exploring the potential of non -profit … · towards exploring the potential of market luca a...

TOWARDS

EXPLORING THE POTENTIAL OF

MARKET

LUCA

OWARDS A MORAL BANKING SYSTEMOTENTIAL OF NON-PROFIT FINANCIAL INSTITUTIONS IN A

ARKET ORIENTED ECONOMY

UCA L. HICKMAN

YSTEM: NSTITUTIONS IN A

Luca L. Hickman

TOWARDS

EXPLORING THE POTENTIAL OF

MARKET

MISES

OCTOBER

Submitted By:

Contact Information:

Date of Submission:

Key Words:

Presentation Date:

2

OWARDS A MORAL BANKING SYSTEMOTENTIAL OF NON-PROFIT FINANCIAL INSTITUTIONS IN A

ARKET ORIENTED ECONOMY

ISTITUTO BRUNO LEONI

ISES SEMINAR, SIXTH EDITION

CTOBER 9-11, 2009 SESTRI LEVANTE, ITALY

Submitted By: Luca L. Hickman

Contact Information:

926 E. Auer Ave., Milwaukee, WI 53212

United States of America • 414-303

[email protected]

Institution: Milwaukee School of Engineering

Date of Submission: August 10, 2009

JEL Codes: G21, G28, G32, L30, E51, E31,E41, E42, E43, E44

Key Words: Non-Profit Finance, Interest-Based Banking, Moral Banking, Currency Debasing, Islamic Banking, Fractional Reserve Banking

Presentation Date: October 11, 2009

Discussant: Kevin Dowd, University of Nottingham

YSTEM: NSTITUTIONS IN A

926 E. Auer Ave., Milwaukee, WI 53212

303-9088 •

G21, G28, G32, L30, E51, E31,E41, E42, E43, E44

Based Banking, Moral Banking, Currency Debasing, Islamic Banking,

Kevin Dowd, University of Nottingham

Towards a Moral Banking System

Copyright © 2009 Luca L. Hickman

All rights reserved, including the right of reproduction in whole or in part in any for

of this publication may be reproduced or transmitted in any form or by any means, electronic,

mechanical, photocopying, recording, or any information storage or retrieval system now

known or to be invented, without written permission of the aut

brief quotations in a review.

3

Copyright © 2009 Luca L. Hickman

All rights reserved, including the right of reproduction in whole or in part in any for



known or to be invented, without written permission of the author, except for the inclusion

All rights reserved, including the right of reproduction in whole or in part in any form. No part



hor, except for the inclusion of


4

ad maiorem Dei gloriam


Upon the outermost

Head of that seventh circle…

Where sat the melancholy folk (the usurers)

Out of their eyes

—Dante

(Divine Comedy

5

Upon the outermost

Head of that seventh circle…

Where sat the melancholy folk (the usurers)

Out of their eyes was gushing forth their woe.

Dante Alighieri

(Divine Comedy, Inferno: Canto V

Luca L. Hickman

INTRODUCTION ................................

Financial Foundations ................................

Interest, Inflation and Fractional Reserve Lending

Topical Preview ................................

Personal Motives and Bias ................................

WHAT IS USURY? ................................

From Usury to Interest—A Slow Revolutio

Islamic Definitions ................................

Author’s Definition ................................

USURY AND MORALITY ................................

Logical Investigation ................................

Jewish Teachings ................................

Christianity and Usury ................................

Traditional Positions ................................

Islam and Usury ................................

Inter-Religious Agreement ................................

FRACTIONAL RESERVE BANKING

Logical Investigation ................................

Money Creation and Morality

TOWARDS A MORAL BANKING S

An Alternative System ................................

Financial Reform Goals ................................

Moral Justification for a Value

Reconciliation with Mises ................................

CAVEAT AND CONCLUSION ................................

Reform ................................................................

Urgency of Reform ................................

One Final Thought ................................

ABOUT THE AUTHOR ................................

Work and Personal Interests ................................

BIBLIOGRAPHY ................................

ENDNOTES ................................................................

6

TABLE OF CONTENTS

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nal Reserve Lending ................................................................

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A Slow Revolution ................................................................

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ANKING AND MORALITY ................................................................

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SYSTEM ...............................................................................................

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Moral Justification for a Value-Based System ................................................................

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Luca L. Hickman

7

Luca L. Hickman

Often the masses are plundered and do not know it.

Financial Foundations

In Matthew 7: 24-27, Jesus gave this parable:

Everyone then who hears these words of mine and does them will be like a wise man who built his house on the rock. And the rain fell, and the floods came, and the winds blew and beat on that house, but it did not fall, because it had been founded on the rock. And everyone who hears these words of mine and does not do them will be like a foolish man who built his house on the sand. And the rain fell, and the floods came, and the winds blew and beat against that house, and it fell, and great was the fall of it.

This passage teaches the importance of building one’s life upon a proper foundation. The

foolish man built his home without first selecting the right base; losing everything once the

trials and storms of life blew in. The wise man, however, founded his home upon solid ground.

When troubles attacked, he survived, drawing strength from the unshak

The financial and popular press is awash in stories decrying the current economic situation as a

growing disaster, “an economic storm”, a “financial tsunami”. How then can one expect the

superstructure of the global economy to respond to s

question, one must first examine not the superstructure itself, but the very foundations upon

which it is built.

One, if not the chief, foundation of the modern financial system is the ubiquitous use of debt

based financial instruments. Chief amongst such instruments is the pervasive practice of

lending money at interest. This practice, all but universally adopted in the West and the Orient,

was not so universal only centuries ago. In fact, a great debate once

Christendom about the morality of lending money at interest. Though this debate has largely

been de facto resolved throughout the West, small pockets of resistant thought have

persevered—with varying influence of the centuries.

In order to fully appreciate the depth of the current crisis

subprime mortgages, a sort of step

examining this deepest of foundations. Doing so can both deepen insights and g

ideas.

8

INTRODUCTION

Often the masses are plundered and do not know it.

—

��

27, Jesus gave this parable:

Everyone then who hears these words of mine and does them will be like a wise man on the rock. And the rain fell, and the floods came, and the winds

blew and beat on that house, but it did not fall, because it had been founded on the rock. And everyone who hears these words of mine and does not do them will be like a foolish

built his house on the sand. And the rain fell, and the floods came, and the winds blew and beat against that house, and it fell, and great was the fall of it.1


lish man built his home without first selecting the right base; losing everything once the


When troubles attacked, he survived, drawing strength from the unshaken foundation.



superstructure of the global economy to respond to such rain, floods and wind? To answer that


One, if not the chief, foundation of the modern financial system is the ubiquitous use of debt

d financial instruments. Chief amongst such instruments is the pervasive practice of


was not so universal only centuries ago. In fact, a great debate once raged throughout


resolved throughout the West, small pockets of resistant thought have

with varying influence of the centuries.

r to fully appreciate the depth of the current crisis—a crisis that owes its start to a

subprime mortgages, a sort of step-child of interest-based finance—one ought to begin by

examining this deepest of foundations. Doing so can both deepen insights and g

—Frederic Bastiat

Everyone then who hears these words of mine and does them will be like a wise man on the rock. And the rain fell, and the floods came, and the winds

blew and beat on that house, but it did not fall, because it had been founded on the rock. And everyone who hears these words of mine and does not do them will be like a foolish

built his house on the sand. And the rain fell, and the floods came, and the


lish man built his home without first selecting the right base; losing everything once the


en foundation.



uch rain, floods and wind? To answer that


One, if not the chief, foundation of the modern financial system is the ubiquitous use of debt-

d financial instruments. Chief amongst such instruments is the pervasive practice of


raged throughout


resolved throughout the West, small pockets of resistant thought have

a crisis that owes its start to a

one ought to begin by

examining this deepest of foundations. Doing so can both deepen insights and generate new

Luca L. Hickman

Interest, Inflation and Fractional Reserve

Before one further examines interest

interdependent relationship between this and two other ills: Inflation and fractional reserve

lending.

Though many reading this will undoubtedly be familiar with this account of the origins of

fractional reserve banking, it is nonetheless useful to hear it afresh. The great Austrian scholar

Dr. Gary North explained that at one time, goldsmiths functioned

He explained that:

A goldsmith accepts gold bullion as a deposit from a gold owner who wants to have the goldsmith fashion the gold into something lovely. The goldsmith issues a receipt for this specific quantity and fineness of with the receipt, as if it were gold. The receipt is "as good as gold."

Next, the goldsmith discovers something wonderful for him. He can issue receipts for gold for which there is no gold in reserve. Treserve receipts. They are "as good as what is as good as gold." He can spend them into circulation. Better yet, he can loan them into circulation and receive interest. The new money is cheaper to produce than mrestriction of the money supply that is imposed by the cost of mining is now removed.

This version of fractional reserve lending is particularly interesting in the way it directly ties the

origins of this practice to lending at interest. Nevertheless, the most important thing to

remember about fractional reserve lending is its implicit creation of money. Note, this is the

creation of money, not wealth, a distinction which will become more important, a

evident, later.

It is also imperative that the reader recall the connections between fractional

money generating effects, and general economic inflation. As the great American politician,

author, and Austrian School proponent

Ludwig von Mises used to say that governments will always try to get people to focus on prices when thinking about inflation. But rising prices are a inflation itself. Inflation is the increase in the money supply.

