The sun. [volume] (New York [N.Y.]) 1833-1916, 1903-04-12

when the claim 10 msde that debtors or
oredltors should be protected by thu Gov
eminent from any unforeseen changes In
prioe which may have altered the value OF
money during the existence Of . contract.
The busins % world buys and els, perfectly
aware Of the impossibility OF finding
perfect standard for defe RED payrnents;
when ente ring into long contract. every
man knows that he TAX . risk, be II smal
or gr at, Of alterations In the value OF
money n lativr ly TO goods.
II N no defence to plead that no couio
not have known enough about money TO
understand this risk to be part OF MS
problem. Our author points out that II Is
characteristic Of human society that q
premium exists on men who do know these
thing. and act accordingly. Tho posei.
bility Of industrial changes which would
effect prices and Of influences which would
touch the money metal and change the
value Of a standard Is as much part OF tho
inevitable risk In making contracts - u
the knowledge Of the soundness OF . buy
er's credit II is one Of the risks which .
man must assume In taking up any indus
trial enterprise. Such being the case, II
would be carrying the plea for Govern
ment interference to q foolish extreme 10
require the State 10 compensate every or
any business man for all mistakes OF judg-
ment which may have involved him In risk
and loss. Every one who enters into Q
time obligation assumes certain risks which
he must face, and Of which he must accept
the consequences. To throw the ordinary
risks OF business upon the State would Do
a perversion Of socialism which Prof.
LAughlin, for his part. deems II super
huous to discuss. just such q policy -
this, however. Ii clearly involved In the
frequent proposals that the Government
should 30 control the currency, increasing
or decreasing It's quantity generally In
creasing 1t. Of course) that prices may be
regulated artiHcislly. and contracts be
thereby affected through action upon the
value Of the standard.
We desire. finally. to draw attention to
another passage In which we are reminded
that the moral and economic considerations
entering into the relations Of debtors and
creditors are not always kept in mind In
legislation on money. 1t Ia sometimes
assumed that the debtor class should be
favored as far as possible. But who. asks
Prof. Laughlin, compose the debtor classf
1t is true. for instance. that . bank u
debtor In tho full extent Of all It's assets.
Large capitalists frequently have out
standing obligations to meet far In excess
OF their actual capital. Merchants are
continually doing business to an amount
far beyond the capits which they actually
possess. They borrow additional means
by discounting their paper. and It is they
who create the greater proportion OF the
general Indebtedness. The largest part OF
the obligations Of q country, 30 far as
amounts arc concerned. arises from those
who are engaged In the more extensive
transactions.
The political outcry. indeed. In favor OF
the debtor which at times Is heard In many
places has no origin in an altrulstic desire
to help the large operators, though they
form the most important part Of the debtor
class. The assumption that the debtor
class should be favored in legislation has
It's inception in the mistake that the poorer
members Of the community form the main
constituents OF the class. A poor man
may be In debt, but the total burden Of the
poorer class Ia but fraction Of the obi
cations OF a few large institutions, and
legislation giving preference to debtors
would serve the poor man infinitely less
than 1t would the large producer. For
example, the mortgage bonds Of railways
alone in the United States amount In the
aggregate to a 200 600 900, whereas all the
mortgages on acres amount to but q 400
900 600. Even the mortgages on acres
result In many cases from operations OF
well-to-do men.
Is the legislation favoring debtors a.
against creditors for the good OF the coun-
try, morally or economically Prof.
Laughlin answers the question in the
negative. Suppose. he suggests, that
salaried clerk has saved something from
his stipend TO provide for old age or possible
death, and that In the course OF i've years
he has accumulated 81 900, which he wishes
to invest safely. He lends the sum TO far
mer in Kansas. securing 1t by a mortgage
on the latter's farm. The frugal clerk sees
his savings Of Ave years pass out OF sight.
while to the farmer is given the power to
consume for his own use all that the 81 900
will purchase. After the farmer has OBJ
/ tanned the satisfaction which this sum
commands is he thereby exempt, merely
because 1t is spsnt. from the moral and legal
obligation to return the 81 900. with interest.
20 the clerk, who went through painful
sacrifices to save the amount. and has.
as yet, never enjoyed anything from the
results Of his savings' The farmer took.
and he must meet. the risks OF borrowing.
Of production. Of crops. Of markets. OF time
contracts. Suppose the crops fail. or that
through foolish errors Of Judgment the
farmer is unable to pay the loan on ma
turity. Does that fact relieve him from
his obligations TO the lender1 BY no means.
II mistakes have been made, II the farming
has been injudicious, or IL the loan was
fraudulently consumed. so that there Is
nothing TO show for II. then II Is clear that
the 81. 900. by the process Of lending. has
passed from a thrifty. honest and fore
sighted to a less efficient or less honest
member OF society.
Should the latter be favored at the ex-
pense Of the former1 Clearly not On the
other hand. suppose that the farmer had
made a good investment OF the loan. and
I had shown skin in the Use Of the new CAPT
| tai on his farm; then the borrower will
have earned more than he borrowed. and
J he will have the means to repay the loan.
| In such q case no question Is ever raised
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