OCTOBER, 1837.] Law of Bankruptcy against Bankrupt Banks. [SENATE. This bill was, by unanimous consent, read | Massachusetts, who delivered his sentiments on twice, and ordered to be engrossed for a third reading. THURSDAY, October 12. Mr. WEBSTER said he rose to present a great number of memorials and petitions against the annexation of Texas to the United States. These papers, he said, were sent to him, some of them from most of the Northern and Eastern States. They were numerous, and some of them contained several thousand signatures. In some instances he knew the signers, and knew them to be highly respectable persons, and he found among the names persons of all parties in politics, and all sects in religion. At one time, Mr. W. said, he had thought it might be as well not to present these petitions till the next session. But it being now officially known that the annexation of Texas to the United States had become the subject of communication between the two Governments, the time had come when it was proper that those citizens who wished to protest against any such annexation should make their sentiments known to their own Government. Mr. SWIFT, Mr. MOKEAN, and Mr. WILLIAMS, also presented remonstrances on the same ject, from citizens of their respective States, which were severally laid on the table. Law of Bankruptcy against Bankrupt Banks. Mr. GRUNDY, from the Committee on the Judiciary, to whom was referred so much of the President's Message as related to bankruptcy, moved that the committee be discharged from the further consideration of that subject. the Treasury note bill, (Mr. WEBSTER.) That Senator spoke briefly, but comprehensively, against this Executive recommendation. He presented all the points which others have since elaborated. In answering him, I answer all. The objections which the Senator from Massachusetts takes to the Executive recommendation are of a two-fold character: first, to the constitutional power of Congress to pass a bankrupt law, confined to moneyed corporations and to bankers, and with a view to operate upon the paper currency; secondly, to the consistency of the President in having made such a recommendation. I take up the second of these objections first, because it creates a prejudice against the whole recommendation of the President. The imputation of inconsistency creates a prejudice; and it is necessary to remove that prejudice before the recommendation can be fairly considered. The inconsistency imputed, lies in the supposed disclaimer of the President of all federal authority over the currency, and then, an assumption of power to regulate that currency, and to regulate it by an unauthorized exercise of the power to pass bankrupt laws. This is the point of the imputed inconsistency. It all turns upon this word currency; and now, what sub-currency does the Senator from Massachusetts mean? Certainly not the currency of the constitution; for the President recites the power to coin that currency, and to regulate its value. It must be the paper currency-the local bank notes and the shin-plasters-which are intended; and, if so, I have to remark that the President very explicitly disclaims both the authority, and the expediency, of having recourse to a national bank to regulate that species of currency. He disclaims that instrument of regulation; and in doing so, he stands upon the constitution, which disowns its existence; upon the fact, which shows its impotency; and upon the ground which the authors of the first national bank occupied, and to whom the regulation of currency and of exchanges was wholly unknown as among the reasons for its creation. These reasons are of modern conception and recent date. They are an after-thought of the subsequent supporters of the second national bank. The President disclaims also a power to suppress the local banking institutions by federal legislation; but he nowhere disclaims the authority to prevent their paper issues from superseding and expelling the hard money currency of the constitution. On the contrary, he claims that power, and points to the sources of its rightful exercise in the incidental effects of federal legislation in favor of hard money as necessarily improving the condition of paper currency; and then he points to the bankrupt power as furnishing the direct means of checking the issues of non-specie paying banks, and giving a remedy to the holders of their unpaid notes. This is what the President does; and Mr. BENTON Said: The recommendation of the President for a bankrupt law, applicable to banks and bankers, has been made the subject of repeated animadversion on this floor, and that while the subject was not before the Senate, but in the hands of a committee. I noticed these animadversions on a former occasion, not for argument, but for the purpose of exhibiting their unparliamentary character; to dissent from their justness; to express my own approbation of the recommendation; and to declare myself ready to support it, whenever it could be done in a parliamentary manner, and without obliquing into a discussion foreign to the subject in hand. The suitable occasion now presents itself; and I embrace it with pleasure, that the great remedial measure proposed by the President, and called for by the rights and interests of the people, and by the character of the country, may not be prejudiced by the unparliamentary and precocious assaults which have been made upon it. At the head of those who have made the attack on this part of the Message, and whose objections cover all the ground which has since been occupied by others, is the Senator from VOL. XII.