The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1896-05-05
THE BANKRUPTCY BILL.

Saturday last is measure OF deep
| concern to the business men OF the
! United States, and to those of the west
in particular However DESTROYS gen
eral bankruptcy law may be in this
country it is very questionable if this
! house measure is the one we want.
While it provides for both voluntary
and involuntary bankruptcy, it also
denies to debtors the right to prefer
creditors, and that, as regards the
west, may be considered as the most
/ vicious part of the bill, and gives some
color to the expressed belief of repre-
sentative Dearmond, of Missouri, that
the measure had been prepared by the
agents of the creditor class.
The mischief such law is likely to
work in the west is that it will make
it extremely difficult if not impossible
for our merchants in times of tempo
rary embarrassment to secure emer-
gency loans, and to be deprived of that
advantage means that merchants and
other business men will often go down
to ruin and bankruptcy, when If they
could secure temporary relief which
would enable them to tide over some
pressing but temporary difficulty, they
could continue in business.
What we mean is this: A merchant,
say, cramped for money to meet his
obligations, goes to his banker and
lays before him his situation; and if
able to say to the banker that in the
event of further misfortune overtaking
him he would make of him a preferred
| creditor, he might be able to secure
such loans as would enable him to tide
over his difficulties, and so pull
! through as to save his business, meet
all his obligations and live to be pros
porous and happy. But in the event
of this house bill becoming law, and
the debtor unable to make these ar
rangements with banks or other firms,
the result very probably would be that
emergency loans would be out Of the
question and the debtor would be
forced to the wall bankrupt.
We had proceeded thus far in the
discussion of the question when there
was handed to The Herald the follow
ing copy of dispatches and letter on
the subject from a prominent banker,
which we commend to the considera-
ton of our readers and especially to
our merchants, who of all men are
most interested in this subject:
Washington. D. c., May 8, 1885,
Hon. ]. P. Jones.
Dear Sir:-I have this date wired
you as follows: Defeat bankruptcy
bill if possible Its passage would ruin
credit here
have also wired Senators Brown,
Cannon, Shoup, Stewart and Dubois
similarly.
1 do not know whether you have
given this subject much thought or
not Similar bills have been intro
duced in the Utah legislature every
session for the past twenty years to my
certain knowledge, and always de-
feated. 1t is purely in the interest of
the eastern wholesale men. Their
grievance is that when assignments
are made local people are preferred,
to the detriment of those in the east.
The answer is, there is no compulsion,
and if they will insist on sending their
| drummers here to sell their goods they
must take wha tever chances there are.
Besides they have a big advantage
over local merchants who are subject
to taxes, rent and interest on their
stock of goods, which they must neces-
sarily carry. When an eastern mer-
chant sends out a drummer with
handful of samples-ruSheS around
from one country store to another, sub
ject to no rent, taxes or license, and
| contributes nothing toward the support
of the state, county or city, and then
has the effrontery to ask that law
| be passed to insure equal division
among creditors in case of an assign
ment, and that the debtor be denied
the privilege of making preferences,
as state in my dispatch, it would ruin
credit here-I mean in the west: as no
one would or could afford TO loan
money without security, and as most of
our people have no security to offer
other than their stock of goods, they
would simply have to retire from bust
ness and leave the field to those with
sufficient capital to do business with
out borrowing Hence most of the
people with whom 1 am acquainted
have all of their capital invested in
goods, which of course cannot be used
as security when they are subject to
daily change, which must be the case
in selling goods Again, no man would
loan money where he would have to
of failure, as 1t would be inequitable;
for example, a merchant starts in bust
ness; he opens an account with a bank
and another with a wholesale mer-
chant It is usual to purchase from
three to four times a year, and the
profit on each sale averages at least 10
per cent Say that only three pur-
cbases are made during the year. The
total profit would amount to 80 per
cent. The banker. at the end of the
same period, would have only 10 per
cent, as that is an average rate of in
terest. Now, if the merchant were to
fail at the end of the first, the whole
sale merchant would go in at an adj
vantage of 20 per cent over that of
the banker or money loaner, and at
the end of two years 60 per cent instead
Of the bankers 20, and so on; hence
money will not be loaned where pre-
ferences are prohibited by law.
The chamber of commerce of this
city passed similar resolutions which
have been forwarded to our Utah sena-
tors.
With the hope that you may be able
to defeat the bill that would, if en-
acted into law, be ruinous to your con-
Stituents, 1 remain
Sincerely yours
(Signed) w. S. MCCORMICK.
The case is made out pretty clear by
Mr.. McCornick's reasoning, that this
bankruptcy bill is not burdened with
good for the west; and our people
should be earnest in protecting them
selves against injurious legislation.
Let Utah's citizens remember that
we are not so helpless down at Wash
ington as we have been in the past
We have there now two senators and