The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1896-05-08
THE BANKRUPTCY BILL.

uiI1cult lOr congress 10 enact Dank-
ruptcy law satisfactory to all interests
and all sections of the country. Among
the powers conferred on Congress by the
Constitution is ''to establish uniform
laws on the subject of bankruptcy
throughout the United States This
shows that the trainers of the Constitu-
ton foresaw that necessity might arise
for general bankrupt law. The power
thus conferred on Congress has been ex-
ercised three times, namely, in 1902, in
1910 and in 1867. The two former acts
were short-lived and the last one was In
operation eleven years. Since its repeal
there have been repeated efforts to Sc
ground that such a law was necessary to
give creditors equal rights in all the
States. State bankruptcy laws and
State courts generally give precedence to
their own citizens who, as creditors, at
tach or seize property Of an insolvent
debtor, over an assignee or trustee for
all creditors equally, including their own
citizens, who claim under decree in
bankruptcy made in another State. 1t
results from this that no State law eff
fects an equal division to creditors of
the property of a bankrupt, If any part
of it happens to be found out OF the
limits of the State Again, no State has
power to discharge a debt due to the
citizens of another State or country, un-
less the creditor chooses to come in and
prove his debt in the bankrupt court.
Obviously, therefore, there are some good
arguments in favor of a general bank
ruptcy law. and yet the difficulty of
framing such a law is great and the
danger of injuring large business inter-
ests IS imminent.
The recent agitation for new bank
rupt law seems to have come from large
creditors desiring better protection for
their interests in various States, and from
the large and increasing class of debtors
who are unable to get a complete dis
charge of their debts in State courts.
Thus two antagonistic interests have
insisted for very different reasons on
urging the passage of a general bankrupt
law. The bill recently passed by the
House has been Endorsed by numerous
boards of trade and other commercial
organizations. So far as known the In
dianapolis Board of Trade is the only
body of the kind that has opposed it, and
the reasons assigned for it's opposition
would seem to go with equal force
against any national bankrupt law what
ever. The fact that such a law has been
passed three different times and each
time repealed would seem to argue
against the necessity Of a permanent law
of the kind, though for that matter no
law is permanent beyond the will Of Con-
gress There are at this time a great
many honest debtors, worthy and estima-
BILE persons broken by misfortune. 10
whom complete discharge in bank
ruptcy would be a great relief and per-
haps enable them to get new start.
But just bankruptcy law should pro-
tect the interests of creditors as well as
debtors, and should discriminate clearly
between honest and dishonest debtors.
Thus, from whatever point of view the
subject is regarded. it presents difficult
ties.
One objection to the Torrens bill is that
it would cause material contraction Of
credits. In the letter of our Board Of
Trade opposing it it is said:
We believe 1T would deprive a great many
people of credit who are not financially en-
titled to it, but whose chances OF success
the creditor class are willing to assume SO
long as no open doorway of escape from
liability is presented, as viii be through any
bankruptcy act.
On the same line with this the presi-
dent of a city bank says:
My opinion, from a banker point of view.
is that the act, should it become a law,
would deprive a good many business firms
from getting accommodations where they
now do without giving absolute security for
1t. 1t Is customary for banks TO assist many
firms without outside security, with the tacit
understanding that If any difficulties arise
the banks will be made preferred creditors.
But with the fear that any outside creditor
would force them into bankruptcy. they
would be afraid to prefer the bank. Conse-
quently, the banks, knowing that they could
not be preferred, would be afraid TO give
outside security and outside parties, who
are relatives or friends of the firm, would
not be willing to indorse, knowing that the
bank where they Endorsed or they them
selves could not be preferred by this party.
l presume that the same thing holds true
with almost every wholesale business house
in the city. They all have customers that
they have been helping TO pull through with
the understanding that if any accident hap
pens lnty Will Dt pItlcilcu mus NiItudliS
giving capital to the country customer. The
latter promises in case OF accident TO pro-
tect the wholesaler with the first lien on the
stock. With the dread of an involuntary
bankrupt application staring them in the
face they would be afraid to do this, conse-
quently the result would be to shut off the
wholesale house from helping TO tide over a
country customer.
Many persons would say that from an
ethical point of view this custom would
be more honored in the breach than in
the observance. No doubt it is great
accommodation TO q business man to get
credit from a bank or wholesale house
on the assurance that If he gets beyond
his depth or finds himself in failing
condition that particular creditor shall
be preferred and made secure at the cost
of all others, but from the standpoint of
commercial integrity it is a very ques-
tionable transaction. A national bank
ruptcy law that would force lame
ducks into bankruptcy and put an end
to the preferred creditor business might
cause temporary hardship. but in the end
IL would be promotive of commercial in
tegrity and national morals.
General Harrison very wisely refrained
from addressing the convention. If he
bod oppaa,sod before tho pIat~orr,, ha n