Bava Metzia 68a (סח.) — the Talmud in English

Even so,

the Merciful One said,

he redeems it

by redeeming it from the possession of the Temple treasury,

for four zuzim.

That is, one sela, because the redeemer assumes the uncertainty: perhaps there will be produce in it, and perhaps there will not be produce in it.

Here too,

with a mashkanta with a deduction,

it makes no difference.

And when the lender assumes the uncertainty—that even if the field suffers a blight and produces no fruit, he will deduct the amount from the debt—it is permitted, because this does not appear to be interest. For from the redemption of an ancestral field it is evident that this is the way of a sale: the price is reduced substantially from the field’s value because of the uncertainty. Therefore, even when he deducts much less than the market value of the produce, the matter appears to be a reduction because of the uncertainty, and not because of the loan.

And the one who prohibits will say to you:

The reason I do not learn from an ancestral field that this is permitted is that

an ancestral field is consecrated property, and the Merciful One established it,

the Torah itself established this low amount

as the redemption price.

And since this is a redemption, any redemption payment suffices, and one cannot learn from this that this is the normal manner of a sale.

But

here, it is a loan, and it appears like interest,

since he consumes produce worth more than the amount of the loan.

Rav Ashi said: The elders

[the old men]

of Mata Meḥasya told me: An ordinary mashkanta,

that is, in a place where the borrower may redeem the property, but they did not specify from when he may redeem it, gives the lender the right to retain it and consume its produce

for a year,

one year.

What is the practical difference? —

If he consumes it

the lender

for a year, the borrower can

to

redeem it from him.

But if he does not

consume it for a year,

he cannot redeem it from him.

Even if it was customary to permit redemption during the first year. But if they explicitly stipulated that he could redeem it during the first year, he can redeem it.

And Rav Ashi said: The elders of Mata Meḥasya told me: What

is the meaning of the term

“mashkanta”? —

That it is settled with him.

That is, the fact that he resides in the courtyard pledged to him is regarded as a complete “settlement”; there is no neighbor like him.

What is the practical difference? —

The law of a boundary neighbor.

“The law of a boundary neighbor” is as follows:

If Reuven wishes to sell his field, and Shimon has a field adjacent to the boundary [the border] of Reuven’s field, Shimon [the “boundary neighbor”] takes precedence over everyone else, and he has the right of first refusal to purchase the field from Reuven. But if the borrower wishes to sell the pledged courtyard, and another person’s courtyard is adjacent to it, the lender is considered the closest neighbor, and he takes precedence over the “boundary neighbor ,” because the entire “neighborhood” is in his possession, and he is considered a “boundary neighbor” on all four sides.

Rava said: The halakha is neither in accordance with the tarsha of the people of Paphuna, nor in accordance with the documents of the people of Meḥoza, nor in accordance with the tenants of Narash.

And the Gemara explains Rava’s statements.

Like the tarsha of the people of Paphuna,

that is,

like the tarsha of Rav Pappa,

who said above, on 65a: “My tarsha is permitted.”

The documents of the people of Meḥoza

[of the people of the city of Meḥoza] were written as follows:

They added the profit to the principal and wrote it in the document.

That is, when they gave merchandise to a merchant to sell it for half the profit [meaning that half the profit would be his and half would belong to the owner of the merchandise; this is called iska in the language of the Sages, and they gave him the wage of an idle laborer, as explained in the following Mishna], they did not write in the iska document the value of the principal that the merchant received and the terms of the iska. Rather, they estimated the amount of profit that should accrue and wrote in the iska document the principal and half the profit as a single sum. For example, if the principal was one hundred and half the profit was ten, they wrote in the document: “So-and-so owes so-and-so one hundred and ten on account of the iska , and the halakha is not in accordance with them; it is prohibited to do so.

And the reason it is prohibited to do so is that

who can say that there will be profit?

If there is no profit, it turns out that he is taking the additional ten from him beyond the principal on account of having lent him money, and this is interest.

Mar bar Ameimar said to Rav Ashi: My father,

Ameimar,

used to do this;

he would write the value of the principal and half the profit in the iska document.

And when they came before him,

the merchants, and said that there had been no profit,

he believed them.

He said to him: Granted, where he is present

at the time of repayment, so that he will believe the merchants and there is no concern of a prohibition.

But what will happen

if he dies,

if he passes away,

and the document falls before the orphans—what then!?

