Authors: Lewis Hyde
So reads the post-Reformation argument in favor of removing all restraint on usury.
To reply in favor of gift exchange we shall have to widen the frame of the argument. When Calvin speaks of judging each situation by its inherent equity, he is articulating an ethic of “balanced reciprocity,” one in which trade is marked by neither exploitation nor gift, neither affection nor animosity. The debate over usury has usually assumed a world clearly divided into brothers and others, friends and enemies. But most social life is not so rigorously symmetrical. Even in tribal groups, but more so in state and urban societies, there is a middle ground—cordial strangers, trustworthy tradesmen, distant cousins, friends of friends, dubious relations, who are neither wholly alien nor a part of the inner circle of unconditional sharing. And as there are degrees of relatedness (and therefore degrees of strangeness), so there are degrees of reciprocity.
If we were to place these degrees of reciprocity on a scale, pure gift would lie at one end, theft at the other; at one pole would be the disinterested sharing that creates or maintains kinship and friendship, and at the other, chicanery, exploitation, and profiteering. Balanced reciprocity, Calvin’s “equity,” lies midway between these extremes. In equable dealings, neither side gains nor loses and there is no enduring social feeling, neither good nor bad will. To this end the ethics of equity permit the reckoning of time and value which the ethics of gift exchange restrain. If we want our trade to leave neither kinship nor anger, then we seek to balance real costs in present time. In the case of loans, as a free loan amounts to the gift of the interest, we make the relationship equable simply by reckoning and charging the interest. What I have called ancient usury refers to this “equity rate.” Where
gift exchange is the accepted and moral form of commerce, even an equity rate is an immoral usury, as it removes the spirit of the gift. Tribal groups that have categorically prohibited this simple usury must be those that have little need for the balanced reciprocities of an amoral stranger trade, while those that have allowed it admit some need for an ongoing, stable trade with outsiders, foreigners, aliens.
Some tribal groups have obviously had reason to develop an ethic of equable stranger trade, but on the whole those situations that call for balanced reciprocity are not as common in pre-state societies as they are now. The shift from pre-state to state, from tribes or small towns to an urban, mass society brings with it a rise in stranger trade. The sphere of positive reciprocity has been shrinking for at least four centuries, until now the bulk of our dealings occur at that middle distance in which people are neither real friends nor real aliens but what I call cordial strangers.
Cordial strangers loan money to one another at the equity rate. It is a mutually agreed upon approximation of the real increase on wealth; it assures that the creditor-debtor relationship is a market relationship and no more; no one is connected, no one is hurt. In a society that recognizes the right to make a reasonable profit on capital, the equity rate is called the prime rate. Above the prime we have rates for speculators and suspicious strangers. Higher still, we have modern usury, loan sharking, theft by debenture. And below the prime we find various “friendship rates,” which fall to different levels for different degrees of friendship, until we return to the interest-free loan, the pure gift case.
All societies, tribal or modern, have some such range of reciprocities to organize and express various degrees of relatedness or social distance. What is particular to a market society is the need to emphasize the balanced reciprocity that occupies the middle of the scale. With it the true citizens of a mass society—members
of no community of common faith or purpose, and of no network of cooperating kin—are able to maintain an ongoing commerce with one another. Without it each citizen would be overwhelmed in two directions as all his dealings would lead him into either kinship or conflict. The ethic of equity which used to appear at the edge of the group now appears at the edge of the self, allowing essentially autonomous individuals to interact with one another. Moderate interest (on loans, but in the other sense as well) gives the modern self a semi-permeable skin so that we may express and deal with the relative strangeness of those with whom we eat our daily lunches. A market society cannot function without this interest, this ancient usury.
A reply to the pro-usury arguments that follow the Reformation has required that we back off in this way so that we might see the invisible assumptions upon which they lie. Their major points are true,
given
the rise of individualism and a decline of a common faith, an increased range of alienable property and the disappearance of the commons, the advent of widespread market exchange, and the emergence of the state. Where commerce feeds no common spirit and social life takes its style from the market, commodity exchange does seem to imitate the functions of gift exchange. Calvin is right, our relationship is not the same as that of the ancient Jews. And he is right, capital will not increase unless it is used.
But market relationships and capital let out at interest do not bear the increase-of-the-whole that gift exchange will bear. Equable trade is not an agent of transformation, nor of spiritual and social cohesion. With the vector of increase reversed, interest is self-interest: it does not join man to man except in the paper connections of contract. And where the spirit of the gift has been suspended, legal contract replaces the felt bonds of gift exchange and a skeleton of law and police must appear to replace the natural structure and cohesion of faithfulness and gratitude (so that perfect law and order are perfect
alienation). The liveliness that Dana speaks of is the bustle of trade, not the bustle of life. As we all know, it is possible to have a lively factory in which no one feels any personal energy. And as for Dana’s “poor, honest debtor” who has no access to capital, the fact that the poor are trapped in a net of property rights that would have them suffer more deeply if they didn’t participate is hardly an argument for that system to continue. Nonetheless, it is true that once the premises of the post-Reformation argument in favor of usury are in place, commodity exchange can begin its alluring imitation of gift exchange. A still odder thing happens: with the rise of the commodity as a form of property, the giving of gifts starts to look suspiciously like the old way of dealing with strangers! Gentlemen, after all, loan money to each other, not to the truly needy. How is it that the needy poor survive? Here is the way the word “charity” comes to be used by William Paley in a book on morality dated 1825:
I use the term Charity … to signify
the promoting the happiness of our inferiors.
