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while this is known to himself, and not known to others ? If he
stops and surrenders, however honestly and fairly, he cannot be
sure of a discharge, and the unpaid balance may keep him a
pauper for life. On the other hand, he sees that another voy*


age, another speculation, some new turn of fortune, may possi
bly relieve him, and bring him out a man of property. On one
side, poverty for life is his only prospect, and only destiny, so
far at least as the law allows him any ground of hope ; and on
the other, there is some chance of escape. Now, Sir, I will ask
any sensible man, if a state of law could be devised more likely
to encourage headlong enterprise and rash speculation. Can
you place a man in a condition where he will be more likely to
throw himself upon desperate chances, and to plunge deeper
and deeper?

We are not without experience on this point, and much in
struction may be gathered from one memorable instance. The
great fire in New York is supposed to have destroyed property
to the amount of twenty or twenty-five millions of dollars, in
houses, warehouses, and merchandise. But nobody failed. This
is a fact full of admonition. I ask attention to it. Nobody
failed, notwithstanding this immense loss of property; and what
was the reason ? No one doubts that hundreds were rendered
deeply insolvent by this so extensive calamity. Why, then, did
they not stop ? The answer is, that the extent of their losses
was, in many cases, known only to themselves, and they con
cealed their own true condition. And they had strong motives for
so doing. If they announced themselves insolvent, and stopped,
nothing was before them and their families, for their whole lives,
but poverty and distress. On the other hand, there was a hope
that, if they could maintain their credit, they might, by extreme
exertion and extreme good-fortune, extricate themselves. On
the strength of that hope, slight as it was, they buoyed them
selves up, and tried to stem the current which was carrying
them, notwithstanding all their struggles, to utter and desperate
bankruptcy. They paid exorbitant interest for money; they
suffered themselves to be jewed in every dark alley in the city;
they sacrificed every thing to maintain their credit, and in the
end, when every thing else was gone, credit went also. And
when they finally failed, where was the fund for dividends to
creditors ? Why, Sir, it had gone to the pocket of the capital
ist ; it had been devoured by the voracity of usury. I know of
one instance in which a merchant paid more than fifty thousand
dollars extra and unlawful interest, for the purpose of upholding
his credit, and failed after all. And there are well-authenticated


cases of payment of still larger sums. Boundless extras and
gross exorbitancy were thus suffered to eat up what belonged to

Now, Sir, would it not have been better for all parties, and
for the public, that these unfortunate persons should have
stopped payment the morning after the fire, assigned all that
was left of their property, and received a discharge? And this,
be assured, many of them would have done, if the law had pro
vided that by so doing they should obtain that discharge. But
there was no such legal provision ; they had no hope on that
side, but from the consent of all their creditors, and they believed
that all would not consent; and therefore there was no way
left to them but to keep on, wading into deeper water at every
step, and stopping at last with nothing to divide except among

Mr. President, we hear it frequently said, that honest debtors
may always obtain discharges from their creditors upon an hon
est assignment of their effects. This is the language of the
memorial of the Board of Trade, and this is the language, espe
cially, of the letter to the honorable member from New York,
which has been read. Sir, such is not my opinion, nor the fruit
of my experience. I believe that creditors are generally hu
mane and just ; but there will always, or often, be some who
are selfish, unjust, or indifferent. There will be some who will
not compound. The man, therefore, who would stop, since he
knows he is insolvent, if he could be sure of a discharge, cannot
be sure of it. He may be as honest as possible ; he may strip
himself of the last farthing ; but yet he cannot promise himself
any release. It is notorious that some creditors will and do hold
on ; and as to the debtor, this is as decisive as if all did so.
Now, Sir, this bill proposes an object to a man whose circum
stances have become insolvent, and makes that object sure. It
tells him, by way of inducing him to stop in season, and before
he has wasted his property, that by assigning it, and acting
honestly in all things, he shall have a discharge ; that no unrea
sonable creditor shall be able to prevent it ; and with this cer
tainty before him he will stop in season, or, at least, he will be
much more likely to stop in season than he is at present.

