SPENDING AND SAVING
There is a new school of philanthropists that are inclined to make
light of thrift, and to class both industry and thrift among the merely
"economic virtues." To this school must belong the settlement worker
who spoke of thrift as "ordinarily rather demoralizing." [1] But
another objection to thrift which has been made by settlement workers
is that it was only good for the working classes "until their employers
discovered that there was a margin to their employees' wages."
Is it true that industry and thrift are merely economic virtues? We
instinctively feel that they are something more. One has only to think
of a lazy man to get an impression of something essentially
contemptible and {109} cowardly. On the other hand the man that loves
work and throws himself into it with energy is winning more than
material rewards. The thriftless and the extravagant, whether rich or
poor, are often mean and self-indulgent, lacking the first quality of
the unselfish in lacking self-control. In teaching industry and
thrift, therefore,--though these virtues, like others, have an unlovely
side,--we may feel that we are dealing with two of the elements out of
which not only character but all the social virtues are built.
Nor will the pessimistic theory that the worker must spend as much as
possible on indifferent food and housing in order to keep up the rate
of wages, bear the light of common sense. It is true that the man who
merely hoards for the sake of hoarding, developing no new and higher
wants, no clearly defined aims, will still be almost as helpless as the
most thriftless. But no one is more helpless against the encroachments
of employers than the man who lives from hand to mouth, whose
necessities press ever hard upon him, crippling him and crippling those
{110} with whom he competes in the open market. Then again, successful
coöperation is impossible to the thriftless. The lack of self-control,
the lack of power to defer their pleasures, unfits them for combined
effort and makes it more difficult for them to be loyal to their
fellow-workmen. Visitors can advocate thrift, therefore, for both
economic and moral reasons.
There is a use of the word "thrift" that may help us to realize its
best meaning. Gardeners call a plant of vigorous growth a "thrifty"
plant. Let us bear this in mind in our charitable work, and remember
that anything that hinders vigorous growth is essentially unthrifty.
Thrift means something more than the hoarding of small savings. In
fact, saving at the expense of health, or training, or some other
necessary preparation for successful living, is always unthrifty. It
is unthrifty to live in damp rooms to secure cheaper rent; it is
unthrifty to put aside money for burial insurance when the children are
underfed; it is unthrifty either to buy patent medicines or to neglect
early symptoms of disease in order to save a doctor's bill; above all,
it {111} is unthrifty to take young children away from school and force
them to become breadwinners. Thrift, therefore, includes spending as
well as saving.
Charity workers often complain that, in the poor families known to
them, thrift is impossible, because there is nothing to save. More
often than not this means that their relations with the poor have
ceased as soon as acute distress is past, and that they have stopped
visiting at the very time when improved material conditions have made
the best friendly services possible.
Any attempt to divide the poor into classes is to be deprecated,
because human beings are not easily classified. But, speaking roughly,
and using the classification merely as a temporary convenience, charity
workers will find that the thrift habit divides the poor into three
classes. First, those who are very thrifty, and this is a large class.
Misfortune may overtake the most provident during long periods of
industrial depression, or they may become temporarily dependent through
sickness or some unforeseen accident. The second class includes {112}
those who are willing to work when work is plentiful, but who have
little persistence or resourcefulness in procuring work. In the busy
season they spend lavishly on cheap pleasures and soon become
applicants for relief in troubled times. Debt has no terrors for them,
and, from their point of view, it is useless to save because they
cannot save enough to make it seem worth while. In the third class we
find the lazy and vicious, who shirk work, and, living by their wits,
are better off in bad times than in good. "It is with the second class
that the charitable may work lasting harm or lasting good. To let them
feel that no responsibility rests with them during the busy season, and
that all the responsibility rests with us to relieve their needs when
the busy season is over, rapidly pushes them into the third class. To
teach them, on the other hand, the power and cumulative value of the
saving habit, and so get them beforehand with the world, is to place
them in the first class and soon render them independent of our
material help." [2]
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A characteristic of the second class is the habit of buying on credit.
