Season Four‎ > ‎Class #6 - Loans‎ > ‎

Class Notes - Class #6

Earlier we saw several mitzvot related to loans from one Jew to another.  The Torah sees loans as a way to help poor people get by through tough times, so Jews are encouraged to make loans to poor people despite the possibility that the borrower will not be able to repay.  But if the lender thinks repayment is a lost cause the lender is less likely to make the loan and the poor person does not get the crucial help the loan would provide.  The mitzvot we will see in this class help strike an appropriate balance.

People often misunderstand how much they will have to pay to cover the interest on a loan.  The borrower can be overwhelmed by the debt, and that is not good for the borrower or for society.  Mitzvah #343 prohibits a Jewish lender from loaning money to another Jew at interest.  Mitzvah #68 prohibits facilitating a loan at interest between two Jews, for example by serving as scribe, guarantor or witness.  Mitzvah #572 completes the set by prohibiting a borrower from taking a loan from another Jew at interest.  We might have thought that a lender is forbidden to charge interest but a borrower could choose to pay interest.  This mitzvah corrects that: both the borrower and lender are forbidden to participate in a loan at interest.

            Mitzvah #573 requires a Jewish lender to charge interest on a loan to a non-Jew and permits Jews to pay interest on loans made by non-Jews to Jews.  A Jew should not give interest-free loans to non-Jews out of kindness or generosity, although apparently the Jew may give a non-Jew an interest free loan if there is some business reason to do so.  Similarly, a Jew may pay interest on a loan from a non-Jew.  Jews who lend money to non-Jews should charge minimal interest rather than a fixed amount, only as much interest as the Jew needs, as the lender will spend less time with the non-Jew because the Jew has less money to collect.  But a Torah scholar may charge a non-Jew more interest since the Torah scholar is less likely to be influenced by the borrower.

            Consider a case where a Jew loans money at interest to a non-Jew.  When the non-Jew is ready to repay the loan, a second Jew suggests an alternative transaction.  The second Jew will borrow the money from the non-Jew and will eventually repay the first Jew, paying interest for the additional term of the loan.  It would seem that the second Jew is paying interest on a loan from the first Jew and we would expect that to be forbidden.  But closer analysis shows there are really two loans here, one from the first Jew to the non-Jew and the second from the non-Jew to the second Jew.  The first Jew is not involved in the loan from the non-Jew to the second Jew, and if the second Jew fails to repay the first Jew the first Jew will have recourse only to the non-Jew and not to the second Jew.  Although when the loan is repaid the second Jew will be paying interest to the first Jew, the underlying structure of the loans does not include any forbidden activity.  Contrast this to a case where when the second Jew negotiates with the non-Jew, they bring the first Jew into the conversation.  The first Jew is then giving tacit approval to the loan from the non-Jew to the second Jew, which converts that loan at interest from one strictly between the non-Jew to the second Jew to a loan from the first Jew to the second Jew.  And that is forbidden both to the borrowing Jew and the lending Jew.

If  a Jew has only enough money to make one loan, the Jew should loan the money interest free to another Jew rather than loaning the money at interest to a non-Jew even though that creates a financial loss for the lender.  If a Jew loans money to a non-Jew who later converts, the Jew collects interest that accrues from the start of the loan until the time the borrower converts, but not thereafter.  The author explains that foregoing the interest would cast doubt on the sincerity of the borrower’s conversion, as people might suspect the borrower only converted to avoid paying the interest owed on the loan.

            Our author understands loans as a form of kindness, and as a sample of the trait of generosity we should instill in ourselves.  These two mitzvot seem to undercut that logic, since loans to non-Jews are as kind as loans to Jews.  The author explains these mitzvot as warnings that Jews not spend too much time with non-Jews lest the Jews be subject to bad influence.  Rather, Jews should display kindness only to others who are faithful to God, so that Jews demonstrate that kindness toward others is a product of love of God and commitment to Torah.  But the author does seem to say that we extend kindness only to those who share our commitment to God and Torah.  It is hard to see how to fit that with other themes he has developed.  Loans to poor people contribute to a settled society and reinforce generosity in the lender even if the poor people are not Jews.        This articulation of the shoresh reflects a real conflict.  Sometimes well intentioned, generous deeds have unintended bad consequences.  We need to be aware of that potential downside and find an appropriate balance. 

            But the explanation is not entirely satisfying.  Apparently these mitzvot apply to all non-Jews, not just idol worshippers.  It is not clear that a lender would spend less time pursuing the borrower for a loan at interest than for an interest free loan.  And refusing to make an interest free loan to a poor person who needs it might inculcate bad character traits even if the lender has a good reason to refuse.  The author’s attempt to give a shoresh for these mitzvot exemplifies the problem with the enterprise of trying to articulate a reason or benefit for each mitzvah. In the situations covered by these mitzvot two themes conflict: mitzvot encourage us to adopt good character traits like kindness and generosity, and mitzvot encourage us to avoid situations where we will be led astray.  One could choose to emphasize either theme at the expense of the other.

