Thus the Bank, "like an abandoned mother, ... bastardized its offspring,"[564] said the enemies of the National Bank, among them all State banks and most of the people. The enforcement of redemption of State bank bills, the reduction of the volume of "currency," were the real causes of the fury with which the Bank of the United States and its branches was now assailed. That institution was the monster, said local orators and editors; its branches were the tentacles of the Octopus, heads of the Hydra.[565] "The 'branches' are execrated on all hands," wrote an Ohio man. "We feel that to the policy pursued by them, we are indebted for all the evils we experience for want of a circulating medium."[566]
The popular cry was for relief. More money, not less, was needed, it was said; and more banks that could and would loan funds with which to pay debts. If the creditor would not accept the currency thus procured, let laws be passed that would compel him to do so, or prevent him from collecting what his contract called for. Thus, with such demands upon their lips, and in the midst of a storm of lawsuits, the people entered at last that inevitable period of bankruptcy to which for years they had been drawing nearer and for which they were themselves largely responsible.
Bankruptcy laws had already been enacted by some States; and if these acts had not been drawn for the benefit of speculators in anticipation of the possible evil day, the "insolvency" statutes certainly had been administered for the protection of rich and dishonest men who wished to escape their liabilities, and yet to preserve their assets. In New York[567] the debtor was enabled to discharge all accounts by turning over such property as he had; if he owed ten thousand dollars, and possessed but fifty dollars, his debt was cancelled by the surrender of that sum. For the honest and prudent man the law was just, since no great discrepancy usually existed between his reported assets and his liabilities. But lax administration of it afforded to the dishonest adventurer a shield from the righteous consequences of his wrongdoing.
The "bankruptcies" of knavish men were common operations. One merchant in an Eastern city "failed," but contrived to go on living in a house for which he "was offered $200,000 in real money."[568] Another in Philadelphia became "insolvent," yet had $7000 worth of wine in his cellar at the very time he was going through "bankruptcy."[569] A merchant tailor in the little town of York, Pennsylvania, resorted to bankruptcy to clear himself of eighty-four thousand dollars of debt.[570]
In their speculations adventurous men counted on the aid of these legislative acts for the relief of debtors. "Never ... have any ... laws been more productive of crime than the insolvent laws of Maryland," testifies Niles.[571] One issue of the Federal Gazette contained six columns of bankruptcy notices, and these were only about "one-third of the persons" then "'going through our mill.'" Several "bankrupts" had been millionaires, and continued to "live in splendid affluence, ... their wives and children, or some kind relative, having been made rich through their swindlings of the people."[572] Many "insolvents" were bankers; and this led Niles to propose that the following law be adopted:
"'Whereas certain persons ... unknown, have petitioned for the establishment of a bank at ——:
"'Be it enacted, that ... these persons, ... shall have liberty to become bankrupts, and may legally swindle as much as they can.'"[573]
In a Senate debate in March, 1820, for a proposed new National Bankruptcy Act,[574] Senator Harrison Gray Otis of Massachusetts moderately stated the results of the State insolvency laws. "Merchants and traders ... are harassed and perplexed by twenty different systems of municipal laws, often repugnant to each other and themselves; always defective; seldom executed in good faith; prolific in endless frauds, perjuries, and evasions; and never productive of ... any sort of justice, to the creditor. Nothing could be ... comparable to their pernicious effects upon the public morals."[575] Senator Prentiss Mellen, of the same State, described the operation of the bankruptcy mill thus: "We frequently witness transactions, poisoned throughout with fraud ... in which all creditors are deceived and defrauded.... The man pretends to be a bankrupt; and having converted a large portion of his property into money ... he ... closes his doors; ... goes through the form of offering to give up all his property, (though secretly retaining thousands,) on condition of receiving a discharge from his creditors.... In a few months, or perhaps weeks, he recommences business, and finds himself ... with a handsome property at command."[576]
Senator James Burrill, Jr., of Rhode Island was equally specific and convincing. He pictured the career of a dishonest merchant, who transfers property to relatives, secures a discharge from the State bankruptcy courts, and "in a few days ... resumes his career of folly, extravagance, and rashness.... Thus the creditors are defrauded, and the debtor, in many cases, lives in affluence and splendor."[577] Flint records that "mutual credit and confidence are almost torn up by the roots."[578]
It was soon to be the good fortune of John Marshall to declare such State legislation null and void because in violation of the National Constitution. Never did common honesty, good faith, and fair dealing need such a stabilizing power as at the moment Marshall furnished to the American people. In most parts of the country even insolvency laws did not satisfy debtors; they were trying to avoid the results of their own acts by securing the enactment of local statutes that repealed the natural laws of human intercourse—of statutes that expressed the momentary wish of the uncomfortable, if honest, multitude, but that represented no less the devices of the clever and unscrupulous. Fortunate, indeed, was it for the United States, at this critical time in its development, that one department of the Government could not be swayed by the passion of the hour, and thrice happy that the head of that department was John Marshall.