Successive Councils of the Church condemned usury for several centuries, although attitudes became more varied in the Middle Ages. With Christians banned from lending money at interest, and Jews barred from many professions by Christian monarchs, moneylending was undertaken by Jews in much of Europe. Many of the same Christian monarchs who encouraged this also used it to whip up anti-Semitic feeling when they wanted scapegoats.
At the same time, some church leaders were prepared to sanction monarchs who borrowed money at interest to finance “holy” wars. Others argued that it is legitimate to charge interest equivalent to the profit that lenders would make if they did not lend the money (profits given up, or lucrum cessans). In modern parlance, this is an “opportunity cost”.
By the time of the Reformation in the sixteenth century, leading church figures such as Martin Luther and John Calvin declared that interest is acceptable as long as it is not excessive. The figure of five percent was usually given. In England, Henry VIII freed up moneylenders to charge higher interest in the paradoxically named Act Against Usury of 1545.
Opposition to usury remained stronger in Roman Catholic circles, and was strengthened by Benedict XIV, who issued an encyclical (a circular letter) in 1745 telling Catholics not to lend money at interest. Amidst legal and economic changes in the early nineteenth century, usury became more socially acceptable and Pope Pius VIII weakened the ban on usury in 1830. From 1917, the Vatican allowed church bodies to make interest-bearing investments.