In the shadows of Deuteronomy: Approaches to Interest and Usury in Judaism and Christianity *
By Mansur al-Mujahid (Vincent J. Cornell, Ph.D., Professor, Duke University)
It is important to recognize that the progressive erosion of the prohibition of usury in the Judaeo-Christian tradition was by no means a simple case of moral weakness or intellectual bankruptcy. Instead, it must be seen as the outcome of successive conflicts between a number of classic religio-ethical oppositions or antitheses: the material world versus the hereafter; the ideal versus the real; collective responsibility versus individual conscience; social justice versus public utility; and in a socio-economic sense, the values of relatively small-scale, agrarian and trading societies versus the efficiency needs and highly materialistic value system of the modern world economy. None of these issues are simple, and each must be examined in detail by Islamic scholars who are fully trained in law, moral theology and modern economics if 20th and 21st century (15th century A.H.) Muslims are to seriously come to grips with them. By no means is it intended to imply that the abandonment of the scriptural commandments and the redefinition of usury by the Protestant Christian West should be taken as authoritative by present-day Muslim thinkers. It is imperative, however, that all Muslim intellectuals should be aware of the Judaeo-Christian example in order to fully appreciate the difficulty of the problem that is to be faced.
PART I - JUDAISM
The fundamental ruling on usury for both Judaism and medieval Christianity is a Biblical statement found in the Book of Deuteronomy, which reads: “You must not lend on interest (Neshekh) to your brother, whether the loan be of money or food or anything else that may earn interest.” (Deut. 23:19-20) This passage is supported by another in Exodus: “If you lend money to any of my (i.e. Yahweh’s) people, to any poor man among you, you must not play the usurer with him: you must not demand interest (neshekh) from him.” (Ex. 22:24-25). The same can be seen as well in Leviticus: “If your brother who is living with you falls on evil days and is unable to support himself with you, you must support him as you would a stranger or a guest, and he must continue to live with you. Do not make him work for you, do not take interest (tarbit) from him; fear your God, and let your brother live with you. You are not to lend him money at interest (neshekh) or give him food to make a profit out of it.” (Lev. 25:35-3 7).
In Judaism, three conclusions have traditionally been drawn from these commandments. First, although the prohibitions on taking interest in the Books of Exodus and Leviticus seem to be motivated primarily by the “social welfare” considerations of Israelite society and concern for the needs of the disadvantaged, the statement in Deuteronomy had been regarded as unequivocal by all subsequent commentators. It is also seen to apply in practice to money lending in general. In this respect, therefore, the concepts of usury and interest must be considered functionally equivalent, as implied in the translation of the Biblical passages quoted above.
The second conclusion to be drawn from pre-modern Jewish scholarship is that the Bible prohibition of usury is confined only to the “brotherhood” of the people of Israel themselves, and need not be applied to non-Jewish (Gentile) populations. This point of view is based on another passage from Deuteronomy, which follows directly after that given above: “You may demand interest on a loan of a foreigner (nokri), but you must not demand interest from your brother (Tahika); so that Yahweh your God may bless you in all your giving in the land you are to enter and make your own.” (Deut. 23:21-22). This so-called “Deuteronomic double-standard,” which was rejected as a matter of principle (although maintained in practice by the medieval Christian church, is seen by historians of religion to have formed a cornerstone of the kinship-oriented morality of early Israelite tribesmen. It affirms the solidarity of the clan (mispaha) by excluding the (nokri) or foreigner, from the privileges and obligations of the community. The only persons exempted from this conceptual segregation of “in-group” and the “out-group” domains are the protected sojourner (ger) and resident stranger (toshab), who are protected from usury by being counted as symbolic ‘Ida” in several Biblical passages. The later commentators, however, were to restrict these protected categories to include only the full proselyte or covert to Judaism (the medieval meaning of ger) and the “incomplete proselyte” (ger toshab) living within Israelite society. Although this convert to Judaism has renounced idolatry in the presence of three devout Hebrew witnesses, he is still unable to maintain the prohibitions that are related to food according to Judaic law.
