Economic perspectives


Various Economic Perspectives on usury and interest on debt


Binary economics

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Binary economics is a heterodox theory of economics that endorses both private property and a free market but proposes significant reforms to the banking system. The aim of binary economics is to ensure that all individuals receive income from their own independent capital estate,[1] using interest-free loans issued by a central bank to promote the spread of employee-owned firms.[2] These loans are intended to: halve infrastructure improvement costs, reduce business startup costs, and widen stock ownership.

Binary economics is a minority discipline, hard to place on the left-right spectrum.[3] It has variously been characterized as an extreme right-wing ideology and as extremely left-wing by its critics.[4][5] The ‘binary’ (in ‘binary economics’) means ‘composed of two’ because it suffices to view the physical factors of production as being but two (labour and capital which includes land) and only two ways of genuinely earning a living − by labour and by productive capital ownership. Humans are usually considered as owning their labour, but not necessarily the other productive factor – capital.[6]

Binary economics is partly based on belief that society has an absolute duty to ensure that all humans have good health, housing, education and an independent income, as well as a responsibility to protect the environment for its own sake. The interest-free loans proposed by binary economics are compatible with the traditional opposition of the Abrahamic religions to usury.[7]

Proponents[8] of binary economics claim that their system contains no expropriation of wealth, and much less redistribution will be necessary. They argue that it cannot cause inflation and is of particular importance as more of the physical contribution to production is automated.[9] and that the Binary economics paradigm[10] is particularly helpful in addressing the issue of why developing countries languish.[11] Advocates[12] contend that implementing their system will lessen national debt and encourage national unity. They believe binary economics could create a stable economy.



The theory behind Binary Economics was proposed by American lawyer Louis Kelso in his book The Capitalist Manifesto (1958). The book’s title could be seen as a Cold War reference in opposition to communism. [13].

Kelso elaborated on his proposals in The New Capitalists in 1961; before teaming up with political scientist Patricia Hetter Kelso to further explain how capital instruments provide an increasing percentage of the wealth and why capital is narrowly owned in the modern industrial economy.[14] Their analysis predicted that widely distributed capital ownership will create a more balanced economy. Kelso and Hetter proposed new “binary” share holdings which would pay out full net earnings as dividends (with exceptions for research, maintenance and depreciation). These could be obtained on credit by those not possessing savings, with a government-backed insurance scheme to protect the shareholder in the event of loss.

Kelso’s writings and his attempts to promote them were not well received by academic economists. Milton Friedman said of The Capitalist Manifesto “the book’s economics was bad…the interpretation of history, ludicrous; and the policy recommended, dangerous” and recalls a debate where even the moderator Clark Kerr “lost his cool as a moderator and attacked [Kelso’s arguments] vigorously” [15]. Paul Samuelson, another Nobel Memorial Prize in Economic Sciences winner, told US Congress that Kelso’s theories were a “cranky fad” not accepted by mainstream economists, but Kelso’s ideas on promoting wider capital ownership nevertheless significantly influenced the passing of legislation promoting employee ownership.[16]

Employee Share Ownership Plans (ESOPs) and other plans

Employee Share Ownership Plans (ESOPs) are compatible with some of the principles of binary economics.[17] These stem originally from Louis Kelso & Patricia Hetter Kelso (1967)Two-Factor Theory: The Economics of Reality; the founding of Kelso & Company in 1970; and then from conversations in the early 1970s between Louis Kelso, Norman Kurland (Center for Economic and Social Justice), Senator Russell Long of Louisiana (Chairman, USA Senate Finance Committee, 1966 – 1981) and Senator Mike Gravel of Alaska. There are about 11,500 ESOPs in the USA today covering 11 million employees in closely held companies.


Binary economics rejects the claim that neoclassical economics alone promotes a ‘free market’ which is free, fair and efficient. (e.g., as an interpretation of the classical First Fundamental Theorem of Welfare Economics). Binary economists believe freedom is only truly achieved if all individuals are able to acquire an independent economic base from capital holdings, and that the distribution of ownership rights can “deepen democracy”.[18]

Binary economics argues financial savings prior to investment are not required on the basis that the present money supply is mostly created credit anyway.[19] They argue that newly-minted money invested on behalf of those without access to existing cash savings or collateral can be adequately repaid through the returns on those investments, which need not be inflationary if the economy is operating below capacity. The theory asserts that what matters is whether the newly-created money is interest-free, whether it can be repaid, whether there is effective collateral and whether it goes towards the development and spreading of various forms of productive (and the associated consuming) capacity.

Another contrast is that, in evidence-based economics, interest (as distinct from administration cost) is practically always necessary; in Binary Economics theory it isn’t (certainly where the development and spreading of productive capacity is concerned).[20] Conventional economics accounts for the observed time value of money, whereas binary economics does not.

Uses of central bank-issued interest-free loans

Binary economics proposes that central bank-issued interest-free loans should be administered by the banking system for the development and spreading of productive (and the associated consuming) capacity, particularly new capacity, as well as for environmental and public capital. While no interest would be charged, there would be an administrative cost as well as collateralization or capital credit insurance.[21]

Proponents of binary economics are dissatisfied with fractional reserve banking, arguing that it “creates new money out of nothing”.[22] The supply of interest-free loans would place in circumstances of a move (over time) towards banks maintaining reserves equal to 100% of their deposits; in practice, the large-scale interest-free lending desired by binary economics is compatible with the widespread reduction in money supply that would be caused by increased reserve requirements only if the government takes over the banks’ role in credit creation.

Investments eligible for interest-free loans

Public capital investment

Interest-free loans for public capital have been successfully used in Canada, New Zealand and Guernsey. Malaysia is today believed to be experimenting with them.[23]

After 1949 central bank loans were a major factor in the Taiwanese Land to the Tiller program which spread land ownership from the few to the many. This was done without causing inflation and was an overall binary solution because, in various ways the money went into the spreading of both productive and consuming capacity.[24] (One way was by financing the buyout with industrial bonds, thus giving capital to small industries to provide things for the newly empowered farmers to purchase.)

Private capital investment

Ownership of productive (and the associated consuming) capacity, particularly new capacity, can be spread by the use of central bank-issued interest-free loans.[25] Interest-free loans should be allowed for private capital investment IF such investment creates new owners of capital and is part of national policy to enable all individuals, over time, on market principles, to become owners of substantial amounts of productive, income-producing capital.[26] By using central bank-issued interest-free loans, a large corporation would get cheap money as long as new binary shareholders are created.

It is proposed that all large corporations should have to pay out all their earnings all the time (with exception of reserves for maintenance, depreciation, repair and research). Large corporations will then have the option of obtaining interest-free loans on condition that they help to spread ownership. Medium-sized corporations (which would not be subject to the full pay out provision) will be able to have interest-free loans if they spread ownership.


Binary productiveness is distinctly different from the conventional economic concept of productivity.[27] Binary productiveness attempts to quantify the proportion of output contributed by total labor input and total capital input respectively,[28] Adding capital inputs to a production process increases labor productivity, but binary economic theory argues that it decreases labor productiveness (i.e. the proportion of the total output with the support of both labor and capital that the labor inputs could have produced alone). For example, if the invention of a shovel allows a laborer to dig a hole in quarter of the time it would take him without the spade, binary economists would consider 75% of the “productiveness” to come from the shovel and only 25% from the laborer.

Roth criticised the shovel example on the basis that the shovel is not a factor of production independent of human capital because somebody invented it, and the shovel cannot act independently: the physical productiveness of the shovel before labour is added to it is zero.[29][30]. Binary economics suggests that even if gains in productiveness result from human innovation they ought to accrue only to those that invest in capital instruments utilising that innovation[31], in this case the owner of the shovel. Although it may be impossible to dig the hole without some human labor, the binary theory of productiveness maintains the contribution of that physical labour can be calculated simply by calculating the productivity increase resulting from adding capital, and in this case valued at only 25% of the total cost of production.

Kelso used the concept of productiveness to support his theory of distributive justice, arguing that as capital increasingly substitutes for labour…”workers can legitimately claim from their aggregate labor only a decreasing percentage of total output”, [32] implying they would need to acquire capital holdings to maintain their level of income. In the The Capitalist Manifesto, Kelso boldly asserted:

“It is, if anything an underestimation rather than an exaggeration to say that the aggregate physical contribution to the production of the wealth of the workers in the United States today accounts for less than 10 percent of the wealth produced, and that the contribution by the owners of capital instruments, through their physical instruments, accounts in physical terms for more than 90 percent of the wealth produced” [33]

Whilst the increased importance of capital as a factor of production following the Industrial Revolution has long been accepted even by those believing economic value derives from labour such as Marx[34], Kelso’s figures suggesting that value was created almost entirely by capital were dismissed by academic economists like Paul Samuelson [16]. Samuelson asserted that Kelso’s had not used any econometric analysis to arrive at his figures, which completely contradicted economists’ empirical findings on the contribution of labour. The Capitalist Manifesto did not provide detailed calculations to support Kelso’s claim, although a footnote[35] suggested that it was based on a simple comparison with 1850s labour productivity figures.


  1. ^ Robert Ashford & Rodney Shakespeare (1999) Binary Economics – the new paradigm
  2. ^ Rodney Shakespeare (2007) The Modern Universal Paradigm.
  3. ^ Robert Ashford (1990) The Binary Economics of Louis Kelso: the Promise of Universal Capitalism (Rutgers Law Journal, vol. 22 No.1. Fall, 1990).
  4. ^ Robert Ashford & Rodney Shakespeare (1999) op. cit;
  5. ^ Time Magazine, June 29, 1970.
  6. ^ Louis Kelso & Patricia Hetter Kelso (1967) Two-Factor Theory: the Economics of Reality.
  7. ^ Rodney Shakespeare & Peter Challen (2002) Seven Steps to Justice.
  8. ^ Norman Kurland, Dawn Brohawn & Michael Greaney (2004)Capital Homesteading for Every Citizen: A Just Free Market Solution for Saving Social Security.
  9. ^ James S. Albus (1976) Peoples’ Capitalism – The Economics of The Robot Revolution.
  10. ^ Sofyan Syafri Harahap (2005), Accounting Crisis. William Christensen Search for a Universal Paradigm: Making Justice Live For All International Conference on Universal Paradigm of Socio-Scientific Reasoning, Asian University of Bangladesh, 2005.
  11. ^ A notable lecture on this matter was given by Ing. B.J Habibie (former President, The Republic of Indonesia) at the international conference Islamic Economics and Banking in the 21st Century, Jakarta, Indonesia, November, 2005. The former President, a successful aircraft engineer, well understands the potential of technology to create wealth. See also Thoby Mutis (1995) Pendekatan Ekonomi Pengetahuan dalam Manajemen Kodedeterminass.
  12. ^ Rodney Shakespeare & Peter Challen (2002) Seven Steps to Justice.
  13. ^ “The Capitalist Manifesto”. Retrieved 2011-02-20.
  14. ^ Louis Kelso & Patricia Hetter Kelso (1986 & 1991) Democracy and Economics Power – Extending the ESOP Revolution through Binary Economics
  15. ^ Friedman, Milton & Friedman, Rose D. Two Lucky People: A memoir, The University of Chicago Press, p.275
  16. ^ a b D’Art, Darryl (1992) Economic democracy and financial participation: a comparative study, Routledge p.96
  17. ^ William Greider (1997) One World, Ready or Not: The Manic Logic of Global Capitalism.
  18. ^ Roy Madron & John Jopling (2003) Gaian Democracies
  19. ^ Michael Rowbotham (1998) The Grip of Death. James Gibb Stuart (1983) The Money Bomb.
  20. ^ Rodney Shakespeare (2007) op. cit.
  21. ^ Norman Kurland (1998) The Federal Reserve Discount Window
  22. ^ John Tomlinson (1993) Honest Money. Joseph Huber & James Robertson Creating New Money. Peter Selby (1997) Grace and Mortgage.
  23. ^ Rodney Shakespeare & Peter Challen (2002) op. cit.
  24. ^ John Medaille (2007) The Vocation of Business: Social Justice in the Marketplace.
  25. ^ Shann Turnbull (1975/2000) Democratising the Wealth of Nations and (2001) The Use of Central Banks to Spread Ownership. Jeff Gates (1999) The Ownership Solution and (2000) Democracy At Risk.
  26. ^ Norman Kurland (2001) Saving Social Security at
  27. ^ Mark Douglas Reiners The Binary Alternative and the Future of Capitalism available at Center for Economic and Social Justice.
  28. ^ Robert Ashford Louis Kelso’s Binary Economy (The Journal of Socio-Economics, vol.25, 1996).
  29. ^ Timothy D. Terrell Binary Economics: Paradigm Shift Or Cluster of Errors? Ludwig von Mises Institute.
  30. ^ Timothy P. Roth, (1996) A Supply-Sider’s (Sympathetic) View of Binary Economics, Journal of Socio-Economics 25 (1) pp. 58–59.
  31. ^ Kelso, Louis (1958) The Capitalist Manifesto, Random House, p.87
  32. ^ Kelso, Louis (1958) The Capitalist Manifesto, Random House, p.110-11
  33. ^ Kelso, Louis (1958) The Capitalist Manifesto, Random House, p.53
  34. ^ Louis Kelso Karl Marx: The Almost Capitalist (American Bar Association Journal, March, 1957).
  35. ^ Kelso, Louis (1958) The Capitalist Manifesto, Random House, p.53


  • Albus, James S.(1976) Peoples’ Capitalism – The Economics of The Robot Revolution.
  • Ashford, Robert & Shakespeare, Rodney (1999) Binary Economics – the new paradigm.
  • Ashford, Robert Louis Kelso’s Binary Economy (The Journal of Socio-Economics, vol. 25, 1996).
  • el-Diwany, Tarek (2003) The Problem With Interest.
  • Gates, Jeff (1999) The Ownership Solution.
  • Gates, Jeff (2000) Democracy At Risk.
  • Gauche, Jerry Binary Modes for the Privatization of Public Assets (The Journal of Socio-Economics. Vol. 27, 1998).
  • Greenfield, Sidney M. Making Another World Possible: the Torah, Louis Kelso and the Problem of Poverty (paper given at conference, Columbia University, May, 2006).
  • Kelso, Louis & Kelso, Patricia Hetter (1986 & 1991), Democracy and Economic Power – Extending the ESOP Revolution through Binary Economics.
  • Kelso, Louis & Adler, Mortimer (1958), The Capitalist Manifesto.
  • Kelso, Louis & Adler, Mortimer (1961), The New Capitalists.
  • Kelso, Louis & Hetter, Patricia (1967), Two-Factor Theory: the Economics of Reality.
  • Kurland, Norman A New Look at Prices and Money: The Kelsonian Binary Model for Achieving Rapid Growth Without Inflation.
  • Kurland, Norman; Brohawn, Dawn & Michael Greaney (2004) Capital Homesteading for Every Citizen: A Just Free Market Solution for Saving Social Security.
  • Miller, J.H. ed., (1994), Curing World Poverty: The New Role of Property.
  • Reiners, Mark Douglas, The Binary Alternative and Future of Capitalism.
  • Schmid, A. Allan,(1984), “Broadening Capital Ownership: The Credit System as a Focus of Power,” in Gar Alperovitz and Roger Skurski,eds. American Economic Policy, University of Notre Dame Press.
  • Shakespeare, Rodney & Challen, Peter (2002) Seven Steps to Justice.
  • Shakespeare, Rodney (2007) The Modern Universal Paradigm.
  • Turnbull, Shann (2001) The Use of Central Banks to Spread Ownership.
  • Turnbull, Shann (1975/2000), Democratising the Wealth of Nations.

External links


Wednesday, October 12, 2011

Occupy Your Mind – A Personal Strategy For Usury Evasion

Occupy Wall Street began in mid-September, triggered by prompting from Adbusters. A few hundred protestors gather in New York City in the proximity of Wall Street, to complain about our orthodox, financial system and how it breeds “corporate greed” and ballooning “corporate profits.” One of their chants or mantras is: “We have to stop being a debt economy and go back to being a production economy.” Since September 17th, the Occupy Wall Street movement has grown and expanded far beyond Wall Street to Y’all Streets in numerous cities all across North America and elsewhere on this planet.In fact, North America has lost its production economy because of the design flaw of usury and how it directly and/or indirectly affects every product purchased by consumers – whether it be a hair pin or an airplane. Few people really understand that it is because of our usury-based, debt money system that the majority of the trans-national corporations have moved their production facilities to Asia or elsewhere in the third world where they can exploit labourers, pay them minimal wages and earn more profits for the corporation and its shareholders.Indeed, the ultimate problem is not debt, rather it is the growth of debt – which is caused by the design flaw of usury. Though greed and excess by governments and the giant, trans-national corporations are symptoms, the root cause of the ever-worsening, economic debacle of debtors (individuals, families, small to medium-sized businesses, corporations, institutions and countries) everywhere is revealed as usury – but this is unknown to 99% of the protestors who chant: “We are the 99%, we will no longer remain silent.”The phenomenon of the growth of debt is caused by the evil and immoral effects of the design flaw of usury. The negative stigma surrounding burgeoning debt is leading many debtors to commit the ultimate gesture of despair – suicide. The stark truth is that debtors are becoming devastated by the negative impact of “interest” – which ought to be correctly called “usury.”Recent statistics reveal 4000+ suicides annually in Canada. The highest percentage of these suicides are committed by males (debtors) who range in age from 40 to 50 years.Their desperate acts of suicide are often financiallly motivated and their actions inflict even more pain and suffering on the loved ones they leave behind.The economic crisis the Occupy Wall Street movement is bringing into focus cannot be understated, nor can we overstate the necessity of offering proven and workable solutions to solve the inter-connected problems of war, violence, poverty, scarcity and lack – all associated either directly and/or indirectly with the design flaw of usury.Occupy Wall Street is a vehicle motivating people (debtors) to action. A personal strategy of we-the-people learning how to crete and spend our own usuryfree community currency, must be introduced and implemented by desperate debtors as they seek workable and proven solutions for temporary, usury prevention and ultimately absolute, usury evasion. What is needed with this personal strategy is a re-education process that promotes self-imposed courses of study on topics that formal education neglects to teach,While Occupying Wall Street or any other streets, debtors are encouraged to “Occupy Your Mind” with the truth about modern money creation and the problems associated with “usury” and add some solution-oriented knowledge and resources about entrepreneurism – the SDI (Self Directed Income) style where they can learn about co-operative networking to earn secondary sources of income(s).A good starting point is for debtors to familiarize themselves with the twin blogs: (a) The UsuryFree Eye Opener and (b) The SDI Eye Opener.Ultimately, for suicide rates to be halted and for something positive to evolve from the Occupy Wall Street movement, usury nust be studied, assessed, exposed and abolished. The abolition of usury begins with a nod to the possibility of usuryfree living in this incarnation. Previously, there was “Life Without Usury” and we can experience “UsuryFree Living” again in this 21st Century.Hopefully, the Occupy Wall Street movement will motivate protestors (debtors) to explore trends that can expand their understanding of their legal right to “evade usury” and “avoid taxes.” With sufficient new knowledge, the majority of debtors will be motivated to become active, usuryfree creatives who double as enthusiastic, SDI entrepreneurs.So “Occupy Your Mind” and commence your personal strategy for temporary, usury prevention and eventual usury evasion. Readers seeking relevant resources are invited to contact: The UsuryFree Network, P. O. Box 9333, Ottawa, Ontario K1G 3V1, or send an email to usuryfree@gmail.comwith “Occupy Your Mind:” in the Subject line – or leave telephone message at this number: 1.888. NOUSURYNOTE: Here is a good article from The Globe and Mail:
This is what democracy looks like: Occupying Wall Street and Bay Street

Posted by at 5:15 PM



Living by Design: Interest— “The Root of Evil”

by Chuck Estin

In 1929 my Grandfather Leo argued with his business partner brother about accepting a $100,000 offer for his farm. His brother convinced Leo to wait a bit for a higher offer. Shortly after, the stock market crashed, and the Depression began. Leo lost his farm in the late 1930s for $500 owed on his mortgage. Whoever bought it must have made a lot of money, because those 40 acres are now a wealthy suburban neighborhood in Roosevelt, New Jersey.

