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Chapter 13


There is an alternative in the subject of this chapter, which places the discourse in the two extremes of a tradesman's fortunes.

I. The fortunate tradesman, called upon by his poor unfortunate neighbour, who is his debtor, and is become insolvent, to have compassion on him, and to compound with him for part of his debt, and accept his offer in discharge of the whole.

II. The unfortunate tradesman become insolvent and bankrupt himself, and applying himself to his creditor to accept of a composition, in discharge of his debt.

I must confess, a tradesman, let his circumstances be what they will, has the most reason to consider the disasters of the unfortunate, and be compassionate to them under their pressures and disasters, of any other men; because they know not--no, not the most prosperous of them--what may be their own fate in the world. There is a Scripture proverb, if I may call it so, very necessary to a tradesman in this case, 'Let him that thinketh he standeth, take heed lest he fall.'

N.B. It is not said, let him that standeth take heed, but him that thinketh he standeth. Men in trade can but think they stand; and there are so many incidents in a tradesman's circumstances, that sometimes when he thinks himself most secure of standing, he is in most danger of falling.

If, then, the contingent nature of trade renders every man liable to disaster that is engaged in it, it seems strange that tradesmen should be outrageous and unmerciful to one another when they fall; and yet so it is, that no creditor is so furious upon an unhappy insolvent tradesman, as a brother-tradesman of his own class, and who is at least liable to the same disaster, in the common event of his business.

Nay, I have lived to see--such is the uncertainty of human affairs, and especially in trade--the furious and outrageous creditor become bankrupt himself in a few years, or perhaps months after, and begging the same mercy of others, which he but just before denied to his not more unfortunate fellow-tradesman, and making the same exclamations at the cruelty and hard-heartedness of his creditors in refusing to comply with him, when, at the same time, his own heart must reproach him with his former conduct; how inexorable he was to all the entreaties and tears of his miserable neighbour and his distressed family, who begged his compassion with the lowest submission, who employed friends to solicit and entreat for them, laying forth their misery in the most lively expressions, and using all the arguments which the most moving distress could dictate, but in vain.

The tradesman is certainly wrong in this, as compassion to the miserable is a debt of charity due from all mankind to their fellow-creatures; and though the purse-proud tradesman may be able to say he is above the fear of being in the like circumstances, as some may be, yet, even then, he might reflect that perhaps there was a time when he was not so, and he ought to pay that debt of charity, in acknowledgement of the mercy that has set him above the danger.

And yet, speaking in the ordinary language of men who are subject to vicissitudes of fortune, where is the man that is sure he shall meet with no shock? And how have we seen men, who have to-day been immensely rich, be to-morrow, as it were, reduced to nothing! What examples were made in this city of such precipitations within the memory of some living, when the Exchequer shutting up ruined the great bankers of Lombard Street.[23] To what fell Sir Robert Viner--the great Alderman Backwell--the three brothers of the name of Forth, of whom King Charles II. made that severe pun, that 'Three-fourths of the city were broke?'

To what have we seen men of prodigious bulk in trade reduced--as Sir Thomas Cook, Sir Basil Firebrass, Sheppard, Coggs, and innumerable bankers, money-scriveners, and merchants, who thought themselves as secure against the shocks of trade, as any men in the world could be? Not to instance our late South Sea directors, and others, reduced by the terrible fate of bubbles, whose names I omit because they yet live, though sinking still under the oppression of their fortunes, and whose weight I would be far from endeavouring to make heavier.

Why, then, should any tradesman, presuming on his own security, and of his being out of the reach of disaster, harden his heart against the miseries and distresses of a fellow-tradesman, who sinks, as it were, by his side, and refuse to accept his offer of composition; at least, if he cannot object against the integrity of his representations, and cannot charge him with fraud and deceit, breaking with a wicked design to cheat and delude his creditors, and to get money by a pretended breach? I say, why should any tradesman harden his heart in such a case, and not, with a generous pity, comply with a reasonable and fair proposal, while it is to be had?

I do acknowledge, if there is an evident fraud, if he can detect the bankrupt in any wicked design, if he can prove he has effects sufficient to pay his debts, and that he only breaks with a purpose to cheat his creditors, and he conceals a part of his estate, when he seems to offer a sincere surrender; if this be the case, and it can be made appear to be so--for in such a case, too, we ought to be very sure of the fact--then, indeed, no favour is due, and really none ought to be shown.

