mistakenly thought that perhaps this was a religious group that was up
to some sort of a scam with me. The
proceedings have proven my doubts were falsely taken and I thank you for
including me in this conference.”
Then Joe, the husband of Lola from the
Everyone
nodded in agreement with his resolution.
“Because of this
conference,” James
chimed in, “I am convinced more than ever that usury is immoral. So I propose that when we go back to our own
dioceses, we go to the bishops’ offices and ask for a copy of their financial
statements and inquire about their policy about charging interest on
loans. That would make the
administrators think.”
Then Mrs. McConeghy
added strongly, “We
need to make them think about it by asking questions about whether or
not they charge interest on loans.”
Manuel, a middle-aged Guatemalan,
the janitor in the parish, spoke up, “James, your proposal is good, but it
does not go far enough. Do you happen to
know how much interest the parish is still paying after fifteen years on the
debt to remodel the rectory?” He
turned to look at Fr. Burke and asked, “Padre, what do you know about this?”
Fr. Burke, stroked his white beard
as he replied, “Well, Manuel, I don’t have the exact figures in my
head. But, I will tell you that when the
new Archbishop came for his visit, last week, the parish treasurer and I asked
him to stop charging interest on the debt we owed to him and he flatly refused!”
Everyone
looked at Fr. in surprise as the Parish Treasurer filled in the data, “I can
tell you, Manuel, how much. After
fifteen years we are still paying eight hundred and sixty-two dollars a month
just for the interest alone. Everyone
here knows this parish is made up of many immigrants from
“Thank you. I did not know it was that serious. Therefore, I think it is very important that
we resolve to ask our bishops to stop charging interest on loans. Maybe we could even send a letter out to each
and every bishop in the country.”
I made a note of this resolution
with a good deal of satisfaction.
Ramon, a young electronic Filipino
engineer, now studying to become a married deacon for the Parish, added his
thoughts, “I want you to know that I am completely in agreement with all of
the resolutions. But, I just cannot
understand how the bishops can ignore this long held doctrine – of some two
thousand years? Anyway, there is very
little that we can do to change the thinking of the bishops. So the only thing I can suggest is that we
mount a campaign of prayer. Then, with
the help of Christ, perhaps, .perhaps we can reform the financial policies of
the bishops.”
Fr. Burke, smiled at that and added, “Amen.”
OUR
JUBILEE LETTER TO THE BISHOPS
1997
Just before leaving
Much to my surprise the Bishop of the Oakland
Diocese also attended the celebration.
We happened to know him since the days when he was just an ordinary
parish priest. My mind began cogitating
as to whether I should approach him about the idea of forgiving the debts owed
to him by the parishes. I finally
screwed up my courage enough to go up to the main table and ask him if I could
talk to him about the debts. He was
gracious enough to take a few moments with me.
I immediately got to the point by asking him,
"Bishop Cummins, you know we are now approaching the Jubilee Year of
2000 where the tradition of the Church ask everyone to
forgive the debts owed to them. Would
you consider forgiving the debts owed to the Diocese by your parishes?"
He thought for a bit before he answered, "That is a
good idea. And I will agree to do it on the condition that we only forgive the
debts owed to us by the poor parishes and not the rich ones. Will you go along with that?"
I was so happy to hear him agree
that it did not take me long to reply, ”Of course,
Bishop.”
I really felt good about that because he was
the first bishop to go along with the idea of forgiving debts.
Not long after, I was reading a Catholic
newspaper and came across an interesting article about the Pope John Paul the
third’s call for the forgiveness of the huge debt placed upon the
underdeveloped countries in the world.
He did this in preparation of the Jubilee Year 2000. It is the tradition of the Church to ask the
faithful to forgive debts every fifty years.
Actually the Old Testament puts it differently. It calls for forgiveness of debts every seven
years as well as the restoring of the ownership of all property to the original
owners every fifty years. What a blessed
alternative to the modern notions of ownership.
That was really good of the Pope to finally
talk about one aspect of usury. But, on
further reading, I came across a disturbing item. He was asking the faithful to put the pressure
on our governments to forgive the debts.
