What Is Money?

With God's help

2009

What Is Money? An Introduction to the Chapter 'HaZahav'

Introduction

This chapter deals with the meaning of money in several different contexts of Jewish law, including the laws of overcharging, acquisition by money, barter, and the like.

The first two mishnayot of the chapter serve as an introduction to acquisition by money, and as part of that they address the meaning of the concept of money. Acquisition by money is relevant both to movables and to land. In the case of movables, drawing is also required, and Rabbi Yohanan and Reish Lakish dispute why that is so, and what the law would have been at root. Here we are dealing mainly with acquisition by money in movables.

In acquisition by money for movables, we buy or sell an object and receive or give monetary consideration. Even in acquisition by money, this is not necessarily payment of the consideration itself, and the Sema and the Taz dispute this, at least with respect to land, where money effects acquisition according to Jewish law. But here we are not concerned with the question of who performs the act of acquisition; rather, with the purpose of the transaction: exchanging money for merchandise. How is this exchange carried out? The rule is that drawing the object is what acquires the coins, that is, the consideration, not the money used for the act of acquisition. In other words, the act of acquisition is performed on the merchandise, that is, the pira, and the money, that is, the tiva, is acquired automatically.

The question is how, in any given transaction, we define what counts as money and what counts as merchandise. That is not always clear. The difficulty is sharpened when we remember that for almost every legal purpose, anything of monetary value is treated like money. Therefore any commodity that has monetary value can itself serve as money, and so this is fundamentally a relative matter. One and the same thing may function as money in one transaction and as merchandise in another. This is explicit in our topic and in the medieval authorities, who state that there are cases in which the same item will be currency relative to one thing and merchandise relative to another; see Shulchan Arukh, sec. 203:6, and elsewhere.

If so, the definition of the concept of money cannot rest on direct pointing, that is, on defining the coins or the object that serves as money, since money is not one defined object, or even several defined objects. This forces us to enter into an abstract definition of the idea of money, and in our topic: that which is readily marketable, or important. Applying that definition will help us understand, in each transaction, what is money and what is merchandise.

From these definitions we can also understand why an asymmetry arises between money and merchandise, namely, that the merchandise acquires the money, while the money does not acquire the merchandise.

What is money?

Rashi on the Mishnah writes:

'Gold acquires silver' means: if one bought minted gold dinars with silver dinars and gave him gold dinars, then drawing the gold acquires the silver for the owner of the gold. From the moment the other party received the gold dinars, he became obligated to give the silver dinars and cannot retract. But silver does not acquire gold: if he first gave the silver dinars, he acquired nothing, and both parties may retract. Silver coinage counts as money because it circulates readily, whereas a gold dinar is merely like other movables. Merchandise and money do not acquire until one draws the movables, but once the movables are drawn, the acquisition takes effect and neither party may retract. The Gemara explains the reason: some derive drawing from the Torah, and some attribute it to a rabbinic enactment.

When one side draws the merchandise, the other becomes obligated to give him the money. Are we speaking of specific coins or specific objects? Certainly not. He becomes obligated to give him some money. If so, what does it mean to say that the money is acquired? It would seem that only a lien and a debt are created. The answer is that here money is indeed acquired, but money is not a specific thing. Money is the embodiment of an abstract concept: value. That is what is acquired. Payment of that value can be given in any form and in any coin, because we are not dealing with a specific object but with abstract value. It turns into a debt only when the money is booked against him as a loan.

In essence, what we have here is purchase money, as opposed to a loan. A loan creates a debt and a lien, but purchase money is an acquisition. And indeed we find that there is a difference between these two kinds of obligation. Several decisors, see Maimonides, Laws of Sale 5:4 and the commentaries there, write that money owed as the purchase price can be used to acquire an object and to betroth a woman, whereas remission of a loan cannot. Likewise, purchase money is not remitted by the Sabbatical year, that is, shop credit, whereas loan money is. What is the difference? Purchase money is money, as though a deposit of value were sitting with the buyer, and therefore it is not remitted, just like a deposit. But money owed from a loan is not money but a debt, and therefore it is remitted.[1]

This explains what is stated in the Mishnah at the end of Shevi'it: shop credit is not remitted. The explanation of the Kesef Mishneh there is puzzling. Rabbi Shlomo Fisher's explanation, in the lecture mentioned above, is that any obligation arising from a sale is not remitted by the Sabbatical year, since it is like a deposit and not like a debt. It is a deposit of value.

