The money belonging to orphans may be lent out with interest. What is the basis for this? How can interest be charged? Are the orphans not bound by Torah law? The answer is that the orphans are minors, and as long as they are minors, the Torah’s laws do not apply to them in the same way. Therefore, their money may be lent out with interest. They do not do this themselves; an administrator does it for them. Under the law, interest may be charged on behalf of the orphans in order to protect their funds.
But how is that possible? The Gemara asks: Can we give orphans something that is forbidden? Can we allow them to benefit from property or transactions that do not properly belong to them? The expression used is that one should not give them something prohibited, because perhaps they will die like those who made them orphans. In other words, how can we allow them to violate a prohibition merely because they are orphans? This is the way the word is understood in that discussion.
When you heard the statement that interest may be charged, what case was being discussed? The question was addressed to someone who had heard the ruling from Shmuel: “Tell me how you heard the case.” He answered that it concerned the orphans of Mar Ukva. They owned a large metal vessel—something like an urn or cauldron—in which hot water was made. Mar Shmuel was administering the vessel on their behalf.
He would weigh the vessel and rent it out to others. When they returned it, he would weigh it again. If the metal had depreciated through use, the renters would pay for the reduction in value. Thus, he collected both the rental fee and payment for any decrease in the vessel’s weight.
The Gemara returns to the matter and asks: If he was taking rent, he should not have been able to charge for the depreciation as well. Once the renter accepts responsibility for the depreciation of the vessel, the arrangement begins to resemble a loan. The renter is effectively accepting responsibility for the vessel’s full value, and when he pays for the depreciation in addition to the rental fee, that appears to be interest.
Rashi explains that this was precisely why the listener had inferred that the case involved a special leniency for orphans. Ordinarily, once the renter accepts responsibility for the depreciation of the vessel, he cannot also be charged rent. Since Mar Shmuel took both the rental payment and payment for the depreciation, it seemed that this must have been a case in which the Sages were lenient because the money belonged to orphans.
He was told, however, that this was not the explanation. The arrangement would have been permissible even with adults. There were two separate matters involved. If the vessel actually broke, or if part of the metal was lost, the renter had to pay for that loss. But merely using the vessel over a fire caused the metal to depreciate gradually, even when the vessel remained intact. That ordinary depreciation was not the renter’s responsibility. He returned the vessel as it was, while paying the agreed rental fee. If the vessel itself broke or some of its metal was lost, he paid for that separate loss.
It is similar to the case discussed previously concerning an animal. A person may accept responsibility for paying the animal’s value if it dies, without accepting responsibility for every ordinary decrease in its value. In such a case, the arrangement is not considered interest. Here as well, the renter was not accepting the vessel as his own property. He was renting someone else’s vessel, paying rent, and accepting responsibility only if the vessel broke or its metal was actually lost. The ordinary depreciation caused by use was not included in that responsibility.
Rashi explains that the renter was accepting responsibility for the deterioration of the copper itself. Even when there was a measurable decrease in weight, the remaining metal had also lost value because it had been exposed repeatedly to the fire. Thus, there were two elements: the actual loss of weight—for example, if the vessel weighed ten pounds originally and later weighed nine—and the reduction in value of the remaining metal caused by its use. The first could be charged to the renter, while the second was ordinary depreciation. Since the renter was not accepting responsibility for all depreciation, the arrangement was permissible even for adults.
The Gemara then asks whether there is another case in which the Sages were lenient for orphans. Rabbi bar Shila said in the name of Rav Chisda, and some say in the name of Rav Sheshet, that the money of orphans may be invested in a way that is close to profit and far from loss.
What does “close to profit” mean? The orphans receive a share of the profit, but they do not accept a share of the loss. They lend out their money and receive a return, while the other party accepts responsibility for any loss. In an ordinary arrangement, that would be a problem of interest. The recipient is obligated to return the principal regardless of what happens, while also giving the investor a profit. That is essentially a loan with an additional payment.
Nevertheless, the orphans may enter such an arrangement. The Sages were lenient because they were concerned that the orphans’ money would otherwise be consumed. If their funds were merely used for their immediate expenses, by the time they reached adulthood they might have nothing left. Therefore, in certain circumstances, the Sages allowed their money to be invested in a way that provided them with all the benefits while exposing them to no risk of loss.
