Page:Debates in the Several State Conventions, v4.djvu/509

1827.] Court of the United States have decided in the cases of Sturges and Crowninshield, and M'Millan and M'Neill, (4 Wheat. 122, 209.) A discharge under the bankrupt or insolvent law of a state is, in these cases, declared to be invalid, in consequence of the constitutional prohibition on the states of passing any law "impairing the obligation of contracts." Now, prior to the adoption of the Constitution, the states possessed this right, and, in some instances, exercised it to the most unlimited extent. It is a right essential to commercial credit and prosperity. It has been taken from the states, and vested in us; and if proper to be exercised at all, can only be exerted by us. I am aware, sir, that there are cases still pending before the Supreme Court, in which the question is involved, whether a state bankrupt law may not be enforced, in such state, on parties residing there, and contracting in reference to that law. This question has remained for several years undecided; but, whatever may be the final decision, it is obvious that it will not restore to the states the power of acting on the subject matter in the only way at all adequate to the exigencies of the country. The application of the lex loci contractus would be but a miserable substitute for a general bankrupt law. And even if it were possible that the case of Sturges and Crowninshield could be reversed, and the power be restored to the states of passing bankrupt laws, without restriction or limitation, I should consider twenty-four different bankrupt laws as infinitely worse than none.

In this bill the committee have framed a system of bankruptcy, which will, in their opinion, greatly contribute to give security to creditors, and relief to debtors, within the sphere of its operation. It is believed that it offers the strongest inducements to debtors for honest dealing; that it holds out a temptation to insolvent traders to make a timely surrender of their effects to their creditors; and that, thus, it will have a powerful tendency to prevent over-trading and desperate adventures. This bill gives power to creditors to arrest the fraudulent career of their debtors, furnishes a prompt remedy for the recovery of debts, and time and means for thorough investigations; it prevents all unjust preferences, and secures an impartial distribution of insolvent estates: it puts citizens of different states on an equal footing, and gives a certain, a just rule for commercial contracts; it puts our own citizens on a footing with foreigners; and, lastly, it will restore to society, to honor, and usefulness, a mass of industry and talent which, under the present system, is irretrievably lost—thus "paying a just tribute to the rights of humanity, by depriving the creditor of the power he now has over the whole life of his debtor."

January 24, 1827. Mr. WOODBURY. The gentleman on his right (Mr. Berrien) had said that Congress might legislate without limitation as to the objects or manner of a bankrupt system, because no limitation as to them had been expressed in the Constitution. But the limitation existed in the subject matter of the grant. The grant was not to legislate on the subject of contracts generally, of descents, of suits at law, but on the subject of bankruptcy. To bankruptcies, and to bankruptcies alone, then, was the power confined. And the word bankruptcies, as used in the Constitution, was never, in his apprehension, intended to extend beyond embarrassments and failures among mercantile men.

The bankrupt system had been limited essentially to persons more or less engaged in trade. The word itself, as remarked last year by the