Pope Francis' revolutionary encyclical addresses not just climate change but the banking crisis. Interestingly, the solution to that crisis may have been modeled in the Middle Ages by Franciscan monks following the Saint from whom the Pope took his name.
Pope Francis has been called "the revolutionary Pope." Before he became Pope Francis, he was a Jesuit Cardinal in Argentina named Jorge Mario Bergoglio, the son of a rail worker. Moments after his election, he made history by taking on the name Francis, after Saint Francis of Assisi, the leader of a rival order known to have shunned wealth to live in poverty.
Pope Francis' June 2015 encyclical is called "Praised Be," a title based on an ancient song attributed to St. Francis. Most papal encyclicals are addressed only to Roman Catholics, but this one is addressed to the world. And while its main focus is considered to be climate change, its 184 pages cover much more than that. Among other sweeping reforms, it calls for a radical overhaul of the banking system. It states in Section IV:
Today, in view of the common good, there is urgent need for politics and economics to enter into a frank dialogue in the service of life, especially human life. Saving banks at any cost, making the public pay the price, forgoing a firm commitment to reviewing and reforming the entire system, only reaffirms the absolute power of a financial system, a power which has no future and will only give rise to new crises after a slow, costly and only apparent recovery. The financial crisis of 2007-08 provided an opportunity to develop a new economy, more attentive to ethical principles, and new ways of regulating speculative financial practices and virtual wealth. But the response to the crisis did not include rethinking the outdated criteria which continue to rule the world.
. . . A strategy for real change calls for rethinking processes in their entirety, for it is not enough to include a few superficial ecological considerations while failing to question the logic which underlies present-day culture.
"Rethinking the outdated criteria which continue to rule the world" is a call to revolution, one that is necessary if the planet and its people are to survive and thrive. Beyond a change in our thinking, we need a strategy for eliminating the financial parasite that is keeping us trapped in a prison of scarcity and debt.
Interestingly, the model for that strategy may have been created by the Order of the Saint from whom the Pope took his name. Medieval Franciscan monks, defying their conservative rival orders, evolved an alternative public banking model to serve the poor at a time when they were being exploited with exorbitant interest rates.
The Franciscan Alternative: Banking for the People
In the Middle Ages, the financial parasite draining the people of their assets and livelihoods was understood to be "usury" -- charging rent for the use of money. Lending money at interest was forbidden to Christians, as a breach of the prohibition on usury proclaimed by Jesus in Luke 6:33. But there was a serious shortage of the precious metal coins that were the official medium of exchange, creating a need to expand the money supply with loans on credit.
An exception was therefore made to the proscription against usury for the Jews, whose Scriptures forbade usury only to "brothers" (meaning other Jews). This gave them a virtual monopoly on lending, however, allowing them to charge excessively high rates because there were no competitors. Interest sometimes went as high as 60 percent.
These rates were particularly devastating to the poor. To remedy the situation, Franciscan monks, defying the prohibitions of the Dominicans and Augustinians, formed charitable pawnshops called montes pietatus (pious or non-speculative collections of funds). These shops lent at low or no interest on the security of valuables left with the institution.
The first true mons pietatis made loans that were interest-free. Unfortunately, it went broke in the process. Expenses were to come out of the original capital investment; but that left no money to run the bank, and it eventually had to close.
Franciscan monks then established montes pietatis in Italy that lent at low rates of interest. They did not seek to make a profit on their loans. But they faced bitter opposition, not only from their banking competitors but from other theologians. It was not until 1515 that the montes were officially declared to be meritorious.
After that, they spread rapidly in Italy and other European countries. They soon evolved into banks, which were public in nature and served public and charitable purposes. This public bank tradition became the modern European tradition of public, cooperative and savings banks. It is particularly strong today in the municipal banks of Germany called Sparkassen.
The public banking concept at the heart of the Sparkassen was explored in the 18th century by the Irish philosopher Bishop George Berkeley, in a treatise called The Plan of a National Bank. Berkeley visited America and his work was studied by Benjamin Franklin, who popularized the public banking model in colonial Pennsylvania. In the US today, the model is exemplified in the state-owned Bank of North Dakota.
(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).