-29 SENATE.] Law of Bankruptcy against Bankrupt Banks. [OCTOBER, 1837. nothing can be further from his words than a stating it as it is, but as it is not; and here, aldisclaimer of all authority over the regulation so, is injustice to the author, in representing of currency. And here let me remark upon him as opposed to the extension of the banka systematic error into which some Senators rupt law to merchants and traders, when the incessantly fall: they always speak of the fed- records of this Senate bear the evidence of the eral authority, and the federal duties over “the fact that he has been one of the most able and currency," meaning all the while, not gold and zealous supporters of such a law applicable to silver, but bank notes and shin-plasters. Now, the trading part of the community. I speak sir, I repeat, for about the thousandth time, of the bill of 1827, brought in by General that the word currency is not in the constitu- Hayne, of South Carolina, and earnestly suption, nor any word whatsoever which can mean ported by the present Chief Magistrate, then a what these speakers intend by it. The nearest member of this body. It is unjust to suppose approach to the term which the constitution that the present Chief Magistrate would obcontains, is the word current, and that is cou-ject to a bill which should include now those pled with the word coin; so that the thing for whom he so strenuously contended when a which gentlemen have constantly in their minds, member of this body. There is nothing in the and which they use an equivocal term to ex-recommendation to deter the friends of a genpress, exists nowhere in the constitution, and is not in any way known to that instrument, either by expression or intendment I think it right, on this occasion, thus to allude to the equivocal use of this phrase; for upon this equivocation there is built up, in these United States, an immensity of erroneous speaking, erroneous writing, and erroneous legislation. Vast is the number of persons who are mystified by the use of an equivocal term; and in nothing does the rhetorician show the perfection of his art in a higher degree, than in making a debate turn upon one of them. The Senator from Massachusetts, in taking his objections, declared that he would not do intentional injustice to the Message or to its author; but it is the same thing to the Message, and to the author, if injustice had been done without intention: and this I apprehend to have been the case. The Message says nothing about confining the bankrupt law to corporations and bankers alone; it says nothing about excluding merchants and traders from the operation of the law; and it proposes something else to result from the law, besides an operation upon currency; and that something else is a remedy to the disappointed creditors of the delinquent banks. This is his recommendation: "In the mean time, it is our duty to provide all the remedies against a depreciated paper currency which the constitution enables us to afford. The eral bankrupt law from coming forward to include the trading class with the banking class; on the contrary, there may be something to encourage them. A general bill, to include banks as well as traders, might combine more support than the bills for the latter class alone have heretofore received. Besides, if the President had expressly recommended the exclusion of other classes from the bill, it would have been no impediment to the action of Congress. His recommendation would have been no prohibition upon their powers. They might have included what classes they pleased; and if they included those for which he contended in 1827, the bill might have become the more acceptable to him on that account. The Senator from Massachusetts objects to our constitutional power to pass such a bankrupt law as the President recommends, qualifying that recommendation, as he does, with a limitation of the law to bankers and banking corporations, and with a primary view to the regulation of a paper money currency. I have shown that this qualification is an error and a mistake; and in doing that, I have sufficiently answered the Senator's objection: but I choose to go further, and to show not only the constitutional right, but the clear expediency of passing such an act as the President recommends, whether merchants and traders shall be included in it or not. The power of Congress to pass bankrupt Treasury Department, on several former occasions, laws is expressly given in our constitution, and has suggested the propriety and importance of a uni- given without limitation or qualification. It is form law concerning bankruptcies of corporations the fourth in the number of the enumerated and other bankers. Through the instrumentality of powers, and runs thus: "Congress shall have such a law, a salutary check may doubtless be im- power to establish a uniform rule of naturalposed on the issues of paper money, and an effectualization, and uniform laws on the subject of remedy given to the citizens, in a way at once equal in all parts of the Union, and fully authorized by the constitution." This is the recommendation-the whole of it; and here is no proposition to exclude merchants and traders; and here is an actual proposition to give a remedy to the injured citizens against the delinquent banks; which remedy would naturally be a pro rata distribution of the effects of the bankrupt institutions. Here, then, is injustice to the Message in not bankruptcies throughout the United States." This is a full and clear grant of power. Upon its face it admits of no question, and leaves Congress at full liberty to pass any kind of bankrupt laws they please, limited only by the condition, that whatever laws are passed, they are to be uniform in their operation throughout the United States. Upon the face of our own constitution there is no question of our right to pass a bankrupt law, limited to banks and bankers; but the Senator from Massachusetts, OCTOBER, 1837.] Law of Bankruptcy against Bankrupt Banks. [SENATE. publican institutions, and according to the progress of events and the expansion