And, therefore, it was a very righteous clause which was inflicted on the fraudulent bankrupt, in a late act of Parliament, namely, that in case he concealed his effects, and that it appeared he had, though upon his oath, not given in a full account of his estate, but willingly and knowingly concealed it, or any part of it, with design to defraud his creditors, he should be put to death as a felon: the reason and justice of which clause was this, and it was given as the reason of it when the act was passed in the House of Commons, namely, that the act was made for the relief of the debtor, as well as of the creditor, and to procure for him a deliverance on a surrender of his effects; but then it was made also for the relief of the creditor, too, that he might have as much of his debt secured to him as possible, and that he should not discharge the debtor with his estate in his pocket, suffering him to run away with his (the creditor's) money before his face.

Also it was objected, that the act, without a penalty, would be only an act to encourage perjury, and would deliver the hard-mouthed knave that could swear what he pleased, and ruin and reject the modest conscientious tradesman, that was willing and ready to give up the utmost farthing to his creditors. On this account the clause was accepted, and the act passed, which otherwise had been thrown out.

Now, when the poor insolvent has thus surrendered his all, stript himself entirely upon oath, and that oath taken on the penalty of death if it be false, there seems to be a kind of justice due to the bankrupt. He has satisfied the law, and ought to have his liberty given him as a prey, as the text calls it, Jer. xxxix. 18., that he may try the world once again, and see, if possible, to recover his disasters, and get his bread; and it is to be spoken in honour of the justice as well as humanity of that law for delivering bankrupts, that there are more tradesmen recover themselves in this age upon their second endeavours, and by setting up again after they have thus failed and been delivered, than ever were known to do so in ten times the number of years before.

To break, or turn bankrupt, before this, was like a man being taken by the Turks; he seldom recovered liberty to try his fortune again, but frequently languished under the tyranny of the commissioners of bankrupt, or in the Mint, or Friars, or rules of the Fleet, till he wasted the whole estate, and at length his life, and so his debts were all paid at once.

Nor was the case of the creditor much better--I mean as far as respected his debt, for it was very seldom that any considerable dividend was made; on the other hand, large contributions were called for before people knew whether it was likely any thing would be made of the debtor's effects or no, and oftentimes the creditor lost his whole debt, contribution-money and all; so that while the debtor was kept on the rack, as above, being held in suspense by the creditors, or by the commissioners, or both, he spent the creditor's effects, and subsisted at their expense, till, the estate being wasted, the loss fell heavy on every side, and generally most on those who were least able to bear it.

By the present state of things, this evil is indeed altered, and the ruin of the creditor's effects is better prevented; the bankrupt can no more skulk behind the door of the Mint and Rules, and prevent the commissioners' inspection; he must come forth, be examined, give in an account, and surrender himself and effects too, or fly his country, and be seen here no more; and if he does come in, he must give a full account upon oath, on the penalty of his neck.

When the effects are thus surrendered, the commissioners' proceedings are short and summary. The assignees are obliged to make dividends, and not detain the estate in their own hands, as was the case in former days, till sometimes they became bankrupts themselves, so that the creditors are sure now what is put into the hands of the assignees, shall in due time, and without the usual delay, be fairly divided. On the other hand, the poor debtor having honestly discharged his part, and no objection lying against the sincerity of the discovery, has a certificate granted him, which being allowed by the Lord Chancellor, he is a clear man, and may begin the world again, as I have said above.

The creditor, being thus satisfied that the debtor has been faithful, does not answer the end of the act of Parliament, if he declines to assent to the debtor's certificate; nor can any creditor decline it, but on principles which no man cares to own--namely, that of malice, and the highest resentment, which are things a Christian tradesman will not easily act upon.

But I come now to the other part of the case; and this is supposing a debtor fails, and the creditors do not think fit to take out a commission of bankrupt against him, as sometimes is the case, at least, where they see the offers of the debtor are any thing reasonable: my advice in such case is (and I speak it from long experience in such things), that they should always accept the first reasonable proposal of the debtor; and I am not in this talking on the foot of charity and mercy to the debtor, but of the real and undoubted interest of the creditor; nor could I urge it, by such arguments as I shall bring, upon any other foundation; for, if I speak in behalf of the debtor, I must argue commiseration to the miserable, compassion and pity of his family, and a reflection upon the sad changes which human life exposes us all to, and so persuade the creditor to have pity upon not him only, but upon all families in distress.

