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law has made true. He declares himself a trader, because the
law has already declared that he shall be considered a trader.
His conscience, therefore, is protected. He swears only accord
ing to the act of Parliament, if he swear at all. But as the
provision stands here, it calls on every one to declare himself a
trader, or that he has been engaged in trade, not within the par
ticular meaning or sense of any act of Congress, but in the
usual and popular acceptation of the word.

Suppose, Sir, a cotton-planter, by inevitable misfortune, by
fire or flood, or by mortal epidemics among his hands, is ruined
in his affairs. Suppose he desires to make a surrender of his
property, and be discharged from his debts. He will be told,
You cannot have the benefit of the law as a cotton-planter ; it is
made only for traders, or persons engaged in trade. Are you
not a trader? No. I am no trader, and was never engaged in
trade. I bought my land here, bought my hands from Carolina,
have bought my stock from Kentucky, and raised cotton and
sold it. But I never bought an article to sell again. I am no
trader. But you must swear that you have been engaged in
trade; you must apply, not as John Jones, Esquire, cotton-
planter, on the Red River, but as Mr. John Jones, trader, at his
storehouse, at or near the plantation of John Jones, Esquire.
And so John Jones, the cotton-planter, must either remain as he
is, excluded from the provisions of the law altogether, or sneak
into them under a disingenuous fiction, if it be not something
worse.

This attempt, therefore, Sir, to avoid a supposed difficulty,
encounters two decisive objections. In the first place, there is



A UNIFORM SYSTEM OF BANKRUPTCY. H

no difficulty to be avoided ; in the second place, if there were,
this manner of avoiding it would be mere evasion.

But now, Sir, I come to a very important inquiry. The Con
stitution requires us to establish uniform laws on the subject of
bankruptcy, if we establish any. What is this uniformity, or in
what is it to consist ? The honorable gentleman says that the
meaning is, that the law must give a coercive power to credit
ors, as well as a voluntary power to debtors ; that this is the
constitutional uniformity. I deny this altogether. No idea of
uniformity arises from any such consideration. The uniformity
which the Constitution requires is merely a uniformity through
out all the States. It is a local uniformity, and nothing more.
The words are perfectly plain, and the sense cannot be doubted.
The authority is, to establish uniform laws on the subject of
bankruptcies throughout the United States. Can any thing be
clearer? To be uniform is to have one shape, one fashion, one
form ; and our bankrupt laws, if we pass them, are to have one
shape, one fashion, and one form in every State. If this be not
so, what is the sense of the concluding words of the clause,
"throughout the United States"? My honorable friend from
Kentucky* has disposed of this whole question, if there ever
could be a question about it, by asking the honorable gentleman
from New Jersey what uniform means, in the very same clause
of the Constitution, where the word is applied to rules of nat
uralization ; and what it means in a previous clause, where it
declares that all duties of impost shall be uniform throughout
the United States.

It can hardly be necessary to discuss this point further. If it
were, the whole history of the Constitution would show the
object of the provision. Bankrupt laws were supposed to be
closely connected with commercial regulations. They were con
sidered to be laws nearly affecting the intercourse, trade, and
dealing between citizens of different States ; and for this reason
it was thought wise to enable Congress to make them uniform.
The Constitution provided that there should be but one coin
age, and but one power to fix the value of foreign coins. The
legal medium of payment, therefore, in fulfilment of contracts,
was to be ascertained and fixed, for all the States, by Congress,

* Mr. Crittenden.



12 A UNIFORM SYSTEM OF BANKRUPTCY.

and by Congress alone ; and Congress, and Congress alone, was
to have the power of providing a uniform mode in which con
tracts might be discharged without payment. Look to the dis
cussion of the times ; to the expositions of the Constitution by
its friends when they urged its adoption ; look to all within the
Constitution, and all without it ; look anywhere, or everywhere,
and you will see one and the same purpose, one and the same
meaning; and that meaning cannot be more clearly expressed
than the words of the clause themselves express it, that laws to
be established by Congress on the subject of bankruptcies shall
be uniform throughout the United States.

