OF THE UNFORTUNATE TRADESMAN COMPOUNDING WITH HIS CREDITORS
This is what in the last chapter I called an alternative to that of the
fortunate tradesman yielding to accept the composition of his insolvent
debtor.
The poor unhappy tradesman, having long laboured in the fire, and
finding it is in vain to struggle, but that whether he strives or not
strives, he must break; that he does but go backward more and more, and
that the longer he holds out, he shall have the less to offer, and be
the harder thought of, as well as the harder dealt with--resolves to
call his creditors together in time, while there is something
considerable to offer them, and while he may have some just account to
give of himself, and of his conduct, and that he may not be reproached
with having lived on the spoil, and consumed their estates; and thus,
being satisfied that the longer he puts the evil day from him, the
heavier it will fall when it comes; I say, he resolves to go no farther,
and so gets a friend to discourse with and prepare them, and then draws
up a state of his case to lay before them.
First, He assures them that he has not wasted his estate, either by vice
and immorality, or by expensive and riotous living, luxury,
extravagance, and the like.
Secondly, He makes it appear that he has met with great losses, such as
he could not avoid; and yet such and so many, that he has not been able
to support the weight of them.
Thirdly, That he could have stood it out longer, but that he was
sensible if he did, he should but diminish the stock, which, considering
his debts, was properly not his own; and that he was resolved not to
spend one part of their debts, as he had lost the other.
Fourthly, That he is willing to show them his books, and give up every
farthing into their hands, that they might see he acted the part of an
honest man to them. And,
Fifthly, That upon his doing so, they will find, that there is in goods
and good debts sufficient to pay them fifteen shillings in the pound;
after which, and when he has made appear that they have a faithful and
just account of every thing laid before them, he hopes they will give
him his liberty, that he may try to get his bread, and to maintain his
family in the best manner he can; and, if possible, to pay the remainder
of the debt.
You see I go all the way upon the suggestion of the poor unfortunate
tradesman being critically honest, and showing himself so to the full
satisfaction of his creditors; that he shows them distinctly a true
state of his case, and offers his books and vouchers to confirm every
part of his account.
Upon the suggestion of his being thus sincerely honest, and allowing
that the state of his account comes out so well as to pay fifteen
shillings in the pound, what and who but a parcel of outrageous
hot-headed men would reject such a man? What would they be called, nay,
what would they say of themselves, if they should reject such a
composition, and should go and take out a commission of bankrupt against
such a man? I never knew but one of the like circumstances, that was
refused by his creditors; and that one held them out, till they were all
glad to accept of half what they said should be first paid them: so may
all those be served, who reject such wholesome advice, and the season
for accepting a good offer, when it was made them. But I return to the
debtor.
When he looks into his books, he finds himself declined, his own fortune
lost, and his creditors' stock in his hands wasted in part, and still
wasting, his trade being for want of stock much fallen off, and his
family expense and house-rent great; so he draws up the general articles
thus:--
STOCK DEBTOR
To cash of my father (being my stock) to begin with in
trade £800 0 0
To Cash of my father-in-law, being my wife's portion 600 0 0
To household-goods, plate, &c. of both 100 0 0
To profits in trade for ten years, as by the yearly balance
in the journal appears 2469 10 0
To debts abroad esteemed good, as by the ledger appears 1357 8 0
To goods in the warehouse at the prime cost 672 12 0
Plate and some small jewels of my wife's left, and old
household-goods altogether 103 0 0
------------
£6102 10 0
Estate deficient to balance 1006 2 0
------------
£7108 12 0
STOCK CREDITOR
By losses by bad debts in trade, in the year 1715 £ 50 0 0
By do. 1716 66 10 0
By do. 1717 234 15 0
By do. 1718 43 0 0
By do. 1719 25 0 0
By do. by the South Sea stock, 1720 1280 0 0
By do. in trade, 1721 42 0 0
By do. 1722 106 0 0
By do. 1723 302 0 0
By do. 1724 86 15 0
By house-keeping and expenses, taxes included, as by the
cash-book appears, for ten years 1836 12 0
By house-rents at £50 per annum 500 0 0
By credits now owing to sundry persons, as by the ledger
appears 2536 0 0
----------------
£7108 12 0
================
This account is drawn out to satisfy himself how his condition stands,
and what it is he ought to do: upon the stating which account he sees to
his affliction that he has sunk all his own fortune and his wife's, and
is a thousand pounds worse than nothing in the world; and that, being
obliged to live in the same house for the sake of his business and
warehouse, though the rent is too great for him, his trade being
declined, his credit sunk, and his family being large, he sees evidently
he cannot go on, and that it will only be bringing things from bad to
worse; and, above all the rest, being greatly perplexed in his mind that
he is spending other people's estates, and that the bread he eats is not
his own, he resolves to call his creditors all together, lay before them
the true state of his case, and lie at their mercy for the rest.