of light and knowledge among ourselves. If not, and if we are to be confined to the "usual objects," and the "usual subjects," and the "usual purposes, of British legislation at the time of the adoption of our constitution, how could Congress ever make a law in relation to steamboats, or to railroad cars, both of which were unknown to British legislation in 1789; and therefore, according to the idea that would send us to England to find out the meaning of our constitution, would not fall within the limits of our legislative authority. Upon their face, the words of the constitution are sufficient to justify the President's recommendation, even as understood by those who impugn that recommendation. The bankrupt clause is very peculiar in its phraseology, and the more strikingly so from its contrast with the phraseology of the naturalization clause, which is coupled with it. Mark this difference: there is to be a uniform rule of naturalization; there are to be uniform the singular, the other in the plural; one is to be a rule, the other are to be laws; one acts on individuals, the other on the subject; and it is bankruptcies that are, and not bankruptcy that is, to be the objects of these uniform laws. (Mr. WEBSTER,) and others who have spoken | country, and according to the genius of our reon the same side with him, must carry us to England, and conduct us through the labyrinth of English statute law, and through the chaos of English judicial decisions, to learn what this word bankruptcies, in our constitution, is intended to signify. In this he and they are true to the habits of the legal profession-those habits which, both in Great Britain and our America, have become a proverbial disqualification for the proper exercise of legislative duties. I know, Mr. President, that it is the fate of our lawyers and judges to have to run to British law books to find out the meaning of the phrases contained in our constitution; but it is the business of the legislator, and of the statesman, to take a larger view-to consider the difference between the political institutions of the two countries-to ascend to first principles-to know the causes of events-and to judge how far what was suitable and beneficial to one might be prejudicial and inapplicable to the other. We stand here as legislators and statesmen, not as lawyers and judges; we have a grant of power to execute, not a statute to in-laws on the subject of bankruptcies. One is in terpret; and our first duty is to look to that grant, and see what it is; and our next duty is to look over our country, and see whether there is any thing in it which requires the exercise of that grant of power. This is what our President has done, and what we ought to As a proposition, now limited to this particudo. He has looked into the constitution, and lar case, I lay it down that we are not conseen there an unlimited grant of power to pass fined to the modern English acceptation of this uniform laws on the subject of bankruptcies; term bankrupt, for it is a term, not of English, and he has looked over the United States, and but of Roman origin. It is a term of the civil seen what he believes to be fit subjects for the law, and borrowed by the English from that exercise of that power, namely, about a thou- code. They borrowed from Italy both the sand banks in a state of bankruptcy, and no name and the purpose of the law; and also the State possessed of authority to act beyond its first objects to which the law was applicable. own limits in remedying the evils of a mischief The English were borrowers of every thing so vast and so frightful. Seeing these two connected with this code; and it is absurd in things a power to act, and a subject matter us to borrow from a borrrower-to copy from requiring action-the President has recommend- a copyist-when we have the original lender ed the action which the constitution permits, and the original text before us. Bancus and and which the subject requires; but the Sen-ruptus signifies a broken bank; and the word ator from Massachusetts has risen in his place, broken is not metaphorical but literal, and is and called upon us to shift our view; trans- descriptive of the ancient method of cashiering fer our contemplation from the Constitution of an insolvent or fraudulent banker, by turning the United States to the British statute book- him out of the exchange or market place, and from actual bankruptcy among ourselves to his- breaking the table to pieces on which he kept torical bankruptcy in England; and to confine his money and transacted his business. The our legislation to the characteristics of the term bankrupt, then, is the civil law from English model. which the English borrowed it, not only applied to bankers, but was confined to them; and it is preposterous in us to limit ourselves to an English definition of a civil law term. As a general proposition, I lay it down that Congress is not confined, like jurists and judges, to the English statutory definitions, or the Nisi Prius or King's Bench construction of the phrases known to English legislation, and used in our constitution. Such a limitation would not only narrow us down to a mere lawyer's view of a subject, but would limit us, in point of time, to English precedents, as they stood at the adoption of our constitution, in the year 1789. I protest against this absurdity, and contend that we are to use our granted powers according to the circumstances of our own Upon this exposition of our own constitution, and of the civil law derivation of this term bankrupt, I submit that the Congress of the United States is not limited to the English judicial or statutory acceptation of the term; and so I finish the first point which I took in the argument. The next point is more comprehensive, and makes a direct issue with the proposition of the Senator from