DON'T GO SECURITY."

Waikato Times, Volume XXXIII, Issue 2668, 17 August 1889, Page 6 (Supplement)

DON'T GO SECURITY."

Tun New York Tribune has an article with the above title, by Ralph Walde Brown, from which we quote tho follow ing:— " Having known many cases where going security brought financial ruir to the endorser, I have been led te study the subject, and to " 'react conclusions contrary to tIiOBO f?erierally accepted. I believe that tho prao tice is founded on wrong 1 principles, and that, looked at with calm judgment, il will be seen to be utterly absurd. When two men trade, it is for mutual benefit but if you put your name to a note, yoi: assume all tho risk of another raan'i business, with no voice in its manage ment ; no chance to sharo the profit, ii tho transaction prove profitable, but .1 certainty of having tho amount to pay if, through misfortune!, rascality, or ruck less speculation, the maker of the note fails to meet it. I quote Bradstreet as authority for the statement that is endorsing notes for a given sum you rur a much greater risk than you would tc insure buildings for a like amount ; aw; yet men who would consider the proposition to insure their neighbour's house for nothing as utterly preposterous will -sij;n their names to these same men's notes -without hesitation. Just lay this down as an axiom : Honest men do uol need an endorser, and dishonest men dr not deserve one. Tiiere is, too, anothei view of the matter generally over-looked, namely, that endorsing is, in a large number of cases, an injury to the mcr you endorse for. 1 have had good opportunities for 15 years to study in several States the conditions of success, and nc one fact has impressed me more than thai it is the men who begin 011 a snial s(;ale, avoid debt, and allow.their business to grow slowly and naturally whe are the substantial men of the day. Going too fast, enlarging one's business before the capacity to manage it has beer acquired by patient plodding, is the causc of nearly all the business failures, and when we come to deduct from those remaining the cases where men have been ruined by paying security debts we shall find that we have accounted for nearly all the business failures My remedy foi this evil is to put all security 011 the same basis as insurance. There are cases where an endorser seems necessary, and it ia a hardship not to have one. Let companies bo formed to give official bonds for executors, administrators, officers: and also to secure the payment of private indebtedness. Let a fee or per centagc be charged for this, just as is now done for insurance. This company will make it their business to know the character and habits of tho men who ask for a bond, and this tho private citizen cannot do, When there is a loss there will be a fund from which to pay it, and it will not fall on an individual, who will perhaps be ruined by it. As it will reqniro time to make a chauge so radical as this in business methods, let mo "lay down a few rules for safe guidance ; 1. No man ought to put his name to anybody's note because 110 thinks it a mere formality, and that there is no possibility of his having to pay. It is unexpected that happens, and a year or two may wreck the fortune of any man ; so, if yon sign his note, do it with a clear understanding of your responsibility and a determination of paying it promptly without lawsuit or deiay. 2. No man has a right to put his name to a note which, if called 011 to pay, would cripple his business, deprive his family of support or education, or defraud his creditors. In other words, a man ought not to risk that which is not his own, and certainly his family has a right to support and education, and his creditors should have a right to his money rather than some one who has given no equivalent for it. 3. No man should endorse for another without the knowledge aud consent of his wife. She should be considered the business partner in a higher sense than the man with whom you form a business partnership, and, as he would be considered dishourablc to sign the lirms name to notes which would endanger their standing, so he should scorn to do without his wife's acquaintance that which risks the property which she has helped to accumulate, and upon which she depends for support. . The man who does not endorse for tliers must not accept an endorse for imself."