THE UNIVERSITY OF ILLINOIS LIBRARY 332 V.20 Wi7/:''^'7W.'Kt?g:wi-iviT^;.'^»»r.^;-^ajj ^r. r j-;:.-jtM.^. ^v^T^«».s^>^)^.:>vr.::.^vi:..^. Return this book on or before the Latest Date stamped below. University of Illinois Library J::^: -4 V-'l JHii ^:>f ( J J i L161— II41 CREDIT PERNICIOUS. LONDON^ PUBUSHED BY JOHN HATCHARD AND SOV, No. 187, PICCADILLY. 1823. i*rice One Shiliin^ and Sixpence . ^ ^ Printedby 11. C. Uodsart, 15, Crost-ttreet, flatton Garden. As the Houses of Parliament are now about to assemble for the consideration of measures for the common good, the folloiving sketch of an insidious and powerful evil is presented to the public, in the hope that those who have more leisure, and greater command of information, than the author possesses, may Jill up the outline here traced, and paint the spurious monster in all its deformity. These pages are the result of reflection on the projected attempts to procure a repeal of the existing laws relative to Insolvent Debtors ; laws which, inasmuch as they abridge the power of the creditor over his debtor, are considered by the author beneficial, but at the same time are only very slight advances towards the object of the decided measure he has to propose. CREDIT PERNICIOUS. Considerable difficulty attends the introduction of any plan which may have an important opera- lion in political economy. If perfectly new it is viewed with jealousy ; for until a novel scheme is put to the test of experiment, though the good it will produce may be foreseen, yet ill results of which it may at the same time be the parent, are not so readily anticipated. Supposing it to be new, and simple also,, suspicions will arise that it would have been earlier promulgated, were it not encum- bered with some insurmountable difficult}^, or teeming with some inevitable evil, which would neutralize, or else overbalance its good effects. In making the proposition, therefore, that in a great variety of cases " simple contract debts between forty shillings and one hundred pounds shall not be recoverable by any suit or process whatsoever," I must bespeak patient examination of the observ- ations that will be made to support it ; and de- precate a hasty condemnation of the plan on the ground of either its powerful and extensive opera- tion, its novelty, or its simplicity. 6 Our great political economists have unaccountably omitted to treat of credit at the length, and with the minuteness, to which the subject is surely entitled. It cannot be unimportant to the wealth, nor to the welfare of a country, whether a considerable portion of its inhabitants, merely consumers, accustom themselves to pay for what they purchase, at a distant^ rather than at the present time. Such a practice may have some effect upon the price of provisions ; it may give spirit to commerce, or enfeeble it ; it may produce the former effect under some circumstances, and the latter under others; lastly, it may tend much to increase the growth of individual prodigality and immorality. The possi- bility of such consequences one would have thought not unworthy the consideration of general econo- mists. But the word credit is so seldom men- tioned by any one of them, and when it is, then so loosely*, that but little useful information on the subject of this particular enquiry, is, I fear, to be derived from their invaluable labours. Some auxiliary arguments, and those not feeble, may however be founded on their conclusions. There will not be space, within the limits to which it is * Dr. Paley, in treating of the general and particular con- sequences of the actions of men, says, " The particular con- sequence of giving credit, is the loss of the goods sold, or money lent : the general, the nourishment of extravagance, dissipation, and vices of all kinds." Mor. and Polit. Phil. to!, i. p. 77. — And there is very little more on the subject of credit in the whole work. intended to confine this essay, for the examination of all those positions of the economists which may be quoted in favor of the proposition in question. For those who are versed in the science, or who are disposed to enter deeply into the present question, it will be unnecessary to make long extracts ; they will refer to the works themselves. As to those who are not, it is presumed the argument will be con- vincing upon the face of it. Credit is that confidence of one individual in another, under the influence of which the former parts with goods, money, or other things, of real or accepted value, upon condition of receiving a future compensation. Credit is under some circumstances necessary, under others convenient ^ and, in the remaining cases, neither necessary nor convenient. Credit probably originated about the same time with the division of labour and the accumulation of stock. " In that rude state of society, in which there is no division of labour, in which exchanges are seldom made, and in which every man provides every thing for himself, it is not necessary that any stock should be accumulated, or stored up before- hand, in order to carry on thebusiness of the society. Every man endeavours to supply by his own industry, his own occasional wants as they occur — when he is 8 lum^Ty he goes to the forest to hunt, when liis coat is worn out he clothes himself with the skin of the first large animal he kills, and when his hut begins to go to ruin, he repairs it as well as he can with the trees and turf that are nearest it."