73. Errors of the schoolmen refuted.
It is for want of having examined the lending of money on
interest in its true point of view that moralists, more rigid
than enlightened, would endeavour to make us look on it as a
crime. Scholastic theologists have concluded, that as money
itself was not prolific, it was unjust to require a premium for
the loan of it. Full of these prejudices they have fancied their
doctrine was sanctioned by this passage in the Gospel, mutuum
date nihil inde sperantes: Those theologians who have adopted
more reasonable principles on the subject of interest of money,
have been branded with the harshest reproaches from those who
adopt the other side of the question.
Nevertheless, there are but few reflections necessary to
expose the trifling reasons that are adduced to condemn the
taking of interest. A loan of money is a reciprocal contract,
free between both parties, and entered into only by reason of its
being mutually advantageous. It is evident, if the lender finds
an advantage in receiving an interest for his money, the borrower
is not less interested in finding that money he stands in need
of, since otherwise he would not borrow and submit himself to the
payment of interest. Now on this principle, can any one look on
such an advantageous contract as a crime, in which both parties
are content, and which certainly does no injury to any other
person? Let them say the lender takes advantage of the wants of
the borrower, to force the payment of interest, this is talking
as absurd as if we were to say, that a baker who demands money
for the bread he sells, takes advantage of his customer's wants.
If in this latter case, the money is an equivalent for the bread
the buyer receives, the money which the borrower receives to day,
is equally an equivalent for the capital and interest he agrees
to pay at the expiration of a certain time; for in fact, it is an
advantage to the borrower, to have, during that interval, the use
of the money he stands in need of, and it is a disadvantage to
the lender to be deprived of it. This disadvantage may be
estimated, and it is estimated, the interest is the rate. This
rate ought to be larger, if the lender runs a risk of losing his
capital by the borrower becoming insolvent. The bargain therefore
is perfectly equal on both sides and consequently, fair and
honest. Money considered as a physical substance, as a mass of
metal, does not produce any thing; but money made use of in
advances in cultivation, in manufacture, in commerce, produces a
certain profit; with money we can acquire land, and thereby
procure a revenue: the person therefore who lends his money, does
not only give up the unfruitful possession of such money, but
deprives himself of the profit which it was in his power to
procure by it, and the interest which indemnifies him from this
loss cannot be looked upon as unjust. The schoolmen, compelled to
acknowledge the justice of these considerations, have allowed
that interest for money may be taken, provided the capital is
alienated, that is, provided the lender gave up his right to be
reimbursed his money in a certain time, and permitted the
borrower to retain it as long as he was inclined to pay the
interest thereof only. The reason of this toleration was, that
then it is no longer a loan of money for which an interest is
paid, but a purchase, which is bought with a sum of money, as we
purchase lands. This was a mode to which they had recourse, to
comply with the absolute necessity which exists of borrowing
money, in the course of the transactions of society, without
fairly avowing the fallacy of those principles, upon which they
had condemned the practice: but this clause for the alienation of
the capital, is not an advantage to the borrower, who remains
equally indebted to the lender, until he shall have repaid the
capital, and whose property always remains as a security for the
safety of such capital; — it is even a disadvantage, as he finds
it more difficult to borrow money when he is in want of it; for
persons who would willingly consent to lend for a year or two, a
sum of money which they had destined for the purchase of an
estate, would not lend it for an uncertain time. Besides, if they
are permitted to sell their money for a perpetual rent, why may
they not lend it for a certain number of years, for a rent which
is only to continue for that term? If an interest of 1000 livres
per annum is equivalent to the sum of 20000 livres from him to
keep such a sum in perpetuity, 1000 livres will be an equivalent
for the possession of that sum for one year.
