The History of Credit & Debt – Benjamin Franklin

While sailing to England in 1757, Benjamin Franklin the famous America statesman and author wrote “The Way to Wealth” which provided advice on a variety of subjects.

The text was only sixteen pages but the advice contained therein was invaluable. Franklin has very strong opinions about debt and he was not shy about expressing them.

Many readers of this page will be surprised to learn that even in 1757 warnings about the abuse of credit were good practical advice. And to think, not a credit card in sight.

Excerpt from Benjamin Franklin’s “The Way to Wealth”

If you would be wealthy, says he, in another Almanack, think of Saving as well as of Getting: The Indies have not made Spain rich, because her Outgoes are greater than her Incomes. Away then with your expensive Follies, and you will not have so much Cause to complain of hard Times, heavy Taxes, and chargeable Families; for, as Poor Dick says,

Women and Wine, Game and Deceit,
Make the Wealth small, and the Wants great.

And farther, What maintains one Vice, would bring up two Children. You may think perhaps, That a little Tea, or a little Punch now and then, Diet a little more costly, Clothes a little finer, and a little Entertainment now and then, can be no great Matter; but remember what Poor Richard says, Many a Little makes a Mickle; and farther, Beware of little Expences; a small Leak will sink a great Ship; and again, Who Dainties love, shall Beggars prove; and moreover, Fools make Feasts, and wise Men eat them.

Here you are all got together at this Vendue of Fineries and Knicknacks. You call them Goods, but if you do not take Care, they will prove Evils to some of you. You expect they will be sold cheap, and perhaps they may for less than they cost; but if you have no Occasion for them, they must be dear to you. Remember what Poor Richard says, Buy what thou hast no Need of, and ere long thou shalt sell thy Necessaries. And again, At a great Pennyworth pause a while: He means, that perhaps the Cheapness is apparent only, and not real; or the Bargain, by straitning thee in thy Business, may do thee more Harm than Good. For in another Place he says, Many have been ruined by buying good Pennyworths. Again, Poor Richard says, ‘Tis foolish to lay out Money in a Purchase of Repentance; and yet this Folly is practised every Day at Vendues, for want of minding the Almanack. Wise Men, as Poor Dick says, learn by others Harms, Fools scarcely by their own; but, Felix quem faciunt aliena Pericula cautum. Many a one, for the Sake of Finery on the Back, have gone with a hungry Belly, and half starved their Families; Silks and Sattins, Scarlet and Velvets, as Poor Richard says, put out the Kitchen Fire. These are not the Necessaries of Life; they can scarcely be called the Conveniencies, and yet only because they look pretty, how many want to have them. The artificial Wants of Mankind thus become more numerous than the natural; and, as Poor Dick says, For one poor Person, there are an hundred indigent. By these, and other Extravagancies, the Genteel are reduced to Poverty, and forced to borrow of those whom they formerly despised, but who through Industry and Frugality have maintained their Standing; in which Case it appears plainly, that a Ploughman on his Legs is higher than a Gentleman on his Knees, as Poor Richard says. Perhaps they have had a small Estate left them, which they knew not the Getting of; they think ’tis Day, and will never be Night; that a little to be spent out of so much, is not worth minding; (a Child and a Fool, as Poor Richard says, imagine Twenty Shillings and Twenty Years can never be spent) but, always taking out of the Meal-tub, and never putting in, soon comes to the Bottom; then, as Poor Dick says, When the Well’s dry, they know the Worth of Water. But this they might have known before, if they had taken his Advice; If you would know the Value of Money, go and try to borrow some; for, he that goes a borrowing goes a sorrowing; and indeed so does he that lends to such People, when he goes to get it in again. Poor Dick farther advises, and says,

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Fond Pride of Dress, is sure a very Curse;
E’er Fancy you consult, consult your Purse.

And again, Pride is as loud a Beggar as Want, and a great deal more saucy. When you have bought one fine Thing you must buy ten more, that your Appearance may be all of a Piece; but Poor Dick says, ‘Tis easier to suppress the first Desire, than to satisfy all that follow it. And ’tis as truly Folly for the Poor to ape the Rich, as for the Frog to swell, in order to equal the Ox.

Great Estates may venture more,
But little Boats should keep near Shore.

‘Tis however a Folly soon punished; for Pride that dines on Vanity sups on Contempt, as Poor Richard says. And in another Place, Pride breakfasted with Plenty, dined with Poverty, and supped with Infamy. And after all, of what Use is this Pride of Appearance, for which so much is risked, so much is suffered? It cannot promote Health, or ease Pain; it makes no Increase of Merit in the Person, it creates Envy, it hastens Misfortune.

