Question
We live in Eretz Yisrael and an American friend asked me for a loan of a thousand dollars for three months. Without asking any questions I lent him the money. When it came time to repay, he brought me the thousand dollars but mentioned that he hadn’t thought about it at the time he borrowed the money, but now he realizes that he didn’t own any dollars at the time when he borrowed the money. We both learned the halachos of ribbis and were aware of the issue but I assumed that he owned dollars and he didn’t think of the fact that he didn’t own dollars when he borrowed the money. Was our arrangement prohibited and if it was, is there a way to get back the thousand dollars that I lent?
Answer
First, we must clarify the issue. The source of your issue is a Mishna (BM 75A) that rules that a borrower may not borrow wheat with the stipulation that he will return the same amount of wheat at the time of the harvest. However, he may borrow wheat “until his son arrives or until he finds the key for the place where he keeps his wheat”. Rashi explains that the reason the latter case is permitted whereas the former is prohibited is because in the latter case the borrower owned wheat and borrowed wheat only because his wheat was temporarily inaccessible, whereas in the former case he did not own any wheat. Thus, we learn that borrowing goods is only permitted if the borrower owns the goods that he is borrowing. Borrowing wheat to return wheat is known in halachic discussions as sa’ah besa’ah.
The Gemoro (BM 62A) states that the prohibition of sa’ah besa’ah is rabbinic and the SA (YD 162, 1) explains that the reason for the prohibition is that the Rabbonon were concerned that in the interim the value of the wheat will rise and thus the borrower will return more monetary value than he borrowed. The Chazon Ish (YD 72, 4) explains that even though the borrower owes wheat and not money, since there are laws such as theft where the focus is on value and not on the particular object, the Rabbonon ruled that one must not return the same amount of an object that he borrowed if its value is greater than its value at the time of the loan.
The Gemara (BM 75A) further states that if one wishes to borrow an object as a loan (that is, not returning the same object that was borrowed but an object of the same type), the object should be evaluated and the loan should be established as the monetary value of the object that was lent. In that case, whether the price of the borrowed object rose or fell in the interim, the borrower must return the value of the object at the time that the loan was extended. Furthermore, if they wish they can even stipulate that the loan will be repaid with the same type of object as what was borrowed, with the amount equal in value to what was originally borrowed.
However, the Gemara says, if they fail to evaluate the borrowed object at the time of the loan the borrower must return only the lesser of the 1-value of the object at the time the loan was extended, and, 2-its value at the time of repayment.
The Gemara (BM 72B) further states (according to the explanation of the Behag that is cited by Rashi) that if the loaned object has a market price, one may lend an object without evaluation. The Gemara clarifies that the market price must have a degree of stability, since the reason one may borrow an object if there is a market price is that the borrower can acquire the object under such circumstances.
Having reviewed the special laws that govern loans of objects we have to see if a loan of dollars in Israel is classified as a loan of money or a loan of an object.
The basic Gemara (BM 45A) that deals with the issue of what is money and what is an object is a section of Gemara that rules that in countries where gold, silver and copper coins were legal tender, only silver was classified as the money, since it was most commonly used in transactions. Therefore, even though it was legal to transact business using gold or copper coins, gold and copper were classified as objects. Therefore, SA (YD 162, 1) rules that one may not lend gold coins for repayment in gold coins.
In a responsum, Rav Shlomo Zalman Auerbach (Minchas Shlomo 1, 27, 3) leaned towards permitting loans in foreign currency in Israel because he felt that the Gemoro only applied to coins that were intrinsically worth the value that was assigned to them. However, he felt that since paper currency has no intrinsic value (it is known as fiat currency), all paper currency, even if is not legal tender in the country where the loan takes place, is classified as money and not an object. He specifically states that according to this approach, since dollars are legal tender in the U. S., one is allowed to extend a dollar loan even outside of the U.S.
Nonetheless, the consensus is like those poskim – including the Chazon Ish (YD 72, 8-10) – who disagree with Rav Auerbach and maintain that paper currency is only classified as money in the country where it is legal tender.
In the days of hyperinflation in E.Y., Rav Moshe Feinstein (Iggros YD 3, 37), in a responsum written in 1980, ruled that dollars were considered money in E.Y. since people had confidence in dollars and not in the regular Israeli currency, due to its price instability. He ruled then that even private people were allowed to lend dollars for repayment in dollars. He adds that certainly Ezras Torah (which had asked the question he was answering) since it is an American organization whose office in E.Y. is merely an arm of the U.S. organization, may (and during hyperinflation must) lend dollars for repayment in dollars.
