You shall not deduct interest from loans to your countrymen, whether in money or food or anything else that can be deduced as interest, but you may deduct interest from loans to foreigners. Do not deduct interest loans to your countrymen, so that the Lord your God may bless you in all your undertakings in the land that you are about to enter and possess. (Deut. 23:20-21)

The laws about loans must be understood in the light of the simple agrarian economy of ancient Israel. There is no evidence that there was a money market of any significance, or that solvent Israelites commonly borrowed for commercial or other purposes, though a couple of passages imply that not all borrowers were poor.[1] The type of loans with which the Torah regularly deals is charitable loans to countrymen who have fallen on hard times. This is clear from the statements of the present law in Exodus and Leviticus, which explicitly refer to the borrower as impoverished.

If your kinsman being in straits, comes under your authority…do not exact from him advance or accrued interest, but fear your God.... (Leviticus 25:36-37)

If you lend money to My people, to the poor among you, do not act towards them as a creditor: exact no interest from there. (Exodus 22:24 )

Under these circumstances, lending is a moral obligation incumbent on those who can afford it, and it is to be done without further increasing the borrower's poverty by requiring interest, which could be ruinous.[2] As Josephus puts it, "It is not just to draw a revenue from the misfortunes of a fellow-countryman. Rather, in succoring his distress, you should reckon as gain the gratitude of such persons and the recompense which God has in store for an act of generosity." Lending without interest is frequently listed among important virtues and praised as an act of generosity, and exacting interest is condemned.

Although interest-free loans are sometimes mentioned in Mesopotamian texts, no prohibition on interest is known from the ancient Near East, possibly because the sites from which we have documentation had more developed commercial economies. There is an interesting letter from Ugarit in which the writer claims that gentlemen do not demand interest of each other. Greek philosophers opposed interest, and it was periodically forbidden in early Rome. As economies developed and money began to play a more important role, the prohibition of interest became impractical, and the halakhah [religious law] devised legal means for circumventing it. Eventually the prohibition was restricted to the realm of charitable loans, in keeping with its original purpose.[3]

Since Exodus 22:24 and Leviticus 25:35-37 refer to loans to the poor [unlike the verse in Deuteronomy], some scholars believe that interest was first prohibited only on loans to them, and that Deuteronomy is the first to protect all Israelite borrowers from interest. However, non-legal passages consistently regard the taking of interest from one's countryman as wrong, without differentiating between solvent and poor borrowers, and it is unlikely that exacting interest from solvent people, on the rare occasion when they might borrow, was ever acceptable. Most likely Exodus and Leviticus specify the poor simply because it was they who normally borrowed.


[1] Exod. 22:24; Deut. 24:2 [back]
[2] Rates of 20 to 25 percent for silver and 33 1/3 to 50 percent for grain were common in the ancient Near East, and higher rates were known. [back]
[3] With the development of a money economy, industry, and trade, Jewish practice evolved — albeit against long resistance — a legal fiction known as hetter iska, whereby a loan is contracted in the form of a partnership. Although this procedure is considered legitimate for business transactions and investments, loans to a person in need are still required to be free of interest. [back]


Jeffrey H. Tigay, editor and commentator, The JPS Torah Commentary: Deuteronomy (Philadelphia: Jewish Publication Society, 1996).

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