Interest on Loans in the Old Testament, Part 3


By Klaus Issler; part three of a series. Reprinted from the Oikonomia Network.

This series wrestles with the question: Does the Old Testament teach that charging interest on a loan is sinful? Deuteronomy 23:19 states: “You shall not charge interest on loans [nāšak II, verb] to your brother, interest [nešek, noun] on money, interest [nešek] on food, interest [nešek] on anything that is lent for interest [nāšak II, verb].” But the first part of verse 20 states: “You may charge a foreigner [nokrî] interest [nāšak II, verb], but you may not charge your brother interest [nāšak II, verb].” (We are looking here at lending money to people who had some potential for paying it back; for those who could not repay, charity rather than loans is called for.)

As we saw in Part 2, the key question is: On what basis can we explain the distinction, drawn between verses 19 and 20, that an Israelite cannot charge interest to a “brother” but can charge interest on a loan to a “foreigner”? We saw that this contrast can be explained in three ways:

  • View A: Ethnic status distinction (Israelites v. foreigners as enemies) implying a total usury ban
  • View B: Ethnic status distinction (Israelites v. foreigners as strangers) implying a two-tiered ethic
  • View C: Economic status distinction (poor v. merchants) implying restrictions on interest for the poor

This article briefly reviews the first two views; the third will be reviewed in Part 4.

View A: Ethnic status distinction (Israelites v. foreigners as enemies) implying a total usury ban

The view with the longest history, dominant in the early and medieval church, regarded the OT as teaching that charging interest on any loan was morally evil. It took verse 19 as an absolute statement, combined with how the OT spoke about interest in later passages (e.g., Psalm 15:5; Proverbs 29:9). Yet this view is the most difficult to support biblically, in light of the immediate context. Deuteronomy 23:20 explicitly states that one can legitimately charge interest on a loan to a foreigner. Verse 20 often was basically ignored in the discussions, or was explained away superficially.

For those who did acknowledge the challenge of accounting for verse 20, the only explanation that could fit with a total usury ban view required understanding the term “foreigner” as implying an enemy – like those placed under the judicial ban by God during the conquest in Judges (e.g. Judges 6:17-21). Ambrose amplifies this interpretation:

Upon him who you rightly desire to harm, against whom weapons are lawfully carried, upon him usury is legally imposed….From him exact usury whom it would not be a crime to kill. He fights without a weapon who demands usury, without a sword he revenges himself upon an enemy, who is an interest collector from his foe. Therefore where there is the right of war, there also is the right of usury. (De Tobia 15.51, from a translation by Lois Zucker; “S. Ambrosii De Tobia: A Commentary, with an Introduction and Translation,” Patristic Studies 35:13).

Accordingly, as in just war theory, one could use means that would otherwise be immoral – here, charging interest – to subjugate one’s enemy justly.

Yet in this passage there is no clear indication that “foreigner” should be taken in this sense of “adversary” or “enemy,” or as one placed under the ban. Importantly, a prominent term for “enemy” occurs about 24 times in Deuteronomy, and is used earlier in that chapter in the context of war and battle (see Deuteronomy 23: 9 and 14). But “foreigner” is used in Deuteronomy generally to identify a non-Israelite. For example: “You may not put a foreigner over you [as king], who is not your brother” (Deuteronomy 17:15). Therefore, this first interpretation has weak biblical support.

View B: Ethnic status distinction (Israelites v. foreigners as strangers) implying a two-tiered ethic

This view takes the wording of Deuteronomy 23:19-20 at face value, in which the prohibition against usury on loans only applies on loans to fellow Israelites, to one’s “brother.” In contrast, an Israelite may legitimately charge interest on a loan to non-Israelite “foreigners” because they are outside the covenant community. Michael Guttman clarifies this point:

The foreigner could not very well be expected, in a year which the Israelites celebrated as a release year, to remit the debt of his Israelitish debtor. Nor could he be expected to loan money to his Israelitish customer without taking interest. If an equal basis for trading between Israelites and foreigners was to be established it could be attained only in this way; that the restrictions of the release year and the law of interest, which were not binding on the stranger a priori, were also void for the Israelite in so far as trade with foreigners was concerned. (“The Term ‘Foreigner’ (נכרי) Historically Considered,” Hebrew Union College Annual 2:7).

According to the view, the OT teaches Israelites to practice a two-tiered ethic on lending and interest. One standard of behavior is appropriate with fellow Israelites, who share the covenant and the law in common. With non-Israelites, the same standard could not be maintained. A less stringent standard was acceptable, as no commerce with outsiders would otherwise be possible.

However, consideration of the larger Pentateuch context raises an important question. How does this view fit with the two related Torah passages that specifically ban interest only on loans for the poor Israelite brother?

  • Leviticus 25:35-36: “[35] If your brother becomes poor and cannot maintain himself with you, you shall support him as though he were a stranger and a sojourner, and he shall live with you. [36] Take no interest [nešek] from him or profit, but fear your God, that your brother may live beside you.”
  • Exodus 22:25: “If you lend money to any of my people with you who is poor, you shall not be like a moneylender [nōŝe’, participle] to him, and you shall not exact interest [nešek, noun] from him.”

If these passages limit the prohibition on charging interest to loans to the poor only, on what basis does one explain that Deuteronomy 23:19-20 changes this prohibition, expanding it to all Israelites?

Sometimes attempting to draw an application may be a good check on an interpretation, and doing so here raises important issues. Perhaps the dual approach harmonizes with the national-political nature of the covenant community of Israel in Old Testament times. But how would one contextualize such a two-tiered ethic on this matter today, after Pentecost, when national-political boundaries no longer restrict the church? Would we regard “brothers” as all Christians, and “foreigners” as non-Christians? On what legitimate basis would we charge interest to non-Christians, and yet avoid that among Christians? Jesus’ teaching about the Golden Rule is to treat others as we would want to be treated (Matthew 7:12). Or if we are now free to charge interest of anyone without restriction, how do we account for the prohibition on interest within Israel? The challenge of drawing any clear implications for today raises a fundamental concern about the integrity of this interpretative option.

Due to these concerns and questions, I regard View C – the contrast in Deuteronomy 23:20 as an economic status distinction implying a contrast between the poor and the merchant – as a view that provides a better explanation of the biblical evidence. This interpretation will be developed in Part 4.

Note: This series is adapted from posts that originally ran on Biola’s Good Book Blog. For a more technical analysis, see the author’s academic journal article.

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