Charity in this sense I take to be the principal province of virtue and religion: for, whilst worldly prudence will direct our behavior towards our superiors, and politeness towards our equals, there is little beside the consideration of duty, or an habitual humanity which comes into the place of consideration, to produce a proper conduct towards those who are beneath us, and dependent on us.
Such charity is not gift. The recipient of a gift should, sooner or later, be able to give it away again. If the gift does not really raise him to the level of the group, then it’s just a decoy, providing him his daily bread while across town someone is buying up the bakery. This “charity” is a way of negotiating the boundary of class. There may be gift circulation within each class, but
between the classes there is a barrier. Charity treats the poor like the aliens of old; it is a form of foreign trade, a way of having some commerce without including the stranger in the group. At its worst, it is the “tyranny of gift,” which uses the bonding power of generosity to manipulate people. As Huddie Ledbetter sang in his song “The Bourgeois Blues”:
The white folks in Washington, they know how
To give a colored man a nickel just to see him bow.
To argue over usury after about 1800 misses the point. By then the usury question is a subtopic in the more central issues of individualism, the ownership of capital, and the centralization of power. All of the pro-usury arguments assume private property and exchange trade, and they must be answered in those terms, not in terms of the usury debate.
Almost all nations and states repealed their usury laws during the last half of the nineteenth century. England abolished hers in 1854, Germany in 1867, and so on. At the same time other religious groups joined the Protestants, who had long tolerated usury among friends. In 1806 Napoleon called upon French Jews to clarify their position on the brotherhood, and they replied that they were Frenchmen first and Jews second. Moreover, they explained that the Talmud made it clear that brothers could legitimately charge interest to one another. The Catholics also fell in line. Even as far back as 1745 the Pope had defended 4 percent interest on a state loan, and in the nineteenth century Rome continually authorized the faithful to lend money at moderate rates. At present the Holy See puts out its funds at interest and requires ecclesiastical administrators to do the same.
Perfect gift is like the blood pumped through its vessels by the heart. Our blood is a thing that distributes the breath through
out the body, a liquid that flows when it carries the inner air and hardens when it meets the outer air, a substance that moves freely to every part but is nonetheless contained, a healer that goes without restraint to any needy place in the body. It moves under pressure—the “obligation to return” that fascinated Marcel Mauss—and inside its vessels the blood, the gift, is neither bought nor sold and it comes back forever.
The history of usury is the history of this blood. As we have seen, there are two primary shades of property, gift and commodity. Neither is ever seen in its pure state, for each needs at least a touch of the other—commodity must somewhere be filled and gift somewhere must be encircled. Still, one usually dominates. The history of usury is a slow swing back and forth between the two sides. I have taken the double law of Moses as an image of the balance point, gift contained by a boundary like the blood moving everywhere within the limit of skin.
The image of the Christian era would be the bleeding heart. The Christian can feel the spirit move inside all property. Everything on earth is a gift and God is the vessel. Our small bodies may be expanded; we need not confine the blood. If we only open the heart with faith, we will be lifted to a greater circulation and the body that has been given up will be given back, reborn and freed from death. The boundaries of usury are to be broken wherever they are found so that the spirit may cover the world and vivify everything. The image of the Middle Ages is the expanding heart, and the deviant is the “hardhearted” man. He is usually taken to be a Jew, the only man in town who feels no self-consciousness in limiting his generosity.
The Reformation brought the hard heart back into the Church. In a sense, the swing from gift to commodity re-crossed its midpoint during these years, the high liveliness of
the Renaissance. The Church still affirmed the spirit of gift, but at the same time it made peace with the temporal world that limited that spirit as it grew in influence.
But the heart continued to harden. After the Reformation the empires of commodity expanded without limit until soon all things—from land and labor to erotic life, religion, and culture—were bought and sold like shoes. It is now the age of the practical and self-made man, who, like the private eye in the movies, survives in the world by adopting the detached style of the alien; he lives in the spirit of usury, which is the spirit of boundaries and divisions.
The “bleeding heart” is now the man of dubious mettle with an embarrassing inability to limit his compassion. Among the British in the Empire it was a virtue not to feel touched by the natives, and a man who “went native” was quickly shipped home. (In
Mrs. Dalloway
, Virginia Woolf lets us know with one sentence that Peter Walsh will never amount to much because he has fallen in love with an Indian woman.) Now the deviant is the heart that does not keep its own counsel and touches others with feeling, not reckoning. Gift exchange takes refuge in Sunday morning and the family. The man who would charge interest to his wife would still be called hardhearted, but outside the family circle there is little to restrain the fences of usury.
