Your Mortgage, The Reformation, and the “Spirit of Capitalism”

For most people, if you want to buy your own home, you need to take out a mortgage. Or if you buy a new car, a car loan is necessary to make it happen. Most Christians, that I know, think nothing of this practice today. Several Christian friends of mine are even loan officers at different mortgage firms. But prior to the Reformation in the 16th century, it would have been unthinkable for a Christian to loan money out to other people at interest.

The Western medieval church banned the practice of Christians loaning out money to others, and charging interest, through a series of church councils, such as the Second and Third Lateran Council (1139 and 1179) and the Council of Vienna (1314). If you were ever convicted of making loans and charging interest, you could be even denied a Christian burial.

Why did the medieval church do this? Well, they thought that the Bible forbade the practice, which was called “usury.”

“Take no interest from him or profit, but fear your God, that your brother may live beside you. You shall not lend him your money at interest, nor give him your food for profit.“(Leviticus 25:36-37ESV)

“He who walks blamelessly and does what is right…who does not put out his money at interest… He who does these things shall never be moved.“(Psalm 15:2-5 ESV)

Forbidding usury has its roots in the Old Testament, something that Muhammed picked up as well in Islam, which is why Sharia law also forbids loaning money to other people, and charging interest.

Even Martin Luther, early in the 16th century Reformation, condemned the practice, urging instead that Christians should loan money out to their neighbor gladly, at no charge:

“After the devil there is no greater human enemy on earth than a miser and usurer, for he desires to be above everyone.”

There were some caveats to this restriction against usury, however. While Christians were forbidden to make interest-bearing loans out to other Christians, the same did not apply to non-believers. Thus, European Jews were allowed to loan money out and charge interest. While this gave European Jews career opportunities, it is also fed into growing antisemitic sentiment, with tragic consequences. If you felt like you were being mistreated by your loan officer, or lender, then you could easily just “blame the Jews.”

However, attitudes towards usury began to shift once John Calvin, the Reformer in Geneva, Switzerland, came along in the mid-16th century. In a 1545 letter to a friend, John Calvin put it like this:

“We ought not to judge usury according to a few passages of Scripture, but in accordance with the principle of equity.”

For John Calvin, not every commandment for Old Testament Israel was applicable to the New Testament Christina. Furthermore, the foundational principle that the usury prohibitions were trying to get at, was to protect against the exploitation of the poor. You get a hint of where Calvin was going, by looking at other passages in the Bible, such as:

“If you lend money to any of my people with you who is poor, you shall not be like a moneylender to him, and you shall not exact interest from him“(Exodus 22:25 ESV)

Calvin therefore taught that charging interest for money loans, in principle, was perfectly acceptable. What should be forbidden was the charging of excessive interest, thus redefining the traditional meaning of “usury.”

Calvin’s ideas were not immediately accepted, as some believed that Calvin was shying away from the “clear” teaching of the Bible. But Calvin was not ultimately labeled as a being some kind of “liberal,” a charge often brought up against someone today, who might suggest that a traditional Bible interpretation be rethought. Nearly 500 years later, Calvin’s views about usury are standard among nearly all Christians. You can be a home mortgage loan officer, or work at a bank that does car loans, but you can not be a “loan-shark,” who charges exorbitant interest rates to exploit the desperate and needy.

John Calvin’s teachings against charging excessive interest demonstrate that Christians should be on the forefront against taking advantage of the poor and needy.

Changes like these, in how Reformers, like John Calvin, read the Bible, is what impressed the late 19th century German sociologist, Max Weber, to write his classic, The Protestant Ethic and the Spirit of Capitalism. Many of us grew up hearing about Weber’s “Protestant work ethic,” and its association with capitalism. Today, economists and historians dismiss many elements of Weber’s thesis. But it is difficult to imagine how the modern banking system, with home mortgages, car loans, and credit cards, would ever have emerged, if John Calvin had not re-examined the meaning of “usury” in the Bible.

So, the next time you make your mortgage payment, and you are grateful that it allows you to live in your own home, just remember to thank the Reformer, John Calvin.

This blog post inspired by reading Alister McGrath’s Reformation Thought.