English: 1926 Promissory Note from the Imperia...Growing up, I recall my father gifting things to folks – in what I deemed – a reckless manner. There was time when someone admired my father’s wristwatch and he took it off and insisted that they take it. My sister and I argued with him, not just on that occasion but on several others that he was being taken advantage of. Of course his response was that there’s as much pleasure, maybe even more, in giving as there is in taking. My sister’s immediate offer of making him ecstatic by happily taking any and all gifts that he planned to give in the future, I don’t think was taken seriously.

Yet once I hit my teens, I became aware that whenever my father lent people money – particularly to a steady stream of strangers, often referred by relatives – for a family exigency or to buy a motorcycle or to go abroad to study, he always insisted that they sign a promissory note or pro-note as was called. This was usually a letter on plain paper, stating the amounts borrowed and the borrower’s intent to return the sums upon demand or by a certain date. The borrower signed it across a revenue stamp pasted on the paper, making it a legal contract. This was in marked contrast with how he handled grants at the small non-profit he ran, which usually gave money directly to elementary, middle or high schools for kids who needed financial help to pay their fees or for books. These grants were just that and the beneficiaries, usually economically disadvantaged kids, were not expected to pay the money back.

So I asked my dad, why he took pro notes from these other folks who borrowed money from him. His response was that if he didn’t treat the money as a loan, that he expected the borrower to return, it diminished the value perceived by the borrower. While most borrowers intended to return the money, it didn’t hurt that there was a legal reason for them to pay off the loan. As my dad put it, “If they return the money, it allows me to lend it to more people who could use a helping hand.”

Ronald Reagan is credited with popularizing the term “Trust but verify” (or as the Russian proverb went “doveryai, no proveryai”). This was my dad’s own method to keep himself and others honest.

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