The book at the corner grocery not only tempts the purchaser into
buying unnecessary things, but the prices are higher than the market
rate for inferior goods. A student in a university laboratory, who is
also a friendly visitor, had occasion to use some sugar in one of his
experiments, and, being hurried, purchased it from the nearest corner
grocery, paying more than the usual price. It proved to be badly
adulterated, and the user has been more careful since in advising his
poor friends about purchasing provisions. The credit system is the
natural outcome of uncertain income, and for that reason is hard to
avoid, but in a number of instances it is continued long after the
necessity that caused the buyer to ask credit has ceased to exist.
Another and less excusable form of the credit system is buying
household goods on the instalment plan. The poor are often teased into
this by glib agents. An old woman, whose income was not sufficient to
keep her alive, contracted to buy a clock on the instalment plan for
$8.00 because she needed one when she {114} occasionally had a day's
job of cleaning. When her visitor remonstrated that a dollar clock
would have done quite as well, she replied triumphantly, "Yes, but this
one is only 25 cents a week!" When payments cannot be made, and the
purchaser is threatened with the loss of the goods, it is possible to
be too hasty in rushing to the rescue. The Fifteenth Report of the
Boston Associated Charities records such an experience. "A family had
purchased furniture upon the instalment plan, when the husband was
suddenly deprived of his job. The furniture was about to be seized,
when generous sympathizers came to the rescue, and redeemed the
articles. Scarcely had the donors time to realize what a financial
relief they had been able to give to the troubled family before the
same bit of folly was repeated, and 'parlor furniture' was added to the
inventory of goods and chattels to be paid for by the week." [3] When
instalment men threaten seizure, it is well to find out whether they
are acting within the law. They have been known to take advantage of
ignorant clients. But the system {115} itself is bad in that it
encourages the purchase of unnecessary things, and at a great advance
upon cash prices.
When the poor man would borrow, he is often exposed to the impositions
of a class of unscrupulous money lenders, who violate the laws against
usury, but hope to escape punishment or loss through the ignorance of
their customers. The pitiful part of it is that the self-respecting
poor often fall into their traps. A family in pecuniary straits for
the first time is naturally attracted by the specious advertisements of
the chattel-mortgage companies, which offer to lend money on goods that
the borrower keeps in his possession, and promise that all negotiations
shall be strictly confidential. This seems an easy way out of present
difficulties without loss of self-respect or any painful publicity.
But the terms of the contract are far from easy in reality. Through a
system of bonuses, extra fees, or monthly payments for "guaranteeing"
the loan, interest amounting to from 100 per cent to 200 per cent a
year is wrung from the borrowers. Bled dry at last, and unable to pay
{116} such extortionate interest and the principal too, their goods are
seized, and the members of the household become objects of charity.
Whereever these chattel-mortgage companies gain any foothold, many of
their victims are applicants for relief. The law usually furnishes
ample protection, but the companies flourish through the poor man's
ignorance of the law.
As soon as a visitor learns that the goods of a poor family are
mortgaged, he should, at once, whether the company is pressing for
payment or not, learn the terms of the contract, and get an opinion as
to its validity from some friend who is a lawyer. The usual form of
contract in Maryland is a six months' mortgage, bearing 6 per cent
interest, with the legal charge for recording deducted from the amount
advanced to the borrower. But, in addition to this, notes for from
$2.00 upward, according to the size of the loan, are made payable
monthly to some third party who is supposed to guarantee the loan.
Lawyers advise no payments on these notes, and that principal and legal
interest be offered at the expiration of the mortgage. If this offer
{117} is refused, the company renders itself liable to damage
proceedings in seizing the furniture. In each case, however, it is
better to have a lawyer's advice, as the contracts vary, and ignorant
men, who thought they were signing a six months' mortgage, have been
known to sign a one month's mortgage instead.