Massachusetts, (Mr. WEBSTER.) His proposition is, that we must confine SENATE.] Law of Bankruptcy against Bankrupt Banks. Protesting against this voyage across the high seas, I nevertheless will make it, and will ask the Senator on what act out of the scores which Parliament has passed upon this subject, or on what period, out of the five hundred years that she has been legislating upon it, will he fix for his example? Or, whether he will choose to view the whole together; and out of the vast chaotic and heterogeneous mass, extract a general power which Parliament possesses, and which he proposes for our exemplar? For myself, I am agreed to consider the question under the whole or under either of these aspects, and, relying on the goodness of the cause, expect a safe deliverance from the contest, take it in any way. [OCTOBER, 1837. our bankrupt legislation to the usual objects, | well as to disinclination to pay, discriminated the usual subjects, and the usual purposes of between innocent and fraudulent bankruptcy, bankrupt laws in England; and that currency and gave to creditors the remedial right to a (meaning paper money and shin-plasters of distribution of effects. This statute opened the course) and banks and banking, are not within door to judicial construction, and the judges the scope of that legislation. I take issue, sir, went to work to define by decisions, who were upon all these points, and am ready to go with traders, and what acts constituted the fact, or the Senator to England, and to contest them, showed an intent to delay or to defraud creditors. one by one, on the evidences of English histo- In making these decisions, the judges reached ry, of English statute law, and of English ju- | high_enough to get hold of royal companies, dicial decision. I say English; for although and low enough to get hold of shoemakers; the Senator did not mention England, yet he the latter upon the ground that they bought could mean nothing else, in his reference to the the leather out of which they made the shoes; usual objects, usual subjects, and usual purposes and they even had a most learned consultation of bankrupt laws. He could mean nothing to decide whether a man who was a landlord else. He must mean the English examples and for dogs, and bought dead horses for his fourthe English practice, or nothing; and he is not legged boarders, and then sold the skins and a person to speak, and mean nothing. bones of the horse carcases he had bought, was not a trader within the meaning of the act, and so subject to the statute of bankrupts. These decisions of the judges set the Parliament to work again to preclude judicial constructions by the precision, negatively and affirmatively, of legislative enactment. But, worse and worse! Out of the frying-pan into the fire. The more legislation the more construction; the more statutes Parliament made, the more numerous and more various the judicial decisions; until, besides merchants and traders, near forty other descriptions of persons were included, and the catalogue of bankruptcy acts, innocent or fraudulent, is swelled to a length which requires whole pages to contain it. Among those who are now included by statutory enactment in And first, as to the acts passed upon this sub- England, leaving out the great classes compre ject: great is their number, and most dissimi- hended under the names of merchants and tradlar their provisions. For the first two hun- ers, are bankers, brokers, factors, and scrivendred years, these acts applied to none but aliens, ers; insurers against perils by sea and land; and a single class of aliens, and only for a warehousemen, wharfingers, packers, builders, single act, that of flying the realm to avoid carpenters, shipwrights, and victuallers; keeptheir creditors. Then they were made to ap-ers of inns, hotels, taverns, and coffee-houses; ply to all debtors, whether natives or foreigners, engaged in trade or not, and took effect for three acts: 1st. Flying the realm; 2d. Keeping the house to avoid creditors; 3d. Taking sanctuary in a church to avoid arrest. For upwards of two hundred years-to be precise, for two hundred and twenty years-bankruptcy was only treated criminally, and directed against those who would not face their creditors, or abide the laws of the land; and the remedies against them were not civil, but criminal; it was not a distribution of the effects, but corporal punishment, to wit: imprisonment and outlawry.* The statute of Elizabeth was the first that confined the law to merchants and traders, took in the unfortunate as well as the criminal, extended the acts of bankruptcy to inability as dyers, printers, bleachers, fullers, calendarers, sellers of cattle or sheep; commission merchants and consignees; and the agents of all these classes. These are the affirmative definitions of the classes liable to bankruptcy in England; then come the negative; and among these are farmers, graziers, and common laborers for hire; the receivers general of the king's taxes, and members or subscribers to any incorporated companies established by charter of act of Parliament. And among these negative and affirmative exclusions and inclusions, there are many classes which have repeatedly chang ed position, and found themselves successively in and out of the bankrupt code. Now, in all this mass of variant and contradictory legislation, what part of it will the Senator from Massachusetts select for his model? The improved, and approved parts, to be sure! But wall interposes-a veto power intervenes. For here a barrier presents itself-an impassable it so happens that the improvements in the British bankrupt code, those parts of it which are considered best, and most worthy of our imitation, are of modern origin-the creations OCTOBER, 1837.] Law of Bankruptcy against Bankrupt Banks. of the last fifty years-actually made since the date of