Now, Sir, the gentleman s bill is not uniform. It proposes
that there may be one law in Massachusetts, and another in New
Jersey. The gentleman s bill includes corporations ; but then it
gives each State a power to exempt its own corporations, or
any of them, from the operation of the law, if it shall so
choose. It decides what shall be, in the case of banks, an act of
bankruptcy ; but then it provides that any State may say, nev
ertheless, that, in regard to its own banks, or any of them, this
shall not be an act of bankruptcy.

Here is the provision :

" Provided, however, That nothing herein contained shall apply to, or
in any wise affect, any corporation or association of persons, incorporat
ed or acting under a law of any State of the Union, or any Territory of
the United States, where such corporation or association shall be au
thorized by their charter, or any express law of such State or Territory,
to do or commit the act herein declared to be an act of bankruptcy, or
where, by any such law of any such State or Territory, the said incor
poration or association of persons shall or may be exempted from the
provisions of this act."

Pray, Sir, what sort of uniformity is this ? A uniformity which
consists in the authorized multiplication of varieties. Who will
undertake to defend legislation of this kind, under our power to
establish uniform laws on the subject of bankruptcies through
out the United States ? Not only is it in direct violation of the
plain text of the Constitution, but it leaves the very evils, every
one of them, which a provision in the Constitution intended to
shut out. The Constitution says that Congress may establish
uniform laws ; the gentleman s bill says that Congress may pro
pose a law, at least so far as corporations are concerned, but



A UNIFORM SYSTEM OF BANKRUPTCY. 13

that still each State may take what it likes, and reject the rest;
and this, he contends, is establishing a uniform law.

I pray, Sir, where is this power of exemption to stop ? If
we may authorize States to exempt their corporations, may we
not, with equal propriety, authorize them to exempt their in
dividual citizens ? May we not say that each State may de
cide for itself whether it will have any thing to do with the law,
when we have passed it, or what parts it will adopt, and what
parts it wdll refuse to adopt ?

But, Sir, I must wait till some attempt is made to defend
this part of the gentleman s bill. I must see some show of
propriety, some plausibility, before I reason against it further.
In the view I take of it at present, it appears to me utterly re
pugnant to the plain requirements of the Constitution, and des
titute, not only of all argument for its support, but of all apolo
gy also. I see nothing in it but naked unconstitutionality.

But, Mr. President, if these provisions were constitutional,
they would still be in the highest degree unjust, inexpedient, and
inadmissible. What is the object of bringing the banks into
the bill at all? Certainly there can be no just object other than
to insure the constant and punctual discharge of their duties,
by always paying their notes on presentment. Clearly there
can be no object but to prevent their suspensions of payment.
And it might be said that this object was kept in view, if the
law. were uniform, peremptory, inflexible, and applying to all
banks. But when you give the power of exemption to the
States, you sanction the very evil which you propose to remedy.
You profess to prescribe a general rule, and yet authorize and
justify its violation. Do not the States now exempt their banks,
and is not that the very evil from which we suffer? Is not sus
pension, under the authority of State. exemption, the topic, the
discussion of which every day nearly stuns us by its reverbera
tion from the walls of this chamber ? The charters of the banks
are, in general, well enough. They require punctual specie pay
ments, under severe penalties, and, in some cases, under the
penalty of forfeiture. But under the pressure of circumstances,
and from a real or supposed necessity, the States relieve the
banks from these penalties, and forbear to enforce the forfeitures.
And will they not, most assuredly, also relieve the banks in the
same manner, and for the same reasons, if they have the power,

VOL. v. 2



14 A UNIFORM SYSTEM OF BANKRUPTCY.

from the penalties of our bankrupt law? State permission,
State indulgence, State exemption, is the very ground on which
suspension now stands, and on which it is justified. And it is
now proposed that Congress shall give its authority and sanc
tion to all this. It is proposed that Congress shall solemnly
recognize the principle, and approve and sanction the practice,
of State exemption, of the suspension of specie payments by
State authority. If the States will not enforce their own laws
against the banks, can any one imagine that they will see the
equally or still more severe penalties of our bankrupt law en
forced, while they have the power to prevent it?

