The Golden Chapter – Money and Monetary Acquisition – Lesson 6
This transcript was produced automatically using artificial intelligence. There may be inaccuracies in the transcribed content and in speaker identification.
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Table of Contents
- Introduction: money, monetary value, acquisition by money versus barter exchange
- Debt, loan, and purchase price: abstract value versus a concrete claim
- The obligation of “specifically a lamb”: stipulation according to Rashi versus ownership according to Maimonides
- Gold dinars versus silver dinars: Rabbi’s change of mind and the criterion of “importance” versus “marketability”
- The main claim about the passage: not the essence of money, but an artificial solution to a pathological case
- Legal systems, consistency, and legal certainty
- Transition to the laws of interest: renting money, payment for waiting on funds, and the connection to the distinction between money and merchandise
- Fixed interest, the dust of interest, and “recoverable through the court” as a rule in Yoreh De’ah
- A se’ah-for-se’ah loan: price fluctuation, two conceptions of the prohibition, and two qualifications
- Preparation for the continuation of the passage: Rabbi Hiyya and gold as coinage
Summary
General Overview
The text summarizes the first three lectures on money, monetary value, and acquisition by money versus barter exchange, and applies the distinctions between debt, loan, and purchase price to a case in which a concrete payment is required and not just equivalent value. It presents a dispute in approach between Rashi and Maimonides on the question of how one can obligate payment specifically in the form of a lamb, and then moves the discussion to the continuation of the Talmudic passage on page 44b about gold and silver as coinage and produce, while arguing that the passage does not define what money is in essence, but rather searches for a technical criterion for cases in which both sides are money. Later, it gives introductions to the laws of interest, to fixed interest versus the dust of interest, and to the law of a se’ah-for-se’ah loan, including the suggestion that the prohibition there is mainly משום looking like interest rather than the dust of interest, and it connects the distinction between money and merchandise to the question of lending produce and its changing valuation.
Introduction: money, monetary value, acquisition by money versus barter exchange
The framework for the first part of the chapter is an economic framework that seeks to understand the foundations of the economic world through the distinction between money, monetary value, and acquisition by money versus barter exchange. In acquisition by money there is an asymmetry in which one side gives money and receives merchandise, and the other side gives merchandise and receives money, whereas barter exchange is merchandise for merchandise. The possibility that merchandise can function as money exists when it is given only for its value and not because it is the object of the transaction.
Debt, loan, and purchase price: abstract value versus a concrete claim
A debt, simply speaking, deals with abstract value, meaning: “I owe you the value of one hundred shekels,” without any concrete bill or note. Debt within the framework of a loan is described as a future obligation that the Torah imposes, within the rule that repaying a debt is a commandment, to give one hundred shekels at a later time. In the case of purchase price, according to Maimonides, “I owe you one hundred shekels” means “you have one hundred shekels with me,” not as specific bills but as abstract value over which there is ownership and which can be used for betrothal and acquisitions.
The obligation of “specifically a lamb”: stipulation according to Rashi versus ownership according to Maimonides
When a concrete payment is required, such as a lamb and not merely the equivalent of one hundred shekels, then according to an understanding of debt as a loan it is difficult to explain how one can compel repayment specifically in the form of a lamb and not with any monetary equivalent. According to Rashi, the explanation is stipulation: the loan is given on condition that the repayment which the Torah obligates be made specifically by means of a lamb. According to Maimonides, there is no need for stipulation, because purchase price is interpreted as ownership: the meaning is “you have my lamb,” and therefore it is natural that the repayment should specifically be with a lamb.
Gold dinars versus silver dinars: Rabbi’s change of mind and the criterion of “importance” versus “marketability”
The Mishnah states, “Gold acquires silver, but silver does not acquire gold,” and this was taught before Rabbi Shimon, the son of Rabbi, who objected that in his youth Rabbi had taught the opposite. The Talmud explains that in his youth Rabbi held that gold is important and therefore it is the coinage, while silver is the produce; whereas in his old age he held that silver is sharper, that is, more marketable, and therefore it is the coinage while gold is the produce. The change is explained as a shift from a criterion of importance to a criterion of marketability, and the Mishnah follows his view in old age.
The main claim about the passage: not the essence of money, but an artificial solution to a pathological case
The criterion for what is called money and what is called merchandise in acquisition by money is not objective, but depends on the intention of the parties, where the object of the transaction is defined as the merchandise and the thing given only for its value is defined as the money. In the example of a lamb versus a chair, the definition is determined by the purpose of the transaction, and therefore the same object can be money or merchandise depending on the intention. In exchanging currency for currency, such as gold dinars versus silver dinars, the intention of the parties does not decide the matter, because both sides want what they are receiving and both sides are objectively “money”; but barter exchange cannot apply to money, and therefore there arises a need for a technical and artificial criterion to determine which side is the coinage and which is the produce. From this it follows that the discussion of Rabbi’s youth and old age is described as a solution to a special situation in which there is no natural way to define money and merchandise, and not as an essential definition of money.
Legal systems, consistency, and legal certainty
The text presents the view that legal rules create formal entanglements and complicate situations that would have been simple without the system, but that one cannot give up the rules because of the need for consistency. It describes a proposal to abolish formal law and decide disputes according to three upright and wise people, on the claim that such a system would be more just but would fail in terms of the ability to create certainty for contracts. The criticism of a period in which flexible doctrines in contract law were adopted is attributed to the damage done to legal certainty, and this is used to explain the need for rules even at the price of complication.
Transition to the laws of interest: renting money, payment for waiting on funds, and the connection to the distinction between money and merchandise
Interest is defined as payment for the waiting on funds, that is, payment for the borrower’s holding the money over time, and it is described as renting money, which the Torah prohibits. Renting merchandise such as a car is permitted, and the text presents this as another context in which there is a distinction between money and merchandise, later sharpening the point that the deeper distinction is between loan and rental and not only between money and merchandise. With money, “a loan is given for spending,” and therefore in practice renting money for economic use has no meaning, because its use is to spend it; whereas with merchandise one can distinguish between borrowing or renting, where the same object returns intact, and a loan, where another object of the same type is returned.
Fixed interest, the dust of interest, and “recoverable through the court” as a rule in Yoreh De’ah
Torah-level interest is fixed interest that is determined in advance at the time of the loan, whereas an added payment that was not fixed in advance is the dust of interest, rabbinically prohibited. “Neshekh” and “tarbit” are described as two prohibitions applying to the same act, and Rashi explains that neshekh is a bite taken from the borrower, while tarbit is an increase in the lender’s money. The rule that fixed interest is recoverable through the court is interpreted as judicial coercion to enforce commandments and not as a civil claim in Hoshen Mishpat, because the borrower’s undertaking to pay 110 is valid on the contractual level, but the Torah prohibits the lender from keeping the interest, and the religious court compels him to return it. A story is brought in the name of Rabbi Yechezkel Abramsky in which it was determined that the person requesting restitution is not a litigant but a witness, and therefore there is no obligation to write for him “from what grounds you judged me.” A moral position is also described according to which the borrower who acts in order to game the system by agreeing to interest and then suing for its return is morally more problematic, even though both have committed a halakhic offense.
A se’ah-for-se’ah loan: price fluctuation, two conceptions of the prohibition, and two qualifications
In a se’ah-for-se’ah loan of produce, a price change may create a situation in which the same quantity is returned but with a higher value, and this is rabbinically prohibited even because of future concern over price changes. The accepted explanation ties this to the fact that there is no certain fixed amount and therefore it is not fixed interest, but the text presents the possibility of seeing it as “doubtful fixing,” similar to the discussion of a “doubtful inevitable consequence” brought from the laws of the Sabbath. An alternative conception is proposed according to which there is no interest here at all, because the borrower returns exactly what he received in kind and quantity, and therefore the prohibition is a decree because it looks like interest and not the dust of interest. The two qualifications—when the borrower has some of that produce at the time of the loan, and when “the market rate has gone out,” meaning it has been established—are presented as hints that the prohibition is due to appearance and not because it is a loan of monetary value with interest, because the leniencies work by removing the appearance and not by permitting the dust of interest.
Preparation for the continuation of the passage: Rabbi Hiyya and gold as coinage
The text marks a transition to the section in the Talmud on page 44b that begins, “And Rabbi Hiyya too held that gold was coinage,” and presents background on Rabbi Hiyya as a contemporary of Rabbi, editor of the baraitot, and Rav’s uncle. It notes that the Talmud seeks to prove from a case of a loan that Rabbi Hiyya holds that gold is coinage, that is, like Rabbi’s view in his youth, and it asks to learn the continuation in light of the introductions given on interest and on a se’ah-for-se’ah loan.
