MR. CHAMBERT.A IN'S BANKRUPTCY BILL.
WI, can heartily support Mr. Chamberlain's proposal for a new Bankruptcy Law, as explained in his wonder- fully careful and lucid speech of Monday. There may be details in plenty to be amended, and the Bill is pre-eminently one for a Grand Committee, but the principle on which it rests is the one for which we have eontended in all discussions on the subject, and is, we maintain, entirely sound. The right of managing an insolvent's estate belongs primarily to his creditors, whose property in the fullest moral sense the estate has become, and should only be taken away on grounds of con- venience, or on suspicion that they are cheating one another ; but the right and duty of adjudicating on the bankrupt's conduct belongs to the State, and cannot honourably be transferred to the creditors, who are never impartial, and seldom competent. That bankruptcy is not in se and of necessity a crime may be readily conceded, but it may be one ; and it is indispensable, if a high standard of commercial honour is to be kept up, that the State should inquire, in each case, whether there has been direct criminality, or criminal negligence, or criminal recklessness, or not. A fraudulent bankruptcy is a theft on a huge scale, and should be treated like one ; while every bankruptcy may involve either dishonest dealing, or conduct so reckless as to deserve, if not criminal penalties, at least disgrace. The man who, knowing that he is insolvent and can pay only ten shillings in the pound, goes on trading till he can only pay two, is neither more nor less than a " welsher,"— a man who bets without the intention of paying, with this aggravation, that he constantly prevents the honest trader from succeeding. Smith, who intends to pay his debts, can never contend with Brown, who does not so intend, and constantly finds himself shut out of the markets by a rival who, morally at all events, is dealing with stolen goods. The risk hampers commerce at every turn, and directly injures the community, which has to pay on every article a needless excess of price, levied in order to cover the risk of making hopelessly bad debts. Every case of bankruptcy should, therefore, be examined by an impartial tribunal before relief is granted, and the creditors neither will be nor can be competent to do this. They care nothing for the punishment of the offender, or the good order of society, or the general interests of trade. They are anxious only to obtain as much dividend as they can without taking personal trouble, and to have done with the affair, without further loss either of time or money. To secure those ends, they find the willing help of the insolvent most essential, and therefore hush up anything, and either submit to a compromise which for- bids investigation, or leave everything to the professional liquidator, who regards the estate first of all as a meal for himself, and has no interest whatever in doing un- profitable justice. Mr. Chamberlain's Bill deals directly with this main evil. He leaves the creditors to manage their property under supervision, but appoints sixty Receivers, scattered all through England, one of whom, as the first pre- liminary of all, will examine the bankrupt, report upon his conduct to the Court of Bankruptcy, and, if he see occasion prosecute him. If he sees no blame in the bankrupt, he will supervise and control any composition the creditors may accept; but if he sees blame, he will prevent the arrangement, and the insolvent, driven directly into the Court, will either be punished or disgraced. Bankruptcy will cease to be the easy method of shuffling off debts which it is now, and the intend- ing bankrupt will be forced to remember that before his debts are cleared off he will inevitably, and without his creditors' permission, be compelled to pass under a search- ing examination, in which every fraud, and extravagance, and act of reckless trading he may have committed will be revealed.
