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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 breasts, 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, — that which no other Legislature in the country possesses, — with a power of giving 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 forever 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 Almighty Mercy to forgive us our debts as we forgive our debtors? Sir, let us meet the unanimous wishes of the country, and proclaim relief to the unfortunate throughout the land. What should hinder? What should stay our hands from this good work? Creditors do not oppose it; they apply for it; debtors solicit it with 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 from 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 husbands and fathers are looking with hopes which they cannot suppress, 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.
m THE SENATE OF THE UNITED STATES, JUNE 5, 1840, ON MR. CLAY'S MOTION TO STRIKE OUT THE COMPULSORY PART OF THE BANKRUPT BILL.
Mr. Webstir addressed the Senate aa follows: —
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 difficulties I freely acknowledge. The subject of bankruptcies is a difficult subject every where, 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 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 debtors, in certain cases, to the operation of the law.
It is well known that the bill by me introduced 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 should cheerfully support a bill which should not contain it, if by so doing I should contribute to the general success of the 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 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 1 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 1 have no doubt will be found true, that persons in insolvent circumstances will generally become voluntary bankrupts. And, in the second place, I maintain that very little value is added to the security of creditors by the compulsory 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 generally, or all who, in the course of business, give trust for merchandise, or other things sold, or for money loaned.
When I speak of the creditors of insolvents,11 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 provisions of this bill, we leave creditors in a better condition than 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 Congress and the country may see what is its actual operation. It will act immediately after it shall have passed; and this operation, as I maintain, will be favorable to creditors. In other words, the law will be useful to creditors, in the creation of debts. It will, I 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 be 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 altogether. 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? Sir, it is the practice of endorsement and suretiship — 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 transaction of sale or purchase, but made for borrowing money merely, and endorsed for the sole accommodation of the borrower. 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. Endorsement and suretiship, therefore, are the means by which excessive and false credit is upholden. And how is this endorsement obtained? This leads us one step farther in the inquiry. How is it that persons, continuing to carry on business after they are really insolvent, and are suspected, if not known, to be so, can procure others to endorse their paper? Sir, we all know how it is. It is by promising to secure endorsers at all events. It is by giving an assurance that, if the party stops, a preference shall be made, and the favored creditors shall be his endorsers. 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 endorsers into the first class. This has become a sort of honorary law. 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 does come, — and come it does, sooner or later, — they have not enough left to discharge 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 endorsement.
On endorsement lies extensive and false credit.
On excessive and false credit lies over-trading.
This, Sir, is the regular stratification. If we strike out prefer
cnce, we shall knock away the foundation stone. And this bill will strike it out.
If this bill shall pass, every endorser, who shall not take previous 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, endorsers 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 ordinary 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 volunteered to give any trust or credit whatever? Well, Sir, will not endorsement 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 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 endorsement, 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 practice 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 advantage, to the whole 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, nevi rtheless.
Hut there is a second, and a still greater advantage.
Mr President, allow me to ask, What is that feature — the capital feature — 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 stopping, and winding up his concerns, he has ventured still deeper, and made his ultimate case thereby still more desperate? Under the present state of law,