The third point to be noted from the Biblical passages reproduced above is a clear distinction, expressed terminologically, between two types of usury. The commandment against usury in Deuteronomy uses the Hebrew word neshekh, which literally means a “bite” like that of a snake. According to at least one of the commentators, this term is used because the victim of a snake-bite does not at first feel the bit, but only notices it when the serpent’s venom has spread throughout his body. In the same manner, one who borrows money at interest does not feel the initial loss incurred by his loan. He only feels the full “bite” too late, when the accrued interest reaches an unbearable sum. The text of Leviticus 25:37, on the other hand, uses neshekh in conjunction with another term, tarbit (also rendered as ribbit and marbit in later texts) for the taking of interest. Although both terms are recognized as being similar in meaning, Talmudic scholars are in wide disagreement about their exact connotations. To Maimonides (12th century C.E.), neshekh refers to accumulating interest, while tarbit is a fixed rate of interest that never increases. The Jewish Publication Society’s translation of Leviticus, on the other hand, regards neshekh as “advance interest” deducted in advance, whereas tarbis is “accrued interest,” deducted at the time of payment. The Mishnah, however, regards neshekh as “interest” obtained in a currency transaction, while tarbit refers to an “increase” in kind, derived from the lending of produce (Baba Mesia, 5:1). Whatever the case, it is clear that according to Jewish law these Biblical prohibitions are not meant to refer only to the restricted category of excessive interest, which is “usury” in the modern sense of the term, but rather are applicable to all interest-bearing transactions, no matter how minimal the interest charged on them may be.
According to the Encyclopaedia Judaica, the prohibition of interest in the Bible and later Judaic texts rests on two grounds; first, that those who are prosperous ought to help the indigent, if not by gifts, then at least by way of extending free loans to them. Secondly, since excessive interest was considered to lie at the root of social ruin, all interest should be banned, regardless of type. Despite this blanket condemnation, however, actual violations of the ban on interest were not seen by Jewish scholars as criminal offenses and hence were not subject to penal sanctions. Instead the taking of interest was regarded as a purely moral transgression, whose avoidance would be positively rewarded by God’s beneficence. Only in the Book of Ezekiel can one find a Biblical passage mentioning usury as a transgression punishable by extreme measures: “. . . where one man engages in filthy practices with his neighbour’s wife, another defiles himself with his daughter-in-law, another violates his sister, his own father’s daughter; where people take bribes for shedding blood; you charge usury and interest, you rob your neighbour by extortion, you forget all about Me. It is the Lord Yahweh who speaks…I mean to disperse you throughout the nations, to scatter you in foreign countries, and to take your foul ness from you and so you will learn that I am Yahweh.” (Ezek. 22:12,15-16).
Elsewhere in the Bible, the taker of interest is simply described as a “wicked man” (Proverbs 28:5 & 8), whereas the one “who does not ask for interest on loans” is a man who has the right to “enter Yahweh’s tent” and live on His “holy mountain.” (Psalms 15:1-5).
Given the moral rather than the penal nature of the sin of usury in Jewish law, it stands to reason that any formal sanction imposed for this transgression would be relatively mild in nature. Originally, rabbinical courts appeared to have been empowered to fine a creditor for taking interest by rejecting his claim for the repayment of his invested capital. Eventually, however, the rule evolved that the act of taking interest did not affect a creditor’s right to have his capital repaid. By the late medieval period, the sanctions imposed on usurers were to become almost entirely symbolic. These same sanctions still remained effective, however, if one’s reputation was at stake. Those who have charged interest from other Jews were routinely disqualified from acting as witnesses and were not administered oaths - a prohibition that extended even to the borrower who agreed to a usurious loan. In certain texts, money-lenders who take interest from their brethren are also likened to deniers of God and those who were considered apostates, who have no share in the world to come.
In the Talmudic period, the concept of usury was expanded beyond the very paradigms set forth in the Torah and other books of the Old Testament to include any type of business transaction giving even the slightest hint of interest. This so-called “dust of interest” (avak ribbit) became the main subject of many discussions on usury contained in the Mishnah and later commentarial works. The Mishnah authors often subjected the question of the propriety or impropriety of transactions involving lending to strict standards of mutuality and functional equivalence. In the book, “Baba Mesia,” of the Mishnah, for example, rulings on the “dust of interest” can be found, as: 1) a person may not lend wheat at a low value and then claim it back at a higher value in order to purchase another commodity (5:1); 2) the use of a subterfuge (ha’aramah) to avoid the interest prohibition is not allowed, such as when one lends money to a person and lives in the debtor’s house for free (5:2); 3) a “futures market” or speculation on the price of commodities is prohibited since it entails buying something that does not exist at a price not mutually agreed upon at the time of transaction (5:7); 4) “iron terms partnerships, in which the lender is being protected from any future loss by the debtor’s agreement to pay the full value of his investment, are prohibited as well, since the contract violates the principle of mutuality (5:6). Indeed, questions of mutuality and equity became important to Talmudic scholars to the extent that certain of them, such as Hillel, went so far as to say: “A woman should not lend a loaf of bread to her friend unless she states its value in money,” and “a man may say to his fellow, ‘Weed with me and P11 weed with you’ or ‘Hoe with me and P11 hoe with you,’ but he may not soy to him, Weed with me and I’ll hoe with you’ or ‘Hoe with me and P11 weed with you.”(5:9-1O). An authoritative post-Talmudic view of usury in Judaism was put forth by the 12th century Andalusian scholar Maimonides (Arabic: Musa ibn Maimun), whose career spanned the apogee of the Almohad dynasty in the Islamic West. Following the example of earlier scholars such as Hillel, who were noted for their piety and fear of God’s commandments, Maimonides was primarily concerned with making elucidations of those “shades of usury” whose repayment could not be obtained through the courts. These “shades of usury” undermined the sense of brotherhood that cemented Jewish society together. Further systematizing the conclusions of Talmudic scholars, Maimonides conceived of a four-fold division of usury. These included: 1) Biblically prohibited usury, 2) shade of usury, 3) verbal usury, and 4) evasion of the laws of usury. In practice, this meant that he included under the prohibition of all interest-bearing transactions, gratuities in the form of “verbal usury” no matter how non-economic, and a variety of other transactions in the form of sales, leases, and wages which could be considered “usurious” in that they fail to express the principle of equivalence between what is given by the creditor and repaid by the debtor.
