§ 1. Abstinence of the conservative kind. § 2. Cumulative abstinence. § 3. Spenders and savers. § 4. No common standard of abstinence. § 5. Saving without and with the use of money. § 6. Classes of borrowers. § 7. Victims of mischance. § 8. The chronic improvident borrower. § 9. Premium concealed in retail prices. § 10. The prodigal borrower. §11. Students and apprentices. § 12. Becoming-owners as borrowers. §13. The borrower for profit.

§ 1. Abstinence of the conservative kind. Abstinence is the name of that faculty of mind which enables present desires to be subordinated to future desires. Abstinence (the faculty) expresses itself in particular acts known as abstaining, or as saving. Conservative abstinence is that which keeps men from using up or invading their present stock of goods, and cumulative abstinence is that which impels them to add to that stock. There is no sharp dividing line, no abrupt break, between these two, yet on the whole they differ. Conservative abstinence is a quality of mind analogous to the inertia and momentum of physical matter, and makes men resist stubbornly a reduction of property, of income, and of an accustomed social position, even when there is little or no disposition to increase or advance them. It is this which makes nearly all men think that using up any part of their principal (when they have sold property or have collected loans) is a very different thing from regularly using up their free income. A large part of accumulation results from the operation of conservative abstinence. Through insurance for one's family, purchase of annuities, laying up "for a rainy day" or for old age, etc., guided by the conservative quality of mind, men seek to maintain (rather than to increase) the standard of themselves or their families.

§ 2. Cumulative abstinence. Adding to wealth at the cost of a present lowering of long-accustomed standards of living is a rare occurrence; but in a large number of cases where there is no deliberate purpose to go beyond conservative abstinence, the uncertainties of life, insensible changes in the habitual standard of possession, desire to leave children a larger patrimony, etc., tend to the heaping up of wealth for heirs. It is much easier to accept a higher than a lower standard of living. Consequently, deliberate cumulative abstinence is most likely to appear at favorable times in the lives of men of rising fortunes, who, while maintaining or even increasing their scale of expenditure, are able to add to their riches. Accumulation comes to be to some men the one game they can enjoy. I recently met an old man who generously was bent on becoming richer so that, as he said, his attractive young wife might get a second husband as good as her first one.

Many successful business men evidently are accumulating not because of a desire to enjoy more material income themselves, excepting in so far as that is necessary to present success or is the evidence that they are succeeding in the present. Business has in it always something of the character of a game, and the game can not be won unless at one place and another the resources of the business are steadily enlarged. The older inexpensive equipment must be replaced by newer and more costly, the stock must be increased and the buildings enlarged, if the business is to maintain its place among competitors and outstrip them. The cumulative abstinence in such cases seems to be but an outgrowth and result, under favoring conditions, of an original conservative motive.

Abstinence of either kind is the guardian of the individual's future against his present desires. Upon the conservative faculty depend the preservation, repair, replacement, and economic use of our environment; upon the cumulative faculty depend largely its growth and betterment. As the capital values in a community are many times as great as the savings in a single year, and as a large part of the savings result from conservative motives, it is evident that the pressure and resistance of conservative abstinence against present desires must be steadily many times as great as that exerted by cumulative abstinence.

§ 3. Spenders and savers. The uniform preference for present over future would lead a Robinson Crusoe to use up and wear out his wealth, and to apply all his labor to present enjoyment, even on the penalty of future misery. On the other hand, the excessive preference for the future over the present would condemn him to the miser's fate of misery and starvation in the midst of wealth. Evidently somewhere between these two extremes he must settle upon some rule of life and habit of choice that involves a ratio of exchange of present and future uses. The world is made up of people each with his habit of choice, not absolutely fixed, slowly changing with years, with education and with circumstances, and occasionally broken into by impulse. Members of families and of groups show some likeness in their habits of choice. Each one having separate control over incomes through the institution of private property, is able to maintain his own standards. It is a matter of degree, ranging from those who spend all they can get hold of, to those who save nearly all. Thus at any time the community is made up of those who are spending more than their incomes, those who are spending just up to their incomes (the large class of conservative abstainers), and those who are spending less than their incomes (the cumulative abstainers). This psychological difference between abstainers and prodigals varies from one person to another, depending on natural temperament, on habit bred of family and community customs and training, and on states of health and on moods affecting the appetites, the imagination, the conscience, and the will.

§ 4. No common standard of abstinence. It must not be thought that any two men's savings in terms of dollars express the comparative degrees of abstinence, sacrifice, suffering, deprivation, etc., of the two men. A poor man denies himself many simple comforts for years to pay $1000 for a little home; a rich man may be able to buy $100,000 of bonds with a fraction of the profits of a rising business or of a growing income from investments while increasing his living expenses in all directions. It is absurd to suggest that the latter has abstained a hundred times as much as the former in a subjective sense.

It might seem that it would be easier for a well-fed, well-clothed, well-housed man to exercise abstinence than for a hungry, ill-clad man with no roof over his head. But neither saving nor prodigality is regularly related to any particular state of fortune or is found exclusively among either rich or poor. A poor peasant living on the most meager fare may possess in high degree the quality of abstinence which is entirely lacking in the rich spendthrift. A man well on in life with a simple standard of living can easily save a large share of an increasing income.

Abstinence is a resultant of the opposing forces of desire in the one man's will. Both of the poor man's desires dependent on a dollar may be very strong (we have no psychic standard unit) but the desire for present enjoyment be the stronger; whereas both the rich man's desires that are dependent on a thousand dollars may be very weak, yet the desire for the present good be the weaker. Natural differences in temperament combine with education, habit, and the imitation of prevailing standards to make desires mild or intense. Saving may result when a vivid imagination aids in making the future desire stronger than present strong impulse; or it may result when very simple tastes fixed by habit are combined with equally habitual and unreasoning frugality. The magnitude of 10 minus 8 is greater than that of 100 minus 99. Two men's powers of abstinence can not be numerically compared, but the objective results appearing in the amounts saved can be compared.