* In such a state credit is unknown. The stronger and more active may sometimes labour for the weak and sick, or spare to them a portion of their own acquisitions. The provident may assist those who have less fore- sight, in time of need, when the rigour of the season renders instant provision, except from a store, dif- ficult or impossible. But these and similar as- sistances are rather acts of charity to be repaid in kind, when opportunity offers, than advances on credit. When civilization commences, and men become acquainted with the comforts, as well as the neces- saries, of life, it is found convenient to divide labour. Individuals devote themselves to particular occu- pations ; one becomes a smith, another a carpenter, and so on, as discoveries and improvements in the mechanical arts proceed. But while the smith is employed in his avocation he cannot go out to hunt for food, or clothing : he must therefore be supplied with those necessaries by some one whose time is not engaged otherwise than in hunting. The latter affords the supply, upon condition of being repaid with, or out of, the produce of the labour of the smith, which produce is not yet complete, and for * Wealth of Nations, vol. ii. p. 1. 9 the completion of which, the party affording the supply must wait. Here is an instance of credit, not, indeed, such as we see it now, but by the way of barter, and in its rudest and most simple form. The hunter, the smith, and the carpenter will, however, soon learn to despise the ill fashioned huts in which they dwell. They will build houses^ arid furnish them with every convenience which im- provement can point out. The labour of each will become more valuable to him ; he will make it as productive as ipossible ; and in parting with his pro- duce he will stipulate to have a compensation be- yond the value of that produce, for the risk he runs of losing it altogether, by the death, future inca- pacity, or improbity of the person to whom he en- trusts it. He will also stipulate that the compens- ation for tiie whole shall be paid within a given time, a time in this stage of society rarely very distant. Thus far we have supposed the society to con- fine its traffic to its own immediate neighbourhood. A superabundance of produce for which there is no dernand in the neighbourhood, the result of a favorable soil or situation, or some other fortuitous circumstance, now leads the society to extend its connections, (ioods are transported to distant parts of the same country, and a new necessity for credit arises. Either the seller must give credit to the bnyer from the moment of parting with his goods B 10 till the receipt of a return for them, or the buyer must trust the seller with the price until the goods come into his possession. The seller is usually con- sidered the party most benefitted, and therefore it is the custom for that party, and not the buyer, to afford the credit. Credit thus assumes a more im- portant shape. The transactions into which it enters are increased in magnitude, and itseU becomes of longer duration. Instead of a small advance to a neighbour, of the provision for a day or something of as little value, to be paid for within a short period, a man now entrusts to the inhabitant of a distant district the produce of the labour of a long period perhaps, and of many labourers. He does this too with the certainty of not being recompensed till the goods have made their slow transit to the consignee ; and the money, or the equivalent for money, has made its transit, almost, or perhaps quite as slow, back to the consignor. The seller considers the probity and wealth of the buyer, and the time within which the latter may conveniently discharge the debt; and binds him as far as he can, in honor at least, to do so on a given day. If the buyer re- quire a time of credit beyond the usual course of dealing, the seller will learn to sell that extended credit also, that is, to make a profit on it. At last, trade with foreign countries renders it necessary for merchants to become thoroughly ac- quainted with the nature of credit ; under what circumstances it ought to be afforded, at what price, H and for what length of time. It is become univer«al and indispensable^and a subject of the highest im- portance. Injudiciously given, credit not unfrequently brings ruin on him who receives, as well as on him who confers it. On the other hand, when well regulated it gives room for an extension of com- merce which would be unattainable without it. To keep commerce in a healthy and active state, the duration of credit should always be as short as possible. Its protraction increases risk and, con- sequently, anxiety, which renders the minds of men less able to direct labour with the best effect. Add to this, the price of all commodities is increased by it. Whenever credit is sold, as it almost invariably is, the consumer ultimately pays the profit upon it. The price most favorable to general labour, of every commodity, is that which is nearest to the natural price, or a fair market price. In such a country as ours, a very watchful eye should be kept upon the operations of credit. There is scarcely an indi- vidual, however humble his rank, who does not occasionally give and receive it. This must have some political effect, and that effect must be very general. It