There is a lot of misconception regarding money lending from time immemorial to the present times. If you study human history and finance, you will see money lending has been related to the morality aspect of the lenders. It has been a taboo for most of the times in history but slowly over time, usury became a respectable business in finance.
According to theology, there is of course some business ethics to follow in money lending. This was not followed in the ancient times whether it was in the community of Christianity, Islam or Judaism.
However, now the scenario has changed and now you not only get the private lenders to borrow money from, but also from different traditional sources such as banks, credit unions and other financial institutions. You can also avail loans from different online sources such as Libertylending.com making loans much more assessible and easily available now.
About the journey
The money lending industry did not have a smooth journey however. There were scandals and criticism from the economists, priests, bishops and even the common people all the way as well as the on-call ethicists.
- Most of them admonished the lenders to follow the money lending law which most of the lenders thought to be inadequate.
- Then they talked about the philosophy in lending especially in the practice of usury and failed once again, underestimating the bankers and the money lenders to be bot so tough nut to crack.
Therefore, all the way the money lenders had to face criticisms on the basis of ethics, meaning, purpose, and even God and Bible. All the time the money lenders focused on the interest, more of their own rather than that of the borrowers. They considered the wisdom in lending whatever is the source.
Comparing today and the past
Today, the money lenders and bankers consider theology as a category error and looks at it with curiosity. However, for most of history, this was kind of a norm for a dialogue. Just hundreds of years ago when modern finance ascended in Europe, the moneylenders toned down their behavior from the typical ‘Shylock’ to a more responsive one.
It is all due to the ever-going debates among the clergy as to how the teachings of the Bible can be put into a complex economy. Lending money therefore has been regarded as a moral matter for a long time.
In the early 1200s, there were lot of morality tales doing around and the priests often used these in their sermons. In that time, the moneylender was considered to be defiled by demons simply because they committed the ‘’sin’’ of usury which is charging interest on a loan, irrespective of the fact that it was high or low.
The stigma against money lending
The Churches at that time too held their position and considered even charging a single cent extra as interest as evil. Therefore, the roots of such revulsion run deep into the cultures and races and across all countries.
- Consider the Vedic law of ancient India and you will see usury been condemned there as well.
- Look at ancient Mesopotamia or Greece and you will see that the rulers characteristically capped the interest rates.
- In Judeo-Christian religion, usury taboo was also cemented.
- The Old Testament on the other hand recommends not to charge any interest from fellow Israelite and the Book of Luke says to love the enemies, do them good and even lend money to them without expecting anything in return for it.
- If you consider the 4th century CE, the Christian councils there denounced such practice, and by 800, emperor Charlemagne made it into a law to prohibit such practices.
Therefore, the stigma against lending money and the money lenders existed and continued in the ancient, dark, middle and modern ages. All the time the critics expressed their anguish over the profits made by the money lenders.
Why, you may ask. This is because in the Biblical times things were considered in the preview of relational and arms-length transactions. Consider this: you take out a loan from a bank at 5% interest and your brother does the same but from your mother. You may not feel the emotional pinch but your brother surely would. This is what a typical loan was considered in the Biblical times.
The present and the future
Lending money is no more a charitable action as it was considered in the past. It is no more of a wealthy man lending to the poor neighbor with no interest expected from it or face misfortune due to the ‘sin’ committed.
It is more of a business now, wherein the lender seems to have the right to charge for the loan sacrificing the scope to put it to other useful and alternative investments. In this world of credit markets where insurance is a must, charging interest is no more considered as extorting a borrower.
Money lending and charging of interest now is considered as:
- A part of economic life within any community
- A system of mutual aid that originates debt and credit
- A kind of a social insurance and most importantly
- A tool that reduces inequality.
People now get loans quite easily and cheaply provided they qualify for it. It helps both the lenders as well as the borrowers to turn money into more money, provided they know the difference between good debt and bad debt. Dent builds wealth and it needs no more proofs.
If you look deeper into the matter you will notice that in the olden times historians and economists condemned usury based on the performance rather than the reality behind it. In reality, debt is something which even monarchs and Popes needed to fund wars in the ancient times. In the modern times, the same money is required to fund another war: an individual trying to keep up with the growing demands of the family, community and the society at large.
Therefore, moneylending is the backbone of finance and credit and is going nowhere for sure.