The account of his present and past fortune standing as it did, and as
appears above, the result is as follows, namely, that he has not
sufficient to pay all his creditors, though his debts should prove to be
all good, and the goods in his warehouse should be fully worth the price
they cost, which, being liable to daily contingencies, add to the
reasons which pressed him before to make an offer of surrender to his
creditors both of his goods and debts, and to give up all into their
hands.
The state of his case, as to his debts and credits, stands as follows:--
His debts esteemed good, as by the ledger, are £1357 8 0
His goods in the warehouse 672 12 0
---------------
£2030 0 0
His creditors demands, as by the same ledger
appears, are £3036 0 0
This amounts to fifteen shillings in the pound upon all his debts,
which, if the creditors please to appoint an assignee or trustee to sell
the goods, and collect the debts, he is willing to surrender wholly into
their hands, hoping they will, as a favour, give him his household
goods, as in the account, for his family use, and his liberty, that he
may seek out for some employment to get his bread.
The account being thus clear, the books exactly agreeing, and the man
appearing to have acted openly and fairly, the creditors meet, and,
after a few consultations, agree to accept his proposals, and the man is
a free man immediately, gets fresh credit, opens his shop again, and,
doubling his vigilance and application in business, he recovers in a few
years, grows rich; then, like an honest man still, he calls all his
creditors together again, tells them he does not call them now to a
second composition, but to tell them, that having, with God's blessing
and his own industry, gotten enough to enable him, he was resolved to
pay them the remainder of his old debt; and accordingly does so, to the
great joy of his creditors, to his own very great honour, and to the
encouragement of all honest men to take the same measures. It is true,
this does not often happen, but there have been instances of it, and I
could name several within my own knowledge.
But here comes an objection in the way, as follows: It is true this man
did very honestly, and his creditors had a great deal of reason to be
satisfied with his just dealing with them; but is every man bound thus
to strip himself naked? Perhaps this man at the same time had a family
to maintain, and had he no debt of justice to them, but to beg his
household goods back of them for his poor family, and that as an
alms?-and would he not have fared as well, if he had offered his
creditors ten shillings in the pound, and took all the rest upon
himself, and then he had reserved to himself sufficient to have
supported himself in any new undertaking?
The answer to this is short and plain, and no debtor can be at a loss to
know his way in it, for otherwise people may make difficulties where
there are none; the observing the strict rules of justice and honesty
will chalk out his way for him.
The man being deficient in stock, and his estate run out to a thousand
pounds worse than nothing by his losses, &c, it is evident all he has
left is the proper estate of his creditors, and he has no right to one
shilling of it; he owes it them, it is a just debt to them, and he ought
to discharge it fairly, by giving up all into their hands, or at least
to offer to do so.
But to put the case upon a new foot; as he is obliged to make an offer,
as above, to put all his effects, books, and goods into their power, so
he may add an alternative to them thus, namely--that if, on the other
hand, they do not think proper to take the trouble, or run the risk, of
collecting the debts, and selling the goods, which may be difficult, if
they will leave it to him to do it, he will undertake to pay
them--shillings in the pound, and stand to the hazard both of debts and
goods.
Having thus offered the creditors their choice, if they accept the
proposal of a certain sum, as sometimes I know they have chosen to do,
rather than to have the trouble of making assignees, and run the hazard
of the debts, when put into lawyers' hands to collect, and of the goods,
to sell them by appraisement; if, I say, they choose this, and offer to
discharge the debtor upon payment, suppose it be of ten or twelve
shillings in the pound in money, within a certain time, or on giving
security for the payment; then, indeed, the debtor is discharged in
conscience, and may lawfully and honestly take the remainder as a gift
given him by his creditors for undertaking their business, or securing
the remainder of their debt to them--I say, the debtor may do this with
the utmost satisfaction to his conscience.