should therefore be ascertained whether it be good or evil. In the foregoing sketch of the probable rise and progress of credit, no circumstances arise in which it V 2 12 does not appear to be necessary, indispensable with- out the intervention of agents. And if agents are employed, confidence, though of a different nature, must be reposed. Credit is_, however, under other circumstances, not absolutely necessary, though highly convenient. It is not necessary that an apothecary, for in- stance, should give credit ; he may be paid for his attendance, as the physician is, on ever)' visit ; and every dose of medicine supplied by him may be paid for on delivery. But this practice would, it is evident, be somewhat troublesome. I know of no mode by which schoolmasters, who take pupils to board, can avoid giving credit. Their remuner- ation is, as to the boarding, like a rent, constantly growing due. Those of some other professions may, perhaps, be in the same predicament. But to come to our immediate subject. There are cases without number, in which credit is hourly given, where it is neither necessary, nor convenient, but mo«t extensively and decidedly pernicious. If it be doubtful whether in some of these latter cases it is not convenient, in the most common acceptation of the word, it may yet be insisted that the quantity of evil it produces is by far greater than the quantity of good. A large proportion of the population of England consists of salaried clerks, officers employed by go- 13 vernment, and other stipendiaries, annuitants, and proprietors, whose incomes are small, and either without prospect of increase, or increasing slowly and by no fixed degrees. Supposing one of these persons to have always in hand a sufficiency of money to purchase what he wants from time to time, until the next portion of his income is due and paid, there can be no necessity for his taking credit. For the present we can only presume the possession of this sufficiency; though the general power to possess it is scarcely doubtful. Such a person would experience no further inconvenience in the practice of paying ready money, than the trifling one of putting his hand into his pocket several times instead of once only. It may be said that credit would not be amvenient to him ; that is, that it would be more beneficial to him, and fitting for him, to pay ready money than to take credit. I cannot imagine any plausible reason why persons of this class should pay at a future time rather than at the present: whether their expen- diture equal their income or not, they make no use of any small sums they may have by them, beyond laving them out in commodities to be con- sumed by themselves and their families; they do not put them out to interest ; but I can perceive most lamentable evils, and such as daily arise, springing from this prevalent practice.* At this * We must be cautious not to put such persons upon tho same footing with traders or merchants. " The laws of Eng- land cautious of encouraging prodigalify and extravagance ^ 14 present moment any individual may live at a cheaper rate than he could a few years ago; But, or a long series of years before, the value of money, allow the benefit of the bankrupt statutes io none but actual traders; but as (rade cannot be carried on without mutual credit, the contracting of debts to facilitate commerce, is not only justifiable, but necessary ; and if, by accidental calamities, a merchant or trader becomes incapable of discharging his debts, it is his misfortune and not his fault. To tlie misfortunes, therefore, of debtors, the law has given a compassionate re- medy, but denied it to their faults ; since at the same time that it provides for the security of commerce, by enacting that every trader may be declared a bankrupt for the benefit of bis creditors as well as himself, it has also, to discourage extra- vagance, declared that no one shall be capable of being made a bankrupt, but a trader ; nor capable of receiving the full benefit of the statutes, but an honest trader." Blackstone's Comm. vol. ii. p. 474. " Solon made a law that the Athenians should no longer seize the body for civil debts. This law is extremely good, with respect to the generality of civil affairs; but there is sufficient reason for its not being observed in those of commerce. For as merchants are obliged to intrust large sums, frequently requiring payment of them within a very short time, and to pay money as well as receive it, there is a necessity that the debtor should punctually fulfil his engagement at the time prefixed ; and from hence it becomes necessary to lay a constraint on his person. In affairs relating to common civil contracts, the law ought not to permit the seizure of the person ; because the liberty of one citizen is of greater import- ance to the public, than the ease or prosperity of another. But in conventions derived fi'om commerce, the law ought to consider the public prosperity as of greater importance than the liberty of a citizen ; which however does not hinder the restrictions and limitations that humanity and good policy demand," Montesquiou Esp. de L. vol. ii. b. 20. c. 14. 