THE BANKERS' MEMORIAL.
WE are glad that the great bankers and merchants in the City, of London are, as the important Memorial addressed to Lord Beaeonsfield shows, giving their minds to the subject of the scandalous working. of the Bankruptcy At of 1869. When fifty of the leading banking and mercantile firms in the City put any complaint respecting commercial law into shape,—when such weighty names as &rings ; Barclay, Bevan, and Co. ; Glyn, Mills, Currie, and' Co. ; Hoare and Co. ; Smith, Payne, and Smiths ; and the London and Westminster Bank, append their names to an address praying an amendment of any law affecting them, no Government can disregard the matter. Bankruptcy Law reform is no longer a " fad " of frequenters of Social Science Congresses. It is henceforth not merely a subject on which successive Attorney-Generals will be content to make luminous speeches which come to nothing. It must be dealt with this year, Irish University education notwithstanding. Very rarely do our banking and mercantile magnates unite their forces to carry any legal reform. Sometimes, however, the Bankers choose to say that a decision of the Courts of Law affecting their interests—some judgment restricting 'the customary negotiability of docks warrants, or interfering with the understood usage of the mercantile world with respect to acceptance of bills of exchange, or declaring that Bankers must, to their great inconvenience, produce their books' in Court—must be altered. They rarely fail to carry their point. When, as is the case here, bankers and merchants of the highest standing unite in asking for a change, the result cannot be doubted. The present Bankruptcy Law is doomed.
Not the least remarkable feature of the Memorial is that it is a virtual recantation. Before the Act of 1869 came into operation—certainly before Lord Westbury's measure of 1861 was passed—nine out of ten men of business would have said,—" The best bankruptcy law would be practically no bank- ruptcy law. Leave creditors alone, to settle with their debtors as they see fit. Let there be no interference on the part of official assignees, with their accompanying official harpies, and the assets of bankrupts will be divided promptly, cheaply, and fairly. Contrast the slow and expensive operation of the old Court of Review and that in Basinghall Street, with their multi- tude of highly-paid officials, serenely indifferent to the miser- able creditors, with the cheap procedure in Scotland, where the creditors arrange matters for themselves, and where the work of distribution is done better as well as more cheaply than here. Only let the creditors do the work which the Courts do, and all will be well." Mr. Mansfield Parkyns, the indefatigable Comptroller in Bankruptcy, argues every year in his report that all this was a delusion ; and that the supposed superior cheapness of the Scotch system was a mistake. But, at all events, the legislation of 1869, which was passed, as the Attorney-General said, "amid the plaudits of Parliament," has utterly disappointed the persons who asked for it, and the supposed excellence of the new system has been its ruin. "Every year," say the memorialists, virtually sum- marising the substance of many of the Comptroller's reports, "there is an increasing number of eases in which the grievous and dangerous scandal is exhibited of men failing for vast liabilities, and finding it easy, in consequence of the defects of the present law, to get their speedy discharge, by the pay- ment of no dividend, or a dividend of a small fraction of a pound, or even a shilling, and without being subjected to any official investigation of their affairs, or of the conduct and pro- ceedings which have led to their insolvency." The 125th Clause, with reference to liquidations, and the easy, considerate provisions of the Act with respect to composition, open a high- road to the escape of a needy man. Nobody need in these days become bankrupt, or expose himself to troublesome examina- tions, it may be in open Court, or to the social stigma still attaching to bankruptcy. Bankruptcy is, as official figures plainly show, going out of fashion. A clever man with any regard to his interests manages to "liquidate by arrangement," or to make a genteel composition with his creditors, paying, or promising to pay, a shilling in the pound ; and he brings an action against you, if you inadvertently speak of him as a bankrupt. With a clever, friendly trustee, often his tool, presiding, all can be comfortably arranged. The bankrupt's affairs need not be publicly investigated. Creditors who make an absurd fuss about being paid a substantial sum can be outvoted ; and it is one of the beautiful, but mysteri- ous features of liquidation by arrangement that A and B, who are creditors, can vote that C, another creditor, shall get only a shilling in the pound, and their vote will bind C, even though he may have never heard of the proceedings.