Greed. Power. Consumption. How did we get from the American Dream to where we are today? Is it because “The love of money is a root for all kinds of evil”? We’ve seen that money is a trust agreement facilitating the exchange of goods and services. Let’s look deeper to see what might be causing an unhealthy “love of money.”

When banks lend money, they charge interest. We can see graphically how the exponential increase caused by charging interest makes debt that much more difficult to repay.

Interest GraphAny form of interest was originally considered to be “usury” in Biblical times: “earning money without doing labor,”or using money to make money. Over time, usury was (conveniently) redefined as “exorbitant interest.”

Consider a farmer needing to borrow grain for seed from someone with stored grain from the previous year. The lender requires repayment of the “principal” amount of grain plus an additional percentage of “interest” to compensate for possible crop failure. Because grain is a living, growing form of money, both the principal and the interest can easily be repaid after the harvest.

Now imagine the loan is a nonliving substance: gold, for example, which the farmer borrows to purchase grain for seeding his crops. The price of grain is high at planting time, when the stores are depleted over the winter. After harvest, he exchanges his crop for gold. But now the market is flooded with grain because everyone else is also harvesting. So the price of grain in gold is low, making it harder to pay off the loan plus interest. Interest is more problematic with inelastic forms of money like gold.

Modern interest causes three powerful effects on society:

  1. scarcity and competitive behavior;
  2. a growth imperative; and
  3. wealth transfer from the poor to the rich.

First, when a loan puts debt money into circulation, only the amount of money for the principal is created. But both the principal AND the interest have to be repaid, forcing all the borrowers in the system to compete with one another for that missing money for interest so they don’t default on their loans. Interest causes money to be scarce. Scarcity results in more “greed” in the system: “love of money.”

Second, we address the interest-caused money shortage, and competitive markets, by encouraging our economy to grow. Our current paradigm is an expanding economy equals a healthy economy. We call it a recession if the growth rate drops. This growth imperative encourages destruction of natural resources and exploitation of cheap labor sources, neither of which are sustainable. Investing in the future is too expensive when paying Interest. So we plan for short-term profit.

Third, interest causes transfer of wealth from borrowers to lenders, in several ways:

  1. When debt goes into default, the borrower forfeits collateral to the lender, like my grandfather’s farm in the 1930s. Fortunes were made purchasing land for pennies on the dollar. My grandfather’s loss was a gain for someone with cash during the Depression.
  2. Borrowers, by definition, need money and are continually making payments to lenders, resulting in a continual wealth transfer. “Them that has, gets.”
  3. Businesses have interest costs, which are passed on to the consumer. Interest percentages for capital-intensive items like houses are as high as 77 percent; for labor intensive services like garbage collection, interest is only 12 percent. Overall, Margrit Kennedy reports the average interest-cost for goods is estimated at 50 percent. Because people with less income use most of it for buying goods, they pay a 50 percent “interest tax.” The wealthy spend a small fraction of their income on goods. So interest costs are a regressive “poor tax” (similar to sales tax). Interest costs are nonproductive economic activity, serving only to transfer wealth from borrowers to lenders.

How Money Transfers Wealth illustrationNot surprisingly, the transfer of wealth leads to class war. The social programs from the 1930s mitigated that to some extent, providing benefits to the poor paid by everyone’s taxes. When the economy was growing rapidly, that managed to quell class conflict, as Charles Eisenstein describes in his online book Sacred Economics. Now the “chickens are coming home to roost,”as global revolution builds from Arab Spring to Occupy Wallstreet.

If interest is so detrimental, how might loans be interest-free? What about inflation? Money would be worth less when it is repaid, so interest has to compensate for inflation. However, expanding the money supply compensates for scarcity, causing further inflation. The inflation cycle must be broken to remove that incentive for interest.

The crux of the problem is one money system tries to serve both the “store of wealth” function and the “medium of exchange” function. Interest creates this conflict between hoarding and free-flow. Interest turns money into a speculative medium, which causes it to fail as a medium of exchange. One currency is needed to mediate exchange, and a different currency is needed for storing wealth.

Grain currencies that deteriorate over time encourage spending them quickly. Silvio Gesell suggested using “negative interest,” or demurrage. Thomas Greco describes how hundreds of “scrip” currencies were created in the 1930s. Stamps were affixed to scrip with an expiration date, so the holder would spend and circulate it.

Understanding benefits of demurrage underscores the problems with its opposite: interest. In our interest-based economy, we derive security from accumulating for financial independence. In hunter-gatherer societies, security came from interdependence: “I stores meat in the belly of my brother.” Demurrage mimics the hunter-gatherers’ pattern of trust in relationships rather than accumulating wealth, reminding us of the need for trust to maintain the value of money as a medium of exchange.

Yin-Yang Balanced Complementary Currences illustrationAlthough charging interest became culturally accepted during the Renaissance, there are interest-free examples (in addition to the “scrips” of the 1930s). President Lincoln financed the Civil War by borrowing from future tax receipts with government-issued “greenbacks” that were paid off over time. An interest-free credit-clearing exchange was initiated by Swiss businesspeople during the 1930s, called the WIR bank. WIR usage remains a significant fraction of the Swiss economy, and it fluctuates counter-cyclically with Swiss franc activity, which explains the stability of the Swiss economy. The Swedish JAK bank is an interest-free bank, balancing savings accounts with home loans, sparing thousands in interest expenses. Of the three world religions that originally prohibited interest, only Islam still has followers who adhere to the original intent. There are many Islamic banks worldwide that have devised creative mechanisms to avoid interest in their lending practices.

The insidious nature of interest causes many of our economic, environmental, and social justice problems. “New economists” are designing creative complementary money systems to better serve the needs of planet, people, and economy. Visionary Bernard Lietaer believes our “monoculture” currency stifles innovation and traps us in a world of scarcity and suffering. He envisions an inflation-proof global trading currency, called the Terra, to stabilize the world economy; business exchange currencies to counteract money shortages during contractions; and targeted community currencies to address social and environmental ills. Lietaer advocates cooperative “yin” currencies to balance our competitive “yang” currency. Strategies to circumvent interest are essential for Living by Design.

Learn more about Chuck Estin, Ph.D., at

Images by Andrew Ciscel and Chuck Estin.



How the “Bank” of Rome Creates “Federal” Reserve Dollars out of Nothing!!

Albert Einstein said:

“Compound interest is the eighth wonder of the world”

Thomas Jefferson said:

“I believe that banking institutions are more dangerous to our liberties than standing armies.”

Maier Amschel Rothschild said:

“Permit me to issue and control the money of a nation and I care not who writes its laws”

The “Federal” Reserve Bank loans the U.S. government their own “money” at usury or interest!!

The Federal Reserve Bank only creates the Principal – not the usury or interest that it lends to the U.S. government. Therefore the usury can NEVER be repaid and the end result is foreclosure and bankruptcy.In 1765, the Bank of England demanded that the American Colonies pay taxes in British specie or coins which the people did not possess. If they had borrowed from the Bank of England to pay the tax, the end result would have been the same: foreclosure and bankruptcy with the Bank owning everything!!It’s the same fatal bite of that old Serpent the Devil and Satan which deceiveth the whole world (Rev. 12:9).No wonder that usury is called nashak or the bite of a serpent in the Bible.

The power of compound interest or usury.

This graph is an example of ONE Rockefeller billion placed in the bank in 1900 at 6% usury and compounded annually. At 6% interest the money doubles every 12 years. There is a rule called the Rule of 72 for calculating usury rates. Divide the usury rate by 72 and the quotient will give you the approximate number of years that it takes the money to double:

The rule of 72

Usury at 4% percent

=15 years approx.
Usury at 6% percent

=12 years approx.
Usury at 8% percent

=9 years approx.

Divide the usury rate by 72 and that will give you the approximate number of years for the money to double.

There is a more precise way to calculate usury using the computer calculator. Most computers have calculators. The formula to calculate principal plus interest for one billion dollars is this:1.000.000 multiplied by 1.06 raised to the power or exponent of 96 equals 268.759.030 billion dollars!! You can also cheat and go here!!

How the “Bank” of Rome creates Federal Reserve Notes out of nothing!!

Step 1 in “money” creation

The “Bank” of Rome

Fiat “money” creation begins when the “Bank” of Rome decides that the U.S. is ready for another bite from that old serpent the Devil. They instruct their American branch —the Federal Reserve Bank — to order Congress to raise the debt limit by $1 billion.

Step 2 in “money” creation

The U.S. Congress

Congress obeys the “Federal” Reserve Bank and instructs the U.S. Treasury to print $1 billion interest bearing bonds and sell them to the Federal Reserve Bank of New York.

Step 3 in “money” creation

The U.S. Treasury

The U.S. Treasury prints the$1 billion interest bearing bonds and sells them to the Federal Reserve Bank!! As security or collateral they offer the INCOME TAX collected from the taxpayers. The U.S. Treasury prints only the Principal . . . not the usury or interest.

Step 4 in “money” creation

“Federal” Reserve Bank of New York

The “Federal” Reserve or the Fed buys the usury bearing bonds and credits the U.S. Treasury for $1 billion. The government must now pay back the bonds with INTEREST. As the interest was not created, it can NEVER be repaid with “Federal” Reserve Dollars!!

In a closed monetary system like the U.S., only “Federal” Reserve Notes are legal tender to pay back the bonds. Gold and silver are REAL money and could be used to repay the debt but they are stored in Switzerland and credited to the account of the “Bank” of Rome.

Since the Treasury only printed the PRINCIPAL —not the usury or interest —the money can NEVER be repaid…. The end result is bankruptcy and foreclosure for the government. This is the very same scam that the Bank of England tried to impose on the Colonies when they made specie or coin the only means to repay the king’s tax.

Here is another example of money creation by the Federal Reserve Bank. The diagram is from The Truth in Money Book by Theadore R. Thoren and Richard F. Wagner. Thoren and Wagner were experts n the Federal Reserve System and monetized debt creation. However they were not aware of the Secrets of the “Bank” of Rome and the real identity of the moneychangers and their crusade to destroy this country by debt and usury.

The American people have to pay usury on their own money. Not even the Mafia could have dreamed up a more stupendous scam than this!!


Usury is the ONLY cause of inflation!!

Growth of usury on the Federal debt follows an exponential curve e.g., 2, 4, 8, 16, 32, etc, etc.

Inflation robs a currency of its purchasing power until eventually it buy NOTHING. Before the fall of the Roman Empire, the government debased the currency by clipping the coins and adding less and less silver and gold. Inflation does the same thing to a paper currency as the paper becomes worthless and people lose all faith in the fiat. Eventual collapse can be postponed by printing more and more “money” but eventually the day of reckoning finally arrives.

Editor’s Notes

John D. Rockefeller (Mr. Usury) in 1872.

Federal Reserve Founder John D., said:

“Among the early experiences that were helpful to me that
I recollect with pleasure was one in working a few days for
a neighbour in digging potatoes—a very enterprising, thrifty
farmer, who could dig a great many potatoes. I was a boy of
perhaps thirteen or fourteen years of age, and It kept me very
busy from morning until night. It was a ten-hour day. And
as I was saving these little sums I soon learned that I could
get as much interest for fifty dollars loaned at seven per cent. — the legal rate in the state of New York at that time for a year—as I could earn by digging potatoes for 100 days.
The impression was gaining ground with me that it was a good thing to let the money be my slave and not make myself a slave to money” (Ida Tarbell, History of the Standard Oil Co., p.41).

What a pity he didn’t stay digging potatoes… The world would be a much better place today.

John D. Rockefeller was the founder of the “Federal” Reserve Bank. He was a typical usurer. Letting other people do the work and then reaping the benefits. It is a shame that the pious hypocrite NEVER heard a sermon on usury when he attended the Euclid St. Baptist Church every Sunday.

Even though the “Federal” Reserve Bank has the name FEDERAL in it’s title, it has no connection with the Federal Government except that it OWNS the government…. The President of the U.S. and Secretary of the Treasury do not sit on its board!! The Chairman is appointed for a period of 14 years. The President does appoint him but that is just a formality as the Fed can easily ruin an uncooperative President by causing a recession or depression.

Vital links

Compound interest calculator

Exponential growth illustrated

Interest on national debt

Share of National debt

Inflation calculator


Elsom, John R., Lightning over the Treasury Building, An Expose of our Banking and Currency Monstrosity, Meador Pub., Boston, Mass.

Griffin, G. Edward, The Creature from Jekyll Island: A Second Look at the Federal Reserve, American Media, P.O. Box 4646, Westlake Village, California, 1998.

Mullins, Eustace, The Secrets of the Federal Reserve, Bankers Research Institute, Staunton, VA, 1993.

Sutton, Anthony C., The Federal Reserve Conspiracy, CPA Book Pub., Boring, Oregon, 1995.

Thoren, Theadore R., & Warner, Richard F., The Truth in Money Book, Truth in Money Inc., Chagrin Falls, Ohio, 1989.

Tarbell, Ida M., History of the Standard Oil Company, in 2 volumes, Mc Clure, Phillips & Co., New York, 1904.

Vennard, Wickliffe B., The Federal Reserve Hoax, Forum Pub., Boston, Mass, 1963

Return to Secrets of the “Bank” of Rome



Beyond The Age Of Usury – The Great Deleveraging Scam

As you read this, the American bailout is reaching epic and fatal proportions of more than 8 trillion and the worst is not over yet.Actually, the current trends are already much worse than depression, though because of some banking toxic tricks and frauds, risks are being constantly shifted down the social ladder deteriorating the consumers purchasing power forever. There’s nothing that can rescue the system as the crisis was built into the system itself.Read *Money and the Crisis of CivilizationAlthough this has not been aired on any major TV broadcast, when the world Leaders got together to discuss our fate last, they admitted to being incapable of doing anything.That we are all screwed. Global wealth destruction amounts to $27 trillion, and that is far from over.
Among many other terrifying recent events, discount window borrowing (from the Fed. Reserve) averaged a record $437.5 billion per day, and that is not included in the cumulative trillion package. Read *trillion package!

In a debt-based economy, competition translates into a great crash enhancer. Take this housing bubble, its engineers, which couldn’t do anything to stop the infectious exuberance, figuring that market saturation would eventually have the last word.

This didn’t prevent them from firmly believing that prices had some room to run up, and everybody competed to get the very last piece of the pie.What is truly outrageous is that we boarded onto the Titanic because Credit Rating Agencies sold us triple AAA rated JUNK BONDS.(Complex securities concocted by math geniuses and PhD types. The only problem is that they didn’t have any data to rely on, and they did not go away because the profit stakes were too huge – the more triple AAA debt rated products on the market the more business they would get.)

The Federal Reserve Usury System
The global leverage is about $400 TRILLION or so, and the world Gross Domestic Product is less than $70 TRILLION.This big picture helps uncover the hidden goal of fractional banking and its ensuing elementary conclusion: that Fiat money, which is backed by confidence only, is designed to eliminate competition, one step at the time.Now the new scheme is the global currency, which is going to consolidate the field of banking even further during/after the Great Deleveraging. By the way, deleverage is again one of those convoluted terms invented to mask reality. Deleverage means (partial or complete) destruction of the debt-vortex unfolding with a domino effect.

Intended Massive Bank Failures

These days, capitalism bashing runs high on the agenda of many pundits, and for which they blame in the name of evil – deregulation.

They deliberately neglected to consider – and report – that lobbies have militated restlessly to bypass them one way or another.
This real estate bubble, now bringing the financial system on its knees, was made possible with the intended failure of regulation. It was regulated to be this way.Yes, this was an original intent and it becomes crystal clear in this Financial Crisis, that the elites have the habit to design laws for themselves; that is why the people get fooled every time they put faith into a ruling body. Every civilization’s collapse precisely occurs because of that; yet people would rather think that what goes up must go down theory is beyond their control.
The delusion consists in persisting that hope is key for a real change. Indeed, did we really have to wait thousands of years to find ourselves confronted to with the current events, and finally admit why hope did absolutely nothing; that We The People neglected throughout the milennia to teach a generation to the next why debts and consumerism’ aren’t bedfellows.Obviously politicians never made it a specific educational platform for high school students.Instead they institutionalize blind speculation and spending when times are good and then implement the bailout of their bankrupt thinking.It thus becomes greatly ironic to listen to Sir Evelyn de Rothschild calling for action since the latter doesn’t provide any solutions but altruistic half-truths and rants. For how long will this cynicism continue .Sir Evelyn de Rothschild talks about the GLOBAL FINANCIAL CRISIS …

Important Online Books
Charles Mackay described in his 1841 book, Extraordinary Popular Delusions and the Madness of Crowds, that what is happening today is nothing new.Read it online …
*Extraordinary Popular Delusions and the Madness of CrowdsRead the views of
*Harvard’s Kenneth Rogoff who has identified 148 crises since 1870 in which a country experienced a cumulative decline in gross domestic product (G.D.P.) of at least 10 percent.Read Online … *The Economic Consequences of the Peace by John Maynard Keynes 1919The Wall Streeters viewed themselves smarter that we are in this giga-mess. They banked on gullibility and it worked out as usual. Exactly, as usual. Charles Mackay described in his 1841 book, Extraordinary Popular Delusions and the Madness of Crowds, that what is happening today is nothing new.There have been 148 crises over a 140 year period and people don’t still get it? How couldn’t this be an incentive to warn populations when bubbles are forming? Should we really believe Greenspan when he says the Fed can only identify a bubble when it has popped and only then intervene to clean up the mess?The crowds are just too mesmerized by the ‘Golden Boys’ way of life to see the trap they keep falling into every now and then – confusing debts with assets and otherwise.

Now that it all becomes clearer, who will give charity WHEN 60% of the population becomes poor overnight and another 30% can barely survive? Meanwhile Businessweek praises the 50 Top American Givers without even asking where did charity lead us since the U.S Government found out that child hunger rose 50%. We are now staring into the abyss?

“The most hated sort of wealth getting and with the greatest reason, is usury, which makes a gain out of money itself and not from the natural object of it. For money was intended to be used in exchange but not to increase at interest. And this term interest, which means the birth of money from money is applied to the breeding of money because the offspring resembles the parent. Wherefore of all modes of getting wealth, this is the most unnatural.” – Aristotle (1258b Politics)

Chinese Prepare For Unrest

From one extreme to the other: in the sweatshop parallel universe.

Read ….
*Chinese ready themselves for mass social unrest.

