The origin of the Talmud was simultaneous with Israel's return from the Babylonian exile, during which a wonderful change had taken place in the captive people. An idolatrous, rebellious nation had turned into a pious congregation of the Lord, possessed with zeal for the study of the Law. By degrees there grew up out of this study a science of wide scope, whose beginnings are hidden in the last book of the Bible, in the word _Midrash_, translated by "story" in the Authorized Version. Its true meaning is indicated by that of its root, _darash_, to study, to expound. Four different methods of explaining the sacred Scriptures were current: the first aimed to reach the simple understanding of words as they stood; the second availed itself of suggestions offered by apparently superfluous letters and signs in the text to arrive at its meaning; the third was "a homiletic application of that which had been to that which was and would be, of prophetical and historical dicta to the actual condition of things"; and the fourth devoted itself to theosophic mysteries--but all led to a common goal.
In the course of the centuries the development of the Midrash, or study of the Law, lay along the two strongly marked lines of Halacha, the explanation and formulating of laws, and Haggada, their poetical illustration and ethical application. These are the two spheres within which the intellectual life of Judaism revolved, and these the two elements, the legal and the æsthetic, making up the Talmud.
The two Midrashic systems emphasize respectively the rule of law and the sway of liberty: Halacha is law incarnate; Haggada, liberty regulated by law and bearing the impress of morality. Halacha stands for the rigid authority of the Law, for the absolute importance of theory--the law and theory which the Haggada illustrates by public opinion and the dicta of common-sense morality. The Halacha embraces the statutes enjoined by oral tradition, which was the unwritten commentary of the ages on the written Law, along with the discussions of the academies of Palestine and Babylonia, resulting in the final formulating of the Halachic ordinances. The Haggada, while also starting from the word of the Bible, only plays with it, explaining it by sagas and legends, by tales and poems, allegories, ethical reflections, and historical reminiscences. For it, the Bible was not only the supreme law, from whose behests there was no appeal, but also "a golden nail upon which" the Haggada "hung its gorgeous tapestries," so that the Bible word was the introduction, refrain, text, and subject of the poetical glosses of the Talmud. It was the province of the Halacha to build, upon the foundation of biblical law, a legal superstructure capable of resisting the ravages of time, and, unmindful of contemporaneous distress and hardship, to trace out, for future generations, the extreme logical consequences of the Law in its application. To the Haggada belonged the high, ethical mission of consoling, edifying, exhorting, and teaching a nation suffering the pangs, and threatened with the spiritual stagnation, of exile; of proclaiming that the glories of the past prefigured a future of equal brilliancy, and that the very wretchedness of the present was part of the divine plan outlined in the Bible. If the simile is accurate that likens the Halacha to the ramparts about Israel's sanctuary, which every Jew was ready to defend with his last drop of blood, then the Haggada must seem "flowery mazes, of exotic colors and bewildering fragrance," within the shelter of the Temple walls.