But without thus putting it into the creditors' choice, it is a force
upon them to offer them any thing less than the utmost farthing that he
is able to pay; and particularly to pretend to make an offer as if it
were his utmost, and, as is usual, make protestations that it is the
most he is able to pay (indeed, every offer of a composition is a kind
of protestation that the debtor is not able to pay any more)--I say, to
offer thus, and declare he offers as much as possible, and as much as
the effects he has left will produce, if his effects are able to produce
more, he is then a cheat; for he acts then like one that stands at bay
with his creditors, make an offer, and if the creditors do not think fit
to accept of it, they must take what methods they think they can take to
get more; that is to say, he bids open defiance to their statutes and
commissions of bankrupt, and any other proceedings: like a town
besieged, which offers to capitulate and to yield upon such and such
articles; which implies, that if those articles are not accepted, the
garrison will defend themselves to the last extremity, and do all the
mischief to the assailants that they can.
Now, this in a garrison-town, I say, may be lawful and fair, but in a
debtor to his creditor it is quite another thing: for, as I have said
above, the debtor has no property in the effects which he has in his
hands; they are the goods and the estate of the creditor; and to hold
out against the creditor, keep his estate by violence, and make him
accept of a small part of it, when the debtor has a larger part in his
power, and is able to give it--this is not fair, much less is it honest
and conscientious; but it is still worse to do this, and at the same
time to declare that it is the utmost the debtor can do; this, I say, is
still more dishonest, because it is not true, and is adding falsehood to
the other injustice.
Thus, I think, I have stated the case clearly, for the conduct of the
debtor; and, indeed, this way of laying all before the creditors, and
putting it into their choice, seems a very happy method for the comfort
of the debtor, cast down and dejected with the weight of his
circumstances; and, it may be, with the reproaches of his own conscience
too, that he has not done honestly in running out the effects of his
creditors, and making other families suffer by him, and perhaps poor
families too--I say, this way of giving up all with an honest and single
desire to make all the satisfaction he is able to his creditors, greatly
heals the breach in his peace, which his circumstances had made before;
for, by now doing all that is in his power, he makes all possible amends
for what is past, I mean as to men; and they are induced, by this open,
frank usage, to give him the reward of his honesty, and freely forgive
him the rest of the debt.
There is a manifest difference to the debtor, in point of conscience,
between surrendering his whole effects, or estate, to his creditors for
satisfaction of their debts, and offering them a composition, unless, as
I have said, the composition is offered, as above, to the choice of the
creditor. By surrendering the whole estate, the debtor acknowledges the
creditors' right to all he has in his possession, and gives it up to
them as their own, putting it in their full power to dispose of it as
they please.
But, by a composition, the debtor, as I have said above, stands at bay
with the creditors, and, keeping their estates in his hands, capitulates
with them, as it were, sword in hand, telling them he can give them no
more, when perhaps, and too often it is the case, it is apparent that he
is in condition to offer more. Now, let the creditors consent to these
proposals, be what it will; and, however voluntary it may be pretended
to be, it is evident that a force is the occasion of it, and the
creditor complies, and accepts the proposal, upon the supposition that
no better conditions can be had. It is the plain language of the thing,
for no man accepts of less than he thinks he can get: if he believed he
could have more, he would certainly get it if he could.
And if the debtor is able to pay one shilling more than he offers, it is
a cheat, a palpable fraud, and of so much he actually robs his creditor.
But in a surrender the case is altered in all its parts; the debtor says
to his creditors, 'Gentlemen, there is a full and faithful account of
all I have left; it is your own, and there it is; I am ready to put it
into your hands, or into the hands of whomsoever you shall appoint to
receive it, and to lie at your mercy.' This is all the man is able to
do, and therefore is so far honest; whether the methods that reduced him
were honest or no, that is a question by itself. If on this surrender he
finds the creditors desirous rather to have it digested into a
composition, and that they will voluntarily come into such a proposal,
then, as above, they being judges of the equity of the composition, and
of what ability the debtor is to perform it, and, above all, of what he
may or may not gain by it, if they accept of such a composition, instead
of the surrender of his effects, then the case alters entirely, and the
debtor is acquitted in conscience, because the creditor had a fair
choice, and the composition is rather their proposal to the debtor, than
the debtor's proposal to them.
Thus, I think, I have stated the case of justice and conscience on the
debtor's behalf, and cleared up his way, in case of a necessity, to stop
trading, that he may break without wounding his conscience, as well as
his fortunes; and he that thinks fit to act thus, will come off with the
reputation of an honest man, and will have the favour of his creditors
to begin again, with whatever he may have as to stock; and sometimes
that favour is better to him than a stock, and has been the raising of
many a broken tradesman, so that his latter end has been better than his
beginning.