Hafka'at She'arim

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HAFKA'AT SHE'ARIM

HAFKA'AT SHE'ARIM (Heb. הַפְקָעַת שְׁעַרִים), raising the price of a commodity beyond the accepted level, or that fixed by a competent authority.

Profiteering and Overreaching

The law of Hafka'at She'arim ("profiteering") is analogous to that of overreaching (*ona'ah, "misrepresentation"), it being the object of the law in both cases to preserve a fair and just price. However, the law of overreaching – fraudulent or innocent (i.e., mistaken) – stems from a biblical prohibition (Lev. 25:14): the law was fixed that if the price exceeded the value by one-sixth, the seller must return this part to the purchaser; if the price was higher yet, the purchaser might demand cancellation of the transaction; conversely, if the price was too low, the law applies mutatis mutandis in favor of the seller. The law of profiteering on the other hand has its source in rabbinic enactment designed to prohibit the setting of prices in excess of the customarily accepted ones, even if the purchaser is aware of and agrees to the inflated price; "… even when he [the seller] says 'it cost me one sela and I want to earn two on it,' he has not transgressed the law of ona'ah but he is prohibited by rabbinic enactment from making a profit of more than one-sixth in essential commodities" (Beit ha-Behirah, bm 51b).

Price-fixing and Control; Prohibition against Profiteering It would seem that in the mishnaic period there were fixed prices, apparently determined by a competent authority (bm 4:12, 5:7). There is evidence that in Jerusalem – prior to the destruction of the Temple – the market commissioners "did not supervise prices but measures only" (Tosef., bm 6:14); in Babylonia (at the commencement of the third century c.e.) there was supervision of prices at the instigation of the *exilarch (tj, bb 5:11, 15a; tb, bb 89a). The sages of that period were divided, however, on this matter. Some expressed the opinion that "price inspectors do not need to be appointed" and that competition between merchants would suffice to stabilize the price while others were of the opinion that it was incumbent on the court to supervise the prices because of the "swindlers" who hoarded commodities toward a time when they might be in short supply in order to sell them at a high price (tj and tb, bb 89a). Over the course of time the view favoring price supervision apparently became generally accepted (bb 89a; Yoma 9a) and thus it was decided in the codes: "But the court is obliged to determine prices and to appoint commissioners for this purpose, to prevent everyone from charging what he likes …" (Yad, Mekhirah 14:1; Tur and Sh. Ar., hm 231:20).

The scholars compared profiteering to the transgressions of "giving short measure of the ephah" (deceit with regard to *weights and measures) and to that of charging interest on loans (bb 90b; and see *Usury). In their opinion, the profiteer transgresses the biblical injunction "that thy brother may live with thee" (Lev. 25:36; Smahm 231:43) and they regarded profiteers as "bandits who prey on the poor … on whom they concentrate their attention" (Meg. 17b and Rashi, ibid.). The prescribed punishment for them: "flagellation and they are compelled to sell at the market price" (Yad, Genevah, 8:20; Tur and Sh. Ar., hm 231:21). Authority to determine prices was given not only to the court, but also to local communal representatives: "and the townspeople are authorized to fix prices" (of wheat and wine, so as to maintain the price in a particular year – Rashi) "and measures and workers' wages, which they may enforce by means of punishment" (i.e., fines; cf. bb 89a and Rashi; Tosef. bm 11:23; bb 8b; see also *takkanot ha-Kahal). It appears that already in the talmudic period, the law of profiteering was only applied to essential commodities such as wheat, oil, and wine, and this was confirmed in the codes: "Prices [of nonessentials] are not determined but everyone may charge what he likes" (Yad, Mekhirah 14:2 and standard commentaries ad loc.; Tur and Sh. Ar., Ḥm 231:20).

The maximum profit generally permitted to the seller was one-sixth (bb 90a). Some of the authorities took the view that this rate applied to one selling his merchandise in bulk, without toil (a wholesaler); a shopkeeper, however, "selling his merchandise little by little, might have his toil and overheads accounted for in addition to a profit of one-sixth" (Tur and Sh. Ar., hm 231:20). They also decided that the rules concerning profiteering were only to take effect if imposed as measures of general application to all vendors, otherwise the individual could not be obliged to adhere to the permitted maximum rate of profit (ibid.).

