There are three references in the Bible to the lending of money,
and the taking of interest. Exodus and Leviticus state that if a Jew lends
money to a fellow Jew, he must not take interest. Deuteronomy forbids the
taking of interest from a fellow Jew, but permits taking it from
Scholars, such as Maimonides, insist that taking interest from a
Gentile is a positive commandment of the Torah. Maimonides believed that
the practice would minimize intermarriage. The reasoning is that if a Jew
lends money to a Gentile, at no interest, he encourages social contact.
Gentiles would eagerly befriend Jews, so that they might obtain interest-free
loans. As a consequence of the close friendship that would develop, Jews
might be influenced to adopt Gentile practices, which would in turn weaken
How did it happen that Jews ignored the Biblical commandments
and began to take interest from fellow Jews as well as Gentiles? In the
post Talmudic period the Church became a powerful political force in
Europe. Monarchs were guided by the will of the Church, and Church and
State joined hands in denying Jews the right to own land. Forbidden to own
land, for their livelihood, Jews turned to commerce, and industry, and
particularly to banking. They were practically forced into banking by the
Church when, in 1179, Pope Alexander III, issued a ban prohibiting all
Christians from lending money at interest.
The Church, which controlled government policy in most
countries, did not apply the ban to Jews, for Jews were not "believers."
In time, as Jews became more immersed in commerce, they travelled from
marketplace to marketplace, from country to country, buying and selling
merchandise. Since they had to pay cash when buying, Jews were forced to borrow
money. But since Christians were unwilling to lend money, Jews were forced to
turn to fellow Jews. Rabbinic authorities realized that it would become
impossible for Jews to make a living if they could not borrow money, so they
allowed Jews to charge fellow Jews interest. Although this is, in effect,
a violation of Biblical law, it was deemed justified on the grounds that the
livelihood of Jews was at stake.