Some weeks ago, the honorable member from Pennsylvania*
moved for a committee to inquire into the propriety of amending
the Constitution, so as to insert a provision giving Congress
power to restrain the circulation of small bank-notes. I did not
concur in his measure, not thinking the Constitution needed
amendment in that respect; but his argument was quite intelli
gible. He said that this abolition of small bills could not now
be accomplished, because the States could not be brought to act
in concert; yet they might all be brought to consent that Con
gress should establish a uniform rule upon the subject. That
was a fair reasoning towards a proper object. It went for uni
formity on a point of great commercial importance. But how is
it here ? We do not propose uniformity ; .we do not require that
one rule may extend over all. Far otherwise ; for we propose
to authorize difference, according to the discretion and circum
stances of the State. Having the power to establish uniformity,
we delegate an authority to create variety. Charged by the
Constitution to establish one rule, we ourselves, instead of per
forming that duty, call upon others to establish different and
varying rules. All must see to what this leads, or rather, what
this is; for it is a measure which would be perfect in ii Bin
ning; it would reach its destiny at its commencement, iis mis
chievous tendencies would be accomplished at its birrh. The
passage of this bill would add the solemn sanction of Co tigress
to the sanction by the States of the suspension of specie pay
ments by the banks. That is the practical sum and substance,
the long and the short of the whole matter. If our constitu-

* Mr. Buchanan.



A UNIFORM SYSTEM OF BANKRUPTCY. 15

tional power enables us to embrace the banks in this bill, and if
we see no insuperable or greatly formidable practical objections,
then, I think, we ought to include them all, without any power
of escape.

Suppose the bill should be made uniform, then, and include
all banks ; have we the power, and is it expedient, to pass it in
that shape ?

On the motion for a committee, made some time ago by the
member from Pennsylvania, to which I have already referred, I
suggested the opinions which I entertain on one branch of the
power of Congress connected with this subject. The constitu
tional point now arising I do not mean to treat, nor to decide ;
it is open to others, and will, no doubt, be discussed by them.
But upon the expediency or propriety of including banks and
other corporations in this bill, I will say a few words. The State
with which I am connected can have as little objection to in
cluding banks in the bankrupt bill as any other State. Many
persons in Massachusetts, quite respectable and well informed,
are in favor of the measure. But it appears to me they have
not well considered the practical difficulties. Let us look at
what is proposed to be done.

There are eight hundred or a thousand State banks in the
country, each with its charter conferring its rights, prescribing its
duties, and enjoining penalties. They are banks of deposit,
banks of discount, and banks of circulation. It is now gener
ally admitted that they are lawfully created. Their legal exist
ence is established. They possess in the aggregate, I suppose,
two hundred millions of capital. Some of them are founded
entirely on private ownership, while in some others the States
creating them are proprietors, and in some others, again, the
States are sole proprietors. Some of them have a right to sus
pend specie payments for a limited time; others have not this
right, the charter of each being its own constitution.

Such being the general state of things, it is now proposed to
subject all these banks to the operation of a bankrupt law, so
that, when they stop payment for a day or an hour, their prop
erty and effects may be seized for distribution among their cred
itors, and their operations broken up. It is proposed to do this,
although the charters of the banks may expressly authorize them
to do that very thing which is an act of bankruptcy under this



16 A UNIFORM SYSTEM OF BANKRUPTCY.

bill, and for which their property is to be thus seized. Here is
certainly a direct collision between State authority and the au
thority of the United States, which ought to be avoided when
ever it can be. The act of Congress in this case would be made
to repeal or annul pro tanto the law of the State. I do not say
that this can in no case be done; but I say that all such collis
ions ought to be avoided, if possible.