Thus, fractional reserve banking and lending money at are inextricably linked to inflation. Von

Mises himself recognized this relationship, and in his 1951 essay

recommended the following course of action:

The first step must be a radical and unconditional abandonment of any further inflation. The total amount of dollar bills, whatever their name or legal characteristic may be, must not be increased by further issuance. No bank must be p

9

Interest, Inflation and Fractional Reserve Lending

Before one further examines interest-based finance, one must first understand the




Dr. Gary North explained that at one time, goldsmiths functioned much as bankers do today.

A goldsmith accepts gold bullion as a deposit from a gold owner who wants to have the goldsmith fashion the gold into something lovely. The goldsmith issues a receipt for this specific quantity and fineness of gold. The recipient then finds that he can buy things with the receipt, as if it were gold. The receipt is "as good as gold."

Next, the goldsmith discovers something wonderful for him. He can issue receipts for gold for which there is no gold in reserve. These receipts circulate as if they were 100% reserve receipts. They are "as good as what is as good as gold." He can spend them into circulation. Better yet, he can loan them into circulation and receive interest. The new money is cheaper to produce than mining the gold that each receipt promises to pay. The restriction of the money supply that is imposed by the cost of mining is now removed.


his practice to lending at interest. Nevertheless, the most important thing to


creation of money, not wealth, a distinction which will become more important, a

It is also imperative that the reader recall the connections between fractional-reserve lending’s


author, and Austrian School proponent Congressman Ronald Paul once reminded his readers:

Ludwig von Mises used to say that governments will always try to get people to focus on prices when thinking about inflation. But rising prices are a result of inflation, not

is the increase in the money supply.3


Mises himself recognized this relationship, and in his 1951 essay The Return to Sound Money

g course of action:

The first step must be a radical and unconditional abandonment of any further inflation. The total amount of dollar bills, whatever their name or legal characteristic may be, must not be increased by further issuance. No bank must be permitted to expand the total

based finance, one must first understand the




much as bankers do today.

A goldsmith accepts gold bullion as a deposit from a gold owner who wants to have the goldsmith fashion the gold into something lovely. The goldsmith issues a receipt for this

gold. The recipient then finds that he can buy things

Next, the goldsmith discovers something wonderful for him. He can issue receipts for hese receipts circulate as if they were 100%

reserve receipts. They are "as good as what is as good as gold." He can spend them into circulation. Better yet, he can loan them into circulation and receive interest. The new

ining the gold that each receipt promises to pay. The restriction of the money supply that is imposed by the cost of mining is now removed.2


his practice to lending at interest. Nevertheless, the most important thing to


creation of money, not wealth, a distinction which will become more important, as well as

reserve lending’s


Congressman Ronald Paul once reminded his readers:

Ludwig von Mises used to say that governments will always try to get people to focus on of inflation, not


The Return to Sound Money he

The first step must be a radical and unconditional abandonment of any further inflation. The total amount of dollar bills, whatever their name or legal characteristic may be, must

ermitted to expand the total

Luca L. Hickman

amount of its deposits subject to check or the balance of such deposits of any individual customer, be he a private citizen or the U.S. Treasury, otherwise than by receiving cash deposits in legal-tender banknotes from the publanother domestic bank subject to the same limitations. This means a rigid 100 percent reserve for all future deposits; that is, all deposits not already in existence on the first day of the reform.4

Mises himself clearly stood opposed to such modern financial practices, as have many others,

including other prominent economists.

However, to disagree with something on the basis of economic reasoning is quite different from

disagreeing for religious reasons. Some time ago

friend from Kuwait, when he learned that Islamic law forbids the practice of lending money at

interest. From other conversations and personal study, it became clear that a traditionalist

reading of the Judeo-Christian scriptures likewise seemed to condemn this practice. It was at

this point that the author first seriously began examining

reasons behind why one might oppose interest

Topical Preview

What follows is a condensation and analysis of the authors research into these two areas

morality and the economics behind interest

already known and many great economists have expounded on th

institutions, the beginning of this paper focuses on a moral examination of both lending money

at interest, and of maintaining less than a 100% reserve ratio. This examination is done using

the foundational writings as well as imp

three great monotheistic traditions

Next, this paper describes an alternative approach to these current, morally questionable

financial practices. Afterwards, this p

general feasibility. This paper then concludes by comparing and contrasting elements

associated with both the current and the proposed financial institution model.

Personal Motives and Bias

For the sake of credibility and intellectual honesty, it is necessary for the reader to have some

notion of the author’s motives in writing this paper. It is the author’s personal contention that

the practice of lending money at interest is immoral and incomp

Christian or an Islamic worldview.

of fraction-reserve induced inflation is an unjust and unnecessary

debasement. As such, it was the author’s g

solution to reconcile liquidity and efficiency in wealth allocation with a non

reserve banking system. It was within this biased, ideological framework that all research and

work was conducted.

10

amount of its deposits subject to check or the balance of such deposits of any individual customer, be he a private citizen or the U.S. Treasury, otherwise than by receiving cash

tender banknotes from the public or by receiving a check payable by another domestic bank subject to the same limitations. This means a rigid 100 percent reserve for all future deposits; that is, all deposits not already in existence on the first day

ly stood opposed to such modern financial practices, as have many others,

including other prominent economists.


disagreeing for religious reasons. Some time ago, the author was discussing these issues with a



Christian scriptures likewise seemed to condemn this practice. It was at

this point that the author first seriously began examining both the morality and the economic

reasons behind why one might oppose interest-based, fractional reserve lending.

What follows is a condensation and analysis of the authors research into these two areas

morality and the economics behind interest-based, fractional reserve lending. Since much is

already known and many great economists have expounded on the economics behind these



the foundational writings as well as important religious teachings associated with the

monotheistic traditions—Christianity, Islam and Judaism.


financial practices. Afterwards, this paper subjects this proposal to tests of moral, economic and


associated with both the current and the proposed financial institution model.

the sake of credibility and intellectual honesty, it is necessary for the reader to have some


the practice of lending money at interest is immoral and incompatible with either a Judeo

stian or an Islamic worldview.5 It is also the author’s personal contention that the practice

reserve induced inflation is an unjust and unnecessary vehicle of currency

As such, it was the author’s guiding intent to develop a plausible theoretical

solution to reconcile liquidity and efficiency in wealth allocation with a non-usurious


amount of its deposits subject to check or the balance of such deposits of any individual customer, be he a private citizen or the U.S. Treasury, otherwise than by receiving cash

ic or by receiving a check payable by another domestic bank subject to the same limitations. This means a rigid 100 percent reserve for all future deposits; that is, all deposits not already in existence on the first day

ly stood opposed to such modern financial practices, as have many others,


, the author was discussing these issues with a



Christian scriptures likewise seemed to condemn this practice. It was at

the economic

based, fractional reserve lending.

What follows is a condensation and analysis of the authors research into these two areas—the

based, fractional reserve lending. Since much is

e economics behind these



with the world’s


aper subjects this proposal to tests of moral, economic and


the sake of credibility and intellectual honesty, it is necessary for the reader to have some


atible with either a Judeo-

It is also the author’s personal contention that the practice

vehicle of currency

uiding intent to develop a plausible theoretical

usurious, full-


Luca L. Hickman

He that plants thorns must never expect to gather roses.

From Usury to Interest—A Slow Revolution

James Buchanan once remarked that revolutions begin in dictionaries

supported by Orwell’s work on politics and language. Such is the case regarding usury, interest

and modern finance. To most, charging interest for monies lent is a natural

function of the financial system.

charged in excess of the rate permissible under civil law.

modern definitions of usury and

degrees. Yet the fickle, statutory distinction

increase compared to another) are

The full, classical meaning of the word

and interest. Usury comes from the Latin noun

specifically the use of borrowed capital. Thus the original meaning for usury wa

for the use of money.7 For centuries, Western scholars drew no moral, economic, or legal

distinctions between degrees of increase. Whether one earned a ten percent or a ten thousand

percent return on a loan, increase was increase, thus u

Thus it remained until the thirteenth or fourteenth century when “interesse” began its long

crawl into the lexicon.8 Interest comes from a Roman legal concept “where it was considered the

difference between the lender’s or other injured p

would have stood if he had not loaned.”

intereo, meaning “to be lost”.10 But this view of interest as damages gives rise to an all

important question: Should “damages” include the profit which the lender might have made

with the money loaned?

If the answer is yes, then maximum interest rates may be seen as a sort of societal

acknowledgement of acceptable recompense for opportunity costs. If the answer is

interest in the classical sense should not include the loss of potential profit, then it is by

definition limited to such things as the fixed costs of making the loan. From the author’s

research, it would appear that it was on this question, whet

damages, that the modern civil distinction between usury and interest was born.

This civil distinction was dramatically reinforced in 1461 when Barbarus, Governor of Perugia,

instituted the first mons pietatis—

11

WHAT IS USURY?

He that plants thorns must never expect to gather roses.