This, then, Sir, is the second benefit which this bill confers
on creditors. And who will deny that it is a clear and a great


benefit? It holds out a strong inducement to debtors to stop
in season, and to distribute their property honestly, while they
have yet property to distribute, and before they have wasted it
all in useless sacrifices to retrieve their affairs.

But there is a third benefit which this bill confers on credit
ors. It takes away the power and the motive of concealment.
Under the present state of things, the motives of an insolvent
man lead in the opposite direction of his duties. Every thing is
brought to bear against his honesty and integrity. He has every
temptation to conceal his property ; and there are many ways in
which he may conceal it. If he surrenders all, he cannot be dis
charged, and therefore will be in no condition to earn any thing
more. He may, therefore, not choose to surrender, and may set
his creditors at defiance. I have heard of an instance in which
a man failed for one hundred and fifty thousand dollars. He
showed assets to the amount of eighty thousand, and there
was no reason to suppose that he had any more, or had acted
dishonestly in any way. He offered to give up all for a dis
charge ; bat while most of his creditors were willing to discharge
him on such a surrender, some were not. A year afterwards he
renewed his offer of giving up all, but his property had by this
time become diminished by ten thousand dollars, so that he had
but seventy thousand to offer; and the obstinate creditors of
last year were now willing to take what was then offered, but
would not take less ; and so the process of offer and refusal went
on ; and the last I heard of the case, this proceeding was likely
to result in the creditors getting nothing, and the debtor s be
coming a beggar. If there be not many cases exactly like this,
or quite so strong in all their circumstances, there are still very
many which much resemble it ; and this bill will put an end to
them all.

Sir, the great motive by which the debtor is to be brought to
act honestly and fairly is his hope of a discharge. This is to
him every thing. Hardly any earthly object, in his view, can be
greater. It is this which is to reinstate him in a condition of
effort and action. Creditors can obtain a benefit, by means of
this, far superior to any good which they can ever get by hold
ing on to his future earnings. Generally, this last right is good
for nothing to the mass of creditors, though sometimes an indi
vidual may profit by it. In some cases, it is true, where the


amount of debt is small, the bankrupt will struggle hard to
earn the means of payment, that he may afterwards work for
himself. But if the amount be large, he will make no such
effort. lie will not work altogether for his creditors. Not only
will he not do that, but, as I have already said, he is under
strong temptation to retain and conceal what he already pos
sesses. I need not say of what evil consequence all this is. I
need not say what ill-will naturally grows up between debtors
and creditors standing in this relation. The creditor thinks his
debtor unjust and roguish ; the debtor regards his creditor as
remorseless and cruel ; and mutual reproaches and deep bitter
ness of feeling are often the result. How much better, Sir, every
way, that the law, by its timely interference, should give the
debtor s property to whom it belongs, and set him free to begin
a new career of industry and usefulness!

And, in the fourth place, Sir, this bill gives the creditors an
equal distribution of the debtor s effects. In the present state of
things, a bankrupt may pay one creditor all, and another noth
ing; and he who gets nothing may, perhaps, fail himself, when,
if he could have received his just proportion, he might have
been saved. The great interest of the mass of creditors is, that
the debtor s effects shall be equally divided among them all. At
present, there is no security for such equal division, and this bill
proposes to give such security. And I repeat, that, if any thing
ever comes of the power of a creditor to hold on upon his debt,
in the hope of getting something out of the future earnings of a
notoriously insolvent debtor, it is usually not the mass of credit
ors, but only some one of them, who gets any thing; and that
one, very likely, may be he who deserves least.

These, Mr. President, are the securities, the new securities, the
important securities, which this bill furnishes to the creditors.
If there be nothing in them, let that be shown ; but until it is
shown, let it not be said that there is nothing in this bill for the
creditors benefit.