It is proposed that Congress shall prescribe duties to the banks
not prescribed by their own charters ; and for the violation of
those duties thus prescribed by Congress, it is proposed to pro
ceed against them as bankrupts, to sequestrate their effects, and
virtually annul their franchises. If this can be done, should it
be done without clear and cogent necessity ? Without washing
to represent the proposition as extravagant, or speaking of it
with disrespect, it seems tome to be bold, if not rash, until a
case of absolute necessity is made out. What would become
of the bank stock in case of such seizure and sequestration?
What extent of depression and fluctuation would attach to it,
when such a law should be passed ? What would become of
the entire circulation of the country, if a general suspension
should happen, and all the banks should be thus seized? What
would become of the country, creditors and debtors, and of all
business, if a general suspension should happen, and all the
banks should be placed in the hands of the federal courts, their
paper entirely disgraced, and an immediate collection of all their
debts attempted to be enforced? What would become of some
of the States who own the banks, and of others who derive
revenues from them ? And how could such immense affairs be
administered by the courts of the United States? These diffi
culties appear to me to be startling. If, indeed, we were quite
confident that such a provision would hereafter prevent all gen
eral suspensions, we might venture upon the measure. We
might expect to be able to deal with here and there an individ
ual case. But this provision is not certain to prevent general
suspension in great emergencies or great commercial revolutions.
Twice within a few years the banks have suspended, notwith
standing the penalties of their own charters and the laws of their
own States. The real truth is, that, in the absence of all regu
lation or control by Congress, the banks have attempted, and do
attempt, regulation by their own concert of action. They make
a law for themselves.



A UNIFORM SYSTEM OF BANKRUPTCY. 17

A general suspension is the result of a general concurrence, or
of a general conviction of the necessity of suspension, on the
part of all the banks, or many of them. This has happened,
and, in the present state of affairs, may happen again, notwith
standing a bankrupt law. In my opinion, indeed, it is certain
to happen, notwithstanding all the bankrupt laws we can pass,
until Congress shall do its duty by enacting prospective and pre
ventive remedies ; and if it should happen, one of two things
must ensue ; either Congress would be called together to repeal
the law, or an utter and dead stop \vould take place in the pay
ment of debts, in the concerns of commerce, and, indeed, in all
the business of life.

In addition to the charters, it is to be remembered that several
of the States have provisions of their own, founded on their
own statutes, for proceeding against failing banks. Such banks
are put into commission, or under sequestration, by the State
courts, and a judicial administration and settlement of their af
fairs take place. Is our bankrupt law expected to supersede
these State bankrupt laws ? Are our courts to dispossess the
State courts ?

Sir, I will not pursue this subject further. I repeat, that, in
the part of the country to which I belong, I believe there is a
pretty strong disposition to include the banks in the bankrupt
law. The people in that quarter apprehend from it no danger
to themselves or their own institutions, and they wish to see
banks elsewhere coerced, by the most effectual means, to resume
and to maintain specie payments. I need not say, that they
are among the greatest sufferers by the present most ruinous
state of things. They pay, and others do not pay them. They
cannot long stand the present state of the currency, and, like
them, I am ready to adopt any practical measure, any thing
short of convulsive shocks between State authority and the au
thority of the United States, to relieve it. But I confess, that,
for myself, to say nothing of the constitutional points, I see for
midable difficulties in subjecting State banks to forfeiture and
destruction by an act of bankruptcy. At any rate, if the banks
are to be dealt with in bankruptcy at all, their case would re
quire, obviously, very many peculiar provisions, and they should
constitute the subject of a bill by themselves. Such a bill
should be prospective, the commencement of its operation de-



18 A UNIFORM SYSTEM OF BANKRUPTCY.

ferrcd, the act of bankruptcy more clearly determined, provision
made to avoid, as far as possible, collision with State authorities,
and provision also for superseding the commission, on resump
tion of payment, or security given. Various provisions of this
kind, as it seems to me, would be essentially necessary.

