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useless to themselves, useless to their families, and useless to
their country, for no reason but that they cannot be legally dis
charged from debts in which misfortunes have involved them,
and which there is no possibility of their ever paying. I repeat,
again, that these cases have now been accumulating for a whole
generation.

It is true they are not imprisoned ; but there may be, and
there are, restraint and bondage outside the walls of the jail, as
well as in. Their power of earning is, in truth, taken away
their faculty of useful employment is paralyzed, and hope itself
become extinguished. Creditors, generally, are not inhuman or
unkind; but there will be found some who hold on, and the
more a debtor struggles to free himself, the more they feel en
couraged to hold on. The mode of reasoning is, that, the more
honest the debtor may be, the more industrious, the more dis
posed to struggle and bear up against his misfortunes, the greater
the chance is, that, in the end, especially if the humanity of oth
ers shall have led them to release him, their own debts may be
finally recovered.

Now, in this state of our constitutional powers and duties, in
this state of our laws, and with this actually existing condition
of so many insolvents before us, it is not too serious to ask ev
ery member of the Senate to put it to his own conscience to
say, whether we are not bound to exercise our constitutional
duty. Can we abstain from exercising it? The States give to
their own laws all the effect they can. This shows that they
desire the power to be exercised. Several States have, in the
most solemn manner, made known their earnest wishes to Con-



A UNIFORM SYSTEM OF BANKRUPTCY. 21

gross. If we still refuse, what is to be done ? Many of these in
solvent persons are young men with young families. Like other
men, they have capacities both for action and enjoyment. Arc
we to stifle all these for ever ? Arc we to suffer all these persons,
many of them meritorious and respectable, to be pressed to the
earth for ever, by a load of hopeless debt? The existing diversi
ties and contradictions of State laws on the subject admirably
illustrate the objects of this part of the Constitution, as stated
by Mr. Madison ; and they form that precise case for which the
clause was inserted. The very evil intended to be provided
against is before us, and around us, and pressing us on all sides.
How can we, how dare we, make a perfect dead letter of this
part of the Constitution, which we have sworn to support?
The insolvent persons have not the power of locomotion. They
cannot travel from State to State. They are prisoners. To my
certain knowledge, there are many who cannot even come here
to the seat of government, to present their petitions to Congress,
so great is their fear that some creditor will dog their heels, and
arrest them in some intervening State, or in this District, in the
hope that friends will appear to save them, by payment of the
debt, from imprisonment. These are truths ; not creditable to
the country, but they are truths. . I am sorry for their existence.
Sir, there is one crime, quite too common, which the laws of
man do not punish, but which cannot escape the justice of God;
and that is. the arrest and confinement of a debtor by his cred
itor, with no motive on earth but the hope that some friend, or
some relative, perhaps almost as poor as himself, his mother it
may be, or his sisters, or his daughters, will give up all their
own little pittance, and make beggars of themselves, to save him
from the horrors of a loathsome jail. Human retribution can
not reach this guilt ; human feeling may not penetrate the flinty
heart that perpetrates it; but an hour is surely coming, with
more than human retribution on its wings, when that flint shall
be melted, either by the power of penitence and grace, or in the
fires of remorse.

Sir, I verily believe that the power of perpetuating debts
against debtors, for no substantial good to the creditor himself,
and the power of imprisonment for debt, at least as it existed in
this country ten years ago, have imposed more restraint on per
sonal liberty than the law of debtor and creditor impose? in any



22 A UNIFORM SYSTEM OF BANKRUPTCY.

other Christian and commercial country. If any public good
were attained, any high political object answered, by such laws,
there might be some reason for counselling submission and suf
ferance to individuals. But the result is bad, every way. It is
bad to the public and to the country, which loses the efforts
and the industry of so many useful and capable citizens. It is
bad to creditors, because there is no security against preferences,
no principle of equality, and no encouragement for honest, fair,
and seasonable assignments of effects. As to the debtor, how
ever good his intentions or earnest his endeavors, it subdues his
spirit, and degrades him in his own esteem ; and if he attempts
any thing for the purpose of obtaining food and clothing for
his family, he is driven to unworthy shifts and disguises, to the
use of other persons names, to the adoption of the character of
agent, and various other contrivances, to keep the little earnings
of the day from the reach of his creditors. Fathers ,act in the
name of their sons, sons act in the name of their fathers ; all
constantly exposed to the greatest temptation to misrepresent
facts and to evade the law, if creditors should strike. All this
is evil, unmixed evil. And what is it all for? Of what benefit
to any body? Who likes it? Who wishes it? What class
of creditors desire it ? What consideration of public good de
mands it?