—Pilpay

��

A Slow Revolution

James Buchanan once remarked that revolutions begin in dictionaries—an assertion strongly


most, charging interest for monies lent is a natural—nay, fundamental

function of the financial system. Usury, to those few acquainted with the term, refers to interest

charged in excess of the rate permissible under civil law.6 It cannot be stressed eno

and interest describe exactly the same behavior, only in varying

statutory distinctions between the two (i.e. lending at one rate of

) are modern contrivances.

full, classical meaning of the word usury encompassed the modern definitions of both

comes from the Latin noun usura meaning the “use” of anything

specifically the use of borrowed capital. Thus the original meaning for usury wa

For centuries, Western scholars drew no moral, economic, or legal


percent return on a loan, increase was increase, thus usury was usury.


comes from a Roman legal concept “where it was considered the

difference between the lender’s or other injured party’s present position and that in which he

would have stood if he had not loaned.”9 This explains why interest stems from the Latin verb

But this view of interest as damages gives rise to an all

ld “damages” include the profit which the lender might have made


acknowledgement of acceptable recompense for opportunity costs. If the answer is



research, it would appear that it was on this question, whether loss of potential profit construed



—a public pawnshop “financed by charitable donations and run

Pilpay

an assertion strongly


nay, fundamental

, to those few acquainted with the term, refers to interest

It cannot be stressed enough, that

describe exactly the same behavior, only in varying

lending at one rate of

encompassed the modern definitions of both usury

meaning the “use” of anything—

specifically the use of borrowed capital. Thus the original meaning for usury was the price paid

For centuries, Western scholars drew no moral, economic, or legal



comes from a Roman legal concept “where it was considered the

arty’s present position and that in which he

stems from the Latin verb

But this view of interest as damages gives rise to an all

ld “damages” include the profit which the lender might have made


acknowledgement of acceptable recompense for opportunity costs. If the answer is no, and



her loss of potential profit construed



blic pawnshop “financed by charitable donations and run

Luca L. Hickman

for the benefit of the poor.”11 Yet Barbarus’ pawnshops charged borrowers at a 6% rate to pay

for operational expenses.12 Despite theological opposition, Pope Paul II approved of this

system, agreeing that “sums repaid above the principle were not usury but were interest

contributions [i.e. damages] to defray the cost of operation.”

as Homer and Sylla explain, “the idea of institutional loans at interest became establ

overwhelmingly accepted.”14

Thus was born the peculiar separation between lending money above or below a

governmentally approved rate. To lend above rendered one guilty of usury, and the manifold

condemnations which are still associated with th

gain and prestige; rendering one a servant of the poor, as under Barbarus, or a patriot, as under

the defense loans made to states like Venice, Florence and Genoa.

Islamic Definitions

So far, the history of usury and interest discussed comes from a wholly Western perspective.

Yet at the same time Western scholars and financiers began separating interest from usury, the

Muslim world had its own advanced and robust approach to finance. In this issue of

definitions, however, the Muslim world seems far less ambiguous about its approach to lending

money at a rate of increase.

Islamic jurists and economist alike make frequent reference to

“increase, excess, growth, rise, etc.”

In the pre-Islamic period the word business transactions. The common feature of these transactions was that a fixed amount was required over the principal due.

Lewis and Algaoud refine this, formally defining

A monetary advantage without a countervalue which has been stipulated in favor of one of the two contracting parties in an exchange of two monetary values.

It is important to note that ribā in Islam, much like

limited to interest on a loan. Ribā

and ribā al-buyu. The former relates to usury involving loans, while the latter

involving trade.19 However, this second form of

scope of this paper, and will not be considered here. Thus whenever

reference to interest.

Author’s Definition

What moderns call “interest” and ancient

rose by any other name.” Blackstone reasoned well when he quipped that:

12

Yet Barbarus’ pawnshops charged borrowers at a 6% rate to pay

Despite theological opposition, Pope Paul II approved of this

that “sums repaid above the principle were not usury but were interest

contributions [i.e. damages] to defray the cost of operation.”13 Other nations soon followed, and

as Homer and Sylla explain, “the idea of institutional loans at interest became establ



condemnations which are still associated with that word. Yet to lend at interest provided both


the defense loans made to states like Venice, Florence and Genoa.15

usury and interest discussed comes from a wholly Western perspective.



itions, however, the Muslim world seems far less ambiguous about its approach to lending

Islamic jurists and economist alike make frequent reference to ribā, an Arabic word meaning

“increase, excess, growth, rise, etc.”16 According to Khan:

Islamic period the word ribā was used conventionally to identify a class of business transactions. The common feature of these transactions was that a fixed amount was required over the principal due.17

his, formally defining Ribā as:

A monetary advantage without a countervalue which has been stipulated in favor of one of the two contracting parties in an exchange of two monetary values.18

in Islam, much like usury in the Judeo-Christian scriptures, is not

ibā in Islamic law can refer to either of two things,

. The former relates to usury involving loans, while the latter relates to usury

However, this second form of ribā, namely ribā al-buyu is clearly outside the

scope of this paper, and will not be considered here. Thus whenever ribā is used, it is with

What moderns call “interest” and ancients called “usury” the great Shakespeare would call “a

rose by any other name.” Blackstone reasoned well when he quipped that:

Yet Barbarus’ pawnshops charged borrowers at a 6% rate to pay

Despite theological opposition, Pope Paul II approved of this

that “sums repaid above the principle were not usury but were interest

Other nations soon followed, and

as Homer and Sylla explain, “the idea of institutional loans at interest became established and



at word. Yet to lend at interest provided both


usury and interest discussed comes from a wholly Western perspective.



itions, however, the Muslim world seems far less ambiguous about its approach to lending

, an Arabic word meaning

was used conventionally to identify a class of business transactions. The common feature of these transactions was that a fixed amount

A monetary advantage without a countervalue which has been stipulated in favor of one

Christian scriptures, is not

in Islamic law can refer to either of two things, ribā al-qarud

relates to usury

is clearly outside the

is used, it is with

s called “usury” the great Shakespeare would call “a

Luca L. Hickman

When money is lent on a contract to receive not only the principal sum again, but also an increase by way of compensation for thethink it lawful, and usury by those who do not.

Such is the human condition when modern distinctions are drawn between usury and interest.

Given the purpose of this paper, it is wise to spend some time

definitions.

For the purposes of this paper, usury

accepted Islamic definition of ribā

wares above the legally established rate”. Rather,

gain above principle, irrespective of rate. Unless otherwise stated, this is the definition of usury

employed in this paper. Interest, however, will continue to be used in its curren

state, referring to “a gain taken for a loan of money or wares below the legally established rate.”

13

When money is lent on a contract to receive not only the principal sum again, but also an increase by way of compensation for the use, the increase is called interest by those who think it lawful, and usury by those who do not.20


Given the purpose of this paper, it is wise to spend some time in developing appropriate

usury is used in its full, classical sense with deference to the

ibā. Thus usury is not the “gain taken for a loan of money or

established rate”. Rather, usury becomes a general prohibition against


employed in this paper. Interest, however, will continue to be used in its curren


When money is lent on a contract to receive not only the principal sum again, but also an use, the increase is called interest by those who


in developing appropriate

is used in its full, classical sense with deference to the

is not the “gain taken for a loan of money or

becomes a general prohibition against


employed in this paper. Interest, however, will continue to be used in its currently accepted


Luca L. Hickman

A man is usually more careful of his money than he

Logical Investigation

Even before a theological analysis of usury within the teachings and traditions of the West’s

monotheistic religions is carried out, it is possible to find flaws within the current

understanding of usury versus interest. These fla

a single appeal to any religious tradition.

The most obvious criticism of the morality of (or, in this case, perhaps the ethics behind) current

interest-based finance is the arbitrary distinction between usury

lending at a fraction of a percent under an artificial limit is perfectly acceptable while lending at

the same small degree above said limit is punishable by fines and imprisonments? How is it

that a mere fraction of a fraction of one percent could make such a difference?

Clearly then, the distinction between usury and interest seem to violate the precepts of natural

law. Especially when one realizes that maximum acceptable interest rates vary from nation to

nation, and often vary from region to region within a country itself. Thus, if one accepts the

validity of distinguishing one rate of increase compared to another, one needs must enter the

realm of positive law.

Here too, one sees a dilemma. If the goal of positive law

of setting a legal maximum interest rate ought to be to find a rate at which the greatest good is

done for the greatest number of people. Apart from being anathema to those who reject

utilitarianism, such a goal presupposes that there is a non

communal utility. Must this be so?

Or suppose that, for a given community, a ten percent interest rate would maximize general

utility. Further suppose that this community has imposed a

interest rate. Would it not be “just”

civic-minded banker to break the law, and lend at what could be called usury? Would not

usury, following such reasoning, become “good”

“bad”? Once lending money at an increase is divided between acceptable and unacceptable

levels of increase, any moral condemnation of usury becomes untenable at best. M

ethical, justification for upholding interest yet forbidding “excessive” interest finds unstable

anchorage in positive law.

14

USURY AND MORALITY

A man is usually more careful of his money than he

is of his principles.