Full Transcript
[Rabbi Michael Abraham] Okay, we’re continuing. And really, I was talking about the first three lectures, I gave some kind of introduction about money,
[Speaker B] monetary value,
[Rabbi Michael Abraham] and about acquisition by money versus barter exchange. I tried to describe a bit the framework within which the first part of the chapter is being conducted, which is basically the economic framework—how to understand the foundations of our economic world. After that I moved on to discuss transactions in which I sell something through acquisition by money and ask for a concrete payment. Meaning, not the value of one hundred shekels, but chairs or specific coins. And I tried to apply to that example the things we saw in the introductions about what money is, what monetary value is, what debt is as opposed to a loan as opposed to purchase price. And we saw that, in fact, it applies there in different ways. We saw that if I’m talking about debt, then simply speaking debt deals with value. Meaning, basically, I owe you the value of one hundred shekels; that doesn’t refer to any concrete note. And if it’s debt in the framework of a loan, then it’s not even a non-concrete note, but rather some future obligation or commandment to give you one hundred shekels. By contrast, with purchase price, according to Maimonides at least, when I say I owe you one hundred shekels, the meaning is: you have one hundred shekels with me. But those aren’t one hundred concrete shekels; they’re an abstract one hundred shekels that you can use to betroth a woman, you can use them to acquire things, because once we made the abstraction that value too is a certain kind of merchandise, there can be ownership over value. So that means I can be the owner of value that’s located with you, and I can use that to buy things and all sorts of things of that kind. We saw that one can obligate something concrete, or by Maimonides’ route, where purchase price really means that there is something with you that is mine. If that’s so, it’s easier to understand why I want specifically, why I want payment by means of a lamb, and not
[Speaker C] just the value of one hundred
[Rabbi Michael Abraham] shekels, something equivalent, but rather I want the payment in the form of a lamb. The meaning is really: you have a lamb of mine. Once I understand that this is ownership over something abstract that is with you, it’s easier for me to explain how there can be ownership specifically over a lamb and not over value in general. If I’m talking here about debt in some abstract sense, then it’s harder to understand how you can owe me a lamb. You can owe me the value of one hundred shekels—you need to give me one hundred shekels in two weeks. But how can I compel you to give it to me specifically in the form of a lamb and not in some other form? So I said that maybe we’re dealing here with a stipulation. Meaning, I lend you the money, a debt of one hundred shekels is created that you owe me. I said that this debt, if it’s not purchase price but rather a loan, then this debt basically means an obligation that the Torah imposes—repayment of a debt is a commandment—your obligation to give me one hundred shekels in two weeks. If that’s the case, then seemingly the lamb that I want is only one way of bringing me those one hundred shekels; you can give me those one hundred shekels in any form whatsoever, either a one-hundred-shekel note or something else that has monetary value equal to one hundred shekels. So how, according to Rashi, can one explain that you owe me specifically a lamb? You have to say: it’s a stipulation. I’m giving you the loan on condition that the repayment which the Torah obligates you to make in two weeks will be done specifically by means of a lamb and not by something else. Okay, so that’s if I understand purchase price the way Maimonides understands a loan, then I basically understand that in purchase price too you owe me a certain value. Okay, not that that value belongs to me, but that you owe me that value; you’ll pay it to me in the future. So here the only way to explain why you have to give me specifically a lamb is to say that there was a stipulation here. Yes, I’m selling you this, provided that the one hundred shekels you owe me, you’ll give them to me in the form of a lamb and not in some other form. So that’s a stipulation. According to Maimonides, you don’t need to get to stipulation; I say: you have a lamb with you that belongs to me. Okay, that’s what we saw in the previous lectures, the last two lectures. What I want to deal with today is the continuation of the Talmud on page 44b, where the Talmud basically continues to deal with the question of what happens when we make a transaction of gold dinars in exchange for silver coins, or silver dinars. So I’ll briefly remind you of the background to the matter. I said that the Talmud is talking about silver dinars versus gold
[Speaker D] coins, where one of them is merchandise and the other is value, right? That’s what we said in the Mishnah.
[Rabbi Michael Abraham] Yes, so look, I’ll share the screen here. Of a dinar—
[Speaker E] or a silver coin.
[Rabbi Michael Abraham] —market. And this starts when they mint the coin, but from that point onward it’s already market, so we’ll talk a bit about that today. So the Mishnah says—yes, so the Mishnah says: gold acquires silver, but silver does not acquire gold. Copper acquires silver, but silver does not acquire copper, and so on. We’ve seen the Mishnah. The Talmud says as follows: Rabbi taught Rabbi Shimon his son. Rabbi says to his son Rabbi Shimon: gold acquires silver. He said to him: Rabbi, in your youth you taught us that silver acquires gold, and now in your old age you go back and teach us that gold acquires silver? Yes, so his son Rabbi Shimon still remembered what Rabbi said in his youth. “His youth” probably means when he was younger. Yes, he says to him: in your youth you said that silver acquires gold, not that gold acquires silver. And here in the Mishnah—the Mishnah was edited by Rabbi—here in the Mishnah you say that gold acquires silver, not that silver acquires gold. So make up your mind. Did you change your mind? What happened here? So the Talmud says: What did he hold in his youth, and what did he hold in his old age? In his youth he held that gold, since it is important, is coinage; silver, since it is not important, is produce, and produce acquires coinage. Meaning, what did he think in his youth? That gold is the money and silver is the merchandise. Yes, from now on I’m not going to call it “money,” I’m going to call it coinage; here “silver” serves as a type of metal. Okay, so when I talk about gold, gold is considered the coinage, and silver is considered produce. Why? Because gold is more important. And what is more important is called the coin relative to what is less important. That’s what Rabbi held in his youth. But in the Mishnah it says the opposite. Why? Because the Mishnah follows his view in his old age. Yes, what happens in his old age? In his old age he held that silver, because it is sharper, is coinage; gold, because it is not sharp, is produce, and produce acquires coinage. Meaning, what did he think in his old age? In his old age he thought that gold is the merchandise and silver is the coinage. Why? But gold is more important, as he said in his youth. But in his old age he says: yes, but gold is less sharp.
[Speaker B] Sharp meaning more marketable, right?
[Rabbi Michael Abraham] More marketable, yes, exactly.
[Speaker B] Sharp—marketable.
[Rabbi Michael Abraham] Because gold is less marketable, therefore gold is basically—sorry, gold is less marketable. Silver is more marketable and therefore it is the coinage, and gold is less marketable and therefore it is the produce, the merchandise. Yes, so ostensibly Rabbi is hesitating here over the question: what is the criterion that determines what is called money and what is called merchandise, what is coinage and what is merchandise? In his youth he thought the criterion was importance. What is important is the money. Therefore, since gold is more important, gold is the coinage. In his old age he retracted and said: no, it’s not what is more important, but what is sharper—that’s the money. And what is sharper, what is more marketable, that is the money. Gold is something heavy, something expensive; what is more marketable, what everyone has, what circulates more in the marketplace, is the silver dinars. And therefore silver is the coinage and gold is the merchandise, and that is how he ruled in practice in the Mishnah as well. And the Mishnah follows his view in old age. Clear? On the face of it, it seems that the Talmud here is dealing with the criterion for why something is called money and something else is called merchandise. But I explained that this is not correct. The criterion for what is called money and what is called merchandise is not an objective criterion. The criterion for what is called money and what is called merchandise depends on the intention of the parties to the transaction. If the parties—yes, I said that in barter exchange both sides are merchandise; it’s merchandise for merchandise. Therefore money does not work for barter exchange. But in acquisition by money there is asymmetry. One side gives money and receives merchandise; the other side gives merchandise and receives money. And in order to define acquisition by money, one has to define which side is the money and which side is the merchandise. And that’s not always simple, because sometimes it’s merchandise for merchandise and still it won’t be barter exchange but acquisition by money, because one of the sides gives merchandise as monetary value, not as merchandise. And therefore it can be acquisition by money even though it’s an exchange of merchandise for merchandise. Okay? So what does determine it? So I said: what determines it is the intention of the parties. The object of the transaction is the merchandise. That for the sake of which the transaction was created is defined as the merchandise. The money is that thing I give as value, and therefore not specifically this item—I could have given something else instead of it, so long as it had the same value. So for example, if I want to buy a lamb from you and I pay you with a chair for the lamb, then what is the merchandise here? The lamb. The lamb—why? Because it is the purpose of the transaction. The transaction exists so that I receive a lamb from you. The chair I give you not because you wanted a chair, but because I need to give you one hundred shekels of value—take a chair, this chair is worth one hundred shekels. I could also have given you a coin, I could have given you a lectern, I could have given you anything else, so long as it was worth one hundred shekels. That thing in the transaction which is not specifically wanted, which I’m basically giving only for its value, is called the money. Even though there’s merchandise here—it’s a chair. So it’s not money in the sense that this object itself is an object called coins, okay? But its function in the transaction is the function of money. Because basically it is being given here only for its value; it is not essential.
[Speaker F] Why is that defined that way? I mean, according to what the public normally uses as merchandise? I mean, the public normally uses a shekel, say, but not chairs. So why not—why is the definition—
[Rabbi Michael Abraham] Usually it will overlap. Usually when I buy a chair from you and pay you, I’ll pay you in coins—that’s what people normally do, right? So therefore usually it really will coincide with the public’s regular definition. But what happens if I pay you with a chair for a lamb? That’s what I’m saying. It’s the subjective value
[Speaker F] of the parties.
