Riba vs. Rate of Return 71
referred to in a deprecating manner, claiming that “hypocritical ascetics are
accused of practicing it.”
JUDAISM AND INTEREST
In Judaism, the Old Testament clearly disallowed dealing with interest as
implied by the Hebrew word “neshekh” (literally, “a bite”). Similar to riba,
neshekh referred to any gain, whether from the loan of money or goods or
property of any kind. While it was not defi ned explicitly, it was commonly
referred to as the practice of the exaction of interest from the debtor by
the creditor. In the books of Exodus (22:25) and Leviticus (25:36 and 37), the
term applies to lending to the poor and destitute, while in Deuteronomy
(23:19–20), the prohibition is extended to include all money lending,
excluding only business dealings with foreigners. In addition to the direct
mention of interest, there are several references to derivatives — or indirect
interest, known as avak ribbit, literally “the dust of interest” — which apply,
for example, to non - fi nancial transactions and include certain types of sales,
rent agreements and work contracts.
CHRISTIANITY AND INTEREST
In Biblical times, all payments for the use of money were forbidden. There
are several references to prohibition of an increase on the amount lent
out. Charging interest was condemned throughout the early history of
Christianity. In The Divine Comedy, Dante places the usurers in the inner
ring of the seventh circle of hell, below even suicides.
By the second century AD, usury had become a more relative term
which meant charging interest beyond the legal rate, but that did not pre-
vent the Church from continuing to condemn the practice. By the fourth
century, the Roman Catholic Church maintained its prohibition on the tak-
ing of interest by the clergy and this rule was extended to the laity in the
fi fth century. In the eighth century, under Charlemagne, the Church declared
usury to be a general criminal offence. During Medieval times, lending was
considered a gratuitous act and lending on interest was morally wrong. In
the early Middle Ages, Popes and Councils continued to oppose all forms
of payments for the use of money lent, as money was mainly for the pur-
pose of exchange and its principal use was its consumption. This anti - usury
movement continued to gain momentum during the early Middle Ages and,
in 1311, Pope Clement V made the ban on usury absolute and declared all
secular legislation in its favor null and void.^5
The end of the thirteenth century saw the decline of the infl uence of
the Orthodox Church and the rise of secular powers and, as a result, despite the
Church’s clear prohibition, the practice of charging interest gained some
acceptance and tolerance. During the Mercantile Era (1500–1700 AD),