What is a Butterfly? At best
He’s but a Caterpillar drest.

The gaudy Fop’s his Picture just,
as Poor Richard says.

But what Madness must it be to run in Debt for these Superfluities! We are offered, by the Terms of this Vendue, Six Months Credit; and that perhaps has induced some of us to attend it, because we cannot spare the ready Money, and hope now to be fine without it. But, ah, think what you do when you run in Debt; You give to another Power over your Liberty. If you cannot pay at the Time, you will be ashamed to see your Creditor; you will be in Fear when you speak to him; you will make poor pitiful sneaking Excuses, and by Degrees come to lose your Veracity, and sink into base downright lying; for, as Poor Richard says, The second Vice is Lying, the first is running in Debt. And again, to the same Purpose, Lying rides upon Debt’s Back. Whereas a freeborn Englishman ought not to be ashamed or afraid to see or speak to any Man living. But Poverty often deprives a Man of all Spirit and Virtue: ‘Tis hard for an empty Bag to stand upright, as Poor Richard truly says. What would you think of that Prince, or that Government, who should issue an Edict forbidding you to dress like a Gentleman or a Gentlewoman, on Pain of Imprisonment or Servitude? Would you not say, that you are free, have a Right to dress as you please, and that such an Edict would be a Breach of your Privileges, and such a Government tyrannical? And yet you are about to put yourself under that Tyranny when you run in Debt for such Dress! Your Creditor has Authority at his Pleasure to deprive you of your Liberty, by confining you in Goal for Life, or to sell you for a Servant, if you should not be able to pay him! When you have got your Bargain, you may, perhaps, think little of Payment; but Creditors, Poor Richard tells us, have better Memories than Debtors; and in another Place says, Creditors are a superstitious Sect, great Observers of set Days and Times. The Day comes round before you are aware, and the Demand is made before you are prepared to satisfy it. Or if you bear your Debt in Mind, the Term which at first seemed so long, will, as it lessens , appear extreamly short. Time will seem to have added Wings to his Heels as well as Shoulders. Those have a short Lent, saith Poor Richard, who owe Money to be paid at Easter. Then since, as he says, The Borrower is a Slave to the Lender, and the Debtor to the Creditor, disdain the Chain, preserve your Freedom; and maintain your Independency: Be industrious and free; be frugal and free. At present, perhaps, you may think yourself in thriving Circumstances, and that you can bear a little Extravagance without Injury; but,

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For Age and Want, save while you may;
No Morning Sun lasts a whole Day,

as Poor Richard says. Gain may be temporary and uncertain, but ever while you live, Expence is constant and certain; and ’tis easier to build two Chimnies than to keep one in Fuel, as Poor Richard says. So rather go to Bed supperless than rise in Debt.

Get what you can, and what you get hold;
Tis the Stone that will turn all your Lead into Gold,
as Poor Richard says.

And when you have got the Philosopher’s Stone, sure you will no longer complain of bad Times, or the Difficulty of paying Taxes.

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This Doctrine, my Friends, is Reason and Wisdom; but after all, do not depend too much upon your own Industry, and Frugality, and Prudence, though excellent Things, for they may all be blasted without the Blessing of Heaven; and therefore ask that Blessing humbly, and be not uncharitable to those that at present seem to want it, but comfort and help them. Remember Job suffered, and was afterwards prosperous.

And now to conclude, Experience keeps a dear School, but Fools will learn in no other, and scarce in that; for it is true, we may give Advice, but we cannot give Conduct, as Poor Richard says: However, remember this, They that won’t be counselled, can’t be helped, as Poor Richard says: And farther, That if you will not hear Reason, she’ll surely rap your Knuckles.”

Thus the old Gentleman ended his Harangue. The People heard it, and approved the Doctrine, and immediately practised the contrary, just as if it had been a common Sermon; for the Vendue opened, and they began to buy extravagantly, notwithstanding all his Cautions, and their own Fear of Taxes. I found the good Man had thoroughly studied my Almanacks, and digested all I had dropt on those Topicks during the Course of Five-and-twenty Years. The frequent Mention he made of me must have tired any one else, but my Vanity was wonderfully delighted with it, though I was conscious that not a tenth Part of the Wisdom was my own which he ascribed to me, but rather the Gleanings I had made of the Sense of all Ages and Nations. However, I resolved to be the better for the Echo of it; and though I had at first determined to buy Stuff for a new Coat, I went away resolved to wear my old One a little longer. Reader, if thou wilt do the same, thy Profit will be as great as mine.

I am, as ever,

Thine to serve thee,

July 7, 1757.

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