After all, his orphans, who inherit the iska document, will collect from the merchants the entire amount written in the document. Your father is prohibited from doing this, because perhaps he will die and his sons will come to violate a prohibition.

It was like “an inadvertent statement that emerges from before the ruler,” and his soul departed,

his life ended,

that of Ameimar.

And as for Rava’s statement, “And not in accordance with the

tenants of Narash”

[the meaning of tenancy is: one who receives a field from another for ten kor of wheat per year, whether the field produces much or little; “Narash” means poor people, who leased fields to the poor].

That is,

they would write the following

in the tenancy document:

“So-and-so mortgaged his land to so-and-so, and afterward leased it from him.”

That is, they would lend money to the poor, take the poor people’s fields as collateral, and then lease them back to them for a specified number of kor of produce per year.

And the reason this is prohibited is that

when did the acquisition occur?

When did the lender actually acquire it from them as collateral, such that he could say

“I transferred its acquisition to him”

to the owners by way of a tenancy? Since there is no tenancy here, it turns out that the produce the borrower would give the lender each year was interest.

But nowadays, when they write as follows: “We have acquired it from him”

the field by way of a pledge,

“and we remained there for some time”

[years] in the lender’s possession, and he worked the field and consumed its produce with a deduction,

“and afterward leased it”

the borrower, who is the owner,

it is satisfactory,

and although it would have been appropriate to prohibit this rabbinically, they were lenient

so that the door would not be locked before borrowers.

That is not so!

Even if the field remained in the lender’s possession for three years as a mashkanta, it is prohibited for him afterward to lease it to the borrower.

Introduction to the Law of an Iska:

iska" business arrangement:

The Sages instituted that when a person receives money from another for an iska—that is, he receives the money in order to conduct a business, and he and the one who provides the money will divide the profits—he may do so without concern for interest, provided that the iska is structured in the manner established by the Sages: the entire iska must be based on the principle of “half a loan and half a deposit,” as will be explained.

The institution was that the recipient of the iska receives the money from the provider of the iska in such a manner that the recipient is responsible for half the money as though it were a loan in his possession. In every circumstance, the recipient must return that half of the money to the lender, and he has no claim of exemption on account of an unavoidable accident, a decline in the value of the merchandise, or the like.

The other half of the money, however, is placed in his possession as a deposit. Thus, if the business suffers a loss due to an unavoidable accident, or if the merchandise declines in value, he bears no responsibility for this half; rather, the entire loss is borne by the provider of the money.

According to this institution, since half the principal is given to the person conducting the business as a loan—for he is liable for unavoidable accidents affecting half the money he received—the profits that arise from this half indeed belong to him, like all profits from his own money, and this does not constitute interest.

As for the other half of the principal, since it is given to him as a deposit, the profits from the half that is a deposit belong to the provider, since they are profits from his money.

The recipient of the iska must receive payment for his labor in handling the half that is a deposit. For if he handles the deposit portion without payment, it turns out that he is laboring on it because of the loan he received, and this constitutes interest.

Therefore, the provider of the iska must pay the person conducting it for his labor in handling the deposit portion [which, as stated, belongs to the provider of the iska].

This payment may be made in two ways:

First, he may pay him for his work each day, as a laborer.

Second, he may pay him a general fee for all the days of the partnership by giving the person conducting the business more than half the profits.

Alternatively, the provider may assume more than half the responsibility, while the person conducting the business assumes less than half. Reducing the extent of his responsibility is also considered payment.

There are also circumstances in which it is sufficient to give only a small payment, such as one dinar, for all the labor involved in the iska.

According to Rambam, this may be done if he stipulated this payment in advance, before the business began.

According to Rif, payment of one dinar is sufficient specifically when the person conducting the business has other animals, which he would in any event be tending, so that tending additional animals does not entail any additional labor for him.

Handling the deposit portion without receiving payment is, in the straightforward understanding, not a Torah prohibition. This is as Tosafot explicitly wrote below, 70b, s.v. ein: the prohibition against giving produce to a shopkeeper to handle for half the profits without paying him for his labor is only due to rabbinic interest.