Leaving this very important part of the case, another question
arises upon the proposed amendment. Shall the bankruptcy
act, in its application to individuals, be voluntary only, or both
voluntary and compulsory ? It is well known that I prefer that
it should be both. I think all insolvent and failing persons
should have power to come in under its provisions, and be vol
untary bankrupts ; and I think, too, that, as to those who are
strictly merchants and traders, creditors ought to have a right to
proceed against them, on the commission of the usual acts of
bankruptcy, and subject them to the provisions of the act. But
the committee think otherwise. They find many objections to
this from many parts of the country, and especially from the
West. In a country so extensive, with a people so various,
with such different ideas and habits in regard to punctuality in
commercial dealings, great opposition is anticipated to any
measure so strict and so penal as a coercive bankruptcy. I con
tent myself, therefore, with what I can get. I content myself
with the voluntary bankruptcy. I am free to confess my lead
ing object to be, to relieve those who are at present bankrupts,
hopeless bankrupts, and who cannot be discharged or set free
but by a bankrupt act passed by Congress. I confess that their
case forms the great motive of my conduct. It is their case
which has created the general cry for the measure. Not that
their interest is opposed to the interest of creditors; still less
that it is opposed to the general good of the country. On the
contrary, I believe that the interest of creditors would be greatly
benefited even by a system of voluntary bankruptcy alone, and I
am quite confident that the public good would be eminently
promoted. In my judgment, all interests concur ; and it is the
duty of providing for these unfortunate insolvents, in a manner
thus favorable to all interests, which I feel urging me forward
on this occasion.

And now, Sir, whence does this duty arise which appears to
me so pressing and imperative ? How has it become so incum
bent upon us? What are the considerations, what the rea-



A UNIFORM SYSTEM OF BANKRUPTCY. 19

sons, which have so covered our tables with petitions from all
classes and all quarters, and which have loaded the air with such
loud and unanimous invocations to Congress to pass a bankrupt
law?

Let me remind you, then, in the first place, Sir, that, commer
cial as the country is, and having experienced as it has done,
and experiencing as it now does, great vicissitudes of trade and
business, it is almost forty years since any law has been in force
by which any honest man, failing in business, could be effectu
ally discharged from debt by surrendering his property. The
former bankrupt law was repealed on the 19th of December,
1803. From that day to this, the condition of an insolvent,
however honest and worthy, has been utterly hopeless, so far as
he depended on any legal mode of relief. This state of things
has arisen from the peculiar provisions of the Constitution of
the United States, and from the omission by Congress to exer
cise this branch of its constitutional power. By the Constitu
tion, the States are prohibited from passing laws impairing the
obligation of contracts. Bankrupt laws impair the obligation
of contracts, if they discharge the bankrupt from his debts with
out payment. The States, therefore, cannot pass such laws.
The power, then, is taken from the States, and placed in our
hands. It is true that it has been decided, that, in regard to
contracts entered into after the passage of any State bankrupt
law, between the citizens of the State having such law, and sued
in the State courts, a State discharge may prevail. So far,
effect has been given to State laws. I have great respect, habit
ually, for judicial decisions ; but it has, nevertheless, I must say,
always appeared to me that the distinctions on which these de
cisions are founded are slender, and that they evade, without
answering, the objections founded on the great political and
commercial objects intended to be secured by this part of the
Constitution. But these decisions, whether right or wrong,
afford no effectual relief. The qualifications and limitations
which I have stated render them useless, as to the purpose of
a general discharge. So much of the concerns of every man of
business is with citizens of other States than his own, and with
foreigners, that the partial extent to which the validity of State
discharges reaches is of little benefit.

The States, then, cannot pass effectual bankrupt laws ; that



20 A UNIFORM SYSTEM OF BANKRUPTCY.

is, effectual for the discharge of the debtor. There is no doubt
that most, if not all, the States would now pass such laws, if
they had the power ; although their legislation would be various,
interfering, and full of all the evils which the Constitution of

t}

the United States intended to provide against. But they have
not the power ; Congress, which has the power, does not exer
cise it. This is the peculiarity of our condition. The States
would pass bankrupt laws, but they cannot; we can, but we
will not. And between this want of power in the States and
want of will in Congress, unfortunate insolvents are left to hope
less bondage. There are probably one or two hundred thou
sand debtors, honest, sober, and industrious, who drag out lives



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