Thursday, September 1, 2016

Friends, Romans, Countrymen: Lend Me Your Money

Feel free to download and print the Parashat Re'eh sheet and share it with your friends and family.

Friends, Romans, Countrymen: Lend Me Your Money
If asked which mitzvah obligates us to help the poor, we would immediately respond, "The mitzvah of tzedakah." There's only one problem: no such mitzvah exists in the Torah. Nowhere in the Torah does it say that if a poor person asks us for money, we must give it to him. But wait, you say, that can't be right. In this week's parasha it says explicitly, "For you shall surely open you hand to him and you shall surely give him sufficient for his need, in that which he lacks" (15:8)! But that's not really what the verse says. The Hebrew word (mis-)translated here as "give" is ta'avitenu. The root of the word is avot, collateral, and it doesn't mean to give money but to lend it.
It is true that by bracketing the key word "lend," the Talmud uses our verse to refer to a mitzvah to give tzedakah: "It is a positive mitzvah to give tzedakah... as the verse says, 'You shall surely open your hand to him'" (Rambam, Laws of Gifts to the Poor, 7:1). But in the simple sense of this verse, there is not a mitzvah to give a gift of money, only to loan it. The context makes this clear. After commanding us to release debts during the shmitta year, the Torah turns to the loans that are the source of that debt. It tells us that we must lend money to a poor person and that we cannot refuse the loan because we know that it will be annulled when the shmitta year arrives. The Torah is clearly dealing with loans, not the giving of alms.
Why would the Torah focus on loans and ignore tzedakah? Isn't it better for a poor person to receive a straight-out gift? He could use the money to feed his family and pay the rent without having to worry about how he will repay it. And lending money is problematic for another reason: the lender has power over the borrower. When the Torah states that a creditor cannot exact payment from a borrower during the shmitta, the word it uses is "yigos." This comes from the same root as the word used to describe the Egyptian taskmasters in Shemot (5:10,14). The reason is obvious: exacting payment from someone is exerting power over that person. Thus we are told, "You shall lend unto many nations, but you shalt not borrow; and you shalt reign over many nations, but they shall not reign over you." The parallel to lending money to someone is reigning over them. Perhaps Mishlei said it best: "The borrower is servant to the lender" (22:7).

Why then the focus on lending? We can begin to answer our question by looking at the nature of lending in the Torah. First, no interest could be charged. This eliminated one of the biggest problems with borrowing: getting deeper and deeper into debt because of interest. This restriction makes no sense from an economic perspective. If I can charge rent when I lend out my car, why can't I charge rent when I lend out my money? While it may not make economic sense, it does make sense in terms of our moral obligations. In an agricultural society, people are not borrowing money to invest it; they are borrowing money because their crops failed and they can't feed their family or buy seed for the next year. Indeed, in our parasha the Torah assumes that the only people borrowing money are poor, and if there were no poor, then we would never have to lend money (15:4)! In that reality, charging interest would only drive desperate people deeper into debt. The Torah therefore tells us that one must give up the interest that could have been charged and the money that could have been made; this is our obligation to the poor among us. This type of lending is actually a form of tzedakah.

The other significant aspect of lending in the Torah is what we find in our parasha: the annulment of debts every seven years. In combination with no interest, this meant that a poor person could not lose money by taking a loan, and if he couldn't pay the money back, eventually the debt would be annulled. This would effectively convert the entire loan into a gift, that is, into tzedakah in the classical sense. But then why not just give a gift outright? There are two reasons, one moral and one financial.

The moral reason is that lending allows a person to keep his dignity. When a person is reduced to asking for alms, he is immediately seen-by himself and others-as someone living off the generosity of others, someone who can't pay his own way, a ward of society rather than a member. The Talmud recognized this and cautioned against it: "Better to treat your Sabbath like a weekday," that is, to go without any special food or special clothes for Shabbat, "than to be dependent on your fellow-beings" (Pesachim 113a). More to the point of prioritizing loans over alms-giving is the statement in Shabbat (63a): "R. Abba also said in the name of R. Simeon b. Lakish: He who lends [money] is greater than he who performs charity; and he who enters into a partnership is greater than all." Quoting Rashi, Beit Yosef (Yoreh Deah, 249) explains that loans are preferable to gifts because of the embarrassment that comes with accepting a gift. He then explains why entering into a partnership is ideal: "In such a case [of borrowing money], the borrower is embarrassed, for he benefits from his friend in a matter from which his friend does not benefit at all. But if one does business with him, in such a case he is not embarrassed at all, since both of them benefit."

There is real irony here. The benefit of lending money is that it preserves the borrower's dignity. But the Torah's mitzvot regarding lending make loans more like tzedakkah, and this means that even loans will entail some compromise of dignity for the borrower. This dynamic was recognized by the founders of the Hebrew Free Loan Society, which was established at the turn of the century to help the immigrant Jewish population. Some local chapters decided to charge nominal interest as a way of making the loan a business transaction rather than an act of charity. While their practice was not consistent with halakha, the same result can be achieved halakhically through a heter iska, a device that frames a loan as a partnership and thus allows for the collection of interest. A heter iska is normally understood to serve the interests of the lender; here we see that, by making something a business transaction, the interests of the borrower may be served as well. It is clear, then, that a person's dignity and full membership in society is an immediate concern of the mitzvah to loan money.

 The second reason to prefer loaning money is a financial one. There are multiple reasons why it makes good financial sense to emphasize loans over gifts. First, because of concerns over dignity, people will ask for a loan well before they will ask for straight out charity. A mitzvah to loan money will translate into help for people whose businesses are faltering by giving them the critical support they need before it is too late. Rashi (Vayikra 25:35) gives a colorful metaphor for this: "To what can this be compared? To a burden on a mule. While it is still on the mule, one person can hold on to it and allow the mule to stand, but once the mule has fallen, even five people will not be able to raise it up."

Even when giving to the truly poor, there is also a difference between the economic impact of lending money and giving it. Gifts of money address an immediate need but not deeper systemic problems. The gift does not incentivize the person in any way. However, if a person takes a loan, even if it could eventually be annulled, she feels a legal and moral responsibility to pay it back, and this incentivizes her to find ways to invest it and generate new income. This is indeed what happened with Hebrew Free Loan Societies: the majority of loans were borrowed for entrepreneurial purposes, and this led to tremendous economic growth for the entire community. And there is one final benefit: if the money is paid back, the same money can be lent out again and again.

We have all internalized the Jewish value of giving tzedakah. We now need to internalize the value of lending money. There are many excellent gemachs, or free loan societies, that a person can give to, and if there isn't one in the immediate area, a new one can always be started. More broadly, a search of the web will reveal many ways to be involved in micro-lending, the practice of making small loans at low interest to allow individuals to invest the money and fund new businesses (halakhic issues would of course need to be addressed). The opportunities are there. It is for us to "open our hands and lend what is needed."


Shabbat Shalom!