[Rabbi Michael Abraham] And if you do this as a barter exchange acquisition, then fine, you’re exchanging a chair for a lamb. But if you define it as acquisition by money, then you have to define here which side is the money and which side is the merchandise. In such a case, what will you do? If you ask the public what is money—is the chair the money or is the lamb the money? Neither of them. The public doesn’t relate to either the lamb or the chair as money. So how are we going to define the transaction? And it has to be defined on the legal level, you have to define which side here is the money and which side here is the merchandise. Right? A chair is a means of payment. Exactly. So I look at the intentions of the parties. And if the purpose of the transaction is the lamb, then the lamb is the merchandise, and I’m giving the chair because it’s worth one hundred shekels. So I’m giving it for its value, and therefore the chair is the money. But that’s not because of the objective definition—someone looking around and seeing a chair doesn’t say, oh, that’s money. Of course not. In that very same transaction, if the purpose had been the chair and the lamb had been given for its value, then the situation would be reversed: the chair would be the merchandise and the lamb would be the money. That means that in a transaction of acquisition by money, the definition of what is merchandise and what is money is subjective. It is defined by the question of what the parties want. Okay, there is no objective definition. Okay. Now, in a place where we’re giving money for merchandise, then it’s quite clear that the money will be the coinage and the merchandise will be the produce. Right? That’s clear. The whole discussion arises in a place where there is no natural objective definition that tells me which is the merchandise and which is the money. For example, when I buy a lamb and pay with a chair. But there is another such case. What happens when I buy gold coins and pay with silver coins? Or the reverse? What happens there?
[Speaker D] The question is what the parties intend. Can’t hear? The question is what the parties intend.
[Rabbi Michael Abraham] Okay, but here the intention of the parties won’t help us. Unlike chair versus lamb, with silver dinars versus gold dinars the intention of the parties won’t help. Why? Because the intention of the parties here is to exchange—it’s like changing dollars into shekels.
[Speaker D] Right? And if you want to buy dollars, then your intention is to buy dollars.
[Rabbi Michael Abraham] Both sides want what they’re receiving. There’s no definition here that can follow the intention of the parties. Both sides are indeed money in the objective definition. Okay? And nevertheless, when we exchange one money for another, we have to establish some criterion that tells us what in this transaction will be the money and what in this transaction will be the merchandise. So what will the criterion be? Now you understand that here the criterion really has to be some artificial criterion. Because it’s not the objective definition, since from the objective standpoint both sides are money. Both gold dinars and silver dinars are really coinage, not merchandise. And when I’m making an exchange of coinage for coinage and I want it to be acquisition by money, then I’m looking for a criterion by which to determine what here is the money and what is the merchandise. So with merchandise for merchandise the same problem also exists, but there I said that what determines it is the intention of the parties, because there the intention of the parties will usually indeed tell me what is the merchandise and what is the money—what was the transaction for? But in the exchange of one currency for another, there the parties are: you need shekels, I need dollars, or you need silver dinars and I need gold dinars. We exchange. But barter exchange—money, after all… So what would have been the most natural thing? To define it as barter exchange. Then barter exchange is symmetric, right? Both sides want the same kind of thing; we exchange gold dinars for silver dinars. Except for one thing: money does not work in barter exchange. You can’t acquire money through barter exchange. So halakhah, and the legal or meta-legal conceptual framework, forces us to define an exchange of currency for currency as acquisition by money and not as barter exchange. But then we’re in a bind, because if it’s acquisition by money, how are we going to define which of the two sides is the coinage and which of the two sides is the produce? We have no way to define it. The intention of the parties won’t help. In objective definition both sides are money, both are coinage. So we have no way to define it. So we have no choice but to look for a technical criterion. So Rabbi in his youth said: okay, the technical criterion is importance. What is important will be the money. In gold versus silver, gold is the more important. Or in dollars versus shekels, for example—what would Rabbi have said in his youth?
[Speaker D] The dollar is the money.
[Rabbi Michael Abraham] The dollar is the money, right. And the shekels are the merchandise, because the dollar is the
[Speaker D] more important thing, right?
[Rabbi Michael Abraham] In Israel—
[Speaker D] it’s exactly the opposite, right?
[Rabbi Michael Abraham] What happens in Rabbi’s youth, in Rabbi’s old age?
[Speaker D] The shekels are the money and the dollar is the merchandise.
[Rabbi Michael Abraham] The sharper one—what is more common, what circulates in trade—that is basically the money. So with silver dinars versus gold dinars, what now will be the money?
[Speaker D] The silver will be the money and the merchandise will be the gold.
[Rabbi Michael Abraham] The gold will be the produce. Why? Because gold is less common, less in circulation.
[Speaker D] By the way, with shekels versus dollars?
[Rabbi Michael Abraham] In Israel it would apparently be the shekels, but in the world at large even in Rabbi’s old age—
[Speaker D] the dollar would be the money, because that’s what you pay with in dollars.
[Rabbi Michael Abraham] Meaning, regarding dollars versus shekels, Rabbi would not have changed his mind between youth and old age—maybe in this country, but in general, no. But with gold coins versus silver coins, yes. Okay? Now why is this whole analysis important? Because it really shows you that the discussion here in the Talmud is not dealing at all with the essential question of what defines money. That’s what we dealt with in the introductory lectures. The discussion here deals only with a pathological situation, a situation in which we have no natural and sensible way to define what is called coinage and what is called produce. So we look for a criterion—a technical, artificial one—that will help us define in such a transaction what is the produce and what is the coinage. Therefore we have no reason to look in this passage for the definitions of what money is and what merchandise is. The Talmud is not dealing with those definitions at all. Those are definitions we are supposed to bring from home, from our own economic or legal understanding. This passage is not dealing with the definition of money and merchandise, contrary to what it seems at first glance. It is dealing with situations in which there is no simple definition of what money is and what merchandise is.
[Speaker G] What is the advantage of defining merchandise first? Why specifically coinage and produce and not simply barter exchange? What’s the advantage?
[Rabbi Michael Abraham] I said that money cannot—it cannot be acquired through barter exchange. Because barter exchange is an exchange of
[Speaker D] merchandise for merchandise,
[Rabbi Michael Abraham] of substance for substance, and money is something that has no substance; it only has value. That’s the whole definition of money. Therefore you have to define it as—after the conceptualizations, we get into all these knots. That’s what I said: when we try to create legal, economic, and similar conceptual frameworks, those conceptualizations get us into knots. We get tangled up because of our conceptualizations, but there’s no choice, you have to preserve consistency. It’s always like that in a legal system: the moment you define the rules, the complications begin. Life is terribly simple before there are legal systems. Once there is a legal system, you start getting tangled up because the rules—you’re trapped inside the rules. But there’s no choice; you have to preserve consistency, because otherwise you break the rules. Once there are rules, you already have to keep them. Okay, that’s the price. Once I wrote a column on my website in which I proposed abolishing the legal system—there should be no law. Life would be much simpler and much more just that way. What do I mean? We would appoint three people, I don’t know, in every place, who seem to us upright and wise, and any dispute people have would come before them and they would decide according to what seems right to them. There would be no law. You understand that such a system would be much more just? Much more. Because in the legal system you always get into formal entanglements, and it’s not the person who is really right who wins the case, but the one with the more sophisticated lawyer, the one who knows how to ride the rules more cleverly—yes, the more sophisticated one wins, not the one who is right. And it’s all because of the rules that complicate our lives. Forget it—we don’t need rules and we don’t need any of this. But the whole purpose of the rules is to solve problems that arise at the margins, because by and large we usually know who is right and who is not right. At the margins there is always some problem, so we need to make definitions so that there won’t be a problem. And those margins take over the whole screen. Now, because of those marginal problems, all our problems become complicated, problems that really would never have arisen if there were no legal system. Everything would be simple. There’s a dispute between people—give it to three wise and moral people and they’ll tell you what to do, and that’s it. You don’t need a legal system and you don’t need anything. Everything would be much more just. But apparently it’s hard to work that way. Yes, it’s hard to work that way, if only because, for example, when you sign a contract there has to be some certainty. Both sides need to know what to expect. You can’t sign a contract and afterward not know what the judge will decide—the judge will decide whatever he decides. You want to know what to write in the contract because you have economic objectives in that contract. That’s what’s called legal certainty, and for certainty you need rules. Yes, and that’s the problem that arose when Aharon Barak, in his merry period, decided—yes, he adopted all kinds of more flexible doctrines regarding contract law. Good faith and all sorts of things like that. Meaning, not what the contract says—not what is written in the contract is what will determine things, but what ought to have been written in the contract, what it would be proper for the contract to say, what is just, what the parties intended—and then that destroyed legal certainty, and that was the main criticism against him. Today that has receded somewhat; it’s no longer what it was then, because of the problem that there was no legal certainty. In other words, it’s hard to work without laws. The same thing here. Once we established the laws, we’re stuck, because now—what would people once have done? They would do barter exchange, exchange gold for silver, and that would be that. You wouldn’t have needed to define which is coinage and which is produce and which is anything. Once we conceptualized it, we defined the concept of money, and then we also defined the concept of merchandise, and now we said there is barter exchange acquisition and there is also acquisition by money, and barter exchange acquisition is symmetric whereas acquisition by money is asymmetric, and in acquisition by money you have to define which is the merchandise and which is the money, because taking possession of the merchandise acquires the money, while taking possession of the money does not acquire the merchandise. You understand that we complicated our own lives? And now, when we want to exchange silver coins for gold coins, we have no way to do it, because barter exchange cannot work on coins, and in acquisition by money you need merchandise versus money, but here we have money versus money. So we have to define which is the merchandise and which is the money, and that is Rabbi’s problem in his youth and in his old age. What was the Talmud—what
[Speaker E] was customary in those days of commerce?
