CREDIT AND ITS CONSEQUENCES

Colonist, Volume IV, Issue 356, 22 March 1861, Page 3

CREDIT AND ITS CONSEQUENCES

" Oat of debt, out of danger."— Old Proverb Under ibis heading a correspondent of the Lyttelton Times makes some rather sensible observations, from which we gather that the habits and morality of the Canterbury pilgrims are much on a par with those of the settlers of the rest of New Zealand, notwithstanding the large infusion of the Church of England element in Canterbury society, and the high tone with the resident dignitaries and clergy of that Church would be supposed to give to the manners and habits of the people. The writer suggests that, to remedy the evils of which he complains, cash should be paid on all retail transactions. The suggestion is, doubtless, a good one, but to render it of service he ought to have pointed out its practicability. We will endeavour to supply the omission. Let a marked reduction be made by retailers in the prices of all goods they sell for cash. This would soon make cash payments the rule, instead of of the exception. It would be necessary, however, that the difference should be such as to induce purchasers to pay cash rather than to obtain on credit the goods that they may require. The adoption of such a plan would gradually, but no less surely, remedy, to a great extent, the evils of the pretent system.

We have before pointed out that the difference between the wholesale and retail prices of is so great as would appear to the residents in England altogether incredible. This has a very injurious effect upon the interests of both producer and consumer, and, while it necessarily greatly increases the cost of living, none of those benefits are realized which are supposed to spiing from the prevalence of high prices. Take for example the article of cheese. The wholesale price of-this artiole, i.e., the price received for it by the farmer, does not, on the average, exceed Bd. per lb., while the price nsked for it over the counter is, on the average, at the rate of Is. 4d. per lb. We thus see that, by the operation of a vicious system, the retailer, in selfdefence, is compelled to make those pay for those who do not pay; while, at the same time, a less price is given to the producer, and a larger price is paid by the consumer than would otherwise be the rase.

A system of this kind must necessarily have a tendency to check production and damp the energies of the country settlers. Nor is the prevalence of artificially high prices consequent upon this state of things an evil of no magnitude. It must tend to prevent the introduction and employment in the Colony of both capital and labor. Monied men will not live in a country where the price of living .is 100 per cent, higher than it is any where else. But if the price of living was moderate, hundreds of persons from the Australian colonies and India might be tempted to take up their temporary or permanent abode in the Colony, on account of the salubrity of its climate. The high priqe of labour of course has a tendency to' check production, and keep down the demand for labor; j?et the nominally high wages given are no more than is absolutely required, owing to the high prices charged for the prime necessaries' of life. Admitting" that the credit system is not wholly to blame for the existence of the evils here indicated, the practice adopted of making those pay for those that don't pay, encourages a loose system of dealing, is detrimental to the morals of the community, and inflicts upon the honest purchaser an injury as great as it is unmerited.

The writer in the LyttellonTimes observes :

"Is land to be bought, not money or tangible property of any kind, but credit is the medium employed to effect it and consequently double or treble the value is given, or promised to be given for what is purchased. Is a house to be built, the same course is pursued, and timber merchants,carpenters, and ironmongers, butchers, bakers and shopkeepers find a great increase in the debts due to them, but comparatively little cash in their tills. Tliis must of course be met by commensurate additions to the prices charged. Estates are occasionally improved by the same means, and horses every day change hands because they can be had on credit. All these credits expire in time, and then the demands must be met, and if not an assignment probably must be mads, or in smaller matters a course of dunning commenced most annoying and most disgraceful very frequently to the dunners who are the objects of it; particularly where tha debt has been incurred through the miserable indulgence of gnzzellmg. It is not the mere cost of getting drunk, but the value of the time lost and the business neglected which usually bring ruin from the indulgence of this vice- Was not the fact ever before our eyes, it would be difficult to believe that men in their right senses would for the certain enjoyments ot drunkenness—sickness, poverty, and contempt, and possibly delirwm tretnem —subject themselves to be turned out of house and home, their wives and families rendered shelterless and foodless, with little hopes of being even able to pay theiv debts and enter themselves again upon the list of honest men. But degrading as these cases are they are scarcely equal to those whore'men, who from education and training ought to be able to appreciate the advantages of veracity, disgrace themselv^, by resorting to all kinds of subterfuges and prevarications to get rid of the present payment of their debls, often contracted to gratify paltry and unnecessary desires. And, strange perversity, some^who are able to pay submit to this disgraceful ordeal unflinchingly; but the money can be lent on profit and the creditor must wait.

" But, what is stranger still, the getting into debt is occasionally advocated under the pretence that a mau having spent his capital should use his credit to increase his estate, his business, or his enjoyments. In other words, that he should get his neighbours' goods into his hands, with no present or early expected means of paying for them. Not legally stealing certainly, because the goods may possibly be paid for, but it would require a very clever casuist to point put the real difference.

"Now, Sir, I have named but a few of the proceedings which have involved our province,in such nn unseemly position of debt, and which if not retrieved must get worse and end in general ruin. I will but sfay to propose one general remedy^ and that is, cash to be paid on all retail transaction^? our bank appears to be holding the reins so taut that bill transactions will not at present be over done; and there are so many houses of almost all kinds on sale at considerable reduced price's, that we can scarcely expect the building mania to run riot again for a lime. And if experience be of any value, individuals taught to think by the resuits of bygone extiavagance and improvidence will endeavour at all events for a time to avoid the miserable degrading feeling of being in debt.