I’ve been critical of the ambiguity and accuracy of the Catholic Encyclopedia on usury (Question 41) because it omits entirely – perhaps its authors were simply ignorant of the requisite documents – the Magisterial distinction (also found in Aquinas) between full recourse and non recourse contracts (Question 31 and Question 36); the article also claims that Vix Pervenit “formally condemns” institutional credit in the Church tied to Church property – which in fact it does not, since the encyclical doesn’t discuss mortgages on Church property at all – suggesting that the Church approves of interest on “loans” (as an ambiguous term) “in practice”.
If the Catholic Encyclopedia has the facts right about the Mountains of Piety though then it is not clear that they made mutuum loans at all. The Mountains operated like modern day pawn shops, taking in existing property as security and making non recourse loans against the property:
The amount of a given loan was equal to two-thirds the value of the object pawned, which, if not redeemed within the stipulated time, was sold at public auction, and if the price obtained for it was greater than the loan with the interest, the surplus was made over to the owner.
Of course as explained in Question 11 of this document, just because a contract does not, in Benedict XIV’s words, “fall under the precise rubric of usury” does not mean it is not exploitative and wrong. I don’t know what loan-to-value ratios they maintained or if they would always assert deficiency judgments against borrowers, but keep in mind that just because a contract is not technically usury does not mean it is not exploitative and wrong. It is important to understand usury correctly; but too much focus on usury specifically could easily become a distraction from other real injustices.
Profit for the lender from a mutuum loan is never morally licit: the borrower has in a literal sense become the owner of what has been lent, because he may do with it as he wills and any risk of loss is his
And that is always something important to acknowledge: that even when a given contract does not “fall under the precise rubric of usury” (Vix Pervenit), “whatever is received over and above what is fair is a real injustice.” (Ibid)