Interest and Usury

Reader Ed Morrow writes in an e-mail:

“The recent U.S. Senate battle over a new personal bankruptcy law got me thinking about interest and usury. In Exodus, Leviticus and Deuteronomy, there are explicit prohibitions on making a profit on loans. There are two different Hebrew words used to describe such a profit, neshekh and tarbit. In both the Jewish Publication Society and the New Revised Standard Version, these terms are translated as ‘interest.’ The King James Version uses the term ‘usury.’ This difference is, of course, significant. Your insight would be much appreciated.”

Before getting to the Hebrew of the Bible, it might be pointed out that in English, the difference between “interest” and “usury” has to do with value judgments and historical developments more than with etymology. Indeed, until the time of the Protestant Reformation, when the money lending that was forbidden by Catholic canon law was widely legalized, “interest” and “usury” meant pretty much the same thing: the amount added by contractual stipulation to a borrowed sum of money on its return to the creditor.

Both words come from Latin. Usura, the older of the two, had meant, literally, “use.” It came to mean what today we call “interest,” because the Romans conceived of it as the lump payment a person made for the use or rental of another person’s money. “Interest,” on the other hand, derives from late Latin inter est, “It makes a difference” (literally, “It is between [one thing and another]”); originally referring in medieval law to il quod interest — thepayment for the damage to a creditor’s standing made by a debtor defaulting on a debt — it eventually turned into a legal fiction ensuring the creditor against the risk of damage even before a debt was defaulted on, or against the damage caused by parting with a sum that he could have profitably invested elsewhere.

Such fictions served to reconcile two opposite perceptions that were common in the ancient world: that there was something morally wrong with letting money lent to needy people turn into more money for creditors who invested no work, effort or risk in it (as Aristotle put it, “Of all modes of getting wealth, this is the most unnatural”), and conversely, that without interest no one ever would lend money at all, thus making it impossible for the poor to recover from bad luck or poor harvests while stifling commercial initiative and bringing economic life to a standstill. The solution was to think of interest either as an ordinary transaction in which you “bought” someone’s money as you might buy his wheat or cattle, or as a form of compensation to an otherwise altruistic lender.

The biblical attitude toward interest was as negative as Aristotle’s: If it was prohibited only among Israelites, who were permitted to collect interest from non-Israelites, this was in line with many other biblical commandments that made a quite sensible distinction between the more stringent obligations applying within a group bound by mutual loyalty, and the less stringent ones applying to its dealings with the outside world. The biblical animus against interest is well expressed both by the word neshekh, which comes from the verb nashakh, to bite, presumably because the interest paid on a loan “bites into” it until nothing is left — and by tarbit, from rav, to increase or multiply, because of the pernicious way in which interest accrues. If a poor person needed money desperately, his better-off neighbor was expected to lend it to him free-of-cost. (In this the Bible differed from other ancient Near East legal codes, such as Hammurabi’s, in which interest was both permitted and regulated.)

Are these wordsto be translated as “interest” or as “usury”? Until the Protestant ethic changed attitudes toward money lending, it didn’t really matter, although since Jerome rendered the words in his enormously influential Latin Vulgate as usura (late Latin interest didn’t exist in his day), the King James and other old English Bibles preferred “usury.” With the advent of Protestantism, on the other hand, the two words diverged: “Interest” now came to mean a reasonable or permissible charge for a loan, and “usury” an unreasonable or impermissible one.

With this in mind, it is possible to say that in a modern Bible translation such as the Jewish Publication Society’s or the New Revised Standard Version’s, “interest” is indeed a better word for neshekh and tarbit than “usury.” This is because, inasmuch as the Bible’s intention was clearly to permit no charge at all for loans among Israelites, thus making the distinction between a reasonable and unreasonable charge irrelevant, “usury” would misleadingly imply that the former was considered acceptable. It was not, and later Jewish law went through no small number of contortions to get around this ban — but that, I’m afraid, is another story.

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Interest and Usury

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