saves the Economy
By D.H.T. Shippey
Editor Michael Burns
One man could have
prevented the September Economic Crisis. One man has the
answers that could fix the crisis now. That man is Ben
was considered a sage in his day, and he did everything
he could to promote that view. He began his professional
life as a poorly educated 16 year old with no money, and
finished his life as one of the most respected and
prosperous men in America.
In 1758, Franklin
decided to share his recipe for financial success with
everyone and wrote
The Way To Wealth. It
wasn’t just the first American do it yourself book, or
just a get rich book; it was a code of behavior and
business ethics for a rising nation of shopkeepers,
farmers, traders and artisans. The book contained advice
that he had collected, implemented and refined in his
already extraordinary life. Being Ben Franklin, he did
not just baldly give advice.
He wrote a story. He made
up a tale about a local auction of merchant’s goods, and
acted as if he was merely reporting what had transpired.
The people waiting for the auction were in deep
conversation about the hard times they were faced with,
and turned to a respected, plainly dressed, older man
for his thoughts. Wise old Father Abraham dispensed his
advice to the crowd, quoting whom else but Ben Franklin
(Under the pseudonym Poor Richard). What is amazing is
that so much of his instruction would have prevented
today’s financial crisis. So here is the Ben Franklin
solution in five easy parts.
“Keep thy Shop and thy shop will keep
It seems so simple, but can
you imagine what it would have been like if the CEO’s of
the now collapsing financial institutions had followed
this simple principal? Think of Lehman Brothers. Over
150 years of wise, ethical, and successful business, all
undone by a few years of frivolous and unscrupulous
dealing. Company executives trying to milk their
businesses for all they could take before the bottom
fell out. It’s the difference between short-term profit
income growth and stability.
Ben’s advice part 2
“Not to oversee workmen, is to leave
them your purse open. Trusting too much to others' care
is the ruin of many.”
The new buzzword from
Wall Street is “oversight.” It’s almost as if the
government forgot that they told us that they were
watching and regulating this business. Now they say that
they saw the danger coming, but gave no warning that the
bad loan bubble was about to pop. Of course, it was our
government that made it easier to get a home loan to
begin with and then did not keep a watch over the work
being done. Trusting too much to others’ care has now
become the ruin of many.
Ben’s advice part 3
would be wealthy, think of saving as well as of getting.
The Indies have not made
rich, because her outgoes are greater than her incomes.”
We live so much
in the age of extended credit that we cannot imagine
life without it. Most homes in
are living well beyond their paychecks, and it has not
been because of necessities. As it turns out, our
financial institutions were doing the same thing. Now,
not wanting to be left out, our government is planning
to buy bad loans with money they don’t actually have.
The simple idea of looking at your regular income and
then spending less than that amount is almost shockingly
revolutionary at this point in history. Our citizens
live beyond our means, our financial institutions give
loans to the citizens that cannot be paid back so that
we can continue to live beyond our means, and the
government buys the debt with funds they don’t have.
Don’t worry, though--they can get the money from the
citizens. Oh, wait a minute.
Ben’s advice part 4
"Away then with your expensive
follies, and you will not then have so much cause to
complain of bad times, heavy taxes, and chargeable
Buy what thou hast no need of, and ere long thou shalt
sell thy necessaries.
Many a one, for the sake of
finery on the back, have gone with a hungry belly and
half-starved their families.
Silks and satins, scarlet and velvets, put out the
kitchen fire, as Poor
These are not the
necessaries of life; they can scarcely be called the
conveniences; and yet, only because they look pretty,
how many want to have them! By these and other
extravagances, the genteel are reduced to poverty, and
forced to borrow of those whom they formerly despised.”
On the radio just the other day, were
two plastic surgeons. These doctors bemoaned the current
housing market. Their business had disappeared because
no one can get a line of credit against their home now.
It seems most of their business of facelifts and
anatomical enhancements was paid for by people taking
loans out against their homes!
Part 4 continued
“A ploughman on his legs is higher than a gentleman on
as Poor Richard says. . . .
But this they might have known before, if they had taken
If you would know the value of money, go and try to
borrow some; for, he that goes a borrowing goes a
sorrowing, 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 sale,
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. What would you think of
that prince, or of that government, who should issue an
edict forbidding you to dress like a gentleman or
gentlewoman, on pain of imprisonment or servitude? Would
you not say that you were 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 such 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 jail till you shall be able
to pay him. When you have got your bargain, you may,
perhaps, think little of payment; but, as Poor Richard
have better memories than debtors.”
The idea that we could sell
ourselves into servitude for a large screen TV is pretty
frightening, but on a national scale the excesses of our
financial institutions carry a heavy price as well.
the bailout is approved, Washington
will assume control over companies and dictate Wall
Street salaries. So now who works for whom?
point in the story the financial lesson would seem
financial prophet Father Abraham finishes with a
Ben’s advice part 5
"’And now, to conclude, Experience
keeps a dear school, but fools will learn in no other,
as Poor Richard says, and scarce in that; for, it is
true, we may give advice, but we cannot give conduct.
However, remember this, they that will not be counseled,
cannot be helped; and further, that, if you will not
hear Reason, she will surely rap your knuckles, as Poor
Richard says.’ It seems though that
knew even then that the best advice often is ignored.
Thus the old gentleman
ended his harangue. The people heard it and approved the
doctrine; and immediately practiced the contrary, just
as if it had been a common sermon; for the auction
opened, and they began to buy extravagantly.”
And so we have the same
choice today. While we as individuals, as companies and
even as a country have the ability to learn and change
our behavior, will we? It seems our government has
already decided to ignore Ben’s advice. Even if somehow
the infusion of money “borrowed” from us (the taxpayers)
works, will being “bailed out” of a financial crisis
change our minds on how we conduct business, or are we
just going to continue to extend the line of credit
until the bill comes due again?
It would do us
good to remember that Benjamin Franklin actually
followed his own advice, which allowed him to retire
from his occupation of printing at age 42. Then he was
able to focus his energy on a few other endeavors as a
diplomat, member of the 2nd
Continental Congress, part of the committee that created
the Declaration of Independence, and framer of the
warned, "Revenue without
economy is never enough."
By choosing to live within our means, even when those
means may occasionally shrink, we can survive and
prosper as individuals, as companies and as a country.
In his life after retirement
survived a 10-year war, a disastrous post war economy
and many financial setbacks, yet
died a very rich man. His final words from the Way To
Wealth are as follows.
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.
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