Jewish public bodies (communal and supracommunal councils) accumulated enormous debts running into hundreds of thousands of Polish zlotys in the seventeenth and eighteenth centuries and were unique to the Polish–Lithuanian Commonwealth. Though members of the aristocracy were sometimes lenders, the main creditors were overwhelmingly institutions of the Roman Catholic church, and some Greek Catholic and Greek Orthodox bodies lent money to Jewish institutions as well. Jewish public bodies were also among the church’s most important debtors; the numerous account books specifically for Jewish debts that many monastic orders held testify to this.
It was in the church’s interest to invest its huge incomes from real estate, tithes, private donations, and wills, especially in an age of high inflation. Since usury was forbidden to the church, the only way it could invest money was through a legal fiction called wyderkaf (from the German Wiederikauf, “prolonged buying”) that allowed real estate (usually urban houses) to be mortgaged. The interest was regarded as income from rent collected by creditors as if the mortgaged properties were in their possession. In theory, interest was paid until the loan was repaid, but in practice the most widespread form of wyderkaf was as a standing loan on which simple interest was paid “forever.” The interest rate could not exceed 7 percent, and the amount of the loan could not exceed half the price value of a mortgaged property.
Jewish public bodies were very attractive customers for the church for several reasons. First, the church found it difficult to confiscate mortgaged property of Christians in cases of nonpayment. Second, the Jewish communities and councils could mortgage not only their public property (usually synagogues), but could also provide collateral in the form of private property (houses and goods) of all Jews under their jurisdiction.
Jewish debts to the church took three forms: direct loans, loans from nobles willed to the church, and revenues of loans from Jews that nobles donated to the church. All levels of the church hierarchy lent money to Jews, but most loans and the largest amounts of money were provided by urban monastic orders, especially Franciscans, Dominicans, and Jesuits.
Studies show that the growth of Jewish debts should properly be seen as a part of the general monetary crisis in the Polish–Lithuanian Commonwealth expressed in galloping inflation, and not, as previously thought, as a sign of the increasing impoverishment of Jewish communal institutions. With the interest rate of loans fixed at a level that often lagged behind the inflation rate, Jews increasingly found loans more attractive than moneylending. Moreover, the interest was not compounded, but was calculated from the original loan. It was paid in equal installments in Polish zlotys, a currency that lost its value more rapidly than other coins (florins, ducats, thalers, and others). Thus, borrowing from the church became a most attractive and less expensive way to finance the infrastructures of Jewish communities and councils (funds were needed for matters such as maintenance, building and repair of public buildings, communal charity, and bribes). Since in most cases the wyderkaf was a standing loan with a principal that was never repaid, internal Jewish taxation was sufficient for interest payments.
The financial activities of the Jewish councils became especially dependent on loans from the church after the fiscal reform of 1717 when the army began to collect the Jewish poll tax directly, bypassing the Jewish regional councils and the Council of Four Lands. Massive borrowings from the church not only enabled the institutions of Jewish autonomy in the Polish–Lithuanian Commonwealth to function, but also changed the entire complex of relations between the church and Jews. Since because of its heavy investments the church was interested in the continued existence of Jewish communal institutions, Jewish supracommunal autonomy survived until 1764, in spite of the growing demands for their abolition in the Polish parliament from the seventeenth century on. When Jewish councils were eventually disestablished in that year, the entire economic network connected with their activities collapsed, and Jewish debts to the church in what had been a mutually beneficial system became an unresolved problem for both sides.
Gershon David Hundert, The Jews in a Polish Private Town: The Case of Opatów in the Eighteenth Century (Baltimore, 1992); Judith Kalik, “Patterns of Contacts between the Catholic Church and the Jews in the Polish-Lithuanian Commonwealth: The Jewish Debts,” in Studies in the History of the Jews in Old Poland: In Honor of Jacob Goldberg, Scripta Hierosolymitana 38, ed. Adam Teller, pp. 102–122 (Jerusalem, 1998); Moshe J. Rosman, “The Indebtedness of the Lublin Kahal in the 18th Century,” in Studies in the History of the Jews in Old Poland: In Honor of Jacob Goldberg, Scripta Hierosolymitana 38, ed. Adam Teller, pp. 166–183.