The New Ordeal

By Freeman Tilden

The North American Review,
v. 239, February 1935, p. 131-7.

If the foundation of civilization is contract, as Mr. Tilden believes, then the world is really facing one of its major crises

THE gods, turned surly, seem bent upon the destruction of mankind. If the indications are trust­worthy, the method employed is the ancient favorite: that of first making men mad.

Hercules, always hated by his fa­ther's wife, was driven witless by Hera, and in his frenzy killed his own children. Insane man naturally attacks that which is most precious to him, the fruits of his own toil and virility and aspiration. Hence we should not be surprised that the present and mounting folly of a crazed world should be directed chiefly against the very foundation of man's existence as a social creature, that chart from which he derives the greater part of his strength, and all his power of organization. This foundation is contract.

Wholly shorn of his belief in the validity of the promises of his fellows, civilized mail necessarily would revert to what we may suppose was his original posture: solitary, lurking, apprehensive and predatory. The transition to this former state would not be abrupt, but once definitely accepted, it would follow an ever descending curve. Within recorded history this decline has several times been narrowly avoided, and then only by the intelligence and heroism of the few, resisting the mama of the many. For the annihilation of former civilizations, whose existence is indi­cated by a few broken but significant remnants, it is adequate to offer the simple explanation that covenants became generally repudiated. That would be enough.

"If you do not know," said Demosthenes, when defending a wealthy banker in an Athenian lawsuit, "that confidence is the principal asset of a business man, you do not know any­thing." Demosthenes was quite modern. He leaped a number of millenniums, with their painful struggle toward the development of contract, when he submitted this statement to the jury. He might correctly have said, "If you do not know, men of Athens, that confidence is the thing which makes it possible for this city, and the court of justice, and you unarmed men, to exist you do not know anything." Manfestly, this is the truth of it. The day when the first Troglodytes agreed upon the giving and receiving of a promise was the day upon which civilization was conceived; and the day when that promise was fulfilled, however grudgingly, was the day when civilization was born. It remained for a superior race to clothe the naked pact with an obligation that could give the promise the sanction of law; but the essence of the social structure was in the discovery that two men acting together by agreement were better off than two men acting as individuals.

The greater part of mankind is incorrigibly hopeful of getting something for nothing, in spite of all the evidence that this way of life is illusory. So, most human beings can imagine no activity more delightful than gambling, and particularly that form of gambling which consists in the attempt to outwit their fellows in exchange of goods and services. The lawyers of Justinian recog­nized this frailty when, in their wise and orderly codification of the rules of contract, they came to the final and per­sonal touch. At this point they threw up their hands and said, "In pretio emp­tionis et venditionis naturaliter licet contrahentibus se circumvenire," and let it go at that. "In buying and selling, a little overreaching is expected in the matter of price." There is something in the horse-trade that defies legal boundary.

In the face of this weakness, we may imagine that the earliest consent to live aggregated by contract was one given with reluctance, and with many mis­givings that a good deal of fun was go­ing to be missed. Only the whip of ne­cessity brought men to that gloomy sobriety in which a promise was to be binding, and the dancing of today must be put aside in the hope of freer fiddling of tomorrow. It is no wonder, then, that at certain times, and indeed at pretty regular intervals, corresponding with the greater cycles of abundance and adversity (the shirtsleeves to shirt­sleeves periods of the race), the basic social contract, which is the sanctity of promises, comes into renewed hazard.

II

No person of composed mind and of any acquaintance with the past can fail to observe that civilization has arrived at one more of its recurrent tests, in which the tensile strength of the chain that keeps individuals from being re­dispersed into barbarism is exactly de­termined by the weight of repudiated promises it can bear. This chain is truly the vinculum juris of the Romans, on a much vaster scale than those words im­plied. Not only individuals, but part­nerships and companies, lesser and greater units of government, are busily engaged in tampering with this bond of contractual confidence with the pur­pose of effecting specific reliefs, without entailing a general collapse. For in the latter case there would be no benefit.