And, Mr. President, these provisions belong to the voluntary,
as well as the involuntary, parts of the bill. The real reciproci
ty, the real equivalent, must be looked for in the provisions made
for conducting the proceedings, and not in the source in which
the proceedings originate. Suppose creditors to have ever so
full a power of declaring their debtors bankrupts; this would


not avail them, unless proper provision were made for a full
assignment and fair distribution of the property. On the other
hand, if such provision be made, the creditor is secured, al
though the proceedings originate with the debtor himself. It
may be wise, or it may be unwise, to retain the coercive clauses;
but whether retained or not, they do not constitute the true
equivalent or reciprocal benefit of the creditor.

The real state of the case stands thus. The benefit of a
debtor consists in obtaining a discharge ; this he shall have, but,
in order to obtain it, he shall give the creditors the benefit of a
full and honest surrender of all his property ; he shall show, if a
merchant, that he has kept proper and regular books of account ;
it must appear that there has been no false swearing on his
part, or the concealment of any part of his property ; that he
has not admitted any false or fictitious debt against his estate ;
that he has not applied any v trust money to his own use; and
that he has not paid any debt by way of preferring one creditor
to another, in contemplation of bankruptcy. And the Senate,
if they see fit, may insert that the consent of creditors shall be
necessary to his discharge, though, for one, I should never agree
to that, without reserving a right to the debtor to summon
dissenting creditors to appear before the proper tribunal, and
show some just reason for withholding a discharge.

I have now, Sir, gone through with all that I proposed to say
upon the voluntary part of this bill. My undertaking was, to
show that that part of the bill does, by itself, and of and in itself
alone, contain provisions of the highest importance to creditors
and the security of creditors ; and, on the various points which I
have noticed, I am ready to meet any gentleman who may
choose to contest the matter. The opinions which I have ex
pressed I hold with confidence, and am willing to defend them,
and to submit them to the judgment of all men of experience.

My second general proposition is, that, whether it were ad
visable, on the whole, or not, to retain the compulsory part, yet
that part does not give any important addition to the security
of creditors ; and that therefore it is not of great consequence
whether it be retained or not.

In the first place, let us remember that the form of proceeding
is the same, after its commencement, whether it be begun by the


debtor or his creditor. If there be any benefit to the creditor at
all in the compulsory part, it must be in the mere power of de
claring his debtor a bankrupt under certain circumstances, and
of causing him, willing or unwilling, to go through the bankrupt
process. Now, the difficulty is, that, though this power might
sometimes be beneficial to the creditor, yet it is next to impos
sible so to describe the circumstances which shall constitute a
just occasion for the exercise of the power, as not to leave it still,
in a great measure, a voluntary matter with the debtor when he
will subject himself to the provisions of the law. This has been
found the difficulty in all systems ; and most bankruptcies are,
therefore, now substantially voluntary. Those acts which are
in this bill called acts of bankruptcy, and which, if committed,
shall enable a creditor to sue out a commission against his
debtor, are nearly all of them voluntary acts, which the debtor
may perform or not at his pleasure, and which, of course, he will
not perform, if he wishes to avoid the process of bankruptcy.

These acts, as stated in the bill, are, secretly departing from
the State with intent to defraud his creditors ; fraudulently pro
curing himself to be arrested, or his lands and goods attached or
taken in execution ; removing or concealing his goods to prevent
their being levied upon or taken by legal process ; making any
fraudulent conveyance of his lands or goods; lying in jail twen
ty days for want of bail, or escaping from jail, or not giving
security according to law when his lands or effects shall be at
tached by process.

