OBSERVATIONS,

&c. &c.

Of all other subjects, the theory of society is the most difficult. There are always a number of evils to which the community are exposed, and to provide a remedy for which the congregate wisdom of the Legislature has been often found inadequate. Witness the influx of our prisons, the magnitude of poor-rates, the recent loud and general complaints against mock auctions, &c. &c. And there is another evil which the community labor under, of great magnitude, and of deleterious and poisonous tendency in its influence on trade, which also escapes a remedy-and this is the abuse of that system called "Credit."

We will briefly inquire into the effects of credit as it is connected with the provisions of the Bankrupt Law, and venture to suggest some properties belonging to it which may lead to that description of evidence, which it is conceived is indispensable to be acquired by the Legislature in revising this Code.

It may be remarked that there is no portion of the jurisprudence of this country as to the utility of which so great a difference of opinion exists, as on that of the Bankrupt Law: and whether it really has operated (as it was always intended) as a punishment to the nefarious and unjust, or as an encouragement to their mal principles and practices, experience and opinion were never more at variance. Its perplexities have increased with its accumulation; and its accumulation belongs to causes, the recurrence of which has rendered Insolvency as familiar as if it were necessarily a branch of commerce, and inseparably connected with the intercourse and engagements of mercantile pursuits.

When men began by their industry to obtain superfluity, they gradually enlarged their dealings; and as they advanced in opulence, they naturally acquired confidence throughout society, and a more liberal latitude of dealing was established-a latitude which powerfully augmented that rational spirit of adventure and enterprise which has led to the present character of this country. Credit, the offspring of industry, has therefore with great propriety been called the life of commerce; and the circumstances in which it originated, evince that it is not less honorable where it is given than it is salutary in its effects. And where it is securely protected by the vigilance of the law, confined to proper hands, and kept within its legitimate bounds, nothing is more likely to give energy and spirit to commerce-to aid and advance the industry of our country-to contribute largely to its social order, and to augment its elegancies and refinement. Credit, in the person obtaining it, presupposes industry; and insolvency ought not necessarily in any case to be the consequence. But where it happens that credit may be abused, applied to indiscriminate adventure, perverted by the ingenuity and artifices of designing and unprincipled men-where it is no longer secured in its integrity by wise and restrictive laws; it becomes another name for gaming-propagates surreptitious wealth-infuses an immoral spirit of enterprise, creates a spurious system of emulation throughout society, and stabs at the root of all moral intercourse. Hence an universal spirit of competition supersedes the ordinary caution of tradesmen, and their rectitude of dealing: thus trade is reduced to a system of monopoly, chicanery, and fraud.

Whatever may be assigned as the immediate cause of a stoppage of payment-which it must be allowed may be occasioned on the moment by a variety of circumstances peculiar to the concerns of individuals—yet it is apprehended that the great primary mischief is produced from one source, viz. that of trading beyond the capital possessed by the party. It is believed that it may be assumed as a fact, ever since the Law on Bankruptcy has been established on its present principles, that there has not been one failure in which this circumstance did not belong to it-however obscured this cause may have been by apparent misfortune, plausible adventure, or high-sounding advantages of interests or connexion.

It is a matter only of speculation, to attempt to describe that state of society, which called for the introduction and severity of the Bankrupt Law. The best evidence to be collected on this point, and which is most to be relied upon, is contained in the preamble to the statute of the 34th and 35th of Henry VIII., which states "that divers and sundry persons, craftily obtaining into their hands great substance of other men's goods, do suddenly flee to parts unknown, or keep their houses, not minding to pay or restore

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 own 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 Bankrupt 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 to 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, a 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 difficulties 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 labor; 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 gains 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;