Bar-Ilan University's Parashat Hashavua Study Center

Parashat Behar 5763/ May 17, 2003

Lectures on the weekly Torah reading by the faculty of Bar-Ilan University in Ramat Gan, Israel. A project of the Faculty of Jewish Studies, Paul and Helene Shulman Basic Jewish Studies Center, and the Office of the Campus Rabbi. Published on the Internet under the sponsorship of Bar-Ilan University's International Center for Jewish Identity.
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Parashat Behar 5763/ May 17, 2003

On Taking Interest

Rabbi Dr. Yitzhak Dov Paris

If your kinsman, being in straits, comes under your authority, and you hold him as though a resident alien, let him live by your side; do not exact from him advance or accrued interest, but fear your G-d. Let him live by your side as your kinsman. Do not lend him money at advance interest, or give him your food at accrued interest. (Lev. 25:35-37)

The proscription against taking interest appears in the Torah three times (also in Ex. 22:24 and Deut. 23:20), to indicate how serious a matter it is. As the Tur warns (Yoreh De'ah 160):

Great care must be taken regarding the proscription against interest, in view of how many times it is said that one must not take interest. Both the person who borrows and the person who gives the loan are guilty of transgression, which is not the case with other laws regarding money; for if a person wishes to harm himself in terms of his assets, he is entitled to. But because this sin is so widespread, warning is given to both the borrower, as well as the guarantor and the witnesses, and to all who are associated with the transaction. Whoever lends for interest, his assets collapse and it is as if he denied his faith in the Exodus from Egypt and the G-d of Israel.

The author of Torah Temimah[1] expressed surprise that on the one hand the Sages were very strict regarding this proscription and extended it greatly, yet on the other it was effectively nullified by the heter iska, the rabbinic waiver of the interest prohibition, which he maintains was an invention of later generations which has not the slightest hint in the Torah nor was "the explanation for the foundation of this waiver ever fully explained"(Torah Temimah, Behar 192).

According to the view in Torah Temimah, at the time the Torah was given the Israelites lived off of agriculture and hardly dealt in commerce at all, which requires money and credit. "When they borrowed money, it was not in order to deal in commerce, but only to acquire bread to eat and clothing to wear for those who were lacking from their fields and work" (loc. sit.). Under these circumstances it was reasonable to forbid interest, in his opinion, since a person borrowing for his very existence had no way to pay interest, and the lender did not need interest as compensation since he suffered no loss. In medieval times, however, when Jews no longer worked in agriculture but were solely dependent on trade, loans became profitable both for the borrower and the lender, and the proscription against interest could no longer be maintained. In fact, interest became beneficial to fulfilling the words of the Torah that your fellow live "by your side," and therefore the rabbis saw fit to find a way to abolish this proscription on taking interest, assuming that the Torah had not intended to prohibit interest under such circumstances. In his opinion the heter iska, literally a "permit" which allows taking interest when the loan is defined as a business venture, was instituted only to preserve the memory of the Torah's original proscription (Tosefet Berakhah, loc. sit.).

This argument of the Torah Temimah is not new and indeed had already been rejected by the tannaim (Bava Metzia 75b):

It is taught: Rabbi Simeon says: those who lend for interest lose more than they gain, and what is more, they prove Moses wise and his Torah true,[2] for they say that if Moses had known that there would be profit in the matter, he would not have written what he did.

His argument that the waiver was given in recent times must also be rejected since the origins of this waiver go back to the Sages,[3] and even the Torah itself actually has a waiver permitting interest.[4] Furthermore, what he says apparently contradicts Maimonides' ninth tenet, and as a general rule the Rabbis are not empowered to annul a proscription in the Torah, even when it appears that the reason for it no longer exists.

As we know today, commerce and lending predate the giving of the Torah. Pottery shards from ancient Babylonia, deciphered after the publication of Torah Temimah,[5] indicate that grain, wool, flocks,[6] and gold were borrowed for interest, even before coins were used as currency,[7] to promote business. It is somewhat difficult to imagine that the Torah would repeat a proscription of something that was not common practice three times, and that the Sages would permit it precisely when it did become common.

