St. Thomas explains his objection to usury:
I answer that, To take usury for money lent is unjust in itself, because this is to sell what does not exist, and this evidently leads to inequality which is contrary to justice. In order to make this evident, we must observe that there are certain things the use of which consists in their consumption: thus we consume wine when we use it for drink and we consume wheat when we use it for food. Wherefore in such like things the use of the thing must not be reckoned apart from the thing itself, and whoever is granted the use of the thing, is granted the thing itself and for this reason, to lend things of this kin is to transfer the ownership. Accordingly if a man wanted to sell wine separately from the use of the wine, he would be selling the same thing twice, or he would be selling what does not exist, wherefore he would evidently commit a sin of injustice. On like manner he commits an injustice who lends wine or wheat, and asks for double payment, viz. one, the return of the thing in equal measure, the other, the price of the use, which is called usury.
On the other hand, there are things the use of which does not consist in their consumption: thus to use a house is to dwell in it, not to destroy it. Wherefore in such things both may be granted: for instance, one man may hand over to another the ownership of his house while reserving to himself the use of it for a time, or vice versa, he may grant the use of the house, while retaining the ownership. For this reason a man may lawfully make a charge for the use of his house, and, besides this, revendicate the house from the person to whom he has granted its use, as happens in renting and letting a house.
Now money, according to the Philosopher (Ethic. v, 5; Polit. i, 3) was invented chiefly for the purpose of exchange: and consequently the proper and principal use of money is its consumption or alienation whereby it is sunk in exchange. Hence it is by its very nature unlawful to take payment for the use of money lent, which payment is known as usury: and just as a man is bound to restore other ill-gotten goods, so is he bound to restore the money which he has taken in usury.
In the example of the rental of a house, the landlord is a seller, and the renter is a buyer. The landlord sells the use of the house to the buyer. St. Thomas is thus explaining usury in this way: the lender sells the use of his money to the borrower, while retaining ownership of the money. At the end of the period, therefore, the borrower must return the original money, since the lender has retained ownership, together with an additional fee for the use of the money.
This is intrinsically unjust, St. Thomas says, because someone cannot have the use of the money without having the money, since using money consumes it.
This is correct, if one analyzes the transaction in this way. But on the other hand, no one would ever borrow money if they analyzed the transaction in this way. In reality, St. Thomas has confused the buyer and the seller. The lender is not a seller, selling the use of money, but a buyer. When he gives money to the borrower at the beginning of the transaction, he does not retain ownership of the money. On the contrary, the money is a payment, by the lender as a buyer, to the borrower as a seller. When the borrower promises to repay the sum with interest, he is promising to provide the future money that he is selling to the lender.
To illustrate this with a concrete example, suppose the lender lends $100 to be repaid a year later with $110. Then the lender buys $110 future dollars for the present sum of $100, and the borrower sells $110 future dollars for the present sum of $100.
St. Thomas is correct, however, that “what does not exist” is being sold here, although he is mistaken about the nature of the transaction. It is not the use of $100 that is being sold, but a future $110, which “does not exist” because it is future. And this is not an injustice; selling what does not exist here is no more unjust than it is unjust to make a contract to provide a certain amount of wheat a year from now. Nor is the price unjust, since future money is in itself less valuable than present money, just as it would be less valuable to be promised wheat a year from now, than to be given it immediately. The different particular situations of the lender (the buyer) and the borrower (the seller) explain why they both benefit from the transaction, just as both the buyer and seller of wheat benefit from it due to their particular situations.