Nevertheless, the Kesef Mishneh, in Laws of Sale 5:4, writes in the name of the Rif that a debt arising from a loan does not count as money for acquisition, but a debt arising from a sale does count as money for acquisition. Mahaneh Efraim, Netivot HaMishpat sec. 191, and Or Sameach on Arakhin 7:12 explain that a person who has not yet paid the purchase price has not fully acquired the purchase. Therefore, when he acquires with that debt, the transaction is really an exchange of the objects for one another. Atzmot Yosef on Kiddushin 28 cites as the source a responsum of Rabbi Yosef ibn Migash, a student of the Rif.

What does it mean that the purchase has not been acquired? After all, drawing acquires movables. Kovetz Shiurim, Pesachim sec. 18, notes that the object and its value are two different things. He uses this to explain the view of Rabbi Yosef ibn Migash in Shevuot, who wrote that a creditor acquires collateral not entirely but only its value; the object itself remains owned by its original owner. And indeed this is because the collateral stands against the money given in the loan, which itself is only value. In a gift, a person transfers both the object itself and its value. In a sale, he transfers the object itself but leaves the value to himself. In principle, the buyer is supposed to strip the value from the object, and therefore he gives the owner money in its place; as noted, this coin or that coin makes no difference. That is, value is something abstract, and money is its embodiment.

In a loan one receives only value, that is, money, and the borrower becomes obligated to pay, for repaying a creditor is a commandment, but not to return the very same thing. 'Returning a loan' is therefore not an accurate concept. We are speaking of repayment, not restitution. A deposit involves restitution; a loan involves repayment. This is a new debt born after the act of lending, and therefore it cannot acquire. There is nothing of the lender's that remains with the borrower; see the law of 'driving away a lion' in Tosafot on chapter HaKones, where one who pays another's debt is merely warding off harm and does not truly provide him with benefit. But a debt arising from a sale is, in essence, the creditor's money that remained in the buyer's hand, the value that remained with him. A debt arising from a loan is not money; it is an intangible matter, an obligation on the person, but not an object that is with him. A debt arising from a sale is money, that is, abstract value whose embodiment is money.

Therefore shop credit is not remitted. The value is a deposit that remains with the buyer, and that is not remitted, just like any other deposit.

If so, money is the concrete embodiment of an abstract concept: value.

The meaning is as follows: every object in the world has value and also has substance or essence. Money has only value and no substance. Therefore, with a coin, one's attention is on its form, and that form may be annulled, as stated in Bava Metzia 45b. And so the Gemara says there:

It was stated: Rav and Levi — one said that a coin can serve for barter, and one said that a coin cannot serve for barter. Rav Pappa said: what is the reason of the one who says that a coin cannot serve for barter? Because one's attention is on its stamped form, and that form may be annulled. We learned: 'Gold acquires silver.' Is this not by barter, from which we may infer that a coin can serve for barter? No — by way of value. If so, instead of 'gold acquires silver,' it should have said 'gold obligates one for silver.' Teach, then: 'gold obligates.' This too is plausible from the latter clause: 'silver does not acquire gold.' Granted, if this is by way of value, then gold is merchandise and silver is currency, and currency does not acquire merchandise. But if you say it is barter, then both should acquire one another.

And Rashi there writes:

'Because his attention is on its form' means that the one who transfers the object and takes the coin in barter relies only on the stamped form upon it, for the coin has importance only through that form. 'And that form may be annulled' means that the king may invalidate it and decree another form to be stamped. Therefore it is like something not definite and complete, and later, in Bava Metzia 47a, they exclude a thing that is not definite from the verse 'shoe.'

And further there:

'Gold acquires' implies that from now the silver is acquired by him wherever it may be. The expression 'gold' applies only to something actually present and exchanged one for the other. But if this is by way of value, where he draws from him one gold dinar for twenty-five silver dinars, then no money is acquired here. Rather, the one who drew the gold became obligated through this act of drawing to give him money. The Mishnah should therefore have said: 'Gold obligates silver,' meaning that it causes the one who drew it to become liable for silver.

This is exactly what we said in explaining Rashi on the Mishnah. Here, however, the wording was also corrected from 'acquires' to 'obligates.'

An implication for the difference between acquisition by money and barter is the dispute between Rashi and Tosafot on Kiddushin 3a, at the end of the amud. So too the Ritva there, regarding the comparison between a woman and a field, says that taking possession does not acquire something whose body is not itself acquired. The same appears in the Shitah Mekubetzet, cited in Avnei Milu'im responsum 17, that a woman is an acquisition through money because of the act, not because she is owned by him. Giving value acquires with regard to a woman, but not in the same way as with a field. In the case of a field, it is consideration; here it is a formal act of acquisition, that is, the creation of a metaphysical bond between him and her.

