“There is wisdom in generosity, as in everything else–a friend to everybody is often a friend to no­body; or else, in his simplicity, he robs his family to help strangers, and so becomes brother to a beggar.”–Spurgeon.

NOT long ago a leading financial newspaper carried the story of a man in New York who went into bankruptcy. His assets were $10, and he owed $93,230, of which amount $61,500 had been borrowed from his friends during a period of seven years.

The newspaper story directed attention to the fact that many people live on other people’s money and enjoy the leisure which rightfully belongs to those others.

This was undoubtedly an extreme case, but the method of operation is not at all uncommon. Lending back and forth between acquaintances employed in the same establishment is a bad enough practice for both lender and borrower, but lending money to every Tom, Dick and Harry is a ruinous practice for both borrower and lender. Such loans destroy friendships and create cool­ness between acquaintances much more than a refusal of the loan.

Another man who failed listed among his assets $18,160, which he had loaned to various relatives, friends and acquaintances without security of any kind. The receiver in the case collected less than $500 of the total amount, as many of the loans could not even be proved. No notes had been taken and no promises to repay had even been made. One former friend testified that the $1,500 claimed from him had been paid to him as a commission on a deal and denied any indebtedness to the bankrupt.

This was a serious case, as it so happened that the total liabilities of this bankrupt were only $8,090, so, if he had never loaned the eighteen thousand dollars, he would not have been a bank­rupt and might have had $10,000 in the bank besides.

Money which has been accumulated through hard work, thrift and frugality should not be loaned without security sufficient to guarantee its repayment. Loans are often made to friends out of hand and with no writing in the case, and the collection of such loans almost invariably causes bad feeling.

The man who is entitled to borrow money is usually in a position to get it from a bank, or, if his credit standing and quick assets are not sufficient to justify a bank loan, he can usually give reasonably good security to guarantee the payment of his note when due.

Under ordinary circumstances he has no right to ask for the loan from his relatives, friends or acquaintances without offering them unquestioned security. In the case of illness, deaths and sudden misfortunes, it is sometimes necessary for relatives and friends to come to the rescue, but these are extreme and unusual cases.

The New York bankrupt has simply made it his business to idle away his time and to live indolently on the money he could borrow from his friends. Lessing must have been thinking of him when he wrote: “Borrowing is not much better than begging.”

The other man who failed because his friends owed him so much money now finds himself unable to provide even the ordinary comforts of life for his wife and two children. And all because he was always ready to lend a five here, a ten there and a hundred more, without security. He was honest, but we are sure you will agree with us that he was also foolish.

It is better to be disliked because you decline to lend money to an acquaintance than to be disliked when you try to collect it; you will be disliked in either case, but, if you refuse to make the loan, you will still have the money.

Perhaps you have not been a reckless lender of money, but it is probable that you have loaned a good many dollars which you never again expect to see.

Shakespeare lived before the days of banks, but not before the days of friendly borrowing. You will remember he said:

“Neither a borrower, nor a lender be; for loan oft loses both itself and friend; and borrowing dulls the edge of husbandry.”

Tags: The Secret of Wealth