Law and Life

Debt and Decapitalization

Professor: Dr. R.J. Rushdoony

Subject: Law

Genre: Sermon Series

Lesson: 31 of 39

Track: 135

Year: 1960’s – 1970’s

Dictation Name: RR156R31

[Rushdoony] Our scripture this morning is Deuteronomy 15 verses 1-6, our subject Debt and Decapitalization. Debt and Decapitalization, Deuteronomy 15:1-6.

“At the end of every seven years thou shalt make a release.

2 And this is the manner of the release: Every creditor that lendeth ought unto his neighbour shall release it; he shall not exact it of his neighbour, or of his brother; because it is called the Lord's release.

3 Of a foreigner thou mayest exact it again: but that which is thine with thy brother thine hand shall release;

4 Save when there shall be no poor among you; for the Lord shall greatly bless thee in the land which the Lord thy God giveth thee for an inheritance to possess it:

5 Only if thou carefully hearken unto the voice of the Lord thy God, to observe to do all these commandments which I command thee this day.

6 For the Lord thy God blesseth thee, as he promised thee: and thou shalt lend unto many nations, but thou shalt not borrow; and thou shalt reign over many nations, but they shall not reign over thee.”

We have been dealing with occultism and its relationship to various aspects of our life. We have seen that occultism decapitalizes man and society materially and spiritually. Occultism is simply the intensive application of the satanic principle that every man is his own God. The fall of man meant that man could try to play his own God now, but it also meant that man was now his own heaven and hell. Having rejected God he rejected God’s world, God’s creation, God’s hell. So now man had to be His own heaven and hell, his own universe. Man as his own universe could not tolerate another man, another would-be God. And so one of the first consequences of the fall was murder, Cain killed Able. Shortly thereafter we have the example of Lamech celebrating his autonomy from all men, boasting of his freedom and power to kill other men at will.

The song of Lamech in Geneses 4:23 & 24 celebrates this autonomous power, this total anarchism. God’s heaven and hell being denied it became necessary for man to cerate his own heaven and hell, but man cannot create heaven. Every attempt by man to create a paradise on earth, to create his own heaven, has failed and the only thing he has been able to create is hell on earth, a projection of his own fallen nature, of his own sin. And the earth has been turned from paradise to hell.

Now as a consequence of the fall man in his social development, while an unbeliever in God, becomes in some fashion a believer of the devil. The only reality he will affirm concerning the world is that it in some sense is demonic. It is interesting that in 1968 Mick Jagger and the Rolling Stones, one of the most popular of rock groups, sang as one of their most popular numbers “Sympathy for the Devil.” Vermon {?} in commenting on the song says, and I quote “In the song the devil says ‘we know him better than we think, he is present in all violence, good, bad, in revolutions, in horrors, and we cannot choose only the violence we want, but must accept the world around us as our creation.’” Now acceptance of violence therefore becomes the new gospel with these people, and Mick Jaggers [sic] goes on in other songs to demand that we accept all violence and to say that we really love the totality of violence. Vermon {?} goes on to say, and I quote “Jagger brilliantly mimed the acts of rape and murder as he twisted himself voluptuously around his unseen victim teenage girls leaped up on the stage and threw themselves hysterically at his feet ‘do it to me’ I heard one yell.”

Now Vermon{?} goes on to say that the principle of this sympathy for the devil is the belief that “it is only by virtue of everything you call sin, destruction, evil, that any such sort of creation can go on.” Well here you have these people stating the fundamental principle of the religion of revolution. The conclusion therefore, as Vermon affirms it is, “accept your destructiveness as part of your divine creativity, and you can throw off your guilt and leave your closet.” And so in terms of this the demand is for total possession of the world in terms of a total gospel of destruction.

Another group, The Doors have a popular song “We Want the World and We Want it Now” departure from God means affirmation of regeneration by violence, destruction, and hell as the means of building heaven. It means not only sympathy for the devil but that all sides of the humanistic spectrum, both communist and conservatives, anarchists and socialists, fascists and republicans, all alike embrace variations of the common principle of autonomy from God and a self-definition of ends and means. All their activity thus becomes destructive. Hatred remains, but no ability can make moral judgments.

Now the society of fallen man’s dreams is an imitation of his ideas of heaven. And because God does not change when men dream of creating their own divine society, a humanistic divine society, they want a changeless society, and so all their destruction is aimed at destroying that which changes so that their own idea of eternity can be established. When we go back through the centuries and exam pagan antiquity we find that the pagan idea of true society was of a static, unchanging, divine society. This is why, in paganism, you find that there is a marked hostility to the idea of interest, of taking interest on money. Aristotle regarded as a horrible concept, so did Plato, so too did Cicero, Cato, go down the line of the great pagan thinkers and their horror for interest is a startling thing. Cato said that taking interest was like committing murder.