[Rabbi Michael Abraham] What does that mean? What kind of acquisition? There was barter, and there was acquisition by money, there was everything. Merchandise you can acquire both with money and by barter. Money you can’t acquire by barter, only through acquisition by money. Fine, what’s described here is apparently what they did, I assume. Okay, now let me move on to the next stage. In the Talmud. The next stage—the Talmud says: “And Rabbi Chiya as well held that gold was coinage.” They want to show that Rabbi Chiya—Rabbi Chiya was a contemporary of Rabbi, right? Rabbi Chiya sat on Rabbi’s court. He was the one who edited the baraitot, and he was Rav’s uncle. Rav was his brother’s son. That’s what it says in the Talmud in Sanhedrin, right? “My brother’s son went down to Babylonia.” Rabbi Chiya says to Rabbi, “My brother’s son went down to Babylonia. He may issue rulings, he may judge cases, but he may not permit firstborn animals.” Okay? Why is he authorized to judge in Babylonia? So Rav was his nephew. Fine? Now Rabbi Chiya had a daughter, and Rav wanted to borrow money from her, from Rabbi Chiya’s daughter, who was his cousin. Okay? Rabbi Chiya is Rav’s uncle, Rabbi Chiya’s daughter is Rav’s cousin. So Rav wanted to borrow dinars—gold dinars—from Rabbi Chiya’s daughter. Okay? And the Talmud wants to prove from the incident brought here that Rabbi Chiya holds that gold is coinage. Gold as against silver, yes? That it’s coinage. What does that mean? Like Rabbi in his youth, right? Not like Rabbi in his old age. That gold, because of its importance, importance is what determines it, not sharp circulation. That’s Rabbi’s youth, not his old age.
Now before I get into the proof the Talmud brings, we need a few introductions here. So I’ll give a few introductions about a se’ah-for-a-se’ah loan. We’re basically entering the topic of interest. In the topic of interest, when I lend you money—when I lend you money—I’m forbidden to take payment from you for your holding the money. I’m forbidden to demand that you return more money than what you received. That’s called interest. Okay? Interest is payment for waiting on money. What does that mean? When I give you one hundred shekels for a month and I demand that you return one hundred and ten, what does that mean? It means that for holding my one hundred shekels for a month, I charge ten shekels. Right? You have to return one hundred and ten. Those ten shekels are payment for the right to use my money for a month. If you got the ability to use my hundred shekels for a month, that costs ten shekels. And interest is defined in the Talmud as payment for waiting on money. “Waiting on money” means the money waits with you and you have to pay me for that—for the fact that I don’t have those hundred shekels for a month. You pay me ten shekels. That’s called payment for waiting on money.
Now it’s obvious that once interest is defined as payment for waiting on money, that means I’m basically renting out my money to you. Just as I rent you a car, give you the car, and after a month you return the car and also pay me a thousand shekels. The thousand shekels are payment for using my car for a month. Now here, with interest, this is basically renting money. I give you the money, you use my money, my hundred shekels, for a month, and you also pay me ten shekels—rental fees. Okay? That’s called payment for waiting on money. The Torah forbids taking interest. It’s permitted to rent out cars; it’s forbidden to rent out money.
Now that’s a very strange thing, because the car is also ultimately worth money. Right? When I rent you a car, why isn’t that interest? Why is renting a car not interest? I rented you a car. The car is worth, I don’t know, thirty thousand shekels. I rented you that car for a month, you return the car to me and pay me a thousand shekels. Basically you received a loan of thirty thousand shekels, and after a month you return it with another thousand shekels payment, which is basically payment for waiting on money on those thirty thousand shekels you got. So why is renting a car permitted and renting money forbidden? The car depreciated. The car depreciated. If you’re paying for the depreciation, that’s not the thousand shekels. If you’re paying for depreciation, that’s nothing. Rental fees are not payment for depreciation; rental fees are payment for use of the car. Otherwise rental companies would never make any profit. You pay them for depreciation, and in the end they’re left with the same value they had at the beginning—so what do they live on?
So it turns out that it’s forbidden to rent out money, but permitted to rent out merchandise—or in other words, the prohibition of interest contains within it a distinction between merchandise and money, or between produce and coinage. Right? In other words, we suddenly discover that there’s another halakhic context in which we encounter this distinction between money and merchandise. Merchandise may be rented out; money may not be rented out. Okay? Just like in acquisition by money, where there is merchandise and money—there too there is an asymmetry between merchandise and money, unlike barter. In a loan with interest, this asymmetry also appears. Merchandise may be lent with interest or rented out, and money may not. That’s point number one. So now we’ll enter the question of interest, and through that we’ll see, when gold stands opposite silver, which is the merchandise and what is the coinage. We can clarify through the laws of interest, in a transaction involving silver and gold, which one is the merchandise and which one is the coinage, which is the produce and which is the coinage. That’s why the Talmud moves to discuss the laws of interest even though it’s talking here about acquisition by money, because both in interest and in acquisition by money we distinguish between money and merchandise. So it’s a good way to try and check, when you have gold opposite silver, which one is the coinage and which one is the produce. Okay? In the laws of interest too we’ll try to check this. That’s the first introduction.
Second point: Torah-level interest is only fixed interest. What does fixed interest mean? Do you know? Something fixed at the time of the loan. When I lend you one hundred shekels and I stipulate with you in advance—when you receive the one hundred shekels—that in a month you must return one hundred and ten, that is fixed interest and it is forbidden by Torah law; that is the Torah prohibition of interest. But if I give you a loan of one hundred shekels and stipulate nothing, and after a month I say to you, return one hundred and ten, or you on your own initiative return one hundred and ten—that is the dust of interest, that is rabbinic interest, not fixed interest. It isn’t forbidden by Torah law, but it is forbidden rabbinically. If you borrowed one hundred, you have to return one hundred. You’re forbidden to return more, and I’m forbidden to accept more. By the way, the prohibition applies both to the borrower and to the lender; the prohibition of giving interest applies to both borrower and lender. Okay? So that’s the difference between fixed interest and…
Interest—is that neshekh? What? Yes, interest is neshekh. The Talmud at the beginning of “What is Neshekh” says that neshekh and tarbit are two kinds of… two prohibitions, but they’re really about the same thing. Every time you lend with interest, you violate both the prohibition of neshekh and the prohibition of tarbit. Rashi explains the difference: neshekh means I bite you—I take one hundred and ten from you instead of one hundred—and tarbit means I increase my wealth from you. These are two sides of the same coin. Taking another ten shekels from you is neshekh; increasing my property by another ten shekels is tarbit. But basically, whenever I take interest from you, I violate both neshekh and tarbit. Therefore, for example, the Talmud says that neshekh and tarbit are there “so that he violates two negative commandments.” But really it’s one prohibition, just with two negative commandments, so they define both neshekh and tarbit. Maimonides also writes in the Laws of Lender and Borrower that you violate neshekh and tarbit, but in his enumeration of the commandments you’ll find only one prohibition. He doesn’t count two negative commandments, because really it’s the same thing. It’s two names for the same thing. So that was the second introduction.
What about the case with one hundred shekels and the hundred… I give you ninety… from the outset I deduct from you… is that permitted? No, that’s interest, you deduct it from him. I give you one hundred shekels… give you ninety shekels and you return one hundred? Well, what difference does it make? If I give you the hundred… I can’t say that ninety of that is the loan.
So that was the second introduction: the prohibition of interest is a prohibition on renting out money, and there’s a difference between fixed interest and the dust of interest depending on whether you stipulate it in advance. Notice that when I rent you money there’s something a bit tricky here. After all, I asked why it’s forbidden to rent out money but permitted to rent out a car. When I rent you money, that means I gave you those hundred shekels, you use them for a month, and return to me not those hundred shekels, but those hundred shekels, right? Renting a car doesn’t mean you return a different car instead. If you return a different car instead, one car in place of another, that’s a car loan. Renting a car means I give you the car, you return that very same car to me and one hundred shekels for the fact that you used the car. Understand that if so, then there is no such thing as renting money. What does “renting money” mean? I give you these hundred shekels so you can use them for a month, and after a month return one hundred and ten. But the hundred… the hundred and ten that you return me are not these hundred plus ten. It’s one hundred and ten, not necessarily these same hundred. So by definition this is not rental, it’s a loan. With money, it is essentially a loan. With a car I can lend you a car, right? Lend you a car—return another car just like it. I can rent you the car—that means, like lending for use or rental, that I give you this car and you return the car that you received—not just the same kind of car, but this very car. Okay? Therefore there is an essential difference between renting money and renting a car. There really is no such thing as renting money.