An insolvent may avoid the commission of most of these acts
if he chooses, especially as there are now few instances of im
prisonment for debt. The acts of bankruptcy, according to the
British statute, are very much like those in this bill. But a
trader may declare himself insolvent, and thereupon a commis
sion may issue against him ; and that is supposed to be now the
common course. Creditors will seldom, if ever, use this power.
A creditor desirous of proceeding against his debtor for pay
ment or security, naturally acts for himself alone. He arrests
his person, attaches his property, if the law allows that to be
done, or gets security for his own debt the best way he can,
leaving others to look out for themselves. Concert among cred
itors, in such cases, is not necessary, and is uncommon ; and a
single creditor, acting for himself only, is much more likely to


take other means for the security of his debt than that of put
ting his debtor into bankruptcy. Nevertheless, I admit there are
possible cases in which the power might be useful. I admit it
would be well if creditors could sometimes stop the career of
their debtors ; and if the honorable member from New York,* or
any other gentleman, can frame a clause for that purpose, at
once efficient and safe, I shall vote for it. Even as these clauses
now r stand, I should prefer to have them in the bill; my original
proposition having been, as is well known, that there should be
both compulsory and voluntary bankruptcy ; and I vote now to
strike the provision out, only because others, I find, object to it,
and because I do not think it of any great importance.

I proceed, Sir, to take some notice of the remarks of the hon
orable member from New York ; and what I have first to say is,
that his speech appeared to me to be a speech against the whole
bill, rather than a speech in favor of retaining the compulsory
clause. He pointed out the evils that might arise from the vol
untary part of the bill ; but every one of them might arise, too,
under the other part. He spoke of the hardship to creditors in
New York; that they should be obliged to take notice of the
insolvency of their debtors in the Western States, and to go
thither to prove their debts, or resist the discharge. But this
hardship, certainly, is no greater when the Western debtor de
clares himself bankrupt, than when he commits an act of bank
ruptcy, on which some Western creditor sues out a commission
against him.


All the other inconveniences, dangers, or hardships to credit
ors, which the honorable gentleman enumerated, were, in like
manner, as far as I recollect, as likely to arise when a creditor
puts the debtor into bankruptcy, as when he puts himself in.
The gentleman s argument, therefore, is an argument against
the whole bill. He thinks Eastern creditors of Western debtors
will be endangered, because State legislatures, in States where
debtors live, as well as commissioners, assignees, and so forth,
will have all their sympathies on the side of the debtors. Why,
Sir, State legislatures will have nothing to do with the matter,
under this bill; and as to the rest, how is it now? Are not
creditors now in the power of local administrations affected, in

* Mr. Tallmadge.

VOL. V. 4


all respects, by these same sympathies ? Are there no instances,
indeed, and is there no danger, of laws staying process, embar
rassing remedies, or otherwise interrupting the regular course of
legal collection ? For my own part, I cannot doubt that a New
York merchant, learning that his debtor in the South or West
is in insolvent or failing circumstances, would rather that his
affairs should be settled in bankruptcy, in the courts of the Unit
ed States, than that his debtor should settle them himself, pay
ing whom he pleased, and disposing of his property according
to his own will, or under the administration of the insolvent
laws of the State.

The gentleman seemed to fear that, if Western traders may
make themselves bankrupts, New York merchants will be shy
of them, and that Western credit will be impaired or checked.
Perhaps there would be no great harm if this should be so. A
little more caution might not be unprofitable ; but the answer to
all such suggestions is, that the bill applies only to cases of in
solvents, actual, real insolvents ; and when traders are actually
insolvent, the sooner it is known the better, nine times out of
ten. Nor do I feel any alarm for our mercantile credit abroad,
which has awakened the fears of the gentleman. What can
foreign merchants suppose better for them than such an admin
istration of the effects of debtors here, as that, if there be foreign
creditors, they shall be sure of a just and equal dividend, with
out preference either to creditors at home or indorsers ? It is
not long since, in some of the States, (I hope it is not so any
where now,) that creditors within the State had preference over
creditors out of it. And, if we look to other countries, do we
find that well-administered systems of bankruptcy enfeeble or
impair mercantile credit ? Is it so in regard to England, or to
France ?

