In the state of New York they have abolished imprisonment for debt; this
abolition however, only holds good between the citizens of that state,
as no one state in the Union can interfere with the rights of another.
A stranger, therefore, can imprison a New Yorker, and a New Yorker can
imprison a stranger, but the citizens of New York cannot incarcerate one
another. Now although the unprincipled may, and do occasionally take
advantage of this enactment, yet the effects of it are generally good,
as character becomes more valuable. Without character, there will be no
credit--and without credit no commercial man can rise in this city. I
was once in a store where the widow who kept it complained to me that a
person who owed her a considerable sum of money would not pay her, and
aware that she had no redress, I asked her how she would obtain her
money. Her reply was--"Oh, I shall eventually get my money, for I will
_shame_ him out of it by exposure."
The Americans, probably from being such great speculators, and aware of
the uncertainty attending their commerce, are very lenient towards
debtors. If a man proves that he cannot pay, he is seldom interfered
with, but allowed to recommence business. This is not only Christians
like, but wise. A man thrown into prison is not likely to find the
means of paying his debts; but if allowed his liberty and the means of
earning a subsistence, he may eventually be more fortunate, and the
creditors have a chance of being ultimately paid. This, to my
knowledge, has often been the case after the release had been signed,
and the creditors had no farther legal claim upon the bankrupt. England
has not yet made up her mind to the abolition of imprisonment for debt,
but from what I have learnt in this city, I have no hesitation in
saying, that it would work well for the morals of the community, and
that more debts would eventually be paid, than are paid under the
present system. Another circumstance which requires to be pointed out
when we would examine into the character of the New York commercial
community, is, the difference between their bankrupt-laws and those of
England. Here there is no law to compel a bankrupt to produce his
books; every man may be his own assignee, and has the power of giving
preference to one creditor over another; that is to say, he may repay
those who have lent him money in the hope of preventing his becoming a
bankrupt, and all other debts of a like description. He may also turn
over his affairs to an assignee of his own selection, who then pays the
debts as he pleases. A bankrupt is also permitted to collect his own
debts.
The English bankrupt laws were introduced, but after one year's trial
they were discontinued, as it was found they were attended with so much
difficulty, and, what is of more importance to Americans, with so much
loss of time. Again, in America, if a person wishes to become a special
partner (a sleeping partner) in any concern, he may do so to any extent
he pleases, upon advertising the same, and is responsible for no more
than the sum he invests, although the house should fail for ten times
the amount.
Here is an advertisement of special partnership.
"Co-partnership. Notice is hereby given, that a limited partnership
hath been entered into by Lambert Morange, DN Morange, and Samah
Solomon, of the city of New York, merchants, in pursuance of the
provisions of the revised statutes of the city of New York. The general
nature of the business of said co-partnership is the manufacturing and
selling of fur and silk hats. The said Lambert Morange is the special
partner, and as such, hath contributed the sum of ten thousand dollars
in cash to the common stock: the said DN Morange and Samah Solomon are
the general partners; and the said business is to be conducted under the
name and firm of DN Morange and Solomon; said co-partnership is to
commence on the 14th day of March, 1837, and to expire on the 14th
March, 1840.
"March 14th, 1837. L. Morange. D.N. Morange. Samah Solomon."
That this loose state of the bankrupt law may be, and has been a cause
of much dishonesty, is true, but at the same it is the cause of the
flourishing state of the community. The bee can always work; indeed the
bankrupt-laws themselves provide for a man's not starving. In the city
the bankrupt's household furniture is sacred, that his family may not be
beggars; and in case of the bankruptcy of a farmer, he is permitted, not
only to retain the furniture of his cottage, but even his plough, with a
proportion of his team, his kine and sheep, are reserved for him, that
he may still be able to support his family. Surely this is much
preferable to the English system under which the furniture is dragged
away, the hearth made desolate, and the children left to starve, because
their father has been unfortunate. Is it not better that a little
villainy should escape punishment, than that such cruelty should be in
daily practice? I say a little villainy, for if a man becomes bankrupt
in New York, it is pretty well known whether he has dealt fairly with
his creditors, or has made a fraudulent bankruptcy: and if so, his
character is gone, and with it his credit, and without credit he never
can rise again in that city, but must remove to some other place.
In England, character will procure to a bankrupt a certificate, but in
New York it will leave him the means of re-commencing business. In
England, it is a disgrace to be a bankrupt; in America, it is only a
misfortune; but this distinction arises from the boldness of the
speculations carried on by the Americans in their commercial
transactions, and owing to which the highest and most influential, as
well as the smaller capitalists, are constantly in a state of jeopardy.
I do not believe that there is anywhere a class of merchants more
honourable than those of New York. The notorious Colonel Chartres said
that he would give 20,000 pounds for a character, because he would have
made 100,000 pounds by it. I shall not here enter into the question,
whether it is by a similar conviction, or by moral rectitude of feeling,
that the merchants of New York are actuated; it is sufficient that it is
their interest to be honest, and that they are so. I state the case in
this way, because I do not intend to admit that the honesty of the
merchants is any proof of the morality of a nation; and I think I am
borne out in my opinion by their conduct in the late state of
difficulty, and the strenuous exertions made by them to pay to the
uttermost farthing, sacrificing at times twenty per cent--in order to be
enabled to remit money to their London and Liverpool correspondents, and
fulfil their engagements with them.
That there is a great deal of roguery going on in this city is
undeniable, much more, perhaps, than (taking into consideration the
difference between the populations) in the good city of London. But it
should be borne in mind that New York has become, as it were, the
Alsatia of the whole continent of Europe. Every scoundrel who has
swindled, forged, or robbed in England, or elsewhere, makes his escape
to New York. Every pickpocket, who is too well known to the English
police, takes refuge here. In this city they all concentrate; and it is
a hard thing for the New York merchants, that the stream of society,
which otherwise might gradually become more pure, should be thus
poisoned by the continual inpourings of the continental dregs, and that
they should be made to share in the obloquy of those who are outcasts
from the society of the old world.
America exists at present upon credit. If the credit of her merchants
were destroyed she would be checked in her rapid advance. But this
system of credit, which is necessarily reciprocal, is nevertheless acted
upon with all possible caution. Many are the plans which the large New
York importers have been compelled to resort to, to ascertain whether
their customers from the interior could be trusted or not. Agents have
been despatched to learn the characters, standing, and means of the
country dealers who are their correspondents, and who purchase their
goods; for the whole of the transactions are upon credit, and a book of
reference as to people's responsibility is to be found in many of the
mercantile houses of New York.
Willing as I am to do justice to the New York merchants, I cannot,
however, permit Mr Carey's remarks upon credit to pass unnoticed. Had
he said nothing I should have said no more; but, as he asserts that the
security of property and credit in America is greater than in England, I
must, in defence of my country, make a few observations.