Recently, we have been wondering at the emphasis in capitalism placed on income earned rather than on asset value. Not marking the value of assets is particularly odd because it does not account for vital assets such as social or human capital, which contain moral qualities or for natural capital, which is subject to degradation.
I recently saw a story that in the U.S., a credit rating agency for individuals will add to its consideration of one’s “asset” potential to support a loan one’s habits of paying cellphone and utility bills. Timely payments indicate a person of more “worth” as a capitalist.
I am, thus, reminded that a person’s credit is a reflection of their asset value, not just their earning capacity. A good credit is a worthy asset. And one’s credit does not depend on one’s income but more on one’s character and good judgment.
A good credit rating is a capital account in some important way, standing us in good stead through the vicissitudes of material ups and downs.
The great Wall Street tycoon J.P. Morgan was once asked: “Is not commercial credit based primarily upon money or property?”
Morgan answered: “No, sir; the first thing is character.”
Untermeyer: “Before money or property?”
Morgan: “Before money or anything else. Money cannot buy it.”
This is from Morgan’s testimony before the U.S. House Committee on Banking and Currency in December, 1912.