15 or the price of commodities, had been continually fluctuating ; the fluctuations tending upon the whole to the diminution of the former, and the enhance- ment of the latter. We may fairly presume, from former experience, that similar fluctuations of the like tendency will again take place. Now those of the class we have in view, are not always specula- tive judges of the diminution in the value of their incomes. No doubt many of them provide against probable changes ; but however large we can admit the number of these to be, there are still enough of the improvident, ignorant, and uncalculating de- scription, to deserve the attention of our legislators. — A man who retired from business twenty years ago with a limited income, would till very lately have found, and will probably again, ere long, find it impossible to maintain himself, with the same income, in as much ease as he did then. The mischief is, such a man does not perceive that money is only the representative of what it will procure. He is still worth the same nominal in- come as when he retired, though, comparing what he can now procure for it with what it would buy when he first completed it, he is in fact worth con- siderably less. But if he had twenty years ago, and ever since, been unable to obtain credit, lie would have had no need of calculating powers. He never could have suflfered his expenditure to exceed his reveime, without experiencing such de- privations as would, once for all, have taught him a lesson never to be forgotten. He would have been forced, under the severest penalties, to measure his 16 expenses by his income. He would have been compelled either to return to business for the pur- pose of increasing his means with the advance of price, and cease to be a mere idle consumer, or to gratify his love of indolence at the expense of some conveniences. But by the facility with which credit is obtained, he is kept unaware o^ his danger. He has agreed with himself to live up to his income ; ^he soon finds he has exceeded it. The next year he must retrench enough not only to pa}'^ for the excess of that preceding, but also to meet a further rise of price. He provides, however, only for the former necessity. It is unaccountable to him how the excess happened ; and he is made no wiser by experience of the effect, because he still wants a knowledge of the cause. If his retrenchment be not fully sufficient, even for his limited view of the matter, he goes on from bad to worse, his finances become more and more embarrassed, he breaks in upon his capita!, gradually consumes it, and finishes in want. Once more I admit there are many whose habitual circumspection will guard them against this catastrophe; but the possibility of any becom- ing its victims should be prevented. If one who has been for years engaged in trade, and who has been in the habit of calculating, may be thus deluded, how much do those need protection, who have not that advantage? The fixed income of the retired tradesman, begins generally when he is advanced in years, when his family has ceased to increase, and when, but for the fluctuation of price, i7 lie may foresee the probable demand upon his meanSv But clerks in public offices, and others similarly circumstanced, us=aally begin their career young, with increasing families and consequent increasing expenses, and under the additional disadvantage of that want of circumspection generally met with in youth. i hey are also too apt to rely upon some possible advance of salary, to enable them to make up for the excess of their expenditure ; and consider it more efficient for that purpose, than it proves to be when made. Tlrey proceed more rapidly to a state of distress than the retired tradesman. If one of them have prudence enough to confine his own wants within bounds, sickness perhaps, or some other unforseen cause of extra expense, or even the improvident contracting of debts by his family upon his responsibility, would disconcert his scheme and embarrass him. But besides those who are merely improvident or nncaleulating, there are many with small and fixed incomes who are wilfully blind to the value of money, and squander what they have, upon super- fluities, supplying themselves with necessaries upon credit. It has been a common practise, for -several years, to place younger sons in government oflfices, which have abounded in situations where small sala- ries are given ; salaries commencing most usually at about eighty pounds per annum. These young men are generally so placed almost immediately «po« leaving school. The hours which they are C 18 obliged to pass in business are but few, and they are left with much vacant time on their hands. They are fortunate if they are not compelled to associate daily with others who poison their minds with a relish for dress, expensive amusements, or sensual pleasures, Very strict economy is necessary to enable a youth to live comfortably, and wear a respectable appearance upon the salary before men- tioned. A single act of dissipation will suffice to render his income unequal to his expenditure; but he can save himself from temporary and salutary want by resorting to credit. Buoyed up with the prospect of the customary occasional advance of a ten pounds per annum, he shuts his eyes to the danger he is in, or drowns the remorse of the first act of imprudence in a repetition of it. It is quite unnecessary here to pursue the consequences of this mad conduct further; they are sufficiently obvious. Nor can it be doubted that this course has been frequently run. One would willingly indulge in the belief