Sir, we talk much, and talk warmly, of political liberty; and
well we may, for it is among the chief of public blessings. But
who can enjoy political liberty if he is deprived, permanently, of
personal liberty, and the exercise of his own industry and his
own faculties? To those unfortunate individuals, doomed to
the everlasting bondage of debt, what is it that we have free in
stitutions of government? What is it that we have public and
popular assemblies? What is even this Constitution itself to
them, in its actual operation, and as we now administer it ?
What is its aspect to them, but an aspect of stern, implacable
severity ? an aspect of refusal, denial, and frowning rebuke ?
nay, more than that, an aspect not only of austerity and rebuke,
but, as they must think it, of plain injustice also, since it will
not relieve them, nor suffer others to give them relief? What
love can they feel towards the Constitution of their country,
which has taken the power of striking off their bonds from their
own paternal State governments, and yet, inexorable to all the



A UNIFORM SYSTEM OF BANKRUPTCY. 23

cries of justice and of mercy, holds it unexercised in its own
fast and unrelenting grasp ? They find themselves bondsmen,
because we will not execute the commands of the Constitution ;
bondsmen to debts they cannot pay, and which all know they
cannot pay, and which take away the power of supporting them
selves. Other slaves have masters, charged with the duty of
support and protection; but their masters neither clothe, nor
feed, nor shelter; they only bind.

But, Sir, the fault is not in the Constitution. The Constitu
tion is beneficent as well as wise in all its provisions on this
subject. The fault, I must be allowed to say, is in us, who
have suffered ourselves quite too long to neglect the duty in
cumbent upon us. The time will come, Sir, when we shall
look back and wonder at the long delay of this just and salutary
measure. We shall then feel as we now feel when we reflect
on that progress of opinion which has already done so much on
another connected subject; I mean the abolition of imprison
ment for debt. What should \vc say at this day, if it were pro
posed to reestablish arrest and imprisonment for debt, as it ex
isted in most of the States even so late as twenty years ago? I
mean for debt alone, for mere, pure debt, without charge or sus
picion of fraud or falsehood.

Sir, it is about that length of time, I think, since you,* who
now preside over our deliberations, began here your efforts for
the abolition of imprisonment for debt; and a better work was
never begun in the Capitol. Ever remembered and ever hon
ored be that noble effort! You drew the attention of the public
to the question, whether, in a civilized and Christian country,
debt incurred without fraud, and remaining unpaid without
fault, is a crime, and a crime fit to be punished by denying to
the offender the enjoyment of the light of heaven, and shutting
him up witlrin four walls. Your own good sense, and that in
stinct of right feeling which often outruns sagacity, carried you
at once to a result to which others were more slowly brought,
but to which nearly all have at length been brought, by reason,
reflection, and argument. Your movement led the way ; it be
came an example, and has had a powerful effect on both sides
of the Atlantic. Imprisonment for debt, or even arrest and hold-

* Hon. Richard M. Johnson, Vice-President of the United States.



24 A UNIFORM SYSTEM OF BANKRUPTCY.

ing to bail for mere debt, no longer exists in England; and
former laws on the subject have been greatly modified and miti
gated, as we all know, in our States. " Abolition of imprison
ment for debt," your own words in the title of your own bill,
has become the title of an act of Parliament.

Sir, I am glad of an occasion to pay you the tribute of my
sincere respect for these your labors in the cause of humanity
and enlightened policy. For these labors thousands of grate
ful hearts have thanked you; and other thousands of hearts, not
yet full of joy for the accomplishment of their hopes, full, rather,
at the present moment, of deep and distressing anxiety, have
yet the pleasure to know that your advice, your counsel, and
your influence will all be given in favor of what is intended for
their relief in the bill before us.

