BANKRUPTCY REFORM.

Press, Volume XIII, Issue 1717, 25 August 1868, Page 3

BANKRUPTCY REFORM.

{ > [From the " PaU Mall Gazette."] Down to the present time the course of bankruptcy legislation has been a reaction against the indiscriminate rigours of the old law. Justice as well as humanity was revolted at the idea of a man being flung into gaol for life, merely because by some ordinary mischance of fortune and by no fault of his own he could not pay a bill when it fell due. Pity for the bankrupt excited prejudice against the creditor. I The theory of the modern law seema to have been that the one was a helpless victim, and the other a cruel and vindictive savage. This tendency has been carried to such an extreme that Mr Moffatt did not put the case at all too strongly when he said that we began by protecting the creditor and then went on to protect the debtor, till the present law may be described as giving immunity to fraud, and confiscating the assets of creditors. This leniency towards debtors reached its climax in the Act of ISG2 and has been attended with the most disastrous effects on commercial moI rality, The two broad features of the

bankruptcy statistics aTe, On the ono 'aider the continual increase in the number of bankrupts, and on the other the decrease in the value of the property available for distribution anions their creditor*. Between ISGI' and 180-4 the cases of bankruptcy multiplied five-fold, while the assets were dimiuished by about a half. Last year" no fewer that 6532 persons were declared bankrupt on their own petition —an increase in this class over the year before of 25 per cent.; and as many as SS7G bankrupts escaped j without payiug a farthing of dividend. J Such facts as these speak for them- \ selves. But even where creditors get j nothing there is a certain social gain j in. having a m t \n openly marked as a ! bankrupt. People are put on their j guard; the frcqueucy of the occurrence j and the rate of dividend arc warnings j of the risk to be eucountered iv any dealings in that quarter. Private arrangements are, as it were, the quicksands and sunken reefs of the mercantile ocean. It is true, they are supposed to be indicated on the chart, but they are apt to escape notice, and there is wanting that emphatic publication of danger which is afforded in the case of actual bankruptcies. To withdraw all legal sanction from composition deeds would be unfair both to debtor and creditors; but it is clear that they require very careful watching, and ought to be surrounded with more effectual precautions against j trickery than now exist. The fact that at present a debtor has it in his power to coerce the helpless people to -whom he owes money into accepting almost any terms ho choose 3to propose by the mere threat of declaring himself bankrupt,-and thus practically withdrawing from their reach even such poor assets as he offers for a division amongst them, is only an | additional reason for placing a check on the growth of private arrangements. Public policy is not limited to securing the largest returns to creditors ; something is due in the shape of warning to the rest of the community, and this is lost w r hen the " smash " is hushed up by means of a private settlement. The object to be aimed at is to bring the career of a bankrupt to a close while he has still means to pay his creditors nearly all he owes. But under the system of composition deeds a rotten firm might go on for years victimising one set' of creditors after another, and pursuing what would be morally, however it might appear in the eye of the law, a course of systematic embezzlement. It is hardly too nmeh to say that a vast system of swindling to the tune of several millions annually is thus carried on in the most shameless manner under the sanction of the law. Mr Moffatt'a bill is intended to put a stop in Borne degree to this intolerable state of things. Ifc provides—several of the clauses being taken from Lord Cairn's larger measure —that no deed, of arrangement shall bo valid _ unless a full and detailed, list of the debtor's liabilities and assets is at the same time deposited with the Chief Eegistrar in bankruptcy ; this list is to be notified in the " Gazette," and inspection of it allowed to all creditors. Each creditor assenting to a composition deed is required to prove his claim by affidavit or declaration, to be duly filed Tri the registry ; and it will be open to any creditor over £10 to demand an examination in open court of the debtor or any of his fellow creditors. - Another object of this measure is to make a debtor's capacity to declare himself bankrupt contingent upon his paying five shillings in the pound, or having the consent of three-fourths of his creditors with claims above £10.