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From: Russell Hendel <rhendel@mcs.drexel.edu> Date: Mon, 9 Nov 1998 19:46:32 -0500 (EST) Subject: Some Comments on Interest Prohibitions and Chinese Auctions A number of posters--Yossie Abramson, Arie Weiss, Leve Gordon--have dealt with the question of paying less in advance at a chinese auction or buying many tickets for less money---the question being as to whether it is a violation of RIBITH--the Biblical Prohibition(s) against taking interest on loans. Rather than give a technical talmudic discourse let me cite a few examples showing the rich complexity of the issue. A summary will try and address the issues in the question: EXAMPLE 1:(Rambam, Loans, 7:8) ========== It is permissable to charge rent for advances in renting. >>How so? If you rent a courtyard and state: "If you pay me in advance >>the courtyard is 10 per year while if you pay me monthly it is 12 >>per year (1 per month)" this is permissable. COMMENT: (Apparently the owner has "paid" two hidden units of currency in order to avoid the possible risk of advertising for renters later. EXAMPLE 2:(Rambam, Loans, 6:8) ========= If Abe loans Bob $100 and Bob gives a field for collateral. >>It is permissable to initially stipulate that Abe deducts 10% per year >>from the loan in exchange for "rights" on the fields fruits (even if >>the field yields $1000 per year COMMENT: The reason is explicitly given that LOAN INTEREST is prohibited >>but all "stiulations in RENTING" are valid (and not considered interest) EXAMPLE 3:(Loans, 5:14) ==========It is permissable to "buy" an IOU at a lower price COMMENT: Because the seller liquidates his liability EXAMPLE 4:(Loans, 5:12) (A stringent example) ========= If Abe loaned Bob it is prohibited (rabinically) for Bob >>to say "Hello" to Abe if he didn't formerly greet him (since the "greeting >>of hello" is interest -- something extra on the loan. SUMMARY: ======== Interest laws are very complicted. While it is considered blashphemous to take interest (Loans Loans 4:7) and while numerous prohibtions are involved (Loans 4:1) and while the interest prohibition extends even to words---nevertheless to properly understand the law one must distinguish between INTEREST and PERMISABLE activities such as exorbitant renting, buying liabilities or saving the seller extra work down the road. I hope this increases peoples appreciation of this complicated prohibition Russell Jay Hendel; PHd ASA RHendel @ mcs drexel edu