What would happen if I gave you these hundred shekels and demanded these very hundred shekels back? And you returned another ten shekels in addition? That really would be rental, not a loan. Maybe it would even be permitted, but there’s no such thing, right? With money, what does using money mean? Hammering nails with it? Using money means buying with it, paying with it. Well then, the hundred-shekel bill I received won’t remain with me, because using it means spending it. “A loan is given to be spent.” Therefore there is a fundamental difference between a loan and a rental, and it’s not only that a loan is with money and rental is with merchandise, but because a loan is with money, another difference follows. It’s related, but it’s not the same thing. The difference is that it’s not really rental. Rather, you take these hundred shekels but return a different hundred shekels plus another ten shekels, so it’s not really rental. With merchandise, by contrast, you can do both kinds of transactions. I can give you the car for use for a month; return that very same car to me and a thousand shekels usage fee. What’s that? Rental. And if I give you the car to use for a month and say, in place of this car return that same Ford Escort and pay me a thousand shekels—not this same car, but a Ford Escort like the one I gave you—that’s a loan. Or it’s a loan of merchandise, not a loan of money, but it’s a loan.
It’s simpler when you give someone a kilo of flour. I didn’t understand? In his life he’ll never return that kilo of flour to you. Right. Correct—when you give a kilo of flour, a bag of flour, that’s a loan. Yes, it’s a loan, not borrowing for use. Say I go to my neighbor and borrow an egg from her, okay? That’s not borrowing an egg for use, right? Borrowing for use is like rental without money. It’s not borrowing the egg for use, because if it were, the egg would be held by me as a deposit and I’d have to return the very egg she gave me. Right? It’s a loan of an egg. Okay, that means that when we deal with merchandise, we have two possibilities before us. You can rent the merchandise or borrow it for use, and you can lend it. The difference is whether the merchandise returns in specie—whether it is the very item I gave that returns, or whether some other item returns. You can borrow for use and you can rent. With money you can only lend. Not borrow for use and not rent. With merchandise you can both lend and borrow for use and rent. With money you can only lend. Theoretically you can rent or lend money for use—give you these hundred shekels and you return these same hundred shekels to me—but then this is rental for use not of money, I’ve rented out a piece of paper here. Okay? Using money means spending it. So therefore you can’t borrow for use or rent money. So like what I said before—that you may rent merchandise but may not rent money—that’s not precise. Maybe renting money would be permitted. Lending money in exchange for usage fees, or payment for waiting on money—that is forbidden. The distinction is not between money and merchandise but between loan and rental. Rental is permitted; a loan with interest is forbidden. Okay?
Now I want to sharpen one more important point. But when someone rents a car, the one who got the car has to make sure it’s returned, let’s call it, in proper condition, not after an accident. And he also has to deal with the fuel. And any damage that occurs he has to pay for additionally. Right, okay, that’s a different discussion—the renter’s liability for damages. But if no damage happened and nothing happened, he’s supposed to return the car as he got it. Fine? That’s the basic transaction. Payments for damages are already side clauses in that contract. Fine, that’s his concern. However he uses it, let him refuel it however he likes, but he has to return me the car he received. Okay?
Now fixed interest, which is forbidden by Torah law—the rule is that it can be extracted by judges. What does “extracted by judges” mean? If I borrowed from you and paid you interest, afterward I can go to a religious court and the judges will extract the interest from you and return it to me. Fixed interest—that’s the rule. But the fact that fixed interest can be extracted by judges does not mean that this claim is a civil-law claim. This is connected to what I spoke about in the previous class. It’s not a claim in civil law; it belongs to Yoreh De’ah. A law in Yoreh De’ah, not in Choshen Mishpat. Obviously. Why? Before Heaven. Suppose I borrowed one hundred shekels from you and we stipulated in advance that I would return one hundred and ten—ten shekels payment for waiting on money. So once I committed to you, and it was with both our consent, then I owe you one hundred and ten; I committed. The Torah forbids you to take those ten shekels. But legally, I committed myself and this is a valid contract, and if I committed myself then I owe you the one hundred and ten. The Torah forbids you to take it, but that doesn’t mean I don’t owe it to you. On the legal level, I owe it to you. Okay? So what does it mean that fixed interest is extracted by judges? How can I suddenly sue you in religious court and they obligate you to give me back the one hundred and ten? When I come to court, I am a witness, not a litigant. I am a witness that you took interest. And when the court takes from you the extra ten shekels, it is not giving me something that belongs to me—it doesn’t belong to me. It is by virtue of coercion to fulfill commandments. You have an obligation to return the interest to me; there rests on you an obligation to return the interest to me. It doesn’t belong to me; I have no right to receive the interest, but you have an obligation to give the interest back to me because you may not hold it. And the court will compel you to fulfill your obligation. The court is not acting on my behalf to protect my rights. The court compels you so that you fulfill your obligations, just as a court would compel you to build a sukkah if you don’t build one. Not because you owe anyone that sukkah, but because a court compels a person to fulfill his obligations, his halakhic commitments. Okay?
Let me give you… Wait, sorry, can the religious court compel him to take the money from you and give it to charity, to some organization or something? In principle yes, in principle yes. Usually they give it to the one who paid it because there’s nothing better to do with it. But in principle they could even throw it into the sea, and this money does not belong to the borrower. Here, I’ll show you a story that illustrates this well.
There’s a story that Rabbi Yechezkel Abramsky tells in an article he wrote about monetary law. He was the chief judge of the London religious court, and under him were all kinds of local courts from different neighborhoods in London. One day, he tells it, a man comes before him and says: listen, I borrowed with interest from so-and-so, I paid him the interest. I sued him in religious court because it was fixed interest, and I wanted him to return the interest to me. Fixed interest can be extracted by judges. I sued him in religious court. The court said he doesn’t have to return it to me—it isn’t fixed interest—and I was outraged. I was sure it was Torah-level fixed interest, and he really should have returned it to me. So I told them: “Write for me from what basis you judged me.” Right, it says in the Talmud that a person who was judged, or against whom judgment was given, can request the reasoning. Why? Because he can show those reasons to a higher instance or to a famous halakhic decisor and appeal—say, look, these are the judges’ reasons, I disagree, those reasons are wrong. So he asked the judges: “Write for me from what basis you judged me.” And they said to him, we don’t want to write it for you, we won’t write for you from what basis we judged you. He said, listen, I don’t understand. First of all they hit me by saying it was non-fixed interest—it was fixed interest, I know, I know Jewish law. Second, I ask them for “Write for me from what basis you judged me,” and they won’t write it. What is going on with them?
Then he got a third slap in the face. Rabbi Yechezkel Abramsky told him they were right and they don’t have to write for you from what basis they judged you. Why? So he explained like this. He said: when you come to religious court and say, so-and-so lent to me with interest, took interest from me, and I am suing him—you cannot sue him. It doesn’t belong to you; this is not civil law. It doesn’t belong to you. You committed yourself to those extra ten shekels, you paid what you committed yourself to, excellent—according to the contract you owed it. The Torah forbids him to hold those ten shekels. The Torah—this is a criminal offense, not a civil offense, in legal language. Meaning this is not an offense against you that he took those ten shekels; it is an offense against the Holy One, blessed be He, against the Torah. What the court compels him to do in returning those ten shekels is by virtue of coercion to fulfill commandments, not because he owes you those ten shekels and the court is protecting your rights. It is coercion to fulfill commandments, just as they would compel him to build a sukkah, so they compel him to return the interest. Therefore it is the court’s decision whether there was fixed interest here and they will compel him, or whether this is not fixed interest and they will not compel him. But you were not harmed even if he didn’t return it—even if it was fixed interest and they didn’t return it to you, you are not the one who was harmed. You were supposed to pay the interest. You committed. Your rights were not violated. When you came to the religious court, you came as a witness, not as a judge. You are a witness that he lent to you with interest. You testified so that the court would see that he is an offender and compel him not to continue in his wrongdoing. But you do not come there as a plaintiff claiming money owed to him. You are not a plaintiff. Because interest does not belong to you.
That’s a nice demonstration of what it means that fixed interest can be extracted by judges, but interest belongs to Yoreh De’ah and not to Choshen Mishpat. It is extracted by judges because they compel you to fulfill the commandments. How can he commit himself to something against the Torah? Yes. What do you mean, how can he? He committed himself, but it is forbidden to carry it out. The commitment exists, but it is forbidden to realize it—and here’s the practical difference. The practical difference is that even if he sued and was rejected, they don’t have to write for him from what basis they judged him. Because they didn’t judge him; he wasn’t a litigant being judged, he was a witness.
