The Biblical prohibition against charging interest seems to be out of place in a modern day economy. Interest rates are crucial to our economy. Too high and the economy is stifled, too low and inflation runs amok. Without the benefit of paying interest homeowners would be few and far between - what bank would offer a 0% mortgage - and business could not get the capital needed to create wealth for all. Simply put we would all be much poorer. So how could the Torah ban such an important financial tool? Furthermore the Torah’s laws of interest seem discriminatory as interest is only forbidden on loans between Jews. It is precisely because charging interest is not immoral – it can even be praiseworthy – that one may do so to a non-Jew. All moral wrongs, be they tax evasion, offering ill- suited advice, price fraud, or misleading advertising are prohibited irrespective of the victim’s religion. Due to the additional desecration of G-d’s name it may in fact be an even more grievous sin if perpetrated against a non-Jew. The charging of interest however is a ritual prohibition not a moral one and thus only applies between Jews, akin to the laws of kashrut. It is a prohibition not only between man but between man and G- d. Apparently the Torah expects, nay demands, that we bestow special favours to our brethren. We must give up small amounts of profit to help those in need by granting an interest free loan.
However favours have their limits. The Torah did not demand, thought the Rabbis did recommend, that we not charge interest to non-Jews. In the modern era loans are no longer for a few shekels but are often in the thousands if not millions of dollars. No one would, or even could lend that kind of money without an expectation of some return. Furthermore many loans today are not to help the struggling poor but to help relatively wealthy people prosper. Thus a legal mechanism was developed that allows many types of loans to be structured as a business venture allowing for payment of “profit” in place of “interest”. This legal loophole to be used only in times of true economic necessity allows us to be faithful to the Divine eternal laws of the Torah while being responsive to the realties of the modern day economy.
