Members of the managing committee and staff of a gemilut ḥesed (free loan society) in front of the organization’s building on Y. L. Peretz Street, Pinsk, Poland (now in Belarus), ca. 1935. (YIVO)

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The role played by moneylending, relative to other Jewish occupations, fluctuated with the times in Eastern Europe. Until the middle of the fifteenth century, moneylending was by far the most dominant profession in which Polish Jews, for example, were employed, as members of the aristocracy would use the services of Jews as sources for both income and credit. The public’s attitude toward these lenders was ambivalent. On the one hand, lenders were always in demand, thanks to their ability to help those in need of a loan; on the other hand, they aroused feelings of tension and of discord by the very fact that they demanded repayments of loans, and profited by collecting interest (or, as it was sometimes disparagingly referred to, usury).

From the time of the 1423 law that forbade their providing mortgages on landed property, Jewish creditors found it increasingly difficult to extend large-scale loans. Jews had to subsist instead with small-scale lending or took up the lucrative task of leasing estates for fixed periods (arenda). Moreover, inflationary conditions in the late sixteenth century meant that moneylending was becoming less profitable for Jewish businessmen.

Broadside with cartoon showing a Jew, an Armenian, and people indicated by occupation mourning the death of Credit, Poland, seventeenth century. (Biblioteka Naukowa Polskiej Akademii Umiejętności i Polskiej Akademii Nauk w Krakowie)

From the seventeenth century on, very few Jews in Poland were involved in lending sizable sums of money, and commercial occupations became much more widespread. In fact, it became more common for Jews to borrow money as mercantile credit than to lend it. Nonetheless, Jews were still involved in lending small sums of money on the basis of collateral (pawnbroking). In addition to loans that Jewish businessmen advanced to Christian clients, nobles, and burghers in late sixteenth- and early seventeenth-century Poland, credit relations developed among Jews themselves. This was the result of a growing demand for mercantile capital by Jewish merchants. Despite the fact that there were halakhic problems with the practice of one Jew advancing a loan with interest to another, such financial transactions flourished, and many attempts were made to institutionalize rules that would permit these types of transactions. Indeed, in February 1607 a meeting of rabbis convened by the Council of Four Lands at Lublin instituted the heter ‘iska (transaction permit) mechanism that allowed lenders to take interest by being regarded as partners of the borrowers.

Another issue that arose first in the Middle Ages and grew acute in later centuries concerned transactions between Jewish businessmen who used the mamran or membrana promissory note that was payable “to the bearer.” These mamrans, unlike other promissory notes, did not stipulate the date the loan was given, the name of the borrower, or any witnesses, and were therefore excluded from the jurisdiction of rabbinical courts, since the Jewish law governing ordinary legal documents did not apply to them. Nonetheless, as an efficient and convenient form of payment they facilitated various financial transactions, not least because they were subject to the jurisdiction of lay rather than rabbinical courts.

The difficulty in obtaining low-cost, short-term loans for an increasingly impoverished community spurred the establishment of gemilut ḥasadim, charity funds whose task it was to advance interest-free credit on small amounts for the short and medium term, in return for collateral. The loans were paid off in small weekly installments. Charities were either associated with synagogues—as was the case with Shiv‘at ha-Keru’im (The Seven Guests), founded in 1598 alongside the Vilna Great Synagogue—or were connected to artisans’ associations. Subsequently, over the course of the eighteenth and nineteenth centuries this second type of organization spread across Eastern Europe. The gemilut ḥasadim fund would support its members at times of distress (sickness, death, and unemployment), deriving its capital from a fixed membership fee, from fund-raising campaigns, and from private donations. Thus, for example, Dvoyre Ester, wife of Moyshe Idel Helfer (1812–1907) of Vilna, founded and supported various gemilut ḥasadim societies, and dedicated her life to furthering their goals. A survey of the Jewish economy conducted by the Jewish Colonial Association (ICA) in 1898, which collected data on 350 gemilut ḥasadim funds in Russia, showed that most had very small capital sums: only 10 percent had a capital of 1,000 rubles or more; fully a third had no more than 100 rubles. Though these institutions continued to exist in Eastern Europe until the Holocaust, the small amount of credit that they were able to advance failed to meet the needs of the impoverished population they were meant to serve.