In this century the man with the bleeding heart is a sentimental fool because he has a feeling that can no longer find its form. Still, his sentimentality is appealing. Everyone likes Peter Walsh, though no one would give him a good job. In the empires of usury the sentimentality of the man with the soft heart calls to us because it speaks of what has been lost.
*
Philip Drucker provides an example from the tribes of the North Pacific coast. Loans were not uncommon there, but most were in the nature of a gift, returned with voluntary increase to indicate gratitude. “However,” Drucker tells us, “loans at interest were strictly commercial transactions, the rate being agreed upon at the time of the loan. The ruinous 10 0 percent rate was usual for a long-term loan, that is, for several years … There are no exact data on the origin of the custom, but there is reason to suspect that it may not be aboriginal in origin… It is probably significant that loans at interest consisted of trade blankets or money, not of aboriginal value items.” Here, as I surmise must be the general case, the appearance of interest on loans coincides with the introduction of market exchange with foreigners.
*
I am not fond of arguments that depend upon declaring something “natural” or “unnatural”; they tend not only to cut off debate but to assume a division between man and nature. Usury may be justly hated, but since men invented it, we must either accept it as a part of nature or say that men are not.
To give Aristotle his due, however, we might change the terms to “organic” and “inorganic.” Organic wealth was the original context for most of our economic language. In
The Origins of European Thought
Richard Onians makes an interesting observation in regard to the word “capital.” For both the Greeks and the Romans, the human head was regarded not as the seat of consciousness but as the container of procreative powers, the seeds of life. A Roman metaphor for kissing was “to diminish the head,” according to Onians; sexual intercourse also “diminished the head,” the point being that erotic or generative activity draws the life-stuff out of its container. In this way it was understood that
caput
(head, but also capital) produced offspring. Onians tells of a Roman cult, the Templars, who worshiped a divine head “as the source of wealth, as making trees bloom and earth to germinate.” Aboriginally “capital” was a strictly organic wealth that quite literally bore
tokos
, and in this context Aristotle is right: it is unnatural, it is not true to nature, to speak and act as if inorganic capital could possibly do the same.
*
Such a double economy is hardly unique to the Jews; it occurs wherever there is a strong sense of an in-group. In fact, if ancient usury was not the exorbitant rate to which the term now refers but something closer to “rent” or “interest,” then the Jewish law is comparatively mild. An ethnologist writes as follows of a Solomon Island society: “Native moralists assert that neighbors should be friendly and mutually trustful, whereas people from far-off are dangerous and unworthy of morally just consideration. For example, natives lay great stress on honesty involving neighbors while holding that trade with strangers may be guided by
caveat emptor.”
*
This remarkable piece of scholarship first appeared in 1949 and has now been reprinted, with addenda, by the University of Chicago Press. Nelson was a historian of religion who, touched by Max Weber’s similar work, fixed on the usury debate as a way to trace moral and economic conscience through the history of the Church. I am indebted to his guidance.
*
“The law was our custodian until Christ came, that we might be justified by faith. But now that faith has come, we are no longer under a custodian.”—Gal. 3:24–25. Luther reinstates the law in civil affairs where faith may not be assumed, but risk may. His is an Old Testament spirit.
*
It may be time to add a note on the Islamic parallel to this story. As we noted at the outset, the Koran clearly forbids charging interest on a loan. The history of that prohibition is essentially the same as that of the Mosaic law, but without the back-and-forth dialectic, as Muhammad makes no distinction between brothers and others, faithful and infidel.
During and after the Middle Ages, Muslims accepted a practical modification of the Koranic prohibition by allowing a return on capital provided the creditor had taken a risk. A man was still forbidden to take interest in the sense of a guaranteed percentage return, but he could share in a profit if he had taken a risk. Nowadays some Muslims, like some Orthodox Jews, still refuse to charge interest on a loan, but most allow a reasonable rate of return.
The debate between these two factions was one of the minor dramas to be played out in Iran after the fall of the Shah in 1979. The stated intent of the followers of Ayatollah Ruhallah Khomeini was to organize an “Islamic republic” rooted in the precepts of the Koran. Even a man not closely aligned with the clergy, for mer president Abolhassen Bani-Sadr, reportedly maintained an elaborate microfilm library with Koranic codes cross-referenced to economic issues.
But, as Calvin told us, a modern state cannot operate on the ethics of an ancient tribe. Soon after the fall of the Shah, the new head of the state-owned oil company—a devout Muslim, a radical lawyer, an enemy of the Shah—declared himself perplexed as to how to proceed, finding it “neither possible nor beneficial … to put all political, economic and judicial problems into an Islamic mold.” A state whose wealth derives from selling fossil fuel to foreigners cannot operate without interest on capital. When this drama is resolved, I imagine that, as was the case in Europe, the merchant princes will emerge with the power. And the clergy will have to produce a Luther or a Calvin if they wish to share that power.