Ordinarily, when the financing partner accepts no risk of loss, the entire amount is considered a loan. He receives his money back and also receives payment for the work that was done with it, which creates a problem of interest. In the case of orphans, however, they may invest their funds while accepting only the profits and no losses. Although such an arrangement would be prohibited for an adult, the prohibition is rabbinic because it is formally structured as a business transaction. The Sages were lenient for orphans so that their money would not be lost.
The Gemara teaches that one who establishes such an arrangement for himself, receiving all the profits while accepting no losses, is called wicked. He is taking all the money, requiring the other party to return the principal regardless of what happens, and also benefiting from the other party’s work. Even though the prohibition is rabbinic, he is still called wicked.
If, however, a person structures the arrangement so that he accepts more of the potential loss than of the potential profit, he is called pious. If the profit and loss are divided equally, that is the ordinary and fair arrangement—the standard practice of a business partnership. Thus, there are three possible arrangements: accepting no loss and all the profit is wicked; accepting more loss than profit is the conduct of a pious person; and accepting half the profit and half the loss is the ordinary standard for everyone.
The Gemara presents another approach. Rav Ada asked Rav Yosef what should be done with money belonging to orphans if one wants to generate a profit without violating the laws of interest. Rav Yosef answered that the money should first be placed under the administration of the court. The court would distribute the funds to the orphans as they needed them, giving them a small amount at a time for their expenses.
But that solution would eventually consume the principal, leaving the orphans with nothing. Therefore, Rav Yosef explained that one should find a wealthy and trustworthy person who owns pieces of gold—gold fragments or nuggets. The court may take those pieces of gold as collateral and give the wealthy person the orphans’ money as an investment partnership.
The arrangement would be that the wealthy person takes the orphans’ money and invests it. The orphans receive the profits, while the wealthy person accepts responsibility for the losses. Ordinarily, this would be a problem of interest, because the wealthy person is effectively receiving a loan and guaranteeing the return of the principal while giving the profits to the lender. For orphans, however, the Sages permitted this arrangement so that their money could be preserved and increased.
Rashi explains why the gold must belong to the wealthy person himself. The court must know that the gold is actually his and is not being held on consignment or belonging to someone else. The person must also be sufficiently wealthy that, if the orphans’ money is lost, the gold will be able to cover the debt. In addition, the fact that he owns pieces or fragments of gold demonstrates that he is capable of providing reliable collateral; people do not ordinarily give broken pieces of gold as collateral unless they actually own them.
The Gemara adds that if the person owns a complete golden vessel, the court should not take that vessel as collateral. Perhaps the vessel does not belong to him. He may have borrowed money from someone else, and the lender may have given him the golden vessel as security. If the court accepts that vessel and gives the orphans’ money to him, the true owner could later come and reclaim it. The orphans would then be left without security for their investment.
Therefore, the court may accept gold fragments or pieces, because people do not generally give such items as collateral unless they own them. It should not accept a complete and valuable object, such as a golden vessel, because that may belong to someone else. The point of the collateral is to protect the orphans’ interests.
All of this is appropriate if one can find a person who owns such collateral. But what should be done if no such person is available? The money of the orphans cannot simply be consumed by their expenses. One should find a wealthy, stable, trustworthy, and religious person—someone who follows the laws of the Torah and has never been excommunicated by the Rabbis—and give him the orphans’ money to invest.
In that arrangement, the wealthy person accepts all the losses, while the orphans receive all the profits. Why is this different from the earlier case? Rashi explains that the court must oversee the transaction. The court has the authority to administer the orphans’ property and to impose obligations for their benefit.
Without the court’s involvement, the arrangement would be interest: the recipient would have to return the principal regardless of what happened, while giving the profits to the orphans. The earlier ruling was that the Sages were lenient with the rabbinic prohibition of interest in the case of orphans. But according to this explanation, even that leniency is not sufficient. The matter is resolved through the principle that the court has the authority to take property and reassign it as necessary.