Acquisition of usufruct and of corpus — rental. Divrei Michael, Bava Metzia sec. 8. Why, according to one view, does produce not function in barter? Because it is depleted through use, unlike utensils. Therefore it too is form without matter. Accordingly, the term 'produce' always describes the form of utensils or objects of use, whose 'produce' is their use. Even the fruits of a tree are the use of the tree, that is, its form, and are not an object in themselves. This is exactly like money, where the object serves as an embodiment of abstract value, that is, form, and therefore barter does not apply in either case.

And indeed we find cases in which only usufruct is acquired, rather than ownership of the corpus for the sake of its fruits, which would create a link to the corpus. For example, the Taz at the beginning of sec. 315 writes that rental is only an acquisition of usufruct. And indeed several medieval authorities wrote that rental and borrowing are not acquired by barter; see Tosafot on Bava Metzia 11b, Kiddushin 27a, and Arakhin 30a. Tosafot on Arakhin there go further and write that anything destined to return to its owners is not acquired by barter.

Ketzot HaChoshen, sec. 195, asks how we learned barter from Boaz, who used it to acquire a field, when that field is destined to return in the Jubilee year. But according to our approach this is well explained, because the return is only a sign and not the cause. In the Jubilee year, acquisition of usufruct is like acquisition of the corpus, and the Jubilee is a royal expropriation. See Mishneh LaMelekh at the beginning of ch. 11 of the laws of the Sabbatical year, who writes that one who buys a field in the Jubilee year may dig pits, ditches, and caves in it, unlike one who buys for a limited term. See also ch. 23 of Maimonides' Laws of Sale.

The Rashba on Kiddushin says that a utensil worth less than a perutah, the minimum halakhic coin-value, can be used in acquisition by money. According to our approach, this is not so. The fact that a utensil worth less than a perutah is effective in barter is a property of barter acquisition, not a property of utensils. That is, it does not mean that a utensil worth less than a perutah is like something worth a perutah; rather, in barter the utensil does not function as value, and therefore we do not require it to be worth a perutah. The Rashba apparently follows Rashi, according to whom barter is not essentially a different kind of acquisition. See Shulchan Arukh, Choshen Mishpat sec. 6:1, and Ketzot HaChoshen there, as well as Ketzot HaChoshen sec. 88, subsections 1 and 3-4.

There are opinions that less than a perutah is not money at all, and does not even count as a partial measure. One who steals less than a perutah does not transgress on the basis of a half-measure. The reason is that money is value, and less than a perutah is not considered value at all. Perhaps the criterion is that it be worth a perutah in Media; the fact that it has value somewhere gives it the legal status of money.

When money is deposited as a deposit, the duty of restitution can also be fulfilled with different money, and not necessarily with the very money deposited, unless this was specially stipulated. And yet this remains a deposit and not a loan, even though it may be spent. Therefore bank deposits are a deposit and not a loan, with practical implications for interest, despite much confusion on this matter.

One can see that the prohibition of interest is sometimes understood as a prohibition on renting out money. This is a transaction of lending in exchange for money, payment for the deferment of the money. At first glance, this loan is not rental, since he is not required to return the very money deposited with him. On the other hand, it is not a sale either, because the payment is not for the coins themselves, which he does not acquire, but for the deferment of the money.

According to our approach, since money is nothing but form without matter, the fact that it stands to be spent does not alter the fact that this is a rental.

The claim 'your wheat burned' is not relevant with respect to money, since money is a debt of value and not a concrete object. Therefore one need not draw money in order to acquire it. Hence, in every sale transaction, the claim 'your wheat burned' applies only to the merchandise and not to the money. Value cannot burn, because he will owe me other money of the same value in its place. Note well: even if the value is an object and not money, if it burns the buyer must still pay something else of equal value.

Merchandise versus money ('pira' and 'tiva')

The last point illustrated the ambiguity involved in defining a sale transaction: what is money and what is merchandise? To which side do we say 'your wheat burned,' and to which side do we not?

The simplistic definition, according to which merchandise is what one wants and money is the value given in exchange for it, is incorrect. After all, the merchant wants the money. More than that, sometimes the essential definition of money itself is unclear, since anything of monetary value is treated as money. Therefore, with gold and silver, the Gemara is uncertain which is the currency and which is the merchandise.

In fact, from the question of what is money and what is merchandise, we arrive at the question of who is the seller and who is the buyer, just as with a stipulation, where the question is which side is the condition and which is the act. For example: the sons of Gad and Reuben and Moses — is the relevant act the giving of the land or the going out to war? There too we are dealing with the giving of an act, not of an object, and consideration for it.