Stringent Supervision in Ereẓ Israel

Particular care was taken to maintain a cheap supply of essential products in Ereẓ Israel, where no middleman between producer and consumer was tolerated: "It is forbidden to speculate in essential commodities in Ereẓ Israel but everyone shall bring from his barn and sell so that these [commodities] may be sold cheaply" (Tosef. Av. Zar. 4:1; bb 91a, Yad, Mekhirah 14:4; Sh. Ar. Ḥm 231:23); however, it was decided that in the case of a commodity in free supply or where a middleman worked to prepare and process the product, such as baking bread from wheat, profit-making was permitted, even in Ereẓ Israel (Tosef. Av. Zar. 4:1; bb 91a and Rashbam, Yad Ramah and Beit ha-Behirah ibid.; Yad, Mekhirah 14:4; Sh. Ar., Ḥm 231:23).

Measures to Prevent Profiteering

The sages sought in various ways to eliminate the factors which made for a climate for profiteering. Thus it was forbidden to hoard produce bought on the market, lest this cause prices to rise and bring losses to the poor, and in a year of famine no hoarding at all was permitted (not as much as a "cab of carobs"), not even of the produce harvested from one's own field (bb 90b; Yad, Mekhirah 14:5–7). In later halakhah storing of produce from the producer's own field was permitted, even in a famine year, for the sustenance of his family (Tur., Ḥm 231:29) for a period of one year (Sh. Ar., Ḥm 231:24). Produce hoarders, like profiteers, were compared to those who charged interest on loans (BB, 90b). In order to prevent profiteering, it was not permitted to export essential products from Ereẓ Israel, since this might cause a shortage and a consequent rise in prices (bb 90b–91a, Yad, Mekhirah 14:8; Sh. Ar., Ḥm 231:26). With the same object in mind the rabbis laid down that the proclamation of a public fast (on account of drought) should not be announced for the first time on a Thursday as this would cause panic (out of fear of famine) at a time when everyone was preparing for the Sabbath, and this might lead to profiteering (Ta'an. 2:9).

In their war against profiteers the scholars made use of a deliberate *interpretation of the law. At a time when the numerous sacrifices required to be brought by a woman who had given birth caused the price of a pair of sacrificial birds (two doves) to be raised to a golden dinar (25 silver dinars), Simeon b. Gamaliel the Elder vowed: "I shall not sleep this night until a pair sells for a dinar" (i.e., silver; Ker. 1:7). He entered the court and taught that a woman who had had five definite births (and thus should bring five sacrifices) need bring one sacrifice only and might eat of the ẓevahim ("sacrificial animals"), i.e. is ritually pure, and that "the remainder is not obligatory upon her; that same day the price of sacrificial birds stood at a quarter [of a silver dinar per pair]." (ibid.); Rashi (Ker. 8a) comments: "though he interpreted the word of the law leniently, it was a time to campaign for the Lord (et la'asot la-shem) for if no remedy had been found, not even one [sacrifice] would have been brought." Some 1,600 years later, when the fishmongers of Nikolsburg, Moravia, greatly raised the price of fish, "having seen that the Jews were not deterred by expensive prices from buying fish for the Sabbath," the Nikolsburg community enacted a takkanah which prohibited everyone from buying fish for a period of two months. Asked whether this takkanah did not in some measure slight the honor of the Sabbath, M.M. *Krochmal, chief rabbi of Moravia, replied that in order to enable also the poor "to honor the Sabbath by [eating] fish" it were better not to buy fish for a few Sabbaths so as to bring down the prices, and he quoted the statements of Simeon b. Gamaliel (above), as a clear practical illustration of the saying: "It is well to desecrate one Sabbath, so that many Sabbaths be observed" (Ẓemaḥ Ẓedek, no. 28).

In the State of Israel

In the State of Israel there are a number of laws designed to combat profiteering in essential commodities. The Commodities and Services (Control) Law, 5718 – 1957, provides for various means of supervision over commodities declared to be subject to control by the minister charged with implementation of the law, enforcible on pain of imprisonment, fine, and closing down of a business, etc. The Tenants' Protection Laws, 5714 – 1954 and 5715 – 1955, control maximum rentals for residential and business premises and also limit the right of ejectment to grounds specified in these laws only. These laws are supplemented by the provisions of the Key Money Law, 5718 – 1958. The Restrictive Trade Practices Law, 5719 – 1959, restricts, among others, the artificial manipulation of price levels at the hands of a monopoly or cartel. In the Knesset debates preceding the passing of these laws, some members relied on Jewish law in support of their arguments (Divrei ha-Keneset vol. 7, p. 564; vol. 14, p. 1822; vol. 18, p. 2176; vol. 21, p. 169; vols. 23, pp. 372, 374, 383; vol. 24, pp. 2478, 2514).