However, the days of hyperinflation are no longer with us and therefore, Rav Moshe’s ruling does not provide you with any grounds for leniency.
Having determined that dollars are classified as an object in E.Y. we must consider whether the two leniencies that were cited above apply to you. The leniency that there is a market price does not apply since in order to qualify as a market price, the price must be settled for a while. However, in today’s market the price of dollars fluctuates all day. Therefore, one cannot rely on this leniency.
The leniency of having dollars applies even if your friend had just one dollar since the Gemara (BM 75A) says that even if one only owns a small amount of wheat, he may borrow a large amount of wheat. Perhaps if he has money in a bank account that he can withdraw in an ATM, or he can write a check against his balance, this is also considered as if he has dollars.
Even though the SA rules that if all that the borrower has of the object he wishes to borrow has been lent out it is not considered as if he owns any of that type of object, a bank account seems better. Even though a deposit in the bank is considered a loan with regard to other laws (such as the need for a pruzbul in order to withdraw one’s deposit after shmittoh), here, since our only concern is the accessibility of the borrower’s funds, a deposit which can be freely withdrawn should be considered as if the funds are in the borrower’s possession. The Nesivos Sholom (162, 2, 11) also tends to think that one can be lenient but is not certain.
Since your loan was a loan of an object and neither of the leniencies applies if your friend did not own any dollars and did not even have dollars in a bank account, you should have determined the value of the dollars in shekels at the time of the loan. Furthermore, since you did not evaluate the dollars, your friend may only repay you the lesser of the value of your dollars at the time the loan was extended or their value at the time he repays.
We note that whether you violated the laws of ribbis by failing to evaluate your dollars at the time of the loan is a dispute amongst the Rishonim. Tosafos (BM 75A) is among those who are stringent and the Ramban (Shabbos 148B) is among those who are lenient. There is a third opinion of the Ritvo (Shabbos 148B) that differentiates saying that only if you mentioned that repayment is to be made in dollars you violated the laws of ribbis. If nothing was stated then no prohibition was violated if the repayment is done properly.
The wording of the SA (162, 1) indicates that he certainly does not rule like the Ramban. (This is observed by many including the Iggros Moshe YD 3, Ribbis, comment 29.) It is possible that he agrees with the Ritvo. Thus, the answer to your first question is that if you made up to be repaid in dollars you violated a rabbinic prohibition but if you didn’t specify that the loan is to be repaid in dollars many rule that no prohibition was violated.
Turning to your second question, there are ways to get back a thousand dollars.
One way, which does not even require your borrower’s co-operation, is for you to wait for a time subsequent to when payment is due when the dollar is worth no more than it was worth on the day that you extended the loan. As we noted, the issue of ribbis exists only if the dollar is worth more at the time of repayment than it was worth at the time of the loan. At that time, if when you ask him for repayment, your friend owns dollars, he must (See Nesivos 107, 4) repay you in dollars since a borrower must return the item that he borrowed if he owns that item. There is no violation of the prohibition of ribbis because the dollars are not worth more. If at that time he does not have dollars but owns shekalim you can demand that he give you enough shekalim to enable you to purchase a thousand dollars.
A second solution is available if your borrower is co-operative and there is someone (e.g., parents) who sometimes gives money to your borrower. The reason this works is that the prohibition of ribbis only applies (See YD 160, 13) if the borrower is the one who pays extra to the lender. If a third party pays interest to the lender and he does not collect the interest from the borrower, there is no prohibition of interest. Therefore, even if the dollar at the time of repayment is higher than it was at the time when you lent him money, your friend can repay in shekalim the amount of shekalim that a thousand dollars was worth at the time of the loan, and his parents can pay the difference between that amount and the amount that is needed to buy a thousand dollars at the time of repayment.
If his parents pay the additional amount on their own, all agree that this is permitted. If he asks his parents to pay you, there is a dispute if they may pay you the difference. The Shach rules (160, 18) that one may be lenient. Moreover, even those who disagree with the Shach (See Pischei Teshuvo 160, 9) would agree to be lenient in your case since the prohibition in your case is only rabbinic.
In conclusion: Whether you violated a rabbinic prohibition of ribbis depends on exactly what was said at the time of the loan. As far as repayment is concerned, if the dollar lost value in the interim, he can repay in dollars. If it went up, he can only pay the amount of shekels that a thousand dollars was worth at the time of the loan. However, there are ways to make up the difference.
