From: TURMEL@freenet.carleton.ca (John Turmel)
The Great Usury Debate #2
Date: Fri, 28 Jan 2000 22:40:23 +0200

>From: courtj@globalnet.co.uk ("john courtneidge")
>Date: Tue, 25 Jan 2000 07:58:06 +0100
>To: lets@onelist.com Cc: cm@driveout.demon.co.uk
>Can some one help me with the matter of words. Advocates of usury
>often suggest that usury refers to 'excessive interest'. I take the
>meaning of usury to be interest of any sort greater than 0% .
>While the comments about usury in, say, Psalm 15 and Thomas 95 are
>very clear, has any-one got *the* clear rebutal argument to the
>(weasling!?) that usury is "excessive' interest? Thanks. j

     JCT: You can refer to Ezekiel who knew the difference:
     Ezekiel 18:8: "Suppose there is righteous man: He does not lend
at usury or take excessive interest."
     Ezekiel 18:13: "Suppose he has a violent son: He lends at usury
and takes excessive interest."
     Ezekiel 18:17: "But supposed this son has a son who does not do
such things: He takes no usury or excessive interest."

     JCT: Of you can refer to Adelard Turmel:
     "Money has no babies."

>Date: Tue, 25 Jan 2000 12:12:26 EST
>From: WesBurt@aol.com
>The question is: when does interest become usury? The answer I would
>offer is found in the common ground shared by your friends Richard
>Kay and John C. Turmel. Both are ardent proponents of Local
>Employment Trading Systems (LETS). Richard believes LETS are
>exclusively a local solution while John believes LETS principles
>should be applied globally. Richard, as a list owner proscribed
>John's posting to his list. But, they both allow that all LETS
>installations must collect fees, or interest, or a combination of
>both in an amount sufficient to cover the operating expenses of the
>institution.
     JCT: I don't know about Richard but I endorse "fees" out of the
money created and not "interest" demanded of money not created.

>That is to say, an amount sufficient to hold the LETS
>operation at, or slightly above, the break-even point at which the
>net revenue equals the costs of operation (including any required
>return to investors for establishing the institution) and the
>operation becomes PROFITABLE (dirty word). Debt service (interest) in
>excess of that net revenue agreed to by Richard and John should be
>called USURY, as in Shakespeare's Merchant Of Venice.
     JCT: Usury has nothing to do with how much is taken. Even  if
they only took 1% interest to cover expenses, I'd object. I'd rather
pay 10% service charges before I paid 1% interest on money, usury.
     So I object to the banker's demand for 1% of money he did not
created while willing to pay 10% of money he did create. This is all
explained in the game theory at the end of my mathematical analysis at
http://www.cyberclass.net/turmel/bankmath.htm
---

>From: charlescmt@hotmail.com ("Charles CMT")
>Date: Tue, 25 Jan 2000 12:45:33 MST
>I would have to respectfully disagree with the definition which I
>think Wes is proposing. He indicates that interest is not usury
>unless it exceeds the amount needed to keep the bank's basic
>operation going AND "including any required return to investors for
>establishing the institution." Now, if Wes is referring to
>owner/investors who are expecting a profit year after year for their
>equity stakes, then that is what what have now. A financial elite
>owns the banks which charge compounding interest to the 90% of us who
>are lifelong net debtors. The compounding interest is their "required
>return" in terms of what the market will bear or what the going rate
>of return is to equity investors.
>It is a powerful transfer of wealth from the poor and middle class to
>the wealthy. On the other hand, if Wes is only referring to investors
>who provide the seed money and organizational initiative to get the
>bank started, then they can be repaid their principle and a one-time
>compensation (call it "interest" if you like) and then the firm can
>operate independently on a nonprofit basis, then I would agree with
>Wes' definition.
     JCT: Even a one-time compensation can be a problem if it is a
demand for more than was created by the loan. It's not how much is
demanded, it's whether the requisite amount of money was created to
pay it with or not which differentiates between usury and service
charges.

>That is why, in the (now infamous) debate I entered last week, I
>suggested that co-op banks are the best model for a new banking
>structure. If they are nonprofits, statutory limits can be placed on
>their tendency to hoard reserves or divert "profits" into executive
>pay or other accounting niches. The profits would be required to be
>returned to customer/owners as dividends or lower service charges.
     JCT: If they operate on service charges, like L.E.T.S., no
problem but if they demand more than the amount of the loan, there is
a problem.

>Even if they are for-profit co-ops, the after-tax earnings can
>similarly be compelled by law to be recyled to customer owners rather
>than an investor elite who will take whatever profit margin the
>market will bear via compounding interest.
     JCT: And the fact good guys are getting the interest and
foreclosing on the poor is no improvement over having evil guys doing
it. It's the shortage of money caused by the interest which
precipitates foreclosures that's the problem, not who's benefiting.