Now none of these society, Greek, Roman, or otherwise, were able to suppress the taking of interest. Why did they hate it, why? Because interest is the recognition of problems, of shortages, of needs, of crisis, of change, of development and those who want to create and eternal order, a static order, a fixed, unchanging social order, resent the fact of interest because it recognizes change, development, crisis, needs. They cannot cope with it and as a result in all pagan societies, in spite of all their hatred of interest, the money lender prevailed. Trying to create a fixed, unchanging heaven, they created perpetual revolution.

Moreover you had the concentration of power in the hands of money lenders in Greece culminating in debt repudiation under Solon in 594 B.C. and again and again in various other city-states of Greece other then Athens, the same thing – debt repudiation. Rome had the same problem. Julius Caesar gained power through debt repudiation. There had been a concentration of power in the hands of money lenders, and a great deal of screaming by people who had been ready to borrow the money and now were angry and upset because they couldn’t repay it, and somehow it was the money lenders fault. And So Julius Caesar rode to power and the republic ended by the demand for debt repudiation. The middle ages again had a great deal of hostility to money-lenders to interest. But none of these societies, past and present who have raged against the idea of interest, have been able to eliminate it, to do so is impossible in a non-eternal world.

Moreover very interesting fact about interest which most writers who have railed against it have never discussed, or will not face up to. IN a very simple society a good deal of borrowing money is to deal with crisis, with emergencies, but the more society develops through the use of interest the more the use of interest becomes less and less oriented to personal disaster and crises and more and more oriented to commerce, to the development of technology, to the advancement technologically of society. Most money-lending today is in terms of development, but pagan societies, because they aimed at an eternal order, were hostile to the idea of interest because interest is a most effective instrument of change, of principal, of peaceful revolution. Wherever as in Marxism, the idea of an eternal order is revived, interest is banned or there are attempts to ban it. It is recognized as a revolutionary or a counter-revolutionary force. But when the free market for interest developed the world saw its most rapid growth and the most radical changes in history. But it also saw a change in the view with regard to interest, from a Biblical view to a humanistic view. The 17th century humanist wrote of it with religious fervor. One nature-industrialist a few years ago told me, and he was a Christian, but at this point he didn’t like the Bible and he said that the Biblical law was here invalid because interest is essential to the growth of modern technology.

Well we could add that apart from the Biblical law with regard to it, it will also destroy modern technology. Now Doctor Howard E. Kershner has seen the fallacy of the modern perspective to a degree. He has pointed out, and I quote “at five percent compounded annually, money doubles in a little less than fifteen years, or about seven times in a century” that’s at five percent. And he goes on to point out that one million dollars loaned out at five percent from the day Columbus discovered America, compounded annually, could not repaid today with all the money in the world. And he says, and I quote “obviously long continued compound interest is a fallacy, and any government dedicated to maintaining it will bankrupt itself.”

Now Kershner says society has derived three methods historically to try and correct this error, to try and correct the destruction that compound interest works. The first, he says, is the Biblical law of the Sabbath and the jubilee, but he does not consider this seriously. Second are bankruptcy laws, but this does lead to a concentration all the same, and it does not solve the problem. As he points out the people of this country are now paying, and he wrote this in the fifties, one sixth or more of their income for interest on various kinds of debt. The third solution that he pointed out is monetary reforms. Inflation is halted, but so is capital accumulation. On a certain date all your old money is a change at a rate of ten to one or a hundred to one for new money. And so as Kershner says “we recognize the need for interest, but how to keep it from destroying that which it creates we have no answer for.” Now our scripture gives us the Biblical answer. In Deuteronomy 15:1-6 and other passages we are told emphatically that interest is legitimate, it must be a short-term loan not to exceed 6 years, except with the ungodly. Long-term debt is slavery, sinners are slaves to begin with and therefore long-term loans can be made to them. Loan made to a person who is a fellow believer in terms of a need, which are really charity, should not involve interest, but other loans should have interest.

Now there are a number of presuppositions here, I’ve touched on some, to review these and others. First of all, short-term debt only is envisioned in terms of scripture. The believer cannot mortgage his future; the borrower is slave to the lender Solomon says. Then second, since the ungodly are slaves of sin, they are in principle slaves. They cannot be prevented from manifesting their bondage, and so long-term interest, long-term loans are permissible to them, nor is their debt cancellation for them. Then third, as we’ve already seen, loans to the needy brethren are charitable loans and are to be without interest. Charity and business are to be kept separate. The ungodly, fourth, are excluded from charitable loans and from the cancelation of debt. Scripture makes emphatically clear, none of the privileges of faith go to anyone without faith, and so we cannot extend the conditions and privileges of faith to the unbeliever.

