This obviously doesn’t mean that the original gold coins are literally eaten or melted down and destroyed by the borrower (although that could be the case in a mutuum loan of, say, food)

A personal commitment to return ‘in kind’ is a commitment to return something which doesn’t actually exist as an actual thing: it is just abstractly a ‘thing’ of such and such a kind. Formally, then, the distinction between currency and property in the context of an investment contract is that currency is returned in kind, while property is returned in particular. The former is the https://loansolution.com/pawn-shops-ne/ basis of a mutuum; the latter is a necessary (but not sufficient) condition for the formation of a licit societas.

If the lender wants $5000 in security to cover the car in case of an accident he should get it as a deposit, a lien on home equity or other property, or as an insurance bond instead of trying to collect it after the fact

A licit societas can and frequently does create in-kind investment returns when things go according to plan (“From these [non-mutuum] contracts honest gain may be made.” – Vix Pervenit). But all contractual claims of all parties must terminate in actually existing property, not in claims against persons, in order to avoid usury. That’s why asking the question “what if things don’t go according to plan?” is particularly helpful in distinguishing usurious contracts from non-usurious contracts.

St. Thomas Aquinas refers to objects pledged in kind as objects “consumed in their use”, as distinct from objects pledged in particular. It just means that the original gold coins are no longer in the possession of either the lender or the borrower once the borrower uses them. A mutuum is that kind of agreement: a pledge to return in kind as opposed to in particular.

It is true that the usurer might accidentally receive back some of the very same gold coins (say) that he loaned, as those coins circulate.Continue reading→