>All this assuming, of course, that these co-ops have powers of money
>creation as in my model. Anyway, that is my input on the issue.
     JCT: If they have money creation powers, then let them create and
lend out enough so that the bankers' service charges can be paid up
front.
---

>Date: Wed, 26 Jan 2000 19:37:00 +0200
>From: stephen@lets.net (Stephen DeMeulenaere)
>Let's be absolutely clear: in LETS, there is no interest charged to
>negative balances or paid to positive balances. Fees are not charged
>in the form of interest in any LETS. If so, they are not a LETS.
>Usury is an excessive amount of interest charged to a *negative*
>balance.
     JCT: Here's a believer that usury is too much interest despite
the fact this discussion is about whether usury is excessive interest
or something else.

>I disagree that "Debt service (interest) in excess of that net
>revenue agreed to by Richard and John should be called USURY, as in
>Shakespeare's Merchant Of Venice."
     JCT: As explained above, I never agreed.

>The rigidly ascetic operations of most LETS systems, underfunded and
>precarious as they are, shouldn't be used as a standard for judging
>when interest becomes usury. It's OK for a non-profit organization
>to make more than it needs or has budgeted, as long as it does not
>benefit anyone privately.
     JCT: So if a non-profit organization does the loansharking and
foreclosure, everything's okay? I don't think so. Then again, he
thinks usury is too much interest and I think usury depends on whether
the loan has babies or not.

>I think that interest becomes usury when the rate exceeds the natural
>rate of growth or natural rate of decline of the item in question,
>which when we talk about natural things is in the order of 8-12% per
>year.
     JCT: If everyone borrows 100 and everyone owes 112, then the
fraction who sell their products and survive the mortgage deathgamble
is P/(P+I) = 100/112 = 89%. The fraction who fail and suffer
foreclosure is I/(P+I) = 12/112 = 11%.
     So Stephen thinks its natural that only 11% of the participants
are thrust into poverty by the usury on their loans. If it were so
natural, why don't L.E.T.S. charge some interest then after Stephen's
handled a few foreclosures, he might change his mind.

>Thus, it differs in each case. 10% interest charged to a farm loan
>will be more excessive than the same amount charged to a business
>loan, perhaps, because the natural rate of growth of farm produce
>is not as great as that of a regular business. regards,
     JCT: Perhaps, perhaps, perhaps. Who needs the failure generated
by the demand for more than was printed. And who needs the
bureaucrats to decide how much interest is natural for someone to have
to pay.
---

>Date: Thu, 27 Jan 2000 04:53:08 +0200
>From: sturnbull@mba1963.hbs.edu (Shann Turnbull)
>I disagree with the definition of usury presented below because it
>accepts that money should earn interest in all situations.
>If governments or communities issued negative interest rate money
>then overall interest rates would be very much lower.
     JCT: Negative interest certainly prevents hoarding and promotes
economic activity but this only useful within the context of a
malfunctioning system. There's no need to punish savers in an
interest-free system.

>Negative interest rate money in the form of "Stamped Script" was
>issued by hundreds of communities in the USA during the great
>depression before they were outlawed by the New Deal. The New Deal
>protected the monopoly of the banking system to expand credit on an
>interest paying basis.
     JCT: And there were also plenty of zero-interest rate money in
the form of barter currencies issued as local currencies. They were
outlawed at the same time as the demurrage currencies. Just as the
Worgl local currency in Austria which had ended unemployment in the
town was stopped by the Austrian central bank forcing those people
back into poverty and misery, it's one reason I think Roosevelt was a
rat president. The second reason he's a rat is that he knew Pearl
Harbor was going to be bombed and let those 2000 sailors be killed,
one of the greatest treasons by a Chief Executive in American history.
That he could be touted as a possible an of the century is a joke.
Actually, preventing local currencies was probably the bigger crime.

>Stamped script would be far more attractive to business than either
>Lets or barter card and modern technology would facilitate its use.
     JCT: LETS use scrip and not needing a stamp makes it even more
attractive to businesses. Ask Paul Glover in Ithaca if the businesses
which accept Hours money would be happier if they had to pay a monthly
fee to use it or lose its value.
     Please do not assume that L.E.T.S. is the dinky low-powered model
being used my most systems around the world. My lectures tours are
most popular when I explain to audiences how to turn them into high-
powered high-velocity systems. Don't think L.E.T.S. are going nowhere
fast just because most people are riding them backwards.

>A simply and elegant description is provided by the little book
>written by Professor Irving Fisher called 'Stamp Scrip', published
>by Adelphi Company, NYC, 1933
     JCT: Again, there is no reason to deter savings with a stamp tax
to force them to use it or lose it. Zero interest pure-service charge
money is best because not only is it stable with no need of forced
activity but also because there's so much less supervision without a
negative interest and all the stamps.