Although the money is in the hands of the person conducting the business as a loan, and when he performs the labor for the provider without charge one might ask why this is not interest prohibited by Torah law, there are several explanations.

a. According to Rava’s statement below, 104b, that the person conducting the business is not permitted to use the money for his personal expenses, but only for the iska, it is not a fully fledged loan in his possession. For a loan is given for the borrower’s use, for all his needs; and since he did not receive the money for all his needs, it is not termed a fully fledged loan.

b. If all the money of the iska is considered a single transfer, the person conducting the business assumed responsibility only for half of it; whereas a fully fledged loan exists only when one assumes responsibility for the entire amount.

c. Even if the half of the money in his possession is considered a fully fledged loan, nevertheless, the additional benefit he provides for the loan through his labor is not fully fledged interest prohibited by Torah law, since the person conducting the business also labors for himself with regard to the half that is a loan. Therefore, the additional labor he performs for the deposit portion is not considered a complete benefit that would constitute interest.

The heter iska commonly used today derives from the above law of an iska. When a person deposits his money in a bank [that has a heter iska] and receives interest, or borrows from the bank and pays interest, the deposited money is considered, in part, a deposit for which the depositor bears responsibility, and the profits from this portion belong to the depositor; while half of it is considered a loan for which the bank bears responsibility, and the profits from this half belong to the bank.

The interest payment is the profit from the deposit. However, the bank or the borrower is not believed with regard to the deposit portion to claim that it was lost due to an unavoidable accident except in certain circumstances; therefore, in practice, the borrower remains responsible.

Mishna:

One may not establish a shopkeeper,

A person who has money to invest in a business may not say to a shopkeeper [a person who sells small quantities of produce in a shop to each customer at a price higher than the market price, at which large quantities are sold cheaply]: Take for yourself a large quantity of produce sold cheaply in the market and sell it in your shop at a higher price,

for half the profits,

so that we will divide the profits of the iska: half for me, since I am giving you the money to conduct the business, and half for you, since you are handling the money as a shopkeeper, without my paying you for your labor.

When a person ordinarily gives money to another to conduct a business with it on the condition that they divide the profits, he gives it on the understanding that the recipient of the iska will be responsible for half the principal, both with regard to unavoidable accidents and with regard to a decline in its value.

Therefore, the half of the principal from which the shopkeeper earns his share of the iska’s profits, since he is responsible for it, is considered a loan. The other portion of the principal, from which the provider of the iska earns his profits, is in the shopkeeper’s possession as a deposit. Consequently, the person conducting the business may not labor gratis with regard to the deposit portion, so that his labor on the deposit portion will not be payment for the loan portion that he received.

Nor may one give money to purchase produce with it.

The same law applies: it is prohibited to give a person money so that he himself will labor to purchase produce cheaply in the market and sell it at a higher price in the shop,

for half the profits,

in order to divide the profits.

Unless

the owner

gives him,

the person conducting the business, payment of

his fee,

for his handling of the provider’s portion,

as a laborer.

The Gemara will explain what type of laborer is meant.

Since he pays him for his labor on the deposit portion, this iska is now permitted, for he is not working on the deposit portion as payment for the loan that he received.

And likewise,

one may not establish fowl for half the profits.

A person may not arrange an iska by giving another person eggs, so that the latter will have a hen sit on them and raise chicks from the eggs, and they will divide the profits.

The iska is arranged by appraising the value of the eggs, with the recipient of the iska assuming responsibility for half the value of the eggs, both in the event of an unavoidable accident and in the event of a decline in value; and the profit represented by the difference between the price of eggs and the price of chicks is divided between them.

Nor may one appraise calves and foals for half the profits.

One may not appraise how much calves are worth now and have the person conducting the business assume half the responsibility, with the two of them dividing the profits when they increase in value.

Unless he gives him payment for his labor,

for what he expends in taking them out and bringing them in,

and their food,

with which he feeds them.

But one may receive calves and foals for half the profits,

as an iska, without appraising them at the time he receives them to determine their value, and without his being responsible for them, but they divide the profits between them as payment for his handling them. For in this manner there is no loan at all, since the person conducting the business did not assume any responsibility; consequently, there is no issue of a prohibition of interest.

And they raise them until they become threefold,

meaning that the calves and foals reach one-third of the growth of an ox or one-third of the growth of a horse, and then they divide them between themselves.

And a donkey—

until it can bear a load.

The person conducting the business must raise the donkey until it can bear a load, and then they divide it.

Gemara:

A tanna taught: Like an idle laborer.

That is, when we learned in the Mishna that the person conducting the business must be paid as a laborer, the amount is assessed according to what a person would be willing to accept as a small wage to sit idle from work, rather than work and earn a great deal from his labor.

And we raise an objection:

What is meant by “like an idle laborer”?

The person conducting the business is not idle; rather, he labors to sell the produce, and he should be paid according to his work.