The law against usury can protect those who know enough to apply it,
but the poor man remains unprovided with any satisfactory means of
negotiating a loan. The legal rate of interest is too low to make
loans on chattels profitable. The organization, by public-spirited
business men, of companies that will be careful in taking risks, and
will secure special legislation enabling them to charge not more than a
reasonable rate of interest, is the only remedy. Companies like these
have been organized successfully in Boston and Buffalo by
philanthropists who were also business men and wise enough to realize
the importance of placing such loan agencies on an equitable business
basis. Several advantages are apparent from the working of these
equitable loan companies. Those who cannot {118} properly negotiate a
loan are discouraged from applying, because the loans are made with
great care. Those who get the loans are fairly dealt with, and are
helped at the right time in a way that saves them from becoming
applicants for charity. Best of all, the other loan companies are
forced to reduce their rate of interest, and offer fairer terms.
The habit of pawning goods has never become general among our native
population, but among the foreign poor of our large cities it is the
common practice; and here, too, the philanthropic pawnshop, started at
the instance of the New York Charity Organization Society, has reduced
the percentage charged by other pawnshops in New York.
This new interest taken by philanthropy in the poor man as borrower is
still in the tentative and experimental stage, but there is an
encouraging analogy between its beginnings and the early history of the
savings banks. "It is seldom remembered," says Mrs. Lowell, "that the
great scheme of savings banks was originally conceived and put into
operation as a means of helping the poor. The two first {119} savings
banks were started in Hamburg in 1778, and in Berne in 1787, and both
were more or less closely restricted to the use of domestic servants,
handicraftsmen and the like. The Hamburg bank was part of the general
administration of the poor funds." [4]
When the poor man attempts to save, what inducements have greatest
weight with him? First of all, he is likely to save for some definite
and immediate object, because he cannot spend in any effective way
until he has saved. In teaching shiftless families to put by small
sums, therefore, it is well to keep some definite object in view. For
instance, persuade the children to save to buy needed clothing, or the
parents to save to buy proper clothing, bedding, etc., for the
children. This strengthens family affection and leads the way to a
bank account later, by showing what money can do.[5]
Next to such immediate inducements to thrift comes the dread of pauper
burial, which is a far more influential motive with the poor than the
dread of either dependence or privation. {120} Respectability is
measured in poor neighborhoods by funerals, and, whether the
neighborhood standards of morality and respectability are ours or not,
we cannot afford, in our charity work, to ignore them. Extravagant
funerals are an evil, and we should use our influence to discourage
extravagance, even where it is rooted quite as much in affection as in
vanity; but an unsympathetic attitude on the part of the charitable, an
inability to understand the neighborhood point of view, has helped to
encourage an extravagant form of saving, namely, burial and child
insurance.
To enter into a discussion of the merits of industrial insurance, as
furnished in this country to the poor, is outside the scope of this
book, and the matter is treated quite fully, moreover, in another
volume of this series ("The Development of Thrift," by Mary Willcox
Brown), but the most enthusiastic advocates of industrial insurance can
hardly claim for it that it is an inexpensive form of saving. A very
large percentage of industrial policies lapse, and it is a common thing
to find that those who have kept up their payments and have {121}
become beneficiaries, spend everything on the funeral of the insured.
"Of $200.00 insurance received by one widow, $180.00 was given to the
undertaker, and the remaining $20.00 was expended for a mourning outfit
for herself. The family were being aided by the Emergency Society at
that time." [6] In New York, the agents of the Charity Organization
Society regard the following as a typical instance: A woman's husband
was insured for $136.00. When he died, she called the same undertaker
that had buried a child for them. His charges on the former occasion
had been moderate. The woman told him that she wanted a very
inexpensive funeral with only one carriage. This was the only
instruction that she gave. The undertaker asked whether the deceased
was insured, and was told that he was, whereupon he offered to collect
the insurance and to pay over to the widow what was left. His bill
amounted to $102.50. These instances do not indicate any collusion, of
course, between the undertakers and the insurance companies.
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We have seen in another chapter that sickness is one of the most
persistent causes of distress, and only in rare instances does a death
occur that has not been preceded by weeks and often months of sickness.
