Twice-a-week plain dealer. (Cresco, Howard County, Iowa) 1895-1913, 1896-09-08
CREDIT AND CONFIDENCE.
Lack of Money to Pay Our Debts Wholly
Responsible for Want of Confidence.


money undermines credit. destroys
confidence, and thus paralyzes indus
try Once cease this agitation and,
declare the gold contractionists, CAPT
talists who now hesitate to loan their
money, fearing repayment in depre-
ciated dollar, will hasten to invest
their funds in productive enterprises,
that consequently industry will revive
and prosperity return.
Want of confidence is loudly pro-
claimed as the source of all our ills,
but want of confidence is the effect,
not the cause of industrial stagnation.
Confidence is based on credit and credit
on the ability of debtors to promptly
pay their debts. When the retail
trader cannot dispose of for cash and
at fair prices the goods he buys from
the wholesaler on credit, and as con-
sequence is obliged to ask for re-
newal in whole or in part of the note
given in payment for sach goods when
due, then his credit is impaired and
the confidence of the wholesaler
in the ability of all other retail
ers similarly placed to prompt
ly meet their Indebtedness is de-
stroyed. And SO in turn, when the
wholesaler is unable to collect prompt
ly for the goods sold to the retailer, he
cannot collect the necessary funds to
pay promptly his indebtedness to the
manufacturer or other producers from
whom he buys the goods in the first
place, and as a consequence his credit
is impaired, and the confidence born of
prompt payment of indebtedness is de-
stroyed.
Thus want of confidence is born of
the inability of debtors to promptly
take up their Indebtedness when due,
and the inability of debtors to meet
their Indebtedness is born of their in
ability to realize on their property.
Hence credit and confidence is based
primarily on property. When prop
erty is rising in value, then the debtor
can readily find buyer for and read
fly realize on his property, and conse-
quently promptly meet his indebted
ness. But when property is depreciat-
ing, then credit is impaired and conf
dence destroyed, for the ability of the
debtor to pay is dependent upon his
ability to realize on his property, and
while property is depreciating it is I'M
salable save at a sacrifice, for the
would-be buyer hesitates, saying: ITO
morrow can buy cheaper"
But it is not only inability to sell,
but inability to collect promptly for
goods sold, that impairs the ability of
debtors to promptly pay their debts,
and hence undermines credit and de-
stroys confidence. 1t is therefore in
falling prices that we find the source
of the want of confidence of which
we hear SO much. The restoration of
confidence, we are told, is all that is
needed to bring renewed prosperity,
but how is confidence to be restored
while prices are falling, while the
value of property, the basis of credit is
depreciating, and while the ability of
the debtor to meet his Indebtedness is
being impaired by the shrinkage Of his
assets? Just as the creditor sees the
property of his debtor on which he re-
lies for payment depreciating in value,
he must lose confidence, for the prop
erty is the security for the prompt and
full payment of the debt.
| So when money is appreciated and
prices falling. credit is impaired and
confidence lacking. Failing prices de-
stroy the profits of industry, and con.
sequently lead to curtailed production,
the throwing of wage-earners out OF
work and lower wages. And as the
income of the wage-earner is cut into
by enforced idleness and lower wages
he must restrict his purchases and for
what he has bought on credit he can
not pay promptly. Consequently, just
as the wage-earner is impoverished his
credit is curtailed, for the corner gro
ceryman, who was glad to sell to him
: on credit so long as he promptly paid
his weekly or monthly bill, and so long
as he knew his customer was working
regularly and at good wages, hesitate:
to sell on credit just as soon as he finds
his customer, the wage-earner, nc
longer at work, for when he knows
the wage-earner is earning nothing ht
, doubts his ability to pay promptly hi
, weekly bill. The result is that wher
the wage-earner is pinched for none,
he must pay cash for all he buys, ant
the necessity of doing so, and thu
: scarcity of money at his commant
forces him to buy in small quantitie
and to pay correspondingly higl
prices.
And just as the wage-earner find
: his credit impaired when out of work
the farmer finds his CREDITOR, il
other words, the confidence of thos
y from whom he buys in his ability t.
: pay-impaired just as prices fall an
l his labor becomes less remunerative
:, So, as he becomes less able to pa.
promptly, he finds that those iron
whom he has been in the habit of buy
ing on credit hesitate to sell for any
! thing but cash. 1t is true, the pre-
!. ducers of some articles, while they dis
! like to sell on credit, are obliged to d
SO to find market for their products
but it is none the less true that as tn
farmer is impoverished his credit
impaired. And SO it is with all pre-
ducers.
Confidence will return when tn
ruinous fall in prices due to the az
: probation of gold is checked, and whe
industries becomes profitable, not BIZ
). fore; for confidence is dependent sole
: ly on the ability of the debtors to pa
. their de BITS, and this ability is deper
L I dent entirely upon the value of good
= on which credits are granted to pul
;, chasers, and which are in effect the 81
Il n a 4 =