Charging interest. From canonical interdiction to commercial use

• Author: Paul Popovici
• Position: Senior Lecturer, Ph.D. 'Dimitrie Cantemir' University, Facultaty of Law, Cluj-Napoca
• Pages: 46-49

CHARGING INTEREST. FROM CANONICAL INTERDICTION TO COMM ERCIAL USE

Paul Popovici*

Abstract

As concluded in a previous ar ticle

1, in our opinion, under the new status of the Romanian Orthodox

Church (BOR), the cler gy a re a llowed, within cer tain limits, the exercise of acts of trade. But is it allowed for

them to carr y out financial a ctivities? It is well known that char ging interest was prohibited by Easter n

Christianity. Ca nons edicts in this r egard ar e based on cer tain Scriptur al provisions, ar ising both from The Old

Testament and from The New Testament. However, nowadays we witness that the Church does not o nly use bank

accounts, but even offers to loan interest- bearing money2.

Keywords: financial activities, usury, clergy, trade, interest.

Introduction

The question of financial inter est, as viewed from a spiritua l perspective, is both essential and pendent.

The importance of interest resides in the fact tha t the entire economy, starting with the financial sector, functions

on the pr inciple expressed by the a ct of charging interest. A strong criticism ha s been directed towar ds interest

by outsta nding per sonalities performing in the spiritual sphere. Interest is consider ed disa vow-able by many

people with spiritual inclin ations. Interest has even been consider ed as functioning on the principle of ga mbling,

even if it is revenue obtained from transactions a nd investments.

Brief diachrony

Surprisingly, the history of financial interest is not a recent one. Neither is it tributar y to nowadays

banking institutions. Interest appears in the early age of the history of mankind.

The first mention of a n interest seems to be that in the code of Hammurabi (about 1800 B . C.). It stated

the maximum q uantum of interest according to the nature of the goods: 33  % per year for cereals that had to

be given back through other goods, and 2 0% per year for silver3. Breaking the legal provision, that is taking a

bigger percentage of interest than the maximum legal one, was punished. In ancient Greece, the rules of So lon

would not limit the rate of the interest. Due to a huge crisis, bigger than any other known, the provisions would

reduce or annul numerous debts. The law of twelve tables would limit interest at 8 % per year. The break of

this disposition was severely punished, with the payment of the fourfold of the loan 4.

Unlike in Antiquity, the Middle Ages will know no fix and stable rates of interest a ssociated to financial

loan. T he rates of interest vary a lot (between 5 and 120%)5, the medieval criteria of establishing the rates of

interest remain obscure to us6.

The modern and contemporary times b rought about the least expected fluctuations of the rates of

interest. The financial complexity and the diversity of conditions in every state made possible extreme rates o f

financial interest. For example, in the last century, there were recorded numerous fluctuations of the rates of

interest between these two extremes: 0,01% (at New York) and 10.000% (at Berlin).

It has to be mentioned that t he unprecedented diversification of financial services resulte d in variation

of rates even within the same bank at the same time7.

These are facts arising from legal provisions. In the following sections of this study we shall analyses

how they were perceived and regulated by the religious and ethical authorities along time.

Biblical, philosophical and patristic tradition

For Christians, the interdiction of receiving any form of financial interest is formulated in the

Scriptures, having even older traces.

The main source of canonical la w is the Bible8. Therefore, any analyses should start with the provisions

of the sacred texts regarding the question of interest.

* Senior Lecturer, Ph.D. “Dimitrie Cantemir” University, Facultaty of Law, Cluj-Napoca; email: paul.popovici@pedagogia.ro.

1 P. Popovici, Incompatibilitatea de a exercita comerul. Revizuirea unui caz, in “Studia Universitatis Babeş-Bolyai. Iurisprudentia”, no.

1/2011, pp. 141-147 (in Romanian), (http://studia.law.ubbcluj.ro/articol.php?articolId=375).

2 See Casa de Ajutor Reciproc a Clericilor şi Mirenilor I.F.N. Iaşi (Mutual Help of Clergy and Laics, Iaşi)

http://www.mmb.ro/ro/comunicate/o_instituie_non_bancara_i_non_profit_in_sprijinul_angajailor_arhiepiscopiei_iailor.html.

3 J. R. McIntosh, Ancient Mesopotamia: new perspectives, ABC & CLIO, 2005, p. 207.

4 S. Homer, R. Sylla, A History of Interest Rates, 4th ed. John Wiley & Sons, 2005, pp. 3-4. Note that in the Roman world companies can be

funded with the purpose of giving loans with interest, Vl. Hanga, Roman law in Dacia, in Vl. Hanga (volume co-ordinator), Dreptul roman

pe teritoriul Daciei (“History of Romanian law”), RSR Academy, Bucharest, 1980, p. 111 (in Romanian).

5 S. Homer, R. Sylla, op.cit. pp. 5-6.

6 As for the Romanian Principates, Transylvania only has reported the existence of the loan with interest, loan governed by the political

authority – V. Şotropa, Contracte reale, în Vl. Hanga (volume co-ordinator), op.cit. p. 564.

7 S. Homer, R. Sylla, op.cit. pp. 4-5.