Hugo Grotius on Usury: Acknowledging the End of the Scholastic Argument

Abstract

This paper explores the way the Scholastic argument against usury, which culminated in the 13th century with Thomas Aquinas’s question on interest loans in the Summa Theologiae, found an end with Hugo Grotius’s introduction of economic issues, in De Jure Belli ac Pacis (1625). Whereas Grotius inherited at least part of his predecessors’ repugnance of interest lending, he found in his questioning of categories from Roman law the source of both a criticism of the main features of the Scholastic argument and an alternative analysis of interest loans in which the income received by the lender is explained and legitimate.

Keywords:

• Grotius
• money loan
• usury
• interest
• contracts

JEL CLASSIFICATIONS:

• B11
• B31
• E43
• G00
• K12
• Z12

Acknowledgements

I am grateful to Laurie Bréban and Pierre Januard for their remarks and discussions at an earlier stage of this paper. The comments and criticisms of two referees of this journal were particularly valuable and helped me to clarify and strengthen my argument. Nonetheless, the usual caveat remains.

Correction Statement

This article has been corrected with minor changes. These changes do not impact the academic content of the article.

Notes

1 The question of knowing when this long maturation reached its conclusion is still disputed. Noonan, for instance, argued that most of the criticism against the doctrine of usury was performed during the second half of the 16th century, with Conrad Summenhart (see Noonan 1957, 341–345), before the same line of argumentation reappears in the following century. O. Langholm, alternatively, supported the idea that this was performed in the continuation of the School of Salamanca, by such authors as Molina and Lugo (Langholm 1998, 74–76).

2 Yet, some interest appears in the scarce references to such issues as Grotius’s understanding of price (Lapidus 1986), his influence on the birth of Scottish political economy (Hont 1986), his conception of poverty (Salter 1999), his doctrinal position on free trade (Borschberg 2011; Suprinyak 2022) or the way he articulates economic issues, like the money loan, and a normative legal concern (Lapidus 2021).

3 The edition used of Hugo Grotius’s De Jure Belli ac Pacis is that by J.B. Scott in 1913, which reproduces the 1646 edition, published just after Grotius’s death. Each time it seemed faithful enough to the Latin original, the translation of Grotius’s quotations hereafter relies on F.W. Kelsey’s translation into English of 1925. References are given according to the numbering for chapters, sections and sub-sections in Kelsey’s translation.

4 Kelsey’s translation, on this point, does not really help to resolve the ambiguity: “the name of usury is hateful, but not in like manner interest”. All the more so since the end of the note is quite faithful to the Latin original: “Because many have misused the word usury […] the word interest is substituted for it in the good sense” (De Jure, II, 12.21 n. 2).

5 Less than 20% of Grotius’s comment on Luke 6:35 are translated in Barbeyrac’s note. The Annotationes were presumably written in 1619-1621, although they were first published only in 1641. See De Jonge (1984, 97–99).

6 Januard (2022b, 247–249) discusses alternative interpretations of these arrangements leading to a societas in the works of Thomas Aquinas: an “activity-based” approach, illustrated by Ege (2014, 403) and an investment-based approach (Chaplygina and Lapidus, 2016a, 37).