that it is not general; but there are few who cannot bear testimony to indivi- dual cases such as is here described. I cannot deny myself the pleasure of quoting an account of the system of domestic economy adopted by Mr. Peregrine Langton, uncle of Mr. Bennet Langton, the intimate friend and companion of Dr. Jolmson. After dwelling upon the evils of unnecessary credit, this account, shewing what may be done by avoiding it, is particularly refreshing, 19 and nothing can be more apt to our purpose. Well may it be said, " maximum vecfigal est parsi- inofiia'' Mr. Langton's income was ttvo hundred and eighteen pounds a year. His family consisted of a sister and a niece. The servants were two maids, and two men in livery. His common way of living, at his own table, was three or four dishes ; the ap- purtenances to his table were neat and handsome ; he frequently entertained company at dinner, and then his table was well served with as many dishes as were usual at the tables of the other gentlemen in the neighbourhood. His own appearance, as to clothes, was generally neat and plain. He had al- ways a post chaise, and kept three horses. The tenth part of his income was set apart for charity. He had always money by him for extraordinary expenses that might arise. Some money he put into the funds. He did not practise any extraor- dinary degree of parsimony, but took care that in his family there should be plenty without waste. Mr. Langton was enabled thus to render an income of small amount sufficient for his wants, and even comforts, by various means. " But the main particular" says Mr. Bennett Langton, who com- municated the account to Mr. Bosvvell, Dr. John- son's biographer, " that seems to have enabled him to do so much with his income, was, that he paid for every thing as soon as he had it, except, alone, what were current accounts, such as rent for his 20 ho^ise, and servants' wages ; and these he paid at llie stated times with the utmost exactness. He gave notice to the tradesmen of the neighbouring market tewnsj that they should no longer have his custom-, if they let any of his servants have any thing without their paying for it. Thus lie p«t it out of his power to commit those imprudences to which those are liable, that defer their payments hy using their money some other way than where it ought to go. And whatever money he had by him, he knew that it was not demanded elsewhere, but that he might safely employ it as he pleased." It is painful to return and pursue the mischievous consequences of unnecessarily taking credit. The next evil which presents itself is the multi- plication of petty law suits. In all cases, where the sum sought to be recovered is small, the expenses of obtaining justice are lamentably large and dispro- portionate. In attempting the recovery of a debt of five pounds, the very Srst step, namely, the service of the process, costs one of the parties as much as half of the debt. The next stage of the proceedings carries the costs beyond the debt, and the debtor has his own costs to pay ako. If the suit runs its full possible course, the debt does not bear the proportion of one tenth to the whole costs. Even supposing the debt to be one hundred pounds, the sum expended in litigating it, is, at the very lowest, large beyond all reason and policy. 21 As to the number of actions now commenced an- nually for small sums I have not made inquiry ; but I am able to state some particulars of actions insti- tuted in Middlesex alone in 179^*, which will shew that if their number be now less, even by one half, than it was at that time, the evil under our imme- diate consideration is yet enormous. In 1793 the number of bailable writs (writs on which the parties were to be ar- rested) issued in Middlesex was - - 11,105 Among these are not, of course, included the writs issued for sums under ten pounds, upon which there could be no arrest ; and these unbailable ivrita as tliey are called, are computed to be as numerous as all the bailable writs. Of the first-mentioned number of bail- able writs, there were issued for debts un- der twenty pounds - - - 4, 96*5 Of actions that went to execution, through the most expensive part of the pro- ceedings at least in all cases, and in some through all the proceedings, there were debts under twenty pounds, no fewer than 7^3 * In (he year 1792, a Committee of the House of Commons reported that a woman had been imprisoned in one of the county gsiols, furfjj-/ive 1/eurs for a debt of nineteen pounds. 22 In this number are not included those actions that were settled on the eve of issuing the execution. At least half of these 753 executions were for debts under ten pounds, viz. - 376 In the same year were issued bailable writs for debts of between twenty and thirty pounds - « - - 1,8/8 And executions for debts within the same Hmifs _ - . - 389 The number of actions now commenced is much reduced by the operations of various Insolvent Acts, by experience of their comparative inadequacy to effect the purpose of their institution, and by other causes. But yet a very large sum of money is still annually spent upon actions for the recovery of debts under one hundred pounds, the only part of which that can in general, even plausibly, be said tabe well spent, is that which is applied to the increase of the revenue. The rest assists in the maintenance of the lowest members of the profession of the law ; and of gaolers, bailiffs, brokers, and others, whose occupations are of such a nature, that we shall hardly feel disposed to retain an evil like this, for their benefit. Indeed the opposition which was manifested by many attorneys to a recent project for establishing cheap courts for the recovery of debts not exceeding fifteen pounds, would almost 23 tiave warranted a suspicion that they mainly de- pended for their Hvehhood, upon actions for sums as small.