Credit or wages: The fundamental debate over lifting the working poor

“ I believe we have a responsibility to create new opportunities for those in our society who have lacked the tools to prosper. For our economy, reliable access to credit and capital is essential to growth and prosperity. For individuals, a chance to get ahead and make a better life often depends on building credit. Buying a home, financing a car, or owning a small business all are made easier by good credit. We must do everything in our power to lower the cost of credit so that all Americans have the ability to establish good credit records and benefit from services. ”

“ The concern is that if we do not re-start lending in this country, our recovery will be choked off before it even begins.
You see, the flow of credit is the lifeblood of our economy. The ability to get a loan is how you finance the purchase of everything from a home to a car to a college education; how stores stock their shelves, farms buy equipment, and businesses make payroll. ”

“ The Grameen Bank believes that credit is the way out of the vicious circle of poverty and the catalyst for the development process as a whole. It views credit as an instrument of emancipation, a weapon given to the poor, who have been denied access to the banking system simply because they were poor and thus financially unattractive, in order to allow them to change their socio economic status. ”

“ In my most sanguine moments I have never dreamed of smoothing this difficulty out of the lot of man, but it is surely no unattainable ideal to establish a Poor Man's Bank, which will extend to the lower middle class and the working population the advantages of the credit system, which is the very foundation of our boasted commerce. ”

“ It's not about helping banks — it's about helping people. Because when credit is available again, that young family can finally buy a new home. And then some company will hire workers to build it. And then those workers will have money to spend, and if they can get a loan too, maybe they'll finally buy that car, or open their own business. ”

“ There will always be a few miscellaneous cases, but the trivial round and common task of the day is collecting the debts of small tradesmen from the working class.
I have no doubt that a County Court Judge gets an exaggerated view of the evils of the indiscriminate credit given to the poor. They seem to paddle all their lives ankle-deep in debt, and never get a chance of walking the clean parapet of solvency. But that is because one sees only the seamy side of the debt-collecting world, and knows nothing of the folk who pay without process. ”

“ He is deceived into debt; the road is made smooth and pleasant for him; things flow into the house, for which he does not seem to pay. But they are all set down against him; and at the year's end, when the bills come in, he is ready to lift up his hands in dismay. Then he finds that the sweet of the honey will not repay for the smart of the sting.
It is the same as respects the poorer classes. Not many years since, Parliament passed a law facilitating the establishment of Small Loan Societies, for the purpose of helping small tradesmen and poor people generally to raise money on an emergency. ”

“ The work they do may be skilled, and they are bound to keep their hand in, and bound to appear daily in order to secure a few days a week for a wage which would be [210] barely sufficient did they get six full days. The lives of the children of the poor are shortened, and the bodies of the children of the poor are stunted and starved on a low wage. And to the insufficiency of a low wage is added the horror that it is never secure. ”

“ That time is not apt to come, for, as I have pointed out, there is no economy in low wages. It is bad financial policy to reduce wages because it also reduces buying power. If one believes that leadership brings responsibility, then a part of that responsibility is in seeing that those whom one leads shall have an adequate opportunity to earn a living. Finance concerns not merely the profit or solvency of a company; it also comprehends the amount of money that the company turns back to the community through wages. There is no charity in this. There is no charity in proper wages. ”

“ No one prefers to be in debt. Debts are chosen as the least of the evils. The natural resources are occupied and the opportunities of life are denied. Lands and all tools of production are withheld and the horns of the dilemma are debt or privation. The independent spirit shrinks from debt until the struggle of life becomes desperate, when he turns to the other evil and is enslaved.
This is not a temptation that comes to the idle and vicious. They could not secure a loan though they tried. An indolent, dissipated and vicious chattel slave would not find a purchaser in the market. ”

“ The idea that such a debt is to become permanent should be at all times discarded as involving taxation too heavy to be borne, and payment once in every sixteen years, at the present rate of interest, of an amount equal to the original sum. This vast debt, if permitted to become permanent and increasing, must eventually be gathered into the hands of a few, and enable them to exert a dangerous and controlling power in the affairs of the Government. The borrowers would become servants to the lenders, the lenders the masters of the people. ”

“ The class-struggles of the ancient world took the form chiefly of a contest between debtors and creditors, which in Rome ended in the ruin of the plebeian debtors. They were displaced by slaves. In the middle-ages the contest ended with the ruin of the feudal debtors, who lost their political power together with the economical basis on which it was established. Nevertheless, the money relation of debtor and creditor that existed at these two periods reflected only the deeper-lying antagonism between the general economical conditions of existence of the classes in question. ”

