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still there was no necessity that the surplus should be spent, -no necessity for spending a revenue of forty or fifty millions of bank-paper, passing into the treasury annually. Could such a tide of paper be permitted to flow into the treasury from year to year, without flowing out through some other channel ? I put the question to the Senator, Would not its first effect have been to transfer a large portion of the property of the country to the banks, and their favorites; and finally, on the reflux of the tide, to leave them in the embarrassed and prostrated condition in which we now find them ? Is not, in fact, the present condition of the country proof conclusive of the truth of what I have asserted ?

[Mr. Clay. The accumulation might have been prevented by the distribution of the surplus.]

MR. Calhoun. Yes, it might, and I accordingly made the qualification ; yet it must be spent, or got clear of some other way ; but the Senator knows my objections to the scheme of raising a revenue for distribution. It may be expedient to get clear of an accidental surplus to avoid a greater evil, by a deposit with the States, as was the case in 1836; but of all measures, I regard a permanent distribution of the revenue as the most fatal effect that could grow out of a surplus revenue.

As bad as an extravagant expenditure is, it is still worse.

We have had the two combined, and they, in the short space of a few years, have well-nigh proved fatal to the country.

The Senator, in conclusion, declared against a bigh tariff, but asserted, if I understood him correctly, that he was for protection, and was in favor of a system of countervailing or retaliatory duties.

[Mr. Clay explained—that he was in favor of maintaining the Compromise Act, and of affording protection within the limits to which it would reduce the duties.]

MR. Calhoun. I certainly understood the Senator to say that he was prepared to meet prohibition with prohibition. Did I understand him correctly ?

[Mr. Clay assented.]

MR. CALHOUN. I do not intend to go into the important question involved ; but I take the occasion of raising a warning voice against the whole system of retaliatory duties. It would prove worse in the end than the protective system. Go into it when you may, it will be almost impossible to get out of it. Begin the war of duties against duties, and prohibition against prohibition, and you will find no stopping place. It will go on. The passions will be aroused on both sides. Pride will be enlisted. If you raise the duty on one article in order to force a reduction on another, instead of reduction, additional duties will be laid to countervail yours. If you prohibit on one article, to force the removal of prohibition on another, it will, in like manner, be met by prohibition on some third article. In every instance there will be less resistance to increased duties on one side than to the reduction of the duties on the opposite, and to adding to the list of prohibited articles on one side than diminishing the list on the other.

It is easy to see the end. We should have the protective tariff in the worst possible form, still more oppressive and more difficult to throw off. I proclaim the danger in advance, and I call on those interested to be on their guard.

In guarding against the danger of the retaliatory system, I am not insensible to the unequal and oppressive duties under which some of our great staples, and especially tobacco, labor in many of the countries with which we have commercial relations, to the great injury of both them and us. I hope the folly of such a policy will yield to the growing intelligence of the age ; and I do trust that those who may be charged with the Executive Department of the Govern

ment will spare no efforts, nor lose any opportunity, to remove the evil, through the agency of negotiation and argument; but I trust that the Government will not go a step beyond.

It would be, at best, but to injure ourselves in order to spite others. I hope that some more suitable occasion may be presented to go fully into this important subject before the termination of the session.

SPEECH

On the Bankrupt Bill, delivered in the Senate, June

2d, 1840.

MR. CALHOUN said : It was impossible to listen to this discussion, without being struck with the difficulty of the subject, and the number and delicacy of the questions involved. The relation of creditor and debtor was, indeed, the all-pervading one in our country, and ought not to be touched without much deliberation and caution. This bill, and the amendment proposed, taken together, embrace this universal relation, almost to its utmost extent and minutest ramification, and ought to be examined with corresponding care and attention.

I was at first inclined to favor the bill; but the discussion and reflection have brought me to the conclusion that it is unconstitutional, and therefore could not receive my support, if there were no other objection. The power of Congress is restricted by the constitution, to establishing laws on the subject of bankruptcies. That is the limit of its power. It cannot go an inch beyond, on the subject of this bill, without violating the constitution. Thus far all must be agreed.

After full and deliberate investigation, I cannot regard this bill as one on the subject of bankruptcy. It relates, in my opinion, to another, but connected subject, not embraced in the constitution—that of insolvency, miscalled voluntary bankruptcy—as I hope to be able to establish.

In order to understand the ground on which my opinion rests, it will be necessary to premise—what none have denied or can deny—that, at the time of the formation of the constitution, there existed, both in this country and in England, from which we derived our laws, two separate systems of laws, growing out of the relation of creditor and debtor ; the one known as the system of bankruptcy, and the other of insolvency.

The two systems had existed together in England for centuries, and in this country from an early period of our colonial governments. It would be useless to waste the time of the Senate in accumulating proof of a fact beyond controversy. This very bill, and the only one ever passed by Congress on the subject of bankruptcy, bear internal evidence of the fact. The decisions of judges recognize the distinction, and elementary works place them under distinct heads, and in separate chapters. The distinction is one neither of form nor accident. The two systems, in commercial communities, naturally grow up out of the relation of creditor and debtor, but originate in different motives, and have different objects, which give different character and genius to the two.

The system of insolvent laws grew out of the debtor side of the relation, and originated in motives of humanity for the unfortunate but honest debtor, deprived of the means of paying his debts by some of the various unforeseen accidents of life, and, in consequence, exposed to the oppression of unfeeling creditors. Their object is to relieve him from the

power of his creditors, on an honest surrender of all his property for their benefit.

Very different are the motives and objects in which the

laws of bankruptcy originated. They grew out of the creditor side of the relation, and form a portion of the mercantile or commercial code of laws. Their leading object is to strengthen the system of commercial credit, with the view of invigorating and extending commercial enterprise ; and we accordingly find that the system commenced in the commercial republic of Venice, and has been confined exclusively, so far as my knowledge extends, to commercial communities. Though growing out of the same relation, and to that extent connected, the two are as different in genius and character as the different aspects of the relation out of which they grow. The one looks to credit and the creditor interest, and the other to the debtor, and the obligations of humanity towards him, when, without demerit on his part, he is utterly deprived of the means of meeting his engagements.

It is true, indeed, that the insolvent system, in its humanity for the debtor, is not unmindful of the interest of the creditor ; neither does the bankrupt system, in guarding the interest of credit and creditors, forget that of the debtor. But this, though it has, to a certain extent, blended the two, and caused some confusion in practice, cannot obliterate the essential and broad distinction between them. Nor is it necessary, with my object, to trace the history of the legislation in relation to them in this country and England, with the judicial decisions, in order to show that the two systems, though blended and confounded in part, have, nevertheless, retained their distinctive features. It is enough for me that there were, when the constitution was adopted, two separate systems, known both to our laws and the English, such as I have described

I next assert, that the members of the convention that framed the constitution could not have been ignorant of the fact, that there were two such systems, known by the names of bankrupt and insolvent laws. The convention abounded with able lawyers, many of whom were among the most dis

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