We saw a similar mitzvah to this one earlier in our study.  Although Jews are forbidden to try to collect loans from other Jews when shmittah comes, mitzvah #476 prohibits Jews from forgiving loans to non-Jews out of kindness.  But the Jew may forgive the loan for some benefit to the lender, for example for business reasons or out of fear of the borrower.

We might expect our author to prefer that Jews err on the side of generosity. Perhaps that is why the author explains Ramban’s position here, parallel to Ramban’s position about the prohibition of forgiving loans to non-Jews.  The source verses for these mitzvot compare what Jews should do in loans to other Jews, forgo interest and not collect the loan when shmittah comes, with how Jews should behave toward non-Jews.  Rambam holds the phrases that describe how Jews behave toward non-Jews are mitzvot that require Jews to treat non-Jews differently.  Ramban, though, takes those phrases as rhetorical contrast to clarify the point of the verses, how Jews should behave toward other Jews.  Ramban does not see the phrases about non-Jews as sources of mitzvot, and apparently Ramban would not forbid Jews from giving interest free loans to non-Jews or forgiving loans to non-Jews.         

            Our author explicitly agrees with Ramban.  Note how he describes Rambam’s erroneous position:  the great scholar is the one who makes only a few mistakes.  And note our author’s commitment to fairly describing opinions he does not agree with.  There is no hint in the shoresh section of these mitzvot that the author is defending notions he thinks are mistaken. 

Mitzvah #67 prohibits a lender from trying to collect a loan when the lender knows the borrower can’t pay.  Our author understands this mitzvah as helping to inculcate the quality of kindness in us.  That notion plays out in mitzvot about how the lender handles collateral a poor borrower provides to secure a loan.

Collateral for a loan, where the lender holds a property right in some of the borrower’s property to help assure that the loan will be repaid, can take many different forms.  The collateral can continue to be held by the borrower, but the lender can take it from the borrower if the borrower fails to repay.  If you own a house with a mortgage, the house stays in your possession but if you fail to pay your mortgage the bank can take your house.  Or the lender can hold the collateral.  If the borrower fails to repay, the lender might have the right to sell the collateral.  But the lender might not have the right to sell the collateral, in which case the collateral still serves as a motivation to the borrower to repay since the borrower will want to recover the collateral.  The borrower can give the collateral to the lender at the time of the loan, or only when the borrower gets behind repaying the loan.  Any kind of object can serve as collateral.  The next several mitzvot cover several rules about collateral.  The author gives us a brief introduction to this much more complex topic.

When the borrower is very poor, providing the lender with collateral can be very difficult.  If the borrower had anything to spare, the borrower probably would have sold those things to raise money, so chances are the only possible collateral the borrower has consists of things the borrower desperately needs.  But, as we said earlier, the more secure lenders feel that loans will be repaid, the more likely affluent people are to loan money to poor people.

The mitzvot in this series are about collateral held by the lender.  Our author does not discuss issues related to collateral held by the borrower, or what recourse a lender has to the property of a borrower when no particular property has been designated as collateral. 

And these mitzvot are not about collateral provided to the lender at the time the loan is made.  Our author explains in mitzvah/essay #583 that the borrower could have sold the property to someone and raised money from the sale.  If the lender could have bought the property, the lender could certainly take a lesser ownership interest in the property by taking it as collateral.  So according to our author, the mitzvot in this series govern collateral the borrower gives the lender later in the loan process, probably when the borrower stops paying promptly.  In mitzvah/essay #583 that author says great rabbis have erred about this, holding that a lender may not take food preparation utensils as collateral at the time the loan is made.  The translator explains that Rambam would prohibit a lender from taking food preparation utensils as collateral at the time the loan is made.  Our author thinks Rambam is wrong.

Some of these mitzvot simply eliminate the possibility of collateral.  Mitzvah #591 prohibits the lender from taking any collateral from a widow. Since the family was the basic economic unit, a widow might be financially vulnerable.  This mitzvah applies to widows of any economic status.  The author explains that this mitzvah reflects God’s compassion on widows, who, even if they are not at financial risk, may still feel anxious and insecure.  Even the beit din cannot wrest collateral from a widow, although if she admits the loan the beit din can force her to pay if she can.  If a private lender took collateral from a widow, the beit din can force the lender to return it. Rambam says that if collateral taken from a widow is destroyed the lender is punishable with malkot.  Our author is puzzled by this.  He explains his objection more fully in mitzvah #585, so we will deal with it in that context. 

