Modern Tzedakah

A group of Jewish women from Seattle began Hebrew free loan societies.

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In 1909, a group of Seattle Jewish women formed a whist and sewing club with dues of 25 cents per month. When they had accumulated $64, they offered to purchase a gift for their local synagogue. Because the rabbi knew that the women raised the money by playing cards, he refused the gift. Undaunted, the women started the Hebrew Ladies’ Free Loan Society of Seattle. Their thoughtfulness helped some of Seattle’s first Jewish entrepreneurs get started in business.

Hebrew free loan societies and aktsiyes, credit cooperatives, helped fuel Jewish immigrant economic success during the first third of the twentieth century. Free loan societies charged no interest on their loans, while aktsiyes charged a small amount.

Before the 1930s, only a handful of banks loaned money to individuals or small businesses, especially those owned by immigrants. By one account, more than 85% of all Americans were excluded from access to commercial credit. More than any other immigrant group at the time, American Jews of Eastern European background worked in or owned small businesses–petty retail stores, small workshops, or peddlers’ pushcarts and wagons. Without access to the small loans provided by the free loan societies and aktsiyes, many of the businesses founded by and employing immigrant Jews would not have been created. Minnie Low, founder of the Chicago Women’s Loan Association in 1897 observed, “In the Chicago Ghetto, along the Jefferson Street market, as well as throughout the entire district, there are comparatively few of the peddlers, vendors and keepers of small stands and shops who have not been given a start in life or helped over rugged places by loans from local organizations.”

Historian Shelley Tenenbaum notes that Hebrew loan societies were “based on the biblical and Talmudic concept of providing the Jewish poor with interest-free loans.” Maimonides considered the interest-free loan among the higher forms of tzedakah because it respects the dignity of the borrower, provides him with a means of self-sufficiency, and does not saddle him with large debt. At their peak, more than 500 Jewish free loan societies operated throughout the United States. In 1920 alone, the New York Hebrew Free Loan Society distributed more than one million dollars in loans to Jewish-owned small businesses.

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Michael Feldberg, Ph.D. is executive director of the George Washington Institute for Religious Freedom. From 1991 to 2004, he served as executive director of the American Jewish Historical Society, the nation's oldest ethnic historical organization, and from 2004 to 2008 was its director of research.

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