The Minneapolis journal. [volume] (Minneapolis, Minn.) 1888-1939, 1905-06-21
NELSON ON THE
BANKRUPTCY LAW
THE SENATOR'S ADDRESS BE.
FORE MINNESOTA BANKERS.
Author of the Act Reviews Bankruptcy
Legislation and Describes Circum-
stances of the Adoption of the Pres
ent Law-What the Latter Is and
Has Done.

One of the principal features Of to-
days meeting of the Minnesota Bank
ers' association was the address. OF
Senator Knute Nelson. His subject
was 1.-The Bankruptcy * Law? ;ntsrsst The he
cause of the fact that Senator Nelson
was author of the law.
The first part Of Senator Nelson 8
paper was review Of former bank
ruptcy laws. He explained that the
first paragraph of section 8, article l
of, the Constitution, gives congress
the subject of bankruptcies turnout the
United States The first law passed
under this act was dated April 4, 1900.
Then imprisonment for debt prevailed,
and the exemption Of property from
levy on execution was scant and next
to nothing. -,.
untary proceedings against merchants,
traders, bankers, brokers, factors and
insurers, upon petition Of their credit
ors, but on such q variety OF grounds
that it was impossible for any one in
embarrassed circumstances, under con-
ditions then prevailing, to escape bank
r1uptcy except thru the charity OF Of cred
they were discretionary with the court.
It was also drastic in it's provisions.
The only absolute exemptions were the
wearing appare. and beds and bedding
of the bankrupt and his family. IF
the estate paid 50 per cent, he might
receive an allowance of 5 per cent on
it did not exceed $500. If it paid IS
per cent he might receive 10 per cent,
but not to exceed $500. But if it paid
less thar, 50 per cent he could, as a
matter Of grace, receive an allowance
not to exceed $500. He could be i'm
prisored from one to ten years for fail
ure to surrender all his property ex-
cept wearing apparel and beds and bed
matter if he acted in good faith, un..
less the estate paid SO per cent and
two-thirds Of his creditors, in both
number and value, consented. This
law was cruel and oppressive on the
poor. debtor, and the proceedings were
cumbrous, dilatory and expensive. 1t
was not popular, and congress repealed
it Dec. 10, 1903.
The next national bankruptcy act
was passed Aug. 10, 1S41. 1t provid-
ed for both voluntary and involuntary
bankruptcy. Insolvency was the only
ground for voluntary bankruptcy, while
fraud, actual and constructive, of va
rious kinds, but not mere insolvency,
was ground for involuntary bankrupt-
cy., Exemptions were wearing apparel
and furniture to the value of $500.
Every bankrupt acting in good faith
could obtain a discharge without re-
gard to the amount paid, unless ma
Jority of the creditors dissented. In
that case he could invoke a trial by
charge ana XII r{ the S work Under ePt9 hs as
was done by the district court. This
act also failed to fix fees. IT was
deemed too liberal at that time, and
was repealed March 3, 1S43.
The 1867 Law. 49,.
The next act passed March 2, 1867.
1t made, similar provisions for volun-
tary and involuntary bankruptcy and
with functions similar to the referees
under the present law. It contained a
drastic section providing that a banker
merchant or trader who had suspended
payment Of his commercial paper fol
fourteen days could be forced into in
laIrged in 1870 to include broker, man
ufacturer or miner This provision
which is not embraced in the 1898 law
proved a fruitful source of litigation
and hardship. The act for the frs
time gave, effect to the exemption laws
provided for, whose duties were thu
same as trustees under the present law
Every bankrupt could within one yea
obtain his. discharge without reference
to the amount paid creditors if he hat
acte1 in good faith, but if proceed
ings were not commenced for more thar
a year, he must pay so per cent OF
claims and obtain the written consen
Of a majority Of the creditors
The penalties Of the act were harsh
and even more drastic than thos,
of the 1900 law, because NOR
minute and extensive. A very higl
schedule of fees was provided. Tn
fourteen-day rule led to many bein,
forced into bankruptcy who were onl,
tied up by temporary stringency an,
inability to realize. In many cases, owin
to the excessive fees, the officials swal
tie for the creditors In 1870 the Law
was amended and improved somewhat