Then fifth, during the six years of debt, there is no limited liability. Unlimited liability prevails, but there is a limited term to debt, and to interest. Moreover, sixth, God says in a society in which men are believers and obey God’s laws there will be no poor, so God does declare that by obedience to his laws the extremes of poverty and wealth will be avoided. There will be no polarization, there will be no long term debts when all are believers, or the majority, inflation will be eliminated and there will be more freedom for all. Finally the modern form of long-term debt with compound interest on notes and loans plus limited liability laws, does make possible the rapid inflationary growth which has as its consequence radical Decapitalization and the destruction of society, the Biblical law prevents this.

Now the Bible does allow for interest precisely because this world is not heaven, it is not eternity, it is the world of time, it is the world of history, it is the world of change and of development, and interest is that which makes change, development, progress, possible, it also recognizes that this, while an excellent instrument, which God’s law provides for, in the hands of the ungodly becomes an instrument of slavery because the ungodly will turn anything and everything into an instrument of slavery because they are slaves at heart. To the pure all things are pure, but to the impure all things are impure. The evil is not banking, as the socialist tell us, the evil is in those people themselves and they will turn banking into an evil, they will turn religion into an evil, they will turn the family into an evil, they will pollute everything they are associated with, nothing is exempt from the sin that is in them.

Change is basic to history, the evil will turn change into a destructive thing and as we saw at the beginning, for them change means destruction, revolution, but interest provides for a peaceful revolution, peaceful change when under God men use it properly, and history requires. God created man and set him upon the earth that he might exercise dominion over it and subdue it. This requires development, exploitation of the resources. Yesterday I was reading the new issue of Access to Energy and it was really amazing to realized how many new sources of energy are there waiting for a development, and the only problem is the shortage of capital because of the various anti-Christian and socialist policies that prevail, and these ungodly people are talking about shortages, an energy crisis which they have manufactured. To the impure all things are impure, they will pollute, they will destroy all things. Whereas God’s law does provide for Godly change and development and interest is an instrument in this and the short term debt is a way of developing, of progress. Where-as long term debt is destructive, it leads the slavery of the ungodly, but for the free man his use of these things is an extension of his freedom and of his growth and of his potential under God.

Today we have zero economic growth and zero population growth because the people who sponsor these things aims at an eternal society, fixed and unchanging. Recently talking to someone who had been doing a lot of research in what the planners are planning, this person remarked “if you talk about what they have in mind people will think you’re crazy, but of course they thought we were five and ten years ago when we predicted some of the things that would happen now.” But he said “Some of these people are so insane they actually visualize turning the whole of the country into vast greenbelts and moving people into the cities.” Because they’re going to create a fixed, unchanging order, and they don’t like anyone tampering with the countryside except those who farm, and they go out from the towns and cities by permission, to their fields. Total planning. Of course this is the kind of thing the Soviet government has taken long strides towards, an unchanging order, and this is the end result of occultism, which is Humanism, man playing God. And God says “I am the Lord, I change not.” And the humanistic society dreams of saying the same thing “I am the lord, I change not, therefore there must be a fixed order in anything that makes for change” such as uncontrolled population growth, such as interest, such as uncontrolled economic growth, must be eliminated, must be destroyed.

We are thus in the midst of a very real warfare between man trying to play God and saying “heaven on earth will be this fixed society.” And the people of God who must say to this “here we have no continuing, that is unchanged, fixed city, but we look for one to come. And therefore our work is to be pilgrims, to move, to make history move, to make history develop, to change, and for us to move forward looking for that city whose builder and maker is God, and here in all that we do we seek to approximate that, knowing that we never attain it in time.”

When men seek to create an eternal society on earth they decapitalize men and nations and today we are being decapitalized. But we cannot recapitalize as long as people say “well, history is nothing and we’re going to be raptured out of it soon, therefore let’s sit around and wait for the rapture.” They too are denying the world of change, of history, where God has said man must exercise dominion and subdue the earth, or moan must be a pilgrim knowing that the world changes, moving with the change towards God’s appointed purpose.

And thus it is our calling to be pilgrims under God, believing in the eternal God and not an eternal human order, believing in the necessity of working for that eternal God here in time. Affirming the validity of change, change sometimes is not to our taste, we don’t like it as we get a little older and a little creakier, but we know that those changes themselves are ordained by God so that a world of sin may pass away, and we who are corruptible may finally put on incorruption and meanwhile with that growing older we are also being summoned to renew all things through Christ and His word, to bring all things into captivity to Christ, to be pilgrims in terms of His calling. Let us pray.