Just think about the situation itself, and this is another lesson you can take from this story. Who here was not okay? The lender was not okay. Both of them were not okay. The lender. Both of them violated the prohibition of interest, but whom would you blame as being immoral? The borrower. The borrower specifically? Only the borrower. Why? Why on earth did you commit yourself? Pay up—what are you trying to get out of? After all, first of all, the prohibition of interest—this is Chaim Soloveitchik, in his book he goes on at length about this matter—the prohibition of interest, he went through all the commentators, and he says he did not find one commentator who says there is a moral problem here. What’s the difference between renting out money and renting out a car? Renting a car is permitted, so renting out money should also be permitted. There’s no moral problem in it. It is a halakhic-religious prohibition, a scriptural decree, whatever you want to call it, not a moral problem. The lender didn’t violate any moral norm here. On the contrary, the one who violated a moral norm here was the borrower. Why? Because the borrower knows that this lender will not lend him the money if he doesn’t pay interest. He doesn’t want to lend; it doesn’t suit him, he needs the money right now. If you pay me interest, then I’ve done business with the money, so okay, then I’m willing to lend to you. Now what did this trickster do? He says: okay, lend to me, I’ll pay you fixed interest. Lend me one hundred shekels and I’ll return one hundred and ten. Then he knows he’ll pay him the one hundred and ten, go to religious court, and the court will compel him to return the ten shekels. In other words, he got the loan from him through deceit. After all, he wouldn’t have given him the loan if he hadn’t committed himself to pay interest. So he says: I commit to paying you interest, while inwardly he lies in ambush, yes? He knows that afterward he’ll sue him and demand the interest back. So he’s a trickster. The one who was not okay here on the moral level was the borrower, not the lender. The lender was perfectly fine. It doesn’t suit him to lend right now—what do you want from him? He needs the money now in order to do business. You want me not to do business? I’ll lose from that. Pay me ten shekels for use of the money, otherwise I’m not willing to lend to you. If you weren’t willing to commit to interest, no problem, that’s your right, but I wouldn’t have lent to you. You obtained this loan from me by deceit. Because you said you would pay me ten shekels and planned to go to religious court so they’d extract those ten shekels from me after you paid. So you’re a trickster. It’s just an interesting shift in perspective. In other words, the one who was not okay here was the borrower, on the moral level. Yes—morally. Halakhically, both committed a transgression. But morally, the one who was not okay was the borrower. So rightly, he got three slaps in the face, in short.
For our purposes, what we learn from here is that fixed interest is a Torah prohibition, it can be extracted by judges, but it belongs to Yoreh De’ah, not Choshen Mishpat. Okay.
Good. Now what happens if I lend you merchandise, not money? Yes, I lend you a car, or I lend you an egg, or a se’ah of wheat, or whatever it may be. I lend you merchandise. On the face of it—and I’m speaking about a loan, notice, not rental. Yes, rental or borrowing for use is no problem at all. You may rent out anything you want. I can rent out a hammer, and there’s no problem with that. But to lend a hammer with interest is forbidden. Now notice, that’s very strange—it’s the same thing. What does “the same thing” mean? Renting you a hammer means I give you a hammer, and a week later you return the hammer to me and pay me ten shekels for using the hammer for a week, right? But if I lend you a hammer—the question is whether it’s the same hammer. That’s a loan with interest. Okay? It’s literally the same thing except that you didn’t return to me exactly that same hammer. But as we already said, on the moral level there really is no difference, and therefore indeed there is really no moral problem with a loan on interest. It’s not a moral question; it’s a halakhic question. Okay? So if I lend you a hammer and you have to return to me two hammers instead, then that will presumably be a Torah prohibition, fixed interest.
But what happens if I borrow a se’ah of produce from you? Now produce is like money. We talked about this; that’s why produce and money also do not effect barter. Because both produce and money are used up by their use. They do not return in specie, right? When I borrow produce from you, just as produce doesn’t effect barter, that means produce is basically similar to money, right? Because when I borrow produce from you, I’m basically borrowing the produce from you in order to eat it. It’s not borrowing produce for use; it’s a loan. When I return it to you, I return different produce to you, the same quantity but different produce. Okay? And with money too, we said, not returning the same item but the same value. Right, I said produce is exactly like money. That’s why neither one effects barter, because both are basically pure value. Why? Because in both cases, use consumes them. There is no separate use and ownership. The use consumes them. We talked about why produce and money do not effect barter. There is a similarity between produce and money.
Now what happens if I borrowed from you a se’ah of produce and return to you another se’ah of produce—not that produce, I return another se’ah of produce to you. Okay? In the meantime the produce became more expensive. Say a se’ah of produce was worth fifty shekels, and I borrowed it for a week, and in another week I have to return to you a se’ah of produce, but after a week it appreciated and is already worth sixty shekels instead of fifty. So ostensibly there is interest here, right? I borrowed something worth fifty and return to you something worth sixty, even though it’s exactly the same se’ah of produce—but it’s worth more. Why is that borrowing? I bought it—why is it… no, I borrowed it. What’s the difference between this and if the lender made a stipulation with the acquisition and I have to return produce to you? What do you mean? I bought produce from you? No, I borrowed it. Why? I have to return produce to you, not return money to you.
So the claim is that if I borrowed produce from you and return produce to you, if the produce appreciated then it’s forbidden because of interest. But this is a rabbinic prohibition, not a Torah prohibition. In a moment we’ll see why. More than that: the Sages say that if I borrowed produce from you—or alternatively, that it is forbidden altogether to borrow produce, no matter what happens later, whether it got cheaper or more expensive, anything could happen. It is forbidden—why? Lest it appreciate. Because price fluctuations are common with produce, and there is a substantial concern that the produce will appreciate or that the market price will change there, and therefore they forbade lending produce se’ah for… this is called se’ah for a se’ah. It is forbidden to lend a se’ah on condition that another se’ah be returned. Irrespective of whether it appreciated or not. If it appreciated, that is a rabbinic prohibition of interest. Quite apart from that, the very loan of se’ah for a se’ah was forbidden.
But how can you lend at all? Wait, so according to this ostensibly… but then there’s no way to make a produce loan, right? No, like money maybe and another… no, I can say: make a loan in fixed money terms—one hundred shekels, return one hundred shekels. That’s a money loan; it’s like a money loan. Take this produce as money-equivalent, lend me one hundred shekels in produce and I’ll return one hundred shekels. Like with inflation… no, here you’re already entering the issue that is our issue—what happens when money changes in value? But for now money is a fixed value, okay?
So ostensibly this is a decree upon a decree, right? Because basically they rabbinically forbade borrowing se’ah for a se’ah when it appreciated, and on top of that, another decree lest it appreciate, they forbade borrowing se’ah for a se’ah irrespective of whether it appreciated. But that’s not terrible. Simply speaking, it’s not a decree upon a decree, it’s one single decree. Why? Since appreciation is so common, price fluctuations happen all the time, you can’t separate them. In other words, once you say it is forbidden to borrow produce out of concern that the market rate will rise… it could also get cheaper. Doesn’t matter. It’s forbidden because it might appreciate. Not certain. It might stay the same, it might get cheaper, but because it might appreciate, it is forbidden to borrow se’ah for a se’ah. Okay?
Now the question is why a se’ah-for-a-se’ah loan is only a rabbinic prohibition and not a Torah prohibition, specifically in a case where it really did appreciate. What do you say? Any suggestions? Why isn’t this full-fledged interest? First of all, it’s not fixed interest. Second, it’s not certain interest. Okay. Not fixed interest, and not certain. No—non-fixed interest and not certain, that’s almost the same thing. Fixed interest is something where at the time of the loan I determine how much you’ll return to me—that’s the same as saying not uncertain interest. Okay.
So basically, right, the accepted and simpler explanation is that we’re talking about non-fixed interest. Why? Because you don’t know in advance whether the rate will go up, down, or stay the same. Fixed interest exists only when at the time of the loan we fixed how much you’ll add for me beyond the loan. But here it wasn’t fixed. Therefore it isn’t Torah-level interest. That is one possible explanation. In certain senses, maybe one could say that this is a doubtful fixing. If you’re determinists at least, then you can say that this thing is a doubtful fixing. You know, later authorities make a comparison, or distinction, between two situations in the laws of Sabbath. There is, for example—you know the difference between… there is a rule of “unintended.” Unintended on the Sabbath, or not on the Sabbath—in all of the Torah. An unintended act is permitted. What does “unintended” mean? Say someone drags a bench, and the dragging makes a furrow. Now making a furrow in the ground is forbidden on the Sabbath. But I didn’t drag the bench for the sake of the furrow; I’m not using the bench as a plow. I’m moving the bench from place to place, it’s just that a furrow is created. That’s called unintended. Unintended is permitted. Fine?
But what happens if we’re in a situation where it is inevitable that a furrow will be made, meaning a furrow will definitely be made, I know this in advance. Okay? In that case, even Rabbi Shimon agrees—and we rule in accordance with Rabbi Shimon that unintended is permitted—but in the case of an inevitable result Rabbi Shimon agrees that it is forbidden. Okay? That’s an inevitable result. So when is there no prohibition? When there is ground where it wasn’t certain in advance that a furrow would be made, right? In the end it was made, otherwise there’s no discussion. But all the same it is permitted—it was permitted even though a furrow was made, because it was not clear in advance that the furrow would be made. In a case where it is clear in advance that the furrow will be made, then it is forbidden. If it isn’t clear in advance, then even if a furrow is made, it’s permitted. If you’re a geologist you know exactly—sorry. If you happen to be a geologist, then you know exactly. That’s already another discussion.
