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to any of their creditors their duties, but at their own wills and pleasures consume debts,and the substance obtained by credit of other men for their owu pleasure and delicate living, against all reason, equity and good conscience.”
The evil here complained of is simply “ Credit;" that " of obtaining great substance of other men's goods, and absconding?" It is the common evil now, only with this difference that «
men craftily obtaining other men's goods," instead of the necessity of
absconding,” or secreting themselves to live luxuriously, remain at home, and " live in luxury” without disguise.
From the passing of the statute of Henry VIII, to the Act of 4th and 5th Ann (A. D. 1705. a period of 163 years) the Bank. rupt Law underwent little modification in principle, and no amelioration whatever in its rigor towards Bankrupts-In severity, its operation resembled the present process of outlawry, a sentence which every individual abhors. No man had then any release from his debts, till the whole were discharged.
The period during which this Law existed, affords powerful evidence of its utility, and because Insolvency since that period has rapidly accumulated, it affords an inference that the alteration in the Law has been one of the means of promoting it.
It is evident that to become bankrupt in those days, was considered a crime; and to destroy that baneful system of Credit (which produced it), was the design of the Law. To obtain credit and abscond would, under its operation, be almost rendered nugatory :a person, under the publicity of being bankrupt, would be unable to carry with him a good character; he could hardly be amply remunerated in undertaking the experiment; and to guard against the occurrence of the practice, the caution of traders would therefore become securely protected; and while the Law would lessen that monopoly and desertion which prevailed, it would be the means of throwing into the hands of the honest and industrious the advantages of industry and genuine commerce. If a case of bankruptcy did occur during that period, which arose from misfortune and not from delinquency, it would be placed where it would generally receive its merited commiseration, viz. in the breasts of British creditors. The Law was not intended for the unfortunate, but the unjust - not to relieve Bankrupts, but Creditors. If the authors of that Law had been told of such a perversion of it as friendly Commissions-or that it would ever have been used as a shield to individuals, instead of a weapon of defence to society; -or that those practices which were their abhorrence, would by succeeding legislators receive protection, or that the severity of the Law would ever be so far abated as to admit of the same evils under another form-they would not have believed it!
If the injuries which society formerly suffered, and which the community now suffer, be similar in effect, merely differing in practice, this question arises—whether there is more danger and evil in society from men getting into debt and absconding, or getting into debt and remaining at home in comparative security, under the very wings of the Law as it now stands.
Credit is still the parent evil not only of Bankruptcy, but of that Insolvency which abounds in our country. And, without meaning to reflect upon any individual who is obliged tu recur to the Law of Bankrupt for relief under his engagements, daily experience proves, that there is a primary disreputable source in every case of bankruptcy; and that it is incurred by an excess of fair and honest dealing and enterprise by individuals, on whom numbers also place their reliance, and thus (probably) innocently fall victims to the temerity and dishonesty of others on whom they depend.
Since the statute of 4th and 5th Ann, for the purpose of encouraging fair and open disclosure by bankrupts, à certificate may be obtained, (which is easily effected in the present day,) that totally absolves the individual from his engagements prior to becoming bankrupt :-he is then restored to society, and to the exercise of his former experiments and practices.
While Credit can be obtained with the mere dread of the present effects of Bankruptcy, or the operation of an Insolvent Debtors' Act ---speculation will be active, and its votaries numerous. Instead of the Law preventing that Credit which is unfounded, and hence putting an end to that adventure which is speculative, it manifestly tends to their increase. The designs of the adventurer who has nothing to lose, cannot be affected by Bankruptcy; and if Credit in trade be easily acquired, the Law should be proportionably vigilant and severe against those who unworthily obtain it. "Emulation in trade cannot, but obligations may, be controllable. The lenity of the Law towards debtors increases competition, and in the same proportion enervates the caution of creditors. Hence fraudulent Credit is more easily obtained and chimerical adventures are encouraged. While the dealings of men are without impenetrable regulations, in vain can we resist that spirit of enterprise which prevails, or expect our national character to be without blemish-in vain shall we look for less insolvency-or its certain concomitants, litigation, insolvent acts, and mock auctions ! Until the former severity of the Bankrupt Law shall be restored, and men only be released from their debts by discharging them, will they continue regardless in contracting them. The danger which might ensue from those practices which were formerly complained of, namely, of men absconding, &c. would, if they were again attempted, be attended with the diffculties already stated, which existed upwards of 160 years; the
evils which now exist, would in a great degree be suppressed ; and hence the caution of traders would be called fully into exercise, and the utmost security provided against imposition which the Law could adopt :
From what has been stated, the suggestions are obvious;-and it is submitted, that in order to apply to the root from which Bankruptcy and its train of evils spring, it should in the first place be considered :
1st. Whether a party can under any circumstances be justified in trading beyond his capital ?
2dly. Whether the necessary caution against contracting bad debts should belong to the creditor ?--Or,
3dly. Whether the debtor should rather be considered criminal in violating his contracts—and the caution against exceeding his resources be obligatory upon him?
Industry is the governing principle of human life—it is the genuine source of happiness—it is to the cultivation and exercise of this principle, that Christianity chiefly directs its divine and genial influence; and it is to industry, that we owe the fortuitous and social gradations of mankind; and the excellence of a government is exactly proportioned to the degree of security in which the rights, exertions, and relations of men are held sacred, and protected.
