Article 1, Section 8, Clause 4 (Bankruptcy)

Document 13

William Rawle, A View of the Constitution of the United States 101--2 1829 (2d ed.)

The power to pass uniform laws on the subject of bankruptcies, is contained in the same paragraph. It is held, however, from its nature, not to be completely exclusive.

Until it is exercised, the states are not forbidden to pass bankrupt laws, except so far as they impair the obligation of contracts. When congress enacts a general bankrupt law, the right of the states is suspended, though not extinguished. From the expiration or repeal of the bankrupt law, the ability of the state to exercise the power, qualified as above mentioned, revives. And even while the act of congress is in force, the power of the state continues over such cases as the law does not embrace. Hence the power to pass insolvent laws remains with the state. Bankrupt laws are generally, perhaps properly, considered as confined to the mercantile class, who are more exposed to pecuniary vicissitudes than those who pursue other occupations. Yet as poverty may also assail the latter, it would be hard to exclude them from the humane protection of the state legislatures. But as states are prohibited from passing laws impairing the obligation of contracts, it has been contended that their power to pass insolvent laws is now questionable. The answer to this objection is, that without impairing the obligation of a contract, the remedy to enforce it may be modified as the wisdom of the legislature may direct. Confinement of the debtor may be a punishment for not performing his contract, or may be allowed as the means of inducing him to perform it. The state may withhold this mean and leave the contract in full force. Imprisonment is no part of the contract, and simply to release the prisoner does not impair its obligation.

The Founders' Constitution
Volume 2, Article 1, Section 8, Clause 4 (Bankruptcy), Document 13
The University of Chicago Press

Rawle, William. A View of the Constitution of the United States of America. 2d ed. Philadelphia, 1829. Reprint. New York: Da Capo Press, 1970.

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