Mitzvah #583 prohibits the lender from taking food preparation utensils as collateral.  The source verse, Deut. 24:6, explicitly prohibits taking millstones as collateral, but the rabbis understood that to include pots, grinding utensils, kneading troughs, anything used in preparing food.  The borrower needs these implements to prepare food, the borrower cannot eat without these implements, and the lender is simply prohibited from taking them as collateral.   The source verse compares taking food preparation vessels as collateral to “taking someone’s life as a pledge.”

A lender violates this mitzvah even if a beit din facilitates the lender taking the prohibited collateral from the borrower.  If a lender improperly took food preparation utensils as collateral, the beit din should force the lender to return the collateral.

The author cites Rambam for details of what activities prohibited by this mitzvah are punishable.  A lender who takes several different food preparation utensils as collateral is punishable with a set of malkot for each utensil taken.  The source verse mentions both the top and bottom grindstone, neither of which could be used alone to grind food.  That implies that a lender is punishable if the lender takes only part of a food preparation utensil and is punishable separately for each part of each food preparation utensil.  So a lender who takes both the top and bottom grindstone is subject to two sets of malkot.

Mitzvot #586 and 587 are a positive/negative pair.  If a lender takes collateral that is necessary for the everyday life of a Jewish borrower, the lender is required to return it to the borrower at the time of day the borrower needs the item.  So if the collateral is a blanket or pajamas the lender must allow the borrower to take it and use it at night, and if the collateral is a work tool or a daytime outfit the lender must allow the borrower to take it and use it during the day.  It is the borrower’s responsibility to pick up and return the collateral at the appropriate times.  This arrangement can go on indefinitely until the loan is repaid or forgiven.

These mitzvot only apply to collateral that the borrower needs for crucial everyday activities, not to items the borrower could do without.  For other collateral items, the lender holds the collateral for thirty days to give the borrower a chance to repay the loan.  After that, the lender gives the collateral to a beit din, the beit din sells it, pays the loan amount to the lender and any money left over to the borrower. 

The assumption behind these mitzvot is that the borrower is so poor the borrower has nothing to act as collateral except items necessary to crucial life activities.  Kitchen utensils are out as collateral, as we saw above.  Other necessary items might serve as collateral, but only if the borrower gets access to those items when they are needed. That avoids a potential “catch 22”  for an impoverished person who otherwise might be forced to give up crucial necessary items like blankets or work tools in order to borrow money to buy other necessities like food.  The author explains the shoresh as yet another case where a mitzvah encourages kindness and empathy for others.

The point of collateral is to encourage a borrower to repay a loan and to give the lender recourse should the borrower fail to repay the loan.  But a lender cannot sell the collateral to recover the loan money without violating these mitzvot.  If the borrower provides collateral but can still get and use that collateral when needed, it is hard to see how the lender gets any benefit from taking the collateral at all.  One obvious answer is that the inconvenience and embarrassment for the borrower of having to take the collateral back and forth to the lender will encourage the borrower to repay.  And it facilitates the borrower deciding to allow the lender to sell the collateral as a way of repaying the loan.  Another benefit is that although loans without collateral are forgiven in shmittah, loans with collateral are not, so this collateral protects the lender from having the loan remitted in shmittah.  The collateral also has an effect on the lender’s rights should the borrower die.  If the borrower dies, the lender gets first access to the collateral to regain payment for the loan, and the heirs only get any money left over from selling the collateral and repaying the loan.  The lender gets first dibs on the collateral even if the collateral was in the borrower’s possession when the borrower died.

Mitzvah #585 prohibits the lender from taking collateral unless the borrower hands it over.  The lender can go to beit din asking for an order requiring the borrower to give the collateral to the lender, but even then the borrower has to comply with the order.  Neither the borrower nor representatives of beit din can invade the borrower’s home to take the collateral.  Nor can the lender snatch collateral from a borrower who is carrying it, although representatives of beit din can snatch the collateral from a borrower carrying it.  If the lender is to get the collateral, the borrower must bring it out of the home and deliver it to the lender. 