* The mischievous consequences of this extensive and unnecessary litigation, are too obvious to re- quire tracing out. The misery actions frequently heap upon the already miserable debtor, or perhaps upon the equally miserable creditor, or even, in many cases, upon both, surely demands prevention, if possible. There is one bad concomitant of unnecessary credit, which I cannot refrain from noticing here* I mean the giving of bills of exchange by little dealers and professional men. Persons of these classes ought reallv to have nothing to do with bills of exchange. Bills have effect by the custom of merchants ; and, without resorting to any learned *■ Mr. Montague relates a ludicrous instance of anxiety in an attorney, on a great diminution in the number of actions. " In November last, upon my return to London, I was informed by a very respectable attorney, that the Insolvent Debtor's Bill would be productive of incalculable evil. The riots by which this country was disgraced, and the prisons opened, in the year 1780, could not have produced a more earnest communication. Upon expressing my anxiety to know the cau9<^' of his alarm, he assured me that since the bill had been passed, there had not been so many writs issued by 6000, as had been issued in the same period of time in the preceding year."— L'njuirie* reipeci- ing the Insolvent Debtor'' s Billj 1816. 24 research, I mean to say that by the word ' merchant,'' was originally intended a character very different from either of tlvose I speak of. We should not even now, in common parlance, describe a retail linen-draper or hosier, or a shoe maker, still less a surveyor, an apothecary, or a solicitor, as a mer- chant. Among nierchants, properly so called, a bill of exchanfrerty on credit if he pleases, even for want of precedent. And if there were no precedent, there are abundance of sound opinions that the rights of every man individually are secon- dary to the weal of the community in general. The facility of obtaining credit is as injurious to many people as the facility of obtaining spirituous liquors is to others. Again there are many '«o rash and \m~ E 34 provident that they require restraint, in this respect, as much as infants, or madmen, or natural fools. And, surely, it is better in the first instance to pre- vent, than merely to follow the disease, when it has taken hold, with palliatives in the shape of insolvent acts, acts of grace, acts restraining arrests, and acts mitigating the severity of the terms on which traders may avail themselves of the benefits of the bankrupt laws. And, after all, these measures are merely so many approaches, though very distant, to the de- struction of credit in cases where it ought never to exist. The next point for consideration is, whether there is any well founded objection to the measure. The first difficulty that will naturally suggest itself is, that, supposing a law were now suddenly promulgated, making all sums, between forty shil- lings and one hundred pounds, not recoverable, those who receive their incomes at stated periods only, and are without ready money sufficient to provide them necessaries till the time of their next receipts coming round, would be unable to live unless they were supported by the bounty of others. If it were necessary to pass such an act suddenly, this might constitute an insurmountable difficulty. But it is not, and, in the first place, the act ought not to be made operative until a period sufficiently distant from its passing, to give ample time to each individual on whom it would operate, for saving and accumulating ready money enough to protecthim from 35 being inconvenienced by it. And, secondly, its opera- tion should not at once be to the full extent pro- posed. Taking forty shillings, as the lower limit, the higher should grow gradually from perhaps five pounds up to the one hundred pounds. The most careless and indiscriminating man would thus be led by easy degrees to the necessity of watching his expenditure, and would accustom himself to keep by him sufficient ready money for procuring such articles as he could not dispense with, and the law would prevent his procuring on credit. These would at first be few, and they would increase in number so imperceptibly, that the transition from a credit to a ready money system would scarcely produce any inconvenience or confusion, though its effects on the moral character of the com- munity w^ould, as I think, be incalculably beneficial. It will perhaps be objected that at all events some individual cases of inconvenience would arise from the adoption of this plan. But, without stopping to hear them detailed, it must be borne in mind that it is only upon debts of that class which are called simple contract debts, that the proposition bears. Therefore, no tradesman, where but a small capital is necessary, is altogether precluded from borrowing. He may borrow upon