Nashville union and dispatch. [volume] (Nashville, Tenn.) 1866-1868, 1867-06-12
HISTORY OF RANKRUPrIAWS.

/ In seVenty-eighty years which have elapst
since the formation Of our government III
der the Federal constitution, we have Ia
only four years of general bankrupt laV
and this, too, Notwithstanding the EXPIRE
provision in the constitution, that "Cor
gress shall have the power to establis
uniform laws on the subject of bankrup
cies throughout the United States" I'll
first exercise of the power was in the yea
1900, when a bankrupt law was passe,
limited in its duration to FIVE years; bu
two years before it had expired by its ow
Limitation, it was repealed. After the clos
of the war with Great Britain in 1925.
renewed effort TO relieve a large class {
tnsolyent debtors, by the passage of a gen
eral bankrupt law, was made. 1t failed
and similar effort in 1926, though urge
in Congress by men of commanding ability
proved abortive.
The second enactment of a national Law
OF bankruptcy was in 1S4T. The Viii!
| party had just succeeded to power, findini
trade paralized, enterprise crushed capita
timid and inert, and thousands of iatel,
prosperous merchants and manufacturer
stricken down by the delusions of specula
tion and the reyulsion of trade. Petitions
were poured into Congress in great number
for relief Hunts Merchants Maaazine il
a leading article urging the expediency O
the measure asked-"Who desire the pas
sage of general bankrupt law Tico k1n
dred thousand bdnkrupts, their wives anC
children. Two millions of direct sufferer,
lift up imploring hands to Congress. Shall
the unfortunate appeal to Congress for sue
cor in vain Z"
The appeal was successful, and Congress
by act approved August 19, 184l, enacted
a general bankrupt law, to take effec
February l, 1912. Its provisions, how
ever, were SO faulty and ill-guarded that il
proved boon to few beside LAWYERS and
after little more than one years trial Il
was suddenly repealed March 8, 1S43) by
the same Congress which enacted it. Re
peated and spasmOdic efforts have beer
made ever since (notably after the great
panics of l847 and 1857, and during the
past four years. to pass a general bank.
rupt act, but they all proved fruitles:
until near the close of the last session o.
Congress, when the Bankrupt Bill by a
close vote in both Houses of Congress. be
came law.
Merchants and traders generally are
found 10 be favorable to a bankrupt law
This class of the community have peti-
toned and memorialized Congress for many
years, and especially after each recurring
financial crisis" to enact comprehensive
insolvent law. There has been, perhaps
as little diversity of opinion among the
commercial classes as to the expediency Of
uniform rules on this subject, as ever ex-
listed among any great body of men on any
subject. TIE fact that all large commercial
houses do business in many States, and that
the lnsolVent laws as well as all the laws
regulating the rights and liabilities o.
debtor and creditor in those States form q
complicated muddle of contradictory stat
utes, shows the evil of the present system
A merchant must know the law of every
separate State in which he has debtors, and
must keep the run of a continually chang.
ing legislation, before he can be assured
what 10 do IN the case Of an insolgent, ol
3lkeiy 70 become insofyeBt, debtor. And
the honest, but insolyent merchant, howevei
full the surrender Of his property, can only
be legally discharged from debts contracted
in the State where he resides.
The agricultural classes, on the other
hand, have generally been opposed to bank
rupt laws. Feeling none of the evils of the
present system, because usually having
their small business in a compact anC
simple shape, they are amply provided fol
by the insolyent laws which the State they
live in may have enacted. Moreover, the
farmer is very apt to believe the bankrupt
laws enure only to the benefit of dishonesi
debtors, and virtually put premium upon
failures and fraud.
The experience of the country under the
former bankrupt laws has been alleged a.
conclusive against the benefits Of any
Professional gentlemen have testified to the
disagreeable fact that nobody but the So
licitors, assignees and fraudulent debtor.
ever profited by bankruptcy commission.
In England Lord Eldon declared, in 1901
that
"The abuses of the bankrupt law are
disgrace to the country, and il were better
at once to repeal all the statutes than TO suf.
fer them to be applied to such purposes
As administered in this country, they are
little more than stock in'trade for the COM
missioners, the assignee and the solicitor"
Since that time, however, the British
bankruptcy system has been wholly changed
and greatly improved. In 1881, the seven
ty commissioners of bankrupts, hitherto
found so expensive, were abolished, and q
Court of Bankruptcy created, with ten
Judges, Registras, Clerks, etc. But in spite
of this and other amendments, the bank
rupt laws proved wholly inadequate TO the
due protection of mercantile credit, and
secret transfers, concealment of property
etc, were persisted in, thus fradulently Sc.
curing the effects of the bankrupt from the
grasp of the law. In lS49, after much ex-
perimenting, the main features of the pre-
sent English bankrupt system were engraft-
ed in the law, and have been found gener-
ally acceptable To the mass of the CONNER
cial world.
The chief characteristic of the English
system, upon which our new law has been
largely modelled is that it drew for the
first time, broad distinction between the
honest and the fraudulent debtor. Traders
who, at an early period of their embarrass-
ment or insolvency, place their affairs be-
fore their creditors, and obtain their assent
to such proposals as they are able to make
are permitted to wind up their affairs,
either by trustees, without expensive inter
ference from the court, or under control OF
the court with the aid of an official assignee
To such debtors, the privilege is secured
OF settlement and a fresh start, without the
stigma of bankruptcy being attached TO
them. But, if bankruptcy cannot be
avoided, then after hearing the case and
Judging of The conduct of the. bankrupt,
1t is left 10 the Commissioner of the Court
to grant the debtor either ''frst-class GER
ti6cate," which declares that the trader 5
inability to pay his debts arises from mis-
fortune only or a "second-class certificate"
in which it is declared to have arisen partly
from misfortune; or, lastly, n "third-ciass
certificate" in which it is declared not TO
have arisen from misfortune, but from
other and more or less discreditable causes.
In 1861 the English law was still further
largely amended. Parties who are charged
by any creditor with fraud or concealment,