The question of what the Old Testament has to say about lending money at interest has engaged the attention of Bible scholars for centuries. In a recent series of articles in this newsletter, I presented a case that the three passages in the Torah on lending money at interest (Exodus 22:25, Leviticus 25:35-36 and Deuteronomy 23:19-20) forbid charging interest on loans to the poor, but permit interest on loans to commercial ventures.
But economic justice hasn’t become any simpler since the canon closed. What does Moses have to say about modern finance?
That question has not received as much attention as it might. Globalization has dramatically increased our capacity for doing business across borders. These opportunities have produced an explosion of unprecedented economic growth – yet poverty remains very much with us. The continued reality of poverty in a world of rapidly increasing plenty raises serious questions that demand the attention of the church.
In this new three-part series, I will consider how the Old Testament could inform our thinking about the challenges of finance in the new global world. This first article identifies basic principles about lending and poverty that we can draw upon. In future articles I will look at loans for commercial purposes, and how we can help create alternative financial services for low-income workers, including the issue of payday loans.
Lending to the Poor Is a Key Component of Economic Justice
The first point may be a surprising one – the Old Testament teaches that lending money to the poor is one key component of economic justice. Lending stands in the Old Testament alongside charitable giving. Giving has received more attention lately, but lending is an equally important component of the Old Testament system.
Both lending and giving are necessary tools in our toolbox for helping the poor. Giving is the appropriate response for those in need who would not be able to repay a loan. Forms of charitable giving in the Old Testament include almsgiving, the gleaning laws (Leviticus 19:9-10, Deuteronomy 24:19-22, Ruth 2:1-23) and tithe contributions every three years to regional storehouses for local distribution of produce to the poor and needy (Deuteronomy 14:28-29 and 26:12-13).
Yet lending was regarded as another important form of compassionate generosity, addressing a pressing financial need for those who had the potential for repayment, i.e., the lower-income working poor, as opposed to the non-working poor. “You should rather open your hand, willingly lending enough to meet the need, whatever it may be” (Deuteronomy 15:8). “Good will come to those who are generous and lend freely, who conduct their affairs with justice” (Psalms 112:5).
Why not make an outright gift rather than arrange a loan? Because for those who are able to work, and thus have a reasonable prospect of repaying the loan, lending affirms their dignity and avoids the potential for dependency. Consider John Goldingay’s comment on Psalms 112:5:
[It affirms]…a willingness to lend. We might think it would express itself in a willingness to give, and the psalm will come to that [v. 9], but this colon makes another point. Lending and borrowing is a common feature of life. In Western society it mostly means people with resources increasing those resources by lending to people with none. In the Old Testament, lending is a means of the rich helping the poor, not helping themselves, and not making them the recipients of charity but giving them [the working poor] means of reestablishing themselves, after which they would pay back the loan (see, e.g., Exodus 22:25-27). Its ideology was closer to that of credit unions and building societies. Here, goodness includes being willing to use one’s surplus wealth for the benefit of others. When they pay it back, it becomes available to help yet others. (John Goldingay, Psalms, Baker, 2008, p. 311-312.)
Jesus maintains this distinction between two forms of economic justice in the Sermon on the Mount: “Give to the one who begs from you, and do not refuse the one who would borrow from you” (Matthew 5:42). In a comment on this verse, John Nolland captures the distinction well: “Loans would have as their goal getting people back on their feet; almsgiving assumed continuing dependency” (John Nolland, The Gospel of Matthew, Eerdmans, 2005, p. 260, n. 247).
Consider also that a charitable donation can be given once to benefit one person, whereas the gift of a loan can be given several times to benefit several people in sequence (unless a default occurs, which changes the loan into a donation).
Loans Involve the Potential for Abuse
Three passages explicitly forbid interest on subsistence loans to the poor:
- “If you lend money to any of my people with you who is poor, you shall not be like a moneylender to him, and you shall not exact interest.” (Exodus 22:25)
- “You may charge a foreigner [trader] interest, but you may not charge your [poor] brother interest, that the Lord may bless you in all that you undertake in the land that you are entering to take possession.” (Deuteronomy 23:20)
- “[He] who does not put out his money at interest and does not take a bribe against the innocent. He who does these things shall never be moved.” (Psalms 15:5)
Temptations for abuse come from a heart of greed, as Jesus notes: “Take care and be on your guard against all covetousness for one’s life does not consist in the abundance of possessions” (Luke 12:15).
Yet we must not throw out the proverbial baby with the bathwater. The abuse of lending does not negate the importance of lending as one form of generosity to the working poor and needy. How can we encourage lending while being on guard against abusive lending?
That is what this series will consider. Below is the first of several applications to consider; future articles will propose additional applications.
We Should Be Making Personal Loans to Address Needs
It’s easy to leap directly to the societal level and start talking about how we need to change this or that aspect of our economic system. Well, systems do matter, and we’ll be looking at them in future articles. But no system can save us if we’re not people whose own lives are characterized by virtue, justice and mercy.
The most direct implication from the Old Testament’s teaching is that we all have the opportunity and the responsibility to be making informal, personal loans without interest in our networks of family and friends. This is a category of generosity that has existed since ancient times and continues today. I have been both a recipient and a giver of such loans myself.
The Old Testament instructions specified that, in exchange for the interest-free loan, the borrower would give the lender a pledge, some item of personal property selected by the borrower (Exodus 22:26-27, Deuteronomy 24:6). The Old Testament affirmed the legitimacy of taking a pledge, but also encouraged lenders to forgo requiring pledges (Ezekiel 18:16). The pledge, also called a “pawn,” provided an aspect of mutual exchange for the loan, which could help maintain the dignity of the borrower and signify a promise of repayment. When the loan was paid off, the lender was expected to return the pledge (Ezekiel 18:7). If it could not be repaid, the pledge could be retained by the lender.
What kind of subsistence needs might apply? We could begin with the basic material needs of food, clothing, shelter and transportation to get to work. Medical costs might fit here also. Discernment is obviously required on a case-by-case basis, not only regarding what counts as a subsistence need but also when the threshold between a case that calls for loans and a case that calls for donations has been crossed.
But what if you don’t see financial needs you can address in your personal network? You either need sharper eyes or a bigger personal network. We don’t want to become nosy or patronizing, but it’s just as bad to be complacent. Even as I was writing this article, the Lord brought to my attention a genuine need of this type in my own network that I hadn’t seen before. Since the loan supported both personal and business aspects (early years of a new enterprise), I decided it warranted an interest-free arrangement.
Heed the words of Job: “I was a father to the needy, and I searched out the cause of him whom I did not know” (Job 29:16, emphasis added). That’s the kind of life God had in mind when he called Job “blameless and upright” (Job 1:8).