—Edgar Watson Howe

��



understanding of usury versus interest. These flaws can be readily exposed without so much as

a single appeal to any religious tradition.


based finance is the arbitrary distinction between usury and interest. Why is it that



on of one percent could make such a difference?



n vary from region to region within a country itself. Thus, if one accepts the


Here too, one sees a dilemma. If the goal of positive law is inherently utilitarian, then the goal



resupposes that there is a non-zero interest rate which maximizes

communal utility. Must this be so?


utility. Further suppose that this community has imposed a significantly lower maximum

interest rate. Would it not be “just”—following utilitarian, positive law reasoning

minded banker to break the law, and lend at what could be called usury? Would not

usury, following such reasoning, become “good”, while lending at interest would become

Once lending money at an increase is divided between acceptable and unacceptable

levels of increase, any moral condemnation of usury becomes untenable at best. M

lding interest yet forbidding “excessive” interest finds unstable

Edgar Watson Howe



ws can be readily exposed without so much as


and interest. Why is it that





n vary from region to region within a country itself. Thus, if one accepts the


is inherently utilitarian, then the goal



zero interest rate which maximizes


significantly lower maximum

following utilitarian, positive law reasoning—for the

minded banker to break the law, and lend at what could be called usury? Would not

, while lending at interest would become

Once lending money at an increase is divided between acceptable and unacceptable

levels of increase, any moral condemnation of usury becomes untenable at best. Moral, or even

lding interest yet forbidding “excessive” interest finds unstable

Luca L. Hickman

However, the great monotheistic traditions of the Western Hemisphere are much less

ambiguous in their approaches to this subject. Quite surprisingly, in fact, tr

Christian and Islamic teachings very nearly agree in their treatment of this subject.

Understanding the moral reasoning behind these teachings makes for a lively and enlightening

discussion.

Jewish Teachings

The Hebraic traditions concerning the morality of

passages in the Tanakh.† To aid in understanding these passages, ea

translations—the New International Version (NIV) and the King James Version (KJV). These

passages include:

Exodus 22:25:

"If you lend money to one of my people among you who is needy, do not be like a moneylender; charge

him no interest.

Leviticus 25:35-37:

If one of your countrymen becomes poor and is

unable to support himself among you, help him as you would an alien or a temporary resident, so he

can continue to live among you.interest of any kind from him, but fear your God, so that your countryman may continue to live among you. You must not lend him money at

interest or sell him food at a profit.

Deuteronomy 23: 19-20:

Do not charge your brother interest, whether on money or food or anything else that may earn

interest. You may charge a foreigner interest, but not a brother Israelite, so that the LORD your God may bless you in everything you put your

in the land you are entering to possess.

Psalm 15: 1,5:

† The Hebrew Bible. To aid in understanding these passages, each is givenInternational Version (NIV) and the King James Version (KJV). Observe how the KJV translates the original Hebrew as “usury” while the NIV translates the same as “interest”. Note: The NIV translation appears at left.

15


ambiguous in their approaches to this subject. Quite surprisingly, in fact, traditional Jewish,



rning the morality of lending at increase stem from several key

To aid in understanding these passages, each is given in two

the New International Version (NIV) and the King James Version (KJV). These

"If you lend money to one of my people among you who is needy, do not be like a moneylender; charge

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.

If one of your countrymen becomes poor and is unable to support himself among you, help him as you would an alien or a temporary resident, so he

can continue to live among you. Do not take m him, but fear your God,

so that your countryman may continue to live You must not lend him money at

interest or sell him food at a profit.

And if thy brother be waxen poor, and fallen in decay with thee; then thou shalt relieve him: 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.

Do not charge your brother interest, whether on money or food or anything else that may earn

interest. You may charge a foreigner interest, but not a brother Israelite, so that the LORD your God may bless you in everything you put your hand to

in the land you are entering to possess.

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 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.

To aid in understanding these passages, each is given in two translations; the New International Version (NIV) and the King James Version (KJV). Observe how the KJV translates the original Hebrew as “usury” while the NIV translates the same as “interest”. Note: The NIV translation


aditional Jewish,



stem from several key

ch is given in two

the New International Version (NIV) and the King James Version (KJV). These

If thou lend money to any of my people that is poor by thee, thou shalt not be to him as an usurer,

lay upon him usury.

And if thy brother be waxen poor, and fallen in decay with thee; then thou shalt relieve him: yea,

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.

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 thou mayest lend upon usury; but unto thy brother thou

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.

in two translations; the New International Version (NIV) and the King James Version (KJV). Observe how the KJV translates the original Hebrew as “usury” while the NIV translates the same as “interest”. Note: The NIV translation

Luca L. Hickman

LORD, who may dwell in your sanctuary? Who may live on your holy hill?

[He] who lends his money without usurynot accept a bribe against the innocent. He who

does these things will never be shaken.

Ezekiel 18:8-9:

He does not lend at usury or take excessive

interest. He withholds his hand from doing wrong and judges fairly between man and man.

follows my decrees and faithfully keeThat man is righteous; he will surely live, declares

the Sovereign LORD.

Clearly, the Hebrew Scriptures are less than warm towards usury. Interestingly,

James translates the original Hebrew

to the New Bible Dictionary:

The word ‘usury’ in the AV [Authorized Version, commonly known as the King James] has not the modern sense of exorbitant interest. The complainnot that interest is excessive but that it is charged at all.

Of special curiosity is the apparent exception for lending at interest to foreigners expressed in

Deuteronomy 23. On the surface, it would seem that God forbade the Jewish people from

lending at interest to one another, but allowed them to lend to Gentiles.

Because of this generally accepted interpretation of Deuteronomy 23, the Jewish people have

traditionally engaged in lending money at interest to Gentiles, especially in Europe durin

medieval period. It should be noted, however, that the Jewish people were by no means the

only, or even the largest, such lenders.

As will be discussed later, the Christian Church during the medieval period generally forbade

lending money at interest at the penalty of excommunication. Writing about the Jewish lenders,

Homer and Sylla explained that:

They were, of course, unaffected by excommunication. They were not excused, and their traffic was deplored and morally condemned. However, the Jewmonopoly on medieval usury. They were early in the field, but their operations were usually small and marginal.

Nevertheless, following this interpretation of Deuteronomy 23, lending at increase to a fellow

Jew was immoral. Because of this, J

16

LORD, who may dwell in your sanctuary? Who may live on your holy hill?

ithout usury and does not accept a bribe against the innocent. He who

will never be shaken.

LORD, who shall abide in thy tabernacle? whoshall dwell in thy holy hill?

He that putteth not out his money to usury, nor taketh reward against the innocent. He that doeth

these things shall never be moved.

He does not lend at usury or take excessive interest. He withholds his hand from doing wrong

and judges fairly between man and man. He follows my decrees and faithfully keeps my laws. That man is righteous; he will surely live, declares

the Sovereign LORD.

He that hath not given forth upon usury, neither hath taken any increase, that hath withdrawn his hand from iniquity, hath executed true judgment

between man and man, Hath walked in my statutes, and hath kept my judgments, to deal truly; he is just, he shall surely live, saith the Lord GOD.

Clearly, the Hebrew Scriptures are less than warm towards usury. Interestingly,

nslates the original Hebrew as usury while the newer renders it as interest

The word ‘usury’ in the AV [Authorized Version, commonly known as the King James] has not the modern sense of exorbitant interest. The complaint in the Old Testamentnot that interest is excessive but that it is charged at all.21



ding at interest to one another, but allowed them to lend to Gentiles.


traditionally engaged in lending money at interest to Gentiles, especially in Europe durin


only, or even the largest, such lenders.


rest at the penalty of excommunication. Writing about the Jewish lenders,

Homer and Sylla explained that:

They were, of course, unaffected by excommunication. They were not excused, and their traffic was deplored and morally condemned. However, the Jews held no monopoly on medieval usury. They were early in the field, but their operations were usually small and marginal.22


Jew was immoral. Because of this, Jewish scholars began teaching that lending money to fellow

LORD, who shall abide in thy tabernacle? who shall dwell in thy holy hill?

putteth not out his money to usury, nor t the innocent. He that doeth shall never be moved.

He that hath not given forth upon usury, neither hath taken any increase, that hath withdrawn his hand from iniquity, hath executed true judgment

h walked in my statutes, and hath kept my judgments, to deal truly; he is just, he shall surely live, saith the Lord GOD.

Clearly, the Hebrew Scriptures are less than warm towards usury. Interestingly, the older King

interest. According

The word ‘usury’ in the AV [Authorized Version, commonly known as the King James] in the Old Testament is




traditionally engaged in lending money at interest to Gentiles, especially in Europe during the



rest at the penalty of excommunication. Writing about the Jewish lenders,

They were, of course, unaffected by excommunication. They were not excused, and s held no

monopoly on medieval usury. They were early in the field, but their operations were


ewish scholars began teaching that lending money to fellow

Luca L. Hickman

Jews was permissible, provided that usury was not exacted. In fact, Jewish thought teaches that

when made to alleviate temporary financial difficulties such loans are not only moral, but

charitable.

For example, Maimonides—arguably the greatest medieval Jewish philosopher and Torah

scholar—taught that “a loan is better than charity

this teaching and the broader religious

communities, especially in Eastern Europe, began making interest free loans available to the

poor.24 This tradition has continued to the present,

Free Loan Society of New York.

Christianity and Usury

Christian teaching is likewise based, in part, on the three passages quoted above. To this,

however, are added several others. One such passage may be found in the gospe

Luke 6:35, Jesus teaches:

But love your enemies, do good to tto them without expecting to get anything back. Then your reward will be great, and you will be sons of the Most High, because he is kind to the

ungrateful and wicke

As Lewis and Algaoud explained:

Jesus himself exhibited a distinctly antifrom the temple, while the Sermon on the Mount revealed strongly antisentiments as well.25

Traditional Positions

The traditional position of the Church

highly opposed to usury. 26 In fact, a canon prohib

Council of Nicea—the first general council of the Christian Church.

usury to all case when one “expect[s] to receive something more than you have given.” While

the Second Lateran Council declared usurers infamous.