Mr. President, let us atone for the omissions of the past by a
prompt and efficient discharge of present duty. The demand
for this measure is not partial or local. It comes to us, earnest
and loud, from all classes and all quarters. The time is come
when we must answer it to our own consciences, if we suffer
longer delay or postponement. High hopes, high duties, and
high responsibilities concentrate themselves on this measure and
this moment. With a power to pass a bankrupt law, which no
other legislature in the country possesses, with a power of giv
ing relief to many, doing injustice to none, I again ask every
man who hears me, if he can content himself without an honest
attempt to exercise that power? We may think it would be
better to leave the power with the States ; but it was not left
with the States ; they have it not, and we cannot give it to them.
It is in our hands, to be exercised by us, or to be for ever useless
and lifeless. Under these circumstances, does not every man s
heart tell him that he has a duty to discharge ? If the final vote
shall be given this day, and if that vote shall leave thousands
of our fellow-citizens and their families, in hopeless and helpless
distress, to everlasting subjection to irredeemable debt, can we
go to our beds with satisfied consciences ? Can we lay our heads
upon our pillows, and, without self-reproach, supplicate the Al
mighty Mercy to forgive us our debts as we forgive our debtors ?
Sir, let us meet the unanimous wishes of the country, and pro
claim relief to the unfortunate throughout the land. What
should hinder? What should stay our hands from this good



A UNIFORM SYSTEM OF BANKRUPTCY. 25

work ? Creditors do not oppose it ; they apply for it ; debtors
solicit it, with an importunity, earnestness, and anxiety not to be
described; the Constitution enjoins it; and all the considerations
of justice, policy, and propriety, which are wrapped up in the
phrase Public Duty, demand it, as I think, and demand it loudly
and imperatively, at our hands. Sir, let us gratify the whole
country, for once, with the joyous clang of chains, joyous because
heard falling from the limbs of men. The wisest among those
whom I address can desire nothing more beneficial than this
measure, or more universally desired.; and he who is youngest
may not expect to live long enough to see a better opportunity
of causing new pleasures and a happiness long untasted to spring
up in the hearts of the poor and the humble. How many hus
bands and fathers are looking with hopes which they cannot sup
press, and yet hardly dare to cherish, for the result of this debate !
How many wives and mothers will pass sleepless and feverish
nights, until they know whether they and their families shall be
raised from poverty, despondency, and despair, and restored
again to the circles of industrious, independent, and happy life!
Sir, let it be to the honor of Congress that, in these days of
political strife and controversy, we have laid aside for once the
sin that most easily besets us, and, with unanimity of counsel,
and with singleness of heart and of purpose, have accomplished
for our country one measure of unquestionable good.



VOL. v.



A UNIFORM SYSTEM OF BANKRUPTCY.



Mu. PRESIDENT, The commendable temper in which the
discussion has been so far conducted leads me to hope that now,
when we are in the midst of the difficulties of the question, the
Senate will indulge me in a few remarks. That there are diffi
culties I freely acknowledge. The subject of bankruptcies is a
difficult subject everywhere, and perhaps particularly difficult
here, as one of the results of a division of legislative powers
between Congress and the States. But these difficulties are not
insurmountable, and their only influence, therefore, should be to
stimulate our efforts, and to increase at once our caution and
our zeal.

It seems to be agreed, by all the friends of any bankrupt bill,
that there shall be a provision for voluntary bankruptcy. The
question now is, whether there ought to be also a compulsory
power, or a power on the part of creditors to subject their debt
ors, in certain cases, to the operation of the law.

It is well known that the bill introduced by me contained such
a power, and I should still prefer to retain it. But I do not
think this of so much importance as some other gentlemen, and
I should cheerfully support a bill which did not contain it, if
by so doing I could contribute to the success of the general
measure. In truth, on this question, and on many others, my
vote will be governed by a desire to make the bill acceptable to
others.

