BANKRUPTCIES

Evening Post, Volume CVI, Issue 46, 31 August 1928, Page 12

BANKRUPTCIES

THEIR RISE AND FALL An interesting and informative review of bankruptcies in the Dominion has been prepared,by the Department of Industries and Commerce. It provides an interesting index of the fluctuations in trading and financial conditions in the Dominion. Tlie following table, covering the years l!) 00-"7 (inclusive.)—in four.periods of seven years —shows clearly how bankruptcy increases or declines with the periods of industrial and trading depression or buoyancy: — 1900-06. 1907-13. 1914-20. 1921-27. Xo bankrupts 1,843 ■ 2,619 1,704 4,443 £ £ £ £ Debts " proved .. 559.917 3,275,421 930,321 4,501,06S bankrupt 483 479 540 1,014 Amount realised . 308.41G 400,027 417,812 779,675 .Amount per bankrupt. 109 133 245 , 17G Total : deficit .. 581,501 . 877,394 512,509 3,722,293 Deficit ■•■ . . ; . ■ , ' per bankrupt 311 32G 301 SIS The foregoing figures are, oE course, exclusive of private compositions wij.li creditors. ..- The number of, bankruptcies per 1000 ofVtlie population in each of the above-mentioned periods lias been 0.00, 0.38. 0.20, and 0.47 respectively. The relatively high figures of the period 1907-13 were clearly, a resultant of llio depression which made itself felt in and around the year 1909, while the favourable figures of the succeeding years, 1911-20, reflect the .commercially prosperous conditions existing, during the'period of priceinflatioii and exceptional;.demand for commodities, which' did "hot ■ reach its peak until ■]920)-- > ;i;-',- ~J • :. The seven-year, period which closed with 1927 was even morn .remarkable, by converse, than the period which preceded it. Though there have been minor fluctuations in the degree of prosperity enjoyed by the Dominion since 1920, the past seven years have seen a general decline in values, and an increase in competition botli internally and from overseas products. Another factor which, can be.',held to account for the increase in the amount of bankrupts' debts and deficits (as, distinct from the number of bankruptcies) is, of course, the generally. higher (though declining) level of prices and values which has prevailed in recent years. TOO MUCH CREDIT. While'there -arc'these outstanding'explanations pf'thc heavy losses which have been borne by traders in particular, and by the Dominion asm whole, there is some evidence that under .the" stress of competition credit has been given by trading firms to a greater extent than, lias been entirely justifiable. The desire for turnover—for an Sutlet for manufactures—lias led to an insufficient regard for the financial stability of the buyer. The Department has in recent years seen many instances of this lack, of adequate caution in the granting of credit: \ In several industries and trades- the loss resulting from bad debts has recently been so high as now to constitute an item o fserious importance in the costs of doing business. As overseas goods are in most instances paid for promptly on arrival in the Dominion, the risk and expense of bad debts, whether arising from the trade in local or imported goods, falls in a great many cases upon Dominion manufacturers, and thus constitutes a definite disadvantage where local manufacturers are in competition with similar imported supplies. Trado associations and similar bodies can find in this matter a field .for activity m a direction which would - safeguard bolli their members' and. the;consuming public.