The relationship between a stipulation and a sales transaction.

Money is what is given merely as value and not as something substantial. Barter is the giving of substance or corpus in exchange for substance or corpus. Money is the giving of value in exchange for substance. When the thing given as value is not important in itself but only for its value, then it is the currency and the other side is the merchandise.

Let us bring a few examples:

1. Shevi'it 8:5: one may not pay for labor with Sabbatical produce, for example a barber, a bath attendant, and the like. The Hazon Ish, Shevi'it sec. 13:12, asks: why say that the greengrocer is paying the barber with Sabbatical produce? Let us say that the barber is paying the greengrocer with labor. In that way one is not handing Sabbatical money to an ignoramus; rather, he does work for him and thereby pays him. Rabbi Shlomo Fisher, in a lecture on the Yeshiva website about remission of money, answers that payment to a laborer, that is, wages, is not a debt but a commandment. There is a commandment to pay for work, and therefore it is clear that here the payment is the produce and not the labor. But this is strained, because on that view one could not effect acquisition by money through the action and labor of a hired worker, yet we know that a woman can be betrothed through an action such as 'dance before me.' Seemingly that would mean that the woman is, as it were, taking the man, for 'he takes,' and not 'she takes.' She gives him the betrothal in exchange for the money, and does not take the money in exchange for the betrothal.

According to our approach, everything is straightforward. The produce is clearly payment for the labor, because the produce is given as value, while the labor is the thing needed.

1. Shulchan Arukh sec. 203: when one stipulates with a worker that he will give him a lamb in exchange, even if the worker has already done the work, he has not acquired the lamb. An additional novelty is that he is not obligated to give him that lamb at all, but may pay him with anything else. There is no act of acquisition here, but beyond that there is not even an obligation to give that specific item. Why not? Ketzot HaChoshen there, subsection 4, explains that labor is money's worth, and money does not acquire movables, and therefore the lamb was not acquired, nor is he obligated in that specific item. The Hazon Ish asks in Likutei Choshen Mishpat sec. 9, and also Even HaEzer sec. 44: why not say that the labor is the merchandise and the lamb is the payment for it?

According to our approach, the answer is simple: indeed, the lamb is given here as value and not as merchandise, and therefore it functions here as money's worth. But money is never acquired as a concrete object, as we saw above: it 'obligates' and does not 'acquire'; it is acquired only as value. Therefore he can give him another equivalent of equal value instead of the lamb.

1. Rashba on Ketubot 56a: when one stipulates away food, clothing, and conjugal rights, the condition stands. This is only with respect to food and clothing, not conjugal rights, which are bodily suffering and cannot be waived by her. At first glance this is difficult, for conjugal rights are a benefit that has monetary value, so why can she not waive them? How is this benefit different from the benefit of 'dance before me'?

The answer is that here the conjugal right is not given as money's worth, but as a substantial obligation. Marriage obligates him to give her conjugal relations. True, this can be redeemed in money, but the obligation itself is not an obligation to give a certain sum of value. Therefore this is not an obligation of money. By contrast, food and clothing are only money, since he can give her whatever he wants so that she can buy clothing and food with it.

1. Why is a borrower not a paid bailee, given that he owes the depositor liability even for unavoidable accidents? How is this different from a finder-guardian, who is considered paid because of Rabbi Yosef's perutah? According to our approach, there is no difficulty at all. In a borrowing transaction it is clear that the merchandise is the cow, and liability for unavoidable accidents is not payment for the merchandise but an obligation imposed by the Torah. It is not that both parties are interested in that part of the arrangement. A practical implication: if someone is traveling abroad and offers his friend the use of his car so that the friend will watch over it, this is a paid-guarding arrangement, the payment being the permission to drive, and not a borrowing.

A distinction between the two aspects of money

Maimonides, Laws of Sale 6:1

Produce, although one does not acquire with it as we explained, is nevertheless acquired by barter like other movables. But coinage, just as one does not acquire with it, so too it is not acquired by barter. Thus coinage is not acquired by barter, nor does it itself become a means of acquisition to acquire like other things.

Maimonides here distinguishes between produce and money: neither can be used to acquire by barter, but produce can themselves be acquired by barter, whereas money cannot. We seemingly said above that both count as money, since both are pure value. So why is there an asymmetry between them?

The answer is that produce are indeed money from the standpoint of their nature, since they are pure value. But from the standpoint of the laws of acquisition by money, one buys them for use and not as value, and therefore they are clearly merchandise and not currency. Indeed, every commodity here is called merchandise.

