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 ñ 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 ñ 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 operation