When we remember that the vital principle of the contract inheres in the intelligently directed selfishness of man, which encouraged him to put aside the immediate interest for the distant but greater good, the naivete of responsible persons who believe the} can steal any lasting advantage become almost pathetic. They are in the case t0 those who spend their last moments OJ a sinking ship in looting the merchandise of the cargo, forgetting that when they have plundered they have no place to go, and no chance of enjoying the fruits of their unsocial act. If you default, then I default, whereupon we all default; try to take a profit from that!

Of course, wherever there are co tracts there are violations; this must is so until perfection arrives. The repudiation of any specific covenant is of slight importance. The habitual felon is not necessarily a person of feeble intelli­gence. Neither is he who refuses to con­tract, or, having contracted, has done so with the deliberate intent to defraud. In both instances, a powerful egotism may inform the delinquent that he will be better off by subscribing to no social order; that by skirmishing on the fringe of the compliant majority, he can pick up a richer living than they. The law provides penalties for these nonjurors when they can be laid by the heels. It was only in the earliest experimental period that the principle of contract was menaced by such dissenters.

It is when repudiation ceases to be casual, and becomes the subject of a new theory of conduct based upon it, on the plea of moral or economic progress, that the principle is in danger. We then find enrolled along the attacking force not merely the unenlightened, the lone wolves, the discontented, the impover­ished and the demagogues, but a new and far more dangerous class of inno­vators, recruited from that part of so­ciety which, having risen highest, has farthest to fall. The .greatest assaults upon civilized society are always led by those who, possessing wealth without habituation, or knowledge without un­derstanding, or sentiment without pro­portion, and above all vanity without curb, are always for marching upon some radical expedition, under the colors of high moral purpose.

Truly, the precious husbandry of the world is always necessary to be fenced from that horde upon whom the proc­esses of education can be lavished with­out the slightest visible effect. They are pressing ever at the gate, ready to swarm through and trample what they can not devour. But, upon examination, it will be found that when the bars are let down, it is by certain beneficiaries of conservation sometimes animated by misdirected benevolence; oftener by restlessness, a love of dramatic novelty or the malice that springs from in­capacity.

In the region of politics, such a man was Jean-Jacques Rousseau, who chose soft boudoirs, but praised the rugged savage life, who had no effective mor­als, but luxuriated in moral theory; who was impotent in friendship toward men, but reeked with a doctrine of brotherhood. A sufficient number of Rousseaus, of Rousseau-cules, can be heard and seen in the political and eco­nomic scene of the moment. But whereas Jean-Jacques was an inspired lunatic and a consummate artist, these contemporaries are neither artists nor inspired. They are simply busy and windy. Yet the times are propitious for Cleons. Our hardships are heavy; and even heavier is the disappointment of those hopes of perpetual prosperity, raised in a period when promissory notes were mistaken for cash.

III

So, with such provocation and under such leadership, we see powerful forces being brought to bear to contrive a nullification of pledges of faith unfor­tunately, unwisely or flippantly made: sophisms multiply; and there is vague idealism, supposed to spring from generosity of spirit or political need, about "the greatest good of the greatest number," as though that excellent con­dition had been waiting thousands of years for the present generation to discover. And since the majority of modern contracts take the form of an indebtedness, in goods, services or money, it follows that the conflict will appear to have creditors ranged upon one side, and debtors upon the other.

I say, it appears, for the truth is not there: in any engagement between those who do and those who do not ac­tively support the strict observance of contracts, the battle is really between the forces of civilization and disintegra­tion. But since it is not possible for many minds to encompass an abstract idea, much less to weep about one; and since it is possible for every one to sympathize with a distressed debtor, and to hate a prosperous and persistent creditor, the simple device of political dramaturgy is to place in scene two interesting an­tagonists: the man who received and can not pay, or would rather not pay; and the man who gave, and is disposed to enforce the covenant. In such a pres­entation, rash sentiment does not fail to perceive who is the hero, and who the villain, for two passions work simul­taneously: first, the feeling of sympathy for the under-dog; second, the inextinguishable envy that delights in see­ing wealth and pride toppled. This fallacy and these blind emotions are, however, not so mischievous in them­selves; they are only what had origi­nally to be overcome in the develop­ment of justice, and what justice must be prepared coolly but understandingly to ignore.

