Mr. Buchanan said, that when he entered the Senate chamber this morning, he had not intended to say one word on the subject of the bankrupt bill. He was content that the question should have been taken silently on its final passage, and decided in its favor, as all knew it would be, from the vote yesterday upon its engrossment. The able remarks of the Senator from New York (Mr. Tallmadge) had induced him to change his purpose, and endeavor to place himself in a proper position before the public in relation to this important measure.
He trusted that he felt as much sympathy for the unfortunate as any Senator on this floor. It would, therefore, have afforded him heartfelt pleasure to be able to vote for this bill. He was sorry, very sorry, that from a deep sense of public duty, he should be compelled to vote against it. Would to Heaven that this were not the case!
It had been asserted over and over again, that there were five hundred thousand bankrupts in the United States anxiously awaiting relief from the passage of this bill. Now, from the very nature of the case, this must be a monstrous exaggeration of the number of these unfortunate men. Less than two millions and a half of votes had been given at the late Presidential election; and, if you add to this number five hundred thousand, the aggregate of three millions would exceed the number of all the male inhabitants of the United States who could by possibility become bankrupts. Could any man believe that half a million of this number were in a state of bankruptcy? That every sixth man in the United States was in this wretched condition? The experience of us all must demonstrate that this was impossible. There were several States in the Union where this bill would be almost a dead letter for want of subjects on which it could operate. Although we had suffered much from the spirit of wild speculation, which had been excited to madness by our unrestricted banking system, yet he did not believe there were more than one hundred thousand bankrupts in the United States who would apply for relief under this bill.[bill.]
Now, sir, what was the nature of this bill? Whom did it embrace in its provisions? He would answer, every individual in the United States who was an insolvent debtor. There was no limitation, no restriction whatever. It would discharge all the insolvent debtors now in existence throughout the Union, from all the debts which they had ever contracted, on the easiest terms possible. It was said that the bill contained provisions both for voluntary and involuntary bankruptcy; and so it did nominally: but in truth and in fact, it would prove to be almost exclusively a voluntary bankrupt bill.
The involuntary clause would scarcely ever be resorted to, unless it might be by a severe and vindictive creditor, for the purpose of unjustly oppressing his unfortunate debtor. And why would this prove in practice to be a voluntary bankrupt bill, and that alone? The compulsory clause applied only to merchants—wholesale and retail, to bankers, factors, brokers, underwriters, and marine insurers. These were objects of compulsory bankruptcy, provided they owed debts to the amount of two thousand dollars. In order to enable their creditors to prosecute petitions against them, for the purpose of having them declared bankrupt, they must have committed one of the acts of bankruptcy specified by the bill. What were they? The debtor must either have departed from the State of his residence, with intent to defraud his creditors;—or concealed himself to avoid being arrested;—or fraudulently procured himself to be arrested or his goods or lands to be attached, distrained, sequestered, or taken in execution;—or removed and concealed his goods and chattels to prevent them from being levied upon or taken in execution;—or made a fraudulent conveyance or assignment of his lands, goods, or credits. These were the five acts of bankruptcy specified in the bill; and could it be supposed that any merchant or man of business, in insolvent circumstances, would wait and subject himself to this compulsory process by committing any of these acts; whilst the bill threw the door wide open to him, in common with all other persons, to become a voluntary bankrupt, at any time he might think proper? He would select the most convenient time for himself to be discharged from his debts; and would cautiously avoid any one of these acts of bankruptcy, which might restrain the freedom of his own will, and place him in some degree within the power of his creditors. He would “swear out” when it suited him best, and would not subject himself to their pleasure. This bill, then, although in name compulsory as well as voluntary, was in fact, from the beginning to end, neither more nor less than a voluntary bankrupt law.
Now it might be wise, on a subject of such great importance, to consult the experience of the past. In 1817, the British Parliament had appointed a commission on the subject of their bankrupt laws. The testimony taken by the commissioners was decidedly against these laws; and the Lord Chancellor declared that the abuses under them were a disgrace to the country; that it would be better to repeal them at once than to submit to such abuses; and that there was no mercy to the bankrupt’s estate nor to the creditors. Mr. B. spoke from memory; but he felt confident he was substantially correct in the facts stated. This was the experience of England, and that, too, notwithstanding their bankrupt laws had interposed many more guards against fraud than the present bill contained, and were executed with an arbitrary severity, wholly unsuited to the genius of our institutions. In that country, however, these laws had existed for so long a period of time, and were so interwoven with the business habits of the people, that it was found impossible to abolish them altogether.
We have had some experience on this subject in our own country. Congress passed a bankrupt law in April, 1800. It was confined to traders, and was exclusively compulsory in its character. The period of its existence was limited to five years and until the end of the next session of Congress thereafter. It so entirely failed to accomplish the objects for which it was created, and was the source of so many frauds, that it was permitted to live out but little more than half its appointed days. It was repealed in December, 1803; and a previous resolution, declaring that it ought to be repealed, passed the House of Representatives by a vote of 77 to 12.
The State of Pennsylvania had furnished another important lesson on this subject. In March, 1812, the legislature of that State passed a bankrupt or insolvent law absolving all those who chose to take advantage of it from the payment of their debts. It was confined to the city and county of Philadelphia; but within these limits, like the present bill, it offered relief to everybody who desired to be relieved. This act was repealed, almost by acclamation, at the commencement of the very next session after its passage. Its baneful effects were so fully demonstrated during this short intervening period, that the representatives from the city and county who had, but a few months before, strained every nerve to procure its passage, were the most active and zealous in urging its repeal.
During the first session of his service in the House of Representatives (that of 1821–2), powerful efforts were made to pass a bankrupt law. There was then a greater and more general necessity for such a measure than had ever existed since. The extravagant expansion of the Bank of the United States in 1816, ’17 and ’18 had reduced it to the very brink of insolvency. In order to save itself from ruin, it was compelled to contract its loans and issues with a rapidity beyond all former example. The consequence was, that the years 1819, ’20 and ’21 were the most disastrous which the country had ever experienced since the adoption of the federal Constitution. Not only merchants and speculators were then involved in ruin; but the rage for speculation had extended to the farmers and mechanics throughout the country, and had rendered vast numbers of them insolvent. The cry for relief, by the passage of a bankrupt bill, therefore, came to Congress from all classes of society, and from almost every portion of the Union.
The best speech which he (Mr. B.) had ever made in Congress was in opposition to that bill. The reason was, that he had derived much assistance from conversations with Mr. Lowndes upon the subject. That great and good statesman was then suffering under the disease which proved fatal to him soon after. He attempted to make a speech against the bill, but was compelled to desist by physical exhaustion before he had fairly entered on his subject. It was his decided conviction, that no bankrupt law, of which the English system was the model, could ever be adopted by Congress without great injury to the country. He (Mr. B.) had attempted to demonstrate this proposition, at that period, and he should now again, after the lapse of nearly twenty years, make a very few observations on the same subject.