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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