But, I say, I argue now upon a different foundation, and insist that it is the creditor's true interest, as I hinted before, that if he finds the debtor inclined to be honest, and he sees reason to believe he makes the best offer he can, he should accept the first offer, as being generally the best the debtor can make;[24] and, indeed, if the debtor be wise as well as honest, he will make it so, and generally it is found to be so. And there are, indeed, many reasons why the first offers of the debtor are generally the best, and why no commission of bankrupt ordinarily raises so much, notwithstanding all its severities, as the bankrupt offers before it is sued out--not reckoning the time and expense which, notwithstanding all the new methods, attend such things, and are inevitable. For example--

When the debtor, first looking into his affairs, sees the necessity coming upon him of making a stop in trade, and calling his creditors together, the first thought which by the consequence of the thing comes to be considered, is, what offers he can make to them to avoid the having a commission sued out against him, and to which end common prudence, as well as honest principles, move him to make the best offers he can. If he be a man of sense, and, according to what I mentioned in another chapter, has prudently come to a stop in time, before things are run to extremities, and while he has something left to make an offer of that may be considerable, he will seldom meet with creditors so weak or so blind to their own interest not to be willing to end it amicably, rather than to proceed to a commission. And as this is certainly best both for the debtor and the creditor, so, as I argued with the debtor, that he should be wise enough, as well as honest enough, to break betimes, and that it was infinitely best for his own interest, so I must add, on the other hand, to the creditor, that it is always his interest to accept the first offer; and I never knew a commission make more of an estate, where the debtor has been honest, than he (the debtor) proposed to give them without it.

It is true, there are cases where the issuing out a commission may be absolutely necessary. For example--

1. Where the debtor is evidently knavish, and discovers himself to be so, by endeavours to carry off his effects, or alter the property of the estate, confessing judgments, or any the usual ways of fraud, which in such cases are ordinarily practised. Or--

2. Where some creditors, by such judgments, or by attachments of debts, goods delivered, effects made over, or any other way, have gotten some of the estate into their hands, or securities belonging to it, whereby they are in a better state, as to payment, than the rest. Or--

3. Where some people are brought in as creditors, whose debts there is reason to believe are not real, but who place themselves in the room of creditors, in order to receive a dividend for the use of the bankrupt, or some of his family.

In these, and such like cases, a commission is inevitable, and must be taken out; nor does the man merit to be regarded upon the foot of what I call compassion and commiseration at all, but ought to be treated like a rapparee,[25] or plunderer, who breaks with a design to make himself whole by the composition; and as many did formerly, who were beggars when they broke, be made rich by the breach. It was to provide against such harpies as these that the act of Parliament was made; and the only remedy against them is a commission, in which the best thing they can do for their creditors is to come in and be examined, give in a false account upon oath, be discovered, convicted of it, and sent to the gallows, as they deserve.

But I am speaking of honest men, the reverse of such thieves as these, who being brought into distress by the ordinary calamities of trade, are willing to do the utmost to satisfy their creditors. When such as these break in the tradesman's debt, let him consider seriously my advice, and he shall find--I might say, he shall always find, but I do affirm, he shall generally find--the first offer the best, and that he will never lose by accepting it. To refuse it is but pushing the debtor to extremities, and running out some of the effects to secure the rest.

First, as to collecting in the debts. Supposing the man is honest, and they can trust him, it is evident no man can make so much of them as the bankrupt. (1.) He knows the circumstances of the debtors, and how best to manage them; he knows who he may best push at, and who best forbear. (2.) He can do it with the least charge; the commissioners or assignees must employ other people, such as attorneys, solicitors, &c., and they are paid dear. The bankrupt sits at home, and by letters into the country, or by visiting them, if in town, can make up every account, answer every objection, judge of every scruple, and, in a word, with ease, compared to what others must do, brings them to comply.

