What Is Wrong with Charging Interest?

All translations are from the NJPS with adjustments.

David P. Wright, Inventing God’s Law: How the Covenant Code of the Bible Used and Revised the Laws of Hammurabi (New York: Oxford University Press, 2009), 302-3.

In addition to giving the reader musical notes, the cantillation marks are meant to outline the proper parsing of the biblical text according to the Masorites. One of the key aspects of the Masoretic parsing system is that certain marks tell the reader to pause, since they have arrived at a conceptual break, and others tell the reader to continue since they have not yet arrived at a conceptual break. The former is called “king” (מלך) and the latter, “servant” (משרת). In this case, the pause mark (a revi’i) sits under the word “my people,” and thus the phrase translates “if you lend silver to my people.” Yet Rashi reads the verse as if there is a pause of the word “lend,” yielding, “if you loan silver – [do so to] my people.”

The Deuteronomic Collection often rewords laws from the older Covenant Collection. See discussion in Bernard Levinson, Deuteronomy and the Hermeneutics of Legal Innovation(Oxford: Oxford University Press, 1997).

In his Biur, Moses Mendelssohn uses the term “debt collector” (Schuldeinforderer).

For other places this word seems to mean creditor, see Jer 15:10 and 2 Kings 4:1. Cf. BDB 674.

The mitzvah to loan poor people money (#66), the prohibition to act like a creditor, which includes the prohibition to lend with interest (#73{67}), and the prohibition—derived from this verse in the Talmud (b. Bava Metzia 75b)—to participate in a loan with interest in any way, even as a guarantor (#74{68}). (The numbering follows the Chavel critical edition, used in the Torat Chayim Rabbinic Bible; the numbers in brackets follow that of the standard printing.)

It is unclear whether the roots are related, since in certain Semitic languages, the word for bite has the root transposed, n-k-s instead of n-s-k. See discussion in HALOT.

Many scholars assume that the Covenant Collection was put together in the Northern Kingdom of Israel, prior to its fall to the Assyrians in 722 BCE. For more on this law collection, see, Wright, Inventing God’s Law.

Since until the Persian period the Tanakh does not know of governmentally issued money (i.e., coinage), we seem to dealing here with silver nuggets that are weighed out, thus the biblical use of shekel, a weight, for what we would consider money.

Alternatively, perhaps Exodus assumes that food would be given as charity and this is why it only includes silver, which is for someone of means down on their luck, involves larger sums, and the possibility of repayment is much more likely.

In contrast, for example, to the Laws of Hammurabi and other documents from the Ancient Near East that recognize that merchants charge each other interest rates (sometimes in the range of 20-33%!). See the Laws of Hammurabi 88 and the papers collected in Raymond Westbrook and Richard Jasnow, eds., Security for Debt in Ancient Near Eastern Law (Leiden: Koninklikjke Brill, 2001)

Adam Smith, The Wealth of Nations (New York: P. F. Collier and Son, 1802, 1776), 78-79.

For Smith, there are three main sources of income: wages (from labor); profits (from stocks); and rent (from land). He assigns relatively little importance to interest income, seeing it as a secondary form of profit:

The interest of money is always a derivative revenue, which, if it is not paid from the profit which is made by the use of money, must be paid from some other source of revenue, unless perhaps the borrower is a spendthrift, who contracts a second debt in order to pay the interest of the first.

Translation from Perseus website. See also his Nicomachean Ethics 1121b for the comparison of “petty userers” to pimps. Compare Ezekiel 18:13, that assigns the death penalty to loaning on interest.

Hillel Gamoran, Jewish Law in Transition: How Economic Forces Overcame the Prohibition against Lending on Interest (Cincinnati: Hebrew Union College Press, 2008).

https://www.star-k.org/images/db/hetter-iska.pdf accessed 02/05/2018

See discussion in, Alan Rappeport, “Payday Rules Relax on Trump’s Watch After Lobbying by Lenders,” The New York Times (Feb. 2, 2018); Bethany McLean, “Payday Lending: Will Anything Better Replace It?” The Atlantic (May 2016).

See Shelly Tenenbaum, A Credit to Their Community: Jewish Loan Societies in the United States, 1880-1945 (Detroit: Wayne State University Press, 1993).