If, say, we’re talking about—later authorities discuss what happens if I close some kind of box on the Sabbath. Now there might be a fly inside it. And if I close it when there’s a fly inside, then I have violated the prohibition of trapping on the Sabbath. But I don’t know whether there is a fly inside. What do you say? Is it permitted to close the box or forbidden? Maybe there’s a fly though? Permitted, permitted—it’s unintended, because I’m closing the box not in order to trap the fly. I’m closing the box because I want to close it so that flies won’t get in. Fine? So I’m not closing it in order to trap the fly; it’s unintended. But if there is a fly inside, then it’s an inevitable result. The fact that I don’t intend to trap the fly is fine, but if I close it, it is definitely trapped inside. Yes, but I don’t know whether there’s a fly inside. Basically it wasn’t certain in advance that I was doing an act of trapping. Even if afterward I discover that I closed a fly inside, that wasn’t clear in advance. So it’s not an inevitable result, and therefore it’s permitted; it’s unintended without an inevitable result. But Rabbi Akiva Eiger argues that this is not correct, that it is forbidden. Why? Because this is called a doubtful inevitable result, not that it’s not an inevitable result. For after all, the reality is either there is a fly inside or there isn’t—already now. I don’t know whether there is a fly inside or not. But the fact is, the Holy One, blessed be He, knows—either there is or there isn’t. If afterward it turns out there was a fly inside, then that fly was already there in advance when I closed it, right? So that means that it was an inevitable result. I just didn’t know whether it was an inevitable result or not. That’s a doubt about a Torah prohibition, and one must be stringent. It’s a doubtful inevitable result. What happens with the bench and the furrow in the ground? There, it’s not that with this ground it was clear a furrow would be made; in advance it was not clear. In the end it was made, but it’s not that in advance it was clear it would be made. Regarding the fly… in advance it was clear that you would trap it, only you didn’t know it, but the fly was inside, and someone who knew could have told you in advance that if you closed the box, the fly would be trapped inside. That’s not called something that is not an inevitable result; it’s a doubtful inevitable result.
Some try to make a similar claim here, when I now lend you a se’ah for a se’ah, yes? So I basically lend you a se’ah. Now you have to return to me a se’ah in a week, say. Maybe the price will rise, maybe not. But this isn’t non-fixed interest—it’s fixed interest on a condition. For example, what happens if I say to you: look, if it rains you’ll return one hundred and ten shekels, and if it doesn’t rain then you’ll return only one hundred. What about that—is that fixed interest or not? If it doesn’t rain you return only one hundred; if it rains, you return one hundred and ten. So there is no certain interest here. But it is similar to a doubtful inevitable result, because on the side where it rains, we fixed in advance that it would be one hundred and ten, it’s just that I don’t know whether it will rain or not. But one could say that this is doubtful fixed interest. It’s not the same thing as interest that is doubtfully fixed; rather, there is a doubt here about fixed interest. Do you understand the difference? There is a question whether this thing is really non-fixed, or whether there is room to say that maybe it is fixed after all.
The accepted explanation of the prohibition of a se’ah-for-a-se’ah loan is that the interest is non-fixed. That’s the accepted explanation. As I just said, it’s not so simple that such interest should be called non-fixed interest. Maybe it should at least be called doubtfully fixed, and a Torah doubt should be treated stringently. So I propose a different explanation. My explanation is: after all, I lend you a se’ah of produce—what do you return to me? A se’ah of produce. A se’ah of produce. So why is this interest? Why is this interest at all? The fact that the se’ah you return to me is worth more—so what? If the se’ah I lent you I had left in my house, then I too would now have a se’ah worth one hundred and ten and not one hundred, right? The price went up. Therefore even if you return to me a se’ah of produce, and when you return it it’s worth one hundred and ten, that isn’t interest. You received a se’ah of produce, you returned to me a se’ah of produce. What’s the problem? Why is this interest? You didn’t return to me more than what you received. Why are you looking at the value and not at the thing itself? You received a se’ah of produce, you returned a se’ah of produce. I don’t care that it’s worth more now. Therefore this is not interest. Ah, it’s worth more, so this is called looking like interest, and the Sages still forbade it. But really there is no interest here at all. You return exactly what you received, not a millimeter more. It’s just that what you received is worth more now, that’s all.
So therefore even if I say that such a thing does count as fixing in terms of the laws of fixing, or doubtful fixing as I said before, still it isn’t interest, because you are not returning to me more than what you received; you are returning to me exactly what you received. Okay? Wait—according to this theory, if I give you a loan indexed to the consumer price index, then there’s no problem at all. No interest, no dust of interest, nothing. No, why? If it’s indexed to the index, you return to me one hundred and ten shekels, not one hundred. But that means you return to me one hundred shekels in the purchasing power that there was. I’m not interested in purchasing power; you return to me more shekels than what you received. The same thing if I give it to you like they do—an interest-free loan fund gives one hundred dollars and you return one hundred dollars? Yes, because you received dollars and you return dollars. That’s similar to se’ah for a se’ah. But interest according to indexed value is not se’ah for a se’ah, even though it rises in value. If you now go to the bank and pay 4.10 shekels, that doesn’t matter according to your method that you’ve raised. That’s interest. No, you said it wasn’t. I took one hundred dollars, an interest-free loan fund lent me one hundred dollars, and now I have to return one hundred dollars. Okay, after all we live in shekels, so now when I go to return the one hundred dollars, that’s not the same hundred. I’ll pay—then it was four shekels… if you treat dollars as merchandise, then that’s like a se’ah-for-a-se’ah loan, and that is a rabbinic prohibition. Yes. And the question whether dollars are merchandise is exactly the issue we’ll deal with in the passage here. So the same thing—sorry—the same thing was also true of the shekel. I gave you a shekel and you return a shekel. If the index rose… you gave a shekel… well, for example if I know the rate will rise, I have insider information, fine? I know the rate will rise in a week, and I lend now se’ah for a se’ah. According to the first explanation, that’s fixed Torah-level interest. Because I’m effectively lending you something now that I know I’ll receive back as one hundred and ten. The only reason this wasn’t Torah-level interest was because we said it wasn’t fixed, since I don’t know whether it will rise or not. But if I know in advance that it will rise, then it is fixed interest. We fixed in advance that you’ll return value of one hundred and ten. But according to the second explanation, that you received a se’ah of produce and return me a se’ah of produce—why should I care that I know in advance the value will rise? Bottom line, you return what you received, so it’s not interest. According to the second explanation, it makes no difference at all whether I know in advance the rate will rise. Fine?
In a certain sense, one can say that the second explanation is basically saying that there is no payment for waiting on money here. What are you really telling me? I lend you a se’ah—I lend you a se’ah of produce and you return me a se’ah of produce worth one hundred and ten, okay? Those extra ten are not payment for waiting on money. You are not returning those extra ten shekels to me as payment for a month’s use of my produce. You return it because the market price rose. If the market price hadn’t risen, then the same thing would be… the same thing would also be true of the indexed shekel you gave—it’s no, you gave me a shekel and it depreciates; that’s exactly like the merchandise, exactly the same thing. What is money? That too is merchandise. No, no, I didn’t understand what—you don’t return to me that very same shekel, right? I gave you a shekel with a value of… and today the index rose, so it’s no longer worth one shekel, it’s worth one hundred and one shekels, but it’s the same one—it’s exactly the same thing as with produce, again. Right, exactly the same thing as with produce, so what’s the question now? No, because now you’re saying that money and produce are not the same thing. My whole claim is that they are the same thing. Money and produce are the same thing. And therefore if the produce is worth more, I don’t care, because if you return the same quantity of produce that you got, there is no interest here. With money too: I lend you a shekel and you return me a shekel when the index changed—you return me a shekel, that isn’t interest. You received a shekel, you returned a shekel. And that’s the claim—exactly that claim. So really the borrower gained and the lender lost, in short. Yes, doesn’t matter. In terms of purchasing power, yes, but that’s exactly the claim: according to this explanation it isn’t interest. It isn’t interest because you returned what you received, not more. Its purchasing power changed, okay.
Now look—what basically lies behind these two explanations? What lies behind these two explanations is really two conceptions of the question: what did I lend here? What does it mean to lend a se’ah for a se’ah? One possibility is to say: I basically lent you money. I gave you a se’ah of produce worth fifty shekels. Basically I gave you money-equivalent and lent you money; I just transferred it to you as money-equivalent, not in coins, doesn’t matter. But I treat that se’ah as money-equivalent. So I lent you fifty shekels and you return sixty shekels to me. Therefore it is interest. Except that it is not fixed, because it was not clear in advance that the market rate would rise, and therefore it is only rabbinic interest. Fine? But in principle there is full-fledged interest here. It’s just non-fixed, and therefore it is rabbinic interest. But all that is only if I really understand a se’ah-for-a-se’ah loan as lending you the value of the produce, not the produce. Okay?
