Borrowing money is a most dangerous practice whenever any difficulty in the repayment is to be anticipated, that is to say, in the circumstances in which men ordinarily think of borrowing, poor, as a rule, men have recourse to this expedient when their expenditure exceeds their income, or when they wish to spend more than they can earn.
In such cases by means of borrowing we are enabled more easily to violate the salutary rule of prudence, which tells us never to spend more than our income.
Any one who borrows under these circumstances seldom sees any definite prospects of repayment, and it would be far better for him to restrict his expenses to the purchase of the barest necessities of life, than thus to throw upon his shoulders the burden of a debt that he does not know how to pay.
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The borrower either entreats a loan from a friend as a favour, or receives it from strangers as a matter of business. The former plan has the advantage of perhaps giving you as loan at a lower rate of interest than that at which you could borrow from a banker. In many cases friends lend money free of interest.
But nevertheless there are serious objections to this mode of borrowing, the greatest of which is that it generally has a prejudicial effect on friendship. It is very difficult for a debtor and creditor to continue to be friends. In the first place, many persons are offended when their friends ask for a loan.
They think they are being imposed upon, and declare that they would much rather be asked for a gift outright. Indeed, in some ways it is more prudent to give than to lend money. The man who lends money expects to be repaid, and, when he has incurred expenses.
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In the expectations of being repaid at a certain date, the disappointment of this expectation may entail very serious consequences. If he had made a gift, he would have known that so much was subtracted from his ready money, and would have regulated his expenses accordingly.
It is a strange fact that the recipient of a loan also is in danger of becoming less friendly to the friend who has tried to do him a benefit. He may be weighed down by the obligation, and feel Resentment on account of the position of inferiority to which he has been reduced by becoming a debtor.
On this account, and also from the fear of being asked for repayment, he is likely to keep out of the way of his friend and creditor. A story is told of a man who, being thus avoided by his friend to whom he had lent money, said to him, “Either give me back my money or give me back my friend.”
Besides being dangerous to friendship, borrowing from friends often leads to base deception. The confirmed borrower is apt to go for money to women, who are so ignorant of business that they are utterly unable to see the danger to which they expose themselves and are easily imposed upon. In this way many have been reduced to destitution by the art of unscrupulous borrowers.
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If one must borrow at all, it is in some respects better to go to the professional money-lender, who will charge interest according to the amount or risk, rather than to our friends and relations. By this kind of borrowing we at any rate avoid the sense of obligation, and are not tempted to do harm to those who love us by imposing upon their ignorance.
Only we must remember that, unless we are extremely circumspect, we cannot borrow without incurring a greater danger of ruining ourselves. In old times the debtor who could not pay actually became the slave of his creditor. In modern times those who borrow money that they cannot pay, though nominally freemen, are virtually deprived of their independence.
One loan leads to another on harder terms, until the poor debtor retains for himself only enough of his earnings to keep body and soul together, and pays the rest to his creditors.
He is thus, to all intents and purposes, a slave, because he has nothing that he can truly call his own, and all his labours benefit not himself but those from whom he has borrowed money.
Therefore, it is well to think twice before making the first step on a downward course which may lead to such ruinous results. However, it is impossible to lay down an absolute rule against borrowing. In business we know that borrowing even on a large scale is often a perfectly legitimate operation.
In private life, also, it is sometimes prudent to borrow in time of great emergency even from our friends. For instance, if a poor student is conscious of good abilities, and a rich relative is willing to lend him money for the expenses of his education, there is no reason why he should not accept the assistance of a loan.
When by honest work at school and college he has gained the means of paying the debt, the mutual feeling of kindliness between himself and his benefactor will be increased by the transaction.
There are also many other times of temporary distress due to sudden illness or unavoidable misfortune, in which it may be advisable to borrow money. So that the rule against borrowing should not be laid down too absolutely.
We must content ourselves with clearly recognizing the evil results that usually spring from the use of other people’s money, and, if we are ever compelled to borrow, we should never rest until we have succeeded in discharging our debt.