Money Lending

You shall not deduct interest from loans to your countrymen."  (Deuteronomy 23:20)

A week ago, I was asked to be part of a “talk-back” panel about Shakespeare’s The Merchant of Venice which was performed by the Flatwater Shakespeare Company. Sarah Kelen of our congregation was asked to be on another panel at a later performance.  For those of you not familiar with the play, it centers around the story of Shylock, better known in the play as THE JEW, the money lender.  We meet Shylock as an individual who is deeply hurt when his daughter runs off with her a Christian suitor and then converts to Christianity.  Shylock, who is bitter, then ends up loaning 3000 ducats to Antonio so Antonio’s poor friend can court the lovely Portia.  The terms upon which the loan is given, says that if Antonio does not pay back the loan, he will have to give Shylock, a pound of flesh. Needless to say, Antonio’s friend is unable to pay back Antonio, and Antonio cannot pay back Shylock. When the loan cannot be repaid, the two end up in court.  During the famous court scene Portia, disguised as a male, gives a speech about the need for mercy for Antonio because Christianity demands mercy vs justice speaking to THE JEW as if mercy were not a Jewish concept!   In the end, Shylock loses his case, and must convert to Christianity.

Why am I speaking about Shakespeare’s play today?  It strikes me that there is a line in today’s Torah portion which speaks about money lending. The Torah teaches that Israelites are forbidden to charge interest to other Israelites on loans.  Israelites could charge interest to foreigners.  "You may deduct interest from loans to foreigners, but do not deduct interest from loans to your countrymen."  (Deuteronomy 23:21) 

This statement in Torah explains Jewish attitudes toward money lending and helps us put it into an historical perspective.  First let’s start with not charging interest to other Israelites on loans.  When an individual fell upon hard times within one’s own community, the money lender was present not to make a profit but to provide money as a form of giving tzedakah that would later be paid back.  “Loans within the Jewish community were usually made because a person had become poor or their crops had failed.  Under those conditions, Jews were not to make a profit off the misfortune of others.  The idea of interest free loans became central to the Jewish understanding of their own community.” When I think about this form of a loan, it is basically saying to the individual receiving help, I’m treating you like family, this is not a business arrangement.  You can pay me back for the help I give you, but you will do so without any interest because it is a Torah prohibition to charge you interest on this loan.
As you know, throughout history, communities were separate.  Non-Israelites, being translated into non-Jews, could be charged interest. Obviously helping the Jew within one’s community was a priority in Torah times to helping someone outside of one’s community because it was part of the ethics of tzedek and mishpat, justice and righteousness.

As time progressed, in medieval Europe, Jews as we know were barred from owning land and participating in many occupations.  Money lending was one business activity in which we could be engaged, hence the image of the Jewish money lender in Shakespeare’s play. At times, it was perhaps the only way in which a Jewish individual could support his family due to other prohibitions taking place in society.  That being said, however, it was also halachikally permissible to help a non-Jew start a business to make money by lending them money.  It was not a Torah prohibition.

 “The Rabbis of the Talmud would later come up with a legal fiction known as a heter iska to allow the lending of money for businesses purposes to other Jews. The lender could not charge interest, but he could take a share of the profits, making money off his money.  Such business loans are at the heart of capitalism.” Heter Iska which is a very difficult concept to understand is used today by banks in Israel when they loan money, otherwise they would be negating a Torah regulation.It is like a venture capitalism transaction where the lender is considered an investor in the business.  Then when it comes time to repayment the money earned is not considered interest, rather income earned.

Rabbi Samson Raphael Hirsch, 1808-1888 of Germany, a Torah scholar, noted that the Torah does not consider the charging of interest to be inherently immoral.  Otherwise, it would have also banned charging interest to non-Jews.  The Torah prohibition, according to Rav Hirsch, is to demonstrate that the wealth we have comes from G-d and so we are to use it to help fellow Jews by donating to Tzedakah and providing loans.  Those actions fulfill our role in building and maintaining a community based on the Torah principles of tzedek and mishpat, justice and righteousness.