St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1891-10-29
Two KINDS OF FAILURES

Failures and assignments belong III
the class of tragedies, and are unhappy
experiences for the men Immediately
interested, as we'll as for the entire COM
munity in which they happen. If an
individual at middle life honestly makes
over to his assignee all his property for
the benefit of his creditors, it means
that he has to start the battle anew
without the help of capital, and the
weight of his disaster to add to his diff
ficultieS. People who have trusted him
suffer by his complications, and if they
refuse to release him for the dividend
which his estate Will pay. his debts
hang over his head and paralyZe his fut
ure efforts.
Business reyerses come to very good
and very able men, and are not neces-
Sary proof Of incompetency or dlshon-
eSty. Personal temperament, inducing
one to be unreasonably hopeful or I'M
wisely cautious, is frequent cause of
trouble when combined with unpro-
pitieus turns in the market. Changes
in the popular pre- Election for particu-
lar lines of goods or securities come
sometimes quite suddenly, and leave
those who are heavily stocked with them
unequal to their engagements. The
present diSfavor for waterworks stocks
and bonds, for example, has involved
several Boston houses which were con-
sidered entirely solvent. Unexpected
shrinkages in the value of commodities
work the same result. Even the most
staple goods fiuctuate in price in the
most unaccountable way. If they hap
pen to be things which are not readily
convertible, and their tendency is down.
wards, ruin is inevitable for him who Is
carrying them. Failures and assign
ments are the possible lot of almost
everybody engaged in trade, and who
undertakes to use his capital to its ut
most limit.
Our state law applicable in such
cases is very wise one in some of its
provisions; but it is a little too broad in
its scope, and little defective in that it
does not supply entirely adequate ma
chlnery for the detection and punish
ment of fraud. Men engaged in ordin-
airy commercial enterprises. who get in
volved by extending credit unfortu-
nately or by oyerstockIng or mistaking
the tastes of their customers, constitute
one set of inSolyents. 1t is altogether
reasonable and proper that they should
be allowed to free themselves from
their entanglements by dividing what
they have left among those to whom
they are indebted. But the same argu-
mentS are not available in their case as
in the case of men who hold fiduciary
relations to their customers. Bankers,
investment companies. savings associa-
tons and kindred enterprises should be
held to Stricter degree of accountable
ity than the ordinary shopkeeper or
manufacturer. They have held the M
selves out to the world as possessing
peculiar qualities. and have invited the
confidence of people with savings. No
one can investigate thoroughly the
character Of such houses. He has to
rely in his dealings with them on their
general repute and on the serious nature
of their business; and he trusts them,
believing that they will be careful, con-
sentative and honest, because thew must
feel that dreadful consequences will fol-
low il they are not.
An insolvency law which makes no
distinction in the privileges :. it extends
to these two entirely different classes of
business men condemns itself out of its
own mouth. A trader who has made an
assignment hurts comparatively few
people, and such as he does hurt are
people who calculate on certain an
nual percentage of loss, and adjust their
prices in view Of this. The banker or
Investment company which fails may
entail lrremediable distress over wide
areas to not only men, but women and
children, who have no corresponding
gains to balance against their loss.
There should he ready way of inquir-
ing whether the houses engaged in such
work have exercised the caution nd
fidelity in their business which their re-
sponslbilities would reasonably require
of them; and, if they have not. they
should secure none of the immunities
and favors which the law extends to the
honest Insolvent. More should be de-
manded in the one instance than in the
other. and, if it is not found, there
should be some sort of penalty attached
for its absence.