Now, Sir, the argument for the compulsory clause is, that,
without this power, the creditors have no security; that the bill

* A Speech delivered in the Senate of the United States, on the 5th of June,
1840, on Mr. Clay s Motion to strike out the Compulsory Part of the Bankrupt



A UNIFORM SYSTEM OF BANKRUPTCY. 27

is a one-sided measure, a measure for the benefit and relief of
debtors only, quite regardless of the just rights of creditors. All
this I deny. I maintain, on the contrary, not only that there is
just security for the rights of creditors under the voluntary part
of the bill, but that that part, of itself, and by itself, is of the
highest value and importance to creditors. This proposition
takes for granted, what I have no doubt will be found true, that
persons in insolvent circumstances will generally become volun
tary bankrupts. And, in the second place, I maintain that very
little value is added to the security of creditors by the com
pulsory part of the bill. These are points on which I propose
now particularly to address the Senate, and, with its patience, I
hope to make them clear.

When I speak of creditors, I mean the class of creditors gen
erally, or all who, in the course of business, give trust for mer
chandise, or other things sold, or for money loaned. When I
speak of the creditors of insolvents, I mean the creditors, in the
mass, of such persons as are actually and really insolvent, that
is, unable to pay their debts, whether their insolvency be known
and acknowledged or not. And to creditors, and the rights of
creditors, in both these senses and uses of the word, I maintain
that the provisions contained in the voluntary part of this bill
are of great value.

The rights of creditors are the means which the laws furnish
for the enforcement and collection of their debts. In the case
of an insolvent debtor, the laws at present give to the creditor,
among other things, a right to pursue and demand his future
earnings. This right the present bill proposes to take away.
The question is, therefore, whether, in taking away this right,
the bill provides for the creditor any just equivalent.

I do not admit, indeed, that by a bankrupt law we might not
take away some of the existing rights or remedies of creditors,
if it should appear just and proper to do so, without providing
any new right or remedy as an equivalent. The relation of
debtor and creditor forms a general subject of legislation. The
proper law-making power may act upon this relation, and
alter and modify it, upon principles of general policy, justice,
and utility, whenever it sees fit. But I am willing to occupy a
narrower ground, and to undertake to show, that, by the pro
visions of this bill, we leave creditors in a better condition than



28 A UNIFORM SYSTEM OF BANKRUPTCY.

we found them; in other words, that, as a voluntary system
alone, it is beneficial to creditors.

The law, it is proposed, shall last some few years, that Con
gress and the country may see what is its actual operation. It
will act immediately on its passage ; and this operation, as I
maintain, will be favorable to creditors, In other words, the
law will be useful to creditors, in reference to the creation
of debts. It will, 1 insist, increase the probability that he
who parts with his money or his merchandise on credit will
be paid for his merchandise, or repaid his money. Sir, we live
in a highly commercial country, and a highly commercial and
enterprising age. The system of credit, which I hold to Ipe
very useful, and, indeed, essential to our general prosperity, may,
no doubt, be carried to excess. There is such a thing as over
trading, and such a thing as false credit; and both these things
are public evils. All admit this ; and many think the evils so
great, that they seem to be enemies to the credit system alto
gether. I am not one of these ; but still I desire to keep credit
within bounds, and to avoid over-trading.

Now, Sir, what is it that upholds so much false credit? "What
is it that enables men to extend their transactions so far beyond
their capital ? What is it that enables them, also, to go on,
often for a long time, after they become really insolvent ? It is
the practice of indorsement and suretyship, a practice, I venture
to say, more extensive in the United States than in any other
country. Men get trust upon the strength of other men s names.
I do not speak of the discount of notes and bills taken in the
common operations of sale and purchase, but I speak of pure
accommodation, of the discount of paper representing no trans
action of sale or purchase, but made for borrowing money
merely, and indorsed for the sole accommodation of the bor
rower. That great excesses have been committed in operations
of this kind, no man who has attended to the transactions of
trade can doubt ; nor can any one doubt that great evils arise
from this source. Indorsement and suretyship, therefore, are
the means by which excessive and false credit is upheld. And
how is this indorsement obtained ? This leads us one step farther
in the inquiry. How is it that persons, continuing to carry on
business after they arc really insolvent, and are suspected, if not
known to be so, can procure others to indorse their paper ? Sir,



