Free Loan Shabbat: Investing in Community

Rabbi Joel Fleekop

Friday, February 12, 2010

Interest is like a snake bite. Those are the words, not of a populist politician decrying the practice of predatory lending nor of an economist warning against the ever increasing federal debt — a debt whose ceiling congress raised this week to 14.3 billion dollars, but rather the 11th century French Rabbi Shlomo Yitzhaki, better known to us as Rashi.

Commenting on the world neshech, interest, Rashi writes, “the word is from the same root as the word that means “bite” for interest is like the bite of a snake, which makes a little wound on someone’s foot, which he doesn’t even feel, and suddenly the swelling goes up to the top of his head. Interest is the same — he does not feel it or even notice it until it mounts up and costs him a huge amount of money.

Similar teachings on the devastating effect of interest — especially interest on loans taken by individuals in desperate straits, are found throughout rabbinic literature. Like Rashi’s commentary, almost all of these teachings are a response to a verse found in this week’s Torah portion, or it’s near parallel in Deuteronomy. The verse in our reading, Parshat Mishpatim, asserts Im Kesef Talveh Et Ami Et Ha’Oni Imach Lo K’no-she Lo T’see-mun Alayv Neshech -- “if you lend money to my people, to the poor among you, do not act toward them as a creditor; exact no interest from them.”

As understood by Jewish tradition, the verse does not prohibit all loans for interest — as for example Islam does, but rather the lending of money at interest between two Jews — as implied by the phrase “ami — my people.” Though over the centuries a number of legal fictions have developed to skirt the ban on lending at interest between Jews, the text’s emphasis on making free credit available to the poor has remained an important Jewish value — most famously heralded in Maimonides’ eight levels of tzedakah. In his Mishneh Torah, Maimonides lists as the highest degree of tzedakah not a charitable gift, even an anonymous one, but rather an interest free loan made to an individual in need.

Over the centuries the important mitzvah of providing loans, of investing in Jews in need, became the work of Gemachs, known in English as Hebrew Free Loan societies. These institutions, initially established in Europe, arrived on American shores with Jewish immigrants from Central and Eastern Europe.

The first Free Loan Society in America was founded in New York City in 1892 when 11 members of the Vilna Synagogue in Manhattan pooled together $95 in capital. Their small loans, in amounts of $5 and $10 served an important need, giving largely immigrant families the capital they needed to get an apartment or start a small business.

Support for the free loan society quickly grew both amongst the more established Jews of the city as well as amongst the immigrant families who only a few years earlier received loans themselves. After just a decade, the society had, according to a 1903 New York Times article, more than $71,000 in capital which they used in 1902 to make nearly 12,000 loans. By 1912 that number had grown to more than $110,000 in capital and more than 19,000 loans made to Jews and non-Jews alike. Remarkably, annual reports, from the societies founding to today reveal a repayment rate above 97%.

Stories like the New York Hebrew Free Loan Society were repeated across the continent. Here in the Bay Area the Hebrew Free Loan Association of San Francisco was established in 1897. The nine founding members agreed to each put aside 25 cents a month into a special fund and make their first loan when they had $50 in capital. When that mark was reached a loan was made to Jacob Goldberg — who repaid his $10 loan over ten months — a dollar a month — and later became a Hebrew Fee Loan donor himself.

Like other Free Loan Societies, our local organization has played a critical role in helping wave after wave of Jewish immigrants establish themselves — from the great Eastern European immigration at the turn of the century to refugees following WWII, to the influx of Soviet Jewry who have found a home here in the Bay Area.

Since its founding the Hebrew Free Loan Association of San Francisco has helped more than 50,000 people, and currently has more than $4.2 million on loan. While the association makes emergency loans of a few hundred dollars, the primary purpose of our local loan association and others around the country is not to save Jews form beggary, but rather to help them achieve their goals and dreams.

Many of our family histories include stories of the $25 free loan an immigrant ancestor received to buy a push cart or open a small store. Today, that might be a $25,000 business loan. But increasingly our family histories also include stories of the interest free loans provided to help with adoption expenses, care for a special need child, the purchase of a first home, or, as is true of my own family, to cover college expenses. Thanks to our local free loan association, my younger brother, a student at UC Hastings, was able to get an interest free loan to help with law school tuition.

These loans, like the associations’ first, are all an investment in fellow Jews and in the building of our community. And Hebrew Loan Associations are continuing to find new ways to invest in the future. Just last month the Jewish Free Loan group in Los Angeles launched a “Green Loan Fund” to encourage people to go green by making their home or business more energy efficient and water wise.

As they have for more than a hundred years, the Hebrew Free Loan Associations play an important role in our communities, but they operate quietly, nearly invisibly. And so, we and congregations around the country are highlighting their contribution on this Shabbat Mishpatim, designated as Free Loan Shabbat.

But being aware is not enough. We can actively help these associations, both by offering our financial support and by spreading the word of their important mission. Unfortunately far too many of those who could be helped by a Free Loan Association simply don’t know that they exist.

We can also help by learning from their example. Beyond providing capital, Hebrew Free Loan Associations offer people in need and those who could use a bit of assistance in pursuing their goals the benefit of the doubt. They are willing to invest in others. We can do the same thing — not only with our financial resources but also with our time and energies.

The great sage Rashi teaches that interest is like a snake bite, swelling over time so that it can be a real threat. Exhibiting kindness, showing support, and demonstrating trust do the same thing — but with an opposite outcome. They might seem like a small thing at first, but over time they have a great and lasting effect: helping others and building our community.

This week’s Torah portion, Parshat Mishpatim includes the guidelines for creating an orderly and just society. Let us do our part in making that vision a reality.