Lending Money To Loved Ones

A reader dissents over how we framed this letter:

I don’t see what is so “horrible” in what Ayn Rand wrote to her niece. First, the niece didn’t ask for $25 as a gift; she asked to borrow it.  If you read the letter, Rand gives TWO examples of where a similar request was made, and the money was NOT used to accomplish the stated goal, nor was it paid back.  Second, Rand didn’t insist on charging interest, merely getting the principle back.  Third, she simply insisted the niece be honest and A) spend it on what she said, and B) pay the loan back when she had the chance instead of spending on something else.

Or if you don’t want to be horrible like her, I too could use some new clothes to improve my employment opportunities, and a $250 (inflation adjusted from 1949) Amazon gift credit in reply would help. And you shouldn’t be horrible about insisting that I really use it for clothes, or that I pay it back, much less according to some terms.  If you did insist, you would be “horrible” just like her.

This is the one thing often missed in Ayn Rand’s works: the heroes keep their promises, and pay what they owe “to the last dime”, often at great cost.

Another reader notes:

It would be nice if all of the sites bringing up this letter would put it into context.

1) Rand had previously had a misunderstanding with one of the niece’s two older sisters regarding money she’d loaned her. 2) The niece took the letter in good spirits. Rand liked her response and the girl not only got the money, but began a correspondence with Rand in which Rand was surprisingly maternal and affectionate towards her. 3) The niece’s oldest sister was one of Rand’s best friends until Rand’s death. 4) The niece the letter was sent to and her middle sister, after the misunderstanding about the loan had been cleared up, had cordial relations with Rand for years.

Another broadens the conversation:

I’m a bit miffed at how ill treated this letter is in your post. What an invaluable lesson this is about debt!  If you read the whole letter – ahem, you cut the most important part after she offers terms, which are quite reasonable, in which she warns that once you start earning money you will want to spend it on other things besides the money you owe.  This is quite right!  We all love to slap it on the credit card, and then when faced with the option to buy a new kitchen appliance, fancy meal, or pair of shoes or pay down our debt, how many of us choose the latter?  Not enough.

Most people in the US think nothing about taking on a new credit card – or a fancy new degree – and the mountain of “irresponsibly” laid down debt literally destroys their lives.  It destroys their entrepreneurial spirit; it destroys their educational, relational, and employment opportunities; it destroys their quality of life and entrenches mild- to severe poverty; and it degrades them psychologically and virtually eliminates any taste for risk taking and enterprise, locking them into “getting by” employment to constantly service the debt.

Would that they had someone as wise as Rand cautioning them to think reeeeealy hard before taking on $40,000 for that BS Degree or $10,000 for a late-model car when they could be driving around a reliable beater.  Think of the suffering that could have been alleviated if such lessons were taught to the entire generation of then-17 year old millennials who are currently groaning under their debt.

And let’s look at the massive handicap our national debt has on this same generation and their children.  Would that anyone in Congress had had an aunt as shrewd as Ms. Rand!  Look at the Greek debt or historic Latin American debt.  How “horrible” would it have been to have a tut-tutting aunt make people painfully aware of the potential repercussions of their decisions before undertaking them?  How much global suffering could have been avoided with a little more tough love from a wiry, stick-in-the-mud Aunty like Ayn Rand?

Sure, she moralizes with the girl (“I hate irresponsible people”) and makes it more personal than perhaps it needs to be.  But it is her money, and she is certainly entitled to do what she wants with it.  And why does she owe an open ended, never-to-be-paid-back line of credit to her relatives?  If all of us lent to all our relatives whenever they came a-begging, we’d be as broke as they are!