The contract is non recourse because Bob pledges the actual field on which he plans to grow the wheat as collateral, and Bill agrees that his recourse is limited to foreclosing on that field.

The bottom line, even if you don’t follow the example, is that the prohibition of usury does not prohibit reasonable investment, including those that involve risking assets you actually own based on how you think things will develop in the market

Now maybe Bob was right, or at least he successfully grew the wheat, and on November 1st he delivers a ton of wheat to Bill. The drought destroyed Bob’s crop. In that case Bill and Bob have agreed to foreclose, and Bob will have to sell the field in order to buy a ton of wheat to hand over to Bill.

However, because the contract is non recourse, that is the limit of Bill’s recourse – as agreed by the parties from the beginning, intrinsic to their contract. If selling the field does not raise enough money to buy the now very expensive wheat, Bill only gets as much as the proceeds will actually buy. Furthermore, if selling the field itself raises only 800 groats, then Bill only recovers 800 groats – less than the principal amount of his initial investment. Bill’s recourse – as they agreed from the outset – is bounded by the actual property pledged in the contract.

What the prohibition of usury forbids is enslaving your fellow man to your expectations, even when he is willing to be so enslaved: it forbids full recourse contracts for profit.

47) What is the evidence against Aquinas and in favor of the modern view that a reasonable amount of profit on a simple mutuum loan is morally licit?

There are three main pillars of evidence which are cited: (a) changes in Canon Law and pastoral practice; (b) the scholastic concept of “extrinsic titles” on loans more or less approved (or explicitly-not-explicitly denied, more accurately) as a general notion (with no specific ones explicitly approved) by the Magisterium; and (c) Magisterial declaration that the specific practices of the “Mountains of Piety” – medieval credit agencies sponsored by the Church to help the poor by making low interest “loans” – were not usurious and in fact were praiseworthy.

In effect Bill now co-owns the field with Bob, and their mutual business interests – their societas – is limited to that field: a real asset distinct from persons

a) The first pillar is changes in Canon Law and pastoral practice. As previously mentioned (Question 29), prior to a declaration by the https://loansolution.com/installment-loans-wa/ Holy Office ending the practice on August 31, 1831 it was frequently imposed that a usurer had to make an accounting of all the money he had made through usury and make restitution before he was given sacramental absolution. It was also frequently true that (as is the case now) confessors and laymen did not accurately grasp the usury doctrine; so businessmen who engaged in perfectly licit contracts and transactions were sometimes harassed, denied the sacraments, told to liquidate their estates, and denied Christian burial.

The intervention of the Holy See on the question, through the Holy Office and revision of Canon Law, basically asserted that as long as a penitent was prepared to follow instruction by the Holy See on the question of usury he should be granted absolution and generally left alone. This in effect removed the problem of understanding the nuts and bolts of usury from the purview of confessors (who were frequently financially naive themselves).