alternative investments

The investment in firms and the investment in real estate do they constitute the best alternatives to the loan with interest (bond loans and others) ?

The loan with interest is condemned by various important groupings (minds trends, groups of pressure, political movements, governments, religions).
Truths of yesterday, today and tomorrow ?

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You will find below some texts little and badly known in which the loan with interest is denounced.

Saint Ambroise, Bishop of Milan (340-397)

« What else is a loan with interest otherwise to kill a person ? »

In 1311, in the Council of Vienne, the pope Clement V declared worthless and vain all civil legislation in favour of loan with interest, by underlining that if somebody falls in this error to dare boldly to maintain that it is not a sin that to make a loan with interest, we announce that he will be punished as heretic and we order all clergy and inquisitors to act vigorously against all those who will be suspected of this heresy.

The Islamic riba

Islamic civilization also condemned interest. The main Koranic rule in economical domain stipulates that God made lawful the purchase and sale, the trade, and illicit loan with interests or usury, or riba (from Arab verb rabâ : to increase). According to J. Schacht, in the Encyclopaedia of Islam, loan with interest is generally, any precarious advantage without counterpart for the provided service. Already, the clairvoyant Mahomed condemned loans with interest when the rate was weak rate as well as when the rate was high.

Urbain III - Letter Consuluit Nos to a priest of Brescia - date uncertain

« … but since we are told clearly in Gospel according to Luke how to behave in these cases, as it is said « Do lend without hoping for anything in return « (Lc 6, 35), it is necessary to judge that such persons act badly because of their intention of lucre - because any interest or any surplus in restitution are defended by law - and in the judgement of souls, they must be firmly encouraged to give back what they acquired in that way. »

Urbain III - Council of Vienne - Constitution « Ex gravi ad Nos » - About interest on loan – 1184

« If somebody falls in this error so as to have presumption to maintain obstinately that it is not a sin to lend with interest, We decide that he must be punished as heretic. »

Benedict XIV – Vix pervenit Encyclical - About usury - 1745

1. « The nature of the sin called usury has its proper place and origin in a loan contract. This financial contract between consenting parties demands, by its very nature, that one return to another only as much as he has received. The sin rests on the fact that sometimes the creditor desires more than he has given. Therefore he contends some gain is owed him beyond that which he loaned, but any gain which exceeds the amount he gave is illicit and usurious. »
2. « One cannot condone the sin of usury by arguing that the gain is not great or excessive, but rather moderate or small ; neither can it be condoned by arguing that the borrower is rich ; nor even by arguing that the money borrowed is not left idle, but is spent usefully, either to increase one’s fortune, to purchase new estates, or to engage in business transactions.
   The law governing loans consists necessarily in the equality of what is given and returned ; once the equality has been established, whoever demands more than that violates the terms of the loan. Therefore if one receives interest, he must make restitution according to the commutative bond of justice ; its function in human contracts is to assure equality for each one. This law is to be observed in a holy manner. If not observed exactly, reparation must be made. »
3. « By these remarks, however, We do not deny that at times together with the loan contract certain other titles-which are not at all intrinsic to the contract-may run parallel with it. From these other titles, entirely just and legitimate reasons arise to demand something over and above the amount due on the contract.
   Nor is it denied that it is very often possible for someone, by means of contracts differing entirely from loans, to spend and invest money legitimately either to provide oneself with an annual income or to engage in legitimate trade and business. From these types of contracts honest gain may be made. »
4. « There are many different contracts of this kind. In these contracts, if equality is not maintained, whatever is received over and above what is fair is a real injustice. Even though it may not fall under the precise rubric of usury (since all reciprocity, both open and hidden, is absent), restitution is obligated. Thus if everything is done correctly and weighed in the scales of justice, these same legitimate contracts suffice to provide a standard and a principle for engaging in commerce and fruitful business for the common good.
   Christian minds should not think that gainful commerce can flourish by usuries or other similar injustices. On the contrary We learn from divine Revelation that justice raises up nations ; sin, however, makes nations miserable. »