The real danger and the emergency derive from the fact that the resistance of law to the same fallacies is surely breaking down. Daily it becomes more apparent that the courts are no longer scrutinizing the contract with a view of deciding what was the intent-and when the statements are cloudy, or the agreement proper in spirit but irregular in detail, exercising the function of equity-but of applying a large pro­gramme of interpretation which has to do with the consequences of performance. This, so far as the principle of con­tract is concerned, is fatal, for decisions rendered on that basis can reflect merely the limited reasoning of a judge, or a group of judges, as to the merits of a transitory condition, or perhaps partisan polity. The man in the street can do that, perhaps with as much keenness as any other guesser.

We hear something, at least among readers of Plutarch, of the salutary siesacthea, or burden-lifting, decreed by Solon when he was called to rescue the tottering Athenian city-state. By his decrees, Solon "made a pound, which before passed for seventy-three drach­mas, go for a hundred, which proved a considerable benefit to those that were to discharge debts," and made other social changes, presumably affecting existing contracts. It should be noted, however, that he did these things, if he did them at all (for Plutarch, though the most honorable of biographers, wrote seven centuries after Solon was born), as Dictator, in a state of alarm when constitutional guarantees were suspended. The principle of contract is not endangered by being wholly stayed, while extra-legal powers supersede it. The Roman Senate, as a legislative body, did not cease to exist because some tyrant dispersed it, but only when, un­hampered by major force, it failed to exert its normal functions, or betrayed the idea by which it had being. And this is quite aside from the question whether the employment of dictatorial power ever cures those social disabilities and inequalities whic9 are offered as its apology. In a verse quoted by Plutarch and credited to Solon himself, the law­giver states in his own honor that (The mortgage-stones that covered her [Athens] Removed, -the land that was a slave is free. But the mortgage-stones reappeared) many times in the course of the next centuries. Glotz. says that agrarian pauperism was always the cancer of Greece, and that when she went down in a whirlwind, "her last defenders fell with promises of sharing land and abolishing debts, on their lips." If the repudiation of contract, including the remission or lightening of debts con­trary to the bond, were the open-sesame to perfect justice and prosperity, the gods would have come down from Olympus and joined the human race long ago. The experiment is not novel.

Neither is there anything new about the abrogations by which governments cheat their own subjects, or swindle each other. Almost as soon as there was coinage there was coin-clipping and coin-sweating; degradation of the stand­ard of value; surcharging; and as soon as the use of paper symbols came into wide employment, the emission of un­redeemable inflation money. Dionysius of Syracuse ordered his creditors to present themselves with all their coin, and then doubled its purchasing power by means of an over-stamp, thus not only wiping out his government debt, but putting himself handsomely in pocket. At least the half of all economic history is concerned with the tragi­comedy of governments getting into debt by extravagance and trying to get out by fraud. A good deal of the other half is concerned with individuals at­tempting to do the same thing. But gov­ernments have the advantage over indi­viduals in this respect, since they are immune from the police power, because they control it. Indeed, it is axiomatic that if the commercial morality of the individual were as low as that of his government, no government could exist.

IV
What concerns us now, however, is not repudiation in specific instances, whether of government or the indi­vidual, but of the attitude toward repudiation, as expressed by those whose position, training and intelligence are of considerable moment. While there is yet no blunt statement from high sources that an obligor is to receive spe­cial favor if his net fortune prove, on examination, to be inferior to that of his creditor; yet we have clearly arrived at the stage when, regardless of the intent of the obligation, if the debtor suffers a loss, the creditor is to be considered a partner in the borrowers enterprise; though, if the borrower prospers, the creditor simply gets his money back, with interest. There is a romantic per­suasion that bankruptcies should be avoided by such means, though com­mon sense would say that an honest bankruptcy is preferable to a stolen solvency.

