Usury and Moneylending in Judaism

Jewish law, rooted in biblical protections for the needy, forbids a Jewish creditor from profiting in any way from lending to another Jew.

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The Spirit of the Law and the Letter of the Law

The spirit of the law against usury would not seem to be violated when money is invested in business in our advanced economy, since the money is being used to increase profits and there is no reason why A should invest his money into B’s business as a sleeping partner unless he hopes to gain as B hopes to gain. Nevertheless, the letter of the law was held to be violated even where the loans were of a commercial nature. From the sixteenth century, a device, known as the hetter ‘iska (“dispensation for commerce”), was introduced, in which money invested in a commercial arrangement is treated as “half loan and half deposit.” Even though the principle [that is] presumably behind the original prohibition of usury, that of helping the needy, hardly applies to business investment, many observant Jews still arrange for the hetter ‘iska document to be drawn up when investing money in a business

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Rabbi Louis Jacobs

Rabbi Dr. Louis Jacobs (1920-2006) was a Masorti rabbi, the first leader of Masorti Judaism (also known as Conservative Judaism) in the United Kingdom, and a leading writer and thinker on Judaism.