A UNIFORM SYSTEM OF BANKRUPTCY. 29

we all know how it is. It is by promising to secure indorsers
at all events. It is by giving an assurance that, if the party
stops payment, a preference shall be made, and the indorsers
shall be favored creditors. Hence it is quite general, perhaps
universal, that, when an insolvent assigns his property for the
benefit of his creditors, he classifies his creditors, and puts in-
dorsers into the first class. This has become a sort of law of
honor. A man that disregards it is, in some measure, disgraced.
We hear daily of honorary debts, and we hear reproaches
against those who, being insolvent, have yet pushed on, in the
hope of retrieving their affairs, until, when failure comes, and
come it does, sooner or later, they have not enough left to dis
charge these honorary obligations.

Now, at the bottom of all this is preference. The preference
of one creditor to another, both debts being honest, is allowed
by the general rules of law, but is not allowed by bankrupt laws.
And this right of preference is the foundation on which the
structure rests. On the legal right or power of preference lies
the promise of preference. On the promise of preference lies
indorsement. On indorsement lies extensive and false credit.
On excessive and false credit lies over-trading. This, Sir, is
the regular stratification. If we strike out preference, we shall
knock away the foundation-stone. And this bill will strike
it out.

If this bill shall pass, every indorser who shall not take previ
ous security will see that, in case of failure, he can no longer be
protected or preferred, but must come in for his share, and his
share only, with other creditors. And this is right. For one, I
have always thought that, if any difference were to be made, in
dorsers should be paid last, because they come in as volunteers ;
they profess to run a risk. They are not giving credit in the
common way, as other persons do, who sell on trust, in the ordi
nary way of business, and in order to earn their livelihood ; but
they assume a voluntary responsibility. And why should they
be preferred to the grocer, the tailor, or the butcher, who has
only dealt in the common way of his trade, and has not volun
teered to give any trust or credit whatever ? Well, Sir, will not
indorsement stay its hand when this bill shall have taken away
all power of preference ? Will not men hesitate, more than they
now do, about lending their names, when they find that, in case
3*



,50 A UNIFORM SYSTEM OF BANKRUPTCY.

of failure, they must come in for neighbor s fare with all other
creditors ? I think they will.

And, Sir, if there be less of indorsement, there will be less of
fictitious credit, and less of over-trading. Every man s business
will be brought down so much the nearer to his own property,
his own capital, and his own means. And if every trading
man s business be brought down to some nearer proportion to
his own capital and his own means, does not this diminish
the probability of his failure ? Certainly it does ; and therefore
whoever deals with him, and trusts him, is not so likely to lose
his debt. There will be more general security in giving credits.
And therefore I say, that, if you take away the power and prac
tice of preference, you affect, to some extent, false credit and
over-trading; and by these means you give a security to the
creditor, even in the creation of his debt ; and this is one advan
tage, to the \vhole class of creditors, to be expected from this
bill. It is a general advantage, and its precise amount cannot
be stated ; but it is a clear advantage nevertheless.

But there is a second, and a still greater advantage. Mr.
President, allow me to ask, What is that feature, the capital fea
ture, which we most often see in the insolvencies which take
place among the trading classes ? What is that which there is
the more frequent occasion to regret and to reprehend ? Is it
not that the party has gone on too long? Is it not that, after
he knew himself to be really insolvent, that is, after he knew he
had not property enough left to pay his debts, instead of stop
ping, and winding up his concerns, he has ventured still deeper,
and made his ultimate case thereby still more desperate ? Un
der the present state of law, this happens quite too often. I am
afraid it would be found, on inquiry, that failures are generally
worse in this country than elsewhere ; that is to say, that gen
erally the amount of assets is less in proportion to the amount
of debts. And, in my opinion, the present state of the law en
courages and produces this result. For, Sir, let me ask, What
will a man naturally do who has been unfortunate, and has
sustained such losses as to bring his property below his debts,



Online LibraryDaniel WebsterThe works of Daniel Webster (Volume 05) → online text (page 3 of 53)