We often speak of Exodus 18 as the place where elders were first appointed. But of course, we have seen elders all through the first part of Exodus. Moses and Aaron went to the elders at the end of chapter 4, when they first told Israel of the coming salvation. Likewise, we see the elders of Israel here in chapter 18 before the appointment of chiefs and judges.
This is because the term “elder” can be used in two different ways. In Exodus 4 and 18, “elder” is used to speak of the “older men of the community.” Perhaps it would be best to call them “tribal elders.”
Here in Exodus 18, the tribal elders do not have a role in deciding cases. And when you listen to Jethro's advice, Jethro does not tell Moses simply to give the tribal elders more authority. Certainly I would imagine that many of the tribal elders would have been selected as chiefs and heads in Exodus 18 – but the criteria that Jethro uses focuses more on character.
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