Usury

In modern language this term denotes a rate of interest greater than that which the law or public opinion permits; but the Biblical law, in all dealings among Israelites, forbids all "increase" of the debt by reason of lapse of time or forbearance, be the rate of interest high or low, while it does not impose any limit in dealings between Israelites and Gentiles. Hence in discussing Jewish law the words "interest" and "usury" may be used indiscriminately.

There are three Biblical passages which forbid the taking of interest in the case of "brothers," but which permit, or seemingly enjoin, it when the borrower is a Gentile, namely, Ex. xxii. 24; Lev. xxv. 36, 37; Deut. xxiii. 20, 21.

The Hebrew word for "usury" is "neshek," meaning literally "a bite," from its painfulness to the debtor; while in Lev. xxv. 36, 37 "increase" is the rendering of the Hebrew "marbit" or "tarbit" which denotes the gain on the creditor's side, and which in the later Hebrew becomes "ribbit." Lending on usury or increase is classed by Ezekiel (xviii. 13, 17) among the worst of sins. See also Ps. xv., in which among the attributes of the righteous man is reckoned the fact that he does not lend on usury.

The Talmud (B. M. 61b) dwells on Ezek. xviii. 13 (Hebr.): "He has lent on usury; he has taken interest; he shall surely not live, having done all these abominations"; on the words with which the prohibition of usury in Lev. xxv. 36 closes: "Thou shalt be afraid of thy God"; and on the further words in which Ezekiel (l.c.) refers to the usurer: "He shall surely suffer death; his blood is upon him"; hence the lender on interest is compared to the shedder of blood.

Loss on a Debt.

The sages of the Mishnah knew full well that the forbearance of a debt causes a measurable loss. Thus the following case is put: A holds a demand on B for 1,000 zuzim payable by agreement in ten years; but two witnesses testify that B had agreed to pay in thirty days. An alibi is proved against the witnesses; and they are condemned as "plotting witnesses" to pay the difference between 1,000 zuzim payable in ten years and the same sum payable in thirty days (Mak. i. 1). It often happens that money is paid to a husband in right of his wife, in which right he has an estate for life or during coverture. In modern times the money might be invested, and the husband would draw the interest or dividends; but in all such cases the Mishnah says: "Let ground be bought and the husband receive the income!" The Babylonians, from whom the post-exilic Jews learned much in the way of legal terms and forms, were accustomed to charge interest at the rate of 20 per cent per annum. Nearly, if not quite, all of their contract tablets show this rate of increase. (The first allusion in the Babylonian Talmud to a rate of interest [B. B. 60a] is to one of 20 per cent.) Yet with this knowledge, that the use of capital has a measurable value, and with the example of the Babylonians before them, the sages of the Mishnah not only do not mitigate the Scriptural injunction against interest, but carefully close many avenues of evasion, and forbid even all kinds of "moral usury."

Usury and Increase.

The chapter on usury and increase (B. M. v.) commences thus: "What is usury ["neshek"] and what is increase ["tarbit"]?"; but by the latter word it seems to refer only to the rabbinical enlargement of the antiusury law. The former mode of dealing is easily illustrated; e.g., "where one lends 4 denarii on a promise of the return of 5; or 2 bushels of wheat when 3 are to be returned"; but the latter, an increase in "fruits" (i.e., provisions which pass by quantity), is more complex and is put thus: "A has bought from B a kor of wheat for 25 denarii (= zuzim), which is the market price; afterward, when wheat has gone up to 30 denarii, A says: 'Deliver to me the wheat which I bought from you, as I wish to sell it and buy wine with the proceeds.' B answers: 'Very well, your wheat is sold to me for 30 zuzim, and you have wine [as much as 30 zuzim will buy at the ruling market price] in my hands'; when in fact B has no wine in his possession." Now the first deal, i.e., B's buying the wheat back at a higher price than he had sold it for, is not objectionable as usury but his agreeing to deliver a named quantity of wine which is then worth 30 zuzim, but which he does not own, at some future time, when he might have to buy it in the open market at a higher price, is not indeed Scriptural but is rabbinical usury. The reason is given: B, who owes A 30 zuzim, takes the risk of having to pay it later on in wine, which may cost him more than 30 zuzim, in order to gain forbearance for his debt. This rule forbids, on the ground ofusury, the sale of futures, made when the market price has not yet been fixed.