“ Therefore, although any minimum wage scheme which proposes to raise the bottom wages in any trade or trades, or for any group or groups of workers, is a necessary part of legislation, and must be urgently insisted upon in any plan for social reform, no minimum wage legislation now proposed, or likely to be proposed, will deal adequately with the question of all the children of the working poor. Yet unless we do deal with all of them, and deal adequately, the problem of the nation’s children goes unsolved. ”

“ It's time to turn the page for all those Americans who want nothing more than to have a job that can pay the bills and raise a family. Let's finally make the minimum wage a living wage and tie it to the cost of living so we don't have to wait another ten years to see it rise. Let's put the jobless back to work in transitional jobs that can give them a paycheck and a sense of pride, let's help our workers advance with job training and life-long education, and let's finally allow our unions to do what they do best and lift up the middle-class in this country once more. ”

“ Today, Federal credit unions are at their strongest point in history. They enter this, their 50th anniversary year, as the Nation's fastest-growing financial institutions. As member-owned cooperatives, credit unions operate with the credo, "Not for profit, not for charity-but for service." Credit unions have maintained allegiance to this ideal and as a result have consistently reflected the philosophical tradition and the cooperative spirit of people helping people that prompted passage of the Federal Credit Union Act. ”

“ The goal here is to get credit where it’s needed most – to businesses that support families, sustain communities, and create the jobs that power our economy. That’s why we enacted the Financial Stability Plan in the first place, back when many of our largest banks were on the verge of collapse; our credit markets were frozen; and it was nearly impossible for ordinary people to get loans to buy a car or home or pay for college. The idea was to jumpstart lending and keep our economy from spiraling into a depression. ”

“ Too many bad loans from the housing crisis have made their way onto the books of too many banks. With so much debt and so little confidence, these banks are now fearful of lending out any more money to households, to businesses, or to each other. When there is no lending, families can't afford to buy homes or cars. So businesses are forced to make layoffs. Our economy suffers even more, and credit dries up even further. ”

“ We can't help people find work or pay their bills unless we unlock credit for families and businesses. We can't solve our housing crisis unless we help people find work so that they can make payments on their homes. ”

“ We have to jumpstart the credit markets and get private lending going again. No matter how good of a job we do here, that's going to be critical. And that's why the Treasury and the Federal Reserve are launching today the Consumer and Business Lending Initiative, which, when fully implemented, will generate up to a trillion dollars of new lending for the American people. And this will help unlock our frozen credit markets, which is absolutely essential for economic recovery. ”

“ The national system will create a reliable and permanent influence in support of the national credit and protect the people against losses in the use of paper money. Whether or not any further legislation is advisable for the suppression of State-bank issues it will be for Congress to determine. It seems quite clear that the Treasury can not be satisfactorily conducted unless the Government can exercise a restraining power over the bank-note circulation of the country. ”

“ Essential to the stable economic growth we seek is a system of well-adapted and efficient financial institutions. I believe the time has come to conduct a broad national inquiry into the nature, performance and adequacy of our financial system, both in terms of its direct service to the whole economy and in terms of its function as the mechanism through which monetary and credit policy takes effect. I believe the Congress should authorize the creation of a commission of able and qualified citizens to undertake this vital inquiry. ”

“ Financing remains difficult for small businessowners across the country, even those that are making a profit.
So tonight, I'm proposing that we take $30 billion of the money Wall Street banks have repaid and use it to help community banks give small businesses the credit they need to stay afloat. (Applause.) I'm also proposing a new small business tax credit -– one that will go to over one million small businesses who hire new workers or raise wages. ”

“ Friends and relatives come to the rescue, fresh credit is obtained to pay off the old debt, and thus the result of a committal order is too often to thrust the unfortunate debtor one step deeper into the slough of insolvency in which he is already sinking beyond recovery. At the same [227] time it is of no use railing at the system. The Select Committee of 1893 reported generally in favour of it, mainly, I think, because the working class themselves uphold it. ”

“ This "putting-down in a book" has proved the ruin of a great many weakminded people, who cannot resist the temptation of taking things upon credit which they have not the present means of paying for; and it would probably prove of great social benefit if the law which enables creditors to recover debts contracted under certain circumstances were altogether abolished. But, in the competition for trade, every encouragement is given to the incurring of debt, the creditor relying upon the law to aid him in the last extremity. ”

“ When a debtor is unable to pay what he owes, and has no relation or friends capable of doing it for him, or when the children of a deceased person do not find property enough to discharge the debts of their parent, they are forced to the state which is called mengiring, which simply means to follow or be dependent on, but here implies the becoming a species of bond-slaves to the creditor, who allows them subsistence and clothing but does not appropriate the produce of their labour to the diminution of their debt. ”

“ If the children of a deceased debtor are too young to be of service the charge of their maintenance is added to the debt. This opens a door for many iniquitous practices, and it is in the rigorous and frequently perverted exertion of these rights which a creditor has over his debtor that the chiefs are enabled to oppress the lower class of people, and from which abuses the English Residents find it necessary to be the most watchful to restrain them. ”

