The Madisonian. [volume] (Washington City [D.C.]) 1837-1845, 1841-07-24
THE. MADISONIAN
REPORT UPON A BANKRUPT LAW.

J,d;c;srv .ccomnanied the Bill reported by MIR. BAR
,,on IN IN. Houss of Representatives on Wednes-
day last, for establishing uniform system Of Bank
Iuptcy:
The Committee on the Judiciary, to whom have
been referred the petitions and memorials presented to
the House on the subject of Bankrupt law, respect
fully report:
ought to be passed by Congress without unnecessary
delay and they present bill for the consideration OF
the House.
This bill is essentially the that was matured in
the Senate in the first session of the last Congress-
after great deberaton, and which finally passed that
body. Il was not then considered in the House for
want Of time.
The policy of laws designed to afford remedy and
relief az between creditors and their debtors who are
hopeessy insolvent has the sanction Of usage in the
past and the present among nearly all highly civilized
and business communities The leading idea upon
which these laws have proceeded has certainly not al
ways been the same it has varied with the general
state of the law, and with the progress OF society IN
country where the creditor was by law, the undls-
puted arber of liberty and life to his insovent debtor
The immediate motive for nterposton must have been
different from that which has prompted legislative IN
reference where the relation of debtor and creditor
has been differently understood.
In England Bankrupt laws had their origin appa-
renty in the idea that debtors who did not pay were
merely unwilling, and not unable to pay. Inc hrs'
Bankrupt law passed in the time of Henry oth was
of other men, and fed kept their houses, not mind
ing to pay their debts" 1t came in aid Of the law,
proceeding on the same idea of ability and unwilling
ness which authorized imprisonment for debt-a thing
paid the credit itself was supposed TO have been craft
~ obtained; the ability to pay was presumed; the
debtor was arrested and imprisoned tif he should be
made willing; or, if he had fled or kept house, that
impossible his estate passed into the custo-
dy Of the law for the liquidation of the debt.
So long this idea OF ability and unwillingness
a1 and tharW m tied he vhaIa ay
so far as creditors considered supposed to be
adequately met by the punishment of imprisonment
or confscation. When, hewever, it was found as
industry and production came to be increased by the
Of capital and credit that the of debtors who
did not pay were only unable and not unwilling, it
became necessary to turn round and without disarm
ing the creditor, threw shield the deenceless
head of his honest and innocent debtor u
The law in England on this subject, often varously
modified in matters of detail is and has long been
in substance: .. ar..E.r aa'.s- tE.,t
First that where creditors invoke the punishment Of
imprisonment their debtor, the latter if willing but
unable to pay, may regain his freedom upon volun:
tary and honest surrender Of his properly to be ap
piled towards liquidation. u.
And second, that where creditors invoke the pun
ishment Of confscation their debtor, which
ly be done where the debtor belongs to another
of certain specified classes the creditors shall take the
full benefit of the proceeding by the application of the
property towards the payment Of their debts provided
the debtor being honest and willing but unable to pay
in full shall certain terms and conditions be for
ever discharged from all legal obligation to pay the
and residue of his debts.
Thus the law of interposition and relief, in Eng
land, between creditors on the hand, and debt
who cannot pay their debts the other stands,
and is administered in two distinct branches, and
der two distinct systems In the system the debt
denomnated insolvent; in the other they are
called bankrupt In reIort made to the Queen, in
July, l840 and signed by eight out of nine commits
sioners appointed to investigate this subject, was
,Iodt hvap
of the law and systems of administration to con-
sistent system and make the whole law of the case
more comfortable TO reason and to right.
The principal improvements in the law relating to
insolvency proposed by the commissioners are these:
To extend the benefits of the discharge from debts
in case of bankruptcy, beyond the mercantile and
other specified classes, to which they chiefly
confined; as to embrace " all persons engaged in
business requiring capital and credit" -, - ...
To ALLOW and encourage voluntary cession of pro-
perry, on the part OF insovents, at such period of
their difficulties as will best equal justice to all
their creditors" .5.. sa
judicial act, which may be opposed by creditors
for cause but to which their'consent shall not be
cessaTy. .=l u
The suggestion of these improvements is sufficient
indicate the great change which public sentiment
has undergone or is undergoing, in England, in le-
gard to the proper basis which those laws ought
rest that interpose their special authority between
ditors and their insolvent debtors. agg t.&
AT this day, and in this country fa system Of laws
relating to bankruptcies is to be established it is be-
ieved that il is not difficult to perceive and state the
ground on which it ought TO stand. .a
Credits, or demands, are property, in which, not in
frequently, the bulk Of large individual estates con-
sists. As property, they are under the protection Of
the law, as much as any other kind of property Ali
the rights of property attach to hemthe right Of pro-
lection and defence against all encroachments and in
jury, and the right of recovery whom wronguly taken
away, or withheld. They are private property, and
Iuafa An IL II - II
And the law must be vigant and efficient in its guar
dianshp of it. Failure in this is failure in the high
est duty of civil society," and tends directly disso
luton. #e. H .sn -.
But the nature Of credits, or demands, is such as
to constitute them peculiar species Of property
and, before we undertake to pronounce with GER
tainy the whole duty of society and the law in re-
gard to hem we must consider atentively their ma
ture and peculiarities @&
They are held by peculiar tenure-a tenure
which implies and includes contingency. The
foundation of loan is trust wherever securities are
not taken it is confidence; it is credit-an terms
which imply risk and the possibility of failure. The
risk relates to the question Of solvency or insolvency
when the period comes for demanding payment This
kind of property is held subject to this contingency
and the lender himself takes the risk; he is his own
insurer IL his debtor fails, he loses; if not, he has
his own He charges too, for this risk in the shape
OF interest, premium, or commission. He parts with
the immediate possession of his property, expecting
IT to come back to him. in proper time with increase
he puts it afoat and takes the hazard of the voyage
for consideration. II whelmed In the turbulent
sea- he expects to sustain the loss He is content to
hold his property subject to this contingency
While his debtor remains solvent, which is always
to De presumed until the contrary appear the duty Of
society and the law towards him and this property
plain enough If he invoke the law in the case, it
will come efficiently to his aid Ifhis debtor attempt
to elude his demand by fight or fraud, II will arrest
him and restrain him of his liberty and, otherwise,
will seize the unwilling debtors estate and make the
debt out of it for the creditor When the law by
these means has aided the creditor in the recovery Of
his property il has done all its duty against his sol
vent debtor.
But suppose before such recovery is had the debtor
is found to have fallen into state Of hopeless nsol
vency; in other words that contingency has arisen
subject to which the demand has been holden from its
inceptons In this case new duty has arisen on the
part Of the law.
The fact Of insolvency being ascertained, the fact
Of utter and hopeless inability to pay all his debts the