In a blunt statement, the chairman of China’s largest sovereign wealth said that China won’t rescue Western banks. There too, the government has decided to embark on a spending highway with £373 billion bail-out package, and this may also imply the eventual dumping of the nefarious US dollar already affecting the rich city of Dubai where speculators are throwing in the towel as a lending drought bursts the ‘Desert Bubble’.

The most comedic element in this grand scale drama is the story of Donald Trump who sues the banks for $3 BILLION for having failed to foresee the housing collapse that is now damaging his reputation in order to avoid the $40 Million he owes in banking interests.

In the Vanity Fair December issue, a columnist wrote an extremely well articulated piece, which also reveals the latest estimate of jobs New York is going to lose, both on and off Wall Street, amounting to 160,000 to start with. Michael Shnayerson’s intro reads like a hook scene:

… Even many of the wealthiest players are retrenching. Others, like the Lehman Brothers bankers who borrowed against their millions in stock, have lost everything. Hedge fund managers try to sell their luxury homes, while trophy wives are hocking their jewelry. Pain is being felt on St. Barth’s and at Sotheby’s, on benefit gala committees and at the East Hampton Airport, as the world of the Big Rich collapses, its culture in shock and its values in question.

Last week Bernanke said that he was not against the possibility to drive interest rates down to near zero if necessary but urged decisive action to protect the economy… the meaning of this can be found in the reason why Bernanke contemplates radical plans to inject cash directly into the economy – the nuclear option – to be used only when interest rates approach zero; an action seconded by President of the European Central Bank Jean-Claude Trichet, hinting in the press conference to announce the ECB’s 75 basis point rate cut that it may also consider “nuclear options”.

The term “nuclear” ought to be taken literally in this particular case. If a well known market guru such as Marc Farber didn’t let himself be duped, it should scare the hell out of you.

In a recent CNBC interview, an outraged Farber calmly explained what the stakes were, as concluding that world central bankers were merely imploding the world economy…

Marc Faber – 2009 To Be Catastrophic
For Global Economy Videos Part1 & Part2

Beyond The Age Of Usury

Because the very premise of usury creates endless inflation, which in turn reduces the purchasing power, extreme materialism dismantles the fabric of societies: everybody prioritizes the need for cash to the detriment of communities, neglecting friends and family. This causes the goods and services to multiply endlessly since people are too busy to chase money – but what for in the end?

Predictions Come True (2002-2009)

As for the corporations, they do not see any incentives in creating long-term perspectives: when loans are so easily available and knowing that more voracious competitors will borrow to take over whatever natural resources there is no time to lose!

Polluting nature, cartelizing the means of production, human exploitation, bribery, collusion to maximize earnings are not diseases but symptoms. This all highlights the gap between people’s creativity and their needs.

We are truly heading toward a terrifying and inevitable crisis of civilization and this is our very last warning before being plunged into an era where money and food will be scarce for many years to come.

Wars may well be the only weapons of unethical governments if civil unrest on a large scale threatens their very existence; they will resort to armed conflicts which will have been financed by their taxpayers.

Yes, you got it: usury also allows killings and destruction to be a lot more devastating. Contrary to the popular belief, money is not the root of all evil but usury is.

Posted Originally on Sunday, January 25, 2009


History of Usury Prohibition

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A Short Review of the Historical Critique of Usury


Wayne A.M. Visser and Alastair McIntosh

Centre for Human Ecology

The following text is now also available in PDF of the original – click here 

First published in Accounting, Business & Financial History, 8:2, Routledge, London, July 1998, pp. 175-189.




Usury – lending at interest or excessive interest – has, according to known records, been practiced in various parts of the world for at least four thousand years.  During this time, there is substantial evidence of intense criticisism by various traditions, institutions and social reformers on moral, ethical, religious and legal grounds.  The rationale employed by these wide-ranging critics have included arguments about work ethic, social justice, economic instability, ecological destruction and inter-generational equity.  While the contemporary relevance of these largely historical debates are not analysed in detail, the authors contend that their significance is greater than ever before in the context of the modern interest-based global economy.


Keywords: usury, interest, debt, discounting, Islamic banking


The concept of “usury” has a long historical life, throughout most of which it has been understood to refer to the practice of charging financial interest in excess of the principle amount of a loan, although in some instances and more especially in more recent times, it has been interpreted as interest above the legal or socially acceptable rate[i].  Accepting this broad definition for the moment, the practice of usury can be traced back approximately four thousand years (Jain, 1929), and during its subsequent history it has been repeatedly condemned, prohibited, scorned and restricted, mainly on moral, ethical, religious and legal grounds.  Among its most visible and vocal critics have been the religious institutions of Hinduism, Buddhism, Judaism, Islam and Christianity.  To this list may be added ancient Western philosophers and politicians, as well as various modern socio-economic reformers.  It is the objective of this paper to outline briefly the history of this critique of usury, to examine reasons for its repeated denouncement and, finally, to intuitively assess the relevance of these arguments to today’s predominantly interest-based global economy.  The scope will not extend to a full exploration of some of the proposed modern alternatives to usury, except to describe the growing practice of Islamic banking as an example.


Usury in Hinduism and Buddhism

Among the oldest known references to usury are to be found in ancient Indian religious manuscripts and Jain (1929) provides an excellent summary of these in his work on Indigenous Banking in India.  The earliest such record derives from the Vedic texts of Ancient India (2,000-1,400 BC) in which the “usurer” (kusidin) is mentioned several times and interpreted as any lender at interest.  More frequent and detailed references to interest payment are to be found in the later Sutra texts (700-100 BC), as well as the Buddhist Jatakas (600-400 BC).  It is during this latter period that the first sentiments of contempt for usury are exressed.  For example, Vasishtha, a well known Hindu law-maker of that time, made a special law which forbade the higher castes of Brahmanas (priests) and Kshatriyas (warriors) from being usurers or lenders at interest.  Also, in the Jatakas, usury is referred to in a demeaning manner: “hypocritical ascetics are accused of practising it”.

By the second century AD, however, usury had become a more relative term, as is implied in the Laws of Manu of that time:  “Stipulated interest beyond the legal rate being against (the law), cannot be recovered:  they call that a usurious way (of lending)” (Jain, 1929: 3-10).  This dilution of the concept of usury seems to have continued through the remaining course of Indian history so that today, while it is still condemned in principle, usury refers only to interest charged above the prevailing socially accepted range and is no longer prohibited or controlled in any significant way.

Usury in Ancient Western Political Philosophy

Among the Ancient Western philosophers who condemned usury can be named Plato, Aristotle, the two Catos, Cicero, Seneca and Plutarch (Birnie, 1958).  Evidence that these sentiments found their concurrent manifestation in the civil law of that period can be seen, for example, from the Lex Genucia reforms in Republican Rome (340 BC) which outlawed interest altogether.  Nevertheless, in practice, ways of evading such legislation were found and by the last period of the Republic, usury was once again rife.  It was the Democratic party in Rome who rededicated themselves to the cause of those suffering the burden of debt, and under the banner of Julius Caesar, a ceiling on interest rates of 12% was set, and later under Justinian, lowered even further to between 4% and 8% (Birnie, 1958).  Clearly, this left fertile ground for the assault on usury which the Church would mount following its Christianisation of the Roman Empire.

Usury in Islam

The criticism of usury in Islam was well established during the Prophet Mohammed’s life and reinforced by various of his teachings in the Holy Quran[ii] dating back to around 600 AD.  The original word used for usury in this text was riba which literally means “excess or addition”.  This was accepted to refer directly to interest on loans so that, according to Islamic economists Choudhury and Malik (1992), by the time of Caliph Ulmar, the prohibition of interest was a well established working principle integrated into the Islamic economic system.  It is not true that this interpretation of usury has been universally accepted or applied in the Islamic world.  Indeed, a school of Islamic thought which emerged in the 19th Century, led by Sir Sayyed, still argues for a interpretative differentiation between usury, which it is claimed refers to consumptional lending, and interest which they say refers to lending for commercial investment (Ahmed, 1958).  Nevertheless, there does seem to be evidence in modern times for what Choudhury and Malik describe as “a gradual evolution of the institutions of interest-free financial enterprises across the world” (1992: 104).  They cite, for instance, the current existence of financial institutions in Iran, Pakistan and Saudi Arabia, the Dar-al-Mal-al-Islami in Geneva and Islamic trust companies in North America.  This growing practice of Islamic banking will be discussed more fully in a later section as a modern application of usury prohibition.


Usury in Judaism


Criticism of usury in Judaism has its roots in several Biblical passages in which the taking of interest is either forbidden, discouraged or scorned[iii].  The Hebrew word for interest is neshekh, literally meaning “a bite” and is believed to refer to the exaction of interest from the point of view of the debtor.  In the associated Exodus and Leviticus texts, the word almost certainly applies only to lending to the poor and destitute, while in Deuteronomy, the prohibition is extended to include all moneylending, excluding only business dealings with foreigners.  In the levitical text, the words tarbit or marbit are also used to refer to the recovery of interest by the creditor.

In addition to these biblical roots are various talmudic extensions of the prohibitions of interest, known as avak ribbit, literally “the dust of interest” which apply, for example, to certain types of sales, rent and work contracts.  This is distinguished from rubbit kezuzah, interest proper in an amount or at a rate agreed upon between lender and borrower.  The difference in law is that the latter, if it has been paid by the borrower to the the lender, is recoverable from the lender, while the former, once paid, is not recoverable, although a contract tainted by the dust of interest will not be enforced.  (The Jewish Encyclopedia, 1912).

Despite the prohibition on taking interest, there is considerable evidence to suggest that this rule was not widely observed in biblical times.  In addition to several references in the Old Testament to creditors being exacting and implacable in their extraction of interest[iv], from the Elephantine papyri it appears that among the Jews in Egypt in the fifth century B.C.E. it was a matter of course that interest would be charged on loans (Encyclodpedia Judaica, 1971).  This charitable nature of the prohibition on interest suggests that its violation was not regarded as a criminal offense with penal sanctions attatched, but rather as a moral transgression.

The phenomenon of evasion can also be partly explained by changing economic conditions, beginning in the amoraic period in Bayolonia when interest prohibition was held to no longer be compatible with the eocnomic needs of the community.  In time, a standard form of legalization of interest was established, known as hetter iskah, meaning the permission to form a partnership, which has become so accepted that nowadays all interest transactions are freely carried out in accordance with Jewish law, by simply adding to the note or contract concerned the words al-pi hetter iskah. (Encyclodpedia Judaica, 1971).


Usury in Christianity

Despite its Judaic roots, the critique of usury was most ferverently taken up as a cause by the institutions of the Christian Church where the debate prevailed with great intensity for well over a thousand years[v].  The Old Testament decrees were resurrected and a New Testament reference to usury added to fuel the case[vi]. Building on the authority of these texts, the Roman Catholic Church had by the fourth century AD prohibited the taking of interest by the clergy; a rule which they extended in the fifth century to the laity.  In the eighth century under Charlemagne, they pressed further and declared usury to be a general criminal offence.  This anti-usury movement continued to gain momentum during the early Middle Ages and perhaps reached its zenith in 1311 when Pope Clement V made the ban on usury absolute and declared all secular legislation in its favour, null and void (Birnie, 1952).

Increasingly thereafter, and despite numerous subsequent prohibitions by Popes and civil legislators, loopholes in the law and contradictions in the Church’s arguments were found and along with the growing tide of commercialisation, the pro-usury counter-movement began to grow.  The rise of Protestantism and its pro-capitalism influence is also associated with this change (McGrath, 1990), but it should be noted that both Luther and Calvin expressed some reservations about the practice of usury despite their belief that it could not be universally condemned.  Calvin, for instance, enumerated seven crucial instances in which interest remained “sinful”, but these have been generally ignored and his stance taken as a wholesale sanctioning of interest  (Birnie, 1952).  As a result of all these influences, sometime around 1620, according to theologian Ruston, “usury passed from being an offence against public morality which a Christian government was expected to suppress to being a matter of private conscience [and] a new generation of Christian moralists redefined usury as excessive interest” (1993: 173-4).

This position has remained pervasive through to present-day thinking in the Church, as the indicative views of the Church of Scotland (1988) suggest when it declares in its study report on the ethics of investment and banking:  “We accept that the practice of charging interest for business and personal loans is not, in itself, incompatible with Christian ethics.  What is more difficult to determine is whether the interest rate charged is fair or excessive.”  Similarly, it is illustrative that, in contrast to the clear moral injunction against usury still expressed by the Church in Pope Leo XIII’s 1891 Rerum Novarum as “voracious usury … an evil condemned frequently by the Church but nevertheless still practised in deceptive ways by avaricious men”, Pope John Paul II’s 1989 Sollicitude Rei Socialis lacks any explicit mention of usury except the vaguest implication by way of acknowledging the Third World Debt crisis.

Usury in Modern Reformist Thinking

Some may be surprised to discover that Adam Smith, despite his image as the “Father of the Free-market Capitalism” and his general advocacy of laissez-fair economics, came out strongly in support of controlling usury (Jadlow, 1977; Levy, 1987).  While he opposed a complete prohibition of interest, he was in favour of the imposition of an interest rate ceiling.  This, he felt, would ensure that low-risk borrowers who were likely to undertake socially beneficial investments were not deprived of funds as a result of “the greater part of the money which was to be lent [being] lent to prodigals and projectors [investors in risky, speculative ventures], who alone would be willing to give [an unregulated] high interest rate” (Smith, 1937: 339).

The great twentieth century economist John Maynard Keynes held a similar position believing  that “the disquisitions of the schoolmen [on usury] were directed towards elucidation of a formula which should allow the schedule of the marginal efficiency to be high, whilst using rule and custom and the moral law to keep down the rate of interest, so that a wise Government is concerned to curb it by statute and custom and even by invoking the sanctions of the Moral Law” (1936: 351-3).

Another less well known anti-usury economic reformist was Silvio Gesell (1904), yet  Keynes wrote that the world could learn more from him than from Marx.  Gesell, as a successful nineteenth century merchant in Germany and Argentina, condemned interest on the basis that his sales were more often related to the ‘price’ of money (i.e. interest) than people’s needs or the quality of his products.  His proposal of making money a public service subject to a use fee led to widespread experimentation in Austria, France, Germany, Spain Switzerland, and the United States under the banner of the so-called “stamp script movement”, but these initiatives were all squashed when their success began to threaten the national banking monopolies (Kennedy, 1995).  Margrit Kennedy (1995), a German professor at the University of Hannover, is one of the most vocal contemporary critics of interest who builds on Gesell’s ideas, believing that “interest … acts like cancer in our social structure”.  She takes up the cause for “interest and inflation-free money” by suggesting a modification of banking practice to incorporate a circulation fee on money, acting somewhat like a negative interest rate mechanism.

Finally, another school of modern interest critics have their roots in the complementary work of several socio-economic reformists of the early twentieth century, namely Douglas (1924), Fisher (1935), Simons (1948) and Soddy (1926).  Their chief common premise was that it is completely wrong and unacceptable for commercial banks to hold a monopoly on the money or credit creation process.  For banks to then charge interest (including to government) on money which they had in the first place created out of nothing, having suffered no opportunity cost or sacrifice, amounted to nothing less than immoral and fraudulent practice.  Various alternative systems are proposed by the original authors and carried forward by their modern-day torch-bearers, for example, the Social Credit Secretariat and the Committee on Monetary and Economic Reform.


Throughout the history of the criticism of usury, various reasons and rationale have been forwarded in support of this position.  While some are unique to particular traditions or individuals, many tread on common ground which this section will briefly attempt to synthesise.

Usury as Unearned Income

The Church’s simplest and perhaps earliest objection to usury was on the basis that it constituted unearned income, an idea which stemmed from its general doctrine of Just Price.  The Lateran Council of 1515 clearly expressed such a view of the Church:  “This is the proper interpretation of usury when gain is sought to be acquired from the use of a thing, not in itself fruitful (such as a flock or a field) without labour, expense or risk on the part of the lender.”  Birnie reinforces this point by noting that “to live without labour was denounced as unnatural, and so Dante put usurers in the same circle of hell as the inhabitants of Sodom and other practisers of unnatural vice” (1952: 4).

This is also the rationale Ahmad uses to explain why in Islam God[vii] “permits trade yet forbids usury”:  “The difference is that profits are the result of  initiative, enterprise and efficiency.  They result after a definite value-creating process.  Not so with interest”;  also “interest is fixed, profit fluctuates.  In the case of interest you know your return and can be sure of it.  In the case of profit you have to work to ensure it” (1958: 25).  Perhaps Aristotle had similar sentiments in mind when he argued that “a piece of money cannot beget another”.

There is an important psycho-political dimension to this argument.  Keynes’ biographer, Skidelsky, intriguingly comments that “Keynes’s sense that, at some level too deep to be captured by mathematics, ‘love of money’ as an end, not a means, is at the root of the world’s economic problem” (1992: 454).  Hence, at a fundamental level of analysis, the so-called evils of usury must be understood as being connected with money being a social psychological construct legitimised by the power dynamics of a given political economy which may or may not be democratically and consciously legitimatised.  An illustration of this understanding can be seen in the Christian tradition where Jesus is asked whether taxes should be paid to Caesar.  Before uttering the famous words, “Render unto Caesar what is Caesar’s,” he tellingly first asks to be shown a coin and inquires, “Whose image and superscription hath it? (Luke 20:24)”.  In other words, “What power structure legitimises this currency?”  Jesus’s response therefore said much more than merely “pay your taxes.”  It invited questioning of the very psycho-spiritual power dynamics that constitute the deep roots of human relationship in economy, and which have always caused matters of political economy to be central to prophetic witness.

Usury is what marks the distinction between money being simply a socially contracted abstract mechanism to lubricate between supply and demand, and money as an end in itself.  As an end in itself, as a social commodity legitimised through usury to tax other economic activity, the honest process of living by the sweat of one’s brow is short-circuited.  The true dignity and full reward of ordinary labour is compromised.  Money thus becomes self-perpetuating power in itself rather than just a mediating agent of power.  And it is the relentlessness of compound interest in the face of adversity that sets the potential cruelty of usury apart from equity-based return on investment. Resonant with Skidelsky’s comment about Keynes, one can see how it is the love of money as an end in itself, not the use of money itself, that is said to be the root of all evil (1 Timothy 6).  It was in recognition of the the need to have corrective feedback mechanisms that Islam not only injuncts usury, but also imposes Zakat or wealth tax. And more radical still, the Old Testament proposes a complete economic readjustment through the “Jubilee” process every fifty years (Leviticus 25), though there is no evidence that such wholescale redistribution of wealth in all forms was ever actually carried out.  Perhaps it is a prophetic vision whose time has yet to come.

Usury as Double Billing

A slightly more obscure rationale was employed by the Church later in the Middle Ages in order to strengthen its anti-usury doctrine.  Drawing on some of the concepts of Civil Law, it argued that money was a consumable good (fungible), for which the ownership passed from lender to borrower in the course of  the loan transaction (mutuum), with the fair price of ‘sale’ therefore being the exact amount of the money advanced.  Hence to ask for more in the form of interest was illegal and immoral, “like selling a loaf of bread and then charging in addition for the use of it” (Birnie, 1952: 6).  Or, as Aquinas intimated in his Summa Theologiae, it would be to sell the same thing twice (Ruston, 1993).