Without entering, however, upon the important subject as it is connected with public morals, and as it so vitally affects the comfort of the greater proportion of the population of this country; it may be briefly observed, that a party trading merely on the capital he possesses, is fairly and honestly exercising his own industry, and is gathering the fruits of his own labur; but the moment he exceeds this point, he is endangering property which is not his own, he exposes the industry of others to the risk and fluctuation which are annexed to the demand and consumption of society. It is therefore contended, that men ought not to take credit beyond the extent of their certain responsibility, and should be considered criminal and be punishable for so doing. Besides, the demand of a country must be supplied through some channel or other, and a man who depends on the risk of such demand arising, and ventures on supplying it through the medium of the credit which he is merely capable of obtaining, directly becomes a monopolist, and to the extent of such credit he commits a fraud on the garus and industry of others. It amounts to this principle --that of spending money before it is earned.
1st. By restraining credit within its natural course, there is no fear of the multifarious species of industry peculiar to this country and its population being paralysed or abated: the capital that is notoriously lying unemployed at this time, would tend to prevent any such effect; and this capital would soon make its appearance in its proper place, from whence it is at present in a great measure excluded by the spurious emulation in trade which exists.
2dly. It is very evident, where persons exceed their capital in trade, that in order to fulfil their own engagements they must necessarily be dependent on the punctuality of others ; and if those, on whom they are thus placed, have equally ventured on the stormy ocean of speculation, and are disappointed in the demand of soci. ety for their merchandize and adventures--the unavoidable consequence is, that failure recoils on all those who have exceeded their responsibility or capital. The difficulty, therefore, of a creditor using any effective caution against dealing with improvident persons or contracting bad debts, must be obvious; and the remedy, on failure in these cases, may rather be said to belong to the debtor;- for, with privileges like those of the Certificate and Insolvent Acts, it is virtually pronouncing the individual culpable who gives credit ; for the remedy (particularly in minor cases) is what is often dreaded being resorted to by the creditor. In Bankruptcy, friendly Commissions (for hostile ones are very rare, as they are seldom worth prosecuting) are the consequence; in lesser cases, the debtor applies to the Insolvent Act,—which he is enabled to take probably in a similar way, or from the hostility of one creditor out of his whole list, who may vainly expect to find redress from legal proceedings.
The principle therefore which becomes established, from the relaxed state of the Law between debtor and creditor, is this—that the onus against contracting bad debts, is imposed on the creditor, instead of the debtor. How far this is calculated to secure the integrity of trade, to give a wholesome stimulus to industry,--to prevent the abuse of credit, and hence insolvency and its concomital evils, with poverty and misery in its train,-must depend on the testimony which can be afforded by practice, on the weight of various experienced evidence, and must ultimately be determined by the wisdom of the Legislature. But if this be the principle intended to be acted upon, it is only a matter of surprise that forgery itself has not been tolerated, and the onus of distinguishing spurious from genuine notes been thrown on the responsibility of individuals in trade :— the principle is the same, with this difference merely,—that the public would have a chance of ascertaining, in the one case, whether a note was bad or good on the face of it, but in the instance of an accommodation bill, not until it was presented for payment; and the former would be no greater fraud upon the individual, than the latter might be upon the industry of numbers.
3dly. The Law of Debtor and Creditor has not merely relation to the general obligations between man and man in a social state, but it is designed for the especial protection of the industrious classes. The manufacturer who employs a numerous population in any species of industry, may be said in some measnre to be their trustee, and upon his prudence and integrity they look for their wages of that labor wbich they have afforded him.- But can it be expected (if speculation be tacitly and virtually encouraged by Law, and indiscriminate Credit abounds,) that he can distinguish the men who will exceed their resources ? and is he a fit object of punishment for the conduct of those who do violate their contracts ?
To distinguish between the Tradesman and the Speculator does not depend on the opulence, but on the character and other circumstances of the individual -- with which he cannot possibly by any representation become sufficiently acquainted. Let his circumstances be what they may, they can afford no criterion to be guided by :-improvidence in commerce may be the more fatal from the abundance of its means :-people are not always satisfied in employing one capital, but in forcing (as it is called) upon society another.
There is much greater chance of preventing mal principle by punishing offenders, than by the unjust and much severer punishment of compelling every man in business to become a commissioner of bankrupt in his own defence, without the means or possibility of becoming acquainted with those circumstances, which it is his object to detect. Besides, it is throwing trade into confusion, and tradesmen into danger. The unprincipled and worthless will not fail to employ every allurement to engage the dealer, and the insolvent man is capable of giving better prices than the honest tradesman, whose dealings are guided by his resources and the natural consumption of the community.
How far Credit, as it is affected by Law, has been the ineans of producing apparent opulence on the one hand, and litigation, insolvency, and poverty on the other; in what degree the prices of commodities, and the necessaries of life in particular, have been influenced by credit and its consequences—from what cause the man of real capital has withdrawn himself from the engagements of trade, and so much genuine capital lies at present unemployed (notwithstanding the rate of interest is confined)-in what degree population and the poor-rates throughout the country have alike been influenced by the operation of credit---belong to the sacred duties of the Legislature to inquire into; to whose care is committed the protection of industry, and the rectitude of mutual obligations in the intercourse of barter.
Credit formerly was simply convenience-a mere portable method of balancing accounts between man and man. It was always understood that the individual taking credit, had the value to pro