Why, then, did the Torah prohibit taking interest, despite its "profitability"?

Rashi (in his commentary on Ex. 22:24) offers an explanation which also provides an answer to the question raised by Torah Temimah:

Advance interest (neshekh) - is like a snake bite (neshikhat nahash), making a small wound in a person's foot which is not felt until suddenly it swells up to his head. Thus interest is not felt or noticed until it increases and costs him much money.

According to this interpretation, interest is not essentially ruled out by the Torah, rather it is forbidden as good advice due to the danger of erring and being hurt by it: "Those who lend for interest lose more than they gain." The Torah recognizes the concept of capital gains: there is profit in lending, but not all are aware of the risks. A borrower who is enthused about business is blind to its dangers,[8] until one day he discovers his loss, his debt swells because of the interest, and he collapses along with the lender.[9]

The Torah permits indirect interest in the case of a person who sells a house in the city wall for a year, or his farmland until the Jubilee, while reserving for himself the rights of redemption. He is in effect extending credit and the use of property is a form of interest that is permitted, since there is no danger of the debt growing out of proportion, for the purchaser always has the land to return. But in a period when not everyone was a landowner, the Sages encouraged another approach (Shabbat 63a): "Better the person who loans money than the person who gives charity, and one who joins in as a partner is best of all." A partner who risks his fortune to obtain a share in the profit will give advice and help the business succeed, and "two are better off than one" (Eccles. 4:9).

Thus it is from the Torah that the Sages learned not to bar the way before the person who would take a loan, making the proscription more lenient through the heter iska, a waiver that combines loaning with partnership.

[1] Rabbi Barukh Epstein, author of the commentary Torah Temimah, was a bank manager and a great Jewish scholar although he did not officiate as a rabbi.
[2] Rabbi Simeon was speaking sarcastically and accusing moneylenders of being disrespectful as far back as the time of Moses; already then, this proscription was mocked for being unreasonable.
[3] "The scholars of Nehardea said: This transaction is partly a loan and partly a deposit, ...", and according to Rabba there, in every penny lent there is part loan and part pikkadon (Bava Metzia 104b). In the Tosafot, s.v. hai iska, they said it is similar to the Mishnah: "One does not pay a shopkeeper half wages" (Bava Metzia 68a). Similarly, the chapter Eisehu neshekh ("What is interest?") gives additional ways of permitted interest.
[4] "Selling a house in the wall of a city, etc. - this is like a sort of interest which is not interest" (Arakhin 31a). Some hold that it is real interest and believe that it was permitted by the Torah. This is a short-term loan, and selling a farm holding that is returned in the Jubilee year (Lev. 25:23028) is a long-term loan; and they come before the proscription against interest in the Torah in order to provide a remedy prior to the ailment.
[5] Had this been known to the author of Torah Temimah, he probably would have changed his interpretation, as Rashi acknowledged to his grandson Rashbam: "If I had the time, I should have written other interpretations according to the new plain meanings that are revealed every day" (Rashbam on Gen. 37:2). The Torah itself mentions commercial dealings such as the sale of the Cave of Machpelah, and Nahmanides notes that farmers used to borrow grain and pay off their debt from their harvest (see his commentary on verse 35, here).
[6] Postgate, "Some old Babylonian Shepherds and Their Flocks," Journal of Semitic Studies 20 (1975), pp. 1-21. This article sheds light on the negotiations between Jacob and Laban (Gen. 30), as well as the discussion in Bava Metzia 68-70.
[7] G. Davies, History of Money, University of Cardiff Press (1994).
[8] Economic theory attributes such behavior to blocked rationalism and to irrational exuberance, among other things.
[9] "Loan crises" have been known even in our times. For example, the difficulty of American households that fall into debt as a result of overextending themselves using credit cards, and the case of governments of extremely poor countries (HIPC).