our constitution; and, therefore, not within the pale of its purview and meaning. Yes, sir, made since the establishment of our constitution, and, therefore, not to be included within its contemplation, unless this doctrine , of searching into British statutes for the meaning of our constitution, is to make us search | forwards to the end of the British empire, as well as search backwards to its beginning. Fact is, that the actual bankrupt code of Great Britain-the one that preserves all that is valuable, that consolidates all that is preserved, and improves all that is improvable, is an act of most recent date of the reign of George the Fourth, and not yet a dozen years old. Here, then, in going back to England for a model, we are cut off from her improvements in the bankrupt code, and confined to take it as it stood under the reign of the Plantagenets, the Stuarts, and the earlier reigns of the Brunswick sovereigns. This should be a consideration, and sufficiently weighty to turn the scale in favor of looking to our own constitution alone for the extent and circumscription of our powers. [SENATE. and this application of the exotic bankrupt law to them, that Sir Edward Coke, in his institutes, takes occasion to say that both the name and the wickedness of bankruptcy were of foreign origin, and had been brought into England from foreign parts. It was enacted under the reign of one of the most glorious of the English princes-a reign as much distinguished for the beneficence of its civil administration as for the splendor of its military achievements. This act of itself is a full answer to the whole objection taken by the Senator from Massachusetts. It shows that, even in England, a bankrupt law has been confined to a single class of persons, and that class a banking company. And here I would be willing to close my speech upon a compromise-a compromise founded in reason and reciprocity, and invested with the equitable mantle of a mutual concession. It is this: if we must follow English precedents, let us follow them chronologically and orderly. Let us begin at the beginning, and take them as they rise. Give me a bankrupt law for two hundred years against banks and bankers; and, after that, make another for merchants and traders. The Senator from Massachusetts (Mr. WEBSTER) has emphatically demanded, how the bankrupt power could be fairly exercised by seizing on corporations and bankers, and excluding all the other usual subjects of bankrupt laws? I answer, by following the example of that England to which he has conducted us; by copying the act of the 30th of Edward the Third; by going back to that reign of heroism, patriotism, and wisdom; that reign in which the monarch acquired as much glory from his domestic policy as from his foreign conquests; that reign in which the acquisition of dyers and weavers from Flanders, the observance of law and justice and the encouragement given to agriculture and manufactures, conferred more benefit upon the kingdom, and more glory upon the king, than the splendid victories of Poictiers, Agincourt, and Cressy. But let us continue this discussion upon principles of British example and British legislation. We must go to England for one or two things; either for a case in point, to be found in some statute, or a general authority, to be extracted from a general practice. Take it either way, or both ways, and I am ready and able to vindicate, upon British precedents, our perfect right to enact a bankrupt law, limited in its application to banks and bankers. And first, for a case in point, that is to say, an English statute of bankruptcy, limited to these lords of the purse-strings: we have it at once, in the first act ever passed on the subject-the act of the 30th year of the reign of Edward the Third, against the Lombard Jews. Everybody knows that these Jews were bankers, usually formed into companies, who, issuing from Venice, Milan, and other parts of Italy, spread over the south and west of Europe, during the mid- But the Senator may not be willing to yield dle ages, and established themselves in every to this example, this case in point, drawn from country and city in which the dawn of reviving his own fountain, and precisely up to the exicivilization, and the germ of returning indus-gency of the occasion. He may want sometry, gave employment to money, and laid the foundation of credit. They came to London as early as the thirteenth century, and gave their name to a street which still retains it, as well as it still retains the particular occupation, and exemplified by the general practice of the the peculiar reputation, which the Lombard British Parliament, for five hundred years, over Jews established for it. The first law against the whole subject of bankruptcy. I will try bankrupts ever passed in England, was against the question upon this basis; and here I lay the banking company composed of these Jews, down the proposition, that this five hundred and confined exclusively to them. It remained years of parliamentary legislation on bankin force two hundred years, without any alter-ruptcy establishes the point of full authority in ation whatever, and was nothing but the ap- the British Parliament to act as it pleased on plication of the law of their own country to the entire subject of bankruptcies. This is my these bankers in the country of their sojourn-proposition; and, when it is proved, I shall ment-the Italian law, founded upon the civil law, and called in Italy banco rotto, broken bank. It is in direct reference to these Jews, thing more, and he shall have it. I will now take the question upon its broadest bottom and fullest merits. I will go to the question of general power-the point of general authority claim from those who carry me to England for authority, the same amount of power over the subject which the British Parliament has been |