>Elements of the theory and practice of concurrent local currencies
>are considered in my contributions to the TOES book: Building
>Sustainable Communities: Tools and Concepts for Self-Reliant Economic
>Change, C. George Bennello, Robert Swann, Shann Turnbull, Edited by
>Ward Morehouse, Bootstrap Press of the Intermediate Technology
>Development Group of North America Inc. New York, New York, 1989,
>Revised second edition 1997. Regards Shann Turnbull
>Shann Turnbull, P.O. Box 266 Woollahra, Sydney, Australia, 1350
>Phone: 02 9328 7466 office; 02 9327 8487 home
>Fax: 02 9327 1497 home & office.  Mobile 0418 222 378
>Outside Australia, replace first "0" with "61" after international
>access code Life long E-mail: sturnbull@mba1963.hbs.edu
>Alternate:sturnbull@optusnet.com.au
>http://members.optusnet.com.au/~sturnbull/index.html
     JCT: If you've been considering L.E.T.S. only in the context of
the small low-powered models now in existence, then you need to look
closer at the high-powered models.
     Ithaca's system is the very best in the world.
     Not only do they permit members an initial allocation of "debt-
free" currency to satisfy Socreds in the audience but they also permit
members to borrow local currency with zero interest on their debt.
Other than getting government to use it, there is no better L.E.T.S.
model in the world and they don't need any demurrage to fly.
---

>From: bernard lietaer <blietaer@earthlink.net>
>Date: Wed, Jan 26, 2000, 10:36 pm
>There is no question that *any* interest on money was officially
>prohibited by the Church from Clement of Alexandria until 1822. Not
>only the Lateran Council, but Thomas Aquinas has written a lot
>about this. It might be easier to check Aquinas than the Lateran
>Council documents. He explains why that is so on the basis of
>"natural law", because while a cow can produce offspring naturally,
>money does not do so. In that logic, there is no room for a "bit of
>interest or offspring"...  Cordially. Bernard
     JCT: Well done Bernard. In my Bible poetry at
http://www.cyberclass.net/turmel/pombible.htm I say:

"Ezekiel declared that usury and interest,
Could have a different effect, there was a simple test.
If interest demanded is of something that can breed,
Such interest is payable and not sin I concede.
So if you lend a hundred head and ask to get two more,
That might not be excessive action that he would abhor.
But if you gain all of the calves and he still owes you some,
That would be judged excessive. That is more than maximum.
And if the interest is on some silver or some gold,
It's usury because there are no babies to behold!
It's interest if principal can breed to multiply,
It's usury if principal cannot so classify."

>All three religions of the book (Islam, Christianity and Judaism)
>have condemned usury, which was defined as "receiving any
>interest on money".
     JCT: And it's evident that Ezekiel seems to permit interest that
is not excessive. I wonder if the Koran has any such permission. Jesus
definitely advocated lending not expecting it to be returned. This is
optimal strategy since the same rules apply to you if you need the
loan and funds are allocated most efficiently when no collections are
expected.

>Technically in Judaism, usury was only prohibited among Jews.
>"Unto thy brother thou shalt not lend upon usury, that the Lord
>thy God may bless thee in all that thou settest thine hands to."
>(Deuteronomy 23:20). This enabled Jews to lend with interest to
>non-Jews. This practice became one of the reasons for their
>unpopularity in the Middle Ages.
     JCT: I've always defined anti-semitism as beating up the Jewish
tailor after the Rothschild loansharks have skipped town with the
gold.

>Islam is more encompassing in its condemnation: "What ye put out at
>usury to increase it with the substance of others, shall have no
>increase from God." (Koran Sura 30:38).
     JCT: My favorite Mohammed lines from the Koran are Chapter 2:275
where he says "Those who devour usury stand as those whom the Evil One
has maddened with his touch."
     It's true, usury has made not only those who collect but also
those who pay yet hope to someday collect quite insane. Even Christ
said that when it came to interest, they would "forever be seeing
without seeing and hearing without hearing or understanding."
     After years of debates with people who've been infected with the
"misunderstanding" of how money works, I'm quite convinced that
history will consider them as financially insane as I do. Imagine,
almost no one realizes how insane it is to promise to repay 11 when
the banks only created and loaned out 10. Bill Ryan thinks he can do
it but saner minds revolt at the thought.