This mitzvah provides another example of a principle of punishment our author taught us when discussing the mitzvot of chasing away mother birds while taking eggs.  Someone who violates a Torah prohibition for which no other punishment is specified is normally punishable by malkot.  One exception is that the violator is not punishable if there is a positive mitzvah that prescribes specific behavior in place of the punishment.  The violator is not punishable as long as it is possible to fulfill that positive mitzvah, but once it becomes impossible to fulfill the positive mitzvah the violator is subject to malkot.  Mitzvah #587 is a positive mitzvah that requires a lender who takes certain collateral to return it to the borrower.  We will see more about that mitzvah below, but here the author says it applies to collateral that a lender took by force in violation of mitzvah #585.  Thus, if a lender takes collateral from the borrower by force, the lender is not subject to malkot as long as it is possible for the lender to return the collateral.  But if the collateral was destroyed or lost, the lender can no longer return it and so the lender is potentially punishable with malkot

The author is not satisfied with that logic, however.  He refers to another exception to the general rule that those who violate negative Torah prohibitions are subject to malkot: no malkot are inflicted on a violator who can make good the violation by compensating the victim. The violator is protected from malkot by the possibility that the violator can compensate the victim even if the violator has not paid that compensation.  Even if the collateral is destroyed, the lender has another alternative.  The lender can accept the destroyed collateral in partial satisfaction of the loan, thereby providing financial compensation to the borrower for the destroyed collateral.  Our author thinks that compensation should preclude the lender being punishable with malkot, and disagrees with Rambam who says the lender who seizes collateral by force is punishable with malkot.  This is the same set of arguments we saw about punishment for taking collateral from a widow that we saw in mitzvah #591.

The author casts the shoresh for this mitzvah in the danger of the strong taking advantage of the weak.  The borrower is probably poor and powerless relative to the lender.  That leaves the borrower subject to abuse of power by the lender, as the weak are always subject to abuse of power by the strong.  This mitzvah prevents the lender from helping himself or herself to the borrower’s goods.  Rather, the lender is subject to judicial process.  This is just one example of the need to limit violence in society, a limit that is necessary for the settled, peaceful society God wants people to have.  The author writes passionately about the need for defending the weak from the strong, the little folks from the power of the powerful.



Mitzvot #592 and 593 complete the topic we saw in mitzvot #216 – 223, defining which parts of the agricultural harvest a farmer is required to leave for poor people to harvest for themselves.  To review what we saw earlier, mitzvot #216 and 217 require the farmer to leave peah, the produce at the edges of certain fields.  Mitzvot #220 and 221, according to Rambam, require peah for vineyards, olive groves and orchards.  Mitzvot #218 and 219 require the farmer to leave leket, grain that falls from the harvester’s hand.  Mitzvot #222 and 223 require the farmer to leave peret hakerem, grapes that fall during the harvesting process.

Mitzvot #592 and 503 are a positive/negative pair that add one more category.  After grain has been harvested and packed into sheaves in the field, the farmer comes back to collect those sheaves.  If the farmer forgets a sheaf, the farmer may not return to collect that sheaf later.  Rather that sheaf is called “shich’chah” and the farmer must leave it in the field for the poor.  The author says the same applies to tree fruit which the farmer fails to collect during the harvest, but our author does not define exactly what that means.

The shoresh for these mitzvot echoes what our author said about the earlier related mitzvot.  When the farmer leaves part of the harvest for poor people the farmer learns to be a kind and generous person.  The author projects how the poor people feel watching the prosperous farmer harvesting food the poor person does not have.  The poor person watches wistfully, imagining the joy and gratitude that would ensue if the poor family had even a small part of the bounty.  Yet again the author takes an obscure mitzvah with little current applicability and makes of it a vivid, contemporary moral lesson.  Again he encourages us to identify with the position of the most vulnerable people in our society.

As usual the author provides details to define these mitzvot more carefully.  Size limits apply to the size of the forgotten sheaf.  The sheaf is not considered forgotten unless everyone on the harvesting crew, owner and workers alike, have forgotten it.  The mitzvot apply to men and women in any place where farmers are required to pay other agricultural taxes, t’rumot and ma’aserot.  Here our author does not say whether these mitzvot apply now, but in mitzvah #216 the author said that mitzvah applied when the Jews were settled in Israel. 

In mitzvah #593 the author has a long discussion of the punishment for breaking these mitzvot focusing especially on someone who violates a mitzvah where the violation is subject to rectification.  We saw this same discussion when we covered the mitzvah to chase away a mother bird before taking eggs from a nest. Mitzvah #593 is a negative mitzvah which prohibits the farmer from retrieving forgotten sheaves.  What if the farmer violates this mitzvah and goes back to retrieve forgotten sheaves?  We might have thought the farmer would be subject to malkot.  But here the farmer can rectify the violation by giving the retrieved sheaves to a poor person.  Even if the wheat has already been processed and baked into bread the farmer can rectify the violation by giving the bread to a poor person.  But if the wheat is no longer available because it has been eaten or otherwise destroyed, the farmer has no way to rectify the violation and is subject to malkot.  That is true whether the farmer destroyed the wheat or whether the wheat was destroyed some other way through no fault of the farmer.  The Talmud’s formulation of this rule seems to say that it applies only to mitzvot of chasing away a mother bird and one other case but the author explains that the same rule applies in all similar cases.