Usury as Exploitation of the Needy

The condemnation of usury in the form of charging for loans to the poor and destitute is a recurring theme in several traditions.  This is clearly the contextual meaning of the Judaic biblical passages in Exodus and Leviticus (Encyclopedia Judaica, 1971) and Ruston suggests that “the original target of the medieval usury laws was the medieval equivalent of  the ‘loan shark’ [but that] the medieval theory was unsatisfactory because it could not distinguish the helpful  loan from the oppressive” (1993: 173).  Sir Sayyed’s school in Islam similarly interprets riba as “the primitive form of money-lending when money was advanced for consumptional purposes” (Ahmed, 1958: 21).  In the Indian tradition, this understanding of usury can be also found, as is evident from this twentieth century quote:  “It is Usury – the rankest, most extortionate, most merciless Usury – which eats the marrow out of the bones of the raiyat [cultivators] and condemns him to a life of penury and slavery” (Jain, 1929: 110-111).

Ruston (1993) claims usury as exploitation of  the needy still exists in modern times.  He cites as an example the findings of a 1992 Policy Studies Institute report which concludes that the poor pay more in absolute terms for their money, while seeking credit only for absolute necessities rather than to finance the acquisition of luxury goods which they cannot afford.  This is borne out by a recent study by the National  Consumer Council (1995) on financial services and low income consumers; as one respondent put it: “It’s like being caught, gotcha, and then they [the banks/lenders] start winding you in”.  Hence, the poor have to sweat doubly so that the rich might live on interest.

A parallel modern argument relates to the devastating social impact of the so-called “Third World debt crisis”, a situation which even Pope John Paul II (1989) acknowledges in his Sollicitude Rei Socialis when he states:  “Capital needed by the debtor nations to improve their standard of living now has to be used for interest payments on their debts”.  This critical modern manifestation of usury is dealt with in more depth and detail in the comprehensive works of Susan George,  A Fate Worst Than Debt (1988) and The Debt Boomerang (1992), among numerous others.  For now, it is only worth pointing out to critics of the Islamic interest-free banking system that if sovereign debt during the 1970’s had been advanced on an equity investment basis, debtor countries would not have been caught on the rack of compounding interest at rates established by non-domestic macroeconomic factors.  Servicing costs could not have burgeoned whilst at the same time most commodity prices paid to debtor nations collapsed.  Return on capital and perhaps capital repayment itself, being commensurate with a nation’s economic wellbeing, would have fluctuated in accordance with ability to pay.  The debtor nations would therefore have enjoyed fiscal security akin to that of a low geared company. Of course, the fact that much sovereign debt comprised recycled dollars from oil producing Moslem countries is an irony, and a disgrace, that should escape notice no more than eyes should be averted to the hypocricy of usury-promoting countries such as Britain and the United States whose leaders often proclaim Christian values.  Be that as it may, by applying the Islamic approach, a lot of human misery could have been avoided.  Applying the same principle, this could be the case for the countless individuals and enterprises caught in the trap of impoverishment through non-sovereign debt.

Usury as a Mechanism of Inequitable Redistribution of Wealth

The observation that usury acts as a mechanism by which ‘the rich get richer and the poor get poorer’ is common to several traditions.  Islam rejects financial interest on the basis that it contradicts the Principle of Distributive Equity which its political economy strives to enshrine:  “Interest in any amount acts in transferring wealth from the assetless section of the population” (Choudhury and Malik, 1992: 51).  Coming from a totally different perspective as a self declared ‘individualist’, Birnie reaches a similar conclusion:  “Interest, by making capital a quasi-monopoly, effectually prevents the establishment of a true competitive system” (1958: 1).  Kennedy (1992) provides some excellent empirical evidence of this phenomenon which relates to Germany in 1982.  She shows that, while the poorest 2.5 million households paid out (net) DM 1.8 billion in interest, the richest 2.5 million households received (net) DM 34.2 billion.  She even goes on to suggest that this covert redistributive mechanism technically works against the constitutional rights of the individual in most countries given that money is a government service to which the public should have equal access.

The psychological effect of this on the relatively poor can be seen to be magnified when merely quantitative evaluation of transfers from poor to rich  is superceded by consideration of the qualitative cost of such a wealth transfer.  For the relatively rich, the utility gain provided by usury is marginal to the already substantial utility of the principal sum.  The principle of the diminishing marginal utility of wealth therefore applies to each incremental unit of wealth procured by interest earnings.  The poor, however, experience the converse of this.  For them, the loss in utility incurred by having to pay interest is qualitatively much greater than the gain to the rich.  Each unit of interest paid incurs increasing marginal utility loss.  Permitting usury to operate in an economy therefore reduces overall utility in the economy.  This must count as one of the strongest arguments against usury.  Any justification of it as an efficient economic instrument would have to first demonstrate that it functions to increase total utility.  In the absence of such demonstration, it can justifiably be condemned as a tool of tyranny.

Usury as an Agent of Economic Instability

Gesell’s (1904) main objection to interest is that it is an endemic factor in the instability of interest-based economies, i.e. the cycles of boom and bust, recession and recovery.  Similarly, Ahmad, arguing from an Islamic perspective, claims “the greatest problem in the capitalist economy is that of the crises [and] interest plays a peculiar part in bringing about the crises” (1958: 36).  Even Keynes, the campaigner for interest-based monetary policy, admits the fact that “the rate of interest is not self-adjusting at the level best suited to the social advantage but constantly tends to rise too high” (1936: 350).  Kennedy (1995) is bolder, suggesting that the compounded growth of interest may in fact cause inflation.  She shows, for instance, how in Germany, while government income, Gross National Product and the salaries and wages of the average income earner rose by about 400% between 1968 and 1989, the interest payments of the government rose by 1,360% which she claims implies an inflationary effect.

Usury as Discounting the Future

The last reason cited for condemning usury relates to the concept and practice of discounting future values.  Because compound interest results in an appreciation in invested monetary capital, it is presumed rational for people to prefer having a specified amount of currency now than the same amount some time in the future.  This simple and rarely questioned logic has several disastrous implications.  For instance, Pearce and Turner (1990) note that discounting affects the rate at which we use up natural resources – the higher the discount rate (derived partly from the interest rate), the faster the resources are likely to be depleted.  Daly and Cobb (1990) take this observation to its logical conclusion and show that discounting can lead to the “economically rational” extinction of a species, simply if the prevailing interest rate happens to be greater than the reproduction rate of the exploited species.  Another consequence of the discounting principle, argued by Kula, is that “in evaluating long term investment projects, particularly those in which the benefits and costs are separated from each other with a long time interval, the net present value rules guide the decision maker to maximise the utility of present generations at the expense of future ones” (1981: 899).

In this context it is fitting to observe that a key feature that distinguishes financial economy from nature’s economy is that the one operates on a compound interest basis, whereas the other is based on simple interest.  Money deposited in the bank may yield 10% plus interest on the compounded sum next year, but in nature, if you leave this year’s crop of apples on the tree, you are unlikely to pick a compoundedly heavier crop next year!  Accordingly, usury permits a disjunction between financial and ecological economy.  The result is either the progressive destruction of nature, or in the absence of redistributive social justice, an inbuilt necessity for periodic financial crashes throughout history.  The point is well made by the illustration that if Judas Iscariot had invested his thirty pieces of silver at just a few percentage points compound, repayable in silver as of today, the amount of silver required would be equivalent to the weight of the Earth.

The implicit ethics, or dearth thereof, of discounting can be used to illustrate clearly why usury corrupts the natural world as well as social relations.  For instance, consider the impact of net present value discounted cash flow methodolgy in appraising the trade-off between natural and human made capital which, over the fullness of time, can usually be justified only if the utility of future generations is discounted (McIntosh, 1996).  This violates intergenerational equity – a key principle of sustainable development recognised by both the 1987 Brundtland Commission and the 1992 Rio Earth Summit of the United Nations.  It also violates an age old percept of right livelihood which flies in the face of the presumption of time value of money on which interest rates are based: that is, it violates the presumption of many traditional land users that the land should be handed on to the next generation in at least as good heart as it was inherited from the forebears.  Discounting, as the counterpoint of usury, can be thus exposed as rueful device employed to justify theft of the children’s future.  Exploration of the theoretical basis and practical illustrations of this argument perhaps provides much scope for future micro and macroeconomic research in ecological economics.



Islamic Banking


A previous section on Islamic prohibition of usury made mention of the rejection by Islam of financial interest or riba, largely on the grounds of its negative distributive justice and equity effects (Khan, 1986).  Out of this prohibition has developed perhaps the most sophisticated and complete theoretical systems of interest-free political economy in the world (Chouhury & Malik, 1992).

The specific methods for implementing Islamic banking have centred around financial equity based approaches, most notably Mudarabah – a joint venture between the bank and a ‘partner’ with both contributing to the capital of the project and sharing the profit or loss – and Musharakah – in which all the capital for an investment is provided by the bank in return for a predetermined share of the profit or loss of the business undertaking (Kahn & Mirakhor, 1986).

The first modern Islamic bank was established in the 1960s in Egypt (The Banker, 1989) and in the ensuing three decades, Islamic banking has grown into an industry with $80 billion in deposits and 100 banks and finance houses (Khalaf, 1995).  Much of this growth has been as a result of the comprehensive attempts by Iran, Pakistan and Sudan over past 10 years to restructure their national banking systems to bring them into accordance with Islamic law of the Shari’ah (Aftab, 1986; The Economist, 1992a).  In addition, increasing numbers of banks outside these countries, including in Western countries, have begun to offer parallel Islamic banking services (O’Brien & Palmer, 1993).  As recently as 1996, the UK joined these latter ranks, with Flemmings Merchant Bank (1996) offering the first Islamic banking service, the Oasis Fund, to British customers.

The claimed advantages of the Islamic banking approach to finance are that it results in: more just and equitable distribution of resources; more responsible and profitable lending due to the necessarily closer bank-client relationship; less volatile business cycles; and more stable banking systems (Taylor & Evans, 1987); as well as “the relative efficiency of the interest-free money system over the alternative interest-based system” (Darrat, 1988).  On the other hand, the Islamic banking industry has been criticised on a number of counts too: for its lack of uniformity and standardisation of products, accounting systems and endorsements by different sharia boards (Khalaf op.cit); various bad-debt complications (Shreeve, 1988); the information-gathering burden on potential consumers and banks themselves to ensure the security and profitability of their funds, as well the lack of an interest-rate mechanism to use as a macro-economic tool (The Economist, 1992b).  However, these limitations must be viewed against the backdrop of Islamic banking as a young and innovative growth market.

CONCLUSION: The preceding paper has attempted to briefly describe the extensive history of the critique of usury, and to crystallise and synthesise the main tenants of the arguments used in support of this position.  The fact that we live in a global economic system which is more usurious/interest-based than ever before begs the question, therefore: Are any of these criticisms of the past either serious and convincing enough or currently relevant enough to merit a legitimate challenge to the status quo?  In the authors’ opinon, every one of the reasons cited in the critique of usury, perhaps with the exception of “double billing”,  seems more pressing and relevant now than ever.  In particular, it is the belief of the authors’ that individuals or organisations in the West with money to invest, especially those which like to consider themselves as being ethical, might have rather more to learn from Islam than is generally acknowledged.  But first, society needs to be re-conscientised to the relevance of the age-old usury debate in modern times.

Go down direct to References


POSTSCRIPT ON THE CREDIT CRUNCH, 2009 (This is not part of the original paper published by ABFH): The global so-called “credit crunch” (defined as “a severe shortage of money or credit”) is generally considered to have “started” on 9 August 2007 when disturbing figures from the French bank BNP Paribas raised the cost of credit and awoke the financial community to the wider seriousness of the situation (see the BBC’s detailed timeline at

Underlying this had been a rise in US interest rates between 2004 and 2005 from 1% to 5.35%, resulting in high levels of default at the “sub-prime” end, which is to say, the high risk end of the housing market. Because mortgage lenders had sold on their debts via hedge funds to other financial institutions, the consequence of irresponsible lending spread contagiously through banking systems, especially in the West, as house prices started to fall and the real estate asset value underpinning the loans became negative.  When BNP Paribas told its investors that they would not be able to draw money out of two of its funds owing to a “complete evaporation of liquidity” it was the start of a domino effect, forcing governments to step in and avert potentially catastrophic runs on major banks.

From the perspective of our paper on usury which we now revisit more than a decade after its first publication in 1998, we find it instructive to reflect on how far such problems can be laid at the door of an interest-based banking system. Full consideration of this is beyond our current scope, but in this postscript we will confine ourselves to making three brief observations.

First, the credit crunch was a consequence of the preceding credit bubble inevitably bursting. In certain Western countries, including Britain and America, governments had deregulated financial agencies to an extent where irresponsible lending became normalised. For example, in Britain, through until 2008, it was easy for people to get mortgage loans on property of 120% of the property value with few questions asked. Property prices were rising sharply, the global economy was booming, and traditional banking caution was thrown to the wind. People re-mortgaged their homes to pay off credit card debts that carried very high rates of interest, and which had been sold to them by aggressive marketing. People had started to believe that ever-rising house values and continuing economic good times would generate property values that would continuously outstrip their liabilities. Far from failing to dispel this notion, leading lenders exploited it. City staff were rewarded with massive “fat cat” bonuses based on the size and quantity of loans made. Concerns about their overall quality of lending portfolios were silenced through hedging – the selling on and spreading out of risk on speculatively buoyant markets.

While everybody played the game and interest rates remained low the system appeared to be working. It met investor expectations with high rewards. But as US interest rates rose in a necessary effort to counteract the economic knock-on effects of house price inflation, the consequences of having bought into a usurious and greed-driven system started to hit home.  Loan default rates reached the point of crisis. Those who were able to see it coming, mostly the wealthy and well-advised who had a greater variety of financial options open to them, were able to bail out in time. Those who had been caught with little option if they wanted to buy a house to live in were squashed – leaving many young families now struggling to pay off debts as their house values fell into negative equity. As the media rightly observed, Wall Street’s gains are Main Street’s losses, with the negative externalities of financial speculation passed on to society as a whole.

We might learn from this that an economics that canonises greed lays in store catastrophic weaknesses that will eventually hit the poor hardest.

Our second point is that globalisation, whilst creating massive new economic wealth from deregulated trade, has reduced resilience in the world financial system. Fire walls between different countries’ economies that were held in place by measures such as controls on foreign currency transactions substantially fell away in the years that followed the “new right” economics of Reagan and Thatcher. Enabled by computerised production planning and stock control, new notions of just-in-time commercal supply systems profitably maximised economic efficiency. But there was a hidden cost. It also reduced the resilience that slack allows in highly interdependent chains of supply. Without slack, supply networks, like the socio-ecological systems on which they depend, become brittle. They become prone to breaking rather than bending when placed under stress. And for a monetarily based economic supply system, a bank running out of liquidity is like a car suddenly losing its oil. Devoid of lubrication the engine grinds to a sudden halt. That was why, in 2008, governments were left with no option but to bail out the banks.

This loss of resilience is what distinguishes the current situation from the bank crashes of the 1920s. Back then, society and especially its food production was less industrialised. People lived closer to the land. Most essential services such as food production were local production for local consumption. But today, essential chains of supply are long, often global, and therefore subject to international market and financial vagaries. A glimpse of the consequences of such dependency can be seen from what happened in Britain in September 2000 when fuel tanker drivers went on strike. Within five days, panic buying emptied some supermarket shelves and the media carried sporadic reports of fighting at the checkouts. The Blair government, fearing civil unrest, capitulated. Applied to the situation in 2008, we might ask much more unrest might have broken out if bank failure had resulted in the sudden loss of financial lubrication with its consequent immediate knock-on effects?

We might learn from this that the risks are too high for governments to wash their hands of regulating modern economies. Unfettered free markets expose the very fabric of civil society to the law of the jungle on a bad day. Overly deregulated markets can only be transient phenomena, like handing out free pizza. Because of their abstract nature based on confidence – the word means “faith together” – financial markets are all the more volatile. The brazenness by which financial engineers or rather, marketeers, tried to spread risk by creating derivative “products” driven ultimately by mortgage interest rates and their effect on property values reveal a massive collapse of responsibility. That collapse happened because faith shifted from having direct equity connection to tangible assets onto abstract financial connections that could be many times removed and diluted from the reality on the ground. Such derivatives had become ships of fantasy. Devoid of anchors, they drifted fecklessly with no bearings on the landmarks of reality until the rocks struck.

Our third observation is that many people ask whether the “credit crunch” (the term sounds disarmingly like a packet of breakfast cereal, with a free gift inside) signals the “end of capitalism”. On the contrary, we consider that it represents only a cyclical spasm in the process by which capitalism periodically restructures itself in a crash that most hurts the weak. The consequence of job losses and repossessions in the housing market are that the relatively disadvantaged, many now saddled with negative equity, will be forced long term to work harder to pay off debts, including their share of the national debt that will manifest in tax rises. As such, the creditors – many from their offshore tax havens – retain and reconsolidate a grip that they would not have had if their involvement in the process had been through risk-shared equity holdings, as with Islamic banking principles. These investors will, in future, be the people who find themselves in a position to buy up repossessed (which is to say, bankrupt) housing stock, and thereby strengthen their arm in future as rentiers to those who have lost out. The relatively poor will be forced to work yet harder on a treadmill that damages family life and with it, weakens the future fabric of society.

Capitalism can be understood at many different levels, from honest trade and entrepreneurialism all the way to its advanced Anglo-American casino version. In the latter, the role of money undergoes a shift. It changes from its primary role as a means of recording and lubricating exchanges of goods and services. It takes on second order abstract qualities of being speculative. Here money alone generates more money, and the principle of usury – defining it as the lending of money at real positive rates of interest (i.e. rates greater than what is needed to cover inflation and risk) – is the inner wheel driving the system.

Although we believe capitalism in one form or another is here to stay, the “credit crunch” may go down in history as the most serious challenge yet to financially speculative advanced capitalism. Henceforth electorates and their governments should give more determined consideration to the oligarchic principle of allowing so much power and latitude to shareholders and their financial analysts whose investment motivation is purely to ‘play the market’.

2009 will probably mark the point at which the pendulum starts to swing back to more carefully and strongly regulated financial markets. As it turns out, this approach is entirely consistent with the philosophy of the iconic economists Adam Smith (who was after all a ‘moral philosopher’) and John Maynard Keynes (who warned against the dangers of speculative activities). Ironically, these are often cited by neoliberal market fundamentalists in support of their ideological deregulatory stance. Any of us who have knowingly participated in usury-related casino economics share the responsibility for what has happened. Whilst neither of the current writers is a Moslem, we cannot help but be reminded of the Islamic hadith that states: “The taker of usury and the giver of it and the writer of its papers and the witness to it, are equal in crime.” To put it in the language of other Abrahamic religions, we have worshipped at the shrine of Mammon, the god of wealth. Mammon has now transmogrified into Moloch – the fire-filled hollow stone god of the Hebrew Bible. Into his lap the children were reputedly sacrificed … and that, in the name of idolatrously seeking future economic prosperity.

Through the lens of such metaphor the “credit crunch” must, like the “climate change crunch”, be understood spiritually, or in terms of deep values. It is our consumer greed that has driven the problems now faced. Whatever our religious background if any, the crises of present times can be seen as a spiritual, or a values-based wake-up call. As such, modernity may still have something to learn from the ancients.