Regarding the dispute over Deuteronomy 23, Saint Jerome argued that the prohibition against

usury was universalized. Homer and Sylla explain that:

The troublesome permission in Deuteronomy to take usury from strangers had besuperseded by the concept of universal brotherhood: there were no strangers. The essence of the approach to usury was expressed in the opinion of St. Raymond: “One ought to lend to one’s needy neighbor only for God and principally from charity.

17



arguably the greatest medieval Jewish philosopher and Torah

loan is better than charity, for it enables one to help oneself

this teaching and the broader religious concept of tzedakah—or charity—that Jewish


This tradition has continued to the present, embodied in such institutions as the Hebrew


however, are added several others. One such passage may be found in the gospe

But love your enemies, do good to them, and lend to them without expecting to get anything back. Then your reward will be great, and you will be sons of the Most High, because he is kind to the

ungrateful and wicked.

But love ye your enemies, and do good, and lend, hoping for nothing again; and your reward shall be great, and ye shall be the children of the Highest: for he is kind unto the unthankful and to the evil.

As Lewis and Algaoud explained:

Jesus himself exhibited a distinctly anti-usury attitude when he cast the money-m the temple, while the Sermon on the Mount revealed strongly anti-wealth

The traditional position of the Church—specifically the Roman Catholic Church

In fact, a canon prohibiting usury by clerics was passed at the

the first general council of the Christian Church.27 St. Augustine expanded


clared usurers infamous. 28


usury was universalized. Homer and Sylla explain that:

The troublesome permission in Deuteronomy to take usury from strangers had besuperseded by the concept of universal brotherhood: there were no strangers. The essence of the approach to usury was expressed in the opinion of St. Raymond: “One ought to lend to one’s needy neighbor only for God and principally from charity.



arguably the greatest medieval Jewish philosopher and Torah

p oneself.”23 It is from

that Jewish


embodied in such institutions as the Hebrew


however, are added several others. One such passage may be found in the gospel of Luke. In

But love ye your enemies, and do good, and lend, and your reward shall be

great, and ye shall be the children of the Highest: for he is kind unto the unthankful and to the evil.

-lenders wealth

specifically the Roman Catholic Church—was thus

iting usury by clerics was passed at the

St. Augustine expanded



The troublesome permission in Deuteronomy to take usury from strangers had been superseded by the concept of universal brotherhood: there were no strangers. The essence of the approach to usury was expressed in the opinion of St. Raymond: “One ought to lend to one’s needy neighbor only for God and principally from charity.29

Luca L. Hickman

St. Thomas Aquinas went further, stating that “to take usury from any man is simply evil…”

Over time, however, the Church’s position towards usury began first to so

entirely as discussed earlier. By the mid

allowed by civil law may be charged by anyone, and in 1950, Pius XII declared that bankers

“earn their livelihood honestly.”

Islam and Usury

Islam is yet more explicit in its denunciation of usury.

of Ribā or usury rests in five Qur’anic verses.

Those who swallow Ribā can’t rise up save as he ariseth whom the devil hat prostrated by [his] touch. That is because they say:trading and forbiddeth Ribā. [he] desists [in obedience], he shall keep that which is past, and his affair henceforth is with Allah. As for him who returneth [to They will abide therein. (II: 275) Allah hath blighted Ribā and made impious and the guilty. (II 276) O, you who believe, keep your duty with Allah and relinquish what remains of you are believers. (II 278) But if you do [it] not, then be apprised of war from Allah and His Messenger; and if you repent, then you shall have your capital. Wrong not279) O, you who believe, devour not Allah, that you may be successful.

It is important to note that the absence of

Judeo-Christian teachings, the prohibition against interest is but one of many financ

guidelines. 33 While both modern

teachings against usury, Islam has been considerably less ambiguous. Although, in practice,

interest based finance is widely carried out within the Islamic w

remain clear. Khan even stated that “as financial transactions are concerned there has never

been disagreement among jurists….”, though he conceded that some controversy has arisen

over exactly what type of transactions sho

Iqbal and Mirakhor distilled Islam’s teachings towards usury writing that:

Generally, any risk-bearing instrument reflecting a real asset and earning a variable rate of return tied to the performance of the aslaw.35

18

homas Aquinas went further, stating that “to take usury from any man is simply evil…”

Over time, however, the Church’s position towards usury began first to soften, then to change

entirely as discussed earlier. By the mid-1800s, the Catholic Church decreed that interest


“earn their livelihood honestly.”31

Islam is yet more explicit in its denunciation of usury. According to Khan, Islam’s

r usury rests in five Qur’anic verses.32 These are:

can’t rise up save as he ariseth whom the devil hat prostrated by [his] touch. That is because they say: trade is just like Ribā, whereas Allah permitteth

Ribā. He unto whom an admonition from his Lord cometh and ], he shall keep that which is past, and his affair henceforth is

with Allah. As for him who returneth [to Ribā] such are the rightful owners of the fire. (II: 275)

and made Sadaqat [charities] fruitful. Allah loveth not the (II 276)

keep your duty with Allah and relinquish what remains of

But if you do [it] not, then be apprised of war from Allah and His Messenger; and if you repent, then you shall have your capital. Wrong not, and you shall not be wronged.

O, you who believe, devour not Ribā, doubling and redoubling, and keep your duty with ah, that you may be successful. (III: 129)

It is important to note that the absence of Ribā does not an Islamic system make. Rather, as with

Christian teachings, the prohibition against interest is but one of many financ

While both modern Judaism and Christianity have all but abandoned the original

against usury, Islam has been considerably less ambiguous. Although, in practice,

interest based finance is widely carried out within the Islamic world, the clerical prohibitions



over exactly what type of transactions should be subject to the Qur’anic injunction.

Iqbal and Mirakhor distilled Islam’s teachings towards usury writing that:

bearing instrument reflecting a real asset and earning a variable rate of return tied to the performance of the asset is considered to be consistent with Islamic

homas Aquinas went further, stating that “to take usury from any man is simply evil…”30

ften, then to change

eed that interest


According to Khan, Islam’s prohibition

can’t rise up save as he ariseth whom the devil hat prostrated whereas Allah permitteth

He unto whom an admonition from his Lord cometh and ], he shall keep that which is past, and his affair henceforth is

] such are the rightful owners of the fire.

not the

keep your duty with Allah and relinquish what remains of Ribā, if

But if you do [it] not, then be apprised of war from Allah and His Messenger; and if you , and you shall not be wronged. (II:

and keep your duty with

does not an Islamic system make. Rather, as with

Christian teachings, the prohibition against interest is but one of many financial

and Christianity have all but abandoned the original

against usury, Islam has been considerably less ambiguous. Although, in practice,

orld, the clerical prohibitions



uld be subject to the Qur’anic injunction. 34

bearing instrument reflecting a real asset and earning a variable rate set is considered to be consistent with Islamic

Luca L. Hickman

Khan wrote with greater certitude, saying that:

The essence for the injunction of demand a fixed return over the principal loan irrespective of what happens with the loaned money.36

It would seem then, that usury has no place within an Islamic moral structure.

Inter-Religious Agreement

The Islamic definition of ribā is exceedingly near the classical definition of

held to by both Christian and Hebrew Holy texts. Lewis and Algaoud recognized this great

similarity, observing that:

English versions of the Holy Qur’an On the face of it, the Islamic position on usury would seem to be little different from the official Christian position in the Middle Ages.

In this, and from our previous logical investigations into t

perspective, the hope of reaching a broad inter

19

Khan wrote with greater certitude, saying that:

The essence for the injunction of Ribā…is the fact that it is unjust for the lender to demand a fixed return over the principal loan irrespective of what happens with the

It would seem then, that usury has no place within an Islamic moral structure.

is exceedingly near the classical definition of usury


English versions of the Holy Qur’an translate the Arabic word ribā as interest or usury. On the face of it, the Islamic position on usury would seem to be little different from the official Christian position in the Middle Ages.37

In this, and from our previous logical investigations into the more Lockean, natural

perspective, the hope of reaching a broad inter-religious agreement on the morality of usury.

is the fact that it is unjust for the lender to demand a fixed return over the principal loan irrespective of what happens with the

usury—a definition


as interest or usury. On the face of it, the Islamic position on usury would seem to be little different from the

he more Lockean, natural-rights

religious agreement on the morality of usury.

Luca L. Hickman

FRACTIONAL

Money is a handmaiden, if thou knowest how to use it,

Logical Investigation

Much has been written on the economic consequences of fractional reserve banking, perhaps

most notably by the late Milton Friedman. However, the moral implications of fractional

reserve lending have received significantly less att

between fractional reserve lending and usury, it is wise to take a moment to explore the moral

implications of this often economically maligned practice.

Money Creation and Morality

How fractional reserve banking creates money is a well studied phenomenon. The often

overlooked question is, is this process

Firstly, these money creating effects seem little different

the jargon and legalities are stripped

wonderful albeit brief essay entitled

comparison, not once, but ten separate

fractional reserve banking “fractional

Unsurprisingly, this is anathema

the reward for honest work i.e. the addition of value to society.

of Bangladesh explained:

The fractional reserve system versus 100% reserves would have different policy implications. Under the former system, banks would have the ability to draw profits on funds that they have exerted no prspirit of Islamic banking. 41

Currency Debasement and Wealth Redistribution

Fractional reserve lending has yet another consequence of questionable morality: namely its

redistribution of wealth through c

source of inflation, one immediately recognizes that fractional reserve banking

leads to inflation. Furthermore, i

rising prices stealing billions in capital purchasing power every year

inescapable conclusion that fractional reserve banking is a direct

enormous amounts of wealth are stolen. One can argue then that fractional reserve bank

tantamount to an invasion of property rights

20

RACTIONAL RESERVE BANKING AND MORALITY

Money is a handmaiden, if thou knowest how to use it,

a mistress, if thou knowest not.