The managing committee and staff of the gemilut ḥesed (free loan society), Pinsk, Poland (now in Belarus), 1937. (Center) Portraits of Józef Piłsudski, Poland's first chief of state, and Ignacy Mościcki, Poland's president. (YIVO)

Józef Kirszrot-Prawnicki, a Jew from a prominent Warsaw family, was a pioneer of the cooperative movement in Poland, identifying this system as a source of investment capital and as a solution to the chronic lack of available credit. In 1896, the Russian government first officially sanctioned the establishment of a popular Jewish loan society, the Savings and Loan Fund, in the shtetl of Paritchi in the guberniia of Minsk. In 1898, the Savings and Loan Society for Artisans and Petty Merchants was formally founded in Vilna. These two funds served as models for the establishment of similar institutions across the Pale of Settlement. In 1904, a law was passed that made it easier to establish these types of funds. By 1906, there were already 58 savings and loan funds (Yid., lay kase or shpar kase), and in the following two years, 280 additional funds were created. By 1915, there were 699 funds across the Russian Empire, with 450,000 members, more than 90 percent of whom were Jewish. Since to be eligible for membership one had to be the head of a household, it is estimated that about half of Russian Jews were members of a savings and loan fund.

A division of fund members according to their professions shows that artisans made up 36 percent (in the Polish territories, 39.2%), merchants and peddlers 32.6 percent (in the Polish territories 39.1%), petty industrialists 8 percent, and the rest came from other sectors. The ICA and its representatives in Saint Petersburg supported most of the funds, demanding that each fund independently amass a basic capital of not less than 1,950 rubles and undertaking to quintuple any amount collected. In 1912, their overall capital reached 30 million rubles. Moreover, in 1912 there were 132 mutual loan banks with 68,000 members, almost all of whom were Jewish merchants and industrialists. These societies were smaller than their gentile counterparts, were not unionized, and received less credit than government institutions.

In 1873, an Austro-Hungarian law made it easier to establish cooperative banks. Although private banks soon became more important in this region, institutions similar to Russia’s lay kase or shpar kase were founded in Galicia and Bucovina at the beginning of 1897, thanks to the ICA. In 1914, there were 28 such organizations with a membership of 30,000, half of whom were merchants, and a quarter of whom were artisans and petty industrialists.

World War I destroyed or at least silenced the cooperative organizations that extended petty credit. Between 1919 and 1920, attempts were made, especially in the Vilna region, to rehabilitate the lay kase and shpar kase, as well as the cooperative banks. In 1921, the Związek Żydowskich Towarzystw Spółdzielczych w Polsce (Union of Jewish Cooperative Societies) was founded in Warsaw. This organization enjoyed the full support of the American Jewish Joint Distribution Committee and the ICA. Partisan organizations, professionals, and groups of people with political aims or interests also established credit cooperatives, which were sometimes called “communal banks” or “popular banks.” All of these cooperatives extended loans to their members to be repaid in the short to medium term.

The credit societies that extended small to moderate loans proved exceedingly resilient and succeeded in withstanding the Polish fiscal crisis of 1923. However, the Great Depression led to a decline (see Table 1). During the 1930s, cooperative organizations suffered hardships because of the significant impoverishment of those classes in Jewish society (mainly artisans and petty merchants) to which they would provide credit on easy terms. Numbers of members, independent capital, and the sum total of the deposits diminished considerably.

The number of Jewish mutual loan banks in Romania rose during the 1920s. The highest numbers were seen in 1930, when Romania had 87 Jewish mutual loan societies, with 64,000 members, most of them in Bessarabia, which before 1918 had been part of the tsarist empire. Jewish mutual loan societies in Lithuania were called “popular banks.” A well-developed and well-organized system, they recorded their best year in 1931 when the consortium of banks claimed a membership of 23,000 Jews. In 1937 this number declined to 15,728.

Suggested Reading

Haim Hillel Ben-Sasson, “Moneylending,” in Economic History of the Jews, ed. Nachum Gross, pp. 259–260 (Jerusalem, 1975); Shmuel Arthur Cygielman, Yehude Polin ve-Lita ‘ad shenat taḥ/1648 (Jerusalem, 1991); Yoysef Yashunsky and Herman Frank, “Yidishe kooperatsye,” in Algemeyne entsiklopedye: Yidn, vol. 1, cols. 533–562 (Paris, 1939).

YIVO Archival Resources

RG 29, Vilna, Collection, 1822-1940; RG 335,2, American Joint Reconstruction Foundation, Records, 1920-1939; RG 335,7, AJDC Landsmanshaftn Department, Records, 1937-1940, 1945-1950.



Translated from Hebrew by David Fachler