Alastair McIntosh & Wayne Visser

Added to the online version of this paper, January 2009

(McIntosh also explores the relevance of ancient texts to modern climate change in,

Hell and High Water: Climate Change, Hope and the Human Condition“, Birlinn, Edinburgh, 2008.)



Aftab, M. (1986) ‘Pakistan Moves to Islamic Banking’, The Banker 136: 57-60.

Ahmad, S.A. (1958) Economics of Islam (A Comparative Study), Lahore, India: Sh. Muhammad Ashraf.

Birnie, A. (1958) The History and Ethics of Interest, London: William Hodge & Co.

Blaxton, J. (1634) The English Usurer, or Usury Condemned, Reprinted, Amsterdam: Theatrum Orbis Terrarum, 1974.

Choudhury, M.A. and Malik, U.A. (1992) The Foundations of Islamic Political Economy, London: MacMillan.

Church of Scotland (1988) Report of Special Commission on the Ethics of Investment and Banking.

Culpeper, T. (1621) A Tract Against Usurie, Reprinted, Amsterdam: Theatrum Orbis Terrarum, 1974.

Daly, H.E. and Cobb, J.B. (1990) For the Common Good, London: Greenprint.

Darrat, A.F. (1988) ‘The Islamic Interest-Free Banking System: Some Empirical Evidence’, Applied Economics 20 (3): 417-25.

Douglas, C.H. (1924) Social Credit, Belfast: K.R.P. Publications.

Encyclopedia Judaica (1971) Volume 16, Jerusalem: Keter Publishing House.

Fenton, R. (1611) A Treatise of Usurie, Reprint, Amsterdam: Theatrum Orbis Terrarum, 1974.

Fischer, I. (1933) 100% Money, New York: Adelphi Publishers.

Flemmings Merchant Bank (1996) Oasis Fund Prospectus.

George, S. (1988) A Fate Worse Than Debt, London: Penguin.

George, S. (1992) The Debt Boomerang, London: Penguin.

Gesell, (1904) Die Naturliche Wirtschaftsordnung. Nuremberg: Rudolf Zitzmann Verlag.

Jadlow, J.M. (1977) ‘Adam Smith on Usury Laws’, Journal of Finance, 32: 1195-200.

Jain, L.C. (1929) Indigenous Banking in India, London: MacMillian & Co.

Kahn, M.S. and A. Mirakhor. (1986). The Framework and Practice of Islamic Banking. Finance & Development, September, 32- 36.

Kennedy, M. (1995) Interest and Inflation Free Money, Okemos: Seva International.

Keynes, J.M. (1936) A General Theory of Employment, Interest and Money, London: MacMillan & Co.

Khalaf, R. (1995). ‘Islamic Banking Survey Supplement’, Financial Times, 28 November.

Khan, M.S. (1986) ‘Islamic Interest-Free Banking’. IMF Staff Papers 33: 1-27.

Kula, E. (1981) ‘Future Generations and Discounting Rules in Public Sector Investment Appraisal’, Environment and Planning A, 13: 899-910.

Levy, D. (1987) ‘Adam Smith’s case for usury laws’, History of Political Economy, 19: 387-400.

McGrath, A.E. (1990) A Life of John Calvin, London: Blackwell Press.

McIntosh, A. (1996) ‘The Fallacy of the Presumption of Symmetrical Depreciation in the Substitution of Natural and Human-Made Capital’,  Journal of Law and Religion, XI:2 (forthcoming).

National Consumer Council (1995) ‘Report on Financial Services and Low Income Consumers”, London: NCC.

O’Brien, J. and M. Palmer. (1993) The State of Religion Atlas, London: Simon and Schuster.

Pandya, N. (1996) ‘Growing Interest In Islam’. Guardian Money, 25 May.

Pearce, D.W. and Turner, R.K. (1990) Economics of Natural Resources and the Environment, London: Harvester Wheatsheaf.

Pope Leo XIII. (1891) Revum Novarum: Encyclical on the Condition of the Working Classes, Centenary Study Edition, London: Catholic Truth Society, 1983.

Price, C. (1990) Time, Discounting & Value, Oxford: Blackwell.

Ruston, R. (1993) ‘Does It Matter What We Do With Our Money?’, Priests & People, May, 171-77.

Shreeve, G. (1988) ‘Paying the Price of Its Own Success’, The Banker 138: 17018.

Simons, H.C. (1948) Economic Policy for a Free Society, Chicago: University of Chicago Press.

Skidelsky, R. (1992) John Maynard Keynes: The Economist as Saviour, 1920-1937 Volume 2, London: Macmillan.

Smith, H. (1591) A Preparative to Marriage; Of the Lord’s Supper; Of Usury, Reprinted, Amsterdam: Theatrum Orbis Terrarum, 1975.

Soddy, F. (1926) Wealth, Virtual Wealth and Debt, New York: Dutton.

Taylor, T.W. and Evans, J.W. (1987) ‘Islamic Banking and the Prohibition of Usury in Western Economic Thought’, National Westminister Bank Quarterly Review, November, 15-27.

The Banker (1989) ‘Islamic Banking’, May, 12-13.

The Economist (1992a) ‘Islam’s Interest’, 18 January, 59-60.

The Economist (1992b) ‘Banking Behind the Veil’, 4 April.

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Wilson, T. (1572) A Discourse Upon Usury, Reprinted, London: G Bell & Sons, 1925.


Wayne A.M. Visser is the Manager of the Environmental Consulting Unit in KPMG’s South African Office and a Fellow of Edinburgh’s Centre for Human Ecology.


Alastair McIntosh is a Fellow of Edinburgh’s Centre for Human Ecology.


[i] Hence, “usury” and “interest” have been used interchangeably in this paper, except where interpretative difference occured historically, in which instance the relevant distinction will be made explicit.  Also,  “interest” has been taken to refer to any real rate after inflation, bad-debt provision and administrative costs.

[ii] Most notable of these is Surah 2 verses 188, 274-280; Surah 3 verse 130; Surah 4 verses 29, 161; Surah 9 verses  34-35, 43; Surah 30 verse 39.

[iii]  Exodus 22:24-25; Leviticus 25:35-37;  Deuteronomy 23:19-21; Ezekiel 18: 20; Proverbs 28:8; Psalms 15:5; Nehemiah 5:7.

[iv] I Samuel 22:2; II Kings 4:1; Isiah 50:1.

[v] For more first-hand detailed insight into the theological debate on usury, especially during the 16th and 17th Centuries, some republished original texts from that period include:  Blaxton (1974), Culpepper (1974), Fenton (1975), Smith (1975) and Wilson (1925).

[vi] Luke 6: 34.

[vii] Whilst opinions differ on the correctness of doing so differ, the authors have presumed God and Allah to represent the same divine principle though expressed differently in the understanding of respective faiths.

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by Michael Hudson, NYU — IFA*
(from the Temples of Enterprise book in progress)

*Delivered at a symposium at the Institute of Fine Arts, New York University, March 15th-16th, 1990, this article was published in Gunter Kopcke and Isabelle Tokumaru, eds, Greece between East and West: 10-th — 8th Centuries BC (Mainz: Verlag Phillip von Zabern, 1992).

This paper seeks to establish that interest‑bearing debts were introduced to the Mediterranean lands from the Near East, most likely by Phoenician merchants in the 8th century BC along with their better known innovations such as alphabetic writing. Contrary to what was believed until quite recently, such debts — and for that matter, commercial and agrarian debts even without interest charges — are by no means a spontaneous and universal innovation. No indications of commercial or agrarian debts have been found in Early Bronze Age Egypt, the Indus valley, or even in Ebla, much less in Mycenaean Greece. They are first documented in a particular part of the world — Sumer — in the third millennium, and can be traced diffusing from southern Mesopotamia upward along the Euphrates and westward into the Levant as part of the Sumerian commercial expansion. Originally documented as being owed to temple and palace collectors, interest‑bearing debts became increasingly privatized as they became westernized.

This implies a diffusionist explanation of how interest‑bearing debt came to be introduced into the Mediterranean lands. But diffusion usually involves change. As commercial and agrarian debt practices spread, they did so in new contexts, often without the public checks and balances that had been developed in southern Mesopotamia. For instance, the periodic royal debt cancellations found in Sumer, Babylonia and Assyria from 2400 to 1600 BC were not transmitted to Greece and Italy. As a result, debt-servitude tended to be irreversible, at least prior to Solon’s seisachtheia in 594 BC. This made the debt problem more serious in the Mediterranean periphery to what had been the Bronze Age core.

 From the Iranian plains to the Aegean, enough Bronze Age records have survived to show that it was neither easy nor automatic for less centralized societies to adopt commercial debt, or for that matter for the Hittite and Mycenaean palace economies to do so. The inference is that no debt balances arose to be settled as long as there was no public enterprise set corporately apart, that is, no economic bifurcation between public and private sectors. Economic units that were self‑contained, such as the Mycenaean “households” and oikos-type estates, had little need of debt balances, and do not seem to have run up financial balances with outsiders.

 The archaeological record shows that Assyrian traders introduced interest‑bearing debt to their Asia Minor colonies such as Kanesh in Cappadocia around 2000 BC (Balkan 1974). Yet signs of commercial debts and interest are not found among the economic records of the Hittites who subsequently dominated the region, nor is there a hint of such debts in the Mycenaean or Cretan Linear B records. Even in Ugarit, one of the most likely candidates for diffusing financial practices to the Aegean, commercial and agrarian debts are found only in quite circumscribed form. These facts make it doubtful that either commercial or agrarian debts (to say nothing of interest) played a role in Bronze Age Greece or early in the first millennium. Yet the charging of interest on debts, above all agrarian usury with its consequent debt‑slavery and forfeiture of land rights, became classical antiquity’s most important economic dynamic, giving Greece and Rome their distinctive social character when compared to more archaic communities or modern anthropological enclaves.

 Usury’s polarizing social impact appears as an intrusive wedge transforming the traditional social balance between well-to‑do grandees and their dependents or clients. Yet anthropologists since Mauss (1967) have tried to trace interest‑bearing debt to the very inception of Indo‑European speaking society. Creditor‑oriented economic historians such as Fritz Heichelheim (1958:54f.) have been eager to find signs of interest as a universally spontaneous phenomenon already in neolithic times. Such attempts retroject modern ways of thinking without placing the debt and interest problem in the context of its times.

The following pages summarize what limited historical evidence is known about commercial and agrarian debts in archaic Greece and Italy. After specifying what is not known and clearing the slate of some popular but false assumptions, I propose to fill the gap with a working hypothesis as to how interest‑bearing debt was brought from the Near East. Of course, given the lack of definitive evidence, the solution which I find most likely can be no more than a reasonable scenario at best. But if we in this room cannot come up with a plausible view, the job will be left to economists and anthropologists spinning webs out of rather abstract “what if” assumptions. The popular “common sense” approach all too often imagines that all societies must have thought much like we do rather than recognizing how different is the perspective of every society and epoch. It is the task of archaeologically minded historians to ward off such popularizations.

The absence of indigenous interest‑bearing debts in Greece and Italy

The first assumption that must be rejected is that interest‑ bearing debt is a universal phenomenon going back to early Indo‑European roots. If this premise is indeed unwarranted, it is necessary to begin thinking about just when the charging of interest may have been introduced, from where it may have come and under what circumstances.

Unfortunately, questioning along these lines has been discouraged from late antiquity until quite recently by the fact that usury was so strong a dynamic in Rome and Greece that it seemed to be universal among all Indo‑European speaking peoples. Certainly wergild‑type debts for personal injury and their collection procedures were well attested from India to Celtic Ireland (Maine 1888).(see note 1) However, although such debts — along with practices such as standing surety for individuals owing reparations debts for having inflicted personal injury — certainly are widespread (Binchy 1970), there is no indication of interest charges except where the practice is adopted from without.

A search for evidence as to just how and when the idea of commercial debt was introduced to Greece and Italy soon founders for lack of relevant documentation. The Homeric poems have little to say about debt except for the argument over wergild depicted on the shield of Achilles. Most of the economic surpluses cited in the Homeric poems take the form of military booty rather than economic enterprise. Hesiod is no more informative. We hear much of gift exchange as part of the general ethic of hospitality, but none of this involves the commercial or agrarian debt familiar from classical antiquity. There is no archaic mention of interest as a stipulated return on capital, or of money‑lending. The earliest inscription which tells us anything about the extension of credit and the charging of interest is from Eleusis c. 435‑430 (Cavignac 1908:41ff. and Bogaert 1968:92).

In the Mycenaean Bronze Age commodities circulated as part of an internal redistribution‑type exchange. Finley (1981:206) observes that in all the Linear B archives, “No word on any existing tablet has been read which can confidently be taken to mean ‘to buy,’ ‘to sell,’ ‘to lend,’ or ‘to pay a wage’ (or the corresponding nouns). Furthermore, Ventris and Chadwick (1956:113) note that they ‘have not been able to identify any payment in silver or gold for services rendered,’ and that there is no evidence ‘of anything approaching currency. Every commodity is listed separately, and there is never any sign of equivalence between one unit and another’ (p. 198).”

This is one argument from silence that carries weight inasmuch as surviving Linear B records seem to be as representative a cross section as the archives found in southern Mesopotamia replete with debt documentation. There is no hint of credit or debt, much less of interest. “The word o‑pe‑ro is translated ‘deficit, but this doesn’t at all imply ‘business dealings’ by a private merchant” (Finley 1981: 278). At most we seem to have inventory balances and delivery obligations by various localities to the central palace ‑‑ more a schedule than a list of debts serving to bridge income and outgo in the financial sense, or reflecting money due for the advance of commercially productive assets. No doubt wergild‑type fines were omnipresent in both Greece and Asia Minor, but they would have been handled by oral common law.

Archaeologists are able to trace such sophisticated economic practices as syllabic writing and account‑keeping on clay tablets, seals and sealing, and many idiosyncratic layouts and technical details of accounting formats moving up the Euphrates to Sumerian outposts such as Asshur and Mari, and on to Phoenicia, Ugarit, and ultimately Crete and Mycenae. However, interest and commercial debt is not found among the innovations reaching the Aegean. Probably this is because Mycenaean palaces and temples (unlike the case in Mesopotamia) were not set corporately apart from the community as “profit centers” producing public goods and turning these over to a private merchant class. Account‑keeping was used not as the elaborate economic management and forward planning found in Sumer by the twenty‑fifth century BC (Lambert 1961), but simply as a check on the access by palace servants and subordinates to storerooms.

As noted above, if interest‑bearing debt had indeed spread to Mycenaean Greece, the most likely point of transmission would have been the emporium city‑state of Ugarit, where Mycenaean trade goods are found concentrated in the fourteenth and thirteenth centuries, along with products from most other neighboring Late Bronze Age regions. However, Astour (1972:26) notes that the merchants of Ugarit differed from their Babylonian counterparts primarily in the fact that “money‑lending operations, so characteristic for the Babylonian tamkaru , are very poorly represented in the hitherto published business documents from Ugarit.” Heltzer (1984:183ff.) likewise rejects earlier speculations that the enslavement of peasants may have occurred in Ugarit as a result of high‑interest credit as is found in regions more closely linked to the Mesopotamian core. In cases where land was foreclosed for debt, foreign creditors had to relinquish these to the king of Ugarit and were compensated for their loans accordingly. But mercantile foreclosure on lands and personal freedom appears as an essentially alien intrusion to Ugarit. There seems little reason to believe that commercial debt was passed on to the Aegean. Unless surviving Linear B records are skewed in a statistically improbable way, there probably were no archaic debts to be written down.

Debt hardly would seem to be more likely in the Dark Age centuries following the collapse of Mycenaean civilization in 1200. With the destruction of the Mycenaean palaces, nearly all the Bronze Age administrative adoptions were lost. The only practices that survived into classical Greece were those which took on a life of their own independently of the palaces — some myth and ritual, technologies and possibly sharecropping arrangements miniaturized and “privatized” in the context of the self‑sufficient family oikos and, in a few cases, temples. Debts, especially at interest, seem unlikely in these Dark Age centuries.

I already have mentioned the absence of interest‑bearing debts in Homer. There is no debt servitude. As Humphreys (1978:161) points out, in the Odyssey (15.403‑84) the only male slave whose origin is explained ‑‑ the shepherd Eumaeus — was captured and sold as a child. Male slaves are as rare in Hesiod as in Homer. Women might be bought, but they are foreigners (mainly captured war prisoners), not debt pledges.

Mycenaean trade and Homeric exchange were more in the character of gift‑exchange among chieftains and aristocrats than production for profit. Without profit‑seeking there was not much motivation for commercial debt. The open question thus becomes how and when Greek and Italian exports became commercialized, and how this transformed their domestic division of labor and agrarian relations in a way which led to the accrual of debt balances.

Some preliminary definitions may help avoid the confusion into which much of the discussion about archaic credit has fallen. By interest‑bearing debts I do not mean simply the informal one‑upmanship of topping another party’s gift, such as Mauss (1925) and other anthropologists have observed in modern tribal communities. Indeed, it is significant that interest rarely is found on “anthropological”‑type debts, i.e., on wergild compensation for personal injury or on the gift exchange and marriage obligations familiar to most tribal communities studied by anthropologists, including Homeric Greece. Except for compensation fines these obligations tend to be free‑floating and often vague as to the exact amounts owed. Largely for this reason they rarely give rise to lawsuits or foreclosure, in contrast to commercial and agrarian “economic” debts.

Also to be distinguished from interest are penalties for late payment of obligations, which often double the debt principal. Rather, interest consists of the formal charging of a fixed rate of return on a specified principal sum, which typically consists of the value of goods advanced or money lent. Interest rates range between 8 1/3% (1/12th, as in Rome’s XII Tables) and 33⅓% per annum (1/3, attested from the neo‑Sumerian Ur III period 2100‑2000). These rates work out mathematically to 20% to 12?%. The 20% midpoint between these extremes is Sumer’s earliest documented commercial interest rate.

On relatively rare occasions the rate of interest may rise to as high as 50 percent per year, as attested in Bronze Age Mesopotamia and even in the modern world (e.g. on Argentina’s and Brazil’s 1989 public debt). But archaic interest rates typically reflected the smallest unit‑fraction measure of their local societies: 1/60th per month in Sumer (a shekel per mina, working out to 12/60ths, or 20% a year), a tenth (dekate) in Greece and a twelfth (an uncia per as) in Rome. The Greek and Latin use of terms meaning “young animal,” “calf” or “birth” (tokos in Greek, faenus in Latin) as terms for interest (the birth of numerical increments due periodically) thus directly translate the Mesopotamian usage of mash (kid or calf, birth).

The term usury refers to interest‑bearing debt extended for noncommercial purposes. In agrarian economies consumer or tenant debts bear an interest charge for loans, advances or overdue obligations that do not provide the debtor with productive assets enabling him to repay the loan. Being part of a zero‑sum economic activity, such interest is parasitic. It thus stands in contrast to commercial loans whose interest is paid out of the incomes earned by merchants productively investing the loan proceeds. This distinction no doubt explains why the “economic freedom” acts canceling debts in Sumer, Assyria, Babylonia, Nuzi (Arraphke) and Israel applied only to agrarian personal debt, not to commercial obligations. There also are other marked differences. No collateral is pledged for anthropological debts, in contrast to formal money lending, in which loans typically are extended among unequals, e.g. from members of one sector or class to those of another, or various interest‑bearing claims accrue to temples from the community at large.

