Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1880-01-30
PROPOSED BANKRUPTCY Law.


and of the creditor. The basis Of any
sound bankruptcy law must be justice. 1t
must be So drawn that it will not encour-
age fraudulent insolvency; that it VIII give
to all creditors the same advantage; that
it will secure the rendition by the insol-
vent debtor OF the whole of his property
for the discharge Of his debts that it will
prevent the robbery of creditors by corpo-
rations whose stockholders may be sol
vent that it viii not destroy that credit
System which experience shows to he
inscparable from the transaction of bust
ness in this State and that it will relieve
the honest insoivent No law which does
not cover every one Of these points can be
accepted as satisfactory, but law cover
ing all of them Is at present required.
The necessity for bankruptcy Act is
created in the first instance by the char
ter of the conditions under which bust
ness in California must be done.
a large proportion of the consumers of the
State are farmers and miners. The occu-
pations of both these classes are precari-
Gus, and their returns are periodical and
not continuous The income of the farmer
depends upon the sale OF his crop, and
that OF the miner upon the season Of high
water. OF both it may be said generally
that they can meet their liabilities only
once year. But they must nevertheless
be subsisted in the meantime, and the
country merchants and traders who sup
ply them must in their turn demand long
credits from the wholesale dealers OF whom
they buy their stocks. In this way vast
and extensive credit system is established,
and it ia at all times liable to serious disas-
ter through the failure of the crops, insult
ficient supply Of water, and other natural
causes. If the country trader cannot collect
his bills from his customers because the
crops have failed, he may be unable to
meet his own obligations, and it often
happens that in such a case the prospect
of recouping his losses is so poor as to
render bankruptcy his only recourse. LII
the absence of an insolvent law this state
of things leads to proceedings destructive
OF credit, and calculated to paralyze enter
prise and cnrtail business. Under such
circumstances every creditor must be con-
stantly on the watch for the first symp-
toms of decline in the debtors business,
and it is then sharp race to see who shall
clap on the first attachment An attach
ment once sued ont, the collapse Of the
debtor is usually certain, and forced sale
dissipates his property in the most waste
full manner, and not seldom consumes the
whole OF it in the satisfaction OF one claim.
All his other creditors arc thus left with
out anything, while the debtor is still sad
died with these liabilities, though all his
property has been taken from him. It is
evident that this system is prejudicial
alike to the creditor and to the debtor.
The former encounters heavy risk of
losing all his debt, while the latter is
liable TO be sold out without being re-
lieved of his obligations. The tendency Of
this practice must be toward eliminating
the class of small traders altogether, and
bringing together the consumer and the
wholesale merchant in which case the
latter would have to bear the whole risk
Of the business, and because of the minute
subdivision of Indebtedness would be
less able than ever to shelter him
self against bad debts. For while
the absence of an insolvent law must
make wholesale merchants reluctant to
give credit, and sharp to attach the prop
erty Of unprosperous debtors, the liability
to attachment and consequent ruin must
discourage men from engaging in that Re
tail business which has, besides these, SO
many inevitable drawbacks Of its own. 1t
is therefore evident that good insolvent
law ought to provide for the apportion-
mert of the property of the debtor equally
among all the creditors, and that prefer
ences of every kind should be carefully
guarded against. In some of the States
no creditor can put in an attachment with
out including in the benefits of the pro
ceeding all other creditors of the estate,
and this is just. The insolvent debtor
must deliver up all he possesses, with
the exception of such part as is ex.
pressly exempted by law, and il
should be seen to that he i:
debarrcd from making fraudulent transfers
such as have too frequently converted laws
of this kind into mere agencies of dishones ST
trickery and evasion. Insolvency must be
real, and the assignment must be full and
genuine The debtor is to be released from
his financial burdens, but only on condition
that he exhausts his resources. The great.
est care is Of course necessary in drawing
up such law, in order to guard against
the kind of fraud referred to, for to the ex.
tent that legislation permits such roguecy,
it must be regarded as evil rather than
good, and more injury is done to credit by
fraud than b. the most sweeping misfor-
tune.
The provisions regarding insolvent cor.
porations demand especial caution 1t has