Why the Talmud Allows Jews to Profit Off Gentiles

Literary critic Adam Kirsch is reading a page of Talmud a day, along with Jews around the world.

Tractate Bava Metzia centers on the concept of ownership: What does it mean, under Jewish law, to own a piece of property? And what happens when there is a dispute over ownership, or when one person takes possession of property that belongs to another? This kind of abuse can take several forms, ranging from straightforward theft to what the Talmud calls “exploitation”—a transaction in which one party takes illegal advantage of the other. But over the last two weeks, in Chapter Six of Bava Metzia, Daf Yomi readers have explored a different kind of crime against property—one that in our capitalist economy is not a crime at all. If it were, anyone who takes out a mortgage or a car loan, or who uses a credit card, would be guilty of it. This is the crime of lending or borrowing at interest, which is forbidden to Jews in Leviticus 25: “Do not take from him interest or increase, but fear your God, in order that your brother may live with you. You shall not give him money with interest, nor give him your food for increase.”

The ban on interest is common to many societies and religions because in a certain light it seems like a form of taking advantage of another person’s need. That is why the Torah prefaces the ban on interest by saying, “And if your brother waxes poor, and his means fail with him, then you shall uphold him”: Instead of seeing someone’s poverty or need as a profit opportunity, you should simply help him. Yet it is also remarkable that wherever interest is banned, legal methods have been invented to get around the ban. That is because borrowing at interest is simply too useful an economic tool to go without. People who have money want to be able to put it to work by lending it; people who need money want to be able to borrow it now in exchange for a penalty later. In this sense, interest is a victimless crime, or at least one in which the victim consents to being injured.

The rabbis zero in on this point in Bava Metzia 61a, where they examine the differences between theft, exploitation, and interest. These subjects are all treated together in the tractate because they are all viewed as property crimes under Jewish law—each is a way of illegitimately gaining control over someone else’s property. But as Rava points out, if they were all fundamentally the same, why would God need to prohibit each of them separately in the Torah? The reason, the Gemara goes on to explain, is that each crime operates on a different principle. Theft always takes place against the will of the victim, and exploitation takes place without the knowledge of the victim. But lending at interest involves both the knowledge and the consent of the victim: The borrower agrees to pay back more than he has borrowed.

Why, we might then ask, is it still a crime? The reason is that, in halakhah, it is not only human beings whose desires are involved; the law is ultimately about what God wants, not what we want. Even if a borrower and a lender think it would be to their advantage to come together and agree on a loan with interest, such a loan would offend God. That is why the Mishna says in Bava Metzia 75b, “And these people violate a prohibition of interest: the lender, and the borrower, and the guarantor, and the witnesses.” Everyone who facilitates a sinful transaction is guilty, even if they are all taking part of their own free will. We might draw an analogy with the ban on selling organs in American law: Even if you want to sell your kidney, you are committing a crime by doing so. In secular law, the offense is against ideas of bodily integrity and the limits of commerce; in halakhah, the sin is against God. (One might say that the prohibition on selling organs itself ultimately relies on a religious conception of the sacredness of the body, but that’s another argument.)

The way the Talmud discusses lending at interest, however, makes clear that it is very difficult to stamp out a property crime when both parties are eager to commit it. After stating the prohibition, the rabbis extend it to cover many cases in which the taking of interest is camouflaged in various ways. This is only necessary, of course, because Jews thought up all these ways to get around the prohibition. The Bible itself distinguishes between two terms for interest, neshekh and tarbit, “interest or increase.” Interest is straightforward: “One who lends another a sela, worth four dinars, for five dinars to be paid later” is taking neshekh.

But tarbit can be more ambiguous: According to the Gemara, this means any transaction that yields “an increase in the produce” beyond the initial investment. So if Reuven lends Shimon a kor of wheat at a time when the market price is 25 dinars, and in the interim the price goes up to 30 dinars, he cannot demand to be repaid with 30 dinars worth of wine, because he would effectively be making a 5 dinar profit on the loan. (At least, I think that is what the Talmud is saying—the examples given are very complex.)

The Gemara goes on to list a number of other legal fictions that were apparently in common use. A seller might offer a discount for payment in advance; or a lender might sell a borrower an item for 100 dinars, and then buy it back for 96 dinars, thus effectively earning 4 dinars profit; or a borrower might deliberately repay more than he borrowed, without explicitly telling the lender that he was doing so; or a borrower might repay just the amount he borrowed, but then later give the lender a “gift” as thanks. These are all essentially ways of taking interest, and they are forbidden under Rav Nachman’s definition, “The principle with regard to interest is: Any payment for his waiting is forbidden.”

There were other ways of effectively paying interest that didn’t involve money, however. A lender might receive services or favors in exchange for a loan: For instance, the borrower might allow the lender to live rent-free on his property. Or else a lender might seize the slaves of the borrower and compel them to work for him without payment. These, too, are usually forbidden methods of exacting interest, though there are disagreements. Thus the question arises of whether slaves are a net asset: If I take your slaves to work for me, but I feed them while they are in my possession, am I actually hurting you, or am I sparing you an expense equal to the loss you incur? Rava grants that this might true in the case of a slave such as Dari—an apparently notorious slave of Rav Nachman, who did not do any useful labor but was a kind of entertainer, “dancing among the wine barrels” for customers at Nachman’s wineshop. To feed Dari was actually doing Nachman a favor; but in the case of a regular slave, taking his labor power means causing the owner a net loss.

The Talmud is not, and cannot be, a universal law code for an egalitarian society. It is a statement not of human beings’ duties to one another, but of Jews’ duty to God.

All these restrictions, however, apply only to transactions between Jews. It is permitted to charge interest when lending to gentiles: “And one may borrow from them and one may lend to them with interest,” the Mishna says in Bava Metzia 70b. This distinction may appear invidious, one of several occasions in the Talmud where the law favors Jews over gentiles. But this is consistent with the letter and the spirit of the Torah, which speaks of not charging interest from “your brother.” A Jew has an obligation to treat another Jew like a family member, holding to a higher standard of consideration than someone who is not a member of the family. This principle, too, is common to many religions and societies, and it would have made instinctive sense to Jews who lived in a hostile separation from most gentiles. The Talmud is not, and cannot be, a universal law code for an egalitarian society; it is a statement not of human beings’ duties to one another, but of Jews’ duty to God.

By the same token, the Talmud puts limits on the ability of human courts to rectify the injustice caused by taking interest. There is a dispute in the Gemara about whether a court can compel a lender to return the interest he has taken from the borrower. According to Rabbi Elazar, “fixed interest”—that is, interest stated explicitly in a contract—can be confiscated by a judge and returned to the borrower. “A hint of interest,” on the other hand—interest that takes other forms, not fixed in advance—cannot be confiscated.

Rabbi Yochanan goes further, saying that “even fixed interest cannot be removed by judges.” Yochanan’s position is that while God will punish interest-taking by death, it is not possible for human beings to undo the consequences of the sin. This distinction between human and divine justice is common in the Talmud, and often feels counterintuitive: Surely it’s not fair to let someone get away with a crime in this world and simply leave the punishment to God. But perhaps that definition of fairness only reveals a lack of trust in the reality of God and of the World to Come. A legal system that equates crime with sin needs God to make true justice possible.

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Adam Kirsch’s Daf Yomi column returns January 10, after a winter hiatus. To catch up on Tablet’s complete archive of Daf Yomi Talmud study, click here.