So you’ll ask: then why do you have to return produce to me? Return value to me. I lent you fifty shekels; return fifty shekels. Why are you returning produce? After all, this is se’ah for a se’ah. I lend you a se’ah on condition that you return a se’ah. If this is a money loan, return it however you want. You see that this ties in exactly with the previous class. There was a condition on the loan. Right, it’s the condition of the loan. Exactly. There is a condition, and we saw in Rashi’s approach in the previous class, there is a condition. I lend you produce worth fifty shekels, which is really a loan of fifty shekels. I just stipulate that you return it to me in the form of produce. But if you return it to me in the form of produce, you have to return the produce according to its updated value at the time of repayment. Don’t return to me a se’ah of produce if it’s worth more, because that would be interest. You borrowed fifty and return sixty. You need to return to me three-quarters of a se’ah, or I don’t know, ninety percent of a se’ah. Because you have to make sure that it has the same value. Because otherwise it is interest. I lent you value of fifty shekels and you return value of sixty shekels.
So if I relate to the value, then there is interest here. Why is this not forbidden by Torah law? Because the interest is not fixed. I don’t know in advance whether the rate will rise. Maybe yes, maybe no. Since the interest is not fixed, it is not Torah law, but in principle this is really a loan with interest in every respect. It’s just a loan where I sort of stipulated with you that you repay the loan specifically in a se’ah of produce, specifically in produce. Fine? That’s exactly like a loan with repayment in a lamb. The price of the lamb can also change. It’s just that in the previous class we talked about buying a chair and I want payment in a lamb, whereas here I’m talking about a loan where I want repayment in a se’ah of wheat. But it’s the same thing. The claim is basically—and therefore the previous class is now translated from the world of sale into the world of loans. Then the first conception says that when I lend you a se’ah for a se’ah, I basically lent you money. I gave it to you in the form of a se’ah of produce, but really I lent you fifty shekels, and I stipulated a condition that you return those fifty shekels to me in produce. The Talmud says: fine and good, but then the produce you return has to be according to its updated value at the time of repayment. Don’t return me a se’ah of produce if it’s worth more, because that would be interest. You borrowed fifty and return sixty. You need to return me five-sixths of a se’ah. Five-sixths of a se’ah will give me the fifty shekels you borrowed, and then everything is fine, right? A se’ah-for-a-se’ah loan is forbidden because I demand that you return to me not produce worth fifty shekels, but a se’ah of produce, and that se’ah of produce is then worth sixty. Therefore in principle, according to this conception, there is really a loan with interest here. It’s just that it is not fixed, because we didn’t set it in advance, we don’t know in advance that there will be appreciation. Therefore it’s only a rabbinic prohibition, but it is absolutely interest; you don’t need explanations of why this is interest, it’s just non-fixed interest.
According to the second explanation, in the second conception I lend you produce. I do not lend you value of fifty shekels. I lent produce; I got produce back—the same quantity of produce, a se’ah. Why should I care that it’s worth more? I’m not looking at the value; I didn’t lend you the value, I lent you the produce. I lent you produce worth fifty shekels, you returned produce worth sixty shekels—so what? But you received a se’ah of produce and returned to me a se’ah of produce. There is no interest here at all. The problem here is not that this interest is non-fixed; there is no interest here at all. You return to me what you received. Why did the Rabbis forbid it? It’s a special decree. A special rabbinic decree that even this they prohibited. Fine? In the first conception there is no special decree; this is rabbinic interest, interest that is non-fixed. In this conception there is no interest here at all, not Torah-level and not rabbinic. They forbade it because in some way it resembles interest. Some distinguish among rabbinic prohibitions of interest between the dust of interest and something that looks like interest. Ordinary rabbinic interest is the dust of interest. There is also something that merely looks like interest—something that has no interest in it at all, it only looks like interest, and they forbade that too. According to this definition, what? A benefit? I don’t know, something where there isn’t really interest, you’re not giving me something extra that has monetary value, it just looks that way. Fine? Therefore the claim I’m making is that the difference between these two explanations lies in the question whether the rabbinic prohibition on a se’ah-for-a-se’ah loan is a prohibition of the dust of interest or a prohibition of something that looks like interest. Okay? That is basically the claim.
Now, continuing the introduction. There are two qualifications that the Sages added to this prohibition of a se’ah-for-a-se’ah loan. It is rabbinically forbidden. There are two qualifications. If that borrower has some of that species in his field—from that kind of produce—at the time he borrows. Say I come to borrow a kilo of oranges from you, and I have oranges at home, and I want a kilo of oranges, and you lend me se’ah for a se’ah, meaning: take a kilo of oranges, return me a kilo of oranges in a week. In principle this is forbidden, but if I have oranges with me at the time that I borrow oranges from you, this is permitted. This they did allow. Why? Because the claim is basically that if I borrowed a kilo of oranges from you and I have a kilo of oranges, then the kilo of oranges I have is basically immediately liened to you at the moment of the loan, and a week later when I return a kilo of oranges to you, I’m returning to you the kilo of oranges I already had. So I don’t care that the price went up, because the decisive price is the price at the moment of the loan; you already got those oranges back then. And meanwhile it appreciated, but it appreciated while already yours. Do you understand what I’m saying? Yes—and doesn’t this depend on quantities? If I have five oranges at home and I borrow fifty? A dispute of amoraim in the Talmud on 72a in “What Is Neshekh,” and in practice we rule that even if he has only part of the quantity at home, that too is fine, because it’s some kind of legal device. Fine? So that is the first qualification.
Now how would you understand this qualification? Does it fit better with the explanation of the dust of interest or of something that looks like interest? Something that looks like interest. Why? Because there is no dust of interest here. No, that’s the whole dispute—whether there is dust of interest here or not. I’m asking: according to the conception that says this is dust of interest, would it help that I have the oranges with me at the time I borrowed oranges from you? Why should that matter? Where have we found that with the dust of interest you can permit things by tricks? The dust of interest is taking interest. Taking interest is forbidden, so why is it relevant that you have oranges at home? Bottom line, you received fifty and returned to me sixty. This fits much better with the conception of something that looks like interest. Why? Because the truth is that there is no interest here at all. You received a kilo of oranges and returned a kilo of oranges. It’s just that there is some problem in that it looks like interest. For the sake of that appearance, I use devices, I solve the appearance problem. But according to the first explanation, then we should have permitted every case of the dust of interest, every case of non-fixed interest, with devices like these. We don’t find any such thing—that we permit the dust of interest with tricks. That’s the first qualification.
The second qualification: when the market rate has gone out. What does that mean? If there is a fixed and known value for the merchandise at the moment of the loan, then there is no problem. Why? Because once the market rate has gone out, I can borrow money, right? Take fifty shekels and go to the market and buy with those fifty shekels a se’ah of oranges. There is a quoted price. So basically it is considered as if I borrowed money from you. Then if I borrowed fifty shekels from you and returned to you a se’ah of oranges, then it’s basically as if I borrowed money from you, so there is no problem. What do you mean there is no problem? According to the conception of the dust of interest, this should also be problematic all the same. But according to the conception of the dust of interest, even if the market rate had not gone out, basically when I borrowed such a se’ah from you I borrowed from you its value in money. And basically what is here is the dust of interest. So why should I care whether the market rate has gone out? So what if the market rate has gone out? So I can borrow fifty shekels from you and not oranges, and go to the market to buy the oranges. Fine and good, but if I had borrowed fifty shekels from you, what would I return to you? Fifty shekels. When I borrow se’ah for a se’ah, I return to you oranges, and in a week the oranges will be worth sixty. So why should I care that now the market rate has gone out and now it’s worth fifty?
This qualification too can perhaps be understood according to the conception of something that looks like interest, but not according to the conception of the dust of interest. I think these two qualifications that we find hint that the prohibition of a se’ah-for-a-se’ah loan is basically of the kind of something that looks like interest, not the dust of interest. We do not see this—or in other words, we do not see this—as a loan of value, of money, merely paid in oranges. We see it as a loan of oranges, and all that was forbidden here is just a local rabbinic decree. There is no actual interest here, and not even dust of interest. There is nothing here. You received a kilo of oranges and returned a kilo of oranges. And these two qualifications, which we’ll also see in the Talmud, these two qualifications hint to us, I think, that the prohibition in a se’ah-for-a-se’ah loan stems from the conception that this merely looks like interest. I think that the prohibition in a se’ah-for-a-se’ah loan stems from the conception that I am lending oranges here. I am not lending fifty shekels of value and transferring it in oranges. I am lending you oranges. And therefore there is really no interest here at all. I borrowed fifty kilos of oranges and returned a kilo of oranges. That’s all. No interest happened here, neither by Torah law nor by rabbinic law. It’s only a rabbinic prohibition because it looks like interest, and if one of these two qualifications is met—the market rate has gone out, or I have oranges at home—then there’s no problem, so they didn’t forbid it. Because in such a case it doesn’t look like interest. It looks less like interest, therefore they did not forbid it.
Okay, we’ll stop here because now I need to start seeing the Talmudic passage. So whoever has time, there’s the Talmudic passage, “And Rabbi Chiya as well held that it was coinage,” what I began reading, on 44b—that section is worth going through. On what page is that? 44b. “And…” It’s a new section in the Talmud that begins, “And Rabbi Chiya as well held that it was coinage.” Fine? So go over that Talmudic passage in light of the introductions I gave here, and we’ll see it in the…