In general, Maimonides shows little concern for the theoretical aspects of usury and instead condemns the taking of interest as a simple case of one Jew’s exploitation of another: “Why is (usury) called neshekh? Because (the lender) bites (noshekh) and afflicts his neighbour and eats his flesh.” In particular he ignores the pseudo- Aristotelian conception of the “sterility” of money so important to medieval Christian scholastics. It merely restates the Talmudic principle that: “it is forbidden to lease dinars, since this is not like leasing a vessel which is being actually returned, whereas these dinars are spent and others are returned. That is why there is a ‘shade of usury’ in the payment of rent for them.” This sense of the consumptibility (what Christian writers have called “fungibility” of money is precisely why Maimonides insisted that a money lender forgoes interest-derived income and instead offers loans to his own co-religionists as a matter of charity. According to Sale Baron of Columbia University, Maimonides’ emphasis en the charitable aspects of the Deuterenomic prohibition of usury had the dual effect of facilitating a mere lenient interpretation of the prohibition, both in cases where a borrower did net really require charitable credit (such as in loans that are productive), and where the lender belonged to a class of persons (such as orphaned minors and scholars) who required special protection. Assuming, for example, that revenue from money lending offered the best livelihood for persons who devoted their lives exclusively to study, he denied the usurious character of credit transactions among scholars, considering the profit thus obtained to be a “gift” given as compensation to one’s creditor. More important to the present discussion, however, were those evasions of usury considered as legally valid by Maimonides.
1) the contractus mohatrae, which had involved the arrangement of a sale below the present market price, with immediate delivery and instantaneous resale at a future higher market price with future delivers;
2) a type of “purchase of rents”, which involved the leasing to the debtor of a field taken over by the creditor as security far his loan, the rental of which secures the stipulated income;
3) the extending to a neighbour of a loan of a certain sum of money in the farm of merchandise according to supposed market value and acquiring elsewhere the same amount of merchandise at wholesale prices;
4) the acquisition of deeds with a discount, by which means a merchant could sell merchandise on credit, at a price yielding him a substantial profit, and obtain cash from the banker by discounting the bill given to him by the purchaser. In addition, Maimonides greatly encouraged the lending of money at interest to non-Jews, interpreting the Deuteronomic permission of this practice as a positive commandment. Needless to say, in a pluralistic society such as Islamic Spain, where Jews comprised a small minority of the population in most localities, such a commandment to “lend to the Gentiles” greatly facilitated the expansion of extensive Jewish financial networks.
The most common Jewish evasion of usury prohibitions in the medieval era was the ‘iska (Lat. contractus trinus), recognized but not fully approved of by Maimonides. This consisted of a particular type of “silent partnership” which is somewhat similar, but not identical to the Islamic mudharabah. In such a transaction, a deed known as a shetar ‘iska would be drawn up in front of two witnesses. This deed stipulated that the lender would supply a certain amount of money to finance a joint venture; the borrower alone, however, would manage the business and would undertake to guarantee the lender’s investment against all losses.
He would also guarantee the lender a fixed amount of minimum profit to be paid after a certain amount of time. To evade Mishnaic prohibitions about the “dust of usury,” the borrower would be paid a nominal salary by the lender and the very contract would stipulate (fictitiously) that both parties would share in any loss. In order to render this lass-sharing agreement null and void in practice, one further provision would be made that such a loss could only be proven by evidence that is stipulated and mostly unobtainable. In the course of time, this form of legalizing interest became so well established that, in order to comply with the strictures of Jewish law, all that is presently required to avoid the usury prohibition is to add the Hebrew phrase, al-pi hetter ‘iska, to any contract that is interest-bearing.
Originally published in the September-October 1991 print edition ofThe American Muslim