The Saline County journal. [volume] (Salina, Kan.) 1871-1893, 1879-05-29
The Cost OF Credit.

Credit is marketable commodity,
and costs the purchaser precisely wha,
il il worth to the seller. In estimating
its cost, there are several things to be
taken into account besides the mere
matter of interests. Interest is defined
by the scientific political economist as
remuneration for the use of money,
which is propertyac cumulated BY labor,
Just as q house or cleared land, or q
ship, is property produced by labor.
For the use of house or land, rent is
paid for the use of ship, freight is
charged; and for the use of money, in
terest is charged. This is just and inev-
table. When q person obtains the use
Of money or moneys value, no is called
upon to pay, and Is morally bound to
pay, q reasonable sum for this use and
from time immemorial this has been
called interest. But delays in payment
incur many other expenses than this.
If every debtor were certain to pay his
debt when due, there would be no nee
essity for the seller of goods or lender
Of money to calculate upon, or require,
any other charge than the interest. But
debtors fail to pay in an uncertain pro-
portion to the number Of them; but
every year there are moro or less of
them who do not meet their engage
ments in time, or fail to pay it at all;
and actually-speaking literally and to
the point-cheat their creditors, perhaps
not Intentionally, but mono the less ef-
tectively, out of their just dues. In
business this risk of loss enters into the
estimates of expences as inevitable as
interest upon the use Of money, and
must be provided for out of the cost
price of goods made and sold.
Again A credit business involves the
use Of greatly increased capital; sew
eral times larger than would be required
If cash were paid on delivery. This is
evident, and can be made plain to a
farmer who would FOR a moment consid
or what would happen if circumstances
were changed, and he we're obliged to
wait q whole year for the money fer
his pork, wheat, butter, cheese, and 9TH
or products. He would have to double
that part of his capital which represents
all this property; that is certain, or he
could not pay wages, meet expenses,
provide seed and Fertilizers, and sustain
tho numberless charges which fall upon
his business in the course Of year.
Tho people from whom he buys are
then placed in precisely this predica.
msnt, when he buys on o years credit.
1t is necessary that they should pur-
chase and carry two years stock OF
materials, and find money to pay tor
two years labor; and this involves lar
ger buildings, the risk of depreciation
in value, cost of extra insurance, and
other onerous charges. No business
man can afford to take risks. Security
is the life of business, and he must pro
vide against whatever event might bring
loss to him and 1t is common prudence
that would estimate the charges which
thus arise, in q sufficiently liberal man
ner to DO on the right side, and so avoid
uncertainty. Then, years credit in
wolves the necessity for the keeping OF
many accounts, and for collecting many
debts; and these are troublesome and ex'
penslve services done for tho debtor, for
which, of course, no must pay.
II Is hardly necessary to pursue this
pOlut luGtuOTs my tuOuS uSuA PSAcOs'
can see through it, and can realize to
what large extent it enters into all
kinds of business. Let such a man put
himself in the place of another, forced
to do large credit business; to suffer
constant harrassing anxleties; to DO ev-
or on the most lively watch; to keep
himself informed continually on hun
dreds OF important points; to meet hun
dreds of otherwise needless expenses;
and he will acknowledge readily the
seriousness of this consideration. What
all this costs the purchaser, can hardly
be told. But one can form an idea OF
it's cost, if he will think of it in this light:
Let him sell cow to this man; bushel
of wheat to that; load of corn to an
other; and so distribute his years pro-
auctions among a thousand people,
opening accounts for every one, watch
ing when these come due, writing off
lost accounts of defaulting debtors, and.
in fact, selling just as he buys; and then
figure up the result.
This will DO tho cost of credit business
from the sellers point of view; but a
worse condition of circumstances can be
shown to exist from that OF the buyer,
and to appropriate tho pertinent words
of Hamlet "Thus bad begins; but
worse remains behind" The truth OF
this We shall endeavor to show here