The memorialists see plainly enough that matters are very wrong. It can, indeed, be hardly denied by any one who looks into the Comptroller's annual reports that the present Bank- ruptcy Law is almost as injurious to honest trading as if there were in the City of London an Alsatia, in which the Queen's writs or warrants did not run, and to which thieves might retire in safety. It is not clear, however, that the memorialists see their way to remedying matters. They talk a little helplessly about establishing a Court of Bankruptcy under the presidency of a distinguished mercantile lawyer, and about the expediency of hurrying on the Government Bill. They do not -explain in what way the model "mercantile lawyer" or" the determined administrator" is to differ from the Judge who now presides over the Bankruptcy Court. They can scarcely be aware that the Government Bill will not make many material changes, or they would speak decisively as to its shortcomings. It provides that the trustee shall be appointed by the com- mittee of inspection, and not the whole body of creditors, and it abolishes proxies. It alters the procedure in liquidations. The changes, good so far as they go, only pierce skin-deep the evils of which the memorialists complain.
The fact is that the memorialists do not show that they have taken the first step which is a requisite condition of all effectual reform of the Bankruptcy law. It must be first settled how the man who cannot pay his debts is to be treated. If it is right to tell the creditors of such a man that they must suffer the consequences of risking their money, we may as well strike out of the Bankruptcy Law all the clauses re- lating to bankruptcy. But if, on the other hand, failure to meet obligations is, as it used to be considered, highly cen- surable, if creditors have their rights and feelings as well as debtors and if the wishes of a minority of creditors are not to be lightly disregarded, the entire law, relating not merely to liquidations, but also to compositions, must be recast. At pre- sent, the Statute-book contains a jumble of both systems. The debtor and his friends are free to select which system they like best, and the result of this freedom is, that we seem fast ap- proaching a time when it will be less inconvenient to wipe out one's debts than to change one's residence.
• Society is scarcely prepared to tolerate the continuance of this state of things. The" poorbankrupt " has had, it is felt, far too good a time of it. Society will never return to imprisonment for debt ; but as men study the accounts of some recent scan- dalous failures, there must be a feeling that not fraud alone, hilt gross recklessness in trading may deserve to be crimin- ally dealt with. The French Bankruptcy Law contains some useful hints as to this. It is not only the fraudulent bank- rupt who is punishable under that law. A person who has failed will be pronounced a ban queroutier simple, if his personal or household expenses are found excessive ; if he has spent large sums in speculating on the Stock Exchange • or if he has made purchases really for the purpose of retarding his failure. A trader who has failed may be pronounced a banqueroutier simple if he has not kept books with toler- able accuracy, and the punishment may be imprisonment, from a -month to two years. A proviso of this sort, especially so far as it punishes traders who keep their books carelessly— the origin of many failures—would be wholesome. Another point clearly established since the Act of 1869 came into operation, is that, in the natural war between creditor and debtor, the former, left to himself, is the weaker ; that the debtorand friends will always be too much lor his credi- tors pawl that the creditor must Jracei*e offioial .proteetion of some sort. There must be, in some form or other, official supervision to protect the interests of large creditors who have neither time, nor disposition, nor ability to protect themselves. The old system of giving certificates justly fell, we are aware, into discredit. It was too complicated to succeed. People would not, and never did, distinguish the respective values of the three classes of the Commissioners' certificates ; and it would be useless to revive the old machinery. But we are by no means sure that it would not be well to revert to a principle underlying the regulations as to certificates of the Act of 1849. At present, a debtor is entitled to his dis- charge if his estate pays 10s. in the pound, and he may get it without this if the creditors think fit. It might be advantage- ous to say distinctly that there is to be no discharge unless either the estate pays 10s., or the bankrupt gets from the Registrar, after an inquiry in open court, n certificate, equivalent to a first-class certificate under the Act of 1849. On the whole, the best mode of amending the law is to make bank- rupts of many persons who now liquidate or compound, and to render bankruptcy a somewhat more disagreeable matter than it is. It should be a big black mark against a man's name, not to be wiped out unless after an acquittal pronounced by a competent and impartial judge fully informed of all the facts.
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