That was fine. But, what he
failed to do was to tell, not ask, his bishops to forgive the debts owed to
them by their parishes ń especially by poor ones.
To us, it was inconsistent, in the light of the
Church’s doctrine against loans with interest.
Nonetheless, and encouraged by Bishop Cummin’s
agreement, I decided to write to each and every bishop in the
Dear Bishop,
Greetings from
The Church is now in preparation
for the coming jubilee year of 2000.
Pope John Paul II wrote an apostolic letter on
In paragraph 51 he writes: "Christians will have to raise their
voice on behalf of all the poor of the world, proposing the Jubilee as an
appropriate time to give thought, if not canceling outright, the international
debt which seriously threatens the future of many nations." This call
to raise our collective voice is a very admirable concern on the part of the
Pope.
What is disconcerting is the failure of the
Pope to have us ask our bishops to do the same and to cancel the debts owed by
poor parishes to the bishops of Church.
One of the most scandalous financial practices
of the administrators and bishops of the Church located in the Rich World is
the policy of investing money in the stock market and the charging of interest
on loans to parishes,
even to poor parishes. This policy is
widespread in practically all of the dioceses in the
The basis of this practice is Canon 1284
(6). This canon makes it obligatory for
all bishops to invest their surplus money.
The charging of interest, however moderate, is based on the present
interpretations by
moral theologians on the still un-repealed doctrine of the Church
against usury.
The depth of this practice is illustrated by
the financial practices of the Archdiocese of San Francisco. According to its annual financial report of
1995 the Archdiocese has over $46 million invested in stocks and bonds while
still have over $30 million in cash and cash assets. All of this is done while they charge
interest on loans to poor parishes.
To show the harm being done to poor parishes
let us cite the example of
We are asking our administrators and bishops to desist from the practice of charging interest at all on loans to poor parishes. As it is, the Church is now silent about usury even though she prohibited it for eighteen hundred years. She has to be silent because so many administrators of the Church are charging interest on loans just like the banking business.
The spirit of celebrating a Jubilee year is
based upon scripture and the law of God.
(Leviticus 25:10-12) "And
you shall hollow the fiftieth year, and proclaim liberty throughout the land to
all its inhabitants, it shall be a jubilee for you, when each of you shall
return to his property and each of you shall return to his family. A jubilee shall that fiftieth year be to you,
in it you shall neither sow, no reap what grows of itself, nor gather the
grapes from undressed vines. For it is a
jubilee, it shall be holy to you; you shall eat what it yields out of the
field."
Now it is well and good for the Pope to ask us
to raise our voice for the poor about the international debt. This we should do with all our power and
might. It is however, quite
inconsistent, to say the least, for him to ask us to do this while he does not
ask the same of the bishops to forgive the debts they have on their hands.
We then sent a letter to every diocese in the
The very best answer came from the Bishop of
the Diocese of Whitehorse.
"Thanks for your letter and
manuscript. I found it interesting and
thought provoking. As Bishop of the poorest Diocese in
Sincerely in J.C. and M.I. Bishop Thomas Libsinger, OMI
P.S. A small contribution to offset your
expenses!
And in the envelope was a twenty dollar bill!
Then we also received a letter from the Bishop
of Albany. He wrote:
Thank you for your letter of September 5th, for
the copy you had enclosed of your
"We Shall Raise Our Voice Again" and for the information contained in
both. In your letter, you have asked
that as we prepare for the Jubilee, I forgive the debts owed by the poor
parishes in our diocese. I have already
done this in conjunction with our Sesquicentennial Year of the Founding of the
Diocese in 1847, which we are celebrating this year. I trust that this information will be helpful
to you.
POPE JOHN PAUL II CALLS
FOR END TO USURY
The
1999
On
Previous to the Pope's statement, Bishop Tarcisio Bertone, secretary of
the Vatican Congregation for the Doctrine of the Faith, said that "It
seems opportune to publish a new encyclical on the subject of usury and, on the
use of money in general, and that this document should be proposed energetically both to people
involved in pastoral activity as well as to those in economic endeavors." Bishop Bertone not
only denounced the critical aspects of usury, but also "the problem of
loans among nations which ends up by creating the problem of international debt."
