COMMERCIAL CREDIT AND ITS PENALTIES.
A CORRESPONDENT, who writes from Newcastle, takes up a ques- tion which we regard as one of the most important that can engage practical intellects at the present day ; we refer to the laws for enforcing debt. And he presents some further conside- rations very forcibly. We had noted the fact that the vendor is often the accomplice, if not the instigator, of the recklessness which he afterwards kects to denounce : the point is presented very clearly by our correspondent: In any future attempt to amend our commercial law, imprisonment for debt and contempt& founded upon judgment debts, demand to be con- sidered. The chaotic state of our procedure, at present, suggests the very startling paradox that we have invented a penalty, intended as a security, which really is only an encouragement to fraud. A creditor at present in dealing with his debtor takes into account, as part of the probability of payment, in addition to the debtor's apparent means, the right to take his goods by operation of law—to speak correctly, by writ of fi : fa :—and in the event of its failure—his person by ca : as. On the face of it these two powers apparently form a great security, but they are utterly useless. An honest buyer is not impelled to payment by their existence—a dishonest debtor smiles at them ; prepares for their reception by the removal of his goods, and willingly accompanies the bailiff to prison when it suits his convenience. I am certain I write only what your pro- fessional readers can confirm, when I say that imprisonment for debt, so far from being regarded as a penalty, is welcomed as the means of deliverance from difficulty. The arrest, in fact, furnishes the pabulam for a petition to the Insolvent Debtors' Court, which can only -be set in motion for relief upon an actual detention in custody. Hence debtors, when they are unfor- tunate, or have succeeded in disposing of all their property, will sometimes irritate a creditor to arrest them, or procure " a friendly arrest," nay, will even invent a debt in order to set the ameliorative Court in motion. A few weeks' imprisonment, during which the debtor is only haunted by a fear that his detaining creditor may discharge him, ends the bondage ; not only as to the particular creditor who detained, but all others who have been unfortu- nate to extend credit to the insolvent, are referred for payment to that in- definite day when he may be rich enough to indulge in the gratification of paying his creditors. The great security arising from the right of the creditor to imprison is only a myth. It is really a mode of action by which the debtor, at the ex- pense of his creditor, obtains a discharge from his pecuniary obligations. No honest man, whose custom is worth having, need be imprisoned, because it deprives him of all opportunity of payment. The existence of the law only gives rise to the existence of an immoral class, who, taking advantage of the fancied security of credulous traders, seek the goods they never in- tend to pay for, run a course of improvidence for a time, and then wind up with an insolvent schedule. A few weeks' intercourse with the inmates of the Debtors' prisons at Whitecross Street, the Queen's Bench, or Lancaster Castle, which it has been my lot, professionally, to have had, would con- vince our legislators of the soundness of my observations. Absurd and mischievous as imprisonment for debt appears to be, it occurs to me that imprisonment for contempt* of the County Court deserve yet stronger terms of condemnation. The law has wisely abolished imprison- ments for debts under 201., but unwisely has substituted penalties under cer- tain states of circumstances, which are accounted contempts of the orders of Court, and .punishable with imprisonment, and I regret to add, prison diet. These imprisonments do not operate, even on expiration b3r effiuxion of time, as a discharge of the debt, but may be repeated again and again. Thus an
artisan by wife, misfortune, or the extravagance of his wife may be imprisoned. i
His work is lost, his character tainted, and his family driven to the Union, all because an artful "Tally-man," or as we say here " Manage-man," has entrapped his wife into debt for articles of dress. . have known such cases.
The law of imprisonment, therefore, draws an illogical but substantial line at 201., and says a discharge from prison upon a debt above that amount shall purge the debt but below that sum imprisonment shall be repeated from time to time. Hence artful debtors always get into debt above 201., knowing the remedy which lies underneath the arrest ; the simple and the
unfortunate only take credit for the smaller sums. I have already sug- gested that imprisonment creates a certain kind of dishonest buyers, who never intend to pay ; it also creates a certain harsh, unfeeling kind of cre- ditor, who only gives credit because he knows his power of imprisonment. Such are the fashionable tradesman and the usurious bill-discounter for amounts above 20/. ; and the tally-man and chandler below it. They know that their customers will not willingly pay, avoid it altogether if they can, and the result is simply a struggle between the two who can wrest the ad- vantages of the law most effectively. It is true that one of the reasons for commitment by the County Court is fraud in the contracting of the debt. But if a creditor is able to show that his goods were obtained by fraud, why not deal with it as we do with the offence of obtaining property by false pretences ? If such an offence be committed we throw the expense of the punishment upon the Treasury and the County-rate. But in the County Court we ask the creditor to prove fraud in the making of the contract, and punish it at an expense to himself of 4s. 7d. in the pound. If fraud will set aside the most solemn of all con- tracts, in the Court of Chancery, even a deed under seal, why should not it also set aside the thin and shadowy line of credit, which separates fraud, by an invoice or bill of parcels, from false pretences. The security of imprisonment is only an illusion ; a snare to the creditor, an opportunity to the debtor. When it really operates as a punishment it is upon an unfortunate man. Nor, financially, would it be difficult to show, that the amount realized by the fear of, or actual imprisonment is not equal to the amount of meta incurred by the legal process to the prison. The abolition of imprisonment for debt would lead to a new state of dealing, which would soon adjust itself to altered circumstances. Creditors would not so recklessly extend credit ; more intimate relations would spring up between buyers and sellers. The defaulter would find it im- possible to obtain further credit, for credit would depend, as it ought to do, upon confidence in a good name. Chambers of Commerce and Trade As- somatiens would soon spring up, to report the proceedings of incipient swindlers. It would be easy to show that associations for the protection of trades already do more to prevent bad debt than all the imprisonment since Lord Redesdale's Act, just in the same way as the numbers and vigilance of the police limit the number of criminals. The amount of property lost by theft or fire is easily borne by reason of the helpfulness which every member of the community affords to his neighbour. The same feeling would prevent oommercial swindlers and improvident buyers spoiling their neighbours' goods. But the first step to rouse that feeling is to destroy the delusive security which creditors derive from the law. The law can no More, morally, enforce the pecuniary performance of contracts, against the unfortunate or dishonest, than it can provide a form of faith for all con- sciences. I will not do my fellow countrymen the injustice to believe, that they are incapable of calculating and providing for possible errors of judg- ment in the selection of their customers; such contingencies are all easily provided against without the aid of a retributive law. Profits will not be less easily averaged without its aid. For the "reckless trader" who will give credit against his judgment, or without exercising reasonable care, no protection ought to be provided. The reckless vendor is not less an enemy of his country than the dishonest purchaser, who abuses the terms of credit to cover fraud. Let fraud be punished by the criminal law in the future, so that the simply unfortunate shall not stand in the same association as the swindler in public estimation.
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