Case of Partnership.

Some kinds of partnership dealings also are forbidden, because the partner without means is made to incur the risk of his time and labor besides that of loss by accidents or depreciation, in consideration of the capital furnished by the other. For instance, one may not give one's corn to a shopkeeper to sell at retail on half the profit over the wholesale price with which he is charged, nor may one give the shopkeeper money wherewith he may buy at wholesale and then sell on half the profits—because he runs the risk of fire and flood and robbery and of fall in price—unless he is paid wages for selling. And so with the breeding of chickens or the feeding of calves or colts on half profit; though the rule does not apply to cows or other grown beasts which "earn their keep." Commenting on B. M. v. 4, R. Judah (tanna of the 2d cent., pupil of Akiba) says (ib. 68b) that a nominal compensation, say a single dry fig, given to the working member of the special partnership is sufficient to exempt it from the usury laws. In modern Jewish practise this view has been followed. The contract between the moneyed man and the small trader is known as "sheṭar 'isḳa"; and in the well-known scrivener's handbook "Naḥalat Shib'ah" (Amsterdam, 1667) two forms of such an instrument are printed, which the compiler (Samuel ben David ha-Levi) follows up with an extract from an eminent rabbi of Lublin to this effect: "A man may say to his friend: 'Here are a hundred florins for thee in business [], half profit and half loss. If thou shouldest say, "I have lost" or "I have not earned any money," thou must take a solemn oath to clear thyself.' But he must give him wages for his trouble; however, anything [] is enough for the purpose." Such special partnerships date back a very considerable time; for 4,000 years ago they were fully regulated by King Hammurabi in sections 100-107 of his code of laws for Babylon, and it seems that in quite modern times they have been common.

One may not give to an Israelite (money wherewith) to buy a certain quantity of corn before the market price ("sha'ar") is known; this restriction also is made in order that the man without means may not incur the risk of loss by higher prices in return for capital furnished. A landlord may lend to his metayers (tenants on shares) wheat for seed to be returned in kind, but not wheat for food. A man should not say to his neighbor, "Give me a kor of wheat and I will return it at thrashing-time"; but he may request such a loan "till my son comes home," or "till I find the key" (B. M. 75a). The reason is, that wheat might rise and the lender would profit. However, the Talmud abrogates this prohibition by allowing such a loan to be made when the borrower has some wheat of his own, though it be a much smaller quantity than that which he borrows. The Mishnah goes even so far as to forbid an exchange of work between neighboring farmers, where the later work is more laborious than the earlier. All these prohibitions are rabbinical only: that against a loan in kind might be called anti-Scriptural; for the Bible, when it speaks of "usury of victuals" (Deut. xxiii. 29), contemplates a loan to be returned in kind, and forbids only the return of a greater quantity than that which was lent.

Possible Evasions.

The lender should not lodge in the borrower's house free of rent, nor at less than the usual rent. The purchase-price must not be increased on account of delay in payment, such as an offer to sell a field at 1,000 zuzim if paid now, but at 1,200 zuzim in a year's time; but in charging rent the landlord may charge more when payable at the end of the year than when the rent is paid every month. It is improper for the seller of a field, after receiving part of the price, to say, "Bring me the rest of the money whenever you will and then take possession of your own"; for the income on the field would be interest on the deferred payment, and the purchaser is already a partial owner. But, what may turn out to be much more oppressive, a man may lend a sum of money upon a field on the terms "If you do not return me the money in three years, the field is mine"; and it actually becomes his. "Once Boethos, son of Zenon, did so under the advice of the learned" (B. M. 63a). It may thus be seen that the legal ban upon interest led to forfeitures which might give to the moneyed man more gain than even a high rate of interest. The mortgage in the English and American form is just such a contract as Boethos used to impose on borrowers. This form was contrived because the English law forbade loans upon interest; and in early times it was literally carried out, the land becoming the property of the mortgagee at once if the bond was not paid on the day appointed.