Of course, many personal loans were extended without interest, e.g. in Greece the eranos “friendly society” loans among aristocratic peers, and also loans to public figures such as those made by the fourth‑century banker Pasion. These obligations are social and interpersonal rather than arms‑length “economic” transactions. They typically are owed among equals, not by poor debtors to well‑to‑do creditors or temples.

When lending money, food or other assets to needy borrowers, creditors typically (either directly or through slaves acting on their behalf) demand not only interest but a pledge of movable assets or property rights in case of default. This collateral often becomes a more important consideration than the rate of interest. In fact, it was the search for adequate collateral for debtors to pledge as an alternative to the personal freedom of their family members that catalyzed the alienability of land rights in many archaic societies.

Turning from these general principles to specific details, it soon becomes apparent that our lack of knowledge about the financial dynamics of archaic Greece and Italy is part of the larger problem of knowing little about how their social life in general was organized prior to the sixth or even the fifth century BC. There is almost no literary or epigraphic evidence apart from the hints that can be extracted from Homer and Hesiod. Outside of Athens the sixth century is nearly as dark as the seventh, and even for Athens we have little primary evidence apart from Solon’s political poetry explaining his actions as archon in 594. The next most important source is Aristotle’s Constitution of Athens written over a quarter millennium later, around 325. The intervening local Atthides were in the character of party pamphleteering over the debt issue and other oligarchic‑democratic controversies, and hence cannot be accepted as primary evidence (Jacoby 1949).

By the 5th century we find such widespread acknowledgment of interest being charged that it seems to have been there all along. Public Athenian inscriptions and the plays of Aristophanes refer to interest (tokos), and soon thereafter we find wealthy landowners letting their slaves invest their peculium in usurious activities. The estates of orphans are let out at interest, and we find commercial investment in trade ventures. But it seems to have been the Persian wars that really monetized Greek economic life and established a credit economy. (To be sure, the change seems to have been one of degree rather than an abrupt innovation.) While coinage certainly was a catalyst, it was not in itself a cause of usury and widespread foreclosure, which are found in the Bronze Age Near East two thousand years prior to the invention of classical coinage.

The real problem concerns how far back we can trace commercial debts, agrarian debts and other economic (as distinct from “anthropological”) debts, with or without interest, and under what conditions they may have been introduced to Greece and Italy.

Burkert (1984) cites a wide range of Near Eastern practices that diffused to the classical Mediterranean lands, including those transmitted via the Etruscans to the Romans. These practices include such highly culture‑specific institutions as liver divination and related omen procedures that can be traced firmly back to Babylonia. Italian city‑founding ceremonies (Rykwert 1988) and the Etruscan and Roman triumph ceremony (Versnel 1970) likewise bear a close kinship to Mesopotamian temple‑founding ceremonies. And I need hardly remind this audience of the many Mediterranean adaptations of Near Eastern myths and rituals, especially Saturnalia‑type New Year festivals (see for instance Bourboulis 1964). Much less explored, however, are the Greek and Italian adaptations of originally Near Eastern economic practices and institutions.

I believe that a major reason for this neglect is an economic ideology that many classical historians have accepted almost unconsciously. As noted above, there is the assumption stemming from our economic philosophy that phenomena such as interest‑bearing debt are so universal and natural as not to require any diffusionist explanation. This view precludes at the outset any investigation into how such practices may have been transmitted from the Near East to the Mediterranean, being decontextualized in the process. By “decontextualized” I mean shifted from a primarily public‑sector context (the Bronze Age palace economies) to the more individualistic and much more decentralized, smaller‑scale context of Mediterranean societies.

Until quite recently classical scholars have not been very receptive to the idea of diffusion of Near Eastern practices. There is still a tendency to view the sharp break from ca. 1200 to 750 — that is, the Mediterranean Dark Age following the collapse of Bronze Age Mycenae, Crete and much of the Levant — as an altogether de novo creation of society in which Greek society reverted to its allegedly Indo‑European roots. Near Eastern influences are not acknowledged to have shaped this classical flowering more than marginally, except in obvious cases as alphabetic writing and a few related commercial practices clearly traceable to the Phoenicians. However, when it comes to the idea of interest, Mauss and subsequent comparative anthropologists have confused the problem by identifying the one‑upmanship of interpersonal gift exchange with the formal charging of economic interest.

In Italy’s case there was no centralized Bronze Age economic organization to be stripped away, not even a Linear B script to be lost. For many years the Romans were viewed as a representative Indo‑European speaking people with traditions fundamentally akin to those of the Greeks and Vedic Indians. The Etruscan influence was recognized, but only recently has the Phoenician‑Greek presence in Ischia — and hence their influence on Etruria — been traced. Here would seem to be a clear example of how Near Eastern financial practices were decontextualized by peripheral societies to produce a rather naked and even cruel development such as we find in Rome seemingly from the inception of its Republic. But such lines of investigation remain to be undertaken.

I propose the following framework for analyzing the evolution of debt in Greece and Italy. We know roughly what went into the Mediterranean Dark Age c. 1200. There is no trace in the Linear B records of interest‑bearing debt, or indeed of debt of any kind save for “deliveries” due from various localities. We know of the agrarian usury that emerged from the Dark Age by the seventh century, culminating in Solon’s seisachtheia. The question at issue is how and under what conditions this interest‑bearing debt may have been introduced.

One of the few hints suggesting a Phoenician role is the fact that the weights and measures used by Greeks and Italians seem to have been brought by Phoenician merchants. A. E. Berriman’s Historical Metrology (1953) points out that the carat originally was the weight of a carob grain, ceratonia siliqua, a tree native to the Mesopotamian meridian, weighing 1/60th of a shekel. The Greek term is keration (“small grain”).

Additionally, by the time we hear of mercantile credit and usury on a large scale, in the fourth century, the major creditors are Phoenicians or other foreigners such as the banker Pasion and his son Apollodorus (Bogaert 1966 and 1968). Humphreys (1978:152) rightly emphasizes the alien character of credit to the Greeks, above all interest‑bearing debt: “Bankers, often ex‑slaves, stood outside the social circle.” No doubt the same could be said of Italy. Historically, the extending of credit at interest has been charged more by outsiders than by peers. This hardly should be surprising, for bankers are basically money‑changers, and hence typically foreigners or persons closely linked to them.

Tracing legal terms and personal names throws some further light. Much financial terminology has Phoenician roots. Finley (1952:81f.) observes that “Among the Greeks, sales were cash sales. This rule found few exceptions, notably when real property was the object of sale.” However, “earnest money” as a binding deposit — arrhabon or arrha — was a common practice. To be sure, in the millennium spanning Homer and the later Roman Empire there are “less than a dozen references to the arrhabon.” But “the word itself, borrowed from a Semitic tongue despite the large number of Greek terms available for the idea of ‘deposit’,” highlight what seems to be a distinction between Near Eastern and Greek practice. It also is noteworthy that the Greeks did not know of mortgages or the acquisition of property at only a small portion of its value, as characterized much debt foreclosure in the Bronze Age Near East.

Bogaert (1966:146) notes that “In the domain of maritime law, Greek law seems to have stemmed from that of Phoenicia, especially in the concept of contrat d’affrétement (insurance), a conception traceable back to the Babylonians.” Also with regard to the financing of sea borne commerce, Humphreys (1978:151) observes that “The nautikon daneion resembles the institution known to the Italians as the commenda, a combination of loan and partnership in which the lending partner contributed a larger share of the capital and/or took a larger proportion of the risk, in return for the other’s services. This type of partnership was certainly known in Babylonia in our period, and very probably in Phoenicia (its existence in Palestine in the time of Christ is documented by the Parable of the Talents).”

Bogaert (1966:156, 1968, etc.) has traced how Greek deposit banking developed out of money‑changing and as such was strongly influenced by Near Eastern practices, as well as by the many Near Eastern trapezites who settled throughout the Aegean and on the Greek mainland to make their fortunes—‑ Pasion, Phormion, Pythodore and other bankers, including Philostrates of Ascalon, trapezite for Delos. But the private documents are few, and literary references prior to the fourth century BC do not enable us to trace the relevant developments with much clarity.

While Phoenician influence is attested in the above ways, there is nothing as clear or datable as the transmission of alphabetic writing. We hardly can take on faith the conviction of ancient scholars such as L. Lydus (De Mensibus I.9, cited in Bogaert 1966:147) that the Phoenicians were the first usurers, the inventors of weights and measures, and methods of earning money in general, while Pliny the Elder (VII, 57) accorded them the invention of money. Such oversimplifications seem to have come more at the end of classical antiquity than at the beginning. But it is clear that maritime commerce, in which the Phoenicians played the major role, was the single most important catalyst to Greek and Italian credit practices.

We thus need to develop a reasonable working hypothesis or scenario for how Mediterranean trade with the Near East might have catalyzed commercial credit and agrarian usury. Probably in the archaic centuries Phoenician models were adopted by the Greeks and Italians to their local circumstances, which almost invariably lacked the traditions of centralized checks and balances which had spread from Bronze Age Mesopotamia to the rest of the Near East. But beyond this general observation the economic organization of archaic and early classical Greece remains opaque. It seems clear that in the seventh century popular revolts in Corinth, Olbia, Sikyon, Megara and other cities replaced aristocratic regimes with leaders (“tyrants” or demagogues) who cancelled the debts and redistributed at least some of the lands. But we are not told exactly how these debts came into being, or even whether or not they bore interest.

For many years the usual assumption was that they represented the type of petty agrarian usury found from the fourth century onwards, i.e. loans of food or other resources to the needy. Even without interest charges the burden of such agrarian debts must have been oppressive. After all, the pound of flesh which forms the centerpiece of Shakespeare’s Merchant of Venice was owed on an interest‑free loan. Finley (1981:161) summarizes the usual situation in antiquity: “A debtor had little chance. In fact, he had little chance before he even became a debtor, because he was poor and essentially defenseless, against bad harvests and famine, against war and its depredations, against the one‑sidedness of the law. When his luck was bad his only defense was to put himself in fidem, in the power of the powerful.” We know that in one way or another, creditor‑patrons ended up with the lands cultivated by their clients, whom they then began to sell outright as debt‑slaves to foreign dealers in the late seventh century. The question is, how at what point did this process begin to polarize Greek and Italian communities?

One of the most intriguing reports concerns the debt revolt at Megara, not far from Athens. Plutarch’s Greek Questions #18 (Moralia 295D, supposedly based on an Aristotelian study of the city’s constitution) describes its great annual festival celebrating its economic freedom from debt c. 540. This festival commemorated the palintokia , literally “the return of interest which they had chanced to have paid their creditors.” The use of the term tokos for interest is not otherwise found before the final quarter of the fifth century. While Plutarch’s statement would imply that archaic agrarian debts were indeed interest‑bearing, matters are complicated by the fact that another term for the palintokia (“back interest”) was prosagoresantes. This suggests that what occurred may have been an outright debt cancellation, which subsequently came to be commemorated as part of the political program and party propaganda of populations oppressed by usury. (See also Aristotle, Politics 1305a24 and Plato, Republic 562D.) Perhaps the palintokia was a mythical fiction. All debts would have been construed as bearing interest, implying that creditors already had got the equivalent of their original principal back — an argument logical enough to be rediscovered by today’s Latin American and other Third World debtors.

Figueira (1985:147f.) interprets Megara’s early debts as being in the character of floating “anthropological” type client/patron obligations: “Loans were usually in foodstuffs or in seed grain, provisions for life itself. Borrowing was seldom a one‑time affair, as marginal farms were repeatedly in need. In this atmosphere, loans were not quantified (in this regard, the absence of coinage is significant) and tended to become open‑ended. Thus, a form of bondage was created with the obligations of the debtors being political, religious, and/or fiscal. Political duties might have included membership in the political following of the rich as in the case of the regional parties in Attica.” In sum, “To be a debtor was not a contractual situation but entailed a caste‑like status. To lend or borrow was a hereditary role.” But when did this ambiguous type of stratification develop?

The city whose debt history is best attested is Athens, but even here there are many gaps. As noted above, little epigraphic information exists prior to the fifth century, while subsequent local histories tend to be in the character of party pamphleteering. All that can be inferred is that in the closing decades of the seventh century large landholders let out their lands to sharecroppers for one sixth of the crop or extended credit to small farmers for repayment of up to a sixth, or perhaps more. Loans evidently were secured by the debtor’s personal freedom. It was these debts that Solon cancelled in 594 when he freed the Athenian debt slaves, redeemed some who had been sold abroad, and permanently banned debt slavery for Athenian citizens. But as in the case of other Greek cities, we are not told just how the status of the hektemoroi (“sixth‑parters”) developed, or whether their debts were essentially rental obligations or financial consumer debts. In fact, neither Lewis (1941), von Fritz (1943), Fine (1951) or Finley (1952 and elsewhere) have even ventured to guess whether these debts bore interest or not! Neither Finley nor any other economic historian has tried to describe how the practice of charging interest first developed in archaic Greece. And as for the Roman histories, they are quite late. It seems clear that Livy and Plutarch are retrojecting the practices of their own times onto the early secessions of the plebs and subsequent debt crises.

A plausible scenario

Having acknowledged the paucity of historical evidence and the reticence of others to speculate, here is my proposed scenario: The Greek and Italian economies of the ninth and eighth centuries were not yet monetized. Nearly all activity was on a subsistence basis. Whatever surpluses were created tended to be consumed conspicuously (often in burials, no doubt also in the form of gift exchange) rather than invested to produce commercial gains. Warlord chieftains carved out their own lands and built client bases.

Enter the Phoenicians. It is axiomatic that the exchange of commodities between an economically sophisticated core and a less commercialized periphery involves more than just the physical exchange of goods. It must ground itself in the context of economic institutions and legal traditions put into place on both sides. I suspect this is why temples played so great a role in archaic trade, and indeed in all types of contact with foreigners. Hence, we would expect the most active traders to establish temple embassies and commercial cults (see note 2) and also for these institutions to sponsor the ligaments of credit necessary for commercial trade. It probably was under such circumstances that the idea of interest was introduced as a payment for time.

No doubt Dark Age Greece and Villanovan Italy had debts of the “anthropological” type ‑‑ wergild fines, gift exchange and marriage obligations. The open question concerns when and under what circumstances such obligations were overlayered by economic debts specified in amount and, ultimately, secured by the debtor’s personal freedom or land‑rights. Such debts and their interest bespeak a commercial market mentality. How might so seemingly alien a mentality have been introduced to archaic Mediterranean communities? What would the lines of least resistance have been?

One way to start constructing a reasonable scenario is to review what is known about the diffusion of interest‑bearing debt in earlier contexts. The first recorded example is found in the Assyrian trade colonies in central Asia Minor, in Cappadocia. The trade colony of Kanesh dates at least from the twentieth century BC, and may have been established earlier by the Sargonids from Akkad or by other southern Mesopotamians. Like the Dark Age Greeks, the archaic Anatolians probably had little reason to develop any kinds of debt except for the omnipresent wergild‑type obligations. But their commerce with Mesopotamia exposed them to the ideas of commercial debt and above all to the idea of paying interest. Also introduced were various aspects of originally Mesopotamian religion, myth and ritual, along with modes of social organization such as contractual legal forms and oaths, weights and measures, and the use of weighed pieces of silver as the cosmopolitan Middle Bronze Age “money of the world.”

Klaas Veenhof (1982:148f.) has summarized how the Assyrians used trade credit among themselves while providing goods to local Anatolians priced in silver in amounts “ranging from ca. 10 shekels to ca.10 minas, occasionally also for quantities of copper and cereals. This identifies [the local Anatolians] either as customers of the Assyrians, buying on credit or being in arrears, or as a kind of commission agents or retail dealers, indebted for the value of the merchandise entrusted to them for sale in local markets. . . . The list of Anatolians indebted (and often in arrears) to Assyrians by far exceeds that of Assyrians in debt to Anatolians.” This probably also would have been the case with the Phoenicians and Phoenicians in Greece.

A further analogy between Assyrian traders in Anatolia and Phoenician merchants in Greece some twelve centuries later is suggested by the fact that local “Anatolians normally have to pay a much higher rate of interest [than did the Assyrian merchants among themselves], and have to provide securities, frequently joint liability by a plurality of debtors. The cooperation only rarely went beyond such elementary and fairly risk-free transactions; more developed forms like partnerships, agencies or investments are almost never attested.”

Also significant is the fact that “Some of the better known Anatolians, represented in exclusively native documents and in some Assyrian texts, function primarily as local money‑lenders, active in loan operations and in buying and selling (debt‑)slaves, at times also as suppliers of cereals. They may have carried on their business on the fringe of the large‑scale commercial activity of the Assyrians.”

I suspect that something similar occurred in the contacts between the Phoenician commercial societies vis-à-vis Greece and Italy. Of course, times had changed by the 8th century. The Bronze Age temples and palaces, in which early commercial enterprise was set aside from the subsistence‑based communal life at large, gave way to a secularized and privatized enterprise in the hands of traders increasingly independent from centralized overrides.

No doubt the first native Greeks and Italians to owe debts to foreigners and extend interest‑bearing loans to their local compatriots would have been landed proprietors and chieftains. They alone were in an economic position to trade with the Phoenicians, to shift away from subsistence grain production to export crops, to establish handicraft workshops to produce export goods, and to act as patrons to cultivators who fell into various types of clientage culminating in debt servitude. The virtual identity between landed proprietors, exporters and importers and workshop owners (Bravo 1977b:65) would explain how the charging of interest spread from the sphere of commercial exchange to agriculture. In neither Greece nor Italy were commerce and agriculture compartmentalized from each other, or from the proliferating use of credit. It is true, as Sally Humphreys (1978:151f.) has pointed out, that “The nautikon daneion and the mortgage of land . . . were different institutions, transacted through different relationships, and belonging to different systems of thought and behavior, even though they could be described by the same general word, hypotheke .” But they had a common nexus in the emerging commercial/landed aristocracy. And if interest could be charged in commerce, why not also in agriculture?

No doubt some catalyst was necessary to help establish this trade and its associated interest‑bearing debt. I suspect that the catalytic ingredient was the temples, which were permanent corporate entities set up to provide continuity and recourse among traders vis-à-vis foreigners, above all to settle disputes among them. This would be in keeping with earlier Near Eastern practice.

It would help to know more about Phoenician debt institutions and commercial contracts, but unfortunately, documentation is almost as sparse here as it is for the Greeks and Italians. All we know are the broad outlines of the Late Bronze Age societies whose collapse c. 1200 led to the Dark Age in the eastern Mediterranean. We also know of the increasingly commercialized city‑states that emerged in the seventh century. But the intervening archaic period is opaque as far as historical records are concerned. All we really know is that from the ninth century onwards a wave of Near Eastern contacts with the Aegean and western Mediterranean gained momentum, reaching from Italy and Sardinia via North Africa all the way to Spain. Among the Near Eastern innovations noted by contributors to the present volume are the North Phoenician bronze cauldrons, conical stands and related banquet utensils (Strǿm, above, 55), gold and silver jewelry with granulation, filigree and punch work, and, by the late 8th century, Phoenician metal jugs (Markoe, 63ff.).

