The Sun.
London, England, 1865-02-10 00:00:00

THE LAW OP BANKRUPTCY.

Mr. MOFFATT moved for a select committee to inquire
into the working of the present law of bankruptcy, and to
report thereon. He said he would not detain the house by
travelling over the grounds which he stated last session
with regard to the operation of the old aystem and its
abuses; but he felt bound to allude to a Parliamentary re-
turn on the subject for the year ending the 11th October,
1864. In that year the total money passed under the
Bankruptcy Act was £680,000. The total of the official
charges on the estates administered was upwards of £140,000,
or at the rate of 20 per cent., and that was exclusive of
solicitors' fees and various other charges. Out of 7,200
bankruptcies 600 were at the instance of the creditors, and
the 6,600 at the instance of their debtors. Of these estates
only 1,500 admitted of a dividend, and only in 150 cases
had the dividend exceeded 7s. 6d. in the pound, whereas in
as many as 5,200 cases there had been no dividend at all
declared. They had, in fact, set up a bankruptcy law which
encouraged knavery and the worst class of offences which
could be committed in a commercial community. The
Bankruptcy Act of 1861 did contain some provisions which
they might have expected to have seen work more satis-
factorily. An important feature in that act was the settle-
ment of bankrupt estates under composition and under
assignment. The first mode had not proved so serious a
failure as had been supposed, for as much as £1,100,000
had been obtained under composition. From a return for
the last three months they got a notion of the character of
these compositions. For the three months ending Decem-
ber last, they learned that of the 304 estates settled under
composition paid less than ss. in the pound ; that 250 of
those paid less 35., and that in several of these latter cases
the dividend was less than 2s. 6d. In fact, creditors pre-
ferred to take anything in the shape of composition rather
than go into the Bankruptcy Court as the law now stood.
With regard to assignmegts, it would appear that it was
the object of the law to incite to fraud, The law allowed
the insolvent to make out a list of creditors having a claim
upon his estate, and there were no means by which the accu-
racy of the return could be tested. The rights of creditors
were positively nil, for no creditor would venture to under-
take the responsibility of questioning the correctness of the
return. The result was, fraud flourished. He, however,
did not wish to cast all the blame on the author of that act.
Indeed, he might observe with respect to that act that it
had been greatly mutilated in its passage through Parlia-
ment, especially in another place, and had been sent down
to the House of Commons a thing so emasculated that its
utter failure was not to be wondered at. The whole system
of the English bankruptcy law was faulty in principle, inas-
much as it proposed to do two things, with either of which
it had no right to interfere. In the first place, it invoked
the interference of the State in the collection and distribu-
tion of the assets of the debtor. In the next place, it set
up a tribunal to judge of the honesty or dishonesty of the
insolvent. That was entirely wrong, and it was better they
should have no bankruptcy law at all than one of that cha-
racter. For his own part, he should like to see the old bank-
ruptcy law restored, as it would be an advantage not only
to the commerce of the whole country, bUt also to that of
the commercial interests of the world at large. In his own
experience he had known foreign houses which had parted
with their goods to English traders, and were honest bona
fide creditors, but when those traders failed they were left
without a dividend, or had to be content with one of a shil-
ling or twin the pound. He would therefore suggest to Par-
liament thepropriety of getting rid of a system so entirely ef-
fete, and substitute for it some very simple machinery ignor-
ing all interference by the State in matters between creditor
and debtor. In Scotland they had an excellent system, where
the interference of the State was of the slightest character.
Under that system the creditors named the person who was to
he a
ta
collect the assets of the debtor, he whom they appointed giving
them
Hpaeidw.
Tengerkooeddfor
years' the
pe di
ri
securityyeaefxoerrethteeourpcs,reoper discharge of that duty
andof
thatby theaet creditorsprovedh
ll
worked satisfactorily to both parties. He should like to see
some such system as that modified to suit the peculiar exi-
gencies of the country introduced into this country. He
would wish, for instance, for the
iestablishment of a court
wouldt give the
theof tsho el e hp iogwh
power
t ofc h
tahr ace t emra
n.
agemrsen of the insol-
ocrfeadiptPeorsal
ehistzsttdiess,cahnardgteh.eylshhoouselderbeedittohres, pielowoenvstro, give the
who did
‘1
vdeebuttos;
not choose to come in and share in the
distribution of those
assets should retain their claim against all property which
he might subsequently acquire. The establishment ofsuch
a system would put an end to fraud, and place the law of
bankruptcy in a sound, intelligible, and satisfactory state.
The same system had worked in France with very great
success. There was now about X 40,000 a-year received from
estates out of which no dividend was declared, and that
would be an ample basis on which to found the pensions of
those officials who might be so got rid of.
The ATTORNEY-GENERAL said the time had not
arrived for the discussion of those questions raised by the
hon. gentleman. It would, however, soon arrive, and lead,
he had no doubt, to many important changes.
Mr. ROEBUCK would not oppose the motion. He merely
rose to call the attention of the house to the great injustice
which
had been done by the committee of last session to cer-
tain parties. The Lord Chancellor sent down to that com-
mittee certain papers which had been prepared by the two
commissioners, Messrs. Ayrton and Harrington. In conse-
quence of that report Mr. F. Whitmore, formerly a mer-
chant in the city of London—but who having become a
bankrupt got appointed to the humble office of official as-
signee—and who was now 80 years of age, had become the
inmate of a lunatic asylum in consequence of the aspersionS
e.ast. upon him. The charges against others were yet sub
.1171 u ti cien' and therefore he would not say anything of them ;
_ . the case of Mr. Harris, the official assignee of the
Birmingham Court, who was charged with being a de-
faulter and having pose more
thanxo
o retained and used for his own pur-
se
h 1, 0 for a longer period than a week,
e rendered liable himself
amount, there had b to 20 per cent. on the
proved that the co metiese: a proper examination, which
is °uers
lumped to conclusions and
were too general in th allegations, not stating the dates
at which the money had been n returned or the amount on