“ The idea is pretty common sense: if you’re a payday lender preparing to give a loan, you should make sure that the borrower can afford to pay it back first. As Americans, we believe there’s nothing wrong with making a profit. But there is something wrong with making that profit by trapping hard-working men and women in a vicious cycle of debt.
Protecting working Americans’ paychecks shouldn’t be a partisan issue. ”

“ Debtors are in reality powerless, because of the extension of that very system of credit which they invented to satisfy their needs. Although the volume of credit is gigantic, the basis on which it rests is so narrow that it may be manipulated by a handful of men. ”

“ It occasions a general and most pernicious subversion of the fortunes of private people, enriching in most cases the idle and profuse debtor at the expense of the industrious and frugal creditor, and transporting a great part of the national capital from the hands which were likely to increase and improve it to those which are likely to dissipate and destroy it. ”

“ And with the rise of national debt-making, want of faith in the national debt takes the place of the blasphemy against the Holy Ghost, which may not be forgiven.
The public debt becomes one of the most powerful levers of primitive accumulation. As with the stroke of an enchanter’s wand, it endows barren money with the power of breeding and thus turns it into capital, without the necessity of its exposing itself to the troubles and risks inseparable from its employment in industry or even in usury. ”

“ But further, apart from the class of lazy annuitants thus created, and from the improvised wealth of the financiers, middlemen between the government and the nation—as also apart from the tax-farmers, merchants, private manufacturers, to whom a good part of every national loan renders the service of a capital fallen from heaven—the national debt has given rise to joint-stock companies, to dealings in negotiable effects of all kinds, and to agiotage, in a word to stock-exchange gambling and the modern bankocracy. ”

“ A national debt, then, is a foul disgrace, at the best. But it is, as now constituted, also a foul crime. National debts paying interest are simply the purchase, by the rich, of power to tax the poor. Read carefully the analysis given of them above, Letter VIII., p. 7.
The financial operations of the St. George’s Company will be the direct reverse of these hitherto approved arrangements. They will consist in the accumulation of national wealth and store, and therefore in distribution to the poor, instead of taxation of them ”

“ And, as what is improperly called the National Debt has been admitted, in both Houses of Parliament, to be in the nature of a bona fide mortgage upon the realised property of the country, it is but strict justice that the owners of this property, and they only, should be henceforward held responsible for both capital and interest. At all events, the industrious classes should not be held answerable for it, seeing that the debt was not borrowed by them, nor for them, nor with their consent, and that even had it been so, they have had no assets left them for the payment of it. ”

“ There is no other security now for the repayment of loans, public or private, than the known capacity of working men to produce a surplus over and above their own consumption. If they could not, or did not, do this, there would be no interest for fundholders, mortgagees, or money-lenders of any sort. Indeed, there is no other source than the said surplus for the payment of rents, taxes, dividends, premiums on insurance policies, and the interest of upwards of two thousand millions of private debts. ”

“ But we can do so much more for the middle class, and for folks working to join the middle class. We should raise the minimum wage so that no one who works full-time has to live in poverty. We should fight for fair pay and paid family leave. ”

“ To give working families a fair shot, we'll still need more employers to see beyond next quarter's earnings and recognize that investing in their workforce is in their company's long-term interest. We still need laws that strengthen rather than weaken unions, and give American workers a voice. But things like child care and sick leave and equal pay; things like lower mortgage premiums and a higher minimum wage -- these ideas will make a meaningful difference in the lives of millions of families. ”

“ Relief checks and expanded unemployment benefits are not only putting food on the table, they’re also stimulating our local economy. Their support — the supports that are being put in place for rent, mortgages, childcare, schools, small businesses, and emergency paid leave are giving workers the security they need to hold on and start planning for a better future. ”

“ This single step would raise the incomes of millions of working families. It could mean the difference between groceries or the food bank; rent or eviction; scraping by or finally getting ahead. For businesses across the country, it would mean customers with more money in their pockets. In fact, working folks shouldn’t have to wait year after year for the minimum wage to go up while CEO pay has never been higher. ”

“ Yet, in the teeth of this well-known capability on his part, the man whose surplus productions enable others to get loans, and repay both capital and interest, is the only man who can get no loan for himself, because, by our atrocious system, the Credit as well as the Land of the country is hermetically sealed against him. ”

“ It destroys the happiness of his household.
Even those who are in the regular receipt of large incomes, feel crippled, often for years, by the incubus of debt. Weighed down by this, what can a man do to save—to economise with a view to the future of his wife and children? A man in debt is disabled from insuring his life, from insuring his house and goods, from putting money in the bank, from buying a house or a freehold. All his surplus gains must go towards the payment of his debt. ”