CORRESPONDENCE "DEBTOR MENTALITY"

Evening Post, Volume CXX, Issue 1, 1 July 1935, Page 8

CORRESPONDENCE

"DEBTOR MENTALITY"

WHAT IS THE REMEDY?

(To the Editor.)

~ Sir,—The subject of "Debtor Mentality," as you ably point out in your leading article of the 28th instant, embraces questions which are important both morally and practically. With your permission 1 propose to examine the practical implications of a tendency which must be eradicated before the economic health of the community can. be cither attained or proclaimed. No remedy can bo-suggested without a cause being determined. No small part in the causation of debtor mentality has been played by the indiscriminate distribution of loan moneys and surplus profits in prosperous times to non-creditworthy borrowers. To attempt to apportion between Government, financial institutions, and private lenders the 'blame for this distribution is beside the point, for in a democratic state—unless we prefer to regard democracy as entirely a delusion—all must share the blame, as all do the consequences. But if "debtor mentality" is a consequence and indiscriminate lending is a cause—if the feckless borrower now turns and rends both the reckless and the prudent lender—then the prudent would-be borrower suffers unjustly and the normal development of the country is retarded. That, howaver, is to state the evil in general terms. Surely the owners of capital have a right—no less than a duty—4o see that their funds are so placed as to earn the maximum return which is. compatible with reasonable security. Conversely, : surely the community owes it to itself,,as well as to' the capitalist, to see that the greatest possible use (compatible with development on economic lines) is made of the funds which are or may be made available. Here it is, or so it seems to me, that the owners of capital may take a leaf from the book of modern business methods; for here it is that they have failed in the past—firstly, in allowing the business of moneylending to be a political business, which has resulted inevitably in a pandering to the debtor mentality, to a hopeless clouding of the issues, and, in fact, to a conflict of duty and interest; and, secondly, in too long allowing the growth of the conception that money-owners are a class which takes everything and gives nothing. "How to remove ill will towards us from the minds of honest people and good customers —this is a subject that we should think about," says Herbert N.-Casson. " ... When worthy people speak ill of you, it is a matter that must be attended to at once. It is not enough, in these days, to make or sell the right goods at the right price. A complete system of service must be built up. There must be the service of truthful advertising. ... AH along the line there must be courtesy and fair dealing. ... Customers must be kept. Employees must be trained and stimulated. ... It is/ a task that never ends—this creation -of a system of service." :>'..:'■ The banks at least have commenced to give attention to this matter: But is there not room for a wider and more comprehensive campaign of enlightenment than anything yet attempted? The statements of bank chairmen, forceful though many of them are, do not, generally speaking, reach the people who require enlightenment; in any event they savour more of. apology than of appeal. And appeal it.is.that is required. Yet'not an indiscriminate appeal. What are needed are not so much new customers as better customers, customers with minds freed from suspicions and theories, alive to their own and the country's potentialities, and ready to accept the help of capital in their realisation. What are needed, in short, are credit-worthy customers in place of debtor-minded • customers. , I submit, therefore, Sir, that the problem which you cite—that of eliminating debtor mentality—must be regarded as a business problem, and treated as such. *I admit that it is a long-range problem, but our leaders of finance should not regard it as any the less a business one because its full solution will not be reflected in next year's balance-sheets, nor yet because such solution must involve .benefits for the community at least as great as those to the institutions which the leaders represent.—l am, etc., v NEMO. June 29. • ■ ' (To the Editor.) Sir,—ln your leading article tonight, you deprecate the development of a "debtor mentality." But under existing conditions how can this possibly be averted? ■ Whilst1 all purchasing power, except. the small. N change, is issued as a debt, and whilst the money necessary to pay the interest is not created, no one can remain solvent except at the expense of making someone else bankrupt. An individual can, of course, pay his debts by capturing the money from someone^ else. But the total indebtedness of the community must continually increase. In most countries the total debt is doubled in about ten or fifteen years. Twenty doublings transform unity into more than a million. Thus if each child born in New Zealand today starts 'with a debt of £200 it follows that, were the present system continued, in two or three centuries, each child would start life with a debt of two hundred million pounds. Since, as you say, a "debtor mentality", "cannot be the architect of a prosperity which it envies," would it not be better to. alter the conditions which make such a mentality unavoidable.—l am, etc., A. C. GIFFORD. June 28. ■ ' . . [In claiming that "debtor mentality" is the unavoidable consequence of the present system the correspondent has reached a conclusion by putting forward unsupported assertions as facts. For example, the assertion that "all purchasing power" except the small change, is issued as a debt" is manifestly incorrect. A great part of the purchasing • power is the payment for service rendered either in the present or in the past. To attribute the "debtor mentality" to the sysem is unwarranted, for this mentality is a growth of recent ■ years whereas 'the system is of much longer duration. Moreover the "debtor mentality" is local and is not to be found in England where there has been adherence to principle. The widespread tendency to ascribe difficulties to a system and not to blame those who have misused the system is in itself one of the most disturbing signs of the influence exerted by debtor agitation.—Ed.]