"Fixed" and Other Increase.

The Talmud and the codes distinguish between "fixed increase" ("ribbit ḳeẓuẓah") and the mere "dust ["abaḳ"] of increase." The Mishnah gives some instances of the latter; e.g., a man sends presents to a well-to-do neighbor, expecting to obtain a loan from him. This is interest in advance. Or after he has repaid his loans, he sends presents, "because your money was idle in my hands." Again, if A had not been in the habit of greeting B first, he should not do him this honor after he had obtained a loan from him; and, as the later authorities put it, if he was not in the habit of teaching B the Torah before the loan, he should not do it thereafter.

One difference between usury under the letter of the Law and rabbinical increase is this: the former, when collected by the creditor, may be reclaimed by action, while the latter may not. R. Johanan, one of the Palestinian amoraim, insists that even "definite usury," such as is forbidden by the written law, can not be recovered legally. In this view he is supported (B. M. 61b) by others on the grounds that in the Scriptural words quoted above the vengeance of Heaven is invoked upon the usurer, and that the rule that he who incurs the pain of death is not held to payment in a civil suit. The upshot of the dispute as laid down in the codes is this (Shulḥan 'Aruk, Yoreh De'ah, 161, 2): The rabbinical court will render judgment for the repayment of definite usury that has been collected, and will not enforce the judgment by levy on the lands or goods of theusurer's property, but only by force against his body.

Case of a Gentile.

When an Israelite lends money to a Gentile or to an "indwelling stranger" (a half-convert of foreign blood), he may and should charge him interest; and when he borrows from such a person he should allow him interest. It is the opinion of Maimonides that for Jews to charge Gentiles interest is a positive command of the written law. [The reason for the non-prohibition of the receipt by a Jew of interest from a Gentile, and vice versa, is held by modern rabbis to lie in the fact that the Gentiles had at that time no law forbidding them to practise usury; and that as they took interest from Jews, the Torah considered it equitable that Jews should take interest from Gentiles. Conditions changed when Gentile laws were enacted forbidding usury; and the modern Jew is not allowed by the Jewish religion to charge a Gentile a higher rate of interest than that fixed by the law of the land.—E. C.] The intervention of a Gentile may lead to an evasion of the law between Israelites. For example, one not standing in need of it has borrowed the money of a Gentile; the borrower lends it to another Israelite, he to pay the interest thereafter; this the first borrower may do only with the consent of the Gentile, if he will accept the other Israelite as his debtor, but not on his own responsibility, although the first borrower would pay to the Gentile the same interest which he should receive from his brother Israelite (B. M. v. 6).In a baraita (ib. 71a) the other case is also put: "A lends money to a Gentile; the latter needs it no longer, but meets an Israelite who does. If the Gentile is willing to lend him the money on interest, he may do so, remaining bound to A; but A must not be a party to the change of debtor." However, it must have been easy to evade the usury law through the Gentile intermediary, even while maintaining these distinctions.

The guilt of breaking a Scriptural command falls not on the lender alone, but on the borrower as well (on the supposition that the verb referring to usury in Deut. xxiii. 20, "tashshik," stands in the causative form); also on the surety for the borrower, the witnesses, and, according to some opinions, the scrivener. The latter participants violate the precept "thou shalt not put a stumbling-block before the blind" (Lev. xix. 14).