bond or other security under seal ; and the expense, and even the solemnity of the security will prevent his incurring debt hastily, and without the probable means of paying. Be- sides, if he can command credit for more than one E 2 36 hundred pounds, he may borrow without any ex- pense ; and the amount of the sum will render the lender circumspect in advancing his money. The borrower will also be carrying on a ready money trade, and therelore not be liable to suffer by bad debts. So that, in every point of view, the proba- bility of repayment will be far greater than it is under the present system. Indeed, there would be nauch greater safety in lending to persons even out of trade, sums for necessary occasions, such as for advancing children, and for other family emer- gencies, than there is at present. There would be m general a more intimate acquaintance with the value of money, fewer examples of extravagance and dissipation, less of that want of determination to be punctual, bordering closely upon dishonesty, less disposition to borrow upon trivial, or any other than laudable and pressing occasions, than now exist. There are certain classes of debts which it might be necessary to except from the operation' "of the measure. Take for instances the cases of masters of vessels sailing to foreign countries, and carrying out wjth them small investments on their own^account; and of certain debts contracted in the coal trade, other than those contracted by consumers. Credit in these cases is highly useful though not absolutely necessary; but as the pre-eminence of this country, as a commercial nation, has been attained, and is preserved through credit of this description, care 37 must be taken not to injure the credit usefully entering into real trade. The object of these pages is to arrest that spurious credit that infects transactions which cannot properly be called trading transactions, and, which spurious credit adds nothing to the prosperity of the country, and the destruc- tion of which would take nothing from it. It may be enquired what provision is to be made for such debts as it would be extremely inconvenient to pay as they grow due ; such as those contracted with apothecaries, attorneys, schoolmasters, and others similarly circumstanced ? To this it is an- swered, that though it may be difficult for a single individual to propose satisfactory arrangements to meet the cases of all professions, yet a few men of judgment, possessed of sound practical knowledge, would be able to provide for each class of cases as it came under consideration. It would, however, be highly desirable that the ready money system should be adhered to, wherever circumstances would admit of it without an unreasonable degree of in- convenience. Wherever it could not, without so much inconvenience, be pursued, it should be ap- proached as nearly as possible. If it should be found that the apothecary's charges (for instance) could not he paid de die in diem, they should be made not recoverable, unless, after amounting to a certain sum, they were sued for within a certain short space of time. The great point is so to change the present system, as that the contracting of a 38 debt and the discharge of it, shall form one idea ; that it shall become habitual to consider a debt con- tracted, and a debt paid, as one and the same thing. At present there are too many chances of some- thing happening, which may ultimately cancel the debt, either wholly or in part, without payment- Death, failure, fire, want of means to procure jus- tice, the statute of limitations, will, I fear, pass in idea between contracting and paying. Indeed, some have been almost proverbial among tradesmen for not paying until compelled ; which proves at once the propensity in buyers to look at payment as doubtful, and the practice of sellers to convert cre- dit into a source of undue profit.* The skill and judgment of apothecaries and schoolmasters are among the things most necessary to heads of fa- * " Those who hare made the laws, have apparently sup- posed (hat every deficiency of payment is the crime of the debtor. But the truth is, that the creditor always shares the act, and often more than shares the guilt of improper trust. It seldom happens that any man imprisons another but for debts which he suffered to be contracted in hope of advantage to himself, and for bargains in which he proportioned his profit to his own opi- nion of the hazard ; and there is no reason why one should pu. uish the other for a contract in which both concurred." — Johnson, " There are two capital faults in our laws with relation to civil debts. One is, that every man is presumed solvent. A presumption, in innumerable cases, directly against truth."— Burke^s Address to the Electors of Bristol^ in 1780. 