This is, we are convinced, the first necessity of a wise Bank- ruptcy Law, in presence of which all other questions, even the great one of " priorities," are matters of mere detail, and it is with unmixed surprise that we see the Tories join battle upon this issue. They cannot want to shelter fraudulent or reckless bankrupts, yet their spokesman, Mr. E. Stanhope, objects to the " officialism " of the Bill. There are, he says, in tones of horror, to be sixty Official Receivers, with duties of the most complicated kind. " Would the House approve of that enor- mous amount of patronage being given to any Government Department ? Would it not be the first step towards the Americanisation of our Civil Service," and therefore deserve the strongest resistance ? Why the service is to be American- ised by the appointment of Receivers, who will, of course, be permanent officials, any more than by the appointment of
County-Court Judges, or Stamp Distributors, or Inland-Revenue Collectors, we are at a loss to conceive. Is it because they are to be paid by fees ? That, if a reasonable objection, which we rather think it is, as the Receiver ought to pay special attention to small bankruptcies, is a matter of detail, to be dis- cussed, and accepted, or rejected, in committee. Is it because the Receivers must be mercantile men, rather than lawyers ? That is not indispensable, and if it were, sixty not very inviting appointments to be distributed among trained accountants can hardly demoralise the State. Is it because the Receivers are to be appointed by a department of the Government ? That is the plain sense of Mr. Stanhope's motion, but what does he suggest as the alternative ? Simply that the Receivers should be appointed by "individuals "—meaning, we suppose, the creditors—a monstrous proposal, which would logically justify the election of County-court Judges by the tradesmen of their districts. These Receivers are to be Judges in all but dignity, with power to decide, in the form of a report, upon the character, conduct, and future status of every bankrupt in the country, to guide all trustees in bankruptcy, and to quash or sanction all compositions. It is impossible to entrust their selection to irresponsible bodies of any kind, and the only alternatives are the Court of Bankruptcy, which cannot be made responsible for its patronage, and a Cabinet Minister, who can. Precedent at least is in favour of the latter selection, and so, we should have thought, was Tory principle. If Tories have a sound, fixed idea, it is that an elective judiciary is bad, and a Receiver appointed by any one except a Minister of State must of necessity be an elected Judge. As to the number of Receivers, it may seem large, but their duties will be most onerous, it is of the first importance that they should act quickly, and the business they are to attack is nothing less than gigantic. Since 1869," said Mr. Dixon-Hartland, the well-known banker, " there had been 109,000 bank- ruptcies, involving a total sum of £245,000,000 and the interests of 5,000,000 of their fellow-countrymen, a popula- tion as large as that of Ireland." That is equal to one hundred and thirty bankruptcies a year to be investigated by each Receiver, who must examine all accounts, hear all creditors, and cross-examine the bankrupt with full knowledge not only of his affairs as shown in his books, but of the very affairs he is most carefully concealing. Twenty-four working hours per case is certainly not a large allowance for such an investigation, and for ourselves, we doubt whether Mr. Chamberlain will find sixty Receivers enough. The result of the whole experiment will rest upon them, upon their shrewdness, their honesty, and their application ; and if they are overloaded till their duties are only perfunctorily performed, the Bill will be as inoperative to check fraud as those which have preceded it, and we shall perhaps be driven to try Lord Sherbrooke's advice—endorsed, we are surprised to see, by Mr. Dixon-Hartland—and abolish relief in bankruptcy alto- gether. The key of the plans is the Receiver, as any man of business can perceive, if he will only imagine what kind of a law it would be if Receivers could be conciliated, coerced, or bribed.
We are rather surprised that Mr. Chamberlain, who is sincerely anxious to pass his Bill, should have inserted in it such debatable matter as the clauses which practically abolish imprisonmpt for debt, and those which sweep away all " priorities:1" except the claim of workmen to their wages. Both are in our judgment reforms, but the first involves the exces- sively difficult question of the credit of the poor, which is now exceptionally good, and the second will perplex and perhaps alarm every landlord in the kingdom. It is the landlords, as Mr. Stanhope at once perceived, not ordinary creditors, who are interested. Both reforms could be dealt with in separate Bills, and we think,—though we fully acknowledge the hardship involved in the present practice as to imprisonment,—should be so dealt with, the grand point to be carried now being that bankruptcy shall be made a presumable offence, deserving inquiry by an impartial State official, and not to be dealt with at the sole discretion of interested creditors. That is the provision the absence of which has multiplied bankruptcies till they have ceased to be discreditable, till all honest traders are com- peting with rogues, and till, as Lord Cairns declared, bank- ruptcy costs the country some £20,000,000 a year, a direct fine levied on its commerce, while it is competing with countries, such as France, where bankruptcy is still considered socially a crime. The internal commerce of France is at this moment facilitated beyond belief by a system of minute dis- counts, which, but for the almost extravagant horror felt of bankruptcy, must be at once abandoned.
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