Maimonides treats of interest in his "Yad" (Malweh, ch. v.), following the Gemara and the responsa of the Geonim. He to a certain extent mitigates the usury law; mitigation had indeed become a necessity in his time, as the Jews no longer dwelt in compact farming settlements like those of Palestine and Babylonia in the days of the Mishnah and the Talmud, but had been forced to become traders, brokers, and money-lenders. He says (ib. ch. xiv.): "There are things resembling interest that are allowed; e.g., a man may buy at a discount bonds belonging to his neighbor; a man may give his neighbor a denarius, on condition that he lends 100 denarii to a third person. A may give B a denarius to induce C to lend him (A) 100 denarii" (ib. ch. xv.). Some things are allowed by law, but have been forbidden by the Rabbis as a cunning evasion. A says to B, "Lend me 100 zuzim." B says, "I have no money, but I have wheat worth that sum, which I can lend you." Then he buys the same wheat from him for 90 zuzim. He may afterward by law recover 100 zuzim because it is not even "dust of interest." Thus a man who has taken a field in pledge should not rent it back to the owner. But if such evasions are forbidden only by an appeal to the lender's conscience, very little is left of the enforceable law against usury.

Views of Maimonides and the Shulḥan 'Aruk.

The Shulḥan 'Aruk treats of usury not in the fourth or juridical part, but in the Yoreh De'ah, among moral and religious duties (§§ 159-177). While Maimonides would restrict the lending of money to Gentiles within narrow limits, lest the lender should acquire a passion for taking usury, and practise it on his fellow Israel ites, this later standard declares it "allowable nowadays in all cases" (ib. § 159). It allows also the money of orphans or of a poor-or a school-fund to be lent on terms which would be "rabbinical increase"; and if a guardian has improperly lent the money of his wards even at a fixed interest, the wards who have had the enjoyment of the income are not bound to restore it when they come of age. To save oneself in great need, however, one may borrow on interest (ib. § 160). The relaxation on behalf of infants and charities was unavoidable; for in numerous countries the Jews were precluded from the old plan of investing funds in land, which alone was permitted by the Talmud.

As a matter of jurisprudence it is found here (ib. § 160; Ḥoshen Mishpaṭ, § 52) that when a bond provides for principal and interest separately, it is enforceable as to the former, but not as to the latter; but if both are cast up into one sum, the bond is void in toto. When interest, even such as is forbidden by the written law, is once paid, it is said (Yoreh De'ah, § 161) that the courts may compel its restoration only by process of contempt (flogging until the defendant is willing to pay). When this power no longer rested with the Jewish courts, there was no remedy. If the lender died after he collected unlawful interest, it is here expressly said that his heirs are not even morally bound to make restitution.

E. C. L. N. D.—Medieval Doctrine:

The Church, basing itself upon a mistranslation of the text Luke vi. 35 interpreted by the Vulgate "Mutuum date, nihil inde sperantes," but really meaning "lend, never despairing" (see T. Reinach in "R. E. J." xx. 147), declared any extra return upon a loan as against the divine law, and this prevented any mercantile use of capital by pious Christians. As the canon law did not apply to Jews, these were not liable to the ecclesiastical punishments which were placed upon usurers by the popes, Alexander III. in 1179 having excommunicated all manifest usurers. Christian rulers gradually saw the advantage of having a class of men like the Jews who could supply capital for their use without being liable to excommunication, and the money trade of western Europe by this means fell into the hands of the Jews. They were freed from all competition,and could therefore charge very high interest, and, indeed, were obliged to do so owing to the insecure tenure of their property. In almost every instance where large amounts were acquired by Jews through usurious transactions the property thus acquired fell either during their life or upon their death into the hands of the king. This happened to Aaron of Lincoln in England, Ezmel de Ablitas in Navarre, Heliot de Vesoul in Provence, Benveniste de Porta in Aragon, etc. It was for this reason indeed that the kings supported the Jews, and even objected to their becoming Christians, because in that case they could not have forced from them money won by usury. Thus both in England and in France the kings demanded to be compensated for every Jew converted. In the former country only in 1281 would the king give up his right to half the property of Jews who were converted. There was a continual conflict between the papal and the royal authority on this subject, and thus as early as 1146 the pope Eugenius declared all usury null and void, while the debtor was on a crusade, and Innocent XIII. made an indignant protest against usury, calling on all Christian princes to demand the return of the interest. Clement V. in 1311 protested against all civil law which permitted any form of usury by Christians.