��



reserve lending have received significantly less attention. Moreover, given the coupled


implications of this often economically maligned practice.38

king creates money is a well studied phenomenon. The often

process moral? It can convincingly be shown that it is not.

money creating effects seem little different than outright counterfeiting

stripped away, money is still being created out of nothing.

wonderful albeit brief essay entitled Fractional Reserve Banking Murray Rothbard made this very

, not once, but ten separate times.39 Rothbard even went so far as to rename

“fractional-reserve counterfeiting”.40

anathema to all three monotheistic traditions, which hold that wealth is

the reward for honest work i.e. the addition of value to society. For example, as the Islami Bank

The fractional reserve system versus 100% reserves would have different policy implications. Under the former system, banks would have the ability to draw profits on funds that they have exerted no productive effort. Such earning is against the original

Wealth Redistribution


through currency debasement. Remembering Mises insights into the

tion, one immediately recognizes that fractional reserve banking by its very nature

leads to inflation. Furthermore, inflation erodes wealth and impedes entrepreneurship, with

prices stealing billions in capital purchasing power every year. This leads to the

inescapable conclusion that fractional reserve banking is a direct mechanism whereby

amounts of wealth are stolen. One can argue then that fractional reserve bank

tantamount to an invasion of property rights—an interesting argument deserving further study.

ORALITY

—Horace



coupled history


king creates money is a well studied phenomenon. The often

It can convincingly be shown that it is not.

counterfeiting. Once all

away, money is still being created out of nothing. In his

Murray Rothbard made this very

nt so far as to rename

to all three monotheistic traditions, which hold that wealth is

r example, as the Islami Bank

The fractional reserve system versus 100% reserves would have different policy implications. Under the former system, banks would have the ability to draw profits on

oductive effort. Such earning is against the original


Remembering Mises insights into the

by its very nature

nflation erodes wealth and impedes entrepreneurship, with

. This leads to the

whereby

amounts of wealth are stolen. One can argue then that fractional reserve banking is

an interesting argument deserving further study.

Luca L. Hickman

Of further moral concern is the fact that

egregiously regressive. As Congressman Paul explained:

Those who receive the new money first receive it before prices have yet risen. They enjoy a windfall. Meanwhile, as they spend the new money, and the next wave of recipients spend it, and so on, prices begin to rise throughout the economymoney has trickled down to most people. The average person is now paying higher prices while still earning his old income, which has not yet been adjusted to account for the higher money supply. By the time the new money has made its way throughout teconomy, average people have all this time been paying higher prices, and only now can begin to break even. The enrichment of the politically well connectedthose who get the newly created money first: government contractors, big banks,like—comes at the direct expense of everyone else.

Though Congressman Paul was

central banks, the outcome is nonetheless identical. Fractional reserve banking

of welfare for the wealthy. A Robin Hood in reverse, robbing the masses to enrich the few.

Once again, one finds such effects completely at odds with Jewish, Christian and Islamic

teachings. What scholar from either of these religions would defend the morality of

resources of the poor for the enrichment of the wealthy?

viewed with suspension our outright contempt.

inflation-caused fluctuations in the value of money tanta

which the Scriptures call an “abomination to the LORD”.

Similar sentiments have been expressed by Islamic jurists, some of whom have stressed the

need “for policies to maintain the stability of the value of currenc

some Islamic economists have argued that a truly Islamic banking system should be based on

100% reserve requirement.45

General Instability

One last topic too large to discuss fully, yet deserving mention are the cyclic effect

based, fractional reserve lending have on the economy according to the Austrian business cycle

theory. Hayek wrote that:

So long as we make use of bank credit as a means of furthering economic development we shall have to put up with the resulpay for a speed of development exceeding that which people voluntarily make possible through their savings and which therefore has to be extorted from them.

If this view is accurate, then the instabili

throughout society.

21

Of further moral concern is the fact that this inflation is not uniform—rather, its effects are

egregiously regressive. As Congressman Paul explained:

hose who receive the new money first receive it before prices have yet risen. They enjoy a windfall. Meanwhile, as they spend the new money, and the next wave of recipients spend it, and so on, prices begin to rise throughout the economy—well before the money has trickled down to most people. The average person is now paying higher prices while still earning his old income, which has not yet been adjusted to account for the higher money supply. By the time the new money has made its way throughout teconomy, average people have all this time been paying higher prices, and only now can begin to break even. The enrichment of the politically well connected—in other words, those who get the newly created money first: government contractors, big banks,

comes at the direct expense of everyone else.42

Though Congressman Paul was describing the Cantillon effects of new money creation by

utcome is nonetheless identical. Fractional reserve banking

A Robin Hood in reverse, robbing the masses to enrich the few.


teachings. What scholar from either of these religions would defend the morality of

resources of the poor for the enrichment of the wealthy? Furthermore, inflation itself is often

viewed with suspension our outright contempt. Some Christian scholars have likened the

caused fluctuations in the value of money tantamount to unjust weights and measures,

which the Scriptures call an “abomination to the LORD”.43


for policies to maintain the stability of the value of currency.”44 Little wonder then why

some Islamic economists have argued that a truly Islamic banking system should be based on

One last topic too large to discuss fully, yet deserving mention are the cyclic effect


So long as we make use of bank credit as a means of furthering economic development we shall have to put up with the resulting trade cycles. They are in a sense the price we pay for a speed of development exceeding that which people voluntarily make possible through their savings and which therefore has to be extorted from them.46

If this view is accurate, then the instability caused by such a system causes yet further suffering

rather, its effects are

hose who receive the new money first receive it before prices have yet risen. They enjoy a windfall. Meanwhile, as they spend the new money, and the next wave of recipients

well before the new money has trickled down to most people. The average person is now paying higher prices while still earning his old income, which has not yet been adjusted to account for the higher money supply. By the time the new money has made its way throughout the economy, average people have all this time been paying higher prices, and only now can

in other words, those who get the newly created money first: government contractors, big banks, and the

of new money creation by

utcome is nonetheless identical. Fractional reserve banking is simply a form

A Robin Hood in reverse, robbing the masses to enrich the few.


teachings. What scholar from either of these religions would defend the morality of stealing the

Furthermore, inflation itself is often

Some Christian scholars have likened the

mount to unjust weights and measures,


Little wonder then why

some Islamic economists have argued that a truly Islamic banking system should be based on a

One last topic too large to discuss fully, yet deserving mention are the cyclic effects interest-


So long as we make use of bank credit as a means of furthering economic development ting trade cycles. They are in a sense the price we

pay for a speed of development exceeding that which people voluntarily make possible

system causes yet further suffering

Luca L. Hickman

TOWARDS

Silver and gold are not the only coin; virtue too passes

An Alternative System

So far, several ills of the current financial system have been identified, yet, as Zeuxis said,

“Criticism comes easier than craftsmanship.”

proposing a theoretically viable alternativ

part of many individuals. At this time, it is best to focus on clearly laying out the goals such an

alternative system ought to strive towards.

virtuous and less problematic financial system, it is necessary to define objectives along both

moral and economic lines of reasoning.

Financial Reform Goals

Firstly, any financial institution which intends to operat

full-reserve system. This immediately relieves said institution from the myriad problems

associated with artificial money creation. Secondly, a moral financial institution must take great

care to ensure that usury is avoided in all its forms. This, of cours

Within the Islamic world, many

interest-based finance. This has centered around commercial loans where the bank enters into a

partnership with a client, sharing in

have not been entirely successful. Part of the great difficulty rests in

profit for the benefit of both depositors and shareholders.

Perhaps a more effective way of doing

(NPFI) Such an institution could operate using an endowment, and could charge a simple fee to

cover the costs of making the loan. Such an NPFI could maintain its endowment in the face of

general economic inflation by lending on a value

the principle plus whatever losses accrued to the NPFI due to inflation over the repayment

period.

To better understand proposal, it is wise to take a moment to examine, i

those costs which would underlie both the operation (

(or economic) costs associated with each type of financial institution. In order, these are:

Economic costs associated with a For

i. Fixed cost of making the loan. (e.g. personnel costs, security costs, etc.)

ii. Opportunity costs of parting with the principle.

iii. Loss due to inflation.

22

OWARDS A MORAL BANKING SYSTEM Silver and gold are not the only coin; virtue too passes

current all over the world.

— Euripides

��


“Criticism comes easier than craftsmanship.” The task of reforming this system, or even of

proposing a theoretically viable alternative, is considerable, and will require great efforts on the


alternative system ought to strive towards. Since the broader goal is a move towards a more

uous and less problematic financial system, it is necessary to define objectives along both

moral and economic lines of reasoning.

Firstly, any financial institution which intends to operate in a moral fashion must operate on a

reserve system. This immediately relieves said institution from the myriad problems


care to ensure that usury is avoided in all its forms. This, of course, is easier said than done.

Within the Islamic world, many financial institutions have taken great strides in eliminating

based finance. This has centered around commercial loans where the bank enters into a

partnership with a client, sharing in either the ventures profit or loss. However, these attempts

have not been entirely successful. Part of the great difficulty rests in their having to make a

profit for the benefit of both depositors and shareholders.