This is a distinction between the two aspects of money discussed here. On the one hand, money is something that has only value or only consumable use, that is, no corpus. On the other hand, money is something given only for its value.

Our chapter

As one can see from the structure of the laws in Maimonides, our chapter begins from this point. Maimonides ought to have opened the discussion with the definition of merchandise and currency, and only afterward to have discussed the various kinds of transactions. But he does not deal with this at all, and in the middle of his discussion of the modes of acquisition he simply turns to transactions of gold and silver and the like. The reason is that in our Gemara the entire discussion concerns only transactions in which it is not clear what is money and what is merchandise, such as a transaction of silver against gold. Seemingly both sides are something intermediate. One might have said that everything depends on the intention of the parties; if one buys gold for use, then it is merchandise according to all views. But in an ordinary purchase in which both sides are used equally, as with a banker — here the golem has risen against its creator: money, which was meant to circulate goods, has become an end in itself — for whom everything is money or merchandise, or one who buys oil for the year 2200 and sees it as money rather than as merchandise, here the doubt arises and there is no simple way to decide what is the money and what is the merchandise.

But when the transaction is clear, there is no need to cling to the criteria of marketability and importance. Those are criteria meant to solve problems in cases where the definition of what is money and what is merchandise is not self-evident from the parties' intentions.

This is the language of Shulchan Arukh, sec. 203:7:

All of these have the status of coinage with respect to other movables, and likewise one against the other. For example, if he sold a gold dinar for a gold dinar, or a silver dinar for a silver dinar, or a copper dinar for a copper dinar, they have the status of coinage.

And likewise there in paragraph 4:

This applies when one sold other movables for one of these kinds of metals. But when one sells coin for coin, gold dinars are like merchandise relative to silver coinage. Gloss: if he transferred the silver as value, meaning that he did not designate specifically these particular coins, then once the gold is drawn he becomes obligated for the silver according to what they agreed upon. Likewise copper coins are like merchandise relative to silver coinage. How so? If he gave him a gold dinar for twenty-five silver dinars, once he drew the gold dinar he became obligated to give him the twenty-five silver dinars according to what they agreed, if new then new, and if old then old. But if he gave him twenty-five silver dinars for a gold dinar, he acquires nothing until he takes the gold dinar.

And so the Sema there, subsection 9, precisely infers that the whole discussion concerns a case of coin against coin:

Relative to silver coinage, etc. Since silver is more marketable and quicker in circulation than gold, a gold coin is therefore called merchandise relative to silver. The same reasoning applies to all the cases that follow: that which is easier to spend is considered coinage relative to the other, which is not as easy to spend.

Now, in this ruling of the Shulchan Arukh and the Rema, it was stated very carefully that the silver is currency only if he did not designate particular coins for him. This implies that if he intends specifically certain coins and not general value, then those coins are merchandise and not consideration. And indeed, later authorities were puzzled by the meaning of the Rema there. The Sema there, subsection 10, inferred, and the same is found in Netivot HaMishpat subsection 12:

The correct reading is 'if he transferred to him the silver.' Old editions read 'and if,' but that is a scribal error; rather, it is explanatory. What the Mechaber wrote, namely, that silver coinage is acquired by drawing gold coinage, applies only when he did not designate a specific silver coinage as value, for the reason I wrote above: if he designated a coin against movables, the coin is not acquired by drawing the movables, because in such a case the transaction has the status of barter.

According to these later authorities, we see that if he designated a specific silver coin in exchange for his gold, not as value but as a concrete object, then the silver coin too is merchandise, and the transaction is barter. In such a case both sides are merchandise. Thus we see that when it is clear what is merchandise and what is currency, we do not look at what is important and what is marketable. These are criteria that arise only in doubtful cases. That is, the whole discussion of the chapter concerns only pathological cases, but the basis of everything is the intention of the parties.

If so, we should not search in this chapter for the fundamental principles that define money, whether marketability or importance. Can importance define money at all? Are banknotes more important than commodities? Why would one think that importance is what determines the matter? And what about marketability, ease of circulation? Here this seems closer, but even that does not satisfy the criteria we proposed above for money. Indirectly, however, it may be that marketability means that these things have value as items that circulate in trade and not for use, and therefore they are money.

In any event, at least from the criterion of importance, it seems that our topic is, perforce, dealing with a criterion for deciding what is money and what is merchandise in cases where the criteria we proposed are not fulfilled, and not with the essential definition of money.

[1] See Rabbi Chaim on Laws of Sale ch. 22, who explains that a debt is property, and perhaps he means this only with regard to a debt arising from a sale.