Usury

Usury, as an illegal transaction, is occasioned, by rate, united with species, and it includes all gain upon loans, whether from the loan of money, or goods or property of any kind.

The teaching of the Qu’ran on the subject is given in [2:275] of which the following is a translation:

“Those who swallow usury cannot rise up save as he ariseth whom the devil hath prostrated by (his) touch. That is because they say: Trade is just like usury; whereas Allâh permitteth trading and forbiddeth usury. He unto whom an admonition from his Lord cometh, and (he) refraineth (in obedience thereto), he shall keep (the profits of) that which is past, and his affair (henceforth) is with Allâh. As for him who returneth (to usury) - Such are rightful owners of the Fire. They will abide therein.”

The Prophet said: “Cursed the receiver and the payer of riba, the one who records it and the two witnesses to the transaction and said: “They are all alike [in guilt].” [Sahih al-Muslim, Sahih Al-Bukhari, Tirmidhi, Ibn Majah, Bahiqi and Musnad Ahmad]

Riba, i.e. usury, in the language of the law, signifies “an excess,” according to a legal standard of measurement or weight in one of two homogeneous articles [of weight or measurement of capacity] opposed to each in a contract of exchange, and in which such excess is stipulated as an obligatory condition on one of the parties, without any return, i.e. without anything being opposed to it. The sale, therefore, of two loads of barley, for instance, in exchange for one load of wheat does not constitute usury, since these articles are not homogeneous; and, on the other hand, the sale of ten yards of cloth in exchange for five yards of another cloth is not usury, since although these articles be homogeneous, they are not estimable by weight, or measurement of capacity.

Usury, then, as an illegal transaction is occasioned [according to most distinguished scholars] by rate united with species, where, however, it must be observed that rate, in the law of Islam, applies only to articles of weight and measurement of capacity, and not to articles of longitudinal measurement, such as cloth, etc., or of tale such as eggs, dates, walnuts, etc., when exchanged from hand to hand. Where the quality of being weighable or measurable by capacity, and correspondence of species [being the causes of usury] both exist, the stipulation of inequality or suspension of payment to a future period, are both usurious. Thus it is usurious to sell either one measure of wheat in exchange for two measures, or one measure of wheat for one measure deliverable at a future period. If, on the contrary, neither of these circumstances exists [as in the sale of wheat for money], it is lawful, either to stipulate a superiority of rate or the payment at a future period. If, on the other hand, one of these circumstances only exists [as in the sale of wheat for barley], then a superiority of the rate may legally be stipulated, but not a suspension in the payment. Thus one measure of wheat may lawfully be sold for two measures of barley; but it is not lawful to sell one measure of wheat for one measure of barley, payable at a future period.

Similars of weight and capacity are distinguished from all other description of property in a very remarkable way. When one article of weight or one of measure is sold or exchanged for another of measure, the delivery of both must be immediate from hand to hand, and any delay of delivery in one of them is unlawful and prohibited. Where again, the articles exchanged are also of the same kind, as when wheat is sold for wheat, or silver for silver, there must not only be reciprocal and immediate delivery of both before the separation of the parties, but also absolute equality of weight or measure, according as to whether the articles are weighable or measurable; any excess of either side is also unlawful and prohibited. These two prohibitions constitute in brief the doctrine of riba [usury], which is a marked characteristic of the Islamic Law of sale. The word riba [in Arabic] properly signifies “excess,” and there are no terms in the Islamic Law which correspond to the words “interest” and “usury” in the sense attached to them in the English language; but it was expressly prohibited by the Prophet to his followers to derive any advantage from loans, and that particular kind of advantage which is called by Westerners “interest” and which consists in the receiving back from the borrower a quantity larger than is actually lent to him, was effectually prevented by the two rules above mentioned.