Perhaps a more effective way of doing this would be to create a non-profit financial institution.


ng the loan. Such an NPFI could maintain its endowment in the face of

l economic inflation by lending on a value-based system. Thus borrowers would repay


, it is wise to take a moment to examine, in an albeit abstract way,

those costs which would underlie both the operation (real or accounting costs) and opportunity


a For-Profit Financial Institution (FPFI):

Fixed cost of making the loan. (e.g. personnel costs, security costs, etc.)

Opportunity costs of parting with the principle.

Euripides


The task of reforming this system, or even of

e, is considerable, and will require great efforts on the


Since the broader goal is a move towards a more

uous and less problematic financial system, it is necessary to define objectives along both

e in a moral fashion must operate on a

reserve system. This immediately relieves said institution from the myriad problems


e, is easier said than done.

financial institutions have taken great strides in eliminating

based finance. This has centered around commercial loans where the bank enters into a

either the ventures profit or loss. However, these attempts

having to make a

profit financial institution.


ng the loan. Such an NPFI could maintain its endowment in the face of

based system. Thus borrowers would repay


n an albeit abstract way,

) and opportunity


Luca L. Hickman

iv. Depositor costs. (i.e. the interest given to entice depositors to utilize

v. The bank’s profits.

vi. Taxes.

“Real” or “accounting” costs associated


ii. Loss due to inflation.

iii. Depositor costs. (i.e. the interest given to entice depositors

iv. The bank’s profits.

v. Taxes.

Economic costs associated with an NPFI:


ii. Opportunity costs of parting with the principle.

“Real” or “accounting” costs associate


The reader will note the obvious exclusion of the bank’s profits

both cost categories associated with the non

the financial institution proposed is to operate using an endowment, the costs associated with

depositors are likewise excluded.

There is, however, one final point which must be considered. That is the

loan category referenced above in each of the four cost statements. Despite the temptation to

assume equal fixed costs between financial systems, this is not an assumption which can validly

be made.

Some fixed costs will undoubtedly disappear

while other costs will just as certainly be magnified and still more, new costs may appear

as dedicating resources towards obtaining additional donations. From the author’s perspective,

it seems foolish to attempt any sort of logical investigation into the differences in the fixed costs

of operating the bank which must be passed onto the borrower. Rather, an empirical

investigation is the only sort which can do justice to the great complexity of this issue. This is

clearly an area for further study. However, it is the author’s empirically unsupported

contention that such fixed costs will not become prohibitively large to the successful operation

of the proposed non-profit financial institution.

Moral Justification for a Value-

One must remember that modern currencies

value, not value in and of themselves. The ideal NPFI lends value without compensation.

23

Depositor costs. (i.e. the interest given to entice depositors to utilize your bank.)

ssociated with an FPFI:


Depositor costs. (i.e. the interest given to entice depositors to utilize your bank.)

sts associated with an NPFI:


Opportunity costs of parting with the principle.47

ssociated with an NPFI:


The reader will note the obvious exclusion of the bank’s profits—and with profits, taxes

both cost categories associated with the non-profit model. The reader will also note that, since


depositors are likewise excluded.

There is, however, one final point which must be considered. That is the fixed cost of making the

category referenced above in each of the four cost statements. Despite the temptation to


Some fixed costs will undoubtedly disappear—like the cost of maintaining tellers and ATMs

while other costs will just as certainly be magnified and still more, new costs may appear


ny sort of logical investigation into the differences in the fixed costs





profit financial institution.

-Based System

One must remember that modern currencies—be they Dollars, Euros, or Pounds


your bank.)

to utilize your bank.)

and with profits, taxes—in

will also note that, since


ixed cost of making the

category referenced above in each of the four cost statements. Despite the temptation to


maintaining tellers and ATMs—

while other costs will just as certainly be magnified and still more, new costs may appear—such


ny sort of logical investigation into the differences in the fixed costs





be they Dollars, Euros, or Pounds—are units of


Luca L. Hickman

Indeed, this characteristic is the definitive one f

what could be seen as a variable interest rate

different from true usury, one needs must have a proper understanding of value versus units of

value.

As the American journalist Steven Jacobson so adroitly explained:

The definition of the word “dollar” has undergone such a transformation to hide the fact that it is not money, but a unit of measurement for gold and silver coin. Logically, if there are no gold and silver coins, there are no dollars of anything. Dollars cannot be money any more than quarts can be milk. A unit of measurement cannot replace or become the “thing” for which it is a measure. However, in the mind of the public, this is exactly what hasled to believe that a dollar is both money and a measure of it. This is what George Orwell called “double-think,” where the mind is infiltrated with conflicting concepts.

This understanding of the nature of value versus unit

great work, The Wealth of Nations

But as a measure of quantity, such as the natural foot, fathom, or handful, which is continually varying in its own quantity, can never be an accurate measureof other things; so a commodity [or indeed, a currency] which is itself continually varying in its own value, can never be an accurate measure of the value of other commodities.49

Smith even argued that the money price of goods was not the

“nominal price only.”50

While charging for the losses incurred due to inflation may outwardly resemble a variable

interest rate to the uninformed, the goal is to collect an equal amount of value as was lent.

Indeed, this argument is nullified when one realizes that in deflationary times, something

tantamount to a negative interest rate would occur

the practice of lending and collecting equal amounts of value (i.e. accounting f

completely in keeping with both the letter and the spirit of those moral traditions and logical

deductions which condemn usury.

Reconciliation with Mises

Mises argued that money does not measure value; rather, agreeing with Menger’s subje

theory of economic value, Mises taught that:

24

Indeed, this characteristic is the definitive one for an NPFI. To understand how the charging of

what could be seen as a variable interest rate—namely charging for inflationary losses


rican journalist Steven Jacobson so adroitly explained:

The definition of the word “dollar” has undergone such a transformation to hide the fact that it is not money, but a unit of measurement for gold and silver coin. Logically, if

silver coins, there are no dollars of anything. Dollars cannot be money any more than quarts can be milk. A unit of measurement cannot replace or become the “thing” for which it is a measure.

However, in the mind of the public, this is exactly what has happened. People have been led to believe that a dollar is both money and a measure of it. This is what George

think,” where the mind is infiltrated with conflicting concepts.

This understanding of the nature of value versus units of value can likewise be found in Smith’s

The Wealth of Nations. In it, he wrote:

But as a measure of quantity, such as the natural foot, fathom, or handful, which is continually varying in its own quantity, can never be an accurate measure of the quantity of other things; so a commodity [or indeed, a currency] which is itself continually varying in its own value, can never be an accurate measure of the value of other

Smith even argued that the money price of goods was not their real price; instead calling it the



his argument is nullified when one realizes that in deflationary times, something

tantamount to a negative interest rate would occur—actually benefiting the borrower. Surely,

the practice of lending and collecting equal amounts of value (i.e. accounting for inflation) is


deductions which condemn usury.

Mises argued that money does not measure value; rather, agreeing with Menger’s subje

theory of economic value, Mises taught that:

or an NPFI. To understand how the charging of

namely charging for inflationary losses—is quite


The definition of the word “dollar” has undergone such a transformation to hide the fact that it is not money, but a unit of measurement for gold and silver coin. Logically, if

silver coins, there are no dollars of anything. Dollars cannot be money any more than quarts can be milk. A unit of measurement cannot replace or

happened. People have been led to believe that a dollar is both money and a measure of it. This is what George

think,” where the mind is infiltrated with conflicting concepts.48

s of value can likewise be found in Smith’s

But as a measure of quantity, such as the natural foot, fathom, or handful, which is of the quantity

of other things; so a commodity [or indeed, a currency] which is itself continually varying in its own value, can never be an accurate measure of the value of other

ir real price; instead calling it the



his argument is nullified when one realizes that in deflationary times, something

actually benefiting the borrower. Surely,

or inflation) is


Mises argued that money does not measure value; rather, agreeing with Menger’s subjective

Luca L. Hickman

Money is neither an abstractan economic good and as such it is valued and appraised on its own merits, i.e., the services which a man expec

This view is not at odds with the value

can be seen as a lender of a given quantity of money, i.e. a given value of economic goods per

Mises. The NPFI then seeks to recover this v

repayment period. However, due to inflation (or deflation) the very metric of denomination

i.e. currency—will certainly have changed. Thus, to recoup “like value for like value” an NPFI

must account for inflation. Such a practice is wholly in keeping with Mises’ views on the

commodity nature of money.

25

Money is neither an abstract numéraire nor a standard of value or prices. It is necessarily an economic good and as such it is valued and appraised on its own merits, i.e., the

hich a man expects from holding cash.51

This view is not at odds with the value-based reasoning presented above. The proposed NPFI


Mises. The NPFI then seeks to recover this value of goods over the duration of the loan

repayment period. However, due to inflation (or deflation) the very metric of denomination

will certainly have changed. Thus, to recoup “like value for like value” an NPFI

on. Such a practice is wholly in keeping with Mises’ views on the

nor a standard of value or prices. It is necessarily an economic good and as such it is valued and appraised on its own merits, i.e., the

based reasoning presented above. The proposed NPFI


alue of goods over the duration of the loan

repayment period. However, due to inflation (or deflation) the very metric of denomination—

will certainly have changed. Thus, to recoup “like value for like value” an NPFI

on. Such a practice is wholly in keeping with Mises’ views on the

Luca L. Hickman

C

There is no subtler, no surer means of overturning the existing basis of

society than to debauch the currency. The process engages all

hidden forces of economic law on the side of destruction,

and does it in a manner which not one man in a

Reform

It is delusional to suppose that meaningful

resistance from entrenched interests. While this is true of all reforms, it is especially true of

those revisions instituted within governments, for wit

of the financial world are at a decided advantage

much needed reform outside of governmental controls and regulations

establishment of charitable NPFIs.

