I’ve been critical of the ambiguity and accuracy of the Catholic Encyclopedia on usury (Question 41) because it omits entirely – perhaps its authors were simply ignorant of the requisite documents – the Magisterial distinction (also found in Aquinas) between full recourse and non recourse contracts (Question 31 and Question 36); the article also claims that Vix Pervenit “formally condemns” institutional credit in the Church tied to Church property – which in fact it does not, since the encyclical doesn’t discuss mortgages on Church property at all – suggesting that the Church approves of interest on “loans” (as an ambiguous term) “in practice”.
If the Catholic Encyclopedia has the facts right about the Mountains of Piety though then it is not clear that they made mutuum loans at all. The Mountains operated like modern day pawn shops, taking in existing property as security and making non recourse loans against the property:
The amount of a given loan was equal to two-thirds the value of the object pawned, which, if not redeemed within the stipulated time, was sold at public auction, and if the price obtained for it was greater than the loan with the interest, the surplus was made over to the owner. Continue reading “The Jewish and Lombard money lenders often required collateral also and charged outrageous amounts of interest”