Almighty God our heavenly Father we give thanks unto Thee that Thou hast called us to be Thy people, to exercise dominion and to subdue the earth, to bring all things into captivity to Jesus Christ and His regenerating power, to conquer one realm after another, to know that things as they are must be shaken, must change, so that only the unshakable, which is of Christ, may remain. Bless us oh Lord in our service unto Thee, and grant that as Thy pilgrims we may move and change and conquer through Christ our Lord, in His name we pray, amen.

Are there any questions now? Yes?

[Audience member] {?}

[Rushdoony] What is the Biblical attitude towards consumer debt? Well since debt in the Bible is regarded as something to be used for emergency and for development a consumer debt is, I would say, basically not the best kind of debt. I would say basically it is to be avoided. Debt should enable us to further capitalize ourselves, to develop, it should be debt towards a home, a business property, towards an expansion, but consumer debt does tend to decapitalize society because it shifts it from production to consumption. SO that in the Bible the kind of debts that are visualized are those for crises, emergency situations, and for development. Consumer debt is a very modern thing, it wasn’t even imagined there.

Yes?

[Audience member] Do you think {?} that the shifting from emergency debt to debt as a capital creation occurred to profit some point in history, when was that? And in history is the explosion of consumer debt {?}?

[Rushdoony] Yes the shift from crises and emergency debts cannot be pinpointed in any society but as a society begins to develop the more debt functions as a developing agency and less and less as a crises relieving agency, in other words it’s an instrument of progress and the more freely it functions, the more there is free market for interest, the more it creates growth and so the crisis factor becomes a minimal situation.

[Audience member] And there’s nothing wrong with that?

[Rushdoony] Nothing wrong with that. For the Christian, however, it has to be short term you see.

Now let’s see, the second part of the question was…

[Audience member] When did we get consumer debt?

[Rushdoony] Oh, consumer debt is a very new thing predominately since WWII. Prior to WWII only the very rich had debts for consumption. But since WWII consumer debt has sky-rocketed and it’s not a healthy fact. Would you say that’s a fair statement Gary?

[Gary] Yeah except in the {?} of housing we did have, say six or seven year debts as early as the turn of the century, maybe 1920’s period, {?} of consumer debt and there was some minimal debt structure on the home {?}

[Rushdoony] Yes, housing until 1920 did have a bout a six or seven year limitation and if you could call that a consumer debt it did exist, that is a point that could be argued as to whether it’s a consumer debt.

Yes?

[Audience member] What do you put in the category of consumer debt? Time payments on an automobile and charge accounts at the store, things like that?

[Rushdoony] Primarily the charge accounts, for much reasons such items, yes that’s a very heavy factor.

For example it was routine, when I was a boy, for young couples when they got married to start housekeeping with nothing more than the bedroom furnishings, at a minimum, a kitchen table and three chairs, one for a visitor, and that was the way they started without debt, and they accumulated the furnishings for a house over a period of time.

Now of course the whole house is furnished immediately, with debt. At that time the debt went into, a grew up in a farming community, into the farm you see, and even then there had to be a substantial down payment. So the debt was for the farm.

Yes?

[Audience member] Is compound interest Biblical {?}

[Rushdoony] I’ll pass that question on to Gary North, you want to comment?

[Gary] Well compound interest is simply impossible over an infinite period of time but it is possible with shared risk over a short-term period. But if limited liability appears where you’re guaranteed a return, irrespective of the {?} which was then the case in modern times {?} perverse concept because usually limited liability comes with the promise of the return coupled with compound interest, that’s impossible, that’s impossible over the long run because there can be failures with ships, they go down, fire can break out, so. But if there’s shared risk even in medival times many of the commentators believed that with shared risk that was ok to ascribe interest on {?} loan since you were {?} it was only as against the limited liability concept that you were guaranteed a return that the {?} came into effect. And it’s interesting that they broke, in medieval times, they broke the prohibition on usury by coming through the back door in the form of an insurance policy where a third party would be insured a particular return on a particular venture, 5%, 6%, whatever, and through an illegitimate use of the concept insurance they finally broke the opposition in medieval times to prohibition on fixed return debt, or fixed return loan.

[Rushdoony] Sometime I think you should write an article on this eternity idea in relationship to interest and the damage it has done, and of course it is a totally pagan idea. Any other questions?

Yes?

[Audience member] Do you consider a 30 year home loan a consumer debt?

[Rushdoony] What was that?

[Audience member] Do you consider a 30 year mortgage on a home loan too long of a consumer debt?

[Rushdoony] I think a question could be raised whether a home is a consumer debt. I really do, I think it’s a basic necessity, the homestead idea did not see the home as a consumer thing, but the thirty year note of course for the Christian would be inacceptable. Are there any other questions? IF not let us bow our heads for the benediction.

And now go in peace, God the Father, God the Son, and God the Holy Ghost bless you and keep you, guide and protect you, this day and always, amen.