Urgency of Reform

The current financial crisis presents a manifold opportunity to test the

financial model as well as the broader reformist concepts behind such an institution. This

opportunity is largely shaped by two factors.

the intellectual foundations of the

debt-financing as indicated by the rising interest in equity

Secondly, the current crisis has greatly eroded

of the current debt-financing model.

before, and the eventual outcome of this crisis remains a matter of speculation. Nevertheless,

the general atmosphere at present

market, in the author’s opinion.

One Final Thought

Whether called “interest” or “usury”

inherently incompatible with the great moral traditions of the West. Moreover, such a system,

when combined with the likewise immoral practice of fractional reserve banking, contributes to

the mass erosion—or, more accurately,

annually. If true reform—be it moral or economic

come as a journey towards a moral banking system. The primary purpose of this paper was to

reignite a once blazing debate over the very foundations of modern

purpose was to offer one potential path towards a more moral banking system. Regardless of

how this specific proposal is received by the world at large, it is the

this primary purpose be realized.

26

CAVEAT AND CONCLUSION There is no subtler, no surer means of overturning the existing basis of

society than to debauch the currency. The process engages all the

hidden forces of economic law on the side of destruction,

and does it in a manner which not one man in a

million is able to diagnose.

—Lord Keynes

��

meaningful financial reform is possible without significant


those revisions instituted within governments, for within the halls of power, the vested interests

of the financial world are at a decided advantage. Thus, this paper has sought to introduce

much needed reform outside of governmental controls and regulations—chiefly through the

FIs.

The current financial crisis presents a manifold opportunity to test the proposed

as well as the broader reformist concepts behind such an institution. This

opportunity is largely shaped by two factors. Firstly, the current financial crisis has weakened

the current banking system—specifically the overreliance on

financing as indicated by the rising interest in equity-based, Islamic banking.

s has greatly eroded the public’s confidence in the long

financing model. This system has successfully faced many a calamity


the general atmosphere at present is favorable towards the testing of new ideas in the capital

er called “interest” or “usury” lending money with the expectation of increase is

ble with the great moral traditions of the West. Moreover, such a system,


or, more accurately, the mass theft—of many billions of dollars of va

be it moral or economic—is to come to the financial world, it must


reignite a once blazing debate over the very foundations of modern finance. The secondary


how this specific proposal is received by the world at large, it is the author’s sincere desire that

this primary purpose be realized.

There is no subtler, no surer means of overturning the existing basis of

Lord Keynes

possible without significant


hin the halls of power, the vested interests

. Thus, this paper has sought to introduce

chiefly through the

proposed non-profit

as well as the broader reformist concepts behind such an institution. This

Firstly, the current financial crisis has weakened

specifically the overreliance on

based, Islamic banking.

long-term stability

has successfully faced many a calamity


favorable towards the testing of new ideas in the capital

lending money with the expectation of increase is

ble with the great moral traditions of the West. Moreover, such a system,


of many billions of dollars of value

is to come to the financial world, it must


finance. The secondary


uthor’s sincere desire that

Luca L. Hickman

The very foundations of Western finance are unstable. Rightly did the Psalmist cry, “If the

foundations be destroyed, what can the righteous do?” In the words of T. S. Eliot, let us,

therefore, dismantle this failed—

fires.” Let us begin by once again discussing the reasonability

of continuing the fractional reserve, interest

27

very foundations of Western finance are unstable. Rightly did the Psalmist cry, “If the


—and failing—superstructure, and bring “old timber to new

fires.” Let us begin by once again discussing the reasonability—moral, economic and political

of continuing the fractional reserve, interest-based financial system now in place.

very foundations of Western finance are unstable. Rightly did the Psalmist cry, “If the


timber to new

moral, economic and political—

based financial system now in place.

Luca L. Hickman

Carry on any enterprise as if all future su

Work and Personal Interests

Luca Hickman is a full-time student studying under a jointly administered program through

the Milwaukee School of Engineering in the United States and the Fachhochschule Lübeck in

Germany. In addition to his work in economics and finance, Mr. Hickman is also a freelance

writer with an interest in energy and environmental policy. He has presented papers on the

subject of American Corn-Ethanol Policy at international conferences, an

soon-to-be-published book on the subject entitled

A proud resident of Wisconsin, Mr. Hickman enjoys fishing, hunting, hiking and spending time

with his family.

To stay up to date with Mr. Hickman’s latest work, vis

28

ABOUT THE AUTHOR Carry on any enterprise as if all future success depended on it.

—Cardinal Richelieu

��

time student studying under a jointly administered program through




Ethanol Policy at international conferences, and is the author of a

published book on the subject entitled The Ethanol Myths.


To stay up to date with Mr. Hickman’s latest work, visit his website at:

www.paxetlux.org

ccess depended on it.

Cardinal Richelieu

time student studying under a jointly administered program through




d is the author of a


it his website at:

Luca L. Hickman

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Luca L. Hickman

Few discoveries are more irritating than those which expose the pedigree of ideas.

1 English Standard Version

2 (North, Mises on Money Part IV 2002)

3 (Paul 2008), pages 144-145

4 (North, Mises on Money Part IV 2002)

5 The author here makes reference to the modern sense, i.e. the sum paid for the use of money, not the classical sense of damages or costs associated with making a loan. Hence the author is advancing both the classical definition of usury and the classical prohibition against it as being immoral.

6 (Elliott 1902) pages 9-10

7 (Homer and Sylla 2005) page 71

8 (Homer and Sylla 2005) page 71 and 1902) page 9




12 (Homer and Sylla 2005) page 76. This 6% rate came in contrast to the 32 ½% to 43 ½% rates previously permitted to private pawnshops.




16 (Khan 1985), page 24

17 (Khan 1985), page 24

31

ENDNOTES Few discoveries are more irritating than those which expose the pedigree of ideas.

—Lord Acton

��

(North, Mises on Money Part IV 2002)

es on Money Part IV 2002)

The author here makes reference to interest in the modern sense, i.e. the sum paid for the use of money, not the classical sense of damages or costs associated with making a loan. Hence the

cal definition of usury and the classical prohibition against it

page 71 and (Elliott

page 76. This 6% rate came in contrast to the 32 ½% to 43 ½% rates previously permitted to private pawnshops.

18 (Lewis and Algaoud 2001), page

19 (Lewis and Algaoud 2001), page 35. It is also worth noting that ribā al-buyu can take two forms: Ribā al-fadl (which involves an exchange of unequal qualities or quantities of the same commodity simultaneously) and (which involves the non-simultaneous exchange of equal quality and quantities of the same commodity according to Lewis and Algaoud.

20 (Elliott 1902) page 10

21 (Willingale 1988)

22 (Homer and Sylla 2005), page 70

23 (Hebrew Free Loan Society; 2009)

24 (Hebrew Free Loan Society; 2009)

25 (Lewis and Algaoud 2001), page 187

26 The reader is again reminded that usury here is used in its full classical sense of any gain on principle received as a reward for lending.






32 (Khan 1985), pages 23-24

33 (Iqbal and Mirakhor 1987), page 1

34 (Khan 1985), page 26

Few discoveries are more irritating than those which expose the pedigree of ideas.

, page 34

, page 35. It is also can take two

which involves an exchange of unequal qualities or quantities of the same

and ribā al-nisa simultaneous exchange

es of the same according to Lewis and Algaoud.)

, page 70

ociety; 2009)

(Hebrew Free Loan Society; 2009)

, page 187

The reader is again reminded that usury here is used in its full classical sense of any gain on

ceived as a reward for lending.

, page 68

, page 68

, page 69

, page 69

, page 78

, page 1

Luca L. Hickman


36 (Khan 1985), page 27

37 (Lewis and Algaoud 2001), page 186

38 Maligned, at least, within certain circles of economic thought.

39 (Rothbard n.d.)

40 (Rothbard n.d.)

41 ( Islami Bank Bangladesh Limited n.d.)

42 (Paul 2008) page 143

43 Proverbs 11:1, KJV


45 (Khan 1985), page 85

46 (Khan 1985), page 82

47 Although, since the non-profit banking system being discussed exists for the explicit purpose of making interest-free loans, the opportunity cost of doing so is simply the foregone opportunity to grant the loan to someone else—ostensibly someone who was less “deserving”.

48 (C. R. Smith 2001) page 129

49 (A. Smith 2003) page 47

50 (A. Smith 2003) page 47

51 (North, Mises on Money, Introduction 2002)

32

, page 5

, page 186

Maligned, at least, within certain circles of

( Islami Bank Bangladesh Limited n.d.)

, page 7

profit banking system being discussed exists for the explicit

free loans, the opportunity cost of doing so is simply the foregone opportunity to grant the loan to

meone who was

(North, Mises on Money, Introduction 2002)

exploring the potential of non -profit … · towards exploring the potential of market luca a...

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