39 milies, and at the same time the charges for them bear most heavily upon those of moderate and limited incomes. If, therefore, these cannot be put upon the same footing with other simple contract debts, any inconveniences arising from the first operation of the proposed measure, would be di- minished by their being made payable punctuallv only by the quarter or half-year. Rent and interest should be made payable with punctuality ; that is to say, if not paid when due, and no steps taken within a given short time to enforce payment by course of law, they should not be recoverable. In short, this beneficial system should be insisted upon fully, wherever practicable, and where not fully practicable, it should be imitated with the utmost possible closeness. If it be objected that buyers and sellers would use their utmost endeavours to evade the act pro- posed, of course the only answer that can be given to the objection is, that the greatest ingenuity must be exerted, so plainly and fully to word clauses as that they shall meet every possible case. The debts coming within the intent and meaning of the act should be absolutely annihilated. They should not be capable of revival, as such debts are now, after the lapse of six years, or after bank- ruptcy, by a fresh promise ; but should be treated as if they never had existed. Nay, even if paid, the amount should be, within any reasonable time, recoverable back by the party paying. Nor should 40 any room for evasion, by breaking the debt into several items, each under forty shiUings, or throw- ing together several, to make one amount of more than one hundred pounds, or by means of any de- posit or pledge, be left. And as half measures are ever futile, and often dangerous, it might not be too much to inflict j)enalties upon buyers and sellers on credit against the meaning of the act.* I would by no means leave it safe to suffer such debts to exist even as debts of honour. If the measure be good, nothing, within the wholesome spirit of our mode of legislation, should be neglected to render it effectual. One objection would certainly be, that by diminish- ing the number of actions at law, the revenue would suffer in the article of stamps. To overthrow this objection we can only appeal to the opinions of all authors on political economy, who have any weight. The balance of the good and evil resulting from any piece of legislation, must be alone attended to.-|* If this rule be observed, the objection will fall to the ground. Besides, it must be borne in mind that many such debts as are now usually only sim- ple contract debts, would be made specialty debts, * Peter the First, of Portugal, to prevent extravagance and the ruin of families, forbade that credit should be given ; and punished the second violation of his law with death, + " The final view of all politics is to produce the greatest quantity of happiness in a given tract of country,"— P«^^^. 41 on which stamp duties to a greater amount than they now yield, would be payable. And, moreover, in^ dividuals by being forced to regulate their expendi- ture, and to become rationally frugal, would bear a much greater degree of taif ation than they can now sustain. _ This objection, the diminution of the starnp re- venue, was raised to Lord Redesdale's late bill for the institution of cheap courts for the recovery of debts under fifteen pounds. But it canie from a quarter in which existed a strong motive of interest to oppose the bill. And if it ha,d been disinte- rested, it certainly was not well-founded. Lotteries continue to be made a source of revenue; but it is difficult to conceive that evil can, upon the whole, be productive of good sufficient to outweigh it. Surely the portion of revenue derived from these pernicious sources might be advantageously raised by more wholesome means. At all events,, before the objection in question be suffered to prevail, it ought to be shewn, by undeniable calculation, that the revenue accruing from actions for small sums, is of vitally important amount, and cannot be fairly sought, elsewhere. I am not aware that any other objection, of even a plausible nature, can be urged against tb^ proposed measure. All that has been written against imprisonment for F 42 debt is entirely in favour of the present argument. All the Insolvent Acts, and acts in mitigation of the bankrupt laws, tend the same way. But why con- tent ourselves with lopping the branches, while the parent stem, the very root may be destroyed ? There need exist no apprehension that this plan would prejudicially affect the great stream of mer- cantile credit, upon which the importance of Eng- land as a nation mainly rests. On the contrary, that stream would run with a more clear and even current, if not disturbed by the polluted spring which custom has permitted to mix with it. As to retail tradesmen, those who are not desirous to make an undue profit by violent risks, would rejoice that all should be put upon a fair level, by being compelled to deal for ready money. Then would industry, integrity, and judgment, secure to the tradesman a fair remuneration for his labour ; and be no longer superBeded by scheming, specula- tion, and chance. Why is it that we now some- times see an immoral and idle tradesman realizing money enough to enable him to revel in luxuries, to an extent that would not have been believed a century ago; while his industrious, sober, and steady neighbour can hardly supply the absolute wants of his family ? It is that this pernicious cus- tom of employing credit where it is unnecessary, renders honesty, justice, and prudence, impedi- inents rather than advantages. 43 Upon the whole, then, it has been shewn that credit for sums between forty shilhngs and one hun- dred pounds is in general mischievous ; that it is productive of vice, want, and misery; and that it may easily be rendered innoxious, by a measure to which no well-founded objection exists. THE END. raiPfi^^^c^v- ':^- ^ ■ mm mM:':^: ■