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IS IT GOOD OR BAD TO BORROW MONEY?

 

For some twenty years I experienced all kinds of suffering, due to my debts. Several times my property was attached and once I went into bankruptcy, so you can imagine the financial suffering I endured. From these experiences I reached a kind of attitude or "philosophy on debts," about which I am going to write.

Let me analyze the psychology of a person who is about to borrow money. There are two kinds of loans, "active" and "passive." An active type is that which is made when a person who intends to start a business has figured how much money he needs and how much profit he can make, and is fairly certain he can earn enough money after interests and costs are subtracted from the revenue. Everybody understands this kind of loan. A passive type of loan is that which is made when expenses are greater than income, the person is short of cash on hand, and has no alternative other than to borrow. This is also quite common. If the situation tightens still more, the borrower loses mental composure when he thinks of the future, and in his desperation he attempts to escape from the urgent financial pinch facing him by borrowing money, no matter how high the interest may be. We often read in newspapers about the outrageous interests demanded by loan sharks. When a person comes to this point, we can say he is only one step from falling over a precipice and is facing a dire situation.

The above is a rough explanation of the differences in the two types of money-borrowing. Next, let me illustrate the situation of a person who has no debts.

Since he does not borrow, this individual has to start his business with the capital he has, so it cannot be helped if his scale of business is quite small. Suppose this person has 100,000 yen (1). Usually, he uses half or maybe a third of his capital to start the business, and retains the balance of the money for future needs. This may appear to be a too conservative way of doing business to most people, at least theoretically, but actually it is the best way. Since the amount of 100,000 yen is not borrowed money but what he has earned and saved by his own labor, it is literally his own and should work powerfully for him.

It is wise to start on as small a scale as possible. I will illustrate this fact with my own experience. In May of 1934, when I started the faith healing work, I rented a five-room house on Hirakawa-cho, Kojimachi, in downtown Tokyo , for a monthly sum of seventy-seven yen. (2) I thought the house was a little too grand for me, but since it fitted my purpose quite well I boldly decided to rent it. At that time my long-standing debts still added up to a considerable amount, but I wanted to put into practice my financial theory, which I had developed from long years of owing money.

By first studying Nature I gained the basic idea of this philosophy, easily understood through careful observation of the way in which a human being grows. He comes into life as a tiny baby, then grows bigger as time goes on, becomes an adult and gains wisdom and strength. This applies to plants, also. A small seed is sown, it sends out a sprout, seed leaves appear followed by true leaves, then a trunk thrusts up, its branches grow and extend themselves, and finally the whole thing becomes a tree reaching toward the sky. This is a truth of Nature which should be followed. I became certain that if this truth was faithfully put into practice, great success could be achieved, so I decided to start on as small a scale as possible.

Individuals generally try to begin something in a big and splendid manner. When we observe them from a long-range view, we find that most of them are not successful. There are too many examples of this kind. Many enterprises first start on a big scale and end up in failure. If they reorganize, reduce the scope of activity and make another start on a much smaller scale, they finally succeed. We see numerous cases like these.

Not everything in the world works out according to a person's theory, or succeeds as he expects it to. There are many reasons for this, but the most important is the mental or psychological factor. Since the due dates for payments on a loan come around regularly, a nagging concern about them is constantly in an individual's mind. And, of course, the situation does not always move as he originally calculated it would. This worry also occupies his mind, blocking any good idea he might have for expansion. This is a point of great disadvantage.

Since someone like this is always in a right situation financially, he tends on lack a vigorous spirit of enterprise. Even though he may try to appear well-to-do, he is actually poor both psychologically and materially, so as a result he becomes passive in every way and lacks the positive, constructive attitude necessary for success. Therefore, he tends to be gloomy all the time. If the is a merchant, even when he finds a bargain he cannot purchase it right away because of a shortage of funds, so he misses a good chance to make a profit.

Both Nobunaga and Hideyoshi (3), famous feudal lords in medieval Japan , finally failed because of their impatience and overstrain. In comparison, Ieyasu Tokugawa (4), who followed them, had no such problems while he was conquering the country, which was one of the reasons the Tokugawa shogunate he founded lasted for nearly three hundred years. He practiced his famous strategy of "Yield for now, win later." When he believed that a certain objective would be a little beyond his power, requiring strain on his part, he simply abandoned the operation for the time being and waited until the situation turned to his advantage. He planned and managed so that the whole country would automatically come under his rule. This policy brought about his lasting success. His famous saying, "A man's life is like walking a long journey carrying a heavy load; he should not make any haste," vividly illustrates his personality.

There may be many reasons for Japan 's defeat in the past war, but impatience and overstrain certainly worked to its disadvantage. The purpose, the motive for the war, was wrong from the beginning. Those in power did not realize this and tied to force something unreasonable, which brought about the disastrous defeat.

The worst possible thing anyone can do is to make a new loan to repay the previous loan simply out of desperation. That was exactly what was done toward the end of the war and paper money was printed in great quantity, causing a spiraling inflation.

Soon after it took power after World War II, the Labor government of Britain borrowed 3.7 billion dollars from the United States . At that time, I felt an apprehension that this might become the cause of its future financial distress. My apprehension proved to be true, and Britain had to secure one loan after another just to keep going. The devaluation of the pound sterling is simply one of the symptoms. When I think of the fact that the United Kingdom at its peak realized an annual income of 300 million pounds from its colonies and other outside sources, I am struck with the change of the times. The sound treasury of the British government was once a source of pride for her people, but after experiencing two major wars it has fallen into the financial difficulties which face it today. We can say that this couldn't have been helped, in the sense that it was an inevitable course of her destiny.

I have already stated that borrowing money should be avoided, and that we should start anything on a small scale. I hope you will always keep this truth in mind. However, if a loan is made for only a short period of time and you are quite sure you can repay it promptly, it can be admitted as an exception.

The above is what I advocate as my philosophy on debts.

(1) Approximately 277.00 U.S. dollars at that time.

(2) Approximately 34.00 U.S. dollars at that time.

(3) Nobunaga Oda (1534-1538) and Hideyoshi Toyotomi (1536-1598) tried to conquer and unify Japan , which had been divide into may warring states until that time. Nobunaga died with his goal unaccomplished, and Hideyoshi could not secure his success for long.

(4) Ieyasu Tokugawa: (1542-1616).

 

 

November 12, 1949

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