Next, as to selling off a stock of goods. The bankrupt keeps open the shop, disperses or disposes of the goods with advantage; whereas the commission brings all to a sale, or an outcry, or an appraisement, and all sinks the value of the stock; so that the bankrupt can certainly make more of the stock than any other person (always provided he is honest, as I said before), and much more than the creditors can do.

For these reasons, and many others, the bankrupt is able to make a better offer upon his estate than the creditors can expect to raise any other way; and therefore it is their interest always to take the first offer, if they are satisfied there is no fraud in it, and that the man has offered any thing near the extent of what he has left in the world to offer from.

If, then, it be the tradesman's interest to accept of the offer made, there needs no stronger argument to be used with him for the doing it; and nothing is more surprising to me than to see tradesmen, the hardest to come into such compositions, and to push on severities against other tradesmen, as if they were out of the reach of the shocks of fortune themselves, or that it was impossible for them ever to stand in need of the same mercy--the contrary to which I have often seen.

To what purpose should tradesmen push things to extremities against tradesmen, if nothing is to be gotten by it, and if the insolvent tradesman will take proper measures to convince the creditor that his intentions are honest? The law was made for offenders; there needs no law for innocent men: commissions are granted to manage knaves, and hamper and entangle cunning and designing rogues, who seek to raise fortunes out of their creditors' estates, and exalt themselves by their own downfall; they are not designed against honest men, neither, indeed, is there any need of them for such.

Let no man mistake this part, therefore, and think that I am moving tradesmen to be easy and compassionate to rogues and cheats: I am far from it, and have given sufficient testimony of the contrary; having, I assure you, been the only person who actually formed, drew up, and first proposed that very cause to the House of Commons, which made it felony to the bankrupt to give in a false account. It cannot, therefore, be suggested, without manifest injustice, that I would with one breath prompt creditors to be easy to rogues, and to cheating fraudulent bankrupts, and with another make a proposal to have them hanged.

But I move the creditor, on account of his own interest, always to take the first offer, if he sees no palpable fraud in it, or sees no reason to suspect such fraud; and my reason is good, namely, because I believe, as I said before, it is generally the best.

I know there is a new method of putting an end to a tradesman's troubles, by that which was formerly thought the greatest of all troubles; I mean a fraudulent method, or what they call taking out friendly statutes; that is, when tradesmen get statutes taken out against themselves, moved first by some person in kindness to them, and done at the request of the bankrupt himself. This is generally done when the circumstances of the debtor are very low, and he has little or nothing to surrender; and the end is, that the creditors may be obliged to take what there is, and the man may get a full discharge.

This is, indeed, a vile corruption of a good law, and turning the edge of the act against the creditor, not against the debtor; and as he has nothing to surrender, they get little or nothing, and the man is as effectually discharged as if he had paid twenty shillings in the pound; and so he is in a condition to set up again, take fresh credit, break again, and have another commission against him; and so round, as often as he thinks fit. This, indeed, is a fraud upon the act, and shows that all human wisdom is imperfect, that the law wants some repairs, and that it will in time come into consideration again, to be made capable of disappointing the people that intend to make such use of it.

I think there is also wanting a law against twice breaking, and that all second commissions should have some penalty upon the bankrupt, and a third a farther penalty, and if the fourth brought the man to the gallows, it could not be thought hard; for he that has set up and broke, and set up again, and broke again, and the like, a third time, I think merits to be hanged, if he pretends to venture any more.

Most of those crimes against which any laws are published in particular, and which are not capital, have generally an addition of punishment upon a repetition of the crime, and so on--a further punishment to a further repetition. I do not see why it should not be so here; and I doubt not but it would have a good effect upon tradesmen, to make them cautious, and to warn them to avoid such scandalous doings as we see daily practised, breaking three or four, or five times over; and we see instances of some such while I am writing this very chapter.

To such, therefore, I am so far from moving for any favour, either from the law, or from their creditors, that I think the only deficiency of the law at this time is, that it does not reach to inflict a corporal punishment in such a case, but leaves such insolvents to fare well, in common with those whose disasters are greater, and who, being honest and conscientious, merit more favour, but do not often find it.


[23] [This event took place in 1671, Charles II. finding it necessary to suspend the national payments for a year.]

[24] [The truth of this continues to be matter of daily observation in our own times.]

[25] [A name applied, in the seventeenth century, to a certain class of robbers in Ireland.]

Daniel Defoe

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