Of course, the leading spirits in the assault upon the contract principle are governments. Whatever specious ex­cuses are given by a government for the repudiation of its promises, either to its own subjects or to others, there is never more than one real reason: that it wants ~ore money to spend as it pre­fers to spend it. As all governments are liberal promisors, their first thoughts, when more money is needed, and there is a fear of alienating support by taxa­tion or direct expropriation, fly to the devising of some means of invalidating their obligations, and setting up a con­struction more to their liking.¹ Fortunately for needy governments, a great part of their subjects are also in debt, and would also like to be relieved. Therefore what the government de­sires, and what would at the same time be popular, happily coincide, and the next thing is to declare that a crisis exists. This is taking high ground, pre­cluding the charge that there is any immoral or illegal purpose of fleecing the creditor class. Whether he likes it or not, the creditor is going to be pro­tected against his own base instincts, among them the craving to have his contract fulfilled.

Having declared that a crisis exists, which is not hard to do, since govern­ments are generally so clumsy and ex­pensive that a crisis is always within call, all that remains is to alter the standard of value in some artificial man­ner; and there are a number of ways of doing so. This step, of course, brings all existing contracts that involve money payments into confusion. The unfortu­nate consequences in respect of these contracts could be avoided by enacting, along with the legislation altering the standard, that preceding obligations should be made good according to the maxim "valor monette considerandus atque inspiciendus est, a tempore con­tractus, non autem a tempore solu­ tionis," which is to say, not according to the new value, but according to that which existed when the contract was made. Curiously enough, this maxim was acted upon by several of the kings of France during the Middle Ages-a period greatly despised by moderns.

But, even if there were no political reasons against this course, it would be unthinkable to a modern government, for the reason that it has its own obliga­tions so clearly in mind. If its act were not to have the final result of assessing the difference to the creditor, the legis­lation might just as well not have been passed, and the crisis was cried up for nothing. Of course, the government is even now not in the happiest position, for its expenses increase in exactly the ratio of the degradation of the stand­ard; but this can be met by a further degradation and that by another, and so on until that day arrives so well sug­gested by Montesquieu when he said: "The State may be a creditor to in­finity but it can only be a debtor to a certain degree, and when it surpasses that, the title of creditor vanishes."

Meantime, the spirit of default nat­urally filters down through the body politic. And truly, it is hard for the humble individual to see why, if a gov­ernment can elude its obligations, or set the stage for a general default based upon one particular kind of contract, it is not equally in order for him to re­pudiate his promise, however and wherever made.

Yet in so far as he is a reflective man, who knows the story of the rise of civil ized man from the cave, he will not readily lend his aid to destroy that which secures to him all the rights (and responsibilities) he possesses. The origi­nal principles of right, as seen by Gro­tius, are confined to a small compass. They require only:

1. Abstaining from what belongs to another.
2. Making a compensation for the advantages derived from the use and possession of another's property.
3. Fulfilling the promises we have given.
4. Making reparation for the in­jury we have done.
5. Submitting to punishment for the offenses we have committed.

These are in fact the rules of civiliza­tion; but I submit that four of these are dependent upon the one named third; all the rest must derive their force from the belief that promises will be fulfilled.

And as no person can be an actively good citizen of a state who is ignorant of the beginnings and adversities and struggles and halting endeavors, by which the unity of that state was brought into being, so it is important to the intelligent performance of promises not to regard it as primarily a moral issue, though years of custom have en­dowed it with that secondary merit, but to realize the centuries of trial and check, the study of which led to the con­clusion of Sir Henry J.S. Maine that "the positive duty resulting from one man's reliance on the word of another is among the slowest conquests of ad­vancing civilization."

1 In this statement no account can be taken of a debasement of monetary standard which arises from the curiosity of a ruler, or his desire to furnish one of his favorites with a sphere field for laboratory experimentation. I know of only two such cases in history: one being the Roman Emperor Gallienus, son of Valerian. Gibbon paints an interesting portrait of this dilettante in supreme power. He had personal magnetism, was a fluent orator, a writer of elegant verses, a skilful gardener and excellent cook. At a .time when the finances of the state were at an alarming point, Gallienus held long conversations with the philosopher Plotinus, concerning subsistence settlements, to be mod­eled after Plato's communistic theories. He promised Plotinus a large tract of land to try the social experiment, but it came to nothing, because the emperor was soon enthralled with a new idea. This virtuosity and intellectual curiosity did not contribute much toward Roman prosperity.