>Given that the modern world evolution occurred mostly under
>Christian influence, it is this religion's change of direction
>over time that is really most relevant for our purposes. The
>historical importance of usury in the teachings of the Christian
>Church can only be compared with today's emphasis on sexual sins
>and abortion. It was definitely one of the most persistent dogmas
>of the Church. One of the earliest Church fathers, Clement of
>Alexandria, specified, "the law prohibits a brother from taking
>usury; designating as a brother not only him who is born of these
>same parents, but also one of the same race and sentiments...
>Do not regard this command as marked by philanthropy."
     JCT: Actually, citing from "The Church and Usury" by Rev. Patrick
Cleary, on page 6, St. Ambrose says:
     "Take usury from him whose life you may take without sin.
The right of waging war implies the right of taking usury."
     On page 51, St. Ambrose again repeats:
     "One may take usury from such as it is lawful to wage war with;
if one may kill a man then he may seek interest from him."
     JCT: I've always ways that the mort-gage death-gamble was the
genocide of the poor, even raising the argument in genocide charges
against the banks in the Supreme Court of Canada five times, and St.
Ambrose also  likens it to murder.
     Of course, in the time of Christ, Roman law permitted the
creditor to put the debt to death if he failed to pay his death-gamble
mort-gage. I think English law also permitted the killing of the
failing debtors.
     Page 49: St. Basil, St. Gregory of Nyssa and St. Ambrose all
argued that usury "is the cause of misery, poverty, slavery, suicide."
     Page 62: Edward the Confessor: "Usury was the root of all vices."
     To prove your point, many saints and on page 88, Scotus stated:
"the sterility of money proves the injustice of usury."
     Finally, that usury is the greatest crime against humanity in
history is one reason I love to argue that abolishing it was Christ's
mission on Earth as I point out not only his prohibition (Thomas 95)
but also his attack on the money-lenders in the temple, the only
instance of physical violence on his criminal record.

>The litany of councils specifically condemning this practice as
>one of the most despicable sins is really impressive: the Council
>of Elvira (305-306AD), Arles (314), Nice (325), Cartage (348),
>Taragona (516), Aix-la-Chapelle (789), Paris (829), Tours (1153),
>the Lateran Council (1179), Lyons (1274), Vienna (1311). This
>last one was even more sweeping than the previous ones; any ruler
>who would not criminally punish anybody committing usury in his
>realm would be excommunicated (even if the ruler himself did not
>do it!). Since the practice was often concealed beneath
>various devices, money lenders were compelled to show their
>accounts to the ecclesiastical authorities. The fifth Lateran
>council (1512-1517) reiterated the definition of the sin of usury
>as "receiving any interest on money" once again.
     JCT: Rev. Cleary's book lists many such councils and I can attest
that it's the most comprehensive book on usury in my library.

>Henry the VIII legalized interest for the first time in the
>Western World in 1545, after he had broken ranks with the Pope.
>The first time that the original doctrine was questioned within
>the Catholic Church itself was in 1822. A woman from Lyons,
>France, had received interest on money and was refused absolution
>unless she returned the ill-gotten gains. Bishop Rhedon requested
>a clarification from Rome, which responded, "Let the petitioner
>be informed that a reply will be given her question when the
>proper time comes; ...meanwhile she may receive sacramental
>absolution, if she is fully prepared to submit to the
>instructions of the Holy See." A forthcoming resolution was
>promised again in 1830, and from the Office of Propaganda in
>1873. This promised clarification never came. The sin of usury
>was never officially repealed, but was simply forgotten.
     JCT: Who was the pope responsible for unleashing the moneylenders
on his flock?

>The Canon Law of 1917 (Canon #1543), still operational today, makes
>it obligatory for bishops to invest, "As the administrators are
>bound to fulfill their office with the solicitude of a good
>father of a family, they shall invest the surplus revenue of the
>church to the benefit of the church." The issue of interest is
>not mentioned.
     JCT: That's what makes the claim that the pope is infallible when
it comes to matters of doctrine so funny. The shepherd permits mort-
gage on his flock and we're to believe he's infallible. It's the
reason I rebuked him when he visited Ottawa in the early 1980s with a
picket sign that said (in Polish) "Let the exacting of your usury
stop. Nehemiah 5:10" even I added the work "your" myself. He got the
message as I picketed him 9 times and even blessed me once despite my
condemnation.

>Later still, usury is redefined as the charging of excessive interest.
>Bernard
     JCT: And later, they changed the Lord's Prayer from "Forgive us
our debts" to "forgive us our sins." Forgiveness of sins I'll want in
the next world. In this world I'd prefer forgiveness of debts which
indicates to me that Christ was showing us a way to have Heaven in the
here and now, not Heaven when we're dead.
     Also, the line from Nehemiah 5:10 is being deleted from the
latest Bibles. If the fudging of Holy Book is going on even today, who
can say that they haven't deleted other prohibitions of interest too.
That's what makes finding the Gospel of Thomas in 1945 in the Nag
Hammadi so important. In it is the only actually direct prohibition of
interest by Christ which makes me wonder if others were once included
and like the Nehemiah 5:10 statement, were erased.
---

--
John C. Turmel