To us it was incredible that the Pope and the
Bishop were completely unaware of the already existing Church's doctrine
against usury. Absolutely incredible!
So, we immediately sent a letter to the
Once again, we never received a reply from the
(NOTE:
Next summer, in the year 2004, our son, Fr. Peter, plans to take us to
JUBILEE YEAR SURPRISE
2000
Then we were surprised to learn about the forgiveness of debts by the following dioceses:
was indeed a very pleasant surprise.
SOME RECENT PERSONAL CONFRONTATIONS WITH USURY
2001
In the year 2001 we needed to buy a motor home
in order to travel back to
Then,
the Lord provided us with an opportunity to live up to our principles about not
charging interest. We had to sell our
farm on
SOME
CLERICAL ATTITUDES TOWARDS USURY
2001
One day when we were visiting some friends in
When we asked him about the issue, we were
shocked to learn that he felt that there was nothing immoral about getting
income from interest on loans. We
finally understood that his congregation was receiving only a little income
from the donations of people. Thus they
were left with interest from their investments as their primary source of
income. It was only natural, then, that
he favored the current position of the Church about the issue. We tried to argue against his position and
tried to cite the many reasons why it was immoral. But all of it was in vain.
A different meeting with a priest in
I found him very concerned about the fact that
interest rates were going down and down.
Consequently, the income that was being received by his order was
gradually diminishing. Like the order
cited above, this meant that their primary source of income was getting close
to zero. When your primary income gets close to zero then you begin to panic -
especially when the donations by the faithful are also getting down to zero.
After a few years, our son Peter was made
pastor of his parish in Escalon. We were
invited for the celebration and the feast put on by the members of his
parish. During the festivities, I made
it a point to talk to the Bishop - again to learn about his attitude towards
usury.
Fortunately he knew a little about the issue. I asked him the crucial question about his getting interest from the loans being made to his parishes. He did not talk about an possible immorality of his actions. Instead he made an interesting proposition.
He said, "I am perfectly willing to not
charge interest on the loans if they are willing to not ask interest on the
loans being deposited with the Diocese."
All of this is a matter of faith in the
providence of God. It seems as if the
priests, the bishops and the
THE
PARISH GROUP PROTEST
2003
Our son, Benedict, besides being a medical
doctor, was the spark that formed a bible study group. A small group of parishioners meet every two
weeks to share their thoughts on the bible.
I attended some of the meetings and upon their invitation I was asked to
share my efforts against usury.
This in turn inspired them to do something
about the huge amount of money that was going from the Sunday collections just
for the interest on the loan they had obtained to build a new church. They decided they would protest. They informed the Pastor and the Bishop that
they would refuse to make their weekly contributions until the Diocese stopped
charging interest on the loan. The
protest was made for awhile but not long after that the group ended their
protest. The Bishop did not do anything
about their protest.
However, one of the members of the group, Mark
Gibson, is a very successful farmer that raises apricots and walnuts. Although he inherited this enterprise from his
father, Mark has expanded the operation so that it is one of the largest farms
in Hollister. The amazing thing is that
Mark is not in debt at all. He, unlike
most farmers, goes year after year running his operation without having to pay
interest on any debt. Most farmers
borrow money from banks - year after year - and work hard to make the payments
and the interest charges.
Mark says he is conservative. Actually he is very liberal.
A PROPOSAL FOR A
CHRISTIAN BANK
1. The Christian Bank shall be owned and
operated by only the members.
2. All of the members are the owners of the
bank.
3. All of the loans to the members shall be
made without any charge for interest.
4. All of the applications for loans shall be
approved by all of the members.
5. Members may deposit funds into the bank but
may not charge any interest on their deposit.
6. To insure the
security of the funds:
a. One member shall take care of the funds in a
locked container.
b. Another member
shall keep the key to the container
c. A third member shall keep the accounts
of the deposits and the loans
7. The
operation of the Christian bank shall be done by unpaid volunteers
8. The
Christian Bank shall not own any property or buildings.
9. All of the above shall be done in the
name of Jesus Christ.
THE
END