The court can therefore establish that whatever profit the person makes belongs to the orphans, and that whatever loss occurs is his responsibility to repay. Once the court imposes those terms, the transaction is not treated as an ordinary private loan. The court has taken control of the funds and structured the arrangement for the benefit of the orphans. According to this view, one should not permit the transaction for orphans merely because the ordinary prohibition is rabbinic; there must be a halachic mechanism such as the authority of the court.
This arrangement is also simpler in practice. It is not necessary to find someone with gold collateral. One must find a wealthy, honest, religious person, give him the orphans’ money, and have the court establish the terms. If he asks what happens if he loses the money, he is told that he must repay the orphans. If he asks what happens if he makes a profit, he must return that profit to the orphans. The court imposes both obligations, and this bypasses the problem of interest.
The Mishnah then discusses a similar arrangement involving an animal as well as an object made of metal. In a standard arrangement, the person who receives the property accepts complete responsibility. The property is assigned a value, and the parties divide the profits. For example, if the animal is valued at one thousand dollars, the person who receives it accepts responsibility for that amount and the parties establish how the profits will be divided.
Rashi asks why this matter is being taught at this point. By now, we should already know the issue from the laws of a business investment. In a standard investment arrangement, when the recipient is responsible for only half the principal, that half is considered a loan, which creates a problem of interest. Certainly, when the recipient is responsible for the entire amount, the entire arrangement should be considered a loan and should create an even greater problem of interest.
Rashi therefore explains that this is not the novelty of the Mishnah. The Jewish side of such an arrangement is prohibited whether the recipient accepts full responsibility or only partial responsibility. The novelty concerns accepting such an arrangement from a non-Jew. A Jew may accept an animal from a non-Jew under an arrangement in which the Jew accepts complete responsibility, even though the Jew will eventually return the principal together with a profit. Since the prohibition of interest does not apply in the same way to a non-Jew, this arrangement is permitted.
The Mishnah also says that one may borrow from non-Jews with interest and lend money to them with interest. The same applies to a resident convert. A resident convert is someone who accepts the seven commandments incumbent upon the descendants of Noah, but with respect to the laws of interest he is treated like a non-Jew. The restrictions governing interest between Jews do not apply to him in the same manner.
The Mishnah further states that a Jew may lend out money belonging to a non-Jew with the non-Jew’s knowledge. The literal meaning is that a Jew may lend the non-Jew’s money to someone else, provided that the non-Jew knows about it. The reverse case is not permitted. Rashi indicates that the precise meaning of this statement will be clarified by the Gemara, so the discussion moves on to establish the issue.
Consider an arrangement in which a Jew makes a full-responsibility partnership with another Jew. When the Jew gives the goods to the recipient, the recipient accepts responsibility for everything. Since he must return the full value regardless of what happens, the arrangement becomes a loan: the principal is guaranteed, and the recipient also pays a profit. In such a case, the goods are considered to belong to the person who received them, because a loan belongs to the borrower, who merely owes the lender its value.
The Gemara challenges this understanding from the law of an animal received from a non-Jew under a full-responsibility arrangement. If the Jew truly owns the animal because the transaction is a loan, then any firstborn offspring should be subject to the laws of a firstborn animal. A Jewish-owned animal whose firstborn offspring is born must be brought under the relevant law. Yet the Mishnah states that the offspring of an animal received from a non-Jew under such an arrangement is exempt from that law.
This is not limited to the first generation. Even if the first animal gives birth to an offspring, and that offspring later gives birth again, the later offspring is also exempt. This indicates that the non-Jew retains some ownership interest in the animal, even though the Jewish recipient accepted responsibility for its full value.
Abaye answers that the case is one in which the recipient accepted both complete responsibility if the animal were lost and responsibility for ordinary depreciation. These are described as responsibility for loss and responsibility for depreciation. If the recipient accepts both, the non-Jew retains an ownership interest, and the arrangement is not a pure loan.
Rava objects that if the giver accepts all responsibility, the arrangement should no longer be called a full-responsibility partnership. The defining feature of that arrangement is that the recipient protects the giver from loss. If the giver himself accepts responsibility for the losses and depreciation, the basic structure has been undone.
