The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1857-12-10

The Proposed Bankrupt Law.
The new Bankrupt law for insolvent banks
and railway corporations, which is proposed by
the President and Secretary Cobb, is likely to
meet with the universal approval of the Ameri-
can people. For many years-indeed, ever
since this country became one of the leading
commercial nations of the world-the vast in
convenience of our banking system, diversified,
irregular, and in many parts actually rotten,
has been felt as q serious hindrance to legitimate
trade. In some States Notwithstanding the les
sons of 1887, the banks are still on the wildcat
principle, and the public who deal with them
and take their notes or deposit their money in
the bank Golfers are at the mercy of the presi-
dent, directors and cashier. Even in those
more civilized and advanced commonwealth,
such as New York, whose interests required,
some years since, the enactment of o Banking
law framed with the utmost care and forethought
in the interest of the noteholder and the public,
some flaw or bubble has enabled the banks to
evade the just penalty of suspension. In this
State the Judges of the Supreme Court assumed
the responsibility of multiplying the law; in
Pennsylvania. the business was done by the
Legislature. OF course we do not presume to
insnuate that either our Judges or the Pennsyl-
vania Legislature were influenced by any but
the purest motives. But, whatever motives
urged them to it, it is undeniable that they neu-
tralzed the salutary principles of our Bank
acts, and stripped the public of the security
they believed they had against bank sus-
pension.
1t is to prevent the recurrence of an event
which, in any point Of view, cannot but be re-
garded as damaging 10 the credit Of our banks,
and injurious to the prestige of our legislation,
that the administration advise Congress to re-
sumo control over the currency 30 far as to pass
an act enabling a citizen to drive an insolvent
or suspended bank into compulsory liquidation.
Such law would forever prevent bank suspen-
sions; for, had such an act existed, our banks in
this city, for instance, would never have ex-
banded to the extent they did last summer, and
would not have placed themselves in the strait
which afterward rendered suspension inevitable.
Under such an act banks would appreciate the
risk they run by undue mutations; and they
would be cautious accordingly.
ferent footing. The railroads are not deposito-
ries Of any ones money. Their promises to pay
are not current medium of circulation. To
this extent, then, the public requires less protec
tion against them than against the banks. But,
on the other hand, the railways are large Dor
rowers, large manufacturers of paper. They
have always, even in the most prosperous times,
great blocks of stock, bonds, and acceptances
to sell. With one or two exceptions every rail-
road in the country has a floating debt.
Here, then, in the interest of the public and
of the borrower, does the occasion for legisla-
tive interference appear Under the present law,
railroad may suspend on its floating debt, let
its acceptances go to protest, and make an as
signment which may effectually cheat lite credi-
tors. Even without going so far 1t may fight
its way through difficulties year by year carry
ing a heavy floating debt and absorbing capital
which ought to be used In trade. The proposed
law will remedy this Under its action, when
the insolvency Of a road Is clearly made known
process will be devised by which creditor or
stakeholder may may move II into bankruptcy
and a compulsory liquidation may follow
There Is, however, another reason why rail-
roads ought to be placed under rigid sur
VIGILANCE of peculiar character. In several
States of the Union the largest corporation in
the State is railway company. In this State
the New York Central Railroad Company il
without a rival In respect Of means, influence,
patronage and power for corruption; in New
Jersey, the railroad to Philadelphia has been
for years the ruler and head of the State; in
Illinois, the Illinois Central may be said to WELD
influence unparalleled. In a few years the
power of these vast corporations will be vastly
greater; they will grow with the growth of the
country; their means and their ambition will
necessarily be constantly on the increase.
Against them the public will have no ade-
quate protection-they may defy judges, courts
and Legislatures-unless this act be passed.
If II become a law the railways-if insolvent
or fraudulent themselves be at the mercy
OF their creditors and the public until il Ia,
the prospect of new power in the shape of
railway companies--as a change from kings,
aristocracies and hierarchies impnd over
the political horizon.
Many will inquire why individuals were not
hclgded in the project Us well as cgtain corpo.