If Phoenician traders indeed brought credit practices with them, the next question concerns the Greeks and Italians on the receiving end. How did they adopt these practices within the context of their own social traditions? Apart from the gold and silver booty they looted, the Greeks had little money. Their production ability also was limited. To the extent that olive oil and wine would be produced as export crops, it would be by the large landed estates cited earlier — but these still functioned largely on a self‑sufficient basis rather than as part of the money economy. No doubt the major (if not the only) customers of the Phoenicians were the chieftains and landed proprietors, and perhaps some of the temples which probably played a role in legitimizing this trade. It probably was with them that the first credit arrangements took root, and via their mediating influence that interest‑bearing debt was developed vis-à-vis their own clients.

Greek temples for their part were accustomed to receiving a tithe (dekate) of war booty (Pritchett 1979). This was what historians of mathematics call a unit‑fraction, that is, one‑tenth. The Roman duodecimal system’s equivalent was an uncia per as — a twelfth (8⅓%). These fractions seem to have become a customary commercial tithing or overplus that evolved into formal economic interest. In addition to Phoenician merchants and local chieftains, the temples would have played at least a catalytic role, if only by sponsoring the sanctity of contracts and debts, of protecting commerce and the safety of merchants on their travels.

In any event the landed creditors would have been the same proprietors who produced export goods and set up workshops. They would have found the new credit practices — and ultimately the charging of interest on their advances — to be an economic lever vis-à-vis less affluent parties. In other words, the proprietors of large estates would have bolstered their power by acting as patrons to rural clients who may either have served as or become sharecroppers (such as the hektemoroi) or simply needy debtors. Personal debts became part of an evolving patron/client relationship, serving as levers to reduce erstwhile free but poor individuals and their families to a state of dependency. This no doubt is how oligarchies came to build up their power in Corinth, Etruria and other regions.

In my reading, debt practices which began in the commercial interface between the Mediterranean periphery and the Near Eastern core would have been applied domestically in an increasingly agrarian context. Such credit did not provide cultivators with resources to invest to generate a surplus to repay their creditors, but was purely corrosive. Its repayment, with or without interest, soon forced cultivators below the break even level into irreversible indebtedness.

With this logic we can re‑evaluate the anthropological evidence concerning debt in archaic Greece and Rome. As noted above, there has long been a tendency to believe that debt was an inherently Indo‑European institution (if not indeed a universal one), simply because it is found both in Italy and Greece, and thus seems to span the documented gamut of classical Indo‑European speaking civilization. But we know that Phoenician traders visited both Italy and Greece by the middle of the eighth century. (David Ridgeway reviews the joint Phoenician‑ Greek establishment of trade on the offshore entrepét of Ischia/Pithecousi.) Thus the mere fact that interest is found in both Italy and Greece by the sixth century is no confirmation of an original native presence in these regions. It can best be explained in terms of Phoenician‑Near Eastern influence.

It is precisely the foreign-ness of this influence that explains the rapidly polarizing impact of interest‑bearing debt as it spread from commercial credit to agrarian usury. This polarization had occurred in the Mesopotamian homeland but was reversed by periodic debt cancellations when rulers proclaimed “economic freedom” from debt: Sumerian amargi, Akkadian andurarum, Babylonian mi’arum, Hurrian —udutu, and Hebrew deror. However, archaic Greece and Italy had no centralized rulers to proclaim such debt cancellations — or, where kings existed as in Rome, they were overthrown by aristocratic families hardly eager to cancel their populations’ debts. Financial polarization in Greece and Italy thus occurred much more rapidly and irreversibly than in Mesopotamia and its Near Eastern periphery, and the deterioration from productive commercial debt to unproductive agrarian usury was more pronounced.

In recognition of the illustrious discussants at this conference, I would very much like to get their views on some still unanswered questions, with the caveat of course that there can be no definitive answers.

To Chester Starr I would like to ask whether he thinks that the debts owed by the Athenian hektemoroi were interest‑bearing. Was their status related to the flowering of trade during the eighth and seventh centuries? What does he think of what Plutarch called the palintokia at Megara? Was Plutarch or his sources anachronistic in calling it a cancellation of back interest, and was it simply a debt cancellation? Or could it have been a subsequent invention of a tradition by politically partisan writers?

I note that Prof. Starr (1977) has emphasized that the Greeks sailed to Al Mina, and that he views them as being the active element in contact with Phoenicia. Would there have been in either case a Phoenician influence, as well as perhaps other Near eastern influences? Could commercial interest‑bearing debts have been part of this influence?

I want to emphasize once again that 2000 years of prior Near Eastern experience shows that coinage emphatically is not the key to the origins of debt, although it certainly catalyzed debts from the Persian wars onward as the economies of Greek cities became more stratified and economically differentiated. The key question is how debts spread before coinage catalyzed their proliferation.

To David Ridgeway and Glenn Markoe I would like to ask whether the idea of charging interest may have been introduced to Etruria by Phoenician and Greek traders on Ischia in the eighth century. Can they help explain why debt relations were more decontextualized and “naked” in Italy than elsewhere in the Mediterranean, that is, taken out of their more originally holistic Near Eastern context to become financial dynamics in and of themselves? What other economic institutions may the Ischia trade have introduced?

To Francois de Polignac and Wolfgang Rollig I would like to ask what role temples and foreign mercantile cults may have played in transmitting interest practices and related economic institutions. Might the Phoenician role at Delos, Delphi, Olympus, Samos and Argos have been important in transmitting worldly economic institutions as part of the general transfer of culture? More specifically, did Mediterranean cults act as commercial embassies sponsoring relations with outsiders and/or as creditors along the lines they had done in third‑millennium Mesopotamian trade with Asia Minor, and as late as the second century BC most notably in Delos? Might the charging of interest, sponsorship of contractual dealings with foreigners and indeed, depository institutions occur as early as the tenth through eighth centuries?

Final Comments

I have had a chance to speak to a number of you about my attempt yesterday to all too briefly summarize a long and complex social process. I would like to put a more elaborate 700‑page background elaboration of my ideas into the proceedings, but Prof. Kopcke tells me this may not be practical.

With regard to Prof. Starr’s comment yesterday asking why Phoenician merchants would have been willing to lend goods to Greeks and then hope (presumably in vain) to collect them when they came back a year later, the answer is twofold. Certainly there is always a problem of how to collect obligations, above all when foreigners are involved. I think that this is why temples played so important a role in archaic exchange. They were a higher and more perpetual source of recourse to traders. Unlike individual debtors (or creditors), they would not go away. In effect, temple groups may have stood surety for their commercial members.

Of course, merchants probably did not lend money or provide goods on credit to many local individuals. The Greeks for their part would have had to borrow the idea of credit itself, and subsequently to apply it among themselves. The very idea of commercial (rather than “anthropological”) credit is so formal that it requires a “higher” and more abstract institution such as temples. Precisely because the traders were private, they needed to form a collective institution standing above their individual members to handle the inevitable problems that arise between their trading groups. These guild‑like organizations seem to have been established as temple cults, as were those on Delos in Hellenistic times. Perhaps they stood ready to redeem the commercial debts of their cult members. Of course, this does not mean that temples directly financed the trade or provided the products, as Prof. Rollig has rightly emphasized. Rather, they served as intermediaries by virtue of their traditional function of sponsoring contacts with alien peoples, including traders and colonizers. (See de Polignac, this vol., 122f.)

It thus is significant that Strøm (46ff., 49) finds that Phoenician objects donated to Greek sanctuaries appear primarily in the 8th century (whereas evidence for the —first wave of Levantine expansion? in the 10th century comes mainly from the less formalized context of family tombs). Whoever it was that dedicated or acquired utensils needed for libation rituals — foreigners, natives, or overseers on behalf of the sanctuaries themselves (Strøm, this vol., 49, 60) — the implication is that such vessels were used for group meals which helped establish a formalized community and equity among the diverse cult members. Temple hierarchies would have served as commercial and diplomatic embassies, being higher social entities than individual families, and hence the most morally binding context for exchange in this archaic period when legal formalities were still relatively loose outside of the sacred sphere. The traditional role of temples in protecting travelers (mainly merchants) and sponsoring the general ethic of hospitality (especially at the pan-Hellenic shrines) also is significant in this regard.

The group meals first attested at these temples, using utensils dedicated by diverse members, seem to have provided a take-off point for subsequent Greek banquet formalities. The inspiration remained a ritual signification of equal status for the diverse guests — in the first instance, presumably, traders, family heads and other temple sponsors or beneficiaries of the temple system.

As Strøm has emphasized, the temples receiving Phoenician offerings are specifically those of Apollo the sun-god of justice, and Hera, Artemis and Athena. These are the counterparts to the Near Eastern deities such as Nanshe in lagash and Nidaba in Umma sponsoring written record-keeping, fair dealing, honest weights and measures, and commercial equity in general. It was of course Apollo’s temple at Delphi that long coordinated Greek colonization and related commerce and diplomacy, and likewise the Delos temple that subsequently developed into a commercial entrepét on the basis of its archaic traditions.

Bearing the above observations in mind, it is significant that temples are history’s first documented creditors at interest, beginning in Sumer in the third millennium. By charging interest and ground rent on their own assets and property, temples helped legitimize the idea of interest‑bearing debt and profit seeking in general. As recipients of votive offerings, they helped legitimize the gains earned both by foreign traders (who typically formed their own cults as diplomatic embassies) and by well‑to‑do local wealthholders. Temples often received a tithe of trade (after the model of war booty), or at least votive offerings. The dekate may well have become the prototype for interest and the 10 percent rate so typical of Greek banking. A tenth certainly would not have been too large a percentage for merchants to pay for ensuring security of payment. Some portion of mercantile revenues certainly was donated to the temples, much as soldiers and generals dedicated military booty. While the temples no longer included the handicraft workshops which characterized third‑millennium Mesopotamia, in their embassy functions they legitimized profit‑seeking trade, as well as by being a major beneficiary.

Prof. Starr mentions 17th-century Europe often in his book on archaic Greece. I find it significant that the English conducted their business abroad via professional temple‑like organizations, e.g. the Levant Company, the Russia Company, the East India Company and so forth. William Scott’s History of English Corporations (1912) describes the early annual meetings of crown corporations such as the East India Company as being renowned for their great feasts. In these celebrations, and also in their hierarchies of corporate offices — and indeed in the very fact of their incorporation as autonomous bodies — the format and organization of British trading companies may be traced back to the Sumerian temples which literally were history’s first corporate entities. (I think of them as being something like regulated public utilities.) Guilds were incorporated as temples‑in‑miniature, as were almost all early corporations. I do not mean this as just a parallel. The point is that the English companies took their prototype the organization of temples vis-à-vis their dependents and servants, with their own hierarchies and calendrical rituals.

Prof. Réllig is, of course, correct that while there were many temples in early first‑millennium Greece and Italy, there was no temple economy to anywhere near the extent found in Mesopotamia. What I tried to establish was that temples were catalysts. It is a characteristic of catalysts that they are not part of the reaction themselves. While indeed there was no temple economy, the private economy took over certain practices that were first innovated and legitimized by temples, and subsequently were privatized.

Obviously, a problem with my scenario is the lack of empirical evidence in the archaeological and literary records, unlike the case in Mesopotamia with its centralized financial record‑keeping. Despite this problem the undeniable fact remains that somehow interest‑bearing debt did indeed come to Greece and Italy, for it does not seem to have been indigenous. As Oscar Muscarella said yesterday in another context, “All we know is that it got there.”

[ The problem is that while we begin to hear of interest only in historical times — from the late 5th century onwards — we hear nothing of its having been introduced as a sudden innovation. The implication is that interest was there for some time. I suggest that it came along with the first strictly arms‑length commercial debts, incorporated into tradition by being sanctified by its association with the temples which acted as economic embassies. Were Carians on Samos doing something like this? Why were foreigners donating proto‑money such as tripods to the Greek temples? Their role in developing the earliest oboloi and drachmae has been much discussed, but this economic dimension of archaic Mediterranean temples still is not well elaborated.

[ The most plausible scenario I have been able to come up with is one using temples and their embassy cults as intermediaries. In serving this function they received various forms of tithes — of commercial profits as well as booty. In the process, they helped legitimize private trade and domestic credit. Indeed, they did so in such a way as to also help legitimize the agrarian interest‑bearing debt which subsequently was responsible for many families being economically degraded to the status of debt‑slaves. Just how this occurred may have turned on the role of individuals or leading families in each area of Greece and Italy. There would have been many possible ways to have organized these credit operations.

[ If we are to say anything more on the subject it must turn largely on the methodology we use. And this is my final point. To the extent that archaeologists remain strictly fact‑based, as Gunther Kopcke noted yesterday, they let the limitations of their immediate material evidence dictate the agenda of their thinking. Methodology thus determines not only what content and information is recognized, but in many respects what the findings of the research project will be. Any progress to be made with regard to how debt was introduced to the Aegean and western Mediterranean must follow from a methodology that goes beyond the inadequate material data at hand. Unfortunately, this artifactual evidence says too little about the structure of the society that produced it. We still need to develop a working hypothesis of the economic evolution of archaic societies.

I note that scholars are willing to make guesses about religion, myth and ritual, language and art. Why not economics and finance? It almost seems as if the more otherworldly or immaterial a phenomenon is, the more willing people are to speculate about it. The more directly economic it is, the less confident historians of antiquity feel about venturing anything about contexts and structural change. Perhaps this is partly because of the absence of economics in the education of most Classicists, philologists and art historians. In any event, the end result is that the public at large is left with an anachronistic view of how Western civilization began in the period we are discussing here.

[ Instead of developing de novo from tribal‑type “anthropological” roots in a pristine manner, the commercialization of Mediterranean economic life began by being taken out of the context of the hitherto centralized Near Eastern Bronze Age economies with their traditional checks and balances, debt cancellations and related economic freedom acts.

[ This decontextualization is why the question of how debts developed in Greece and Italy — and hence in modern Euro‑American civilization — is so important. For as I noted at the beginning of my paper, when today’s market‑oriented economists choose to say anything about antiquity, they tend to retroject their own ideology back onto early history, much as Stoic historians did already in late antiquity. The unchecked economic polarization stemming from antiquity’s debt problems, and which today threatens once again to polarize our own world economy, are explained as having perfectly natural and ancient Indo‑European roots and thus as being virtually a part of human nature rather than subject to alleviation or political change.

I like Chester Starr’s anecdote about how he never saw an excavation that said anything about kinship systems. I doubt that any Mediterranean excavation says much about financial systems and interest either. We have ancient literary evidence, but there reason to doubt most of it as being political propaganda or anachronistic retrojection, as in the financial history of Athens. Whereas the archaeologists, classicists and philologists most directly familiar with archaic Greece and Etruria might be expected to take the lead in suggesting scenarios for early financial relations in these societies, and to explain how these changes shaped the framework for the classical period to come, these unfortunately are just the professions that have hesitated most to express their views in print. And so the opportunity to suggest plausible economic scenarios falls to comparative outsiders such as myself. No one here has given me reason to withdraw my speculations.


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* The meeting “Greece between East and West, 10th ‑ 8th Century BC” was held at the Institute of Fine Arts in New York in March of 1990. It was organized in the expectation that archaeologists would speak as historians. A majority of the ten participating contributors were archaeologists. One works in Israel, one concentrates on the Near East north of Palestine, and four specialize in Cyprus, Greece and Italy. At first glance the four remaining participants might seem to be a token representation to justify calling this meeting interdisciplinary: a Semitic philologist, an economist, and two historians (including de Polignac in this category). Yet the composition of this panel was never seen as representative of all aspects that logically should have been present on this occasion. Given another framework, and more years experience to assimilate new directions, the convener would have wished to invite still more specialists and non‑archaeologists. For ultimately at issue is the archaeologist’s participation in the broad discussion of history.

What is considered central to this discussion as opposed to marginal depends on one’s perspective. To take an extreme example, the traditional archaeologist or art historian may well be perplexed to hear Dr. Hudson lecture on the “decontextualized” practice of charging interest, and his contention that interest‑bearing debt was brought to Greece by Phoenicians in the 8th century BC. No document to confirm or contradict this will or can ever been found in the field. Why then should this view — and an economist — appear on this panel? The answer may be provided by what probably is the single most famous art work of the 8th century BC — the monumental amphora inv.# 804 in the Athens National Museum. This gravemarker was commissioned at the death of a female member of a leading Athenian family, whose fortunes were such that only the very best and most original or “modern” would do for this occasion. The painter imitated (though this may not be quite the right expression) something that apparently was popular and admired: the art of Phoenician figural decoration. The question of “how this money was earned” and how this artistic masterpiece relates to the economic realities of its day will interest some people more than others, but those who do indeed think it relevant will not that perhaps what is “orientalizing” in art corresponds to other domains as well. Alone among the participants, Hudson sounds the theme of Phoenicians on the one hand, Greeks and westerners on the other as unequal partners, not so much in the sense of rich and poor as of having different “systems” or ways of acquiring wealth. The Phoenician way presumably was that of the future. But where and when in Italy and Greece did this future begin? To return to the amphora Athens 804: if certain significant advances in art spell self‑confidence and success, how far and wide should we look for the sources?

Along these lines Chester Starr’s paper addresses a contentious issue: the unwillingness of archaeologists to speculate, that is, to go beyond merely retrieving and ordering material evidence. Yet all that can be retrieved is obstinately silent. It calls for exploration in terms of thought process and human motivations. Some may shrug off this kind of curiosity, or even condemn it as speculative. Starr cites the kind of injunction that one often hears (and that in my view ultimately does more harm than good) by ruling searching questions out of bounds. Others call this reconstructive reasoning “humanistic,” “unscientific” or, less kindly, “nebulous.” They may deem it passe, insisting that rigorous “methodologies” be followed. Applied science certainly has made immense contributions, but in the process has it “marginalized” traditional archaeology? Many traditional archaeologists may fear the results. If a new Gordon Childe were to appear, he would have to take in this information and elaborate on the grand scheme of things in much greater detail. I believe that viscerally, all traditional archaeologists know there is such an agenda. It is pressing, and we ought to admit that the field has substantially broadened beyond pottery classification and similar endeavors.

The title “Greece between East and West” has been chosen advisedly, and not merely as an invitation to discuss “interconnections.” Well documented political and economic forces active in the early first millennium seem likely to have affected Greece, calling for us to look beyond “bric‑a‑brac,” and even to set aside Homer’s half‑hearted interest in non‑Greeks from the Levant. Let us ask what naturally would have transpired between individuals and groups in search of opportunities, in the spirit of the impressive reports on traffic in the Mediterranean and its environment in the 11th/12th centuries and 14th to 18th centuries AD as rendered by E. Gothein and F. Braudel. For the period under discussion at this conference we have, for instance, Sir John Boardman’s admirably articulate surprise at the rise of Greece from seemingly hopeless depression. We also see the respect paid by later Greeks to Phoenicians as providers of their culture. For Greece, we have to explain big innovations. Villages and families are drawing together to form polities. They are designating central places of worship, frequently placing extraordinary emphasis on the divinity’s house. They send settlers abroad as a matter of policy, to insure the community’s survival. All in all, what happens more or less simultaneously in several places, in the span of just a few years or decades in the 8th century, seems too much to be entirely self‑generated. The meeting was designed to cautiously approach the question whether and how we can form an idea of developments that would involve East and West as mutual participants in an unfolding continuum.

