Tuesday, February 04, 2014

Bentham on Champerty and Maintenance

Jeremy Bentham's theory of money and lending plays a significant role in Eugénie Grandet, so I've been re-acquainting myself with his Defence of Usury. One of the things that struck me on this reading was the following passage at the beginning:

In a word, the proposition I have been accustomed to lay down to myself on this subject is the following one, viz. that no man of ripe years and of sound mind, acting freely, and with his eyes open, ought to be hindered, with a view to his advantage, from making such bargain, in the way of obtaining money, as he thinks fit: nor, (what is a necessary consequence) any body hindered from supplying him, upon any terms he thinks proper to accede to.

This proposition, were it to be received, would level, you see, at one stroke, all the barriers which law, either statute or common, have in their united wisdom set up, either against the crying sin of Usury, or against the hard-named and little-heard-of practice of Champerty; to which we must also add a portion of the multifarious, and as little heard-of offence, of Maintenance.

Since maintenance and champerty are in most places no longer on the books and are not common terms in any case, the force of that second paragraph is easy to overlook. Champerty and maintenance are crimes of litigiousness. So why does a general liberty of making contracts on whatever terms one pleases do away with laws designed to limit lawsuits? Ah, there's the interesting thing. Champerty is establishing a contract with someone in a lawsuit allowing one to share in the proceeds from the lawsuit. Maintenance is paying someone to sue someone else for financial reasons. Almost the very first conclusion that Bentham draws from his general principle of unrestricted liberty of contract is that one should therefore allow people to invest in other people's lawsuits for profit. This position, the reasonableness of trading in other people's lawsuits for profit and gain, is a rather remarkable one. Bentham devotes the entire twelfth letter to discussing it. It's quite clear that he knows what he's saying:

To the head of Maintenance, I think you refer, besides other offences which are not to the present purpose, that of purchasing, upon any terms, any claim, which it requires a suit at law, or in equity, to enforce.

Champerty, which is but a particular modification of this sin of Maintenance, is, I think, the furnishing a man who has such a claim with regard to a real estate, such money as he may have occasion for to carry on such claim, upon the terms of receiving a part of the estate in case of success.

He calls these the barbarous precautions of a barbarous age, and, quite unexpectedly given his usual views of the state of affairs in British law and justice, insists that it's the excellent impartiality of the British court system that makes them no longer useful:

A mischief, in those times it seems but too common, though a mischief not to be cured by such laws, was, that a man would buy a weak claim, in hopes that power might convert it into a strong one, and that the sword of a baron, stalking into court with a rabble of retainers at his heels, might strike terror into the eyes of a judge upon the bench. At present, what cares an English judge for the swords of a hundred barons? Neither fearing nor hoping, hating nor loving, the judge of our days is ready with equal phlegm to administer, upon all occasions, that system, whatever it be, of justice or injustice, which the law has put into his hands.

It seems a little odd to hang the elimination of a judicial protection entirely on the character of judges. I also find it interesting that he doesn't consider the possibility of abuse by investors; when he attacks the laws against maintenance and champerty he does so entirely by insisting that people should be allowed to borrow money when they need it for a lawsuit, and so claims that the laws against champerty and maintenance are bad for the poor. But he never considers the possibility of people stirring up lawsuits in order to gain profit at the expense of the poor, nor the broader implications for things like employment that it might have for businesses and businessmen as targets of lawsuit. This is not the only work in which Bentham attacks laws against champerty and maintenance, though: it's not a quirk of this argument, but one of Bentham's major positions on the subject.

People often claim that Mill's liberalism, and particularly the harm principle, are inconsistent with his utilitarianism. In reality, I think the two go together quite well; people who argue for the inconsistency usually have a very different idea of utilitarianism than Mill does. But I honestly don't see how Bentham's argument for liberty of contract is consistent with Bentham's own utilitarianism; Bentham's utilitarianism is much less flexible than Mill's, and the principle of liberty of contract, as he formulates it, is a vastly greater restriction of the power of sanction than Mill's harm principle, at least in monetary matters. The harm principle allows restrictions; Bentham's principle of liberty of contract none. One very famous example from Mill's discussion of the harm principle provides a sharp picture of the difference in restrictiveness: Mill explicitly argues that contracts in which one sells oneself into slavery should not be allowed. Bentham's liberty of contract commits him to allowing it.

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