It was impossible to carry out the canonical restrictions without stopping all progress in commerce, and numerous expedients were adopted to avoid the canonical laws. Especially the Cahorsins and Lombards invented methods by which usury was disguised in the form of payment for possible loss and injury, payment for delay, and so on. The competition of these Italian usurers—they were called the "pope's usurers"—rendered Jews less necessary to the kings in France and England in the middle of the thirteenth century, and both Louis IX. (1254) and Edward I. (1275) attempted to influence the Jews to avoid usury, but without effect (see England). No other means of livelihood was open to them.

Amount of Interest.

Very high interest was permitted the Jews in France under Philip Augustus, two deniers on the pound per week, or 43.3 per cent per annum, and King John in 1360 allowed this even to be doubled. In Sicily Frederick II. allowed 10 per cent in 1231. In Castile Alfonso X. allowed 25 per cent, while in Aragon the Cortes of Tarragona put 20 per cent as the maximum, and this was reduced to 12 per cent in the year 1231. In Navarre Philip III. established 20 per cent ("5 for 6") in 1330, while in Portugal Alfonso IV. (1350) fixed the maximum at 33⅓ per cent.

The enormously rapid increase of indebtedness due to this large interest caused ordinances to be passed to prevent interest being counted on interest, but without avail. As an instance of the extent to which interest could grow, the abbot of St. Edmund in 1173 borrowed about 40 marks from Benedict the Jew, and this had grown to £880 in seven years, though not entirely through interest (see Jacobs, "Jews of Angevin England," p. 60).

The loans were generally made upon Pledges, which could not be sacred vessels of the Church, to pledge which was punished as early as 814 by confiscation of goods. Almost all other objects could be pledged, and it became a problem whether when a Jew had the pledge he could claim usury as well. This applied when lands were pledged for loans, when it was claimed the land or the produce thereof was sufficient to compensate for any loss of use of capital without further payment. Notwithstanding this the Jews claimed interest until both capital and interest were repaid.

Later on in the Middle Ages the doctrine of Aristotle that "money does not breed" was referred to usury, and forms the basis of Shylock's and Antonio's contention in "The Merchant of Venice," I., iii., and the casuists of Roman law drew a distinction between things consumable and fungible; that is, the use of which is exhausted by one using, and things which can be used over and over again. Interest or usury was allowed for the latter, but not for the former class, to which money was supposed to belong, because every passing of coin was regarded as a separate use. The lending of money with the expectation of any further return was still regarded as unnatural and disreputable, but in the later Middle Ages the Jews had been bereft of all capital, so that from the fifteenth century onward they are found mostly as dealers in second-hand clothing, rather than as usurers. Moreover a class of Christian merchants arose which evaded the canon law and lent money on interest without any opposition.

Notwithstanding this, the reputation of usurers has clung to the Jews even to modern times, though there is little evidence of their being more addicted to it than other persons who trade in money. In Russia the Christian "kulak" is regarded as being much more stringent in his demands than the Jewish money-lender, though in Bukowina the latter has proved to be somewhat of a plague. The poverty of the majority of Jews prevents them from any extensive addiction to this practise (see Poverty).

Bibliography:

  * Endemann, Die Nationalökonomischen Grundsätze der Kanonischen Lehre, 1863, pp. 8 et seq., 20 et seq.;
  * Ashley, English Commerce, i. 152-154;
  * Scherer, Rechtsverhältnisse der Juden, pp. 185-196.



J.