4. Fourth Conclusion

134. About the last type of contract, namely the giving of a loan [n.118], let the fourth conclusion of this article be as follows: for justly contracting a loan, it is necessary to keep equality in number and weight simply (with the exception of certain cases that will spoken of at the end [nn.144-150]). The reason for this is assigned by some [Thomas Aquinas, ST IIa IIae q.78 a.2 ad 2, Richard of Middleton, Sent. IV d.15 princ.5 q.5] as follows, that the use of money is its consumption, therefore he who yields it as a loan consumes it.Richard: “Now the reason why nothing beyond the principal can be demanded for a loan but can be for something rented, is that a loan is of things whose principal use cannot be handed over without the thing itself, because the use of them is the using up of them...as is plain of money, which was principally invented for this purpose, that it be expended in the buying of other things; for this reason, when such sorts of thing are handed over to others, ownership of them is transferred to the latter.” ²⁵

135. Against this is objection made through ‘On the signification of words’, and it is today in [Boniface VIII], Sixth Book of Decretals V tit.12 ch.3, that the use of certain things is perpetually separated from ownership.The argument of Richard, and Aquinas, is that lending money is different from renting a house, say, because a house can be used without being used up, so that the owner of the house can retain ownership of it while selling the use of it (as by renting it). Consequently, after the rental period is over, the owner gets the house back and keeps the rent in addition. The same cannot be said of money because to use money is to use it up and so to possess it at the same time. There is no difference between use and possession that would allow charging ‘rent’ for the ‘use’ of the money. One gets back everything one lent when one gets the same amount of money back, and to get back extra for ‘use’ is ‘usury’ and wrong, because it amounts to selling the same thing twice. Scotus’ response is to deny, relying on Boniface VIII, that the use and ownership of money necessarily go together, or to deny the validity of the inference: money is used up in being used, therefore possession cannot be separated from use. However, as he explains in nn.136-137, usury is still wrong. For either (n.136) to loan money is to give possession, so that to get the loan back is to get possession back, and to get something extra back for ‘use’ as well would be to suppose one still somehow owned the money while it was being used when precisely one did not. Usury is wrong, therefore, because one sells what one no longer owns. Or (n.137) one can suppose that the lender still owns the money but that the gain that comes from the use of it comes from the borrower’s industry and not from the lender’s, so that the lender has no claim to the fruits of that use, or to extra payment because of it. ²⁶

136. It is possible, then, to assign the following reason, that in the giving of a loan ownership is transferred; for this is what the words indicate ‘I give you what is mine as loan’; therefore he who allows it as a loan does not remain owner of the loaned money, and consequently if he receives for the money something beyond the principal, he receives something for what is not his, or he sells what is not his.

137. The other reason is: let it be that the money remained his, yet the money does not of its own nature have any fruit, as some other things have that germinate from themselves; but only from someone’s industry, namely the user’s, does any fruit come. Now the industry of the user is not the industry of him who allowed the money; therefore, when he receives fruit from the money, he wishes to have the fruit of someone else’s industry, which however that other did not give him by the fact that from that other he accepted a loan exchange. And this is the reason why, by contrast, the fruit of pledges that do germinate is computed in the principal.

138. Excepted in this matter of loaning are two cases in general: for sometimes one can licitly receive more than the capital by agreement, sometimes not by agreement.

139. The first [by agreement] in three ways:

Namely by reason of conventional penalty, though however it may not be done for the fraud of usury. For example: suppose you need my money for trading, but I allow it to you up to a certain day, adding a conditional penalty that if you do not pay it on such and such a day (because I will otherwise be greatly harmed) you will pay afterwards so much more. This added penalty is licit, because it is licit for me to keep myself from damage by thus forewarning him with whom I contract. Now the sign that it is not for fraud of usury is this manifest one: when a merchant more want the money to be paid to him on a predetermined day than on the day after with added penalty; and by contrast it is for the fraud of usury when he wants the day to be missed rather than the money on that day to be paid.

The second is by reason of interest; for a debtor from whose non-payment the creditor is notably harmed, is held by justice to satisfy the creditor with interest. And although this creditor could not have an action in the external forum against the other, because for example pacts have perhaps not been entered into or have changed, yet in the forum of conscience the debtor is bound for interest beyond the principal.

The third condition is when both, namely the capital and what is superfluous, are put under uncertainty. This is proved from Gregory IX Decretals V tit. 19 ch.19, ‘On Usury’,“By reason of this doubt [sc. about greater and lesser valuation] is he also excused who sells bread, grain, wine oil, or other merchandise so as to receive for the same, within a certain time limit, more than they then are worth -provided, however, that at the time of the contract he had not been about to sell them.” ²⁷ and also by reason, using the argument from similarity, because just as uncertainty is an excuse there, so is it also here.

140. Also is [receiving more than the capital] licit without any agreement [n.138], because the mind alone without any verbal agreement, or other equivalent sign showing to the debtor that the lender would not lend without hope of gain, does not, when receiving more than the principal, make the lender to have what is another’s without agreement, and therefore he is not bound to restitution.

141. One needs also to understand that money has some useful use from its own nature, as for looking at or for decoration or for displaying possibility, as if one were rich, and for this end can it be rented like a horse or something rentable; and for this use can, while ownership is retained, money be received. And then is it in its totality a contract for renting or hiring (and not borrowing or lending), and a weight numerically the same should be returned, unless perhaps something equal in weight and value satisfy the renter.

142. These aforesaid rules show what is just and what unjust in exchanges immediately made, that is, when each exchanger at once gives or receives that for which he exchanges.