Rava adds that once the discussion introduces a case in which the non-Jew accepts responsibility, there is no need for the Mishnah to distinguish between a Jewish recipient and a non-Jewish recipient. It could simply have presented two cases: one in which the recipient accepts all responsibility, which would be prohibited for a Jew because it is treated as interest, and one in which the giver accepts all responsibility, which would be permitted. Why bring a case involving a non-Jew at all?
The Gemara therefore returns to the question of why the offspring of the animal is exempt. It must be discussing a case in which the Jewish recipient accepted responsibility, because otherwise the arrangement would not resemble a full-responsibility partnership. Why, then, is the offspring not treated as Jewish-owned?
The answer is that although the Jewish recipient is technically responsible for the animal’s value, the non-Jew still has the ability to reclaim the animal. If the Jew does not pay what he owes, the non-Jew can enter the Jew’s herd and take the animal. If the original animal is no longer there, he can take one of its offspring instead. He can even take a later generation of offspring, including an animal in which the Jew already has a partial ownership interest.
Thus, the non-Jew retains a practical claim to the animal. Even though the Jewish recipient accepted responsibility and the arrangement resembles a loan, the non-Jew can reclaim the animal or its offspring if the Jew fails to pay. That ability to seize the animal is sufficient to exempt it from the law of the firstborn. The non-Jew’s hand remains present in the property, even if that possibility never actually materializes.
The Gemara then teaches that a person who accumulates wealth through various forms of interest will ultimately lose that money to someone who distributes it to the poor. The money will be taken by a non-Jewish government and distributed to non-Jewish poor people.
The example given is Shvor Malka, the Persian king. Shvor Malka would repossess the money and give it to poor non-Jews. Rashi explains that he was a Persian king who would take money and property from the Jewish people and distribute it to the poor. The money would therefore not remain with the person who earned it through interest.
This applies even when a Jew charges interest to a non-Jew. Although the Torah permits lending to a non-Jew with interest, the money will not have blessing if it is acquired in that manner. The Torah says that interest may be taken from a non-Jew, but perhaps the verse should be understood differently: one may allow oneself to be charged interest by a non-Jew, but one should not take interest from him.
The verse excludes one’s fellow Jew. It teaches that interest may be charged to a non-Jew, but not to one’s Jewish brother. The Torah’s explicit prohibition applies to charging interest to a fellow Jew, while the positive wording permits the corresponding arrangement with a non-Jew.
The discussion further explains that charging interest to a Jew involves both a prohibition and the violation of a positive commandment. The positive commandment concerning the non-Jew implies that interest may be taken from him, while the exclusion of one’s Jewish brother means that interest may not be taken from a Jew. Therefore, charging interest to a Jew violates both the negative commandment prohibiting it and the positive commandment that excludes such a transaction.
This is why the teaching states that even money obtained by charging a non-Jew will ultimately be lost. Although the Torah permits the transaction, the money is not guaranteed to remain with the person who earned it. It may be taken by the government and distributed to non-Jewish poor people.
The Gemara challenges this from the Mishnah, which explicitly says that one may borrow from non-Jews with interest and lend to them with interest. If charging interest to a non-Jew is prohibited, how can the Mishnah permit it? The same question applies to a resident convert, who accepts the seven commandments but is treated like a non-Jew with regard to this matter.
Rabbi Chiya bar Rav Huna answers that the permission to charge a non-Jew interest applies only to the amount necessary for one’s livelihood. A Jew may charge a non-Jew enough interest to sustain himself, but not more than that. By contrast, one may not charge a fellow Jew even a single penny of interest, even if one is starving.
Rashi explains that charging more than what is necessary for one’s livelihood is prohibited by rabbinic decree. The Sages were concerned that if a person became accustomed to charging interest to non-Jews, he might eventually begin charging interest to Jews as well. Therefore, they permitted the practice only within a limited measure, enough to support oneself, but not beyond that.
That is the meaning of the teaching: interest may be taken from a non-Jew only within that restriction. If a person takes more than he needs for his livelihood, the money will not remain with him. It will ultimately be lost and distributed elsewhere.