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Christian Economics in One Lesson, II: 7: Interest and Rent

Written by Gary North on May 14, 2016

And another came, saying, Lord, behold, here is thy pound, which I have kept laid up in a napkin: For I feared thee, because thou art an austere man: thou takest up that thou layedst not down, and reapest that thou didst not sow. And he saith unto him, Out of thine own mouth will I judge thee, thou wicked servant. Thou knewest that I was an austere man, taking up that I laid not down, and reaping that I did not sow: Wherefore then gavest not thou my money into the bank, that at my coming I might have required mine own with usury? And he said unto them that stood by, Take from him the pound, and give it to him that hath ten pounds (Luke 19:20-24).


The King James Version translates the Greek word tokos as usury when it means interest. The term usury has negative connotations. The King James Version always translates the Greek and Hebrew words for interest as usury. Tokos comes from the root word, tikto. According to Strong’s Concordance, it means “to produce (from seed, as a mother, a plant, the earth, etc.), lit. or fig.: bear, be born, bring forth, be delivered, be in travail.” The King James translators repeatedly translated tikto as bear (as in birth) or bring forth.

Jesus’ “parable of the pounds” (the English unit of money) clearly states that the owner who had entrusted money to his stewards had the right to collect an increase from them when he returned. The most blessed steward invested the money and had made ten to one on his investments (Luke 19:16). The owner praised him (v. 21). The second steward had made five to one (v. 18). He, too, received praise (v. 19). The third steward had buried the money. This had cost the owner something: forfeited interest. He chastised the steward for not having at least entrusted the money to a banker. Had the steward done so, the owner would have received an increase: interest on his money.

The third steward had wanted to avoid all uncertainty. Uncertainty is defined by economists as the statistically incalculable possibility of future loss or gain. This is contrasted with risk: the probability of loss that can be estimated statistically in advance. Uncertainty is the source of profit, which in turn is defined as any rate of return above the prevailing market rates of interest.

The steward also wanted to avoid all risk: any threat of loss, which exists when we lend money at interest. But risk is unavoidable in life. There is always a possibility of loss. He earned the wrath of the owner for having been too timid with the owner’s capital. His timidity had cost the owner something: forfeited interest. So, there was a possibility of loss, no matter what the steward did: speculate in hope of an unpredictable profit, invest in hope of a predictable interest return, or bury the coin and receive the wrath of the owner.

A Positive Rate of Return on God’s Investment

This parable was designed to teach us that God grants all men benefits in life: capital. Men are required by God to do something positive with their talents. In the parallel passage in Matthew 25, the Greek unit of money is called a talenton. We derive the word talent from it. This is a proper application of the general principle of capital accumulation: Jesus was really speaking of men’s talents in the broadest sense, though He used a unit of money to illustrate this kingdom principle. He was speaking of men’s productivity in history. Matthew 25 begins with the parable to the ten virgins and their lamps, moves to the parable of the talents, and ends with a description of the final judgment: sheep vs. goats, God’s right hand (reward) vs. Gods left hand (punishment).

This parable teaches that the least that God’s people must do is take calculated risks in order to multiply their wealth in the broadest sense: their output for God’s kingdom. It acknowledges the legitimacy of interest. What it condemns is a utopian quest for risk-free living. God demands a positive rate of return from all men. He provides us with capital; he expects us to increase it for the sake of His kingdom.

The parable of the pounds-talents does not forbid taking interest. On the contrary, it recommends this for risk-aversive, people who want a lower but predictable rate of increase on their capital. This positive attitude toward interest is even stronger in the Old Testament. Interest-taking was a means for Israel to extend the rule of Gods people over foreigners who do not affirm God’s covenant. “The LORD shall open unto thee his good treasure, the heaven to give the rain unto thy land in his season, and to bless all the work of thine hand; and thou shalt lend unto many nations, and thou shalt not borrow” (Deut. 28:12). God’s people were assured that their position as interest-seeking lenders was valid. What they were to avoid was becoming indebted to foreigners.

Zero-Interest Loans

The Mosaic law specified that an Israelite was not allowed to take interest on loans from poor brethren. “If thou lend money to any of my people that is poor by thee, thou shalt not be to him as an usurer, neither shalt thou lay upon him usury” (Ex. 22:25). Notice that the debtor had to be poor. The loan here was a charity loan. This law also applied to a particular kind of stranger in the land. “And if thy brother be waxen poor, and fallen in decay with thee; then thou shalt relieve him: yea, though he be a stranger, or a sojourner; that he may live with thee. Take thou no usury of him, or increase: but fear thy God: that thy brother may live with thee. Thou shalt not give him thy money upon usury, nor lend him thy victuals for increase” (Lev. 25:35-37). Here again, the issue was the debtor’s poverty. This was not a commercial loan. It was an emergency loan.

For charitable loans, there was a time limit in Mosaic Israel. In the seventh year, all charitable debts were cancelled simultaneously. This year is sometimes called the sabbatical year, though this term is not found in the Bible.

At the end of every seven years thou shalt make a release. And this is the manner of the release: Every creditor that lendeth ought unto his neighbor shall release it; he shall not exact it of his neighbour, or of his brother; because it is called the LORD’s release. Of a foreigner thou mayest exact it again: but that which is thine with thy brother thine hand shall release; Save when there shall be no poor among you; for the Lord shall greatly bless thee in the land which the LORD thy God giveth thee for an inheritance to possess it (Deut. 15:1-4).

In this case, it was lawful to demand payment from a foreigner. But the Hebrew word for stranger here is nokree. In the Leviticus passage, which prohibited taking usury from a stranger, it was gehr. The nokree could be treated more severely than a gehr. “Thou shalt not lend upon usury to thy brother; usury of money. usury of victuals, usury of any thing that is lent upon usury: Unto a stranger [nokree] thou mayest lend upon usury; but unto thy brother thou shalt not lend upon usury: that the LORD thy God may bless thee in all that thou settest thine hand to in the land whither thou goest to possess it” (Deut. 23:19-20).

What was the difference? The gehr had decided to live in Israel under Israel’s laws. The nokree was a foreign businessman or temporary resident who had not participated in Israel’s covenantal life, including Passover. “And when a stranger [gehr] shall sojourn with thee, and will keep the passover to the LORD, let all his males be circumcised, and then let him come near and keep it; and he shall be as one that is born in the land: for no uncircumcised person shall eat thereof” (Ex. 12:45). The nokree remained uncircumcised.

The Jubilee

We know there was a distinction between charitable loans and commercial loans because of the jubilee. The jubilee law required that every fiftieth year every family that was an heir of the conquest generation would receive back its share of the original land distribution made under Joshua (Lev. 25:10). The jubilee year followed the seventh sabbatical year. This means that the heir had not received back his land in any of the preceding seven sabbatical years. But the law of the sabbatical year required the creditor to release his indentured servant and supply him with food and animals (Deut. 15:12–14). The creditor had no such obligation in a jubilee year.

(For the rest of my article, click the link.)

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