At first glance the 10th and 9th centuries might seem to have had little or nothing to contribute. Yet it is clear from several papers, notably Kochavi’s, Ridgway’s and my own, that long‑distance traffic of one kind or another always existed. It is probable that earlier contacts underlie 8th‑century consequences. In the 8th century, conditions outside of Greece caused these contacts to flourish anew. Those who engaged in these contacts had centuries ago ceased to be strangers to the Greeks. Their encounters lowered linguistic and other barriers. This aspect of matters needs to affect our thinking. It is essential not to neglect the Bronze Age and its aftermath which we now hesitate to call a dark age.

There has been a view (and it may still be held by some) that Greek history should not be allowed to begin before ca. 700 BC, because of the absence of written documentation before that date. This literary gap has led to a refusal to look at archaeology. The result was the Greek “miracle.” Today we are trying to put together a factual explanation of this “miracle” or “mirage.” It may not rest on as firm a ground as if we had a Herodotus to tell us the story, but at least it is reasonable enough to be entertained.

Needless to say, our meeting highlights the sea and the opportunities it offered. But this is by no means the only aspect able to shed light on the ascendancy of early Greece. The 1988 congress held in Rome, “La transizione dal Miceneo all’alto arcaismo. Dal palazzo all citta” (published in 1991) touches closely on our subject, yet with perhaps one exception the contributors saw no need to examine their subject in the context we propose.

We are beginning to collect ideas on a subject — the early history and background of classical Greece — that many agree is ripe for a re‑evaluation. We still may be far from linking various sections, to be sure. One friendly critic took us to task for not reflecting Bernal’s by now familiar views on Greeks of mixed Semitic and African stock. But this is one case in which I think the archaeologist’s reluctance to speculate is justified. At a certain critical point in his argument Bernal himself has chosen to disavow, in rather strong terms, the evidential value of archaeology. He evidently did so to help his theory. That bias does not necessarily prove him wrong, yet for the near future — and certainly until the volume containing the testimonia for his linguistic claims has appeared and been digested — there is little that non‑linguists can do but stand back and wait for a verdict based on criteria that Bernal himself deems relevant. Possible consequences of racial affinity apart — reality or chimaera, who knows — if Semitic and Egyptian roots in the Greek language are indeed as numerous as Dr. Bernal claims, this could be ground for speculating on an East‑West symbiosis. Yet this is another issue that has been published with incendiary claims and phrases. Such partisan issues never get settled until the furor dies down.

The traditional archaeology of pre‑literate periods can never deal with certainties when it comes to making historical reconstructions. What is absent from the material record is the role played by individuals and events, and even that of political institutions, economies and beliefs. These are never self‑evident. They must be derived from other sources, and often are imposed upon the findings. For the traditional archaeologist, this insufficiency makes for dependence, or at least it opens him to instruction. This meeting is thus an admission of a venerable discipline’s shortcomings, but it claims that other parties may help alleviate the impasse.

Gunter Kopcke

Michael Hudson (b. 1939) has taught international economics at the Graduate Faculty of the New School for Social Research, and has been economic adviser to the United Nations Institute for Training and Research, as well as to numerous government agencies and corporate clients. He is the author of many books and monographs on international economics, most recently Trade, Development and Foreign Debt (1991). As an economic historian he has been a Research Fellow at Harvard’s Peabody Museum specializing in Babylonian economic relations, and Visiting Scholar in Bronze Age economic history in the Economics and Classics Departments of New York University, as well as at the Institute of Fine Arts. He is currently writing a history of debt and debt cancellations from the Bronze Age Near East to the present day.


  1. These wergild payments are fines owed to injured parties for manslaughter and lesser damages. A wergild obligation is illustrated on the shield of Achilles, Iliad IX.632ff. (for a reparation due in cattle), where —the refusal of the penal gift . . . (marks Achilles) as a man of unacceptable excesses.? Finley 1978:117f.
  2. Certainly the southern Mesopotamian cities organized their foreign trade through temple embassies. The function of temples as —neutral zones? in peripheral regions protected and sanctified above all their commercial undertakings. We find such cults in Hellenistic Delos (viz. esp. Rostovtzeff 1941, II:790f.).

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Phoenicia website author’s note: The above study is reproduced by kind permission of the author(s) in 2005.

Read more: Did the Phoenicians Introduce the Idea of Interest to Greece and Italy; and if so When?


on Mar 2, 2012

How Wall Street Became a Foreign Country.

Claire Kerr


I’ve been thrilled and privileged to participate in the Occupy movement via Occupy Pittsburgh.

While sitting out in the cold and rain, I got to having some deep thoughts about the poetics of the occupation and I figured I’d share them here with you.

I suggest the opposite of our failing capitalism isn’t socialism, it’s gift economy.

The term “occupy” has obvious military connotations. The poetic use of the term as a metaphor to describe a peaceful protest demands some reflection.

Currently, the U.S. military is just winding down a massive, costly and controversial occupation of Iraq. This occupation of Iraq is the  prominent cultural back drop in the minds of most Americans when we hear the term “Occupy.” “Occupy” in this sense suggests going on to foreign soil where we’re not particularly wanted or welcome and ensuring that our interests are protected there.

Thus, the notion that we would need to Occupy Wall Street, for example, frames “Wall Street” as a kind of hostile foreign nation, a place where we need to send “troops” (of peaceful protesters) in order to control the situation there and to protect our interests.

But Wall Street is American soil, right? Why should we feel we need to “occupy” it?

How Wall Street Made Itself a Foreign Land: Usury

The answer to this, I believe, lies in the spiritual dimension of our financial institutions and failing economy. The spiritual malaise of Wall Street, the banking industry, and the corporations has created a sense of alienation and violation so potent that those institutions can no longer be perceived by Americans as even belonging to their country.

There’s a sense of these institutions and corporations as alien and hostile. This sense is not imaginary or paranoid. It’s completely correct, and it has its root in the alienating and hostile actions of those institutions towards the American people.

In order to make my point clear, I need to explain a few rather arcane (but fascinating) points which I first learned from Lewis Hyde’s brilliant book, The Gift: Creativity and the Artist in the Modern World.

To begin, the banking industry’s practice of usury is a practice that was recognized in spiritual traditions throughout the ancient world as an act which promoted division, suspicion, and alienation within a community. I think we need to reconsider ancient and indigenous attitudes towards usury in order to understand the extent to the unity and spiritual virtue of the United States has been violated by Wall Street.

Today, “usury” means “lending at unbearably high interest.” In the ancient world, usury just meant charging any interest at all on a loan.

Lending at interest itself is now widely accepted and taken for granted as perfectly acceptable and normal. Loan-sharking, or lending at really high and outrageous interest, is the only stuff that raises eyebrows now. Loan-sharking on the part of the banks is a large part of what created the sub-prime mortgage crisis.

We can keep in mind that the banks have practiced the intense form of usury-as-loan-sharking and that this practice has led to the current widespread poverty and outrage, but in order to understand the severity of loan-sharking, I want to start by discussing the problematic spiritual dimensions of usury, period.

In order to understand why usury (which is now so widely accepted) would be seen as a spiritual problem, we first need to understand a little bit about the way gifts work.

The Increase of the Gift

An interest-free loan is a form of a gift. For example: if I give you an interest-free loan of $1000 dollars, and you are able to use that loan to invest in a business which then makes you money. A year later, you return to me $1000, but you’ve still been able to create an “increase” out of the loan that I gave you, an increase that you wouldn’t have been able to enjoy if I hadn’t loaned you the $1000 to begin with.  So the increase that you make on account of me loaning you $1000 is a kind of gift from me to you. Theoretically, if I had held on to my $1000 and not given it to you, I could have used the $1000 to invest and thereby enjoyed the increase myself.

Gifts are really cool because they create relationships of community and connection. There’s something magical and in harmony with the natural growth and decay of nature in the increase that properly treated gifts can create.

In indigenous cultures which maintained gift economies, it was always considered imperative that the increase generated by a gift  be passed on or used up, and never hoarded or used as capital itself. This passing-on or “paying it forward” was thought to be necessary in order to keep the “spirit of the gift” moving. So, for example, if you were able to make $2000 out of the $1000 interest-free loan I had given you, it would be good form for you to spend that $2000 on necessities for you and your family or to throw a big party and share the wealth. It would be very bad form for you to keep that $2000 to invest as capital or to hoard in savings.

The idea behind this is that gifts in a community should be kept in circulation and not used to unduly benefit or to create an unfair advantage for any one individual. When gifts are hoarded or used to create only private benefit, the spirit of the gift dies and the nihilism of separation, meaninglessness and isolation arises. This nihilism of separation creates a general atmosphere of cruelty. It’s the atmosphere we’re living in now.  It’s the atmosphere that the Occupy movement has arisen to protest.

The Spirit of the Gift

We can think of the “spirit of the gift” as a sense of gratitude that puts human beings in an attitude of reverence and love for each other, nature, and divinity.  When gifts are kept moving and circulating, no one person has giant storehouses of money or goods to use as “security.” The “security” and “prosperity” of an individual is instead intimately tied to the security and prosperity of the community, and thus to relationships of good will, love, and interdependency. Furthermore, a person who is living in the spirit of the gift, rather than seeking to extract and hoard the riches of the earth in warehouses instead respectfully fosters and tends for the earth so as to continue to enjoy the bounty of her gifts in a sustainable fashion.

Living in the spirit of the gift is an act of faith. It involves a surrender of control.  This surrender entails two spiritual attitudes that are largely unknown to our control-obsessed modern world: 1) A general trust that the community / nature / divinity will continue to provide and 2) A graceful willingness to accept death and suffering in the event that the community / nature / divinity does not provide.

The act of living in the spirit of the gift is something which my favorite poet and all-around-awesome dude, Jesus, pointed to many times, perhaps most memorably in his Sermon on the Mount, when he suggested that everyone live “like the lilies of the field.” The lilies of the field, J.C. pointed out, don’t do any work or save for rainy days, and yet they’re gorgeous and happy. The lilies live in the spirit of the gift, accepting the nourishment of the sun and earth and giving forth radiant beauty. Then they gracefully die when it gets cold and they don’t whine about it. They don’t control or hoard anything.

The Nihilism of Usury and the Control Freaks of Wall Street

Usury, in essence, is an expression of fear and clinging to material existence.  It’s a refusal to surrender control. Usury hears about the notion of living like the lilies of the field and says “screw that!”

Usury seeks to maintain control over the increase generated by a gift.  It thus kills the spirit of the gift and creates disconnection.

When I give you that $1000 interest-free loan, I’m letting go of my say over that money. I’m letting you “use” it. In turn, in our little gift society, I trust that you will put your “use” of the gift (the increase you accrue from investing it) to benefit all of us.  But I’m trusting. I’ve surrendered control of the “use” of the gift.  Through my trust, I’m making space for the spirit of the gift to live and breathe.

When I give you a $1000 dollar loan with 20% interest, I’m not letting go of my say over that money. I’m not trusting that you will use the increase of the gift to ultimately benefit our community and thus me. I’m demanding that you put the increase that you generate through your “use” of the gift back in my pocket. Thus I am controlling the “use-stuff” or “use-ury” or of the gift. In my control, I don’t trust you and I certainly don’t love you.

Usury = commerce between foreigners

Lewis Hyde explains:

To ask for interest on loaned wealth is to reckon, articulate, and charge its increase.  The idea of usury therefore appears when spiritual, moral, and economic life begins to be separated from one another, probably at the time when foreign trade, exchange with strangers, begins. As we saw in an earlier chapter, wherever property circulates as a gift, the increase that accompanies that circulation is simultaneously material, social, and spiritual; where wealth moves as a gift, any increase in material wealth is automatically accompanied by the increased conviviality of the group and the strengthening of the hau, the spirit of the gift.  But when foreign trade begins, the tendency is to differentiate the material increase from the social and spiritual increase, and a commercial language appears to articulate the difference.  When exchange no longer connects one person to another, when the spirit of the gift is absent, then increase does not appear between gift partners, usury appears between debtors and creditors.

(144-145 The Gift: Creativity and the Artist in the Modern World)

The key point that Hyde makes here is that usury begins when foreign trade begins.  It’s an economic relationship forged between groups of people who have no necessary bonds to each other communally or spiritually and who do not trust each other. It’s a relationship of outsider to outsider.

Think about this: usury now colors every exchange in our financial institutions. The banks lend to us, the people, at interest– and in the case of the sub-prime mortgage crisis at insanely high, loan-sharking interest.  They might call themselves things like “Bank of America” but to them, we, their debtors, are obviously foreigners.

The Occupy Movement as a Gift Society


Therefore, it makes perfect sense that the movement against the banks, against our financial institutions and corrupt government and corporations calls itself an “Occupation” and takes the form of physical encampments.

We are occupying Wall Street and occupying symbolic squares and parks in our hometowns because the banks have made themselves foreigners to us through their usury.  We have no fellow-feeling and good-will for them because we have no trace of a gift relationship with them. They’ve destroyed the spirit of the gift through their rapacious lust to control and their absolute unwillingness to trust.

They’ve treated us, the people, their fellow citizens, like strangers.

To speak in biblical terms, our financial institutions have committed grave sins and the consequences of those sins are alienation and disunity.

It is absolutely no accident that the Occupy encampments in NYC and throughout the world are operating as communal gift economies with free healthcare (in the form of medic tents), free education (in the form of teach-ins, speakers, and lending libraries), free food, free shelter (in the form of donated tents, clothing, sleeping bags, etc.), and free entertainment (as people share their musical and artistic skills).

The Occupy encampments are modeling the living power of the spirit of the gift which the banks, corporations, and corrupt government of the United States had sought to destroy through usury, among other means.

Debts create suspicion, scarcity, distrust and death.  Gifts create love, abundance, trust and life.

Why doesn’t Occupy need to articulate demands?

In the Occupy movement, the spirit of the gift is rising up and roaring through the hearts and minds of people throughout the world. This is what makes it enormously powerful and wonderful.

This is why it doesn’t need to “articulate demands.” The demand of the movement is implicit in its very existence. The medium is the message.  Gifts, not debts. Consensus, not tyranny. Community, not commodity. The time has come. The spirit will prevail.


Edited by Hayley Samuelson

Incorrect source, offensive, or found a typo? Want to write?

Carolyn Elliott is a mischief-maker who helps people struggling with economic inequality to realize their dreams, feel whole and live beautifully. She charts the liminal wilderness of spirituality and radical politics over at the bright hearth of Love & Anarchy. Carolyn experienced a series of heart-awakenings while earning her PhD in critical and cultural studies at the University of Pittsburgh. These awakenings caused her to dedicate her life to sharing joy and feedom. She now offers her book on cultivating ecstatic creativity, Awesome Your Life: the Artist’s Antidote to Suffering Genius, as a free and shareable gift right here. If you find you dig the book, you might want to sign-up for low-cost coaching with Carolyn, which comes highly recommended.



Money As Debt – Set of 2 DVDs

Money As Debt

The first ‘Money as Debt’ DVD is a 47 minute DVD created by Paul Grignon from Gabriola, British Columbia, Canada. It has been in distribution since 2006. I describe it as colourful entertainment with an educational twist. The intent is to share this DVD with people and get them fully interested and halfway to an understanding of all topics related to ‘money as debt.’ Now there is a second DVD “Money As Debt” and both are included as a two-pack DVD.

Paul has interspersed a series of historical banking quotations throughout the DVD. He also uses cartoon characters in a very effective manner to explain ‘What Is Money.’ Then using these cartoon characters to relate a ‘Goldsmith’s Tale’ that explains the history of gold as money and how the idea of interest or usury was conjured up by the goldsmiths who became greedy.

Finally, he presents a good explanation of ‘The Money System Today’ wherein he shows how money in our modern society really represents debt. He shows graphically how banks create money from the borrower’s promissory note. He points out that the amount of money in circulation is equal to the total amount of debt. He also confirms that loans do not come from depositors’ funds which is the misleading impression held by most people.

Paul gives a short history of usury and explains how there was a time in history when every religion opposed usury. He summarizes that the charging of interest or usury is a moral and practical problem in this 21st Century because the banks create the principal of any loan but they never create the interest or usury that is exacted and added to any loan payment. The design flaw of usury is amply illustrated for the evil function that it is.

Finally, Paul spends some time on proposals that will change the orthodox system of usury-based finance. He advocates the usuryfree LETS (Local Employment Trading System) software and illustrates paper notes of usuryfree time currency as usury-free debt money. He shows an example of personalized money with the creator’s picture on it. It visually makes the point that we can issue “personal and usuryfree debt money” without the involvement of banks. Paul recommends that local communities establish independent, local barter networks as the last, best defense against the New World Order’s plans for a one world usury-based, electronic money supply where every transaction is tracked by the system. In summary, usuryfree community currencies are the optimal, emergency-preparedness model for any community.

In closing, Paul presents a permanent usuryfree money proposal that can be implemented by any level of government. Such a proposal would free us from the Economic Dictatorship that currently is the shadow behind all levels of government – municipal, provincial/state and federal.

Most people that I have shown this DVD to say that they want (need) to see it more than once. I recommend this DVD for anyone’s library as it can be a great teaching tool to share with those who are ready and willing to learn what formal education neglects to teach.

The UsuryFree Network is promoting the DVD ‘Money As Debt’ as a  fundraiser to raise money for the Seventh Annual UsuryFree Week from November 13th to 19th, 2011. That whole week is being designated as UsuryFree Week and usuryfree creatives in various communities are planning events to recognize that usuryfree living is possible and probable for those who make the choice to free themselves from the scourge of usury. More details about the events to celebrate the Seventh Annual UsuryFree Week will follow in the fall of 2011.

The UsuryFree Network is marketing the ‘Money As Debt’ DVD with a retail value of $25.00 (Canadian Funds) or its equivalency in any other national currency. This is payable in Canadian Funds or in the alternative $20.00 Canadian Funds and $5.00 usuryfree community currency. Any usuryfree community currency is accepted whether in Canada or the United States. Shipping costs are $5.00 and this is payable in Canadian funds.

You are encouraged to buy an extra copy and gift it to any social, environmental or electoral reform group or organization as such groups need to know that unless the money-as-debt-plus-interest system is fundamentally reformed, no other reforms will ever succeed, at least not for long. Encourage these groups to view this entertaining explanation about money and then recommend it to their members and the public. Any further suggestions in this regard are welcomed and appreciated.

My pitch to social justice, environmental and electoral reform activists is that, without monetary reform, political reforms will not achieve the goals intended – fundamental power lies in money creation, not laws. And without electoral reform, monetary reform is not going to happen. In this way, I see the ‘Money As Debt’ DVDs helping to enlist a wide variety of social activists behind the demand for both electoral and monetary reform.

Enjoy this day!
Working with you for ‘peace and plenty’ by 2020 AND ‘Let’s celebrate usuryfree heaven in 2 oh 11′
Tom J. Kennedy otherwise known as ‘Tommy UsuryFree Kennedy’

Please forward payment (cash, cheque or money order) for your order to:

The UsuryFree Network,
P. O. Box 9333, Ottawa, Ontario
K1G 3V1
Tel: 1.888. NOUSURY

Any questions about the “Money As Debt” should be emailed to:

with “Money As Debt” in the Subject





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