The poor man needs sick benefits more than burial or life insurance,
and the children of the poor stand in need of many other things besides
decent burial. In fact, the money spent in child insurance, which can
be of no possible benefit to the child, is often needed to protect the
child's health or provide for its education. These should be a
parent's first care from no sordid motive, and yet it is a legitimate
view to regard children as an investment. The poor man has a right to
expect support from his children when he is no longer able to work, and
to neglect their best interests is to cripple his own future.
The beneficial societies and fraternal orders furnish a means of saving
for sick benefits, but they are of such varying degrees of merit and
trustworthiness that it is impossible to recommend them without
qualification. They have not gained the same position that the {123}
friendly societies hold in England, partly, perhaps, because they are
not subject in America to the same legal restrictions and official
inspection.
Though the savings banks are open to the objection that money is too
easily withdrawn from them, and is not, therefore, always available at
the time of greatest need, yet, after making every allowance for this,
the savings banks remain one of the safest and best means of putting by
small savings. Another way of saving, which is not open to the
objection of too easy withdrawals, is the purchase of shares in a good
building and loan association.
Some banks provide facilities for small savings by selling special
stamps of small denominations, and, in several cities, charities have
established stamp saving societies to promote the saving habit,
especially among children. When $5.00 has been saved in this way, a
bank account should be opened. One visitor has found that, in getting
children to save, it helps to have a stamp-saving card of one's own,
and show it. As a means of teaching children to save, visitors should
encourage the {124} introduction of stamp savings into our public
schools.
Another way to promote small savings is to send volunteer collectors
among the poor, who will visit certain families weekly, and collect the
five and ten cent pieces until enough has been saved to open a bank
account. This work may be combined with friendly visiting, though the
collector must visit at regular intervals, and in many cases it is
better for the friendly visitor to visit at irregular intervals. One
visitor always leaves a small bank with her family when she goes away
in summer, and the unlocking of this on her return has become a family
ceremony.
Saving for fuel becomes an admirable object lesson, when it is used to
establish the saving habit and not allowed to stop with the mere
purchase. During the summer, families can be encouraged to put by
small sums weekly, and, instead of buying coal in small quantities at
very high prices during the winter, can save more than half the cost by
buying a ton or more early in the season.
In teaching thrift in a careless and shiftless {125} home, we can get
many valuable suggestions from more thrifty families in the same
neighborhood, or with the same income. To effectively advise about
expenditure, one must know the family budget of receipts and
expenditures, and often this is more than the family knows. Learning
to take note of the items is the first lesson in thrift. The most
important thing, however, is our own attitude of mind. "We must not
get into the habit of saying, 'Poor things; they can do nothing.' We
should rid ourselves of the habit of treating them, not as men and
women, people who can look after themselves with strength in their
muscles and brain-power in their heads, but as animals whom we allow to
live in society along with ourselves, taking for granted that they are
deprived of, or cannot exert, those faculties which go to make up the
strength and fibre of men and women. I assure you, those who are
inclined to take a sentimental turn have great temptations put before
them to treat the poor as if they were dependent animals." [7]
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Collateral Readings: "The Development of Thrift," Miss Mary Willcox
Brown. "The Standard of Life," Mrs. Bernard Bosanquet, especially the
essay on "The Burden of Small Debts." Annual Reports of the
Workingmen's Loan Association, Boston; the Provident Loan Association,
New York; and the Provident Loan Company, Buffalo. For stamp savings,
see reports of New York Charity Organization Society (Committee on
Penny Provident Fund).
[1] See Report on the Questions drawn up by Present Residents in our
College Settlements, p. 17. Published by the Church Social Union,
Boston.
[2] Leaflet on "Summer Savings," published by the Baltimore Charity
Organization Society.
[3] p. 25.
[4] "Public Relief and Private Charity," p. 109.
[5] See Fourth Report of Boston Associated Charities, p. 38.
[6] Eighteenth Report of Boston Associated Charities, p. 27.
[7] C. S. Loch in Fifteenth Report of Baltimore Charity Organization
Society.
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