ing every advantage where there has been any doubt as to the causes of their insolvency, that where nine happen from extravagance or dishonesty, one" at most "may be referred to misfortune alone."*

Is it rational to expect among the trading classes any high sense of justice, honor, or integrity, when the law enables men who act in this manner to shuffle off the consequences of their misconduct upon those who have been so unfortunate as to trust them; and practically proclaims that it looks upon insolvency thus produced, as a "misfortune," not an offence?

It is, of course, not denied, that insolvencies do arise from causes beyond the control of the debtor, and that, in many more cases, his culpability is not of a high order; and the law ought to make a distinction in favor of such cases, but not without a searching investigation; nor should the case ever be let go without having ascertained, in the most complete manner practicable, not the fact of insolvency only, but the cause of it. To have been trusted with money or money's worth, and to have lost or spent it, is prima facie evidence of something wrong; and it is not for the creditor to prove, which he cannot do in one case out of ten, that there has been criminality, but for the debtor to rebut the presumption, by laying open the whole state of his affairs, and showing either that there has been no misconduct, or that the misconduct has been of an excusable kind. If he fail in this, he ought never to be dismissed without a punishment proportioned to the degree of blame which seems justly imputable to him; which punishment, however, might be shortened or mitigated in proportion as he appeared likely to exert himself in repairing the injury done.

It is a common argument with those who approve a

* Pp. 50, 51.

relaxed system of insolvency laws, that credit, except in the great operations of commerce, is an evil; and that to deprive creditors of legal redress is a judicious means of preventing credit from being given. That which is given by retail dealers to unproductive consumers is, no doubt, to the excess to which it is carried, a considerable evil. This, however, is only true of large, and especially of long credits; for there is credit whenever goods are not paid for before they quit the shop, or, at least, the custody of the seller; and there would be much inconvenience in putting an end to this sort of credit. But a large proportion of the debts. on which insolvency laws take effect, are those due by small tradesmen to the dealers who supply them; and on no class of debts does the demoralization occasioned by the present state of the law, operate more perniciously. These are commercial credits, which no one wishes to see curtailed; their existence is of great importance to the general industry of the country, and to numbers of honest well-conducted persons of small means, to whom it would be a grievous injury that they should be prevented from obtaining the accommodation they need, and would not abuse, through the omission of the law to provide just remedies against dishonest or reckless borrowers.

But although it were granted that retail transactions, on any footing but that of ready money payment, are an evil, and their entire suppression a fit object for legislation to aim at; a worse mode of compassing that object could scarcely be invented, than to permit those who have been trusted by others to cheat and rob them with impunity. The law does not select the vices of mankind as the appropriate instrument for inflicting chastisement on the comparatively innocent; when it seeks to discourage any course of action, it does so by applying inducements of its own, not by outlawing those who act in the manner it deems objectionable, and letting loose the predatory instincts of

the worthless part of mankind to feed upon them. If a man has committed murder, the law puts him to death; but it does not promise impunity to anybody who may kill him for the sake of taking his purse. The offence of believing another's word, even rashly, is not so heinous that for the sake of discouraging it, the spectacle should be brought home to every door, of triumphant rascality, with the law on its side, mocking the victims it has made. This pestilent example is already very widely exhibited since the relaxation of the Insolvency laws. It is idle to expect that, even by absolutely depriving creditors of all legal redress, the kind of credit which is considered objectionable would really be very much checked. Rogues and swindlers are still an exception among mankind, and people will go on trusting each other's promises. Large dealers, in abundant business, would refuse credit, as many of them already do; but in the eager competition of a great town, what can be expected from the tradesman to whom a single customer is of importance, the beginner, perhaps, who is striving to get into business? He will take the risk, even if it were still greater; he is ruined if he cannot sell his goods, and he can but be ruined if he is defrauded. Nor does it avail to say, that he ought to make proper inquiries, and ascertain the character of those to whom he supplies goods on trust. In some of the most flagrant cases of profligate debtors which have come before the Bankruptcy Court, the swindler has been able to give, and had given, excellent references.*

*The following extracts from the French Code de Commerce (the translation is that of Mr. Fane) show the great extent to which the just distinctions are made, and the proper investigations provided for, by French law. The word banqueroute, which can only be translated by bankruptcy, is, however, confined in France to culpable insolvency, which is distinguished into simple bankruptcy and fraudulent bankruptcy. The following are cases of simple bankruptcy :

"Every insolvent who, in the investigation of his affairs, shall appear 41*

VOL. II.

486

CHAPTER X.

OF INTERFERENCES OF GOVERNMENT GROUNDED ON

ERRONEOUS THEORIES.

1. FROM the necessary functions of government, and the effects produced on the economical interests of society by their good or ill discharge, we proceed to the functions which belong to what I have termed the optional class; those which are sometimes assumed by governments and sometimes not, and which it is not unanimously admitted that they ought to exercise.

Before entering on the general principles of the question, it will be advisable to clear from our path all those cases, in which government interference works ill, because grounded on false views of the subject interfered with. Such cases

chargeable with one or more of the following offences, shall be proceeded against as a simple bankrupt.

"If his house expenses, which he is bound to enter regularly in his daybook, appear excessive.

"If he has spent considerable sums at play, or in operations of pure hazard.

"If it shall appear that he has borrowed largely, or resold merchandise at a loss, or below the current price, after it appeared by his last accounttaking that his debts exceeded his assets by one half.

"If he has issued negotiable securities to three times the amount of his available assets, according to his last account-taking.

"The following may also be proceeded against as simple bankrupts :"He who has not declared his own insolvency in the manner prescribed by law;

"He who has not come in and surrendered within the time limited, having no legitimate excuse for his absence;

"He who either produces no books at all, or produces such as have been irregularly kept, and this, although the irregularities may not indicate fraud."

The penalty for "simple bankruptcy" is imprisonment for a term of not less than one month, nor more than two years. The following are cases of

have no connection with any theory respecting the proper limits of interference. There are some things with which governments ought not to meddle, and other things with which they ought; but whether right or wrong in itself, the interference must work for ill, if government, not understanding the subject which it meddles with, meddles to bring about a result which would be mischievous. We will, therefore, begin by passing in review various false. theories, which have from time to time formed the ground of acts of government more or less economically injurious.

Former writers on political economy have found it needful to devote much trouble and space to this department of their subject. It has now happily become possible, at least in our own country, greatly to abridge this purely negative part of our discussions. The false theories of political economy which have done so much mischief in times past, are entirely discredited among all who have not lagged be

fraudulent bankruptcy, of which the punishment is travaux forcés, (the galleys) for a term :—

"If he has attempted to account for his property by fictitious expenses and losses, or if he does not fully account for all his receipts;

"If he has fraudulently concealed any sum of money or any debt due to him, or any merchandise or other movables;

If he has made fraudulent sales or gifts of his property;

"If he has allowed fictitious debts to be proved against his estate; "If he has been entrusted with property, either merely to keep, or with special directions as to its use, and has nevertheless appropriated it to his own use;" (for such acts of peculation by trustees there is generally in England only a civil remedy, and that too through the Court of Chancery ;) "If he has purchased real property in a borrowed name; "If he has concealed his books.

"The following may also be proceeded against in a similar way:"He who has not kept books, or whose books shall not exhibit his real situation as regards his debts and credits.

"He who, having obtained a protection (sauf-conduit) shall not have duly attended."

These various provisions relate only to commercial insolvency. The laws in regard to ordinary debts are considerably more rigorous to the debtor.