The honorable member feels alarm, too, lest the banks should
be great sufferers under the operation of this bill. He is appre
hensive that, if it shall pass, very many debtors of the banks
will become bankrupts, pay other creditors more or less, and pay
the banks nothing. Sir, this is not according to my observation.
Bank debts are usually preferred debts, because they are debts
secured by indorsement. But, by mentioning the case of the
banks, the gentleman has suggested ideas which I have long en
tertained, and which I am glad of this opportunity to express
briefly, though I shall not dwell on them.


Sir, a great part of the credit of the country is bank credit.
A great part of all indorsement and suretyship is bank indorse
ment and bank suretyship. I do not speak particularly of the
great cities ; I speak of the country generally. Now, indorse
ment, as I have already said, rests on the idea of preference.
And if we take away preference, do we not diminish bank in
dorsement and bank accommodation ? And do we not in this
way act directly on the quantity of bank paper issued for circu
lation ? Do we not keep the issues of paper nearer to the real
wants of society ? This view of the case might be much pressed
and amplified. There is much in it, if I am not mistaken. For
the present, I only suggest it; but he who shall consider the
subject longest and deepest will be most thoroughly convinced
that in this respect, as well as others, the abolition of preference
to indorsers will act beneficially to the public.

The immediate motion before the Senate, Mr. President, does
not justify a further extension of my observations on this part
of the case. My object has been to prove that this bill is not
one-sided, is not a bill for debtors only, but is what it ought to
be, a bill making just, honest, and reasonable provisions for the
distribution of the effects of insolvents among their creditors ;
and that the voluntary part of the bill alone secures ah 1 these
principal objects, because, in the great and overruling motives
of obtaining a discharge, it holds out an inducement to debtors
who know themselves to be insolvent to stop, to stop season
ably, to assign honestly, and to conform in good faith to all the
provisions intended for the security of their debtors.


A MOTION was submitted in the Senate, on the 14th of December,
1840, to refer so much of the President s message at the beginning of
the session as relates to the finances to the Standing Committee on
Finance. This question coming up for discussion on the 16th, Mr.
Webster addressed the Senate substantially as follows :

MR. PRESIDENT, It has not been without great reluctance
that I have risen to offer any remarks on the message of the
President, especially at this early period of the session. I have
no wish to cause, or to witness, a prolonged, and angry, and
exciting discussion on the topics it contains. The message is,
mainly, devoted to an elaborate and plausible defence of the
course of the existing administration ; it dwells on the subjects
which have been so long discussed among us ; on banks and
banking, on the excess of commerce and speculation, on the
State debts, and the dangers arising from them, on the Sub-
treasury, as it has been called, or the Independent Treasury, as
others have denominated it. I propose now to deal with none
of these points. So far as they may be supposed to affect the
merits or character of the administration, they have, as I under
stand it, been passed upon by the country ; and I have no dis
position to reargue any of them. Nor do I wish to enter upon
an inquiry as to what, in relation to all these things, is supposed
to have been approved or disapproved by the people of the
United States, by their decision in the late election. It appears,
however, thus far, to be the disposition of the nation to change
the administration of the government. All I propose at this

* Remarks upon that part of the President s Message which relates to the Reve
nue and Finances, delivered in the Senate of the United States, on the 16th and
17th of December, 1810.


time to do is, to present some remarks on the subject of the
finances, speaking on the present state of things only, without,
recurring to the past, or speculating as to the future. Yet I
suppose that some proper forecast, some disposition to provide
for what is before us, naturally mixes itself up, in a greater or
less degree, with all inquiries of this sort.

In this view, I shall submit a few thoughts upon the message
of the President; but I deem it necessary to preface what I
shall say with one or two preliminary remarks.

And, first, I will say a word or tw r o on the question, whether
or not unfounded or erroneous impressions are communicated to
the people by that document, in several respects. In this point
of view I first notice what the President says on the eighth page.
He there represents it as the great distinctive principle, the grand
difference in the characters of our public men, that of one class

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